EX-10.62 4 xoma-ex1062_340.htm EX-10.62 xoma-ex1062_340.htm

Exhibit 10.62

 

EXECUTION VERSION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROYALTY INTEREST ACQUISITION AGREEMENT

 

 

 

Dated as of December 20, 2016

 

 

 

between

 

 

 

XOMA Corporation and XOMA (US) LLC

 

 

 

and

 

 

 

HealthCare Royalty Partners II, L.P.

 

 


TABLE OF CONTENTS

 

Page

 

ARTICLE I

 

DEFINITIOS

 

 

 

 

 

Page

 

 

 

 

 

ARTICLE I

 

 

 

 

 

DEFINITIONS

 

 

 

 

 

Section 1.01

 

Definitions

 

5

Section 1.02

 

Currency

 

11

 

 

 

 

 

ARTICLE II

 

 

 

 

 

SALE AND ASSIGNMENT

 

 

 

 

 

Section 2.01

 

Sale and Assignment

 

11

Section 2.02

 

Purchased Interest Payments

 

12

Section 2.03

 

Payments at Closing

 

12

Section 2.04

 

No Assumption.

 

12

Section 2.05

 

Excluded Assets

 

13

Section 2.06

 

Non-Assignable Rights

 

13

 

 

 

 

 

ARTICLE III

 

 

 

 

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

 

 

 

 

Section 3.01

 

Organization.

 

13

Section 3.02

 

Authorizations; Enforceability

 

13

Section 3.03

 

Litigation.

 

13

Section 3.04

 

Compliance with Laws

 

14

Section 3.05

 

Conflicts; Consents

 

14

Section 3.06

 

Ownership

 

14

Section 3.07

 

Subordination

 

14

Section 3.08

 

License Agreement

 

15

Section 3.09

 

Broker’s Fees

 

16

Section 3.10

 

Solvency; No Material Adverse Effect

 

16

Section 3.11

 

Intellectual Property Matters

 

16

Section 3.12

 

Exploitation.

 

17

Section 3.13

 

Taxes.

 

17

Section 3.14

 

No Set-Offs; No Material Liabilities

 

17

Section 3.15

 

TGF-beta License Agreement

 

17

 

 

 

 

 

 


ARTICLE IV

 

 

 

 

 

REPRESENTATIONS AND WARRANTIES OF XOMA

 

 

 

 

 

Section 4.01

 

Organization.

 

18

Section 4.02

 

Authorizations; Enforceability

 

18

Section 4.03

 

Conflicts; Consents

 

18

Section 4.04

 

Broker’s Fees

 

19

Section 4.05

 

Intellectual Property Matters

 

19

Section 4.06

 

Taxes.

 

19

Section 4.07

 

Material Inducement

 

19

 

 

 

 

 

ARTICLE V

 

 

 

 

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

 

 

 

 

Section 5.01

 

Organization.

 

20

Section 5.02

 

Authorization.

 

20

Section 5.03

 

Broker’s Fees

 

20

Section 5.04

 

Conflicts

 

20

 

 

 

 

 

ARTICLE VI

 

 

 

 

 

COVENANTS

 

 

 

 

 

Section 6.01

 

Consents and Waivers

 

21

Section 6.02

 

Compliance

 

21

Section 6.03

 

Confidentiality; Public Announcement

 

21

Section 6.04

 

Protective Rights Agreement

 

23

Section 6.05

 

Further Assurances

 

23

Section 6.06

 

Notice by Seller

 

23

Section 6.07

 

Enforcement of and Disputes Under License Agreement

 

24

Section 6.08

 

Negative Covenants

 

25

Section 6.09

 

Future Agreements

 

25

Section 6.10

 

Reports; Records; Access

 

25

Section 6.11

 

Remittance to Deposit Account; Set-Offs

 

26

Section 6.12

 

Certain Payments; Option.

 

26

 

 

 

 

 

ARTICLE VII

 

 

 

 

 

THE CLOSING; CONDITIONS TO CLOSING

 

 

 

 

 

Section 7.01

 

Closing

 

27

Section 7.02

 

Conditions Applicable to Buyer

 

27

Section 7.03

 

Conditions Applicable to Seller

 

28

 

 

 

 

 

ARTICLE VIII

 

 

 

 

 

TERMINATION

 

 

 

 

 

Section 8.01

 

Termination.

 

28

Section 8.02

 

Effects of Expiration or Termination.

 

29

 

 

 

 

 

 


ARTICLE IX

 

 

 

 

 

MISCELLANEOUS

 

 

 

 

 

Section 9.01

 

Survival

 

29

Section 9.02

 

Notices

 

29

Section 9.03

 

Successors and Assigns

 

30

Section 9.04

 

Indemnification.

 

31

Section 9.05

 

Independent Nature of Relationship; Taxes

 

32

Section 9.06

 

Entire Agreement

 

33

Section 9.07

 

Amendments; No Waivers

 

33

Section 9.08

 

Interpretation.

 

34

Section 9.09

 

Headings and Captions

 

34

Section 9.10

 

Counterparts; Effectiveness

 

34

Section 9.11

 

Severability

 

34

Section 9.12

 

Expenses

 

34

Section 9.13

 

Governing Law; Jurisdiction.

 

34

Section 9.14

 

Waiver of Jury Trial

 

35

 

EXHIBITS

 

Exhibit A

––

Form of Assignment

Exhibit B

––

Form of Consent

Exhibit C

––

Form of Escrow Agreement

Exhibit D

Form of Protective Rights Agreement

Exhibit E

Form of Opinion of Counsel

 

 


 

This ROYALTY INTEREST ACQUISITION AGREEMENT (this Agreement”) is made and entered into as of December 20, 2016 by and between XOMA Corporation, a corporation organized under the laws of the State of Delaware (“XOMA”) and XOMA (US) LLC, a limited liability company organized under the laws of the State of Delaware (“Seller”), and HealthCare Royalty Partners II, L.P., a limited partnership organized under the laws of the State of Delaware (“Buyer”).

 

RECITALS

 

WHEREAS, Seller (as successor in interest to XOMA Ireland Limited) and DYAX Corp., a Delaware corporation (the Licensee”), have entered into that certain Amended and Restated License Agreement, dated effective as of October 27, 2006, a true, correct and complete copy of which, together with all amendments, modifications and supplements thereto, has been previously provided to Buyer (the License Agreement”);

 

WHEREAS, pursuant to the License Agreement, subject to the terms and conditions set forth therein, Seller is entitled to receive License Payments; and

 

WHEREAS, Seller wishes to sell, assign, convey and transfer to Buyer, and Buyer wishes to accept the sale, assignment, conveyance, and transfer from Seller of, the Assigned Rights pursuant to the License Agreement;

 

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

 

Article I

 

DEFINITIONS

Section 1.01 Definitions.

 

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

 

Affiliate” shall mean, with respect to any Person, any other Person that controls, is controlled by, or is under common control with such Person, but only for so long as such control exists. As used in this definition, “control” and “controls” mean (i) ownership of 50% or more of the voting interests of such entity or (ii) the power to direct or cause the direction of the general management or actions of such entity.

 

Agreement” shall have the meaning given in the preamble hereto.

 

Assigned Rights shall mean (i) the Purchased Interest and the absolute right to payment and receipt thereof under or pursuant to the License Agreement, (ii) any rights of Seller under the License Agreement to receive reports, worksheets, notices and other associated information, whether related to the Purchased Interest, net sales of any Product or other matters, ,(iii) any rights of Seller under the License Agreement to request inspection of or to audit records and accounts available in accordance with the License Agreement, whether related to the Purchased Interest, the License Payments, net sales of any Product or other matters, and (iv) the right to enforce all rights of Seller under the License Agreement with respect to the License Payments (including with respect to any development, commercialization or similar obligations of the Licensee).

