Document:

Exhibit 10.1

 

CONTRACT WORK AUTHORIZATION (Form 1)
RELEASE NO. 6

 

for

ENGINEERING AND

CONSTRUCTION MANAGEMENT SERVICES

 

Between

 

ACUSPHERE, INC. (“ACUSPHERE/OWNER”)

 

and

 

PARSONS COMMERCIAL TECHNOLOGY
INC. (“PARSONS”)

 

All work authorized by Acusphere and performed by Parsons in accordance
with this Contract Work Authorization shall be governed by the “Terms and
Conditions for Engineering, Procurement and Construction Management Services
between Acusphere, Inc. and Parsons Commercial Technology Group Inc.” (the
EPCM), effective date July 6, 2004.

 

 

CONTRACT WORK AUTHORIZATION RELEASE 6

(Form 1)

FOR

ENGINEERING AND CONSTRUCTION MANAGEMENT
SERVICES

 

THIS
Contract Work Authorization for the continuing performance of engineering,
construction management, procurement services and placement of subcontracts
(where applicable) is executed May 13, 2005 and between ACUSPHERE, INC.,
with principal offices at 500 Arsenal Street, Watertown, Massachusetts 02472 (“Acusphere/Owner”)
and PARSONS COMMERCIAL TECHNOLOGY GROUP INC. (“PARSONS”), with principal
offices for this project located at 150 Federal Street, Boston, Massachusetts
02110.

 

This
Contract Work Authorization, the scope of which is defined below, is intended
to cover engineering, construction management, procurement services and
placement of subcontracts (where applicable) (authorized to date by Acusphere)
to be provided by Parsons for Acusphere from July 6, 2004 through June 15,
2005. This Contract Work Authorization (Form 1) Release 6 extends Parsons
performance period from May 15, 2005, as previously authorized per
Contract Work Authorization (Form 1) Release 5, to June 15, 2005.

 

IN
CONSIDERATION of the covenants hereinafter set forth, the parties hereto
mutually agree as follows:

 

ARTICLE I                                                                                     SCOPE OF SERVICES

 

1.1                                 Description of Services

 

Parsons shall continue to perform engineering
construction management and other services as required (hereinafter referred to
as the “Services”) in connection with Owner’s aseptic pharmaceutical
manufacturing facility located at 890 East Street, Tewksbury, Massachusetts
(the “Facilities”), as previously set forth and described in Exhibit 1,
which is attached to Contract Work Authorization (Form 1) Release Number
1, which was executed by the parties November 11, 2004.

 

ARTICLE II                                                                                 ESTIMATED COST

 

	
  Previous total estimated cost up through and
  including Contract Work Authorization (Form 1) Release Number 5

  	
   

  	
  $

  	
  12,878,663.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Estimated increase based on Contract Work
  Authorization (Form 1) Release Number 6

  	
   

  	
  $

  	
  3,921,337.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Revised total estimated cost up through this
  Contract Work Authorization (Form 1) Release Number 6

  	
   

  	
  $

  	
  16,800,000.00

  	
   

  
						

 

It is anticipated that the revised estimated costs
added herein will be incurred prior to June 15, 2005 and that, in
accordance with the terms of the EPCM and Contract Work Authorization (Form 1)
Release Nos. 1, 2, 3, 4, 5 and 6 if Acusphere were to terminate this contract
during this term or elect to not extend this contract beyond June 15,
2005, Acusphere will be liable for costs which may exceed the amounts stated
above.

 

 

ARTICLE III                                                                             TERMS AND CONDITIONS

 

THE PARTIES ACKNOWLEDGE AND
AGREE THE TERMS AND CONDITIONS OF THIS AGREEMENT HAVE BEEN FREELY, FAIRLY AND
THOROUGHLY NEGOTIATED. FURTHER, THE PARTIES ACKNOWLEDGE AND AGREE SUCH TERMS
AND CONDITIONS, INCLUDING BUT NOT LIMITED TO THOSE RELATING TO WAIVERS,
ALLOCATIONS OF, RELEASES FROM, INDEMNITES AGAINST AND LIMITATIONS OF LIABILITY,
WHICH MAY REQUIRE CONSPICUOUS IDENTIFICATION, HAVE NOT BEEN SO IDENTIFIED
BY MUTUAL AGREEMENT AND THE PARTIES HAVE ACTUAL KNOWLEDGE OF THE INTENT AND
EFFECT OF SUCH TERMS AND CONDITIONS. EACH PARTY ACKNOWLEDGES THAT IN EXECUTING
THIS AGREEMENT IT RELIED SOLELY ON ITS OWN JUDGEMENT, BELIEF, AND KNOWLEDGE,
AND SUCH ADVICE AS IT MAY HAVE RECEIVED FROM ITS OWN COUNSEL, AND IT HAS
NOT BEEN INFLUENCED BY ANY REPRESENTATION OR STATEMENTS MADE BY ANY OTHER PARTY
OR SUCH OTHER PARTY’S COUNSEL. NO PROVISION IN THIS AGREEMENT IS TO BE
INTERPRETED FOR OR AGAINST ANY PARTY BECAUSE THAT PARTY OR ITS COUNSEL DRAFTED
SUCH PROVISION.

 

ARTICLE IV                                                                             SCHEDULE

 

It is estimated that the
work covered by the Contract Work Authorization shall commence and be completed
as noted below:

 

Work commenced on July 6,
2004 and shall be suspended at the end of the day June 15, 2005 unless a
subsequent authorization to continue is received by Parsons from Acusphere on
or prior to June 15, 2005.

 

All other terms and
conditions for the Contract for Engineering, Procurement and Construction
Management Services, as previously amended by Contract Work Authorization
Numbers 1 through 5 remain unchanged.

 

IN WITNESS WHEREOF, the
parties hereto have executed this contract, document as of the date and year
first above written.

 

	
  ACUSPHERE, INC. (“ACUSPHERE”)

  	
   

  	
  PARSONS COMMERCIAL
  TECHNOLOGY GROUP

  INC. (“PARSONS”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ John F. Thero

  	
   

  	
   

  	
  By:

  	
  /s/ Daniel Mariani

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Senior Vice President

  	
   

  	
   

  	
   

  	
  Sr. Vice President

  	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
  TitleExhibit 10.1

 

PURCHASE
AGREEMENT

 

Dated as of
May 16, 2005

 

between

 

AVANT
IMMUNOTHERAPEUTICS, INC.

 

and

 

PRF VACCINE
HOLDINGS LLC

 

 

Table of Contents

 

	
  ARTICLE I DEFINITIONS

  	
   

  
	
  Section 1.01
  Definitions

  	
   

  
	
  ARTICLE II PURCHASE AND SALE OF
  PURCHASED INTEREST

  	
   

  
	
  Section 2.01
  Purchase and Sale.

  	
   

  
	
  Section 2.02
  Transfers and Payments in Respect of the Purchased Interest

  	
   

  
	
  Section 2.03
  Purchase Price

  	
   

  
	
  Section 2.04
  No Assumed Obligations

  	
   

  
	
  Section 2.05
  Excluded Assets

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND
  WARRANTIES OF AVANT

  	
   

  
	
  Section 3.01
  Organization

  	
   

  
	
  Section 3.02
  Corporate Authorization

  	
   

  
	
  Section 3.03
  Governmental Authorization

  	
   

  
	
  Section 3.04
  Ownership

  	
   

  
	
  Section 3.05
  (intentionally omitted)

  	
   

  
	
  Section 3.06 Solvency

  	
   

  
	
  Section 3.07
  Litigation

  	
   

  
	
  Section 3.08
  Compliance with Laws

  	
   

  
	
  Section 3.09
  Conflicts

  	
   

  
	
  Section 3.10
  Place of Business

  	
   

  
	
  Section 3.11
  Broker’s Fees

  	
   

  
	
  Section 3.12
  Intellectual Property

  	
   

  
	
  Section 3.13 Regulatory Approval

  	
   

  
	
  Section 3.14 Subordination

  	
   

  
	
  Section 3.15 (intentionally
  omitted)

  	
   

  
	
  Section 3.16 License Agreements

  	
   

  
	
  Section 3.17 Set-off

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND
  WARRANTIES OF PRF

  	
   

  
	
  Section 4.01 Organization

  	
   

  
	
  Section 4.02 Authorization

  	
   

  
	
  Section 4.03 Broker’s Fees

  	
   

  

 

i

 

	
  Section 4.04 Conflicts

  	
   

  
	
  Section 4.05 Funds Available

  	
   

  
	
  ARTICLE V COVENANTS

  	
   

  
	
  Section 5.01 Consents and
  Waivers

  	
   

  
	
  Section 5.02 Books and Records

  	
   

  
	
  Section 5.03 (intentionally
  omitted)

  	
   

  
	
  Section 5.04 Confidentiality;
  Public Announcement

  	
   

  
	
  Section 5.05 Quarterly Reports

  	
   

  
	
  Section 5.06 Rights of First
  Discussion

  	
   

  
	
  Section 5.07 Security Agreement

  	
   

  
	
  Section 5.08 Reasonable Best
  Efforts; Further Assurance

  	
   

  
	
  Section 5.09 Remittance to
  Initial Concentration Account

  	
   

  
	
  Section 5.10 License Agreements

  	
   

  
	
  Section 5.11 Audits

  	
   

  
	
  Section 5.12 Notice

  	
   

  
	
  ARTICLE VI THE CLOSING; CONDITIONS
  TO CLOSING AND FUNDING

  	
   

  
	
  Section 6.01 Closing

  	
   

  
	
  Section 6.02 Conditions Applicable
  to PRF in Closing

  	
   

  
	
  Section 6.03 Conditions
  Applicable to AVANT

  	
   

  
	
  ARTICLE VII EXPIRATION

  	
   

  
	
  Section 7.01 Expiration Date

  	
   

  
	
  Section 7.02 Effect of
  Expiration

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS

  	
   

  
	
  Section 8.01 Survival

  	
   

  
	
  Section 8.02 Specific
  Performance

  	
   

  
	
  Section 8.03 Notices

  	
   

  
	
  Section 8.04 Successors and
  Assigns

  	
   

  
	
  Section 8.05 Indemnification

  	
   

  
	
  Section 8.06 Independent Nature
  of Relationship

  	
   

  

 

ii

 

	
  Section 8.07 Tax

  	
   

  
	
  Section 8.08 Entire Agreement

  	
   

  
	
  Section 8.09 Amendments; No
  Waivers

  	
   

  
	
  Section 8.10 Interpretation

  	
   

  
	
  Section 8.11 Headings and
  Captions

  	
   

  
	
  Section 8.12 Counterparts;
  Effectiveness

  	
   

  
	
  Section 8.13 Severability

  	
   

  
	
  Section 8.14 Governing Law;
  Jurisdiction

  	
   

  
	
  Section 8.15 Waiver of Jury
  Trial

  	
   

  

 

iii

 

 

EXHIBITS AND SCHEDULES

 

EXHIBITS

 

	
  Exhibit A

  	
  –

  	
  Form of Bill of
  Sale

  
	
  Exhibit B

  	
  –

  	
  Gamble License
  Agreement

  
	
  Exhibit C

  	
  –

  	
  Form of Deposit
  Agreement

  
	
  Exhibit D

  	
  –

  	
  “Product Payment
  Amount” Condition

  
	
  Exhibit E

  	
  –

  	
  Information Format

  
	
  Exhibit F

  	
  –

  	
  Form of Security
  Agreement

  
	
  Exhibit G

  	
  –

  	
  Legal Opinions of
  Goodwin Procter LLP
  (transaction counsel)

  
	
  Exhibit H

  	
  –

  	
  Legal Opinion of
  Yankwich and Associates (patent counsel)

  
	
  Exhibit I

  	
  –

  	
  Form of Letter to
  GSK

  
	
  Exhibit J

  	
  –

  	
  Form of Guarantee

  

 

SCHEDULES

 

iv

 

PURCHASE AGREEMENT

 

PURCHASE AGREEMENT
(as amended, supplemented or otherwise modified from time to time, this “Agreement”)
is made and entered into as of May 16, 2005 by and among AVANT
Immunotherapeutics, Inc., a Delaware corporation, and PRF Vaccine Holdings
LLC, a Delaware limited liability company (“PRF”), an Affiliate of Paul
Royalty Fund II, L.P., a Delaware limited partnership.

