Exhibit 10.1

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

by and between

 

THERAVANCE, INC.

 

and

 

THERAVANCE BIOPHARMA, INC.

 

Dated as of June 1, 2014

 

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Table of Contents

 

 

 

PAGE

Article I Definitions

1

 

 

 

Article II The Separation

12

2.1

General

12

2.2

Transfer of SpinCo Assets and Assumption of SpinCo Liabilities

12

2.3

Governmental Approvals; Consents

13

2.4

Deferred Transfers/Assumptions

13

2.5

Calculation, Adjustment and Payment of Selected Liabilities

14

2.6

Termination of Agreements

15

2.7

Disclaimer of Representations and Warranties

15

 

 

 

Article III The Distribution

16

3.1

The Distribution

16

3.2

Actions in Connection with the Distribution

16

3.3

Conditions to Distribution

18

3.4

Fractional Shares

18

 

 

 

Article IV Insurance

19

4.1

Policies and Rights Included Within the SpinCo Assets

19

4.2

Post-Effective Time Claims

19

4.3

ParentCo Policies

20

 

 

 

Article V Releases And Indemnification

20

5.1

Release of Pre-Distribution Claims

20

5.2

Indemnification by SpinCo

22

5.3

Indemnification by ParentCo

22

5.4

Reduction for Insurance Proceeds and Other Recoveries

23

5.5

Procedures For Indemnification of Third-Party Claims

23

5.6

Additional Matters

25

5.7

Survival of Indemnities

25

 

 

 

Article VI Certain Covenants And Other Agreements Of The Parties

25

6.1

Legal Names

25

6.2

Preparation of Opening SpinCo Balance Sheet

26

 

 

 

Article VII Confidentiality

26

7.1

Confidentiality

26

7.2

Protective Arrangements

27

 

 

 

Article VIII Access To Information And Services

27

8.1

Provision of Books and Records

27

8.2

Access to Information

28

8.3

Production of Witnesses

28

8.4

Reimbursement

28

 

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8.5

Privileged Matters

28

8.6

GSK Agreements

30

 

 

 

Article IX Dispute Resolution

30

9.1

Disputes and Negotiation

30

9.2

Dispute Resolution and Arbitration

31

9.3

Confidentiality

32

9.4

Limitation of Liability

32

 

 

 

Article X Further Assurances

32

10.1

Further Assurances

32

 

 

 

Article XI Termination

33

11.1

Termination

33

 

 

 

Article XII Miscellaneous

33

12.1

Governing Law; Jurisdiction

33

12.2

Assignability

33

12.3

Third Party Beneficiaries

33

12.4

Notices

34

12.5

Severability

34

12.6

Expenses

34

12.7

Survival of Covenants

35

12.8

Waivers of Default

35

12.9

Specific Performance

35

12.10

Waiver of Jury Trial

35

12.11

Amendments

35

12.12

Schedules

35

12.13

Construction

35

12.14

Counterparts

36

 

ATTACHMENTS

Attachment 1.4 — List of Ancillary Agreements

Attachment 1.9 — Consents

Attachment 1.20(a) — Excluded Trademarks

Attachment 1.20(b) — Excluded Patents and Patent Applications

Attachment 1.20(c) — Excluded Domain Names

Attachment 1.23 —FF

Attachment 1.43 — ParentCo Fixed Assets

Attachment 1.60(b) — SpinCo Patents and Patent Applications

Attachment 1.60(c) — SpinCo Trademarks

Attachment 1.60(d) — SpinCo Domain Names

Attachment 1.60(g) — Registrations

Attachment 1.60(k) — Assumed Contracts

Attachment 1.62 — SpinCo Employees

Attachment 1.63(g) — SpinCo Liabilities

 

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Attachment 1.64 — SpinCo Policies

Attachment 1.80— UMEC

Attachment 1.81 — VI

 

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SEPARATION AND DISTRIBUTION AGREEMENT

 

This SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”), dated as of
June 1, 2014, is entered into by and between Theravance, Inc., a Delaware
corporation (“ParentCo”), and Theravance Biopharma, Inc., a Cayman Islands
corporation (“SpinCo”) (each a “Party” and collectively, the “Parties”). 
Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in Article I.

 

RECITALS

 

WHEREAS, the Board of Directors of ParentCo has determined that it is
appropriate, desirable and in the best interests of ParentCo and its
stockholders to separate its two businesses, the ParentCo Business and the
SpinCo Business, into ParentCo and SpinCo respectively, two publicly traded
companies, by means of the transfer/assumption of certain assets and liabilities
from ParentCo to SpinCo or any of the SpinCo Subsidiaries, all as more fully
described in this Agreement and the Ancillary Agreements (the “Separation”);

 

WHEREAS, in order to effect the Separation, the Board of Directors of ParentCo
has further determined that it is appropriate, desirable and in the best
interests of ParentCo and its stockholders to distribute to holders of shares of
ParentCo Common Stock, on a pro rata basis, all of the issued and outstanding
ordinary shares, par value $0.00001 per share, of SpinCo, all as more fully
described in this Agreement and the Ancillary Agreements (such shares, the
“SpinCo Common Shares”, and such distribution, the “Distribution”); and

 

WHEREAS, the Parties intend in this Agreement to set forth the principal
corporate arrangements between the Parties with respect to the Separation and
the Distribution.

 

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions,
covenants and provisions of this Agreement, ParentCo and SpinCo mutually
covenant and agree as follows:

 

Article I

 

DEFINITIONS

 

1.1                               “Action” shall mean any demand, action, cause
of action, suit, countersuit, arbitration, inquiry, proceeding or investigation
by or before any federal, state, local, foreign or international Governmental
entity or any arbitration or mediation tribunal.

 

1.2                               “Affiliate” of a Person shall mean any firm,
individual, corporation, business trust, joint venture, association, company,
limited liability company, partnership, or other organization or entity, that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control (provided that such common control is
not by a natural person) with such specified Person.  As used herein, “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities or other interests, by contract or otherwise;
provided that if control is deemed solely on the basis of ownership of voting
securities or other interests, such ownership must be in excess of fifty percent
(50%) of the then-

 

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outstanding shares of common stock or the combined voting power of such Person. 
For the sake of clarity, neither SpinCo nor any of the SpinCo Subsidiaries shall
be considered Affiliates of ParentCo and the ParentCo Subsidiaries under this
Agreement and vice versa.

 

1.3                               “Agent” shall have the meaning set forth in
Section 3.1(a).

 

1.4                               “Ancillary Agreements” shall mean all of the
contracts, obligations, indentures, agreements, leases, purchase orders,
commitments, permits, licenses, notes, bonds, mortgages, arrangements or
undertakings (whether written or oral and whether express or implied) that are
legally binding on either Party or any part of its property under applicable Law
entered into in connection with the transactions contemplated hereby, including
the documents listed on Attachment 1.4, to be delivered by SpinCo and ParentCo
in connection with the Separation.

 

1.5                               “ANORO” means (a) the combination medicine
comprising UMEC with VI, with no other therapeutically active component, and
explicitly excluding either component as a monotherapy, and which is proposed,
as of the date hereof, to be sold under the brand name “ANORO® ELLIPTA®”, and
(b) any and all product improvements, additional claims, line extensions, dosage
changes and alternate delivery systems, in each case, with respect to only such
combination medicine set forth in subsection (a) comprising UMEC with VI, with
no other therapeutically active component (and explicitly excluding either
component as a monotherapy).

 

1.6                               “BREO/RELVAR” means (a) the combination
medicine comprising FF and VI, with no other therapeutically active component,
and explicitly excluding either component as a monotherapy, and which is
proposed, as of the date hereof, to be sold under the brand name
“BREO® ELLIPTA®” in the United States and “RELVAR® ELLIPTA®” in the European
Union and Japan, and (b) any and all product improvements, additional claims,
line extensions, dosage changes and alternate delivery systems, in each case,
with respect only to such combination medicine set forth in subsection
(a) comprising FF and VI, with no other therapeutically active component (and
explicitly excluding either component as a monotherapy).

 

1.7                               “Collaboration Agreement” means that certain
Collaboration Agreement, dated as of November 14, 2002, by and between ParentCo
and Glaxo Group Limited, including all amendments and supplements thereto.

 

1.8                               “Combined Books and Records” shall have the
meaning set forth in Section 8.1(b).

 

1.9                               “Consents” shall mean any and all consents,
waivers or approvals from, or notification requirements to, any Third Parties,
including those set forth on Attachment 1.9.

 

1.10                        “Contract” shall mean any contract, obligation,
indenture, agreement, lease, purchase order, commitment, permit, license, note,
bond, mortgage, arrangement or undertaking (whether written or oral and whether
express or implied) that is legally binding on any Person or any part of its
property under applicable Law, but excluding this Agreement and any Ancillary
Agreement save as otherwise expressly provided in this Agreement or any
Ancillary Agreement.

 

1.11                        “Convertible and Non-Recourse Debt” shall mean the
(i) 2.125% Convertible Subordinated Notes due 2023 issued by ParentCo and
(ii) notes issued by LABA Royalty Sub

 

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LLC, a wholly owned subsidiary of ParentCo, pursuant to April 17, 2014 note
purchase agreements relating to the private placement of $450.0 million
aggregate principal amount of non-recourse 9% fixed rate term notes due 2029.

 

1.12                        “Distribution” shall have the meaning set forth in
the recitals hereto.

 

1.13                        “Distribution Date” shall mean the date on which the
Distribution to the stockholders of ParentCo is effective, which is June 2,
2014.

 

1.14                        “Effective Time” shall mean 12:01 a.m. Pacific
Daylight Time on the day immediately preceding the Distribution Date.

 

1.15                        “Environmental Laws” shall mean any environmental
laws, rules and regulations of any jurisdiction.

 

1.16                        “Environmental Liabilities” shall mean any
Liabilities relating to Environmental Laws.

 

1.17                        “Exchange” shall mean the NASDAQ Global Market.

 

1.18                        “Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time that reference is made thereto.

 

1.19                        “Excluded Assets” shall mean all assets solely
relating to the ParentCo Business, including (a) the Excluded Intellectual
Property and the Excluded Products; (b) and any and all Contracts of ParentCo
(including, without limitation and for the avoidance of doubt, the Collaboration
Agreement) other than the Assumed Contracts and the Leases; (c) all of
ParentCo’s right, title and interest in and to any and all other assets that are
expressly contemplated to be retained by ParentCo by this Agreement or any
Ancillary Agreement (or the Attachments and Schedules hereto or thereto),
including all of the TRC Class A Units and 750 of the TRC Class C Units; (d) all
of the assets held by TRC; and (e) all of the capital stock of ParentCo
Subsidiary.

 

1.20                        “Excluded Intellectual Property” shall mean (a) the
Trademarks listed in Attachment 1.20(a); (b) the patents and patent applications
listed in Attachment 1.20(b), and any patents of addition, re-examinations,
reissues, extensions, granted supplementary protection certifications,
substitutions, confirmations, registrations, revalidations, revisions, additions
and the like, of or to said patents and any and all divisionals, continuations
and continuations-in-part, and any patents issuing therefrom, as well as any
patent applications related thereto; (c) the domain names listed in
Attachment 1.20(c), (d) all U.S. and foreign copyrights and copyrightable
subject matter solely related to the ParentCo Business (but excluding the SpinCo
Copyrights), whether registered or unregistered, published or unpublished,
statutory or common law, and all Actions against past, present, and future
infringement, misappropriation, or other violation of the foregoing; and (e) all
other Intellectual Property solely related to the ParentCo Business.

 

1.21                        “Excluded Liabilities” shall mean (a) any and all
Liabilities of ParentCo and its Affiliates, relating solely to the ParentCo
Business or arising out of or relating to the Excluded

 

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Assets, (b) any and all Liabilities of ParentCo and its Affiliates, relating to
ParentCo’s guaranty of TRC’s performance under the portion of the Collaboration
Agreement assigned to TRC and under the Strategic Alliance Agreement, (c) any
and all Liabilities of ParentCo and its Affiliates relating to, arising out of
or resulting from ParentCo’s performance or obligations under any Ancillary
Agreement or this Agreement and (d) the Convertible and Non-Recourse Debt.

 

1.22                        “Excluded Products” shall mean any products
developed under the Collaboration Agreement and under the Strategic Alliance
Agreement.

 

1.23                        “FF” shall mean the inhaled corticosteroid known as
Fluticasone Furorate (with the chemical structure as set forth in Attachment
1.23) or an ester, salt or other noncovalent derivative thereof.