 

Assignment shall mean the Assignment pursuant to which Seller shall assign, convey and transfer to Buyer Seller’s rights and interests in and to the Assigned Rights, which Assignment shall be substantially in the form of Exhibit A.

 

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Bankruptcy Law shall mean Title 11 of the United States Code entitled “Bankruptcy” and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions (domestic or foreign) from time to time in effect and affecting the rights of creditors generally.

 

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 any day on which banking institutions located in the State of New York are required by law or other governmental action to close.

 

Buyer” shall have the meaning given in the preamble hereto.

 

Buyer Indemnified Party shall mean each of Buyer and its Affiliates and any of their respective partners, directors, managers, members, officers, employees and agents.

 

Capital Stock of any Person shall mean any and all shares, interests, ownership interest units, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into, or exchangeable for, such equity.

 

Claim shall mean any claim, demand, action or proceeding (including any investigation by any Governmental Authority).

 

Closing shall mean the closing of the transactions contemplated under this Agreement in accordance with Section 7.01.

 

Closing Advance Amount” shall mean $3,500,000.

 

Closing Escrow Amount shall mean $8,000,000.

 

Closing Date shall mean the date all of the conditions set forth in ARTICLE VII are fulfilled or waived in writing by the applicable Party, as set forth in such ARTICLE VII.

 

Collateral shall mean the Collateral (as defined in the Protective Rights Agreement).

 

Confidential Information of any Disclosing Party shall mean any and all information, whether communicated orally, by email or in any physical form, including without limitation, financial and all other information furnished by or on behalf of the Disclosing Party to the Receiving Party, together with such portions of analyses, compilations, studies, or other documents, prepared by or for the Receiving Party and its Representatives, which contain or are derived from information provided by Disclosing Party. Without limiting the foregoing, information shall be deemed to be provided by Disclosing Party to the extent it is learned or derived by Receiving Party or Receiving Party’s Representatives (a) from any inspection, examination or other review of books, records, contracts, other documentation or operations of Disclosing Party, (b) from communications with authorized Representatives of Disclosing Party or (c) created, developed, gathered, prepared or otherwise derived by Receiving Party while in discussions with Disclosing Party. However, Confidential Information does not include any information which Receiving Party can demonstrate (i) is or becomes part of the public domain through no fault of Receiving Party or its Representatives, (ii) was known by Receiving Party on a non-confidential basis prior to disclosure, or

(iii)was independently developed by Persons who were not given access to the Confidential Information disclosed to Receiving Party by Disclosing Party. For clarity, Confidential Information includes any disclosures and information with respect to the Assigned Rights made by the Licensee pursuant to the License Agreement and provided to Buyer pursuant to this Agreement.

 

6


 

Confidentiality Agreement shall mean that certain Confidentiality Agreement by and between XOMA and HealthCare Royalty Management, LLC dated as of November 3, 2016.

 

Consent” shall mean the written consent of the Licensee to the assignment pursuant hereto of the Assigned Rights and agreement to the other matters set forth therein in the form attached as Exhibit B, with only such modifications thereto as are reasonably acceptable to Buyer.

 

Damages shall mean any loss, assessment, award, claim, charge, cost, expense (including cost and expenses of investigation and reasonable legal fees and expenses of attorneys), fines, judgments, liability, obligation, penalty or set-off.

 

Deposit Account shall mean an account established, controlled and maintained by Buyer as the account into which all License Payments that are or become payable shall be deposited by the Licensee. As of the Closing Date, the “Deposit Account” shall be:

 

Bank Name: Silicon Valley Bank

Bank Address: 3003 Tasman Drive, Santa Clara, CA ABA #: 121-140-399

Account #: 3301301694

Account Name: HealthCare Royalty Partners II, L.P.

Reference: XOMA

 

Disclosing Party shall mean, with respect to any Confidential Information, the Party disclosing the Confidential Information to another Party.

 

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

 

Economic Commencement Date” shall mean January 1, 2017.

 

Escrow Account shall mean the account specified as the “Escrow Account” in the Escrow Agreement.

 

Escrow Agreement shall mean the Escrow Agreement pursuant to which the Closing Amount shall be deposited into the Escrow Account and released to Seller upon receipt of the Consent or to Buyer in the other circumstances described therein, in each case subject to the terms and conditions set forth therein, substantially in the form of Exhibit C.

 

Excluded Liabilities and Obligations shall mean each liability or obligation of Seller or any of its Affiliates of whatever nature, whether presently in existence or arising or asserted hereafter, whether known or unknown, and whether under the License Agreement or any other Transaction Document or otherwise.

 

 

 

7


 

Exploit” shall mean, with respect to any Product or product candidate, the manufacture, use (including development and testing), sale, offer for sale (including marketing and promotion), importation, distribution or other commercialization; and “Exploitation” shall have the correlative meaning.

 

Fiscal Quarter” shall mean a calendar quarter.

 

Full Purchase Price” shall mean $11,500,000.

 

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, or any other government authority in any country.

 

Indemnified Expenses shall mean collectively, all Losses with respect to which Seller is obligated to indemnify any party pursuant to Section 9.04(a) or XOMA is obligated to indemnify any party pursuant to Section 9.04(b).

 

Insolvency Event shall mean the occurrence of any of the following with respect to any XOMA Entity:

 

(a)an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of such XOMA Entity or any Subsidiary, or of a substantial part of the property of such XOMA Entity or any Subsidiary, under any Bankruptcy Law now or hereafter in effect, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such XOMA Entity or any Subsidiary or for a substantial part of the property of such XOMA Entity or any Subsidiary, (iii) the winding- up or liquidation of such XOMA Entity or any Subsidiary, which proceeding or petition shall continue undismissed for 90 calendar days or (iv) an order of a court of competent jurisdiction approving or ordering any of the foregoing shall be entered; or

 

(b)such XOMA Entity shall (i) voluntarily commence any proceeding or file any petition seeking relief under any Bankruptcy Law now or hereafter in effect, (ii) apply for the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such XOMA Entity or for a substantial part of the property of such XOMA Entity, (iii) fail to contest in a timely and appropriate manner any proceeding or the filing of any petition described in clause (a) of this definition, (iv) file an answer admitting the material allegations of a petition filed against it in any proceeding described in clause (a) of this definition, (v) make a general assignment for the benefit of creditors or (vi) wind up or liquidate (except as permitted under this Agreement); or

 

(c)such XOMA Entity shall take any action in furtherance of or for the purpose of effecting the foregoing; or

 

(d)such XOMA Entity shall admit in writing its inability, or fail generally, to pay its debts as they become due.

 

Intellectual Property shall mean patents, patent applications, copyrights, trademarks, trade secrets, and any legally protectable information, including computer software, technical information, non- patentable inventions, developments, discoveries, know-how, methods, techniques, formulae, algorithms, data, processes and other proprietary ideas (whether or not patentable or copyrightable) and biological materials, including, without limitation, vectors, antibodies and cells.

 

Knowledge shall mean, with respect to any XOMA Entity and any particular matter, the actual knowledge, after due inquiry, of Senior Management relating to such particular matter.

 

8


 

Licensee shall have the meaning given in the Recitals hereto.

 

License Agreement shall have the meaning given in the Recitals hereto.

 

License Payments shall mean (a) all amounts paid or payable to Seller under, arising out of or otherwise related to the License Agreement, whether in respect of or based on net sales of products, upon achievement of regulatory, clinical or other milestones or events, as annual or other maintenance fees or otherwise pursuant to the License Agreement, in each case from and after the Economic Commencement Date, plus (b) all Other Payments, but excluding (c) Reimbursement Payments.