 

WHEREAS, AVANT
has the right to receive all royalties and payments under the Intellectual
Property and License Agreements concerning the Product; and

 

WHEREAS, AVANT
wishes to sell, assign, convey and transfer to PRF, and PRF wishes to purchase
from AVANT, the Purchased Interest, upon and subject to the terms and
conditions hereinafter set forth; and

 

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 1.01  Definitions.

 

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

 

“Additional Payments”
shall have the meaning set forth in Section 2.03(b).

 

“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 interest with the power to direct
the management and policies of such non-corporate entities.

 

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

 

“Audit Costs”
shall mean, with respect to any audit described hereunder with respect to
amounts payable or paid under this Agreement or any License Party Audit, the
cost of such audit, including all fees, costs and expenses incurred in
connection therewith.

 

“AVANT” shall mean
AVANT Immunotherapeutics, Inc., a Delaware corporation,
and its successors and assigns.

 

“AVANT Concentration
Account” shall mean a segregated account established and maintained at the
Depositary Bank pursuant to the terms of the Deposit Agreement and this
Agreement.  The AVANT Concentration
Account shall be the account into which the funds

 

 

remaining
in the Joint Concentration Account after payment therefrom of the amounts
payable to PRF pursuant to this Agreement are swept in accordance with the
terms of this Agreement.

 

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

 

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

 

(i)                                     AVANT 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 it, 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 AVANT shall make a general assignment for the benefit of its
respective creditors; or

 

(ii)                                  there shall be
commenced against AVANT 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 AVANT 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
Product or any substantial portion of the Intellectual Property related to the
Product, 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)                              AVANT 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)                                 AVANT shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
respective debts as they become due; or

 

(vi)                              AVANT shall be in a
financial condition such that the sum of the net present value of its debts is
greater than the fair market value of its property, when taken together on a
consolidated basis.

 

“Bill of Sale”
shall mean the Bill of Sale pursuant to which AVANT shall assign to PRF all of
its rights and interests in and to the Purchased Interest purchased hereunder,
which Bill of Sale shall be substantially in the form of Exhibit A.

 

2

 

“BLA” shall mean a
biologic license application, and all amendments and supplements thereto for
regulatory approval by the FDA, as defined under the Public Health Service Act
as such act or regulations thereunder may be amended, supplemented or replaced
from time to time, filed with the FDA in the United States or an equivalent
application filed with a Regulatory Agency in any country outside of the United
States.

 

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

 

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

 

“Closing Date”
shall mean May 17, 2005.

 

“Collateral” shall
mean the property included in the definition of “Collateral” in the Security
Agreement.

 

“Confidential
Information” shall mean, as it relates to AVANT and its Affiliates and the
Product, the Intellectual Property, Know-How, trade secrets, confidential
business information, financial data and other like information (including
ideas, research and development, know-how, formulas, schematics, compositions,
technical data, 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 and tangible or intangible
proprietary information or material. 
Notwithstanding the foregoing definition, Confidential Information shall
not include information that is (i) already in the public domain at the
time the information is disclosed, (ii) thereafter becomes lawfully
obtainable from other sources, (iii) is required to be disclosed in any
document to be filed with any Government Authority or (iv) is required to
be disclosed under securities laws, rules and regulations applicable to
AVANT or PRF, as the case may be, or pursuant to the rules and regulations
of any stock exchange or stock market on which securities of AVANT may be
listed for trading.

 

“Contract Party”
shall mean any party to a License Agreement (other than AVANT and its
Affiliates) and includes GSK and Gamble.

 

“Daily Amount”
shall have the meaning set forth in Section 2.02(a).

 

“Deposit Accounts”
shall mean, collectively, the Initial Concentration Account, the Joint
Concentration Account, AVANT Concentration Account and PRF Concentration
Account, each established and maintained pursuant to the Deposit Agreement.

 

“Deposit Agreement”
shall mean any agreement (including initially that certain Deposit and Account
Control Agreement) entered into by the Depositary Bank, AVANT and PRF,
substantially in the form of Exhibit C attached hereto, pursuant to
which, among other things, the Initial Concentration Account, the Joint
Concentration Account, the PRF Concentration Account and the AVANT
Concentration Account shall be established and maintained.

 

3

 

“Depositary Bank”
shall mean JP Morgan Chase Bank, N.A. or such other bank or financial
institution approved by each of PRF and AVANT.

 

“Discrepancy Notice”
shall have the meaning set forth in Section 5.11(b).

 

“Dispute” shall
have the meaning set forth in Section 3.12(i).

 

“E.U. Commercial
Launch Date” shall mean the earlier of the date upon which either
(i) GSK makes a public press release announcing, or (ii) PRF receives
a written certificate of the Chief Executive Officer of AVANT certifying in
writing to PRF, that GSK or its assignee or sublicensee has made the first
arm’s-length commercial sale of the Product for value to a third party in any
of the following countries:  Austria, Belgium, Switzerland, Germany,
Denmark, Spain, France, Great Britain, Greece, Italy, Luxemburg, Netherlands or
Sweden.  Sales for clinical
studies, compassionate use, named patient programs, sales under a treatment
investigation marketing application filed with a Regulatory Agency, test
marketing, non-registrational studies or any similar instance where the Product
is supplied at cost or without charge shall not constitute an “arm’s-length
commercial sale” for the purpose of determining the E.U. Commercial Launch
Date.

 

“E.U. Commercial
Launch Payment” shall mean an amount equal to $40.0 million.

 

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

 

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

 

“First Funding”
shall have the meaning set forth in Section 2.03(a)(i).

 

“Funding” shall
have the meaning set forth in Section 2.03(b).

 

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

 

“Gamble” shall
mean the Cincinnati Children’s Hospital Medical Center, formerly the James N.
Gamble Institute of Medical Research, and its Affiliates.

 

“Gamble License
Agreement” shall mean the License and Clinical Trials Agreement between
Virus Research Institute, Inc. (a predecessor of AVANT) and Gamble
Institute of Medical Research effective February 27, 1995, as amended
(including the amendment dated November 17, 2003, attached hereto as Exhibit B),
supplemented or otherwise modified from time to time.

 

“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 United States National
Institute of Health, the EMEA, or any other government authority in any
country.

 

4

 

“Gross Milestone
Payment” shall mean any and all amounts payable during the Term to AVANT by
GSK pursuant to Section 5.02(e) of the GSK License Agreement.

 

“Gross Product
Payments” shall mean (i) for so long as the GSK License Agreement is
in effect, all Royalties paid or payable by its terms to AVANT under the GSK
License Agreement and (ii) for any period during which the GSK License
Agreement is not in effect or is no longer the exclusive agreement by which
AVANT may be paid Royalties, all Royalties paid or payable by its terms to
AVANT under any License Agreement other than the GSK License Agreement; and any
collections, recoveries or payments made in lieu thereof and any amounts paid
or payable to AVANT in respect of the GSK License Agreement or any other
License Agreement by their terms pursuant to Section 365(n) of the United
States Bankruptcy Code.

 

“Guarantee” shall
have the meaning set forth in Section 6.03(d).

 

“GSK” shall mean
GlaxoSmithKline PLC and its Affiliates.

 

“GSK License Agreement”
shall mean the License Agreement between SmithKline Beecham plc (a predecessor
of GSK) and Virus Research Institute, Inc. (a predecessor of AVANT) effective
December 1, 1997, as amended (including the amendment dated
January 9, 2003), supplemented or otherwise modified from time to time.

 

“IND” shall mean
an investigational new drug application and all amendments and supplements
thereto for regulatory approval by the FDA, as defined in 21 C.F.R.
Section 312 et seq. as such act or regulations may be amended,
supplemented or replaced from time to time, filed with the FDA in the United
States or an equivalent application filed with a Regulatory Agency in any
country outside of the United States.

 

“Independent
Accountants” shall have the meaning set forth in Section 5.11(b).

 

“Initial Concentration
Account” shall mean the deposit account established and maintained at the
Depositary Bank pursuant to a Deposit Agreement and this Agreement.  The Initial Concentration Account shall be
the account into which all payments made in respect of the Royalties involving
the Product are to be remitted, as provided herein.

 

“Intellectual Property”
shall mean all Patent Rights; trade secrets; Know-How; Confidential
Information; inventions (whether patentable or unpatentable and whether or not
reduced to practice) and all improvements thereto; all registered or
unregistered trademarks, trade names, service marks,
including all goodwill associated therewith; all domain names and websites; and
all registered and unregistered copyrights and all applications, in each case
that are owned, controlled by, issued to, licensed to, licensed by or hereafter
acquired by or licensed by AVANT or any of its Subsidiaries, in each case
relating to the Product.

 

“Joint Concentration
Account” shall mean a segregated account for the benefit of AVANT and PRF
and maintained at the Depositary Bank pursuant to the terms of the Deposit
Agreement and this Agreement.  The Joint
Concentration Account shall be the account into which the Depositary Bank
sweeps the funds held in the Initial Concentration Account.

 

5

 

“Know-How” shall
mean, relating solely to the Product, (a) all “KNOW-HOW” as such term is
defined in the GSK License Agreement, and (b) to the extent not otherwise
covered by clause (a), all trade secrets, materials, discoveries, data,
processes, methods of manufacture, devices, techniques, algorithms, flow
charts, schematics, compositions, formulations, formula, specifications, uses
and other information, including, but not limited to (i) medical,
chemical, pharmacological and other scientific or clinical data or materials
and (ii) methodology and information used in the manufacture, packaging,
labeling, development, testing or analysis of the Product, that, in each case,
derives actual or potential independent economic value from not generally being
known to, and not being readily ascertainable by proper means by, other Persons
who can obtain economic value from its disclosure or use, and that is now
owned, controlled or licensed by AVANT or any of its Subsidiaries or that is
hereafter acquired or licensed by AVANT or any of its Subsidiaries during the
Term.

 

“Knowledge” shall
mean, with respect to AVANT, the actual knowledge of any current officer or
employee of AVANT or its patent attorney at Yankwich & Associates
relating to a particular matter. 
Notwithstanding the foregoing, any of the foregoing persons charged with
responsibility for the aspect of the business relevant or related to the matter
at issue shall be deemed to have knowledge of a particular matter if, in the
prudent exercise of his or her duties and responsibilities in the ordinary course
of business, such person should have known of such matter; provided that no
such knowledge concerning any third party patent rights shall be so attributed
to any such person, other than with respect to the investigations completed as
described in the opinion letter identified in Section 6.02(h)(ii).

 

“Letter of Intent”
shall mean the letter dated March 23, 2005 between Paul Capital Advisors,
LLC and AVANT as the same may be amended to the date hereof, including that
certain amendment dated April 5, 2005.

 

“License Agreements”
shall mean any existing or future license, co-promotion, collaboration,
distribution, manufacturing, marketing or partnering agreements entered into by
AVANT or any of its Affiliates relating to the Product and/or the Intellectual
Property, including but not limited to the GSK License Agreement and Gamble
License Agreement.  For clarity, any
agreement with any Person for the Transfer of some or all of the Royalties not
constituting the Purchased Interest (such as an agreement akin to this Purchase
Agreement and the other Transaction Documents) shall not constitute a “License
Agreement” hereunder.

 

“License Party Audit”
shall have the meaning set forth in Section 5.11(a).

 

“Lien” shall mean
lien, hypothecation, charge, instrument, license, 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 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 claims, damages, losses, judgments, liabilities,
costs and expenses (including reasonable expenses of investigation and
reasonable attorneys’ fees and expenses in connection with any action, suit or
proceeding).

 

6

 

“Material Adverse
Effect” shall mean (i) the effect of a material adverse change in the
business, operations, assets, prospects or financial condition of AVANT and its
Subsidiaries, taken as a whole, as such would materially effect the Product,
(ii) a material adverse effect on the validity or enforceability of any of
the Transaction Documents, (iii) a material adverse effect on the ability
of AVANT to perform any of its obligations under any of the Transaction Documents,
(iv) a material adverse effect on the rights or remedies of PRF under any
of the Transaction Documents, (v) an adverse effect on the right of AVANT
to receive any payments payable under any License Agreement or any other
material rights and remedies of AVANT under any License Agreement, (vi) an
adverse effect on the right of PRF to receive the Purchased Interest or any
payment due to PRF hereunder or (vii) a material adverse effect on the
Purchased Interest, including any material adverse effect on the Product or the
ability of GSK to manufacture, distribute, market and/or sell the Product on
the level of anticipated Product net sales.

 

“Net Milestone Payment”
shall mean 35% of any Gross Milestone Payment.