 

1.24                        “Form 10” shall mean the registration statement on
Form 10 filed by SpinCo with the SEC relating to the SpinCo Common Shares, as
amended from time to time.

 

1.25                        “Governmental Approvals” shall mean any notices,
reports or other filings to be made, or any consents, registrations, approvals,
permits or authorizations to be obtained from, any Governmental Entity.

 

1.26                        “Governmental Entity” shall mean any federal, state,
local, foreign or international court, government department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
entity.

 

1.27                        “IND” shall mean an investigational new drug
application, including any amendments and supplements thereto, and all reports,
correspondence and other submissions related thereto.

 

1.28                        “Indemnifying Party” shall have the meaning set
forth in Section 5.4(a).

 

1.29                        “Indemnitee” shall have the meaning set forth in
Section 5.4(a).

 

1.30                        “Indemnity Payment” shall have the meaning set forth
in Section 5.4(a).

 

1.31                        “Information” shall mean information, whether or not
patentable or copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies, reports, records,
books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), communications and materials
otherwise related to or made or prepared in connection with or in preparation
for any legal proceeding, and other technical, financial, employee or business
information or data.

 

1.32                        “Insurance Proceeds” shall mean those monies
(a) received by an insured from an unaffiliated Third Party insurer under any
ParentCo Pre-Distribution Policy, or (b) paid by such Third Party insurer on
behalf of an insured under any ParentCo Pre-Distribution Policy, in either

 

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case net of any applicable premium adjustment, retrospectively-rated premium,
deductible, retention, or cost of reserve paid or held by or for the benefit of
such insured.

 

1.33                        “Intellectual Property” shall mean all intellectual
property and industrial property rights of any kind or nature, including all
United States and foreign (a) patents, patent applications, patent disclosures,
and all related continuations, continuations-in-part, divisionals, reissues,
re-examinations, substitutions and extensions thereof, (b) Trademarks and all
goodwill associated therewith, (c) copyrights and copyrightable subject matter,
whether statutory or common law, registered or unregistered and published or
unpublished, (d) rights of publicity, (e) moral rights and rights of attribution
and integrity, (f) rights in Software, (g) trade secrets and all other
confidential and proprietary information, know-how, inventions, improvements,
processes, formulae, models and methodologies, (h) rights to domain names,
(i) rights to personal information, (j) telephone numbers and internet protocol
addresses, (k) applications and registrations for the foregoing, and (l) Actions
against past, present, and future infringement, misappropriation, or other
violation of the foregoing.

 

1.34                        “Law” shall mean any United States or non-United
States federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, rule, code, order, requirement or rule of
law (including common law).

 

1.35                        “Leases” shall mean that certain (i) Amended and
Restated Lease Agreement, 951 Gateway Boulevard, between ParentCo and HMS
Gateway Office L.P., dated as of January 1, 2001 and (ii) Lease Agreement, 901
Gateway Boulevard, between ParentCo and HMS Gateway Office L.P., dated as of
January 1, 2001, in each case, including all amendments and supplements thereto.

 

1.36                        “Liabilities” shall mean any and all debts,
liabilities, and obligations, whether accrued or fixed, known or unknown,
absolute or contingent, matured or unmatured, reserved or unreserved, or
determined or determinable of any kind or nature whatsoever, including those
arising under any Law or Action, whether asserted or unasserted, or order, writ,
judgment, injunction, decree, stipulation, determination or award entered by or
with any Governmental entity, and those arising under any Contract or any fines,
damages or equitable relief which may be imposed in connection with any of the
foregoing and including all costs and expenses related thereto.

 

1.37                        “NDA” shall mean a new drug application, including
any amendments or supplements thereto, and all reports, correspondence and other
submissions related thereto.

 

1.38                        “Opening SpinCo Balance Sheet” shall mean the
combined balance sheet of SpinCo, dated as of the Distribution Date, prepared on
the same basis as the unaudited pro forma condensed combined balance sheet,
dated December 31, 2013, included in the Form 10.

 

1.39                        “ParentCo Business” shall mean the pharmaceutical
royalty management business of ParentCo, other than the SpinCo Business, as
conducted or proposed to be conducted by ParentCo prior to or as of the
Effective Time.  For the avoidance of doubt, the ParentCo Business includes the
management of ParentCo’s rights to receive payments under the Collaboration
Agreement and Strategic Alliance Agreement with respect to the Excluded
Products, including

 

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as a result of ownership of the TRC Class A Units and TRC Class C Units, rights
to receive distributions from TRC with respect to the TRC Class A Units and TRC
Class C Units, and other assets, Contracts and Liabilities related the
foregoing.

 

1.40                        “ParentCo Common Stock” shall mean the Common Stock,
$0.01 par value per share, of ParentCo.

 

1.41                        “ParentCo Consolidated Balance Sheet” shall have the
meaning set forth in Section 2.5(a).

 

1.42                        “ParentCo Employee” shall mean an active employee or
an employee on vacation or on approved leave of absence (including maternity,
paternity, family, sick leave, salary continuation, qualified military service
under the Uniformed Services Employment and Reemployment Rights Act of 1994, and
leave under the Family Medical Leave Act and other approved leaves) who, on the
Distribution Date, is employed or will be employed by ParentCo.

 

1.43                        “ParentCo Fixed Assets” shall mean the fixed assets
listed on Attachment 1.43 and such other fixed assets of SpinCo with an
aggregate value of no more than $20,000 that the parties may determine within
six (6) months after the Effective Time are reasonably required by ParentCo for
the ParentCo Business.

 

1.44                        “ParentCo General Liability Policies” shall mean all
ParentCo Pre-Distribution Policies that respond to claims on an occurrence
basis.

 

1.45                        “ParentCo Policies” shall mean all ParentCo
Pre-Distribution Policies that respond to claims on a claims-made basis.

 

1.46                        “ParentCo Pre-Distribution Policies” shall mean all
Policies, other than the SpinCo Policies and including the ParentCo General
Liability Policies and the ParentCo Policies, entered prior to or as of the
Effective Time, which are between or among ParentCo and one or more Third
Parties, that benefit either or both the ParentCo Business and the SpinCo
Business.

 

1.47                        “ParentCo Subsidiary” shall mean Advanced Medicine
East, Inc., a Delaware corporation.

 

1.48                        “Party” shall have the meaning set forth in the
preamble hereof.

 

1.49                        “Person” shall mean any natural person, firm,
individual, corporation, business trust, joint venture, association, company,
limited liability company, partnership, or other organization or entity, whether
incorporated or unincorporated, or any governmental entity.

 

1.50                        “Policies” shall mean insurance policies and
insurance Contracts of any kind (other than life and benefits policies or
Contracts), including primary, excess and umbrella policies, comprehensive
general liability policies, director and officer liability, fiduciary liability,
automobile, aircraft, property and casualty, business interruption, workers’
compensation and employee dishonesty insurance policies, bonds and
self-insurance and captive insurance company arrangements, together with the
rights, benefits and privileges thereunder.

 

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1.51                        “Post-Closing Cash” shall have the meaning set forth
in Section 2.5(d).

 

1.52                        “Products” shall mean, individually and
collectively, telavancin and all of the products under development, regardless
of the state of development, by ParentCo, other than the Excluded Products.

 

1.53                        “Record Date” shall mean the close of business on
the date to be determined by the ParentCo Board of Directors as the record date
for the Distribution.

 

1.54                        “SEC” shall mean the United States Securities and
Exchange Commission or any successor agency thereto.

 

1.55                        “Security Interest” shall mean any mortgage,
security interest, pledge, lien, charge, claim, option, right to acquire, voting
or other restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever,
excluding restrictions on transfer under security Laws.

 

1.56                        “Selected Liabilities” shall have the meaning set
forth in Section 2.5(b).

 

1.57                        “Selected Liabilities Statement” shall have the
meaning set forth in Section 2.5(d).

 

1.58                        “Separation” shall have the meaning set forth in the
recitals hereto.

 

1.59                        “Software” shall mean all computer programs (whether
in source code, object code, or other form), algorithms, databases, compilations
and data, and technology supporting the foregoing, and all documentation,
including flowcharts and other logic and design diagrams, technical, functional
and other specifications, and user manuals and training materials related to any
of the foregoing.

 

1.60                        “SpinCo Assets” shall mean:

 

(a)                                 All categories of assets that are reflected
as assets of SpinCo in the unaudited pro forma condensed combined balance sheet
of SpinCo, dated December 31, 2013, included in the Form 10, with the value of
such asset as reflected in the Opening SpinCo Balance Sheet.

 

(b)                                 All of ParentCo’s rights, title and interest
in and to the patents and patent applications listed in Attachment 1.60(b), and
any patents of addition, re-examinations, reissues, extensions, granted
supplementary protection certifications, substitutions, confirmations,
registrations, revalidations, revisions, additions and the like, of or to said
patents and any and all divisionals, continuations and continuations-in-part,
and any patents issuing therefrom, as well as any patent applications related
thereto and all Actions against past, present, and future infringement,
misappropriation, or other violation of the foregoing.

 

(c)                                  All of ParentCo’s rights, title and
interest in and to the Trademarks listed on Attachment 1.60(c), together with
(i) all common law rights to such Trademarks, (ii) the goodwill of the SpinCo
Business symbolized by such Trademarks, (iii) all Actions for, or arising

 

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from any infringement, dilution, unfair competition, or other violation,
including past infringement, dilution, unfair competition, or other violation,
of such Trademarks, and (iv) all rights corresponding thereto throughout the
world.

 

(d)                                 All of ParentCo’s rights, title and interest
in and to the domain names listed in Attachment 1.60(d) and all Actions against
past, present, and future infringement, misappropriation, or other violation of
the foregoing.

 

(e)                                  All U.S. and foreign copyrights and
copyrightable subject matter related to the SpinCo Business, whether registered
or unregistered, published or unpublished, statutory or common law, including
all related registrations, applications and common law rights, in any labels,
product marketing materials or other copyrighted works related to the SpinCo
Business and all Actions against past, present, and future infringement,
misappropriation, or other violation of the foregoing (“SpinCo Copyrights”).

 

(f)                                   All of ParentCo’s rights, title and
interest in and to all Intellectual Property, including trade secrets, not
hereto forth described in the definition of SpinCo Assets that are reasonably
likely to be used in the SpinCo Business, but excluding the Excluded
Intellectual Property.

 

(g)                                  With respect to the Products, all
(i) material regulatory filings and regulatory approvals, registrations and
governmental authorizations, (ii) each NDA, (iii) each IND or equivalent,
(iv) all licenses and permits relating to the Products, and (v) all applications
to the FDA or the comparable foreign law or bodies in effect or pending at the
Effective Time, all as set forth on Attachment 1.60(g), and all other
information contained therein or materials relating thereto (collectively, the
“Registrations”).

 

(h)                                 All SpinCo Books and Records.  “SpinCo Books
and Records” shall mean books and records which relate to SpinCo, the SpinCo
Assets, the SpinCo Liabilities or the conduct of the SpinCo Business.

 

(i)                                     All pre-clinical and clinical data
related to the SpinCo Business and which is contained in ParentCo’s databases or
otherwise in ParentCo’s possession or control.

 

(j)                                    All fixed assets of ParentCo as of the
Effective Time except for the ParentCo Fixed Assets.

 

(k)                                 All rights and benefits of ParentCo in
existence as of the Effective Time or arising after the Effective Time under the
Contracts listed in Attachment 1.60(k) (the “Assumed Contracts”), including any
rights to Intellectual Property or SpinCo Copyrights contained therein.  The
Assumed Contracts shall be deemed to include all purchase, work and change
orders related thereto.

 

(l)                                     All of ParentCo’s rights, title and
interest in and to the Trial Materials.

 

(m)                             All of ParentCo’s rights, title and interest in
and to the Trial Study Reports.

 

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(n)                                 Cash and cash equivalents in the amount of
three hundred ninety three million U.S. Dollars ($393,000,000) in the aggregate
plus the amount of the Post-Closing Cash, as determined in accordance with
Section 2.5.

 

(o)                                 All of ParentCo’s rights under the Leases,
including the right to possess, use and occupy the Premises and the Subleased
Premises (as defined in the Leases), and all of ParentCo’s rights, title and
interest in and to the Lessee Improvements and the Sublessee Improvements (as
those terms are defined in the Leases).

 

(p)                                 Any and all interest in the SpinCo
Subsidiaries, including, without limitation, all of the capital stock of
Theravance UK Limited.