 

License Termination” shall mean the date on which the last to expire of Buyer’s rights to receive any License Payment in respect of the License Agreement expires in accordance with the terms of the License Agreement.

 

Liens shall mean any lien, hypothecation, charge, security agreement, security interest, mortgage, pledge or any other encumbrance, right or claim of any 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, direct Damages and the actual, documented out-of-pocket costs, fees and expenses (including reasonable expenses of investigation and reasonable legal fees and expenses of a single law firm), in any such case arising out of or relating to any claim, action, suit or proceeding commenced or threatened by any Person or entity (including a Governmental Authority), other than Seller or Buyer or any of Buyer’s Affiliates, officers, directors, agents or other representatives, and relating to the activities or matters contemplated by this Agreement, but specifically excluding all Lost Profits and punitive damages.

 

Lost Profits” shall mean collectively, any and all claims, damages and losses in respect of loss of profits and other consequential damages, including without limitation indirect damages, special damages, incidental damages and exemplary damages.

 

Material Adverse Effect shall mean (a) a material adverse effect on the ability of Seller to perform any of its obligations hereunder or under the other Transaction Documents, (b) a material adverse effect on the Purchased Interest or other Assigned Rights or Buyer’s rights therein, including, without limitation, any material adverse effect on the amount, timing or duration of any License Payments, (c) a material breach by Seller of any obligation owing by Seller to the Licensee under the License Agreement as a result of which the Licensee may (i) materially reduce or eliminate the amount of the License Payments (whether directly or indirectly, including, without limitation, by counterclaim or setoff), or (ii) terminate the License Agreement prior to the License Termination or (d) a material breach by Seller of any obligation owing by Seller to Novartis under the TGF-beta License Agreement as a result of which Novartis may (i) materially reduce or eliminate the amount of the TGF-beta Phase 1 Milestone (whether directly or indirectly, including, without limitation, by counterclaim or setoff), or (ii) terminate the TGF- beta License Agreement prior to the receipt of the TGF-beta Phase 1 Milestone.

 

Novartis” shall mean Novartis International Pharmaceutical Ltd.

 

Other Payments shall mean (a) any sums accrued, paid or due, other than License Payments, that are (i) in lieu of or in respect of the License Payments; (ii) in satisfaction of the obligation to pay the License Payments; or (iii) indemnity payments, recoveries, damages, settlement or other amounts to which Seller is or may become entitled to pursuant to or in connection with the License Agreement or any item of Intellectual Property licensed thereunder, whether based on actual or alleged infringement, breach, re-licensing or otherwise, in each case described in this clause (iii) to the extent such infringement, breach, default or re-licensing has resulted or would result in a reduction in, or such payment is made in

9


 

lieu of, License Payments described in clause (a) of the definition thereof, but in any event net of any costs and expenses incurred by a XOMA Entity in connection therewith; and (b) the rights of Buyer to Indemnified Expenses pursuant to and in accordance with the terms and conditions of this Agreement.

 

Party” shall mean any XOMA Entity or Buyer, as the context indicates, and “Parties” shall mean the XOMA Entities and Buyer.

 

Person” shall mean an individual, corporation, partnership, limited liability company, limited partnership, association, trust or other entity or organization, but not including any Governmental Authority.

 

Product shall mean any Product (as defined in the License Agreement).

 

Protective Rights Agreement” shall mean the Protective Rights Agreement by and between Seller and Buyer of even date herewith, which Protective Rights Agreement shall be substantially in the form of Exhibit D. For the avoidance of doubt, the Protective Rights Agreement is not intended to derogate from the validity of the absolute assignment of the Assigned Rights, as contemplated by this Agreement and as evidenced by the Assignment, but is being executed and delivered solely to protect Buyer’s interests to the extent such assignment becomes subject to a Recharacterization despite the Parties’ intentions.

 

Purchased Interest shall mean an undivided 100% interest in Seller’s contract rights under the License Agreement to receive License Payments paid, payable, arising or received on or after the Economic Commencement Date.

 

Purchased Interest Payment” shall mean any payment in respect of the Purchased Interest.

 

Receiving Party shall mean, with respect to any Confidential Information, the Party receiving the Confidential Information from another Party.

 

Recharacterization shall mean a judgment or order by a court of competent jurisdiction that Seller’s right, title and interest in, to and under the License Agreement and the Assigned Rights were not fully sold, assigned and transferred to Buyer pursuant to, as contemplated by, and subject to the provisions of this Agreement and the Assignment, but instead that such transaction(s) constituted a loan and security device.

 

Reimbursement Payments” shall mean indemnity payments to the XOMA Entities and their Affiliates under the License Agreement comprising Damages in respect of third party claims against the XOMA Entities, in each case owed to a XOMA Entity pursuant to the express provisions of the License Agreement.

 

Representative shall mean, with respect to any Person, directors, officers, employees, agents, and advisors.

 

Seller” shall have the meaning given in the preamble hereto.

 

Seller Indemnified Party shall mean each XOMA Entity and each of their respective Affiliates and any of their respective partners, directors, managers, officers, employees and agents.

 

Senior Management shall mean the following officers of XOMA or any other XOMA Entity or any other officer, director, manager or internal counsel that has a similar position or has similar responsibilities, powers or duties, regardless of title: Chairman of the Board; Chief Executive Officer; Chief Operating Officer; Chief Scientific Officer; Chief Financial Officer; Senior Director of Intellectual Property; and Senior Corporate Counsel and Secretary.

 

10


 

Subsidiary shall mean, with respect to any Person, at any time, any entity of which more than fifty percent (50%) of the outstanding Voting Stock or other equity interest entitled ordinarily to vote in the election of the directors or other governing body (however designated) is at the time beneficially owned or controlled directly or indirectly by such Person, by one or more such entities or by such Person and one or more such entities.

 

TGF-beta License Agreement shall mean that certain License Agreement, dated as of September 30, 2015, by and between XOMA (US) LLC and Novartis.

 

TGF-beta Phase 1 Milestone shall mean Development and Regulatory Milestone Number 1 (as set forth in Section 4.2 of the TGF-beta License Agreement as in effect on the date hereof) in the amount of $10.0 million.

 

Third Party” shall mean any Person other than Seller or Buyer or their respective Affiliates.

 

Transaction Documents shall mean, collectively, this Agreement, the Assignment, the Consent, the Escrow Agreement and the Protective Rights Agreement.

 

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

 

United States Person” shall mean a person as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended.

 

Voting Stock shall mean Capital Stock issued by a company, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such contingency.

 

XOMA shall have the meaning given in the preamble hereto.

 

XOMA Entity shall mean one or more of XOMA and Seller, as the context indicates.

 

Section 1.02 Currency.Unless otherwise specified, all reference to monetary amounts in this Agreement are references to the lawful currency of the United States.

 

Article II

 

SALE AND ASSIGNMENT

 

Section 2.01 Sale and Assignment.

 

(a)Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller shall sell, assign, transfer and convey to Buyer, free and clear of all Liens (other than any Liens in favor of Buyer) and subject to the conditions set forth in ARTICLE VII and the other provisions of this Agreement, all of Seller’s right, title and interest in, to and under the Assigned Rights, and Buyer shall accept such sale, assignment, transfer and conveyance from Seller. Such sale, assignment, transfer and conveyance shall be evidenced by the execution and delivery of the Assignment by Seller in accordance with Section 7.02.

 

11


 

(b)Notwithstanding anything to the contrary contained in this Agreement, the sale, assignment, transfer and conveyance to Buyer of the Assigned Rights pursuant to this Agreement shall not subject Buyer to, or transfer, affect or modify, any obligation or liability of Seller under the License Agreement.