 

“Obligations”
shall mean any and all obligations of AVANT under the Transaction Documents.

 

“Patent Office”
shall mean the respective patent office, including the U.S. Patent and
Trademark Office and any comparable foreign patent office, for any Patent
Rights.

 

“Patent Rights”
shall mean all current and future patents, patent applications and patent
disclosures, together with all reissuances, divisions, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof
relating to the Product and/or the Intellectual Property, composition of matter,
formulation, or methods of manufacture or use thereof that are issued or filed,
including those identified on Schedule 3.12(c), that, in each case,
are owned, controlled by, issued to, licensed to, licensed by or hereafter
acquired by or licensed by AVANT or any of its Subsidiaries.

 

“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.

 

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

 

“PRF Concentration
Account” shall mean a segregated account established for the benefit of PRF
and maintained at the Depositary Bank pursuant to the terms of the Deposit
Agreement and this Agreement.  The PRF
Concentration Account shall be the account into which the funds first held in
the Joint Concentration Account that are payable to PRF pursuant to this
Agreement are swept by the Depositary Bank in accordance with the terms of this
Agreement and the Deposit Agreement.

 

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

 

“Product” shall
mean any product (including “VACCINE”, as such term is defined in the GSK
License Agreement) for which Royalties or other consideration
are paid or payable to AVANT under the terms of the GSK License
Agreement or any other License Agreement.

 

7

 

“Product Payment
Amount” shall mean an amount equal to the sum of (i) the first $27.5
million of 70% of the Gross Product Payments for each calendar year after the
Closing Date during the Term and (ii) 7.5% of 70% of the Gross Product
Payments in excess of $27.5 million for each calendar year after the Closing
Date during the Term; provided, however, if and when during the
Term the aggregate Product Payment Amount under clauses (i) and
(ii) above exceeds 245% of the Purchase Price actually paid by PRF
pursuant to Section 2.03(a), then thereafter (for the applicable calendar
year and in each subsequent calendar year), the Product Payment Amount shall be
calculated as 7.5% of 70% of all Gross Product Payments.  Notwithstanding the immediately preceding sentence,
if the condition on Exhibit D is at any time during the Term not
satisfied, then “Product Payment Amount” shall have the meaning set
forth on Exhibit D.

 

“Purchased Interest”
shall mean an undivided interest in the accounts (as such term is defined in
the UCC) of AVANT in respect of the GSK License Agreement and any other License
Agreement consisting of (i) that portion of the Gross Product Payments in
an amount equal to the Product Payment Amount, and (ii) the Net Milestone
Payments (other than that portion of the amounts set forth in clauses
(i) and (ii) above relating to sales of Product in the United States
after December 31, 2009, if AVANT or PRF exercises its respective right
pursuant to Section 2.03(c) to terminate certain obligations and
rights hereunder).

 

“Purchase Price”
shall have the meaning set forth in Section 2.03.

 

“Quarterly Report”
shall mean, with respect to the relevant calendar quarter of AVANT, (i) a
report showing all payments made by AVANT to PRF under this Agreement during
such quarter and showing in detail the basis for the calculation of such
payments, (ii) a reconciliation of such report referred to in clause
(i) above to all information and data deliverable to AVANT, PRF or their
Affiliates by the parties to any of the License Agreements, together with
relevant supporting documentation, (iii) a report showing, to the extent
available, the amount of gross end-user sales of the Product and all deductions
supporting AVANT’s calculations of Gross Product Payments and (iv) such
additional information in AVANT’s possession as PRF may reasonably request, in
each case subject to any confidentiality obligations AVANT may have with any
Contract Party.  With respect to the GSK
License Agreement, the Quarterly Report will include all information set forth
on Exhibit E.

 

“Regulatory Agency”
shall mean a Governmental Authority with responsibility for the approval of the
marketing and sale of pharmaceuticals in any country or other regulation of
pharmaceuticals or biohazardous substances or materials.

 

“Regulatory Approvals”
shall mean, collectively, all INDs, BLAs and other regulatory approvals,
registrations, certificates, authorizations, permits and associated materials
(including the product dossier) relating to the Product, issued by the
appropriate Regulatory Agency as to the Product and all reports, correspondence
and other submissions related thereto and the regulatory and clinical files and
data pertaining thereto, and all information, data, formulations, assays, or
Intellectual Property contained in such INDs and the BLAs, relating to the
Product together with all amendments, supplements and updates thereto, and all
comparable regulatory approvals, registrations and associated materials
throughout the world.

 

8

 

“Royalties” shall
mean the gross amount of all royalties, profit payments, license fees,
settlement payments, judgments, payments, consideration or any other
remuneration of any kind relating to the Products and/or Intellectual Property,
and paid or payable to AVANT during the Term under any License Agreement by its
terms (subject to any Set-off set forth in such License Agreement); provided,
however, that Royalties shall not include (1) Gross Milestone
Payments or (2) $1,000,000 of royalties otherwise payable to AVANT by GSK
for which GSK has the right to take a credit pursuant to
Section 5.02(d) of the GSK License Agreement.

 

“Security Agreement”
shall mean the Security Agreement of even date herewith by and between AVANT
and PRF providing for, among other things, the grant by AVANT in favor of PRF
of a valid continuing, perfected lien on and security interest in, the
collateral described therein.

 

“Set-off” shall
have the meaning set forth in Section 3.17.

 

“Subsequent Funding
Date” shall have the meaning set forth in Section 2.03.

 

“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 ordinary circumstances shall at the
time 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, directly or indirectly, owned by such Person.

 

“Term” shall mean
the term of this Agreement, which shall commence on the date hereof and
terminate on December 12, 2012, unless otherwise extended pursuant to
Section 5.06(b).

 

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

 

“Transfer” or “Transferred”
shall mean any sale, conveyance, assignment, disposition, license, sublicense,
co-promotion agreement, or other form of transfer, other than any permitted
assignment by AVANT as provided in the first proviso contained in
Section 8.04.

 

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

 

“U.S. Commercial
Launch Date” shall mean the earlier of the date upon which either
(i) GSK makes a public press release announcing, or (ii) PRF receives
a written certificate of the Chief Executive Officer of AVANT certifying in
writing to PRF, that GSK or its assignee or sublicensee has made the first
arm’s-length commercial sale of the Product for value to a third party in the
United States.  Sales for clinical
studies, compassionate use, named patient programs, sales under a treatment
investigation new drug application filed with the FDA, test marketing,
non-registrational studies or any similar instance where the Product is
supplied at cost or without charge shall not constitute an “arm’s-length
commercial sale” for the purposes of determining the U.S. Commercial Launch
Date.

 

“U.S. Commercial
Launch Payment” shall mean an amount equal to (a) $11.0 million
if the U.S. Commercial Launch Date occurs on or before December 31, 2007;
(b) $10.0 million if

 

9

 

the
U.S. Commercial Launch Date occurs on or between January 1, 2008 and December 31,
2008; or (c) $9.0 million if the U.S. Commercial Launch Date occurs on or
after January 1, 2009.

 

ARTICLE II

 

PURCHASE AND SALE OF PURCHASED INTEREST

 

Section 2.01  Purchase and Sale.

 

Upon the terms and
subject to the conditions set forth in this Agreement, on the Closing Date,
AVANT agrees to sell, assign, transfer
and convey to PRF, and PRF agrees to purchase from AVANT, free and clear of all
Liens (except those Liens created in favor of PRF pursuant to the Security
Agreement and any other Transaction Document), all of AVANT’s right, title and
interest in and to the Purchased Interest.

 

Section 2.02  Transfers and Payments
in Respect of the Purchased Interest.

 

From the Closing Date,
PRF shall be entitled to receive the following transfers and payments in
respect of the Purchased Interest:

 

(a)                             Cash
in respect of the Product Payment Amount shall be paid to PRF from the Gross
Product Payments that are received from time to time in the Initial
Concentration Account, which Product Payment Amount shall be swept from the
Joint Concentration Account into the PRF Concentration Account on a daily basis
(the “Daily Amount”) pursuant and subject to Section 5.09.  In the event AVANT receives any Gross Product
Payments, AVANT shall hold such amounts in trust for the benefit of PRF and,
within two (2) Business Days after receipt thereof, deposit into the
Initial Concentration Account by wire transfer of immediately available funds
such Gross Product Payments.

 

(b)                            Within
two (2) Business Days after AVANT’s receipt of any payment in respect of
the Gross Milestone Payments, AVANT shall pay to PRF, by wire transfer of
immediately available funds to an account designated by PRF, an amount equal to
the Net Milestone Payment for each such payment.

 

(c)                             Except
as otherwise provided by Section 8.05, for avoidance of doubt, the parties
understand and agree that if GSK or any other Contract Party fails to pay any
Royalties or any Gross Milestone Payment when AVANT or PRF reasonably believes
they are due under the applicable License Agreement (each such unpaid amount,
a ”Discrepancy”) because of a disagreement with GSK or such other
Contract Party as to (A) when or whether any Royalties or the Gross
Milestone Payment are owed AVANT, or (B) the amount of any Set-off taken by
GSK or such other Contract Party, then AVANT shall not be obligated to pay to
PRF or otherwise compensate or make PRF whole with respect to any such
Discrepancy, but instead AVANT and PRF may seek to recover such Discrepancy
from GSK or such other Contract Party as contemplated by
Sections 5.10(c) and (d).

 

10

 

Section 2.03  Purchase Price.

 

(a)                             In
full consideration for the sale of the Purchased Interest, and subject to the
terms and conditions set forth herein, PRF shall pay to AVANT, or its designee,
the following amounts:

 

(i)                                     $5.0
million on the Closing Date (the “First Funding”);

 

(ii)                                  $5.0
million on December 1, 2005;

 

(iii)                               the
E.U. Commercial Launch Payment, payable twenty (20) Business Days after the
E.U. Commercial Launch Date has occurred; and

 

(iv)                              the U.S. Commercial Launch Payment, payable twenty (20)
Business Days after the U.S. Commercial Launch Date has occurred.

 

(b)                            The
aggregate of payments that are actually made under clauses (i), (ii), (iii) and
(iv) of Section 2.03(a) shall
constitute the “Purchase Price”. 
Each of the payments in clauses (i), (ii), (iii) and (iv) of
Section 2.03(a) shall be referred to herein as a “Funding”,
and each date in which payments are made pursuant to clauses (ii),
(iii) and (iv) of Section 2.03(a) shall be referred to
herein as a “Subsequent Funding Date”. 
If the conditions set forth in Section 6.02 for a Funding under
clause (ii), (iii) or (iv) of Section 2.03(a) are not
satisfied on such Funding’s applicable Subsequent Funding Date, then PRF’s
obligation to make such Funding shall cease to exist at the time of such
Subsequent Funding Date; provided, however, that (1) if the
failure to so satisfy any such condition could not reasonably be foreseen to
materially effect any payment relating to the Purchased Interest, then PRF’s
obligation to make such Funding shall be suspended until such time as the
conditions for such Funding are satisfied, and (2) if such conditions are
not later satisfied as provided in clause (1) above, in the event that any
Royalties accruing after such Subsequent Funding Date are paid to PRF with
respect to the Purchased Interest (the ”Additional Payments”), PRF
and AVANT shall negotiate in good faith and agree on an amount to be paid to AVANT,
on a mutually agreeable time-table, to ensure that AVANT receives from PRF a
fair and equitable price for the Purchased Interest, which amount shall be
based upon and take into account (A) original and revised projected sales
of Product, (B) estimated and targeted returns of the parties used to
establish the Purchase Price provided above, (C) the total projected
Product Payment Amounts as of such time, including those already received and
the Additional Payments received and projected, (D) the portion and timing
of the Purchase Price already paid by PRF to AVANT, (E) any Losses
sustained by PRF as a result of such failure to satisfy such condition(s) as of
such Subsequent Funding Date, and (F) the effect of the failure to satisfy
any such condition.  The Purchase Price
is non-creditable and non-refundable, not subject to set-off, and is not
conditioned in any way on the payment to or receipt by AVANT of any
Royalties.  Without limiting any other
rights or remedies available to AVANT hereunder, PRF shall pay interest to
AVANT on the aggregate amount of any payments that are not paid on or before
the date such payments are due under this Agreement at a rate per annum equal
to the daily prime rate, as published in The Wall Street Journal,
Eastern United States Edition, plus three percent (3%), calculated on the
number of days such payment is delinquent.