 

(q)                                 All of the TRC Class B Units and 6,375 TRC
Class C Units.

 

(r)                                    SpinCo Policies.

 

(s)                                   All of ParentCo’s rights, title and
interest in and to any and all other assets that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Attachments and Schedules
hereto or thereto) to be transferred to SpinCo or any of the SpinCo
Subsidiaries.

 

For the avoidance of doubt and notwithstanding anything to the contrary herein,
SpinCo Assets shall not include (i) any cash or cash equivalents other than as
described in clause (n) above, (ii) any net operating losses, net operating loss
carry-forwards or other Tax attributes of ParentCo, whether or not relating to
SpinCo or the SpinCo Business, or (iii) the Excluded Assets.

 

1.61                        “SpinCo Business” shall mean the business of
ParentCo related to (i) the discovery, development and commercialization of
medicines and technologies related thereto, including the Products (but
excluding the Excluded Products), as conducted or proposed to be conducted by
ParentCo prior to or as of the Effective Time and (ii) ownership of all of the
TRC Class B Units and 6,375 TRC Class C Units.

 

1.62                        “SpinCo Employees” shall mean all employees of
Theravance Biopharma US, Inc., a Delaware corporation, listed on
Attachment 1.62.

 

1.63                        “SpinCo Liabilities” shall mean:

 

(a)                                 All categories of Liabilities that are
reflected as liabilities of SpinCo in the unaudited pro forma condensed combined
balance sheet of SpinCo, dated December 31, 2013, included in the Form 10 with
the value of such liabilities as reflected in the Opening SpinCo Balance Sheet.

 

(b)                                 All Liabilities under the Assumed Contracts.

 

(c)                                  All Liabilities under the Leases.

 

(d)                                 All Liabilities under the Registrations
arising after the Effective Time.

 

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(e)                                  All other Liabilities (other than Excluded
Liabilities) arising out of the conduct of ParentCo’s business prior to the
Effective Time, other than liabilities solely related to the ParentCo Business,
including Liabilities arising out of the conduct of the SpinCo Business or
arising out of or related to the SpinCo Assets.

 

(f)                                   Any and all Environmental Liabilities.

 

(g)                                  Any and all Liabilities expressly set forth
on Attachment 1.63(g).

 

(h)                                 The Selected Liabilities, as described in
Section 2.5.

 

(i)                                     Any and all other Liabilities of SpinCo
relating to, arising out of or resulting from SpinCo’s performance or
obligations under any Ancillary Agreement or this Agreement.

 

(j)                                    Any and all other Liabilities that are
expressly contemplated by this Agreement or any Ancillary Agreement (or the
Attachments and Schedules hereto or thereto) to be transferred to and assumed by
SpinCo or any of the SpinCo Subsidiaries.

 

For the avoidance of doubt, SpinCo Liabilities shall not include the Excluded
Liabilities.

 

1.64                        “SpinCo Policies” shall mean all Policies, current
or past, which are owned or maintained by or on behalf of ParentCo or its
Subsidiaries, which relate solely to the SpinCo Business and are assignable to
SpinCo, as listed on Attachment 1.64.

 

1.65                        “SpinCo Subsidiaries” shall mean Theravance
Biopharma US, Inc., a Delaware corporation, Theravance Biopharma
Antibiotics, Inc., a Cayman Islands exempted company, Theravance Biopharma
R&D, Inc., a Cayman Islands exempted company, Theravance Biopharma R&D IP, LLC,
a Delaware limited liability company, Theravance Biopharma Antibiotics IP, LLC,
a Delaware limited liability company, and Theravance UK Limited, a company
organized under the laws of the United Kingdom.

 

1.66                        “Strategic Alliance Agreement” means that certain
Strategic Alliance Agreement, dated as of March 30, 2004, by and between
ParentCo and Glaxo Group Limited, including all amendments and supplements
thereto.

 

1.67                        “Subsidiary” of a Person shall mean any firm,
individual, corporation, business trust, joint venture, association, company,
limited liability company, partnership, or other organization or entity, whether
incorporated or unincorporated of which at least a majority of the securities or
interests having by the terms thereof ordinary voting power to elect at least a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization, that is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; provided,
however, that no Person that is not directly or indirectly wholly owned by any
other Person shall be a Subsidiary of such other Person unless such other Person
controls, or has the right, power or ability to control, that Person.  For the
sake of clarity, SpinCo shall not be considered a Subsidiary of ParentCo under
this Agreement, and TRC shall be considered a Subsidiary of ParentCo.

 

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1.68                        “Third Party” shall mean any Person other than
ParentCo, any ParentCo Affiliate, SpinCo and any SpinCo Affiliate.

 

1.69                        “Third-Party Claim” shall have the meaning set forth
in Section 5.5(a).

 

1.70                        “Trademarks” shall mean all trademarks, service
marks, trade names, names, slogans, taglines, logos, design marks, trade dress,
product designs, and product packaging, including all applications for and
registrations of the foregoing, and including those at common law.

 

1.71                        “Transfer” shall have the meaning set forth in
Section 2.2(a).

 

1.72                        “TRC” shall mean Theravance Respiratory Company,
LLC, a Delaware limited liability company.

 

1.73                        “TRC Class A Units” shall mean the Class A
membership units in TRC.

 

1.74                        “TRC Class B Units” shall mean the Class B
membership units in TRC.

 

1.75                        “TRC Class C Units” shall mean the Class C
membership units in TRC.

 

1.76                        “TRC Operating Agreement” shall mean that certain
Limited Liability Company Agreement of Theravance Respiratory Company, LLC,
dated as of May 31, 2014, by and between ParentCo and SpinCo.

 

1.77                        “Trial” shall mean a pre-clinical or clinical trial
related to the Products.

 

1.78                        “Trial Materials” shall mean the Products and the
placebo for each of these Products for use in Trials, whether in bulk,
formulated or finished form and whether or not in existence at the Effective
Time.

 

1.79                        “Trial Study Reports” shall mean all reports or
summaries of all data, records and documents resulting from the Trials.

 

1.80                        “UMEC” means the long-acting muscarinic antagonist
umeclidinium bromide (with the chemical structure as set forth in Attachment
1.80) or an ester, salt or other noncovalent derivative thereof.

 

1.81                        “VI” means the long-acting beta2 agonist vilanterol
(with the chemical structure as set forth in Attachment 1.81) or an ester, salt
or other noncovalent derivative thereof.

 

1.82                        “VI Monotherapy” means (a) VI, solely as a
monotherapy (i.e., excluding VI in combination with any one or more other
therapeutically active component(s)), and (b) any and all product improvements,
additional claims, line extensions, dosage changes and alternate delivery
systems, in each case, with respect to only VI solely as a monotherapy (i.e.,
excluding VI in combination with any one or more other therapeutically active
component(s)).

 

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Article II

 

THE SEPARATION

 

2.1                               General.  Subject to the terms and conditions
of this Agreement, the Parties shall use, and shall cause any of their
respective Subsidiaries to use, their respective reasonable best efforts to
consummate the transactions contemplated hereby.

 

2.2                               Transfer of SpinCo Assets and Assumption of
SpinCo Liabilities.  Subject to Sections 2.3, 2.4 and 2.5:

 

(a)                                 At the Effective Time, ParentCo shall, and
hereby does, transfer, contribute, assign, distribute and convey, or cause to be
transferred, contributed, assigned, distributed and conveyed, to SpinCo and/or
its designated Subsidiaries all of ParentCo’s right, title and interest in and
to the SpinCo Assets (the “Transfer”).

 

(b)                                 At the Effective Time, SpinCo shall, and
hereby does, on behalf of itself and certain of its Subsidiaries, accept the
Transfer from ParentCo.

 

(c)                                  On or before the Distribution Date,
ParentCo shall transfer, or cause to be transferred, the SpinCo Employees to
SpinCo and/or its designated Subsidiaries, as the case may be and as more
particularly set forth on Attachment 1.62.

 

(d)                                 Except as otherwise specifically set forth
in this Agreement or any Ancillary Agreement, at the Effective Time SpinCo
shall, and hereby does, accept, assume or, as applicable, retain (on behalf of
itself and /or its designated Subsidiaries) all the SpinCo Liabilities and shall
after the Effective Time perform, discharge and fulfill (or cause its
Subsidiaries to perform, discharge and fulfill), in accordance with their
respective terms, all the SpinCo Liabilities, in each case, unless specified
otherwise in the definition of SpinCo Liabilities, regardless of (i) when or
where such Liabilities arose or arise, (ii) where or against whom such
Liabilities are asserted or determined, (iii) which entity is named in any
action associated with any Liability, and (iv) whether the facts on which they
are based occurred prior to, on or after the Effective Time (the “Assumption”). 
Notwithstanding the foregoing, SpinCo shall not assume (on behalf of itself and
/or its designated Subsidiaries) any Liability attributable to the failure of
ParentCo or its officers, directors, employees, agents or Affiliates to
materially perform ParentCo’s obligations to SpinCo pursuant to this Agreement
or the Ancillary Agreements.

 

(e)                                  If at any time, after the Effective Time,
the Parties agree that ParentCo or its Subsidiaries possess any assets or
liabilities related to the SpinCo Business, ParentCo shall as promptly as
practicable transfer or cause to be transferred, at SpinCo’s expense, and SpinCo
shall accept such transfer and/or assume (on behalf of itself and /or its
designated Subsidiaries), for no additional consideration, such SpinCo Asset
and/or Liability, including any and all economic benefits or detriments
generated from such SpinCo Asset and/or Liabilities after the Effective Time, to
SpinCo.  Each such transferred asset or liability shall be deemed a SpinCo Asset
or a SpinCo Liability, respectively, and shall be subject to the terms and
conditions of this Agreement applicable thereto.

 

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(f)                                   If at any time, after the Effective Time,
the Parties agree that SpinCo or its Subsidiaries possess any assets or
liabilities solely related to the ParentCo Business, SpinCo shall as promptly as
practicable transfer or cause to be transferred (on behalf of itself and /or its
designated Subsidiaries), at ParentCo’s expense, and ParentCo shall accept such
transfer and/or assume, for no consideration, such ParentCo Asset and/or
Liability, including any and all economic benefits or detriments generated from
such ParentCo Asset and/or Liabilities after the Effective Time, to ParentCo. 
Each such transferred asset or liability shall be deemed a ParentCo Asset or a
ParentCo Liability, respectively, and shall be subject to the terms and
conditions of this Agreement applicable thereto.

 

(g)                                  In furtherance of the Transfer and the
assumption of the SpinCo Liabilities by SpinCo as set forth above, and
simultaneously with the execution and delivery of this Agreement (i) ParentCo
shall execute and deliver such bills of sale, stock powers, certificates of
title, assignments of contracts and other instruments of transfer, conveyance
and assignment as and to the extent necessary to evidence the Transfer, and
(ii) SpinCo (on behalf of itself and /or its designated Subsidiaries) shall
execute and deliver to ParentCo such bills of sale, stock powers, certificates
of title, assumptions of contracts, indemnity agreements and other instruments
of assumption as and to the extent necessary to evidence the valid and effective
Assumption.

 

2.3                               Governmental Approvals; Consents.

 

(a)                                 To the extent that the Transfer or the
Assumption requires any Governmental Approvals, the Parties shall use reasonable
best efforts to obtain any such Governmental Approvals.  If and to the extent
that the Transfer or the Assumption would be a violation of applicable laws or
require any Governmental Approval in connection with the Separation or the
Distribution, then, unless ParentCo shall otherwise determine, the Transfer to
or Assumption by SpinCo of such SpinCo Assets or SpinCo Liabilities, as the case
may be, shall be automatically deemed deferred and any such purported Transfer
or the Assumption shall be null and void until such time as all legal
impediments are removed and/or each of such Governmental Approval has been
obtained.

 

(b)                                 The Parties shall use reasonable best
efforts to obtain any Consents required in connection with the transactions
contemplated by this Agreement.  Notwithstanding the foregoing, no Party shall
be obligated to pay any consideration therefor to any Third Party from whom any
such Consent, substitution or amendment is requested (unless such Party is fully
reimbursed by the requesting Party).

 

2.4                               Deferred Transfers/Assumptions.

 

(a)                                 If the Transfer of any SpinCo Asset or
Assumption intended to be Transferred and assumed hereunder is not consummated
prior to or at the Effective Time, whether as a result of the provisions of
Section 2.3 or for any other reason, then ParentCo shall thereafter hold such
SpinCo Asset for the use and benefit of SpinCo if permitted by Law.