 

(c)Seller and Buyer intend and agree that the sale, assignment, transfer and conveyance of the Assigned Rights under this Agreement shall be, and is, a true sale by Seller to Buyer that is absolute and irrevocable and that provides Buyer with the full benefits of ownership of the Assigned Rights, and neither Seller nor Buyer intends the transactions contemplated hereunder to be, or for any purpose characterized as, a financing transaction, borrowing or loan from Buyer to Seller or entitle Buyer to any other rights or interests except as expressly set forth in this Agreement. Accordingly, Seller and Buyer will treat the sale, assignment, transfer and conveyance of the Assigned Rights as sales of “accounts” or a “payment intangible” (as appropriate) in accordance with the UCC, and Seller hereby authorizes Buyer or its designee(s), from and after the Closing, to execute, record and file such financing statements (and continuation statements with respect to such financing statements when applicable) naming Seller as the seller and Buyer as the purchaser of the Assigned Rights, as may be necessary to perfect such sale. Seller waives any right to contest or otherwise assert that this Agreement is anything other than a true sale by Seller to Buyer under applicable law, which waiver shall be enforceable against Seller in any bankruptcy or insolvency proceeding relating to Seller.

 

Section 2.02 Purchased Interest Payments.

 

(a)Seller agrees and will use all commercially reasonable efforts to ensure (including taking such actions as Buyer shall reasonably request) that the Licensee remits all Purchased Interest Payments the Licensee is required to pay to Seller under the License Agreement directly to the Deposit Account.

 

(b)Pursuant to the Consent, Seller shall instruct the Licensee to (i) remit all Purchased Interest Payments into the Deposit Account pursuant and subject to Section 6.11 and (ii) furnish all milestone, royalty and other reports required under the License Agreement to Buyer at an address specified by Buyer.

 

Section 2.03 Payments at Closing.

 

(a)Subject to the terms and conditions set forth herein, at the Closing, Buyer shall pay Seller the Closing Advance Amount by wire transfer of immediately available funds as directed by Seller.

 

(b)Subject to the terms and conditions set forth herein, at the Closing, Buyer shall deposit the Closing Escrow Amount by wire transfer of immediately available funds into the Escrow Account. Upon such deposit, the amount so deposited shall be “Escrowed Funds” as defined in the Escrow Agreement, and the release and disbursement thereof shall thereafter be governed by the terms and conditions of the Escrow Agreement.

 

Section 2.04 No Assumption.

 

Notwithstanding any provision in this Agreement or any other Transaction Document or writing to the contrary, Buyer is accepting the purchase and assignment of only the Assigned Rights and is not assuming any Excluded Liabilities and Obligations. All Excluded Liabilities and Obligations shall be retained by and remain obligations and liabilities solely of Seller or its Affiliates.

 

12


 

Section 2.05 Excluded Assets.

 

Notwithstanding any provision in this Agreement or any other writing to the contrary, Buyer does not, by purchase, acquisition or acceptance of the rights granted hereunder or otherwise pursuant to any of the Transaction Documents, purchase, acquire or accept any assets or contract rights of Seller under the License Agreement, other than the Assigned Rights, or any other assets or rights of Seller.

 

Section 2.06 Non-Assignable Rights.

 

Nothing in this Agreement shall be construed as an attempt or an agreement to assign or cause the assignment of any Assigned Rights (other than the Purchased Interest) to the extent the assignment thereof would be prohibited by, require a consent under, or otherwise result in a breach of, any License Agreement; provided that in the case of any Assigned Rights that pursuant to the foregoing are not assigned, Seller shall act as Buyer’s agent and shall hold such Assigned Rights for the benefit of Buyer.

 

Article III

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Buyer that the following representations are true, correct and complete as of the date of this Agreement and as of the Closing Date, except as otherwise indicated:

 

Section 3.01 Organization.

 

Seller is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware. Seller has all limited liability company 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 and the License Agreement.

 

Section 3.02 Authorizations; Enforceability.

 

(a)Seller has all necessary limited liability company power and authority to enter into, execute and deliver this Agreement and the other 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.

 

(b)Once signed, the Transaction Documents will have been duly authorized, executed and delivered by Seller and each Transaction Document will then constitute the valid and binding obligation of Seller, enforceable against Seller in accordance with their 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 Litigation.

 

There are no (i) Disputes pending or, to the Knowledge of Seller, threatened against Seller, or to the Knowledge of Seller, Disputes pending or threatened against the Licensee, or (ii) to the Knowledge of Seller, inquiries of any Governmental Authority pending or threatened against Seller or the Licensee, which, in each instance of clauses (i) and (ii), if adversely determined, could reasonably be expected to have a Material Adverse Effect.

 

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Section 3.04 Compliance with Laws.

 

Seller (i) is not in violation of, has not violated, and is not under investigation with respect to, and (ii)has not been threatened to be, charged with or been given written notice of any violation of any law, rule, ordinance or regulation of, or any judgment, order, writ, decree, permit or license entered by, any Governmental Authority which, in the case of either clause (i) or clause (ii), could reasonably be expected to have a Material Adverse Effect.

 

Section 3.05 Conflicts; Consents.

 

(a)Neither the execution and delivery by Seller of any of the Transaction Documents nor the performance or consummation of the transactions contemplated thereby (including, without limitation, the assignment to Buyer of the Assigned Rights) to be performed or consummated by Seller 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, ordinance or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any Governmental Authority, in any case, applicable to the Purchased Interest or the Collateral; or (B) any material contract, agreement, commitment or instrument to which Seller is a party or by which any of the Collateral is bound or committed; (ii) except for the filing of the UCC-1 financing statements required hereunder (or under the Protective Rights Agreement), the Consent and notices contemplated by the Transaction Documents, require any notification to, filing with, or consent of, any Person or Governmental Authority; (iii) give rise to any right of termination, cancellation or acceleration of any right or obligation of Seller or any other Person as such right or obligation relates to the Purchased Interest, the Purchased Interest Payments or any of the other Collateral or to a loss of any benefit relating to the Purchased Interest, the Purchased Interest Payments or any of the other Collateral; or (iv) result in the creation or imposition of any Lien on any the Purchased Interest, the Purchased Interest Payments or any of the other Collateral, other than in favor of Buyer pursuant to the Protective Rights Agreement.

 

(b)Except pursuant to the Transaction Documents, Seller has neither granted nor agreed to grant to any Person other than Buyer, nor does there exist, any Lien granted by Seller on the Purchased Interest or any other Collateral other than pursuant to the Protective Rights Agreement.

 

(c)Neither Seller nor any of its property is subject (i) to any judgment, order, writ or decree of any Governmental Authority or (ii) to any contract, agreement, commitment or instrument, which, in either case of clause (i) or clause (ii), the violation or breach of which by Seller could reasonably be expected to have a Material Adverse Effect.

 

Section 3.06 Ownership.

 

Immediately prior to the assignment thereof to Buyer pursuant to this Agreement, Seller owns, and is the sole holder of all of the Assigned Rights, free and clear of any and all Liens (other than any Liens in favor of Buyer). Seller has not transferred, sold, conveyed, assigned, or otherwise disposed of, or agreed to transfer, sell, convey, assign, or otherwise dispose of any portion of the License Agreement and/or the Assigned Rights other than as contemplated by this Agreement. Upon delivery to Buyer of the executed Assignment, no Person other than Buyer shall have any right to receive the Purchased Interest. Upon delivery to Buyer of the executed Assignment, Seller shall have sold, transferred, conveyed and assigned to Buyer all of Seller’s right, title and interest in the Assigned Rights, free and clear of any Liens (other than any Liens in favor of Buyer), but subject to the further provisions of this Agreement.