 

(c)                             In
the event that the U.S. Commercial Launch Date does not occur on or before
December 31, 2009, then either PRF or AVANT shall have ten
(10) Business Days to notify the

 

11

 

other party of
its intention to continue or to terminate all of its and the other party’s
rights and obligations under this Agreement relating to sales of the Product in
the United States, including any payments relating thereto under
Section 2.03(a)(iv) and remittances under Section 2.02(a).  If both parties agree to choose to continue
such rights and obligations under this Agreement, then those rights and
obligations of AVANT and PRF hereunder shall continue.  If either party notifies the other of its
choice to terminate such rights and obligations under this Agreement, or does
not provide notice to the other party of its choice to continue such rights and
obligations, in each case within ten (10) Business Days after
December 31, 2009, then (i) all of PRF and AVANT’s rights and
obligations under this Agreement relating to sales of the Product in the United
States, including any payments relating thereto under Section 2.03(a)(iv) and
remittances under Section 2.02(a), shall terminate in accordance with the
provisions of Article VII, and (ii) PRF and AVANT shall amend the
Deposit Agreement to provide that, as of such date, the portion of Gross
Product Payments that otherwise would have been transferred from the Initial
Concentration Account to the Joint Concentration Account relating to sales of
the Product in the United States shall be transferred from the Initial
Concentration Account directly to the AVANT Concentration Account, and none of
such portion shall be transferred to the Joint Concentration Account.

 

(d)                            In the
event that PRF and AVANT are unable to agree on a fair and equitable price for
the Purchased Interest under Section 2.03(b) above, such dispute shall be settled by arbitration in accordance
with the rules of the American Arbitration Association, and judgment upon
an award arising in connection therewith may be entered in any court of
competent jurisdiction.  Any arbitration,
mediation, court action, or other adjudicative proceeding pursuant to the
Section 2.03(d) shall be held in New York, New York or, if such
proceeding cannot be lawfully held in such location, as near thereto as
applicable law permits.  The prevailing
party in any arbitration, mediation, court action, or other adjudicative
proceeding arising out of this Section 2.03(d) shall be reimbursed by
the party who does not prevail for its reasonable attorneys, accountants and experts fees and related expenses and for the costs of such
proceeding.

 

Section 2.04  No Assumed
Obligations.

 

Notwithstanding
any provision in this Agreement or any other writing to the contrary, PRF is
acquiring only the Purchased Interest and is not assuming any liability or
obligation of AVANT or any of its Affiliates of whatever nature, whether
presently in existence or arising or asserted hereafter, whether under any of
the License Agreements or any Transaction Document or otherwise.  All such liabilities and obligations shall be
retained by and remain obligations and liabilities of AVANT or its Affiliates
(the “Excluded Liabilities and Obligations”).

 

Section 2.05  Excluded Assets.

 

PRF 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 AVANT under the License
Agreements or any other assets of AVANT, other than the Purchased Interest.

 

12

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF AVANT

 

AVANT hereby represents
and warrants to PRF as of the date first written above the following:

 

Section 3.01  Organization.

 

AVANT is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate powers and all licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and as proposed to be conducted in connection with the transactions
contemplated by the Transaction Documents. 
AVANT 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 in a Material Adverse Effect.

 

Section 3.02  Corporate Authorization.

 

AVANT has all necessary
corporate 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
AVANT and each Transaction Document constitutes the valid and binding
obligation of AVANT, enforceable against AVANT in accordance with its
respective terms, subject, as to enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally or general equitable principles.

 

Section 3.03  Governmental Authorization.

 

The execution and
delivery by AVANT of the Transaction Documents, and the performance by AVANT of
its obligations hereunder and thereunder, does not require any notice to,
action or consent by, or in respect of, or filing with, any Government
Authority, except for the filing of proper financing statements (including
Form UCC-1s) under the UCC and filings with the U.S. Patent and
Trademark Office.

 

Section 3.04  Ownership.

 

AVANT owns, or holds a
valid license under, all of the Intellectual Property free and clear of all
Liens, and no license or covenant not to sue under any Intellectual Property
has been granted to any third party, except as provided in the GSK License
Agreement.

 

Section 3.05  (intentionally omitted).

 

Section 3.06  Solvency.

 

AVANT is not insolvent as
defined in any statute of the United States Bankruptcy Code or in the
fraudulent conveyance or fraudulent transfer statutes of the States of
Delaware, New

 

13

 

York
or Massachusetts. 
Assuming consummation of the transactions contemplated by the
Transaction Documents, (i) the present fair saleable value of AVANT’s
assets is greater than the amount required to pay its debts as they become due,
(ii) AVANT does not have unreasonably small capital with which to engage
in its business, and (iii) AVANT has not incurred, nor does it have
present plans to or intend to incur, debts or liabilities beyond its ability to
pay such debts or liabilities as they become absolute and matured.

 

Section 3.07  Litigation.

 

There is no
(i) action, suit, arbitration proceeding, claim, investigation or other
proceeding pending or, to the Knowledge of AVANT, threatened against AVANT or
(ii) any governmental inquiry pending or, to the Knowledge of AVANT,
threatened against AVANT, in each case with respect to clauses (i) and
(ii) above, which, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect. 
There is no action, suit, claim, proceeding or investigation pending or,
to the Knowledge of AVANT, threatened against AVANT or any other Person
relating to the Product, the Intellectual Property, the Regulatory Approvals or
the Purchased Interest.

 

Section 3.08  Compliance with Laws.

 

AVANT (i) is not in
violation of, has not violated, or to the Knowledge of AVANT, is not under
investigation with respect to, and (ii) has not been threatened to be charged
with or been given notice of any violation of any law, rule, ordinance or
regulation of, or any judgment, order, writ decree, permit or license entered
by any Government Authority applicable to the Purchased Interest, which could
reasonably be expected to result in a Material Adverse Effect.

 

Section 3.09  Conflicts.

 

(a)                             Neither
the execution and delivery of any of the Transaction Documents 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, in any respects any provisions of, that
in each case or in the aggregate could reasonably be expected to result in a
Material Adverse Effect: (A) any law, rule, ordinance or regulation of any
Government Authority, or any judgment, order, writ, decree, permit or license
of any Government Authority, to which AVANT or any of its Subsidiaries or any
of their respective assets or properties may be subject or bound; or
(B) any contract, agreement, commitment or instrument to which AVANT or
any of its Subsidiaries is a party or by which AVANT or any of its Subsidiaries
or any of their respective 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 the certificate of incorporation or by-laws (or other
organizational or constitutional documents) of AVANT or any of its
Subsidiaries; (iii) except for the filing of proper financing statements
(including Form UCC-1s) under the UCC required hereunder and filings
with any Patent Office, require any notification to, filing with, or consent
of, any Person or Government Authority; (iv) give rise to any right of
termination, cancellation or acceleration of any right or obligation of AVANT
or any of its Subsidiaries or any other Person or to a loss of any benefit
relating to the Purchased Interest; or (v) result in the creation or
imposition of any Lien on the Purchased Interest or any

 

14

 

other Collateral, other than, with respect
to clause (v) above, pursuant to the Security Agreement or any other
Transaction Document.

 

(b)                            AVANT
has not granted, nor does there exist, any Lien on any License Agreement, the
Purchased Interest or any other Collateral other than pursuant to the Security
Agreement or any other Transaction Document.

 

Section 3.10  Place of Business.

 

AVANT’s principal place
of business and chief executive office are set forth on Schedule 3.10.

 

Section 3.11  Broker’s Fees.

 

AVANT has not taken any
action that would entitle any Person to any commission or broker’s fee in
connection with the transactions contemplated by the Transaction Documents.

 

Section 3.12  Intellectual Property.

 

(a)                             AVANT
has provided PRF all information in its possession or otherwise Known to it with respect to the Intellectual Property, other
than immaterial aspects thereof.

 

(b)                            AVANT
has provided PRF all information in its possession or Known to it with respect
to compositions of matter, formulations, methods of manufacture or use thereof
developed to date by any party which relate to the Product, including Rotarix®,
other than immaterial aspects thereof.

 

(c)                             Schedule 3.12(c) sets
forth an accurate and complete list of all Intellectual Property, including all
(i) patents, (ii) applications for patents with the applicable Patent
Offices worldwide, (iii) registrations with the applicable trademark or
copyright offices worldwide (including, if applicable, each Patent Office) of
trade names, trademarks and copyrights and (iv) all material unregistered
trademarks and copyrights.  For each item
of the Intellectual Property listed on Schedule 3.12(c), AVANT has
indicated (A) the countries (and Patent Offices and the trademark and
copyright offices, as applicable), in each case in which such item is patented,
registered or in which an application for patent or registration is pending,
(B) the application number, (C) the registration or patent number and
(D) the expected expiration date of the issued patents.

 

(d)                            The
issued Patent Rights are valid and enforceable, and to the Knowledge of AVANT,
the other Intellectual Property is valid, enforceable and subsisting.  To the Knowledge of AVANT and except as set
forth on Schedule 3.12(d), there has been no act or failure to act
by Gamble, the Virus Research Institute, Inc., or by AVANT or any of their
respective directors, officers, employees, attorneys or agents during the
prosecution or registration of, or any other proceeding relating to, any of the
Intellectual Property or any other fact that could render invalid or
unenforceable, or negate the right to issuance of any of the Patent Rights.

 

(e)                             The
patents and patent applications set forth on Schedule 3.12(c) generically
or specifically claim at least one version of the “VACCINE” as defined in the
GSK License

 

15

 

Agreement.  Upon the sales of Rotarix®,
royalties are due and owing to AVANT under the terms of the GSK License
Agreement.  AVANT represents and
warrants to PRF the accuracy of the last sentence of Section 3.03 of the
GSK License Agreement.

 

(f)                               Schedule 3.12(f) is
an accurate and complete list of all agreements, including any and all License
Agreements to which AVANT is a party, whether oral or written, express or
implied, including licenses, options, franchise, distribution, marketing and
manufacturing agreements, sponsorships, agreements not to enforce, consents,
settlements, assignments, security interests, liens and other encumbrances or
mortgages, and any amendment(s), renewal(s), novation(s) and termination(s)
pertaining thereto, pursuant to which AVANT or any Contract Party thereto exploit
any of the Intellectual Property listed on Schedule 3.12(c).  To the Knowledge of AVANT, each agreement
specified on Schedule 3.12(f) (other than the License
Agreements which are addressed in Section 3.16) constitutes a valid and
binding obligation, enforceable in accordance with its terms, subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally, the UCC, or general
equitable principles.  AVANT is not in
breach of such agreements and, to the Knowledge of AVANT, no circumstances or
grounds exist that would give rise to a claim of breach or right of rescission,
termination, revision, or amendment of any of the agreements specified on Schedule 3.12(f) (other
than the License Agreements which are addressed in Section 3.16), except
for the signing of this Agreement.

 

(g)                            There
are no unpaid maintenance or renewal fees payable by Gamble to any third party
that are currently overdue for any of the Patent Rights or other Intellectual
Property.  To the Knowledge of AVANT and
except as disclosed on Schedule 3.12(g)(i), no applications or
registrations therefor have lapsed or been abandoned, cancelled or
expired.  To the Knowledge of AVANT and
except as disclosed on Schedule 3.12(g)(ii), each individual
associated with the filing and prosecution of the Patent Rights, including the
named inventors of the Patent Rights, has complied in all material respects
with all applicable duties of candor and good faith in dealing with any Patent
Office, including any duty to disclose to any Patent Office all information
known to be material to the patentability of each of the Patent Rights, in
those jurisdictions where such duties exist.

 

(h)                            No
payments by AVANT or any Affiliate of AVANT, or to the Knowledge of AVANT, no
payments by any other party are, or at any time in the future will become, due
to any other Person in respect of the Intellectual Property or the Product, in
each case that would diminish the Purchased Interest in any way, except for
those contained in any License Agreement (including for the GSK License
Agreement, the Set-offs).  Except as
disclosed on Schedule 3.12(h), the GSK License Agreement does not
contain any provisions providing for or permitting a reduction in, or setoff
against, the royalties payable thereunder to AVANT as a result of infringement
by third parties of the Intellectual Property. 
To the Knowledge of AVANT, except as disclosed on Schedule 3.12(h),
there is no reduction in, or setoff against, the royalties payable thereunder
to AVANT as a result of payments that GSK, or a licensee of GSK, may be
required to make to third parties for the use of any intellectual property
rights controlled by the third party for the manufacture, use, sale, offer to
sell, or importation of sale of the Product.