 

(b)                                 If and when the Consents and/or Governmental
Approvals, or any other impediments to Transfer or Assumption, the absence of
which caused the deferral of Transfer of

 

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any SpinCo Asset or Assumption pursuant to Section 2.3 or otherwise, are
obtained or removed (as appropriate), the Transfer of the applicable SpinCo
Asset or Assumption shall be effected in accordance with the terms of this
Agreement and/or the applicable Ancillary Agreement.

 

(c)                                  With respect to any SpinCo Asset retained
by ParentCo due to the deferral of the Transfer of such SpinCo Asset, ParentCo
shall take such actions with respect to such SpinCo Asset as may be reasonably
requested by SpinCo (and SpinCo shall fully reimburse ParentCo for all costs and
expenses associated therewith).

 

(d)                                 If the Parties are unable to obtain, or to
cause to be obtained, any such required Governmental Approvals, Consents,
release, substitution or amendment pursuant to Section 2.3 or otherwise,
ParentCo shall (i) continue to be bound by such Contract, license or other
obligation, which shall not constitute a Liability of ParentCo (unless not
permitted by Law or the terms thereof), (ii) as agent or subcontractor for
SpinCo, pay, perform and discharge fully all the obligations or other SpinCo
Liabilities thereunder after the Effective Time, and (iii) deliver to SpinCo any
payments, benefits or other consideration received by ParentCo under such
Contract, license or other obligation; provided, however, that ParentCo shall
not be obligated to extend, renew or otherwise cause such Contract, license or
other obligation to remain in effect beyond the term in effect as of the
Effective Time.  SpinCo shall have the right to direct ParentCo to exercise
ParentCo’s rights under such Contract, license or other obligation for the
benefit of SpinCo.  SpinCo shall fully indemnify ParentCo and its Affiliates,
officers, directors, employees, agents and hold each of them harmless against
any and all obligations or SpinCo Liabilities arising in connection therewith
and also for any actions requested by SpinCo pursuant to Section 2.4(c),
provided, however, that SpinCo shall have no obligation to indemnify ParentCo
with respect to any matter to the extent that ParentCo has engaged in any
violation of Law or fraud in connection therewith.  ParentCo shall, without
further consideration, promptly pay and remit, or cause to be promptly paid or
remitted, to SpinCo, all money, rights and other consideration received by it or
any of its Subsidiaries in respect of such performance on behalf of SpinCo
(unless any such consideration is an Excluded Asset of ParentCo pursuant to this
Agreement).  If and when any such Governmental Approval, Consent, release,
substitution or amendment shall be obtained or such agreement, lease, license or
other rights or obligations shall otherwise become assignable or capable of
novation, ParentCo shall promptly assign, or cause to be assigned, all rights,
obligations and other SpinCo Liabilities thereunder of ParentCo’s to SpinCo or
its designated Subsidiary without payment of any further consideration and
SpinCo (or its designated Subsidiary, as applicable), without the payment of any
further consideration, shall assume such rights and obligations and other SpinCo
Liabilities.

 

2.5                               Calculation, Adjustment and Payment of
Selected Liabilities.

 

(a)                                 “ParentCo Consolidated Balance Sheet” shall
mean the unaudited consolidated balance sheet of ParentCo, dated as of the day
immediately preceding the Distribution Date, prepared on a basis consistent with
the basis on which the unaudited consolidated balance sheet included in
ParentCo’s Quarterly Report on Form 10-Q for the three-month period ended
March 31, 2014 and filed with the Securities and Exchange Commission on May 7,
2014 was prepared.  As soon as reasonably practicable after the Effective Time,
the Parties shall coordinate in the preparation of the ParentCo Consolidated
Balance Sheet.

 

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(b)                                 “Selected Liabilities” shall mean certain
current liabilities that are both recorded on the ParentCo Consolidated Balance
Sheet in accordance with U.S. generally accepted accounting principles (“GAAP”)
and unpaid as of the Effective Time, in the following categories: accrued
nondiscretionary cash bonus expenses, accrued clinical and development expenses,
and accrued sales and marketing expenses.  For clarity, the Selected Liabilities
shall be recorded on the Opening SpinCo Balance Sheet.

 

(c)                                  Payment of Current Liabilities.  ParentCo
shall under the terms of each respective Contract remit payment to payees for
all current liabilities that are both recorded on the ParentCo Consolidated
Balance Sheet in accordance with GAAP and unpaid as of the Effective Time, with
the exception of (i) the Selected Liabilities and (ii) any deferred revenue, 
deferred rent, accrued vacation expenses, and accrued discretionary cash bonus
expenses that are recorded on the Opening SpinCo Balance Sheet.  SpinCo shall
remit payment for the Selected Liabilities to the payees identified by ParentCo
under the terms of each respective Contract.

 

(d)                                 Initial Selected Liabilities Statement and
Post-Closing Cash.  SpinCo shall provide ParentCo in writing with its estimate
for the amount of the Selected Liabilities within fifteen (15) business days
after the Effective Time (the “Selected Liabilities Statement”).  ParentCo shall
have ten (10) business days following the receipt of the Selected Liabilities
Statement to review and analyze SpinCo’s calculation of the amount set forth in
the Selected Liabilities Statement (the “Post-Closing Cash”) and ParentCo shall
then pay to SpinCo any undisputed part of the Post-Closing Cash.  If ParentCo
does not agree with SpinCo’s calculation of the Post-Closing Cash, the parties
shall work in good faith to resolve the disagreement.  After resolution of such
disagreement, any payments owing either to SpinCo as a result of such adjustment
shall be made within five (5) business days after the agreement of the parties.

 

2.6                               Termination of Agreements.  Except with
respect to this Agreement and the Ancillary Agreements (and agreements expressly
contemplated herein or therein to survive by their terms), the Parties hereby
terminate any and all written or oral agreements, arrangements, commitments or
understandings, between or among them, effective as of the Effective Time; and
each Party shall, at the reasonable request of the other Party, take, or cause
to be taken, such other actions as may be necessary to effect the foregoing.

 

2.7                               Disclaimer of Representations and Warranties. 
THE PARTIES UNDERSTAND AND AGREE THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR
IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT
OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT HEREBY OR
THEREBY, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE SPINCO ASSETS,
SPINCO BUSINESS OR SPINCO LIABILITIES CONTRIBUTED, TRANSFERRED, DISTRIBUTED OR
ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR GOVERNMENTAL
APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR
FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY
SPINCO ASSETS, SPINCO BUSINESS OR SPINCO LIABILITIES OR AS TO THE ABSENCE OF ANY
DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY
CLAIM, INCLUDING ANY

 

15

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ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY
CONTRIBUTION, DISTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT
DELIVERED HEREUNDER TO CONVEY TITLE TO ANY SPINCO ASSET OR THING OF VALUE UPON
THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF.  EXCEPT AS MAY EXPRESSLY
BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH SPINCO ASSETS ARE
BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS AND SO LONG AS THE TRANSFEROR
IS IN COMPLIANCE WITH THE TERMS OF THIS AGREEMENT RELATING TO THE TRANSFER, THE
TRANSFEREE SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL
PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE,
FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY CONSENTS OR
GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT THE REQUIREMENTS OF LAWS,
CONTRACTS, OR JUDGMENTS ARE NOT COMPLIED WITH.

 

Article III

 

THE DISTRIBUTION

 

3.1                               The Distribution.

 

(a)                                 Subject to Section 3.3, on or prior to the
Distribution Date, for the benefit of and distribution to the holders of
ParentCo Common Stock on the Record Date, ParentCo will deliver stock
certificates, endorsed by ParentCo in blank, to the distribution agent,
Computershare (the “Agent”), representing all of the outstanding and issued
SpinCo Common Shares then owned by ParentCo.  ParentCo shall instruct the Agent
to electronically distribute on the Distribution Date the appropriate number of
such SpinCo Common Shares to each such holder or designated transferee or
transferees of such holder.

 

(b)                                 Subject to Section 3.4, each holder of
ParentCo Common Stock on the Record Date (or such holder’s designated transferee
or transferees) will be entitled to receive in the Distribution one (1) SpinCo
Common Share for every three and one-half (3.5) shares of ParentCo Common
Stock.  No investment decision or action by any such stockholder shall be
necessary for such stockholder (or such stockholder’s designated transferee or
transferees) to receive the applicable number of SpinCo Common Shares.

 

(c)                                  SpinCo and ParentCo, as the case may be,
will provide to the Agent any and all information required in order to complete
the Distribution.

 

3.2                               Actions in Connection with the Distribution.

 

(a)                                 SpinCo shall prepare and, in accordance with
applicable Law, file with the SEC and cause to become effective the Form 10,
including amendments, supplements, exhibits and any such other documentation
which is necessary or desirable to effectuate the Separation and the
Distribution, and ParentCo and SpinCo shall each use reasonable best efforts to
obtain all necessary approvals from the SEC with respect thereto as soon as
practicable.

 

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(b)                                 In connection with the Distribution,
ParentCo and SpinCo shall prepare and mail to the holders of ParentCo Common
Stock such information concerning SpinCo, the SpinCo Business, the SpinCo
Assets, the SpinCo Liabilities, operations and management, the Distribution, the
Separation and such other matters as ParentCo shall reasonably determine and as
may be required by Law.

 

(c)                                  SpinCo shall also prepare, file with the
SEC and cause to become effective any registration statements or amendments
thereto required to effect the establishment of, or amendments to, any employee
benefit and other plans necessary or appropriate in connection with the
transactions contemplated by this Agreement, or any of the Ancillary Agreements.

 

(d)                                 ParentCo and SpinCo shall take all such
action as may be necessary or appropriate under the securities or blue sky laws
of the states or other political subdivisions of the United States or of other
foreign jurisdictions in connection with the Distribution.

 

(e)                                  ParentCo and SpinCo shall take all
reasonable steps necessary and appropriate to cause the conditions set forth in
Section 3.3 to be satisfied and to effect the Distribution on the Distribution
Date.

 

(f)                                   SpinCo shall prepare and file, and shall
use reasonable best efforts to have approved and made effective, an application
for the original listing on the Exchange of the SpinCo Common Shares to be
distributed in the Distribution, subject to official notice of distribution.

 

(g)                                  ParentCo shall give the Exchange not less
than ten (10) days’ advance notice of the Record Date in compliance with
Rule 10b-17 under the Exchange Act.

 

(h)                                 ParentCo and SpinCo shall take all actions
necessary to cause, immediately prior to the Distribution, the number of SpinCo
Common Shares issued and outstanding to be increased to equal the number of
SpinCo Common Shares to be distributed to holders of ParentCo Common Stock in
accordance with this Agreement.

 

(i)                                     ParentCo and SpinCo shall cooperate to
change the name, effective on or prior to the Distribution Date, of any entity
that is part of (i) SpinCo and any of its Affiliates so that the word
“Theravance,” without “Biopharma” immediately following, is changed to
“Theravance Biopharma”, and (ii) ParentCo and its Affiliates so that the words
“Theravance Biopharma” are changed to “Theravance” without “Biopharma” as part
of any such name. The parties acknowledge and agree that the name of Theravance
UK Limited will not be changed to “Theravance Biopharma UK Limited” or a
comparable name prior to the Distribution Date, but SpinCo agrees to do so
promptly following the Distribution Date.

 

(j)                                    The Board of Directors of ParentCo and
SpinCo shall have obtained an opinion from a nationally recognized appraisal,
valuation and investment banking firm, in a form reasonably satisfactory to the
Parties, substantially to the effect that each of ParentCo and SpinCo will be
solvent and adequately capitalized immediately after the Distribution and
ParentCo has sufficient surplus under the Laws of Delaware to distribute the
SpinCo Common Shares.

 

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3.3                               Conditions to Distribution.  Subject to
Section 3.2, the following are conditions to the consummation of Distribution. 
The conditions are for the sole benefit of ParentCo and shall not give rise to
or create any duty on the part of ParentCo or the Board of Directors of ParentCo
to waive or not waive any such condition:

 

(a)                                 The Form 10 shall have been declared
effective by the SEC, with no stop order in effect with respect thereto;

 

(b)                                 All permits, registrations and consents
required under the securities or blue sky laws of the states or other political
subdivisions of the United States or of other foreign jurisdictions in
connection with the Separation and the Distribution shall have been obtained and
be in full force and effect;

 

(c)                                  All material Government Approvals and other
consents necessary to consummate the Separation and the Distribution shall have
been obtained and be in full force and effect;

 

(d)                                 No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Separation and the Distribution
shall be in effect and no other event outside the control of ParentCo shall have
occurred or failed to occur that prevents the consummation of the Distribution;

 

(e)                                  The Board of Directors of ParentCo shall
have authorized and approved the Distribution and not withdrawn such
authorization and approval;

 

(f)                                   The Board of Directors of ParentCo shall
have approved the basis of the determination of the Selected Liabilities and
categories of assets and liabilities included in both the Opening SpinCo Balance
Sheet and the ParentCo Consolidated Balance Sheet.