 

Section 3.07 Subordination.

 

Seller has not agreed to any contractual subordination of the License Payments to the rights of any creditor of the Licensee or any other Person.

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Section 3.08 License Agreement.

 

(a)Seller has been provided a true, correct and complete copy of the License Agreement including all amendments, waivers, consents and other modifications thereto currently in effect. The License Agreement constitutes the only applicable agreement (other than the Transaction Documents) to which Seller is a party regarding the License Payments. To the Knowledge of Seller, there are no unpaid License Payments that have become due, and none are expected to become overdue, as of the Closing Date.

 

(b)Seller is not in breach of the License Agreement (other than immaterial breaches previously disclosed to Buyer) and, to the Knowledge of Seller, no circumstances or grounds exist that would give rise (i) to a claim by the Licensee of a breach by any XOMA Entity of the License Agreement, or (ii) to a right of the Licensee to require rescission, termination or revision of the License Agreement or setoff against the License Payments. Seller has no material unfulfilled obligations in respect of the License Agreement or the Assigned Rights that were required to be fulfilled on or prior to the date of this Agreement.

 

(c)To the Knowledge of Seller, the Licensee is not in breach of or in default under the License Agreement.

 

(d)To the Knowledge of Seller, no circumstance or grounds exist, that would invalidate, reduce or eliminate, in whole or in part, the enforceability or scope of the Assigned Rights including with respect to Seller’s right to payments made in respect of License Payments.

 

(e)The License Agreement is valid and binding on Seller in accordance with its terms and, to the Knowledge of Seller, the License Agreement is valid and binding on each of the other parties thereto in accordance with its terms, in each case subject to bankruptcy, insolvency, reorganization, moratorium, or other laws affecting creditors’ rights generally or general equitable principles, and is in full force and effect.

 

 

(f)

Seller has not:

 

(i)forgiven, released, delayed, postponed or compromised any payment in respect the License Payments;

 

(ii)except as set forth in the data room and made available to Buyer prior to the date hereof, amended, modified, restated, cancelled, supplemented, terminated or waived any provision of the License Agreement including the Assigned Rights, or granted any consent thereunder, or agreed to do any of the foregoing;

 

 

 

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(iii)exercised any right of rescission, offset, counterclaim or defense, upon or with respect to the Assigned Rights or the Collateral, or agreed to do or suffer to exist any of the foregoing;

 

(iv)sold, leased, pledged, licensed, transferred or assigned (or attempted to do any of the foregoing) all or any portion of the Assigned Rights and/or the License Agreement, except in favor of Buyer pursuant to the Transaction Documents; or

 

(v)received any advance payments on any of the License Payments

 

(g)

Seller has not been released from any of its obligations under the License Agreement.

(h)Seller has not received any written notice from the Licensee that the Licensee has granted any sublicense of Seller or the Licensee’s rights under the License Agreement. Seller has not received any written notice and has no Knowledge (i) of the Licensee’s intention to terminate, amend or restate the License Agreement, in whole or in part, (ii) of the Licensee’s or any other Person’s or Governmental Authority’s (where applicable) intention to challenge the validity or enforceability of the License Agreement or the obligation of the Licensee to pay the License Payments or other monetary payments under such License Agreement, or (iii) that the Licensee is in default of any of its obligations under the License Agreement. Seller has no intention of terminating, amending or restating the License Agreement and has not given the Licensee notice of termination (or request to amend or restate any provision) of the License Agreement, in whole or in part.

 

Section 3.09 Broker’s Fees.

 

Except for a pending Engagement Letter with Torreya Capital, Seller 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. Any payments or other consideration of any kind paid, payable, due or owing to Torreya Capital or any other Person pursuant to such Engagement Letter shall be the sole and exclusive responsibility of Seller and/or XOMA and not, in any event or in any respect, Buyer.

 

Section 3.10 Solvency; No Material Adverse Effect.

 

Upon consummation of the transactions contemplated by the Transaction Documents, (a) the fair saleable value of Seller’s assets will be greater than the sum of its debts and other obligations, including contingent liabilities, and (b) the present fair saleable value of Seller’s assets will be greater than the amount that would be required to pay its probable liabilities on its existing debts and other obligations, including contingent liabilities, as they become absolute and matured. No Insolvency Event has occurred regarding Seller. To the Knowledge of Seller, no event has occurred and no condition exists that could reasonably be expected to have a Material Adverse Effect.

 

Section 3.11 Intellectual Property Matters.

 

(a)To the Knowledge of Seller, all of the representations and warranties given by any XOMA Entity or any past or present Affiliate of a XOMA Entity, or any predecessor in interest of any thereof, in the License Agreement relating to the Intellectual Property underlying the License Agreement were true and correct as of the date given.

(b)To the Knowledge of Seller, (a) the product candidates known as (i) lanadelumab/DX-2930 (anti-kallikrein), (ii) KD-014/DX-2400 (anti- MMP-14) and (iii) imalumab/SHP653 (anti-MIF) are all “Products” as such term is defined in the License Agreement and

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(b)the product candidate known as XOMA089 is a “Licensed Antibody” as such term is defined in the TGF-beta License Agreement.

 

Section 3.12 Exploitation.

 

To the Knowledge of Seller, (a) the Licensee is not considering ceasing to Exploit either of the product candidates known as DX-2930 or SHP653 and (b) Novartis is not considering ceasing to Exploit the product candidate known as XOMA089 and intends to file or has filed an Investigational New Drug application with respect thereto.

 

Section 3.13 Taxes.

 

All License Payments received by any XOMA Entity prior to the Closing Date have been made without any deduction or withholding for or on account of any tax.

 

Section 3.14 No Set-Offs; No Material Liabilities.

 

(a)Except as expressly set forth in the License Agreement, the Licensee has no right of set-off under any contract or other agreement against the License Payments or other monetary payments on account of the Purchased Interest payable to Seller under the License Agreement. The Licensee has not exercised, and, to Seller’s Knowledge, Licensee has not had the right to exercise any set- off against the License Payments or other monetary payments on account of the Purchased Interest payable to Seller under the License Agreement.

 

(b)Except as expressly set forth in the License Agreement, there are no material liabilities of Seller or its Affiliates related to the Purchased Interest, the License Payments or the License Agreement of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition or set of circumstances which could reasonably be expected to result in any such liability. Without limiting the generality of the foregoing, to the knowledge of Seller after review of the filings by Shire plc with the U.S. Securities and Exchange Commission since February 23, 2016, there have been no serious, adverse events, or other events or circumstances suggesting a significant hazard to humans, with respect to any Product in development as of the date of this Agreement.

 

Section 3.15 TGF-beta License Agreement.

 

(a)Seller has been provided a true, correct and complete copy of the TGF-beta License Agreement including all amendments, waivers, consents and other modifications thereto currently in effect. The License Agreement constitutes the only applicable agreement (other than the Transaction Documents) to which Seller is a party regarding the TGF-beta Phase 1 Milestone.

 

(b)Seller is not in breach of the TGF-beta License Agreement and, to the Knowledge of Seller, no circumstances or grounds exist that would give rise (i) to a claim by Novartis of a breach by any XOMA Entity of the TGF-beta License Agreement, or (ii) to a right of Novartis to require rescission, termination or revision of the TGF-beta License Agreement or setoff against, or that would invalidate, reduce or eliminate, in whole or in part, the TGF-beta Phase 1 Milestone.