 

16

 

 

(i)                                Except
as set forth on Schedule 3.12(i), AVANT has not undertaken any act
or omitted to undertake any act and, to the Knowledge of AVANT, neither Gamble
nor GSK has undertaken or omitted to undertake any acts, and to the Knowledge
of AVANT, no conduct, circumstances or grounds exist, that would void,
invalidate, reduce or eliminate, in whole or in part, the enforceability or
scope of (i) any of the Intellectual Property (or, in the case of any
Intellectual Property licensed on an exclusive basis to AVANT, AVANT’s
entitlement to exclusively exploit such Intellectual Property in accordance
with the terms of the applicable License Agreement), and (ii) AVANT’s
right to receive payments made pursuant to any License Agreement.

 

(j)                                To
the Knowledge of AVANT there is, and has been, no pending, decided or settled
opposition, interference, reexamination, injunction, claim, lawsuit,
proceeding, hearing, investigation, complaint, arbitration, mediation, demand,
International Trade Commission investigation, decree, or any other dispute,
disagreement, or claim (collectively referred to hereinafter as “Disputes”),
nor, to the Knowledge of AVANT, has any such Dispute been threatened,
challenging the legality, validity, enforceability or ownership of any
Intellectual Property or which would give rise to a credit against the payments
due to AVANT from the applicable License Agreements for the use of the related
licensed Intellectual Property.  To the
Knowledge of AVANT, there are no Disputes by any third party against AVANT,
Gamble or GSK involving the Product. 
AVANT has not received, and to the Knowledge of AVANT, neither Gamble
nor GSK has received, any written notice of any Dispute involving the Product.  AVANT has not sent, and to the Knowledge of
AVANT, neither Gamble nor GSK has sent, any notice of any Dispute involving the
Product.  To the Knowledge of AVANT, the
Intellectual Property is not subject to any outstanding injunction, judgment,
order, decree, ruling, charge, settlement or other disposition of Dispute.

 

(k)                             To
the Knowledge of AVANT, there is no pending or threatened action, suit, or
proceeding, or any investigation or claim by any Government Authority to which
AVANT or, to the Knowledge of AVANT, to which Gamble or GSK is a party
(i) that would be the subject of a claim for indemnification, if any, by
or against AVANT, Gamble or GSK under the related License Agreements, and
(ii) that the marketing, sale or distribution of the Product worldwide, by
GSK or by any licensee of GSK or any other Contract Party, pursuant to the
related License Agreements does or will infringe on any patent or other
intellectual property rights of any other Person.  To the Knowledge of AVANT, there are no
pending U.S., international or foreign patent applications owned by any such other
Person, which, if issued, would limit or prohibit, in any material respect, the
use manufacture, use or sale of the Product, in each case by the applicable
Contract Party.

 

Section 3.13  Regulatory Approval.

 

(a)                             AVANT
has made available to PRF all of the following documents that AVANT has in its
possession as of the date first written above in any form from any Contract
Party to any License Agreement:

 

(i)                                     all
material regulatory correspondence, written notes in respect of telephone
communications, electronic communications, copies of all material submissions
to any active regulatory files regarding preclinical, clinical, manufacturing
or adverse events, and any

 

17

 

material
notices and forms received by a Contract Party from appropriate Regulatory
Agencies relating to compliance, developmental (including safety, efficacy and
potency), marketing promotion or manufacturing activities, in each case,
concerning the Product;

 

(ii)                                  material
correspondence or reports from both internal corporate employees and
non-governmental consultants relating to any of the regulatory and/or product
liability exposures, marketing and reimbursement strategies, manufacturing
(i.e., annual audit reports), preclinical and clinical data issues concerning
the Product; and

 

(iii)                               any
information or communication that would indicate that any Regulatory Agency
(A) is not likely to approve any application with respect to the Product,
(B) is likely to revise or revoke any current approval granted by any
Regulatory Agency with respect to the Product, or (C) is likely to pursue
compliance actions against AVANT or any Contract Party relating to a License
Agreement.

 

(b)                            To
AVANT’s Knowledge, GSK possesses all Regulatory Approvals issued or required by
the appropriate Regulatory Agencies necessary to conduct its current business
relating to the Product, and neither AVANT nor, to AVANT’s Knowledge, GSK has
received any notice of proceedings relating to, and there are no facts or
circumstances to AVANT’s Knowledge that would lead to, the revocation,
suspension, termination or modification of any such Regulatory Approvals.

 

(c)                             AVANT
is in material compliance with, and has materially complied with, all
applicable federal, state, local and foreign laws, rules, regulations,
standards, orders and decrees governing its business, including all regulations
promulgated by each Regulatory Agency, the failure of compliance with which
could reasonably be expected to materially adversely effect a Regulatory
Approval resulting in a Material Adverse Effect; AVANT has not received any
notice citing action or inaction by it that would constitute any material
non-compliance with any applicable federal, state, local and foreign laws,
rules, regulations, or standards, which could reasonably be expected to
materially adversely effect a Regulatory Approval resulting in a Material
Adverse Effect; and to AVANT’s Knowledge, no prospective change in any
applicable federal, state, local or foreign laws, rules, regulations or
standards has been adopted which, when made effective, could reasonably be
expected to materially adversely effect a Regulatory Approval resulting in a
Material Adverse Effect.

 

(d)                            The
studies, tests and preclinical and clinical trials conducted relating to the
Product by or on behalf of AVANT or, to AVANT’s Knowledge, GSK were and, if
still pending, are being conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to, where applicable,
accepted professional and scientific standards; the descriptions of the results
of such studies, tests and trials provided to PRF are, to AVANT’s Knowledge,
accurate in all material respects; and neither AVANT nor, to AVANT’s Knowledge,
GSK, has received any notices or correspondence from any Regulatory Agency or
any Institutional Review Board or comparable authority requiring the
termination, suspension, or material modification or clinical hold of any such
studies, tests or preclinical or clinical trials conducted by or on behalf of
AVANT or GSK, which non-compliance, inaccurate description, termination,
suspension, material modification or clinical hold could reasonably be expected
to result in a Material Adverse Effect.

 

18

 

Section 3.14  Subordination.

 

The claims and rights of
PRF created by any Transaction Document in and to the Purchased Interest are
not and shall not be subordinated to any creditor of AVANT or any other Person.

 

Section 3.15  (intentionally omitted).

 

Section 3.16  License Agreements.

 

(a)                             Other
than the License Agreements and the Transaction Documents, there is no
contract, agreement or other arrangement to which either AVANT or any of its
Subsidiaries is a party or any of AVANT’s or its Subsidiaries’ respective
assets or properties are bound or committed for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to result in a
Material Adverse Effect.

 

(b)                            Exhibit B
attached hereto sets forth an accurate, complete and updated copy of the Gamble
License Agreement.  AVANT has provided to
PRF an accurate, complete and updated copy of the GSK License Agreement.

 

(c)                             Except
as otherwise disclosed on Schedule 3.16(c), there are no
(i) other agreements, writings, understandings, commitments, arrangements,
or amendments related to or affecting either of the Gamble License Agreement or
(ii) outstanding royalties or other payment obligations of AVANT currently
due and payable to Gamble under the Gamble License Agreement that have not been
paid.

 

(d)                            AVANT
is the legal successor in interest to Virus Research Institute, Inc. under
the Gamble License Agreement and GSK License Agreement, and Schedule 3.16(d) describes
the facts and events under which AVANT succeeded Virus Research
Institute, Inc. therein.

 

(e)                             The
License Agreements are valid and binding on AVANT and its Subsidiaries and, to
the Knowledge of AVANT, on each Contract Party thereto, and are in full force
and effect.  There has been no
correspondence or other written communication sent by or on behalf of AVANT to,
or received by or on behalf of AVANT from, any Contract Party, the subject
matter of which could reasonably be expected to result in a Material Adverse
Effect.  With respect to each existing
License Agreement:

 

(i)                                     AVANT
has not, nor has to AVANT’s Knowledge the Contract Party, impaired, waived,
altered or modified in any respect, whether by way of any sublicense or consent
or otherwise, such License Agreement.  To
the Knowledge of AVANT, no Contract Party has granted a sublicense under such
License Agreement.

 

(ii)                                  AVANT
has not released the Contract Party under such License Agreement, in whole or
in part, from any of its obligations under such License Agreement.

 

(iii)                               AVANT
has not received (i) any notice of the Contract Party’s intention to
terminate such License Agreement in whole or in part or (ii) any notice of
the Contract Party requesting any amendment, alteration or modification of such
License Agreement.

 

19

 

(iv)                              To
the Knowledge of AVANT, nothing has occurred and no condition exists that would
adversely impact the right of AVANT to receive any payments payable under such
License Agreement.  Neither AVANT, or to
the Knowledge of AVANT, the Contract Party has taken any action or omitted to
take any action, that would adversely impact the right of PRF to receive the
Purchased Interest.

 

(v)                                 All
payments required to be made under such License Agreement have been made.  Except for any Set-off as set forth on Schedule 3.17,
no payment required to be made under such License Agreement has been subject to
any claim pursuant to any right of rescission, set-off, counterclaim or
defense.

 

(vi)                              Such
License Agreement has not been satisfied in full, discharged, canceled,
terminated, subordinated or rescinded, in whole or in part by AVANT, or to the
Knowledge of AVANT, the Contract Party thereto. 
Such License Agreement is the entire agreement between AVANT and the
Contract Party thereto relating to the subject matter thereof.

 

(vii)                           Such
License Agreement is the legal, valid and binding obligation of each of AVANT
and, to the Knowledge of AVANT, the Contract Party thereto, enforceable against
AVANT and, to the Knowledge of AVANT, such Contract Party in accordance with
its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally, the UCC, and general equitable principles.  The execution, delivery and performance of
such License Agreement was and is within the corporate powers of AVANT and, to
the Knowledge of AVANT, the Contract Party thereto.  Such License Agreement was duly authorized by
all necessary action on the part of, and validly executed and delivered by,
AVANT and, to the Knowledge of AVANT, the Contract Party thereto.  There is no breach or default, or event which
upon notice or the passage of time, or both, could give rise to any breach or
default, in the performance of such License Agreement by AVANT or, to the Knowledge
of AVANT, the Contract Party thereto.

 

(viii)                        To
the Knowledge of AVANT, the representations and warranties made in such License
Agreement by Virus Research Institute, Inc. (a predecessor of AVANT) for
the Gamble License Agreement and the GSK License Agreement were as of the date
made true and correct in all material respects.

 

Section 3.17  Set-off.

 

Except as provided on Schedule 3.17,
GSK has no right of set-off, rescission, counterclaim, reduction, deduction or
defense (each a “Set-off”) against Royalties or any other amounts
payable to AVANT under the GSK License Agreement.  For any Set-offs listed on Schedule 3.17,
AVANT shall describe the nature and magnitude of such Set-off and set forth the
section reference in the GSK License under which such Set-off arises.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF PRF

 

PRF represents, warrants
and covenants to AVANT the following:

 

20

 

Section 4.01  Organization.

 

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

 

Section 4.02  Authorization.

 

PRF 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 PRF and each Transaction
Document constitutes the valid and binding obligation of PRF, enforceable
against PRF 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.

 

Section 4.03  Broker’s Fees.

 

PRF has not taken any
action that would entitle any Person to any commission or broker’s fee in
connection with the transactions contemplated by the Transaction Documents.

 

Section 4.04  Conflicts.

 

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 Government Authority, or
any judgment, order, writ, decree, permit or license of any Government
Authority, to which PRF or any of its assets or properties may be subject or
bound; or (B) any contract, agreement, commitment or instrument to which
PRF is a party or by which PRF 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 organizational or constitutional documents of PRF; or
(iii) require any notification to, filing with, or consent of, any Person
or Government Authority.

 

Section 4.05  Funds Available.

 

PRF will at all times
maintain sufficient funds to satisfy its obligations under
Section 2.03(a) and Section 8.05 as they become due, and further
PRF shall maintain in full force and effect the Guarantee in accordance with
its terms.

 

21

 

ARTICLE V

 

COVENANTS

 

During the Term (and, for
the avoidance of doubt, subject to the terms of Section 2.03(c)), the
following covenants shall apply:

 

Section 5.01  Consents and Waivers.