 

(g)                                  The SpinCo Common Shares to be delivered in
the Distribution shall have been approved for listing on the Exchange;

 

(h)                                 ParentCo shall have completed the Transfer
of SpinCo Assets and transfer of SpinCo Employees to SpinCo, and the Assumption
of all the SpinCo Liabilities by SpinCo shall be completed;

 

(i)                                     All Ancillary Agreements shall have been
entered into by the Parties and all other Parties thereto, as applicable, and
shall remain in full force and effect; and

 

(j)                                    No other events or developments shall
have occurred that, in the sole discretion of the Board of Directors of
ParentCo, would result in the Distribution having a material adverse effect on
ParentCo or on the stockholders of ParentCo or not being in the best interest of
ParentCo and its stockholders.

 

3.4                               Fractional Shares.  The Agent and ParentCo
shall, as soon as practicable after the Distribution Date (a) determine the
number of whole and fractional of SpinCo Common Shares allocable to each holder
of record or beneficial owner of ParentCo Common Stock as of close of business
on the Record Date, (b) aggregate all such fractional shares into whole shares
and sell

 

18

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the whole shares obtained thereby in open market transactions at then-prevailing
trading prices on behalf of holders who would otherwise be entitled to
fractional share interests, and (c) distribute to each such holder, or for the
benefit of each such beneficial owner, such holder’s or owner’s ratable share of
the net proceeds of such sale, based upon the average gross selling price per
SpinCo Common Share after making appropriate deductions for any amount required
to be withheld for United States federal income tax purposes.  The Agent, in its
sole discretion, will determine the timing and method of selling such fractional
shares, the selling price of such fractional shares and the broker-dealer to
which such fractional shares will be sold, provided that the designated
broker-dealer is not an Affiliate of ParentCo or SpinCo.  Neither ParentCo nor
SpinCo will pay any interest on the proceeds from the sale of fractional shares.

 

Article IV

 

INSURANCE

 

4.1                               Policies and Rights Included Within the SpinCo
Assets.  Without limiting the generality of the definition of the SpinCo Assets,
the SpinCo Assets shall include (a) the SpinCo Policies and (b) any and all
rights of an insured Party or its Affiliates under each of the ParentCo
Pre-Distribution Policies, to the extent allowable under such Policies,
including rights of indemnity and the right to be defended by or at the expense
of the insurer, with respect to all injuries, losses, Liabilities, damages and
expenses incurred or claimed to have been incurred prior to the Effective Time
by any Party or any of its Affiliates in connection with the SpinCo Business
(provided ParentCo shall have equal rights with respect to indemnity and the
right to be defended to the extent practical and appropriate) and which
injuries, losses, liabilities, damages and expenses may arise out of insured or
insurable occurrences or events under one or more of the ParentCo
Pre-Distribution Policies; provided, however, that nothing in this Section 4.1
shall be deemed to constitute (or to reflect) the assignment of the ParentCo
Pre-Distribution Policies, or any of them, to SpinCo.

 

4.2                               Post-Effective Time Claims.

 

(a)                                 If, subsequent to the Effective Time, any
Person shall assert a claim against SpinCo or its Affiliates with respect to any
injury, loss, Liability, damage or expense incurred or claimed to have been
incurred prior to the Effective Time, including claims related to the SpinCo
Business, or in connection with the Distribution, and such injury, loss,
Liability, damage or expense may have or has arisen out of insured or insurable
occurrences, claims or events under one or more of the ParentCo Pre-Distribution
Policies, ParentCo shall at the time such claim is asserted (except to the
extent inconsistent with Section 4.1 and to the extent allowable under the
ParentCo Pre-Distribution Policies) be deemed to assign, without need of further
documentation, to SpinCo or its Affiliates, any and all rights of an insured
party under the applicable ParentCo Pre-Distribution Policy with respect to such
asserted claim, including rights of indemnity and the right to be defended by or
at the expense of the insurer; provided, however, that nothing in this
Section 4.2 shall be deemed to constitute (or to reflect) the assignment of the
ParentCo Pre-Distribution Policies, or any of them, to SpinCo.

 

(b)                                 In the event that any ParentCo
Pre-Distribution Policy does not allow such assignment of a claim to SpinCo or
its Affiliates, at SpinCo’s sole option, cost and expense,

 

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claims for coverage of insured SpinCo Liabilities shall be tendered by ParentCo
as necessary to invoke the benefit of the ParentCo Pre-Distribution Policies. 
If such insurers do not promptly acknowledge insurance coverage in connection
with such insured SpinCo Liabilities, then, with respect to such insured SpinCo
Liabilities, SpinCo, on an as-incurred basis (i) shall advance all amounts
expended by ParentCo, incurred at the request of SpinCo, for or with respect to
such insured SpinCo Liabilities, including all costs and expenses in connection
with the defense and settlement and in satisfaction of any judgment incurred,
and amounts sufficient to cover any Liabilities required to be paid by ParentCo
or its Subsidiaries, and (ii) shall pay all costs incurred in connection with
pursuing and recovering Insurance Proceeds with respect to the insured SpinCo
Liabilities, but only to the extent so requested by SpinCo, which shall be
entitled to direct such recovery efforts.  Any payments made to ParentCo or its
Subsidiaries by SpinCo or the SpinCo Subsidiaries on account of such insured
SpinCo Liabilities shall be deemed to be advances pursuant to this Section 4.2. 
SpinCo and the SpinCo Subsidiaries shall have the right to recover any advances
made pursuant to Section 4.3 from ParentCo and its Subsidiaries, and ParentCo
and its Subsidiaries shall have the obligation promptly to reimburse SpinCo and
the SpinCo Subsidiaries for such advances, solely from the Insurance Proceeds of
the ParentCo Pre-Distribution Policies that cover such insured SpinCo
Liabilities and that are received by ParentCo or its Subsidiaries.  ParentCo and
its Subsidiaries (i) shall, at all times until paid to SpinCo, hold Insurance
Proceeds received for or with respect to insured SpinCo Liabilities in trust for
the benefit of SpinCo; and (ii) shall promptly remit such Insurance Proceeds to
SpinCo.

 

4.3                               ParentCo Policies.  ParentCo shall, to the
extent that the ParentCo Policies cover the SpinCo Liabilities, after discussion
with SpinCo, either (a) maintain the ParentCo Policies, (b) buy replacement
insurance, or (c) purchase an extended reporting period endorsement for the
ParentCo Policies.  In each of (a), (b) and (c), such coverage shall be at the
expense of SpinCo and be of a type and with a limit and terms and conditions
similar to those in force under the ParentCo Policies as of the Effective Time
and shall be maintained for a minimum of eight (8)  years after the Effective
Time.

 

Article V

 

RELEASES AND INDEMNIFICATION

 

5.1                               Release of Pre-Distribution Claims.

 

(a)                                 Except as otherwise provided in this
Agreement or any Ancillary Agreement, SpinCo, together with its Subsidiaries,
executors, administrators, successors and assigns, does hereby, effective as of
the Effective Time, remise, release and forever discharge ParentCo, its
respective Affiliates and all Persons who at any time prior to the Effective
Time were stockholders, directors, officers, agents or employees of ParentCo or
any of its Affiliates (in each case, in their respective capacities as such), in
each case, together with their respective heirs, executors, administrators,
successors and assigns, from all Liabilities existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Effective Time.

 

(b)                                 Except as otherwise provided in this
Agreement or any Ancillary Agreement, ParentCo, together with its respective
Subsidiaries, executors, administrators,

 

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successors and assigns, does hereby, effective as of the Effective Time, remise,
release and forever discharge SpinCo, its respective Affiliates and all Persons
who at any time prior to the Effective Time were stockholders, directors,
officers, agents or employees of SpinCo or any of its Affiliates (in each case,
in their respective capacities as such), in each case, together with their
respective heirs, executors, administrators, successors and assigns, from all
Liabilities existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Effective Time.

 

(c)                                  Nothing contained in Section 5.1(a) and
Section 5.1(b) shall impair or otherwise affect any right of any Party to
enforce this Agreement or any Ancillary Agreement.  In addition, nothing
contained in Section 5.1(a) and Section 5.1(b) shall release any Party from:

 

(i)                                     any Liability assumed by, or
transferred, or assigned or allocated to, a Party or its respective Affiliates
pursuant to or contemplated by this Agreement or any Ancillary Agreement;

 

(ii)                                  any Liability provided in or resulting
from any other Contract or understanding that is entered into after the
Effective Time between one Party (and/or a member of such Party’s Affiliates),
on the one hand, and the other Party (and/or a member of such Party’s
Affiliates), on the other hand; and

 

(iii)                               any Liability that the Parties may have with
respect to indemnification or contribution pursuant to this Agreement or
otherwise for claims brought against the Parties by a Third Party, which
Liability shall be governed by the provisions of this Article V and, if
applicable, the appropriate provisions of the Ancillary Agreements.

 

(d)                                 Each Party shall not, and shall not permit
any of its Subsidiaries to, make any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or
indemnification, against the other Party or any member of the other Party’s
Affiliates, or any other Person released pursuant to Section 5.1(a) and
Section 5.1(b), with respect to any and all Liabilities released pursuant to
Section 5.1(a) and Section 5.1(b).  If a Party breaches this Section 5.1(d),
such breaching Party shall be liable for all related expenses, including court
costs, attorneys’ fees, and all other legal expenses of the other Party.

 

(e)                                  It is the intent of each Party, by virtue
of the provisions of this Section 5.1, to provide for a full and complete
release and discharge of all Liabilities existing or arising from all acts and
events occurring or failing to occur or alleged to have occurred or to have
failed to occur and all conditions existing or alleged to have existed on or
before the Effective Time, whether known or unknown, between one Party (and/or
any Affiliate of such Party) and the other Party (and/or a member of such other
Party) (including any contractual agreements or arrangements existing or alleged
to exist between or among any such members on or before the Effective Time),
except as otherwise set forth in this Section 5.1.

 

(f)                                   Each Party hereby acknowledges that it has
considered the possibility that it may not now fully know the nature or value of
the claims which are generally released pursuant to this Section 5.1 and that
such general release extends to all claims of every nature

 

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and kind, known or unknown, suspected or unsuspected, past or present, however
arising, and that any and all rights granted to such Party pursuant to
Section 1542 of the California Civil Code or any analogous applicable state or
federal law or regulation are hereby expressly waived.  Said Section 1542 of the
Civil Code of the State of California reads as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

(g)                                  If any Person associated with a Party
(including any director, officer or employee of a Party) initiates an Action
with respect to claims released by this Section 5.1, the Party with which such
Person is associated shall indemnify the other Party against such Action in
accordance with the provisions set forth in this Article V.

 

(h)                                 At any time, at the request of a Party, each
Party shall, and to the extent practicable, cause each other Person on whose
behalf it released Liabilities pursuant to this Section 5.1, to execute and
deliver releases in customary form reflecting the provisions hereof.

 

5.2                               Indemnification by SpinCo.  Except as
otherwise provided in this Agreement or any Ancillary Agreement, following the
Effective Time, SpinCo shall indemnify, defend and hold harmless ParentCo and
its Affiliates and all Persons who at any time prior to the Effective Time were
directors, officers, agents or employees of ParentCo or any of its Affiliates
(in each case, in their respective capacities as such), in each case, together
with their respective heirs, executors, administrators, successors and assigns
(collectively, the “ParentCo Indemnitees”), from and against any and all
Liabilities and related losses of the ParentCo Indemnitees relating to, arising
out of or resulting from any of the following:

 

(a)                                 The failure of SpinCo, its Subsidiaries or
any of their respective Affiliates or any other Person to pay, perform or
otherwise promptly discharge after the Effective Time any SpinCo Liabilities in
accordance with their respective terms;

 

(b)                                 The SpinCo Liabilities (including any
subsequently identified SpinCo Liabilities under Section 2.2(e));

 

(c)                                  Any untrue statement, alleged untrue
statement, omission or alleged omission of a material fact in the Form 10,
resulting in a misleading statement, with respect to all information contained
in the Form 10; and

 

(d)                                 Any breach by SpinCo of this Agreement or
any of the Ancillary Agreements.