 

 

 

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(c)The TGF-beta License Agreement is valid and binding on Seller in accordance with its terms and, to the Knowledge of Seller, the TGF-beta License Agreement is valid and binding on each of the other parties thereto in accordance with its terms, in each case subject to bankruptcy, insolvency, reorganization, moratorium, or other laws affecting creditors’ rights generally or general equitable principles, and is in full force and effect.

 

Article IV

 

REPRESENTATIONS AND WARRANTIES OF XOMA

 

XOMA hereby represents and warrants to Buyer that the following representations are true, correct and complete as of the date of this Agreement and as of the Closing Date, except as otherwise indicated:

 

Section 4.01 Organization.

 

XOMA is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware. XOMA 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 and the License Agreement.

 

Section 4.02 Authorizations; Enforceability.

 

(a)XOMA has all necessary corporate power and authority to enter into, execute and deliver this Agreement and the other 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.

 

(b)Once signed, the Transaction Documents will have been duly authorized, executed and delivered by XOMA and each Transaction Document will then constitute the valid and binding obligation of XOMA, enforceable against XOMA in accordance with their 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 4.03 Conflicts; Consents.

 

(a)Neither the execution and delivery by XOMA of any of the Transaction Documents nor the performance or consummation of the transactions contemplated thereby (including, without limitation, the assignment to Buyer of the Purchased Interest) to be performed or consummated by XOMA 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, ordinance or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any Governmental Authority, in any case, applicable to the Purchased Interest or the Collateral; or (B) any material contract, agreement, commitment or instrument to which XOMA is a party or by which any of the Collateral is bound or committed; (ii) except for the filing of the UCC-1 financing statements required hereunder (or under the Protective Rights Agreement), the Consent and notices contemplated by the Transaction Documents, require any notification to, filing with, or consent of, any Person or Governmental Authority; (iii) give rise to any right of termination, cancellation or acceleration of any right or obligation of XOMA or any other Person as such right or obligation relates to the Purchased Interest, the Purchased Interest Payments or any of the other Collateral or to a loss of any benefit relating to the Purchased Interest, the Purchased Interest Payments or any of the other Collateral;

 

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or (iv) result in the creation or imposition of any Lien on any the Purchased Interest, the Purchased Interest Payments or any of the other Collateral, other than in favor of Buyer pursuant to the Protective Rights Agreement.

 

(b)Except pursuant to the Transaction Documents, XOMA has not granted or agreed to grant to any Person other than Buyer, nor does there exist, any Lien granted by XOMA on the Purchased Interest or any other Collateral other than pursuant to the Protective Rights Agreement.

 

(c)Neither XOMA nor any of its property is subject (i) to any judgment, order, writ or decree of any Governmental Authority or (ii) to any contract, agreement, commitment or instrument, which, in either case of clause (i) or clause (ii), the violation or breach of which by XOMA could reasonably be expected to have a Material Adverse Effect.

 

Section 4.04 Broker’s Fees.

 

Except for a pending Engagement Letter with Torreya Capital, XOMA 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. Any payments or other consideration of any kind paid, payable, due or owing to Torreya Capital or any other Person pursuant to such Engagement Letter shall be the sole and exclusive responsibility of Seller and/or XOMA and not, in any event or in any respect, Buyer.

 

Section 4.05 Intellectual Property Matters.

 

(a)To the Knowledge of XOMA, all of the representations and warranties given by any XOMA Entity or any past or present Affiliate of a XOMA Entity, or any predecessor in interest of any thereof, in the License Agreement relating to the Intellectual Property underlying such License Agreement were true and correct as of the date given.

 

(b)To the Knowledge of Seller, (a) the product candidates known as (i) lanadelumab/DX-2930 (anti-kallikrein), (ii) KD-014 /DX-2400 (anti- MMP-14) and (iii) imalumab/SHP653 (anti-MIF) are all “Products” as such term is defined in the License Agreement and

(b)the product candidate known as XOMA089 is a “Licensed Antibody” as such term is defined in the TGF-beta License Agreement.

 

Section 4.06 Taxes.

 

All License Payments received by any XOMA Entity prior to the Closing Date have been made without any deduction or withholding for or on account of any tax.

 

Section 4.07 Material Inducement.

 

Each of the Parties hereby acknowledges that the representations, warranties and covenants of XOMA to Buyer set forth in this Agreement are, collectively, a material inducement to Buyer to enter into and consummate the transactions contemplated by this Agreement.

 

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Article V

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller that the following representations are true, correct and complete as of the date of this Agreement and as of the Closing Date, except as otherwise indicated:

 

Section 5.01 Organization.

 

Buyer is a limited partnership formed and validly existing under the laws of the State of Delaware, and has all limited partnership 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.

 

Section 5.02 Authorization.

 

Buyer has all necessary limited partnership power and authority to enter into, execute and deliver this Agreement and the other 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. Once signed, the Transaction Documents will have been duly authorized, executed and delivered by Buyer and each Transaction Document will then constitute the valid and binding obligation of Buyer, enforceable against Buyer in accordance with their 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 5.03 Broker’s Fees.

 

None of Buyer or its Affiliates has 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 5.04 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 Governmental Authority, or any judgment, order, writ, decree, permit or license of any Governmental Authority, to which Buyer or any of its assets or properties may be subject or bound; or (B) any contract, agreement, commitment or instrument to which Buyer is a party or by which Buyer 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 the organizational or constitutional documents of Buyer; or (iii) require any notification to, filing with, or consent of, any Person or Governmental Authority.

 

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Article VI

 

COVENANTS

 

During the term of this Agreement, the following covenants shall apply:

 

Section 6.01 Consents and Waivers.

 

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

 

Section 6.02 Compliance.

 

Seller and XOMA shall comply with and fulfill, in all material respects, all of their respective obligations under the License Agreement.

 

Section 6.03 Confidentiality; Public Announcement.

 

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

 

(b)Notwithstanding anything to the contrary set forth in this Agreement or any other Transaction Document, the Receiving Party may, without the consent of the Disclosing Party, but with prior written notice when permissible to the Disclosing Party and subject to compliance with any confidentiality obligations applicable to the relevant Confidential Information under the License Agreement, furnish or disclose Confidential Information of the Disclosing Party to the Receiving Party’s Affiliates and its and their respective Representatives, actual or potential financing sources, underwriters, investment bankers, rating agencies, investors or co-investors and permitted assignees, buyers, transferees or successors-in-interest under Section 9.03, in each such case, who need to know such information in order to provide or evaluate the provision of financing to the Receiving Party or any of its Affiliates or to assist the Receiving Party in evaluating the transactions contemplated by this Agreement and the other Transaction Documents, in connection with such actual or potential assignment, sale or transfer, or in exercising its rights and remedies and performing its obligations hereunder and thereunder and who are, prior to such furnishing or disclosure, informed of the confidentiality and non-use obligations contained in this Section 6.03 and who are bound by written or professional confidentiality and non-use obligations no less stringent than those contained in this Section 6.03.