 

AVANT shall use
commercially reasonable efforts to obtain any required consents, acknowledgements,
certificates or waivers so that the transactions contemplated by any
Transaction Document may be consummated and/or shall not result in any default
or breach or termination of any of the License Agreements.

 

Section 5.02  Books and Records.

 

(a)                             Promptly
after receipt by AVANT of notice of any action, claim, investigation or
proceeding (commenced or threatened) relating to the transactions contemplated
by any Transaction Document or any License Agreement, AVANT shall inform PRF of
the receipt of such notice and the substance of such action, claim,
investigation or proceeding and, if in writing, shall furnish PRF with a copy
of such notice and any related materials with respect to such action, claim,
investigation or proceeding (subject to any AVANT confidentiality obligations
with third parties).

 

(b)                            AVANT
shall keep and maintain, or cause to be kept and maintained, at all times full
and accurate books of account and records adequate to reflect accurately all
payments paid and/or payable with respect to the License Agreements and all
deposits made into the applicable Deposit Accounts.

 

(c)                             Promptly
after receipt by AVANT of any material written notice, certificate, offer,
proposal, correspondence, report or other written communication relating directly
to any License Agreement, the Gross Product Payments, the Gross Milestone
Payments, or the Product, AVANT shall inform PRF of such receipt and the
substance contained therein and, if in writing, subject to any AVANT
confidentiality obligations with third parties, shall furnish PRF with a copy
of such notice, certificate, offer, proposal, correspondence, report or other
communication.

 

Section 5.03  (intentionally omitted).

 

Section 5.04  Confidentiality; Public Announcement.

 

(a)                             Except
as otherwise required by law or the rules and regulations of any
securities exchange or trading system or the FDA or any Government Authority
with similar regulatory authority and except as otherwise set forth in
Section 5.04(b), all information furnished by PRF to AVANT or by AVANT to
PRF, including the Confidential Information, in connection with this Agreement
and any other Transaction Document and the transactions contemplated hereby and
thereby, as well as the terms, conditions and provisions of this Agreement and
any other Transaction Document, shall be kept confidential by the recipient
thereof, and shall be used by the recipient thereof only in connection with
this Agreement and any other Transaction Document and the transactions
contemplated hereby and thereby, except to the extent that such information
(i) is already in the public domain at the time the information is
disclosed, (ii) thereafter becomes lawfully obtainable from other sources,
(iii) is required to be disclosed in any document to be filed with any Government
Authority, or (iv) is required to be disclosed

 

22

 

under
securities laws, rules and regulations applicable to AVANT or PRF, as the
case may be, or pursuant to the rules and regulations of any stock exchange
or stock market on which securities of AVANT may be listed for trading.  Notwithstanding the foregoing, AVANT and PRF
may disclose such information to their actual and potential partners,
directors, employees, managers, officers, investors, co-investors, financing
parties, bankers, advisors, trustees and 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 5.04(a).

 

(b)                            AVANT
and PRF shall agree upon the form and content of any press release by AVANT or
PRF with respect to the transactions contemplated by this Agreement.

 

Section 5.05  Quarterly Reports.

 

AVANT shall, promptly after the end of each fiscal quarter of AVANT
(but in no event later than fifteen (15) calendar days following the receipt by
AVANT of the reports required under Section 9.02 of the GSK License
Agreement), produce and deliver to PRF a Quarterly Report for such quarter,
together with a certificate of the Chief Financial Officer of AVANT, certifying
that to the Knowledge of such officer (i) such Quarterly Report is a true
and complete copy and (ii) any statements and any data and information therein
prepared by AVANT are true, correct and accurate in all material respects; provided,
however, that AVANT shall not be obligated to deliver the Quarterly
Report sooner than thirty (30) days following the end of the prior AVANT fiscal
quarter.

 

Section 5.06  Rights of First Discussion.

 

(a)                             Neither
AVANT nor any Affiliates of AVANT shall Transfer any of AVANT’s rights to
payment during the Term relating to the Product (except after December 31,
2009 with respect to any and all rights to payment for sales of the Product in
the United States if those rights are terminated as contemplated by
Section 2.03), without first providing PRF the exclusive right to propose
and negotiate the terms for the proposed Transfer for a period of sixty (60)
calendar days after PRF’s receipt of written notice of such proposed
Transfer.  After the end of such 60-day
period, AVANT and its Affiliates shall have no further obligation to PRF under
this Section 5.06(a).

 

(b)                            Upon
written notice from AVANT to PRF that the GSK License Agreement has been
extended beyond December 12, 2012 (as a result of any applicable patent extensions relating thereto), which written
notice shall indicate the date to which the GSK License Agreement
thereafter extends, PRF shall have the exclusive right for a period of one
hundred twenty (120) calendar days after PRF’s receipt of written notice from
AVANT of the GSK License Agreement extension to propose and negotiate with
AVANT an extension of the Term hereunder coincident with the extension of the
GSK License Agreement.  After the end of
such 120-day period, AVANT shall have no further obligation to PRF under
this Section 5.06(b).

 

(c)                             If
and when (i) the aggregate Product Payment Amount paid to PRF at any time
during the Term exceeds 245% of the Purchase Price; and (ii) AVANT has
fully performed its obligations under Sections 5.06(a) and (b) above,
pursuant to which no Transfer to PRF or

 

23

 

extension of
the Term, as applicable, resulted thereunder; and (iii) AVANT proposes to
Transfer any of its remaining rights to payment relating to the Product to an
unaffiliated bona fide third party; then PRF shall (x) upon the
consummation of such Transfer, release its security interest in that portion of
the Collateral relating solely to such remaining rights to payment (and PRF
hereby agrees to take all action reasonably requested by AVANT to cause such
release, including amending the Security Agreement and the Deposit Agreement),
and (y) in the event such transferee seeks a security interest junior to PRF,
in good faith negotiate and enter into with the proposed transferee a mutually
agreeable intercreditor agreement on market terms relating to PRF’s first
priority security interest in the Collateral other than the Purchased Interest.

 

Section 5.07  Security Agreement.

 

AVANT shall, at all times
until the Obligations are paid and performed in full, grant in favor of PRF a
valid, continuing, first perfected lien on and security interest in the
Purchased Interest and the other Collateral.

 

Section 5.08  Reasonable Best Efforts; Further Assurance.

 

(a)                             Subject
to the terms and conditions of this Agreement, each party hereto will use its
reasonable best 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.  PRF and AVANT agree to execute and deliver
such other documents, certificates, agreements and other writings (including proper
financing statement filings (including Form UCC-1s) requested by
PRF) 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 PRF good, valid and marketable rights and interests in
and to the Purchased Interest free and clear of all Liens, except those Liens
created in favor of PRF pursuant to the Security Agreement and any other
Transaction Document.  Notwithstanding
the foregoing or the remainder of this Section 5.08, (i) AVANT shall
not be obligated to seek an amendment to the GSK License Agreement, and
(ii) the License Agreements shall be subject to Section 5.10 in lieu
of this Section 5.08.

 

(b)                            Each
of the parties hereto shall execute and deliver such additional documents,
certificates and instruments, and perform such additional acts, as may be
reasonably requested and necessary or appropriate to carry out and effectuate
all of the provisions of any Transaction Document and to consummate all of the
transactions contemplated by any Transaction Document.

 

(c)                             AVANT
and PRF shall cooperate and provide assistance as reasonably requested by the
other parties in connection with any litigation, arbitration or other
proceeding (whether threatened, existing, initiated, or contemplated prior to,
on or after the date hereof) to which any party hereto or any of its officers,
directors, shareholders, members, managers, agents or employees is or may
become a party or is or may become otherwise directly or indirectly affected or
as to which any such Persons have a direct or indirect interests, in each case
relating to any Transaction Document, the Purchased Interest or any other
Collateral, or the transactions described herein or therein but in all cases
excluding any litigation brought by AVANT against PRF or brought by PRF against
AVANT.

 

24

 

Section 5.09  Remittance to Initial Concentration
Account.

 

(a)                             Within
ten (10) Business Days after the Closing Date, the parties hereto shall
enter into a Deposit Agreement, substantially in the form of Exhibit C
attached hereto, which will provide for, among other things, the establishment
and maintenance of an Initial Concentration Account, a Joint Concentration
Account, an AVANT Concentration Account and an PRF Concentration Account in
accordance with the terms herein and therein. 
Any PRF Concentration Account shall be held solely for the benefit of
PRF, but shall be subject to the terms and conditions of the Transaction
Documents.  Funds deposited into the
Initial Concentration Account shall be treated as provided in the Deposit
Agreement.  PRF shall have immediate and
full access to and control of any funds held in the PRF Concentration Account
and such funds shall not be subject to any conditions or restrictions
whatsoever.  After the Daily Amount and
any other amounts payable to PRF under Section 2.02 are swept into the PRF
Concentration Account, as provided in the Deposit Agreement, the amounts
remaining in the Joint Concentration Account shall then be swept into the AVANT
Concentration Account on a daily basis. 
AVANT shall have immediate and full access to and control of any funds
held in the AVANT Concentration Account and such funds shall not be subject to
any conditions or restrictions whatsoever other than those of the Depositary
Bank.  None of the foregoing herein shall
(i) affect or reduce AVANT’s obligations to pay in full all amounts due to
PRF under this Agreement, or (ii) in any manner limit the recourse of PRF
to the assets of AVANT to satisfy AVANT’s obligations hereunder.

 

(b)                            PRF
and AVANT shall equally share all fees, expenses and charges of the Depositary
Bank by debiting half of each such fee, expense or charge from the AVANT
Concentration Account and half of each such fee, expense or charge from the PRF
Concentration Account.

 

(c)                             At
all times during the Term, AVANT shall instruct and use commercially reasonable
efforts to cause GSK to pay directly into the Initial Concentration Account all
payments in respect of Royalties payable by GSK, and within ten
(10) Business Days after the Closing Date, AVANT shall send the letter
attached hereto as Exhibit I to GSK.  Without in any way limiting the foregoing,
commencing on the later of the Closing Date and the date on which the Deposit
Agreement is executed and at any time thereafter, any and all payments in
respect of Gross Product Payments
received by AVANT shall be held in trust for the benefit of PRF and directed
into the Initial Concentration Account within two (2) Business Days of
AVANT’s receipt thereof.  In the event
any amounts in respect of Gross Milestone Payments are incorrectly deposited by
GSK into the Initial Concentration Account or Joint Concentration Account and
subsequently swept into the PRF Concentration Account, PRF shall reimburse
AVANT to the extent any such amounts exceed the Net Milestone Payments relating
thereto.

 

(d)                            With
respect to any License Agreement or other sale agreement or invoice entered
into or issued by AVANT during the Term, AVANT shall (i) at the time of
the execution and delivery of such License Agreement or other sale agreement or
the issuance of any invoice, instruct any party thereto or recipient thereof to
remit to the Initial Concentration Account when due all applicable payments in
respect of sales of the Product
and in respect of Royalties that are due and payable to AVANT in respect of or
derived from such License Agreement or other sale agreement or invoice during
the Term and (ii) in the case of any License Agreement or other sale

 

25

 

agreement,
deliver to PRF written evidence of such instruction and of such applicable
party’s agreement thereto.

 

(e)                             Neither
party hereto shall have any right to terminate the Depositary Bank without the
other party’s prior written consent.  Any
such consent, which the other party may grant or withhold in its discretion,
shall be subject to the satisfaction of each of the following conditions to the
satisfaction of the other party:

 

(i)                                     the successor
Depositary Bank shall be reasonably acceptable to the other party;

 

(ii)                                  PRF and AVANT and the
successor Depositary Bank shall have entered into a lockbox agreement
substantially in the form of the Deposit Agreement attached hereto as Exhibit C;

 

(iii)                               all funds and items in
the accounts subject to the Deposit Agreement to be terminated shall be
transferred to the new accounts held at the successor Depositary Bank prior to
the termination of the then existing Depositary Bank; and

 

(iv)                              PRF shall have received
written evidence that all of the applicable parties making payments to the then
existing Depositary Bank prior to termination in respect of sales of the
Product have been instructed to remit all future payments in respect of sales
of the Product to the new accounts held at the successor Depositary Bank.

 

Section 5.10  License Agreements.