 

5.3                               Indemnification by ParentCo.  Except as
otherwise provided in this Agreement or any Ancillary Agreement, following the
Effective Time, ParentCo shall indemnify, defend and hold harmless SpinCo, its
Subsidiaries and any of their respective Affiliates and all Persons who are
directors, officers, agents or employees of SpinCo, its Subsidiaries  or any of
their respective Affiliates (in each case, in their respective capacities as
such), in each case, together with their

 

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respective heirs, executors, administrators, successors and assigns
(collectively, the “SpinCo Indemnitees”), from and against any and all
Liabilities and related losses of the SpinCo Indemnitees relating to, arising
out of or resulting from any of the following items:

 

(a)                                 The failure of ParentCo, its Affiliates or
any other Person to pay, perform or otherwise promptly discharge after the
Effective Time any Excluded Liabilities;

 

(b)                                 The Excluded Liabilities; and

 

(c)                                  Any breach by ParentCo of this Agreement or
any of the Ancillary Agreements.

 

5.4                               Reduction for Insurance Proceeds and Other
Recoveries.

 

(a)                                 The amount that any Party is required to
provide indemnification (the “Indemnifying Party”) to or on behalf of the Party
entitled to such indemnification (the “Indemnitee”) pursuant to this Article V,
shall be reduced (retroactively or prospectively) by Insurance Proceeds or other
amounts actually recovered from Third Parties on behalf of such Indemnitee in
respect of the Liability or related loss.  If an Indemnitee receives a payment
as required by this Agreement from an Indemnifying Party in respect of any
Liability or related loss (an “Indemnity Payment”) and subsequently receives
Insurance Proceeds in respect of such Liability or related loss, then such
Indemnitee shall hold such Insurance Proceeds in trust for the benefit of the
Indemnifying Party (or Indemnifying Parties) and shall pay to the Indemnifying
Party, as promptly as practicable after receipt, a sum equal to the amount of
such Insurance Proceeds received, up to the aggregate amount of any payments
received from the Indemnifying Party pursuant to this Agreement in respect of
such indemnifiable loss of such Insurance Proceeds.

 

(b)                                 An insurer who would otherwise be obligated
to pay any claim shall not be relieved of the responsibility with respect
thereto or, solely by virtue of the indemnification provisions hereof, have any
subrogation rights with respect thereto, it being expressly understood and
agreed that no insurer or any other Third Party shall be entitled to a
“windfall” (i.e., a benefit they would not be entitled to receive in the absence
of the indemnification provisions) by virtue of the indemnification provisions
hereof.  Notwithstanding the foregoing, each Party shall be required to use
reasonable best efforts to collect or recover any available Insurance Proceeds.

 

5.5                               Procedures For Indemnification of Third-Party
Claims.  The following procedures shall apply to indemnification of Third-Party
Claims under this Agreement.

 

(a)                                 If an Indemnitee shall receive notice or
otherwise learn of the assertion by a Third Party (including any Governmental
entity) of any claim or of the commencement by any such Person of any Action
(collectively, a “Third-Party Claim”) with respect to which an Indemnifying
Party may be obligated to provide indemnification to such Indemnitee, such
Indemnitee shall give such Indemnifying Party and each Party to this Agreement,
written notice thereof as soon as reasonably practicable, but no later than
thirty (30) days after becoming aware of such Third-Party Claim.  Any such
notice shall describe the Third-Party Claim in reasonable detail.  If any Party
shall receive notice or otherwise learn of the assertion of a Third-Party Claim
which may reasonably be determined to be a Liability of the Parties, such Party
shall give the

 

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other Party to this Agreement written notice thereof within thirty (30) days
after becoming aware of such Third-Party Claim.  Any such notice shall describe
the Third-Party Claim in reasonable detail.  Notwithstanding the foregoing, the
failure of any Indemnitee or other Party to give notice as provided in this
Section 5.5(a) shall not relieve the related Indemnifying Party of its
obligations under this Article V, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice.

 

(b)                                 An Indemnifying Party shall be entitled to
participate in the defense of any Third-Party Claim, at such Indemnifying
Party’s own expense and by such Indemnifying Party’s own counsel; provided that
if the defendants in any such claim include both the Indemnifying Party and one
or more Indemnitees and in such Indemnitees’ reasonable judgment a conflict of
interest between such Indemnitees and such Indemnifying Party exists in respect
of such claim, such Indemnitees shall have the right to employ separate counsel
and in that event the reasonable fees and expenses of such separate counsel (but
not more than one separate counsel reasonably satisfactory to the Indemnifying
Party) shall be paid by such Indemnifying Party.  Within thirty (30) days after
the receipt of notice from an Indemnitee in accordance with Section 5.5(a) (or
sooner, if the nature of such Third-Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third-Party Claim.  After notice
from an Indemnifying Party to an Indemnitee of its election to assume the
defense of a Third-Party Claim, such Indemnitee shall have the right to employ
separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnitee.

 

(c)                                  With respect to any Third-Party Claim, the
Indemnifying Party and Indemnitees agree, and shall cause their respective
counsel (if applicable), to cooperate fully (in a manner that will preserve all
attorney-client privilege or other privileges) to mitigate any such claim and
minimize the defense costs associated therewith.

 

(d)                                 If an Indemnifying Party fails to assume the
defense of a Third-Party Claim within thirty (30) days after receipt of written
notice of such claim, the Indemnitee will, upon delivering notice to such effect
to the Indemnifying Party, have the right to undertake the defense, compromise
or settlement of such Third-Party Claim on behalf of and for the account of the
Indemnifying Party subject to the limitations as set forth in this Section 5.5;
provided, however, that such Third-Party Claim shall not be compromised or
settled without the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, delayed or conditioned.  If the Indemnitee
assumes the defense of any Third-Party Claim, it shall keep the Indemnifying
Party reasonably informed of the progress of any such defense, compromise or
settlement.  The Indemnifying Party shall reimburse all such costs and expenses
of the Indemnitee in the event it is ultimately determined that the Indemnifying
Party is obligated to indemnify the Indemnitee with respect to such Third-Party
Claim.  In no event shall an Indemnifying Party be liable for any settlement
effected without its consent, which consent will not be unreasonably withheld,
delayed or conditioned.

 

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5.6                               Additional Matters.  The following shall apply
to indemnification matters under this Agreement.

 

(a)                                 Any claim on account of a Liability which
does not result from a Third-Party Claim shall be asserted by written notice
given by the Indemnitee to the related Indemnifying Party.  Such Indemnifying
Party shall have a period of thirty (30) days after the receipt of such notice
within which to respond thereto.  If such Indemnifying Party does not respond
within such sixty (60) day period, such Indemnifying Party shall be deemed to
have accepted responsibility to make payment.  If such Indemnifying Party
rejects such claim in whole or in part, such Indemnitee shall be free to pursue
such remedies as may be available to such party as contemplated by this
Agreement and the Ancillary Agreements.

 

(b)                                 In the event of payment by or on behalf of
any Indemnifying Party to any Indemnitee in connection with any Third-Party
Claim, such Indemnifying Party shall be subrogated to and shall stand in the
place of such Indemnitee as to any events or circumstances in respect of which
such Indemnitee may have any right, defense or claim relating to such
Third-Party Claim against any claimant or plaintiff asserting such Third-Party
Claim or against any other person.  Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense
(including allocated costs of in-house counsel and other in-house personnel) of
such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

 

(c)                                  In the event of an Action in which the
Indemnifying Party is not a named defendant, if the Indemnifying Party shall so
request, the Parties shall endeavor to substitute the Indemnifying Party for the
named defendant, and add the Indemnifying Party as a named defendant if at all
practicable.  If such substitution or addition cannot be achieved for any reason
or is not requested, the named defendant shall allow the Indemnifying Party to
manage the Action as set forth in this section and subject to Section 5.5 with
respect to Liabilities, the Indemnifying Party shall fully indemnify the named
defendant against all costs of defending the Action (including court costs,
sanctions imposed by a court, attorneys’ fees, experts’ fees and all other
external expenses, and the allocated costs of in-house counsel and other
in-house personnel), the costs of any judgment or settlement, and the cost of
any interest or penalties relating to any judgment or settlement.

 

5.7                               Survival of Indemnities.  The rights and
obligations of each Party and their respective Indemnitees under this Article V
shall survive the sale or other transfer by any Party or its Affiliates of any
assets or businesses or the assignment by it of any and all Liabilities.

 

Article VI

 

CERTAIN COVENANTS AND OTHER AGREEMENTS OF THE PARTIES

 

6.1                               Legal Names.  Absent a written agreement to
the contrary, as soon as reasonably practicable and in any event within one
hundred eighty (180)  days after the Distribution Date, each Party shall
(i) cease to make any use of the other Party’s respective name and any
Trademarks related thereto or containing or comprising the foregoing, including
any name or mark confusingly similar thereto or dilutive thereof (the “Marks”),
(ii) take all steps necessary,

 

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and fully cooperate with the other Party and its Affiliates, to remove the Marks
from any corporate, trade, and assumed names and cancel any recordation of such
names with any Governmental entity, and change any corporate, trade, and assumed
name that uses the Marks to a name that does not include the Marks or any
variation, derivation, or colorable imitation thereof, and (iii) remove, strike
over or otherwise obliterate all Marks from (or otherwise not use) in all
materials owned by each Party and its Affiliates, including without limitation,
any business cards, stationary, packaging materials, displays, signs,
promotional and advertising materials, and other materials or media including
any internet usage or domain names that include the Marks.

 

6.2                               Preparation of Opening SpinCo Balance Sheet. 
As soon as practicable after the Distribution Date, the Parties shall cooperate
in the preparation of the Opening SpinCo Balance Sheet, prepared on the same
basis as the unaudited pro forma condensed combined balance sheet of SpinCo,
dated as of December 31, 2013, included in the Form 10.

 

Article VII

 

CONFIDENTIALITY

 

7.1                               Confidentiality.

 

(a)                                 Notwithstanding any termination of this
Agreement and subject to Section 7.2, for a period of ten (10) years after the
Distribution Date, each Party agrees to hold, and to cause its respective
Subsidiaries, Affiliates, directors, officers, employees, agents, accountants,
counsel and other advisors and representatives to hold, in strict confidence,
and undertake all reasonable precautions to safeguard and protect the
confidentiality of, all Information concerning the other Party that is in its
possession after the Distribution Date or furnished by the other Party or its
respective directors, officers, employees, agents, accountants, counsel and
other advisors and representatives at any time pursuant to this Agreement, any
Ancillary Agreement or otherwise, and shall not use any such Information other
than for such purposes as shall be expressly permitted hereunder or thereunder,
except, in each case, to the extent that such Information has been (i) in the
public domain through no fault of such Party, its respective Subsidiaries,
Affiliates, directors, officers, employees, agents, accountants, counsel and
other advisors and representatives, (ii) lawfully acquired from other sources,
which are not bound by a confidentiality obligation, by such Party or its
respective Subsidiaries or Affiliates, or (iii) independently generated without
reference to any proprietary or confidential Information of the other Party or
its Subsidiaries.

 

(b)                                 Each Party agrees not to release or
disclose, or permit to be released or disclosed, any such Information to any
other Person, except its directors, officers, employees, agents, accountants,
counsel and other advisors and representatives who need to know such Information
and who are informed and advised that the Information is confidential and
subject to the obligations hereunder, except in compliance with Section 7.2. 
Without limiting the foregoing, when any Information is no longer needed for the
purposes contemplated by this Agreement or any Ancillary Agreement, each Party
will promptly after request of the other Party either (i) destroy all copies of
the Information in such Party’s possession, custody or control (including any
that may be stored in any computer, word processor, or similar device, to the

 

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extent not commercially impractical to destroy such copies) including any
copies, summaries, analyses, compilations, reports, extracts or other
reproductions, in whole or in part, of such written, electronic or other
tangible material or any other materials in written, electronic or other
tangible format based on, reflecting or containing Information prepared by such
Party, and/or (ii) return to the requesting Party, at the expense of the
requesting Party, all copies of the Information furnished to such Party by or on
behalf of the requesting Party.  Notwithstanding the foregoing, each Party may
maintain the confidential Information of the other Party that is contained in
such Party’s electronic back-up files that are created in the normal course of
business pursuant to such Party’s standard protocol for preserving its
electronic records.