 

(c)In the event that the Receiving Party, its Affiliates or any of their respective Representatives is required by applicable law, applicable stock exchange requirements or legal or judicial process (including by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to furnish or disclose any portion of the Confidential Information of the Disclosing Party, the Receiving Party shall, to the extent legally permitted, provide the Disclosing Party, as promptly as practicable, with written notice of the existence of, and terms and circumstances relating to, such requirement, so that the Disclosing Party may seek, at its expense, a protective order or other appropriate remedy (and, if the Disclosing Party seeks such an order, the Receiving Party, such Affiliates

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or such Representatives, as the case may be, shall provide, at their expense, such cooperation as such Disclosing Party shall reasonably require). Subject to the foregoing, the Receiving Party, such Affiliates or such Representatives, as the case may be, may disclose that portion (and only that portion) of the Confidential Information of the Disclosing Party that is legally required to be disclosed; provided, however, that the Receiving Party, such Affiliates or such Representatives, as the case may be, shall exercise reasonable efforts (at their expense) to preserve the confidentiality of the Confidential Information of the Disclosing Party, including by obtaining reliable assurance that confidential treatment will be accorded any such Confidential Information disclosed. Notwithstanding anything to the contrary contained in this Agreement or any of the other Transaction Documents, in the event that the Receiving Party or any of its Affiliates receives a request from an authorized representative of a U.S. or foreign tax authority for a copy of this Agreement or any of the other Transaction Documents, the Receiving Party or such Affiliate, as the case may be, may provide a copy hereof or thereof to such tax authority representative without advance notice to, or the consent of, the Disclosing Party; provided, however, that the Receiving Party shall, to the extent legally permitted, provide the Disclosing Party with written notice of such disclosure as soon as practicable.

 

(d)Notwithstanding anything to the contrary contained in this Agreement or any of the other Transaction Documents, (i) the Receiving Party may disclose the Confidential Information of the Disclosing Party, including this Agreement, the other Transaction Documents and the terms and conditions hereof and thereof, to the extent necessary in connection with the enforcement of its rights and remedies hereunder or thereunder or as required to perfect the Receiving Party’s rights hereunder or thereunder, and (ii) the XOMA Entities may disclose the Transaction Documents in any required filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges.

 

(e)No Party shall, and each Party shall cause its Affiliates not to, without the prior written consent of the other Parties (which consent shall not be unreasonably withheld or delayed), issue any press release with respect to the transactions contemplated by this Agreement or any other Transaction Document, unless the Party proposing (or whose Affiliate proposes) to issue such press release uses commercially reasonable efforts to consult in good faith with the other Parties regarding the form and content thereof before issuing such press release.

 

(f)Except with respect to Buyer’s internal communications or private communications with its Representatives, Buyer shall not, and shall cause its Representatives, its Affiliates and its Affiliates’ Representatives not to make use of the name, nickname, trademark, logo, service mark, trade dress or other name, term, mark or symbol identifying or associated with Seller without Seller’s prior written consent to the specific use in question; provided that the consent of Seller shall not be required with respect to publication of Seller’s name and logos in Buyer’s promotional materials, including without limitation the websites for Buyer and its Affiliates consistent with its use of other similarly situated Third Parties’ names and logos.

 

(g)In addition to the terms of this Section 6.03, Buyer also acknowledges that any Confidential Information (as defined in the License Agreement) it receives shall be subject to the applicable confidentiality provisions contained in the License Agreement to the same extent that such Confidential Information would be subject to such confidentiality provisions if received by any XOMA Entity, and that Buyer shall be bound by such confidentiality provisions.

 

(h)Buyer and XOMA hereby (i) agree that, notwithstanding the terms thereof, the Confidentiality Agreement is hereby terminated and (ii) acknowledge that this Agreement shall supersede such Confidentiality Agreement with respect to the treatment of Confidential Information by the Parties (including, without limitation, with regard to Confidential Information previously provided pursuant to such Confidentiality Agreement).

 

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Section 6.04 Protective Rights Agreement.

 

For protective purposes only and to secure Seller’s performance of its obligations hereunder to the extent the assignment hereunder, as evidenced by the Assignment, becomes subject to a Recharacterization despite the Parties’ intentions, Seller shall execute and deliver the Protective Rights Agreement at the Closing as contemplated by Section 7.02(d).

 

Section 6.05 Further Assurances.

 

(a)Subject to the terms and conditions of this Agreement, each of Buyer and Seller will use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate the transactions contemplated by this Agreement and any other Transaction Document. Buyer and Seller agree to execute and deliver such other documents, certificates, agreements and other writings (including any financing statement filings, other documents, certificates or agreements requested by Buyer) and to take such other actions as may be reasonably necessary to carry out and effectuate all of the provisions of this Agreement and any other Transaction Document, to consummate the transactions contemplated by this Agreement and any other Transaction Document and to vest in Buyer all of Seller’s rights (whether joint, several or joint and several) under the License Agreement, including, without limitation, the Assigned Rights, free and clear of all Liens, except those Liens created in favor of Buyer pursuant to the Protective Rights Agreement and subject to the further provisions of this Agreement and Liens incurred by Buyer.

 

(b)Except for disputes between one or more of the XOMA Entities, on the one hand, and Buyer, on the other hand, each of the Parties shall cooperate and provide assistance as reasonably requested by the other Parties (and at no expense to the requesting Party unless the requesting Party is obligated to indemnify the other Parties pursuant to the requesting Party’s indemnification obligations provided for in this Agreement) 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 or any of its officers, directors, shareholders, 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 this Agreement or any other Transaction Document, and the Assigned Rights, the License Agreement, the Collateral, or the transactions described herein or therein. In particular, without limitation, Seller shall, upon request of Buyer, be available and fully cooperate with and support Buyer free of charge in connection with the enforcement of the Assigned Rights under the License Agreement.

 

Section 6.06 Notice by Seller.

 

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

 

(i)any breach or default by any XOMA Entity of any covenant, agreement or other provision of this Agreement or any other Transaction Document;

 

(ii)any representation or warranty made or deemed made by any XOMA Entity in any of the Transaction Documents or in any certificate delivered to Buyer pursuant to any Transaction Documents shall prove to be untrue, incorrect or incomplete in any material respect on the date as of which made or deemed made;

 

(iii)the occurrence of an Insolvency Event with respect to any XOMA Entity or the occurrence of any equivalent event with respect to the Licensee;

 

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(iv)the occurrence of any event or circumstance that could reasonably be expected to have a Material Adverse Effect;

 

(v)any breach or default by the Licensee under the License Agreement; and

 

(vi) any written notice, report (including without limitation royalty reports and worksheets) or other written communication, together with copies of the same, received from or on behalf of Licensee with respect to the Purchased Interest, any of the other Assigned Rights or the License Agreement.

 

 

(i)

 

 

(b)In the event any oral communication is received by Seller from the Licensee or Novartis the substance of which could reasonably be expected to have a Material Adverse Effect, Seller shall promptly inform Buyer of such oral communication and provide a reasonable description of such oral communication.

 

Section 6.07 Enforcement of and Disputes Under License Agreement.

 

(a)In the event (i) the Licensee is in breach or default of an obligation or restriction under the License Agreement in a manner that is reasonably likely to adversely affect the License Payments, the Purchased Interest or the Assigned Rights or (ii) of any dispute arising under the License Agreement between Seller and/or Buyer, on the one hand, and the Licensee, on the other hand, that relates to or is reasonably likely to adversely affect the License Payments, the Purchased Interest or the Assigned Rights, Seller or Buyer, as applicable, shall inform the other Parties of such breach, default or dispute and shall provide reasonable detail regarding the nature of such breach, default or dispute. Seller and Buyer shall consult with each other regarding such breaches, defaults and disputes and as to the timing, manner and conduct of any enforcement of Licensee’s obligations or restrictions under the License Agreement or other means of dispute resolution relating thereto. If after ten (10) Business Days the Parties cannot agree on the timing, manner and conduct of such enforcement or means of dispute resolution, then Seller shall take such actions as Buyer shall request to enforce the Licensee’s obligations and restrictions under the License Agreement and/or to resolve such dispute, as applicable.