 

(a)                             AVANT
shall not (i) forgive, release or compromise any amount owed to AVANT and
involving the Purchased Interest, (ii) waive, amend, cancel or terminate,
exercise or fail to exercise as provided in Sections 5.10(c) and (d), any
of its material rights constituting or involving the right to receive the Gross
Product Payments or the Gross Milestone Payments, or (iii) amend, modify,
restate, cancel, supplement, terminate or waive any provision of any License
Agreement, or grant any consent thereunder, or agree to do any of the
foregoing, including entering into any agreement with the Contract Party under
the provisions of such License Agreement, in each case, other than with respect
to the GSK License Agreement, unless any such action would reasonably be
expected not to have a Material Adverse Effect.

 

(b)                            AVANT
shall promptly provide to PRF copies of any material reports or other
information prepared by any Contract Party it has received pursuant to the
License Agreement or hereunder that has not been previously provided to PRF by
either AVANT or any other Person (subject to any AVANT confidentiality
obligations with such Contract Party).

 

(c)                             Promptly
after (i) receiving written or oral notice from a Contract Party,
(A) terminating the related License Agreement, (B) alleging any
material breach of or default under such License Agreement by AVANT or
(C) 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

 

26

 

material
breach of or default under or right to terminate such License Agreement or
(ii) AVANT otherwise having 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 material breach of or default under such License
Agreement by AVANT or a right to terminate such License Agreement by such
Contract Party, in each case, AVANT shall (x) give a written notice to PRF
describing in reasonable detail the relevant breach, default or termination
event, including a copy of any written notice received from such Contract
Party, subject to any AVANT confidentiality obligations with third parties,
and, in the case of any breach or default or alleged breach or default by
AVANT, describing any corrective action AVANT proposes to take and (y) take all
commercially reasonable efforts to cure promptly such breach, default or
termination event.

 

(d)                            Promptly
after becoming aware of a material breach of or default of a Contract Party
under a License Agreement or of 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 material breach of or default by a Contract Party
under or right of AVANT to terminate such License Agreement, including any
failure of a Contract Party to meet their diligence or other commercialization
requirements, then in each case, AVANT shall (i) give a written notice to
PRF describing in reasonable detail the relevant breach, default or termination
event, including a copy of any written notice that AVANT proposed to send to
the applicable Contract Party and, in the case of any breach or default or
alleged breach or default by such Contract Party, describing any action AVANT
proposes to take, and (ii) make all commercially reasonable efforts to
enforce all of its rights and remedies thereunder; provided, however
AVANT will not take any actions under the applicable License Agreement without
the prior written consent of PRF, which consent shall not be unreasonably
withheld.

 

(e)                             AVANT
shall, at its sole expense, either directly or by causing the Contract Party to
do so, take any and all actions, and prepare, execute, deliver and file any and
all agreements, documents or instruments, which are reasonably necessary or
desirable to, and to the extent permitted under the applicable License
Agreement, (i) diligently
maintain the applicable Intellectual Property and (ii) diligently defend
such Intellectual Property against infringement or interference by any other
Persons, and against any claims of invalidity or unenforceability, in any jurisdiction
(including by bringing any legal action for infringement or defending any
counterclaim of invalidity or action of a third party for declaratory judgment
of non-infringement or non-interference). 
AVANT shall not, and shall use commercially reasonable efforts to cause
the applicable Contract Party not to, unreasonably disclaim or abandon, or fail to take any action reasonably necessary or
desirable to prevent the disclaimer or abandonment of, the applicable Intellectual Property.

 

(f)                               AVANT
shall use commercially reasonable efforts to, where a Contract Party is
required to do so under any License
Agreement, assist such Contract
Party in securing and maintaining, all regulatory and other governmental
approvals, clearances, registrations and permits which may be required to
manufacture, market and/or sell the Product and are reasonably intended to
maximize the commercial potential of the Product.

 

27

 

(g)                            AVANT
shall cause each Contract Party under any License Agreement, as applicable and
to the extent provided in the GSK License Agreement, to provide promptly
following the end of each calendar quarter all information with respect to net
end-user sales (including all components of information required to calculate
Gross Product Payments) under each such agreement for inclusion in the
Quarterly Report for such quarter, and AVANT shall cause such obligation to be
included in every License Agreement it enters into following the Closing Date.

 

Section 5.11  Audits.

 

(a)                             To
the extent AVANT has the right to perform or cause to be performed inspections
or audits under any of the License Agreements regarding payments payable and/or
paid to AVANT thereunder (each, a “License Party Audit”), AVANT shall,
at the reasonable request of PRF, cause a License Party Audit to be performed
promptly in accordance with the terms thereof. 
In conducting a License Party Audit, subject to the terms of the
applicable License Agreement, AVANT may engage its then retained internationally
recognized independent public accounting firm, or, if AVANT elects otherwise,
such other internationally recognized independent public accounting firm
reasonably acceptable to PRF.  Promptly
after completion of any License Party Audit (whether or not requested by PRF),
AVANT shall promptly deliver to PRF an audit report summarizing the results of
such License Party Audit (subject to any AVANT confidentiality obligations with
such audited Person).

 

(b)                            To
the extent that either PRF or AVANT has determined that there is a discrepancy
as to the amounts paid to PRF pursuant to Section 2.02 in any calendar
year, then the party hereto who has made such determination may notify the
other party hereto in writing of such discrepancy indicating in reasonable
detail its reasons for such determination (the “Discrepancy Notice”).  In the event that either PRF or AVANT
delivers to the other party a Discrepancy Notice, PRF and AVANT shall meet
within ten (10) Business Days (or such other time as mutually agreed by
the parties) after the receiving party has received a Discrepancy Notice to
resolve in good faith such discrepancy. 
If the discrepancy has been resolved and, as a result thereof, it is
determined that a payment is owing by PRF to AVANT or by AVANT to PRF, then the
party owing such payment shall promptly make such payment to the other
party.  If, within thirty (30) Business
Days after receipt of the Discrepancy Notice, AVANT and PRF cannot resolve any
such discrepancies, then PRF and AVANT shall promptly instruct their respective
firms of independent certified public accountants to select, within five
(5) Business Days thereafter, a third nationally recognized accounting
firm (the “Independent Accountants”). 
After offering AVANT and its representatives and PRF and its
representatives the opportunity to present their positions as to the disputed
amounts, which opportunity shall not extend for more than ten
(10) Business Days after the Independent Accountants have been selected,
the Independent Accountants shall review the disputed matters and the materials
submitted by AVANT and PRF and, as promptly as practicable, deliver to AVANT
and PRF a statement in writing setting forth its determination of the proper
treatment of the discrepancies as to which there was disagreement, and that
determination will be final and binding upon the parties hereto without any
further right of appeal.

 

(c)                             PRF
and any of its representatives shall have the right, from time to time, to
visit AVANT’s offices and properties where AVANT keeps and maintains its books
and records

 

28

 

relating or
pertaining to the Purchased Interest for purposes of conducting an audit of
such books and records, and to inspect, copy and audit such books and records,
during normal business hours, and, upon five (5) Business Days written
notice given by PRF to AVANT, AVANT will provide PRF and any of PRF’s
representatives reasonable access to such books and records, and shall permit
PRF and any of PRF’s representatives to discuss the business, operations,
properties and financial and other condition of AVANT or any of its Affiliates
relating or pertaining to the Purchased Interest with officers of such parties,
and with their independent certified public accountants, subject to any AVANT
confidentiality obligations with any third parties.  PRF’s visits to AVANT’s offices pursuant to
this Section 5.11(c) shall occur not more than one time per calendar
year; provided, however, that PRF may so visit more frequently to
the extent that there has occurred an event which could reasonably be expected
to result in a Material Adverse Effect, and PRF’s visit or visits to AVANT’s
offices in connection therewith are for purposes related to such event.

 

(d)                            All
Audit Costs in respect of a License Party Audit or an audit of AVANT’s books
and records pursuant to Section 5.11(c) shall be borne by PRF, unless
the results of such audit, as the case may be, reveals that either (i) in
any calendar year, the Royalties that should have been paid by GSK to AVANT
pursuant to the GSK License Agreement are at least five percent (5%) greater
than those which were actually paid by GSK, or (ii) the amounts paid to
PRF for the period subject to such audit have been understated by more than the
greater of $20,000 or 5% of the amounts due to PRF pursuant to this Agreement
for the period subject to such audit and AVANT was primarily responsible for
such understatement, then in either case the Audit Costs in respect of such
audit shall be borne by AVANT.

 

Section 5.12  Notice.

 

AVANT shall provide PRF
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)                                     the occurrence of
a Bankruptcy Event;

 

(ii)                                  any material breach or
default by AVANT of any covenant, agreement or other provision of this
Agreement or any other Transaction Document; or

 

(iii)                               any representation or
warranty made by AVANT in any of the Transaction Documents or in any
certificate delivered to PRF pursuant hereto shall prove to be untrue,
inaccurate or incomplete in any material respect on the date as of which made.

 

ARTICLE VI

 

THE CLOSING; CONDITIONS TO CLOSING AND
FUNDING

 

Section 6.01  Closing.

 

Subject to the closing
conditions set forth in Sections 6.02 and 6.03, the closing of this Agreement
(the “Closing”) shall take place at the offices of Goodwin Procter LLP, Boston Massachusetts, on the
Closing Date.  Subject to the additional
Funding conditions set forth in

 

29

 

Sections 6.02 and
6.03, each additional Funding shall take place at the offices of Goodwin
Procter LLP, Boston
Massachusetts, on the applicable Subsequent Funding Date.

 

Section 6.02  Conditions Applicable to PRF in Closing.

 

The obligations of PRF to
effect the Closing, including the requirements with respect to one or more
Fundings of the Purchase Price (as specifically indicated) pursuant to
Section 2.03(a), shall be subject to the satisfaction of each of the
following conditions, as of the Closing Date and/or each Subsequent Funding
Date, as applicable, any of which may be waived by PRF in its sole discretion:

 

(a)                             Accuracy
of Representations and Warranties. 
For the First Funding only, the representations and warranties of AVANT
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.  For all the
Fundings, there shall not have occurred or be continuing any event or
circumstance described in the definition of a Material Adverse Effect (except
with respect to clauses (i) and (vii) of such definition,
which shall be deemed not to be part of the definition of Material Adverse
Effect for purposes of this Section 6.02(b)).

 

(c)                             Litigation.  For the First Funding only, no action, suit,
litigation, proceeding or investigation shall have been instituted, be pending
or, to the Knowledge of AVANT, 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 PRF’s
acquisition or future receipt of the Purchased Interest.

 

(d)                            (intentionally
omitted).

 

(e)                             Officer’s
Certificate.  PRF shall have received
a certificate of the Chief Executive Officer of AVANT pursuant to which such
officer certifies that (1) for the First Funding, the conditions set forth
in Sections 6.02(a), (b), (c), and (j) shall have been satisfied in all
respects, and (2) for each Subsequent Funding, the conditions set forth in
Sections 6.02(b) and (j) shall have been satisfied in all respects.

 

(f)                               Bill
of Sale.  For the First Funding only,
a Bill of Sale in the form set forth in Exhibit A shall have been
executed and delivered by AVANT to PRF, and PRF shall have received the same.

 

(g)                            Security
Agreement.  For the First Funding
only, the Security Agreement shall have been duly executed and delivered by all
the parties thereto and shall be in form of Exhibit F hereto,
together with proper financing statements (including Form UCC-1s)
for filing under the UCC and/or any other applicable law, rule, statute or
regulation relating to the perfection of a security interest in filing offices
in the State of Delaware, and such agreements shall be in full force and
effect.

 

(h)                            Legal
Opinions.

 

30

 

(i)                                     For the First
Funding only, PRF shall have received two opinions of Goodwin Procter LLP, transaction counsel to AVANT, in
form and substance satisfactory to PRF and its counsel, to the effect set forth
in Exhibit G.

 

(ii)                                  For the First Funding
only, PRF shall have received an opinion of Yankwich and Associates, patent
counsel to AVANT, in form and substance satisfactory to PRF and its counsel, to
the effect set forth in Exhibit H.

 

(i)                                Corporate
Documents of AVANT.  For the First
Funding only, PRF shall have received certificates of an executive officer of
AVANT (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 resolutions of the
board of directors of AVANT authorizing and approving the execution, delivery
and performance by AVANT of the Transaction Documents and the transactions
contemplated herein and therein; (ii) setting forth the incumbency of the
officer or officers of AVANT who have executed and delivered the Transaction
Documents including therein a signature specimen of each such officer or
officers; and (iii) attaching copies, certified by such officer as true
and complete, of a certificate of the appropriate Government Authority of
AVANT’s jurisdiction of incorporation, stating that AVANT is in good standing
under the laws of the State of Delaware.