 

7.2                               Protective Arrangements.  In the event that
either Party or their respective Subsidiaries or Affiliates, either (i)
determines after consultation with counsel, in the opinion of such counsel that
it is required by law to disclose any Information, or (ii) receives any demand
under lawful process or from any Governmental entity to disclose or provide
Information of the other Party or their respective Subsidiaries that is subject
to the confidentiality provisions hereof, such Party shall notify the other
Party prior to disclosing or providing such Information and shall cooperate at
the expense of the requesting party (and to the extent legally permissible) in
seeking any reasonable protective arrangements requested by such other Party. 
Subject to the foregoing, the Party that received such request may thereafter
(i) furnish only that portion of the Confidential Information that is legally
required, (ii) give notice to the other Party of the Information to be disclosed
as far in advance as is practical, and (iii) exercise reasonable best efforts to
obtain reliable assurance that the confidential nature of such Information shall
be maintained.

 

Article VIII

 

ACCESS TO INFORMATION AND SERVICES

 

8.1                               Provision of Books and Records.

 

(a)                                 Except as otherwise provided in any
Ancillary Agreement, as soon as practicable after the Distribution Date,
ParentCo and SpinCo shall cooperate to provide that originals of SpinCo Books
and Records (including all documents and electronically stored information
except e-mails or other electronic correspondence not readily available in hard
copy) which solely relate to SpinCo or the conduct of the SpinCo Business, as
the case may be, up to the Effective Time, are in the possession or control of
SpinCo or a SpinCo Subsidiary.

 

(b)                                 With respect to SpinCo Books and Records
(including e-mails and other electronic correspondence not readily available in
hard copy) that relate to both the SpinCo Business and the ParentCo Business
(the “Combined Books and Records”), (i) the Parties shall use good faith efforts
to divide as soon as practicable but no later than six (6) months following the
Distribution Date such Combined Books and Records into the books and records
which solely relate to ParentCo or the conduct of the ParentCo Business and
those that relate solely to SpinCo and the SpinCo Business, as the case may be,
up to the Effective Time, as appropriate, and (ii) to the extent such Combined
Books and Records are not so divided, each Party shall keep and maintain copies
of such Combined Books and Records as reasonably appropriate under the

 

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circumstances, subject to applicable confidentiality provisions hereof and of
any Ancillary Agreement.

 

8.2                               Access to Information.  Except as otherwise
provided in any Ancillary Agreement, after the Distribution Date, each Party
shall provide the other Party and such other Party’s authorized accountants,
counsel and other designated representatives reasonable access and duplicating
rights during normal business hours to all records, books, contracts,
instruments, computer data and other data and Information relating to
pre-Distribution operations of the SpinCo Business or ParentCo Business, as
applicable, or within such Party’s possession or control or such other
Information reasonably necessary for the preparation, review or auditing for
spin-out financials for such other Party (including using reasonable best
efforts to give access to Persons or firms possessing Information) insofar as
such access is reasonably required by such other Party for the conduct of the
SpinCo Business or ParentCo Business, as applicable, subject to appropriate
restrictions for classified or privileged information.

 

8.3                               Production of Witnesses.  At all times after
the Effective Time, each of SpinCo and ParentCo shall use reasonable best
efforts to make available to the other, upon prior written request, its and its
Subsidiaries’ officers, directors, employees and agents as witnesses to the
extent that such Persons may reasonably be required in connection with any
Action.

 

8.4                               Reimbursement.  Except to the extent otherwise
contemplated in any Ancillary Agreements, a Party providing any information
under Section 8.2 or witness services under Section 8.3 to the other Party shall
be entitled to receive from the recipient, upon the presentation of invoices
therefor, payments of such amounts, relating to supplies, disbursements and
other out-of-pocket expenses (at cost) and direct and indirect expenses of
employees who are witnesses or otherwise furnish assistance (at cost), as may be
reasonably incurred in providing any such information under Section 8.2 or
witness services under Section 8.3.

 

8.5                               Privileged Matters.  To allocate the interests
of each Party with respect to privileged information, the Parties agree as
follows:

 

(a)                                 ParentCo shall be entitled, in perpetuity,
to control the assertion or waiver of all privileges in connection with
privileged information which relates solely to the ParentCo Business, whether or
not the privileged information is in the possession of or under the control of
ParentCo or SpinCo.  ParentCo shall also be entitled, in perpetuity, to control
the assertion or waiver of all privileges in connection with privileged
information that relates solely to the subject matter of any claims constituting
Liabilities of ParentCo and its Affiliates and all Persons who at any time prior
to or as of the Effective Time were directors, officers, agents or employees of
ParentCo or any of its Affiliates (in each case, in their respective capacities
as such), in each case, together with their respective heirs, executors,
administrators, successors and assigns, now pending or which may be asserted in
the future, in any lawsuits or other Actions initiated against or by ParentCo,
whether or not the privileged information is in the possession of or under the
control of ParentCo or SpinCo.

 

(b)                                 SpinCo shall be entitled, in perpetuity, to
control the assertion or waiver of all privileges in connection with privileged
information which relates solely to the SpinCo Business, whether or not the
privileged information is in the possession of or under the control of

 

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ParentCo or SpinCo.  SpinCo shall also be entitled, in perpetuity, to control
the assertion or waiver of all privileges in connection with privileged
information which relates solely to the subject matter of any claims
constituting SpinCo Liabilities, now pending or which may be asserted in the
future, in any lawsuits or other Actions initiated against or by SpinCo, whether
or not the privileged information is in the possession of SpinCo or under the
control of ParentCo or SpinCo.

 

(c)                                  ParentCo and SpinCo agree that they shall
have a shared privilege, with equal right to assert or waive, subject to the
restrictions of this Section 8.5, with respect to all privileges not allocated
pursuant to the terms of Sections 8.5(a) and (b).  All privileges relating to
any claims, proceedings, litigation, disputes or other matters which involve
both ParentCo and SpinCo in respect of which ParentCo and SpinCo retain any
responsibility or liability under this Agreement shall be subject to a shared
privilege.

 

(d)                                 No Party may waive any privilege which could
be asserted under any applicable law, if the other Party has a shared privilege,
without the consent of the other Party, except to the extent reasonably required
in connection with any litigation with Third Parties or as provided in
Section 8.5(e).  Such consent shall be in writing, or shall be deemed to be
granted unless written objection is made within twenty (20) days after notice
upon the other Party requesting such consent.

 

(e)                                  In the event of any litigation or dispute
between the Parties and any of its Affiliates, either Party may waive a
privilege in which the other Party has a shared privilege, without obtaining the
consent of the other Party, provided that such waiver of a shared privilege
shall be effective only as to the use of Information with respect to the
litigation or dispute between the Parties and any of its Affiliates, and shall
not operate as a waiver of the shared privilege with respect to Third Parties.

 

(f)                                   If a dispute arises between the Parties
regarding whether a privilege should be waived to protect or advance the
interest of either Party, each Party agrees that it shall negotiate in good
faith, shall endeavor to minimize any prejudice to the rights of the other
Party, and shall not unreasonably withhold consent to any request for waiver by
the other Party.  Each Party specifically agrees that it will not withhold
consent to waiver for any purpose except to protect its own legitimate
interests.

 

(g)                                  Upon receipt by any Party of any subpoena,
discovery or other request which arguably calls for the production or disclosure
of Information subject to a shared privilege or as to which the other Party has
the sole right hereunder to assert a privilege, or if any Party obtains
knowledge that any of its current or former directors, officers, agents or
employees has received any subpoena, discovery or other request which arguably
calls for the production or disclosure of such privileged information, such
Party shall promptly notify the other Party of the existence of the request and
shall provide the other Party a reasonable opportunity to review the Information
and to assert any rights it may have under this Section 8.5 or otherwise to
prevent the production or disclosure of such privileged information.

 

(h)                                 The transfer of all Information pursuant to
this Agreement is made in reliance on the agreement of ParentCo and SpinCo, as
set forth in this Section 8.5 and elsewhere

 

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in this Agreement, to maintain the confidentiality of privileged information and
to assert and maintain applicable privileges.  The access to Information being
granted pursuant to Sections 8.1 and 8.2, the agreement to provide witnesses and
individuals pursuant to Section 8.3 and the transfer of privileged information
between the Parties pursuant to this Agreement shall not be deemed a waiver of
any privilege that has been or may be asserted under this Agreement or
otherwise.

 

8.6                               GSK Agreements.  Notwithstanding any other
provision contained herein, ParentCo shall not, and shall cause its Affiliates
and its and its Affiliates’ officers, directors, employees, agents and
representatives (collectively, “Representatives”) not to, take (or omit to take)
any action (including, without limitation, the disclosure of any information to
SpinCo or any of its Representatives), that is or would be reasonably expected
to result in a breach or violation of, or be in conflict with, any ParentCo
confidentiality obligation to GSK under the Collaboration Agreement and/or the
Strategic Alliance Agreement.  To the extent that SpinCo or any of its
Representatives becomes aware or believes that it has or may have received from
ParentCo or any of its Representatives Confidential Information (as defined in
the Collaboration Agreement or the Strategic Alliance Agreement) of GSK, it will
promptly notify ParentCo in writing, will follow any reasonable instructions
from ParentCo with respect to the return or destruction of such information, and
will not use or disclose such information unless ParentCo confirms that it is
not Confidential Information (as defined in the Collaboration Agreement or the
Strategic Alliance Agreement) of GSK.  Each party agrees and understands that
monetary damages would not adequately compensate the non-breaching party for a
breach of this Section 8.6, that this Section 8.6 shall, to the fullest extent
permitted by law, be specifically enforceable, and that any breach or threatened
breach of this Section 8.6  shall be the proper subject of a temporary or
permanent injunction or restraining order sought pursuant to Section 12.9
hereof.  Further, ParentCo and SpinCo waive, to the fullest extent permitted by
law, any claim or defense that there is an adequate remedy at law for such
breach or threatened breach.  Notwithstanding any other provision contained
herein, SpinCo acknowledges and agrees that it has no rights to any non-public
information under the Collaboration Agreement and/or the Strategic Alliance
Agreement, the disclosure of which by ParentCo or any of its Representatives to
SpinCo or any of its Representatives is or would be reasonably expected to
result in a breach or violation of, or be in conflict with, any ParentCo
confidentiality obligation to GSK under the Collaboration Agreement and/or the
Strategic Alliance Agreement.  Notwithstanding anything else to the contrary, in
the event of any conflict between this Section 8.6, or any covenant, right,
agreement, obligation or duty of ParentCo or SpinCo (or any of their respective
Representatives) under this Section 8.6, on the one hand, and any other
provision of this Agreement, or any attachment hereto or any covenant, right,
agreement, obligation or duty of ParentCo or SpinCo (or any of their respective
Representatives) thereunder, on the other hand, this Section 8.6 shall govern
and supersede such other provision, attachment, covenant, agreement, obligation
or duty. Each party will be liable for breach of this Section 8.6 by any of its
Representatives.

 

Article IX

 

DISPUTE RESOLUTION

 

9.1                               Disputes and Negotiation.  ParentCo and SpinCo
recognize that disputes as to certain matters may from time to time arise during
the effectiveness of this Agreement and the

 

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Ancillary Agreements which relate to either Party’s rights and obligations
hereunder or thereunder.  It is the objective of the Parties to establish
procedures to facilitate the resolution of disputes arising under this Agreement
and the Ancillary Agreements (other than the TRC Operating Agreement) in an
expedient manner by mutual cooperation and without resort to litigation.  To
accomplish this objective, the Parties agree to follow the procedures set forth
in this Article IX if and when a dispute arises under this Agreement or the
Ancillary Agreements (other than the TRC Operating Agreement).  In the event of
a dispute between the Parties, a designated representative of each of ParentCo
and SpinCo will meet as reasonably requested by either Party to review any such
dispute.  If the disagreement is not resolved by the designated representatives
by mutual agreement within thirty (30) days after a meeting to discuss the
disagreement, either Party may at any time thereafter provide the other Party
written notice specifying the terms of such disagreement in reasonable detail. 
Upon receipt of such notice, the chief executive officers of ParentCo and SpinCo
shall meet at a mutually agreed upon time and location for the purpose of
resolving such disagreement.  The chief executive officers of ParentCo and
SpinCo will discuss such disagreement and/or negotiate for a period of up to
sixty (60) days in an effort to resolve such disagreement or negotiate an
acceptable interpretation or revision of the applicable portion of this
Agreement or the Ancillary Agreements (other than the TRC Operating Agreement)
mutually agreeable to both Parties, without the necessity of formal procedures
relating thereto.  During the course of such negotiations, the Parties will
reasonably cooperate and provide information that is not materially confidential
in order that each of the Parties may be fully informed with respect to the
issues in dispute.  The institution of a formal proceeding, including
arbitration under Section 9.2, to resolve the disagreement may occur by written
notice to the other Party only after the earlier of: (i) the chief executive
officers of ParentCo and SpinCo mutually agreeing that resolution of the
disagreement through continued negotiation is not likely to occur; or (ii) the
expiration of the sixty (60) day negotiation period.