 

(b)Buyer shall have the sole right to determine the timing, manner and conduct of any enforcement of the Licensee’s obligations or restrictions under the License Agreement or means of dispute resolution as described in Section 6.07(a) above, including, without limitation, the selection of any counsel to assist in such enforcement or dispute resolution and the commencement of any legal action or suit, and upon Buyer’s request, Seller shall cooperate with Buyer to enforce and assist Buyer in enforcing compliance by the Licensee with the relevant provisions of the License Agreement and the exercise of such rights and remedies relating to such breach or default or alleged breach or default as shall be available to Seller or Buyer and as directed by Buyer, whether under the License Agreement or by operation of applicable law, including bringing (to the extent Seller is entitled to so bring), or joining in, any legal action or suit requested or commenced by Buyer. Seller shall not consent to the entry of any judgment or enter into any compromise or settlement with respect to such enforcement of the License Agreement against the Licensee without the prior written consent of Buyer.

 

(c)All reasonable and documented out-of-pocket costs and expenses (including reasonable and documented counsel fees and expenses for one counsel per jurisdiction) incurred in connection with any enforcement or dispute resolution efforts pursuant to this Section 6.07 shall be borne by Seller, provided that any amounts recovered as a result of any judgment or other monetary award or settlement in respect of an action brought or settlement reached pursuant to this Section 6.07 shall be first applied to reimburse Seller and/or XOMA for its costs incurred in connection therewith and the remainder, if any, shall then be treated as Purchased Interest.

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(d)Notwithstanding the foregoing, neither Seller nor any other XOMA Entity shall be responsible to bear or reimburse costs and expenses for litigation for any dispute involving less than $300,000.

 

Section 6.08 Negative Covenants.

 

Seller shall not, without the prior written consent of Buyer:

 

(a)forgive, release or reduce any amount, or delay or postpone (other than on a commercially reasonable basis) any amount, owed to Seller relating to the License Payments;

 

(b)create, incur, assume or suffer to exist any Lien, upon or with respect to the Assigned Rights, the other Collateral or the right to receive License Payments, or agree to do or suffer to exist any of the foregoing, except for any Lien or agreements in favor of Buyer granted under or pursuant to this Agreement and the other Transaction Documents;

 

(c)waive, amend, cancel or terminate, exercise or fail to exercise, any material rights constituting or relating to the License Payments, the Purchased Interest or any other Assigned Rights;

 

(d)amend, modify, restate, cancel, supplement, terminate or waive any provision of the License Agreement, or grant any consent thereunder, or agree to do any of the foregoing; or

 

(e)until the earlier of (i) receipt of the Consent or (ii) payment to Buyer of the amount specified in Section 6.12(b), amend, modify, restate, cancel, supplement, terminate or waive any provision of the TGF-beta License Agreement relating directly or indirectly to the amount or timing of the TGF-beta Phase 1 Milestone, or grant any consent thereunder, in each case that could negatively impact the amount or timing of the TGF-beta Phase 1 Milestone, or agree to do any of the foregoing.

 

Section 6.09 Future Agreements.

 

Seller shall not enter into any agreement that could reasonably be expected to have a Material Adverse Effect without Buyer’s prior written consent.

 

Section 6.10 Reports; Records; Access.

 

(a)During the term of this Agreement and for a period of two (2) years thereafter, Seller shall keep and maintain proper books of record and account in which true, correct and complete entries in conformity with U.S. generally accepted accounting principles and all requirements of applicable law are made of all dealings and transactions as are adequate to calculate correctly and verify the accuracy of all reports and all Purchased Interest Payments.

 

 

(b)

During the term of this Agreement:

 

(i)Buyer and its representatives shall have the right, from time to time during normal business hours and upon at least fifteen (15) Business Days’ prior written notice to Seller, but no more frequently than one (1) time per calendar year without cause, as determined by Buyer in its reasonable discretion, to visit the offices and properties of Seller where books and records relating or pertaining to the Purchased Interest Payments, the License Payments, the Purchased Interest, the Assigned Rights and the other Collateral are kept and maintained, to inspect and make extracts from and copies of such books and records, to discuss, with officers of Seller, the business, operations, properties and financial and other condition of Seller and to verify the accuracy of the reports, the Purchased Interest Payments and the License Payments. In

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the event any inspection of such books and records reveals any underpayment of any Purchased Interest Payment in respect of any Fiscal Quarter, Seller shall pay promptly (but in any event within five (5) Business Days thereafter) to Buyer the amount of such underpayment; and

(ii)if such underpayment exceeds five percent (5%) of the Purchased Interest Payment that was required to be made in respect of such Fiscal Quarter, the reasonable out-of- pocket fees and expenses incurred by Buyer and its Affiliates in connection with such inspection will be borne by Seller (in all other cases, such fees and expenses will be borne by Buyer and its Affiliates). All information furnished or disclosed to Buyer or any of its representatives in connection with any inspection shall constitute Confidential Information of Seller and shall be subject to the provisions of Section 6.03.

 

(c)Seller shall deliver to Buyer such information and data relating or pertaining to the Purchased Interest Payments, the License Agreement, the Purchased Interest, the Assigned Rights and the other Collateral as Buyer shall reasonably request, promptly upon such request.

 

(d)Upon the request of Buyer, Seller shall at least once per calendar year, on at least 15 Business Days’ notice, cause such of the officers and employees of Seller as shall be reasonably identified by Buyer in such notice to meet, or, at Buyer’s option, to participate in a conference call with, Buyer for the purpose of discussing the Assigned Rights, the License Agreement or any Product.

 

Section 6.11 Remittance to Deposit Account; Set-Offs.

 

(a)Seller shall instruct the Licensee to remit all amounts payable to Seller pursuant to the License Agreement directly to the Deposit Account and may not change or otherwise amend such instruction without the prior written consent of Buyer. All payments made to Seller on account of the License Payments shall be immediately remitted to the Deposit Account and shall be held by Seller in trust for the benefit of Buyer until so remitted. Seller shall have no right, title or interest whatsoever in such amounts and shall not create any Lien thereon. Amounts deposited into the Deposit Account shall be in United States dollars.

 

(b)If Seller fails to pay any amount that it is contractually obligated to pay to the Licensee, and, as a consequence of such failure to pay, the Licensee exercises a right of set-off and reduces amounts payable in respect of any License Payment, then Seller shall promptly, and in any event no later than five (5) Business Days, following the date on which Seller becomes aware of such setoff pay to Buyer a sum equal to the amount of such reduction and in the currency in which the amount offset is denominated.

 

Section 6.12 Certain Payments; Option.

 

(a)In the event the Consent is received within 30 days following the Closing Date and the Escrowed Funds (as defined in the Escrow Agreement) are released in accordance with the Escrow Agreement, Buyer agrees to reimburse Seller for any consent fee paid to the Licensee as consideration for the Consent in an amount not to exceed $100,000.

 

(b)In the event the Consent is not received within 30 days following the Closing Date, Seller shall pay to Buyer, directly from the proceeds to Seller of the TGF-beta Phase 1 Milestone, an amount equal to $4,000,000 promptly, and in no event more than two (2) Business Days, following receipt of the TGF-beta Phase 1 Milestone by Seller or XOMA from Novartis, by wire transfer to the Deposit Account.

 

(c)Without limiting Buyer’s right to the payment referred to in clause (b) above in the circumstances set forth therein, in the event the Consent is received more than 30 days, but less than

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60 days, after the Closing Date, Buyer agrees to purchase all of Seller’s right, title and interest in, to and under the Assigned Rights on the terms and conditions set forth in this Agreement for the Full Purchase Price so long as the conditions set forth in clauses (a), (b), (f) and (g) of Section 7.02 are satisfied or waived by Buyer in its sole discretion.

 

(d)Without limiting Buyer’s right to the payment referred to in clause (b) above in the circumstances set forth therein, in the event the