 

(j)                                Covenants.  For the First Funding only, AVANT shall have
complied in all material respects with the covenants set forth in the
Transaction Documents.  For each Funding
other than the First Funding, AVANT shall have complied in all material
respects with the covenants set forth in the Transaction Documents other than
those contained in Section 5.12.

 

Section 6.03  Conditions Applicable to AVANT.

 

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

 

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

 

(b)                            Litigation.  For
the First Funding only, no action, suit, litigation, proceeding or
investigation shall have been instituted, be pending or, to the knowledge of
PRF, 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 PRF’s acquisition of the Purchased
Interest.

 

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

 

31

 

(d)                            Guarantee.  For the First Funding, a Guarantee in the
form set forth in Exhibit J shall have been executed by Paul
Royalty Fund II, L.P. and delivered to AVANT for its benefit.

 

ARTICLE VII

 

EXPIRATION

 

Section 7.01  Expiration 
Date.

 

This Agreement shall
terminate on the expiration of the Term; provided, however, that
if any Obligations under this Agreement remain unpaid or any payments are
required to be made by either of the parties hereunder after that date, this
Agreement shall remain in full force and effect until any and all such payments
have been made in full, and solely for that purpose.

 

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 5.04, 8.01, 8.04 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.

 

ARTICLE VIII

 

MISCELLANEOUS

 

Section 8.01  Survival.

 

(a)                             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 later of the 3rd anniversary of the Closing Date
or twelve (12) months after the U.S. Commercial Launch Date; provided, however,
that the representations and warranties contained in Sections 3.04, 3.09, 3.12,
3.13, 3.16 and 3.17 shall survive indefinitely following the execution and
delivery of this Agreement and the Closing and the expiration of this Agreement.  Notwithstanding anything in this Agreement or
implied by law to the contrary, all the agreements contained in Sections 5.04,
8.01, 8.04 and 8.05 shall survive indefinitely following the execution and
delivery of this Agreement and the Closing and the expiration of this
Agreement.

 

(b)                            Any
investigation or other examination that may have been made or may be made at
any time by or on behalf of the party to whom representations and warranties
are made shall not limit, diminish or in any way affect the representations and
warranties in the Transaction Documents, and the parties may rely on the
representations and warranties in the Transaction Documents irrespective of any
information obtained by them by any investigation, examination or otherwise.

 

32

 

Section 8.02  Specific Performance.

 

Each of the parties
hereto acknowledges that the other party 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 party shall have the right, in addition to any other rights it
may have (whether at law or in equity), to specific performance of this
Agreement.

 

Section 8.03  Notices.

 

All notices, consents,
waivers and communications hereunder given by any party to the other shall be
in writing (including facsimile transmission) and delivered personally, by
telegraph, telecopy, telex or facsimile, by a recognized overnight courier, or
by dispatching the same by certified or registered mail, return receipt
requested, with postage prepaid, in each case addressed:

 

If to
PRF to:

 

c/o Paul Capital Advisors, LLC

50 California Street, Suite 3000

San Francisco, CA  94111

Attention:  Chief Financial Officer

Facsimile No.:  (415) 283-4301

 

with a
copy to:

 

Paul Capital Advisors, LLC

Two Grand Central Tower

140th East 45th Street, 44th Floor

New York, NY 10017

Attention: Clarke B. Futch

Facsimile No.:  (646) 264-1101

 

and

 

McDermott Will & Emery LLP

227 West Monroe Street

Chicago, IL  60606-5096

Attention:  Timothy R.M. Bryant

Facsimile No.:  (312) 984-7700

 

If to
AVANT to:

 

AVANT Immunotherapeutics, Inc.

119 Fourth Avenue

Needham, MA 02494

Attention: Una S. Ryan, Ph.D.

Facsimile No.:  (781) 433-3191

 

33

 

with a
copy to:

 

Goodwin Procter LLP

53 State Street

Boston, MA 02109

Attention: Stuart M. Cable, PC

Facsimile No.:  (617) 523-1231

 

if or to such other
address or addresses as PRF or AVANT 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 shall be deemed effective five (5) Business
Days after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled,
be effective upon receipt by the transmitting party of confirmation of complete
transmission, or (c) when delivered by a recognized overnight courier or
in person, be effective upon receipt when hand delivered.

 

Section 8.04  Successors 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. 
AVANT shall not be entitled to assign any of its obligations and rights
under the Transaction Documents without the prior written consent of PRF; provided,
however, AVANT may, without the consent of PRF, assign any of its
obligations and rights under the Transaction Documents to any other Person with
which it may merge or consolidate or to which it may sell all or substantially
all of its assets or all of its assets related to the Product.  PRF may assign any of its obligations and
rights under the Transaction Documents, without restriction and without the
consent of AVANT, to any Affiliate or member of PRF or to any Person in
connection with any financing (including any capital markets or securitization
transaction), provided the assignee has sufficient resources at the time of
assignment to adequately meet the obligations for future Fundings pursuant to
the terms of this Agreement or PRF remains obligated to satisfy such future
Fundings.

 

Section 8.05  Indemnification

 

(a)                             AVANT
hereby indemnifies and holds PRF and its Affiliates and any of their respective
partners, directors, managers, members, officers, employees and agents (each a
“PRF Indemnified Party”) harmless from and against any and all
(i) Losses incurred or suffered by any PRF Indemnified Party arising out
of any breach of any representation, warranty or certification made by AVANT in
any of the Transaction Documents or certificates given by AVANT in writing
pursuant hereto or thereto or any breach of or default under any covenant or
agreement by AVANT pursuant to any Transaction Document, and (ii) Losses
in connection with any product liability claims directly against a PRF
Indemnified Party, to the extent in clauses (i) or (ii) any such
Losses are not subject to indemnification by PRF hereunder.

 

34

 

(b)                            PRF
hereby indemnifies and holds AVANT, its Affiliates and any of their respective
partners, directors, managers, officers, employees and agents (each an “AVANT
Indemnified Party”) harmless from and against any and all Losses incurred
or suffered by an AVANT Indemnified Party arising out of any breach of any
representation, warranty or certification made by PRF in any of the Transaction
Documents or certificates given by PRF in writing pursuant hereto or thereto or
any breach of or default under any covenant or agreement by PRF pursuant to any
Transaction Document, to the extent any such Losses are not subject to
indemnification by AVANT hereunder.

 

(c)                             If
any claim, demand, action or proceeding (including any investigation by any
Government 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, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and 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
unless (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 indemnifying 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 loss or liability 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

 

35

 

been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

 

(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, 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 herein to the
contrary, in no event shall Losses include any consequential, lost profits or
punitive damages.  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.

 

Section 8.06  Independent Nature of Relationship.

 

(a)                             The
relationship between AVANT and PRF is solely that of seller and purchaser, and
neither PRF nor AVANT 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 AVANT and PRF as a partnership, an association, a joint
venture or other kind of entity or legal form.

 

(b)                            No
officer or employee of PRF will be located at the premises of AVANT or any of
its Affiliates, except in connection with an audit performed pursuant to
Section 5.11.  No officer, manager
or employee of PRF shall engage in any commercial activity with AVANT or any of
its Affiliates other than as contemplated herein and in the other Transaction
Documents.

 

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

 

Section 8.07  Tax.

 

(a)                             Notwithstanding
the accounting treatment thereof, for United States federal, state and local
tax purposes, AVANT and PRF shall treat the transactions contemplated by the
Transaction Documents as a sale for United States tax purposes.  The parties hereto agree not to take any
position that is inconsistent with the provisions of this Section 8.07 on
any tax return or in any audit or other administrative or judicial proceeding
unless (i) the other party to this

 

36

 

Agreement has
consented to such actions, which consent shall not be unreasonably withheld, or
(ii) the party that contemplates taking such an inconsistent position has
been advised by counsel in writing that, due to a change in law subsequent to
the Closing Date, it is more likely than not that there is no “reasonable
basis” (within the meaning of Treasury Regulation Section 1.6662-3(b)(3))
for the position specified in this Section 8.07.

 

(b)                            To
the extent any amount is withheld at source from a payment made pursuant to the
GSK License Agreement or any other License Agreement, such withheld amount
shall for all purposes of this Agreement be treated as paid to AVANT and PRF 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 PRF, amounts so withheld shall be
attributed to PRF, and deemed paid to PRF, in accordance with the Purchased
Interest.  Any amounts withheld pursuant
to this Section 8.07 attributable to PRF shall be credited for the account
of PRF.  If there is an inquiry by any
Governmental Authority of PRF related to this Section 8.07, AVANT shall
cooperate with PRF 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 (e.g.,
with respect to PRF, any amounts withheld and so attributed to PRF shall be
included in calculating the $27.5 million and 245% thresholds referred to in
the definition of Product Payment Amount).

 

Section 8.08  Entire Agreement.

 

This Agreement, together
with the Exhibits and Schedules 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 (including the Letter of Intent), 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, Schedules 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 8.09  Amendments; 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 either 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.

 

37

 

Section 8.10  Interpretation.

 

When a reference is made
in this Agreement to Articles, Sections, Schedules or Exhibits, such reference
shall be to an Article, Section, Schedule or Exhibit to this
Agreement unless otherwise indicated.  The
words “include,” “includes” and “including” when used herein shall be deemed in
each case to be followed by the words “without limitation.”  Neither party hereto shall be or be deemed to
be the drafter of this Agreement for the purposes of construing this Agreement
against one party or the other.  All
references to $ or dollars herein shall refer to U.S. dollars.

 

Section 8.11  Headings and Captions.

 

The headings and captions
in this Agreement are for convenience and reference purposes only and shall not
be considered a part of or affect the construction or interpretation of any
provision of this Agreement.

 

Section 8.12  Counterparts; Effectiveness.

 

This Agreement may be
executed in two or more counterparts, each of which shall be an original, but
all of which together shall constitute one and the same instrument.  This Agreement shall become effective when
each party hereto shall have received a counterpart hereof signed by the other
parties hereto.  Any counterpart may be
executed by facsimile signature and such facsimile signature shall be deemed an
original.

 

Section 8.13  Severability.

 

If any provision of this
Agreement is held to be invalid or unenforceable, the remaining provisions
shall nevertheless be given full force and effect.

 

Section 8.14  Governing Law; Jurisdiction.

 

(a)                             This
Agreement shall be governed by, and construed, interpreted and enforced in
accordance with, the laws of the state of New York, without giving effect to
the principles of conflicts of law thereof (other than the provisions of
Section 5-1401 of the General Obligations Law of the State of New
York).

 

(b)                            Any
legal action or proceeding with respect to this agreement or any other
transaction document may be brought in any state or federal court of competent
jurisdiction in the state, county and city of New York.  By execution and delivery of this agreement,
each party hereto hereby irrevocably consents to and accepts, for itself and in
respect of its property, generally and unconditionally the non-exclusive
jurisdiction of such courts.  Each party
hereto hereby further irrevocably waives any objection, including any objection
to the laying of venue or based on the grounds of forum non conveniens,
which it may now or hereafter have to the bringing of any action or proceeding
in such jurisdiction in respect of any Transaction Document.

 

(c)                             Each
party hereto hereby irrevocably consents to the service of process out of any
of the courts referred to in Section 8.14(b) above in any such suit,
action or proceeding by the

 

38

 

mailing of
copies thereof by registered or certified mail, postage prepaid, to it at its
address set forth in this agreement. 
Each party hereto hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any suit, action or proceeding commenced hereunder or under any other
transaction document that service of process was in any way invalid or
ineffective.  Nothing herein shall affect
the right of a party to serve process on the other party in any other manner
permitted by law.

 

Section 8.15  Waiver of Jury Trial.

 

Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any action, proceeding, claim or counterclaim
arising out of or relating to any Transaction Document or the transactions
contemplated under any Transaction Document. 
This waiver shall apply to any subsequent amendments, supplements or
modifications to any Transaction Document.

 

39

 

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.

 

 

	
  AVANT:

  	
  AVANT
  Immunotherapeutics, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Una S. Ryan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Una S. Ryan, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  President &
  CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PRF:

  	
  PRF Vaccine Holdings LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  PRF Vaccine Acquisition LLC,

  
	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paul Capital Royalty Management, LLC,

  
	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paul Capital Advisors, LLC,

  
	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory B. Brown

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gregory B. Brown, M.D.

  
	
   

  	
   

  	
  Title:

  	
  Member

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