 

9.2                               Dispute Resolution and Arbitration.  Disputes
arising out of, relating to or in connection with this Agreement or the
Ancillary Agreements (other than the TRC Operating Agreement), or in relations
between the parties with respect to the subject matter hereof, for any reason or
under any circumstances, will be finally settled by a single arbitrator in a
binding arbitration in accordance with the Judicial Arbitration and Mediation
Services (“JAMS”) Comprehensive Arbitration Rules and Procedures (the “Rules”). 
Upon receipt of written notice by one Party to the other of the existence of a
dispute, the Parties shall, within thirty (30) days conduct a meeting of one or
more senior executives of each Party, with full settlement authority, in an
attempt to resolve the dispute.  Each Party shall make available appropriate
personnel to meet and confer with the other Party reasonably within the
thirty-day period.  Upon the expiration of the thirty-day period, or upon the
termination of discussions between the senior executives, either Party may elect
arbitration of any dispute by written notice to the other (the “Arbitration
Notice”).  The arbitration shall be held in San Francisco, California before one
(1) arbitrator from JAMS  having substantial experience as a jurist and mediator
with significant disputes in the pharmaceutical industry selected by the mutual
agreement of SpinCo and ParentCo; provided, however, that if such parties cannot
agree on an arbitrator within thirty (30) days of the Arbitration Notice, either
Party may request JAMS select the arbitrator, and JAMS shall select an
arbitrator pursuant to the procedure set out by the Rules; provided, however,
that the arbitrator selected by JAMS shall be a former judge with at least
fifteen (15) years’ experience addressing as a jurist and/or mediator
significant disputes in the pharmaceutical industry.  The arbitration shall be
administered by JAMS pursuant to the Rules.  Judgment on the

 

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arbitration award may be entered in any court having jurisdiction.  The
arbitrator may, in the arbitration award, allocate for payment by the
non-prevailing party all or part of the costs of the arbitration, including fees
of the arbitrator and the reasonable attorneys’ fees and costs incurred by the
prevailing party.  This Section shall not preclude the parties from seeking
provisional remedies in aid of arbitration or equitable relief from a court of
appropriate jurisdiction.  In respect of any actions for such provisional
remedies, injunctive or other equitable relief hereunder, any action or
proceeding may be brought against any Party in the state and federal courts
located in the county of San Mateo, California and each of the parties consents
to the jurisdiction of such courts in any such action or proceeding and waives
any objection to venue laid therein.

 

9.3                               Confidentiality. The arbitration proceeding
shall be confidential and the arbitrator(s) shall issue appropriate protective
orders to safeguard each Party’s confidential Information. Except as required by
law, no Party shall make (or instruct the arbitrator(s) to make) any public
announcement with respect to the proceedings or decision of the
arbitrator(s) without prior written consent of each other Party. The existence
of any dispute submitted to arbitration, and the award, shall be kept in
confidence by the Parties and the arbitrator(s), except as may be required in
connection with the enforcement of such award or as otherwise required by
applicable law or regulatory authority.

 

9.4                               Limitation of Liability. IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER FOR CONSEQUENTIAL, SPECIAL OR PUNITIVE
DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST PROFITS AND BUSINESS INTERRUPTION.

 

Article X

 

FURTHER ASSURANCES

 

10.1                        Further Assurances.

 

(a)                                 In addition to and without limiting the
actions specifically provided in this Agreement, each of the Parties shall use
its reasonable best efforts, prior to, on and after the Distribution Date, to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things, reasonably necessary, proper or advisable under applicable laws,
regulations and agreements to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements.

 

(b)                                 Without limiting the foregoing, prior to, on
and after the Distribution Date, each Party shall cooperate with the other
Party, and without any further consideration, but at the expense of the
requesting Party, to execute and deliver, or use its reasonable best efforts to
cause to be executed and delivered, all instruments, including instruments of
conveyance, assignment and transfer, and to make all filings with, and to obtain
all consents, approvals or authorizations of, any Governmental entity or any
other Person under any permit, license, agreement, indenture or other instrument
(including any Consents or Governmental Approvals), and to take all such other
actions as such Party may reasonably be requested to take by the other Party
from time to time, consistent with the terms of this Agreement and the Ancillary
Agreements, in order to

 

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effectuate the provisions and purposes of this Agreement and the Ancillary
Agreements and the transfers of the SpinCo Assets and the assignment and
assumption of the SpinCo Liabilities and the other transactions contemplated
hereby and thereby.

 

Article XI

 

TERMINATION

 

11.1                        Termination.  Notwithstanding anything to the
contrary herein, this Agreement (including Article V (Indemnification)) may be
terminated and the Separation and Distribution may be amended, modified or
abandoned at any time prior to the Distribution by and in the sole discretion of
ParentCo without the approval of SpinCo or the stockholders of ParentCo.  In the
event of such termination, no Party shall have any Liability to the other Party
or any other Person.  After the Distribution, this Agreement may not be
terminated except by an agreement in writing signed by each Party.

 

Article XII

 

MISCELLANEOUS

 

12.1                        Governing Law; Jurisdiction.  This Agreement shall
be deemed to have been made in the State of Delaware and its form, execution,
validity, construction and effect shall be determined in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof. In respect of any actions for injunctive or other
equitable relief hereunder, any action or proceeding may be brought against any
Party in the state and federal courts located in the county of San Mateo,
California and each of the parties consents to the jurisdiction of such courts
in any such action or proceeding and waives any objection to venue laid therein.

 

12.2                        Assignability.  Except as otherwise provided in the
TRC Operating Agreement, the provisions of this Agreement, each Ancillary
Agreement and the obligations and rights hereunder shall be binding upon, inure
to the benefit of and be enforceable by (and against) the Parties and their
respective successors and permitted transferees and assigns.  Notwithstanding
the foregoing, this Agreement shall not be assignable, in whole or in part, by
any Party without the prior written consent of the other Party, and any attempt
to assign any rights or obligations arising under this Agreement without such
consent shall be null and void; provided, however, that a Party may assign this
Agreement to an Affiliate controlled by such Party or in connection with a
merger transaction in which such Party is not the surviving entity or in
connection with the sale or other transfer by such Party of all or substantially
all of its assets, and upon the effectiveness of such assignment, the assigning
Party shall be released from all of its obligations under this Agreement if the
surviving entity of such merger or the transferee of such assets shall agree in
writing, in form and substance reasonably satisfactory to the other Party, to be
bound by all terms of this Agreement as if named as a “Party” hereto.

 

12.3                        Third Party Beneficiaries.  Except for the
indemnification rights under this Agreement of any ParentCo Indemnitee or SpinCo
Indemnitee in their respective capacities as such, (a) the provisions of this
Agreement and each Ancillary Agreement (other than the TRC

 

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Operating Agreement) are solely for the benefit of the Parties and are not
intended to confer upon any Person except the Parties any rights or remedies
hereunder, and (b) there are no Third Party beneficiaries of this Agreement or
any Ancillary Agreement (other than the TRC Operating Agreement) and neither
this Agreement nor any Ancillary Agreement (other than the TRC Operating
Agreement) shall provide any Third Party with any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement or any Ancillary Agreement (other than the
TRC Operating Agreement).

 

12.4                        Notices.  All notices and other communications given
or made pursuant to this Agreement shall be in writing and shall be deemed
effectively given:  (a) upon personal delivery to the Party to be notified,
(b) when sent by confirmed facsimile, (c) five (5) days after having been sent
by registered or certified mail, return receipt requested, postage prepaid or
(d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt.  All
communications shall be sent to the respective parties at the addresses set
forth below (or at such other addresses as shall be specified by notice given in
accordance with this Section):

 

If to ParentCo, to:

 

Theravance, Inc.

 

 

Attention: Legal Department

 

 

951 Gateway Boulevard

 

 

South San Francisco, CA 94080

 

 

Facsimile: 650-238-9601

 

 

 

If to SpinCo, to:

 

Theravance Biopharma, Inc.

 

 

c/o Theravance Biopharma US, Inc.

 

 

Attention: Legal Department

 

 

901 Gateway Boulevard

 

 

South San Francisco, CA 94080

 

 

Facsimile: 650-808-6095

 

12.5                        Severability.  If any provision of this Agreement or
any Ancillary Agreement (other than the TRC Operating Agreement) or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof or thereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any Party.  Upon such
determination, the Parties shall negotiate in good faith in an effort to agree
upon such a suitable and equitable provision to affect the original intent of
the Parties.

 

12.6                        Expenses.  Except as expressly set forth in this
Agreement or in any Ancillary Agreement, whether or not the Separation or the
Distribution is consummated, all Third Party fees, costs and expenses paid or
incurred in connection with the Separation and Distribution shall be paid by
ParentCo but only to the extent such fees arise or were paid or incurred prior
to the Effective Time.

 

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12.7                        Survival of Covenants.  Except as expressly set
forth in any Ancillary Agreement, all covenants, representations and warranties
contained in this Agreement and each Ancillary Agreement, and liability for the
breach of any obligations contained herein, shall survive the Effective Time and
remain in full force and effect in accordance with their applicable terms.

 

12.8                        Waivers of Default.  The failure of either Party to
require strict performance by the other Party of any provision in this Agreement
or any Ancillary Agreement will not waive or diminish such Party’s right to
demand strict performance thereafter of that or any other provision hereof.

 

12.9                        Specific Performance.  The Parties agree that
irreparable damage would occur in the event that the provisions of this
Agreement were not performed in accordance with their specific terms. 
Accordingly, it is hereby agreed that the Parties shall be entitled to (a) an
injunction or injunctions to enforce specifically the terms and provisions
hereof in any arbitration in accordance with Article IX, (b) provisional or
temporary injunctive relief in accordance therewith in the courts located in San
Mateo County, California, and (c) enforcement of any such award of an arbitral
tribunal in any court of the United States, or any other any court or tribunal
sitting in any state of the United States or in any foreign country that has
jurisdiction, this being in addition to any other remedy or relief to which they
may be entitled.

 

12.10                 Waiver of Jury Trial. SUBJECT TO ARTICLE IX HEREIN, EACH
OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH
THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 12.10.

 

12.11                 Amendments.  This Agreement may not be modified or amended
except by an agreement in writing signed by each of the Parties.

 

12.12                 Schedules.  All schedules attached hereto are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.  Capitalized terms used in the schedules hereto but not otherwise
defined therein will have the respective meanings assigned to such terms in this
Agreement.

 

12.13                 Construction.

 

(a)                                 This Agreement has been prepared jointly and
shall not be strictly construed against either Party.

 

(b)                                 For purposes of this Agreement, whenever the
context requires:  the singular number shall include the plural, and vice versa;
the masculine gender shall include the

 

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feminine and neuter genders; the feminine gender shall include the masculine and
neuter genders; and the neuter gender shall include the masculine and feminine
genders.

 

(c)                                  Except as otherwise indicated, all
references in this Agreement to “Articles,” “Sections,” “Exhibits” and
“Attachments” are intended to refer to Articles and Sections of , and Exhibits
and Attachments, to this Agreement.

 

(d)                                 The words “include” and “including,” shall
not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words “without limitation.”

 

(e)                                  The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

 

12.14                 Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.  Any executed counterpart
delivered by facsimile or other means of electronic transmission shall be deemed
an original for all purposes.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Separation and Distribution
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

 

 

THERAVANCE, INC.

 

 

 

 

 

 

By:

/s/ Michael W. Aguiar

 

Name:

Michael W. Aguiar

 

Title:

Chief Financial Officer

 

 [Signature Page to Separation and Distribution Agreement]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties have caused this Separation and Distribution
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

 

 

 

THERAVANCE BIOPHARMA, INC.

 

 

 

 

 

 

 

By:

/s/ Rick E Winningham

 

 

Name:

Rick E Winningham

 

 

Title:

Chief Executive Officer

 

[Signature Page to Separation and Distribution Agreement]

 

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