Exhibit 10.1
EXECUTION COPY
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“***”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.
ASSET PURCHASE AND LICENSE AGREEMENT
BETWEEN
AVANIR PHARMACEUTICALS INC.
XENEREX BIOSCIENCES INC.
EMERGENT PRODUCT DEVELOPMENT GAITHERSBURG INC.
AND
EMERGENT BIOSOLUTIONS INC.
Dated as of March 6, 2008

 

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ASSET PURCHASE AND LICENSE AGREEMENT
     This Asset Purchase and License Agreement is entered into as of March 6,
2008 (the “Agreement”) by and between Emergent Product Development Gaithersburg
Inc., a Delaware corporation (“Buyer”), Emergent BioSolutions Inc., a Delaware
corporation (“Buyer Parent”), Avanir Pharmaceuticals Inc., a California
corporation (“Seller Parent”), and Xenerex Biosciences Inc., a California
corporation (“Seller” and, together with Seller Parent, the “Sellers”). Each
party to this Agreement is sometimes referred to herein as a “Party” or
collectively, the “Parties.” Capitalized terms used in this Agreement shall have
the meanings ascribed to them where defined or in Article IX.
INTRODUCTION
     WHEREAS, Seller Parent is a pharmaceutical company focused on developing,
acquiring and commercializing therapeutic products for the treatment of chronic
diseases; and
     WHEREAS, Seller is a wholly-owned subsidiary of Seller Parent; and
     WHEREAS, Seller owns the Product and Sellers desire to transfer ownership
of the Product and certain rights related to the Product Line Operations to
Buyer; and
     WHEREAS, Buyer is the wholly-owned subsidiary of Emergent BioSolutions Inc.
and as an inducement to the Sellers to enter into the transactions contemplated
by this Agreement, Buyer Parent will concurrently with the execution hereof
enter into this agreement with the Sellers whereby Buyer Parent will assure
payment of all of the financial obligations of the Buyer; and
     WHEREAS, upon the terms and subject to the conditions of this Agreement,
Sellers wish to sell the Acquired Assets (including the Product and the Product
Line Operations), license the Xenerex Technology for use in the Anthrax Field,
and assign the Assumed Liabilities to Buyer, and Buyer wishes to purchase the
Acquired Assets (including the Product and the Product Line Operations), license
the Xenerex Technology and assume the Assumed Liabilities from Seller.
     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants, agreements and provisions set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties hereto agree
as follows:
ARTICLE I
THE ASSET PURCHASE
     1.1 Purchase and Sale of Assets. Upon the terms and subject to conditions
of this Agreement, Buyer shall purchase from Seller, and Seller shall sell,
transfer, convey, license,

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assign and deliver to Buyer, at the Closing, for the consideration specified
below in Article II, all of its right, title and interest in, to and under the
Acquired Assets.
     1.2 Assumption of Liabilities.
          (a) Upon the terms and subject to the conditions of this Agreement,
Buyer shall assume and become responsible for, from and after the Closing, the
Assumed Liabilities.
          (b) Notwithstanding the terms of Section 1.2(a) or any other provision
of this Agreement to the contrary, Buyer shall not assume or become responsible
for, and Seller shall remain liable for, the Retained Liabilities.
     1.3 Consent of Third Parties.
          (a) Assigned Contracts. On the Closing Date, Seller shall assign to
Buyer, and Buyer shall assume, the Assigned Contracts to the extent provided in
this Agreement. The list of all Assigned Contracts is set forth in
Schedule 1.3(a) hereto. To the extent that the assignment of all or any portion
of any Assigned Contract shall require the consent of the other party thereto or
any other third party, this Agreement shall not constitute an agreement to
assign any such Assigned Contract if an attempted assignment without any such
consent would constitute a breach or violation thereof. In order, however, to
seek to provide Buyer the full realization and value of every Assigned Contract
of the character described in the immediately preceding sentence (i) as soon as
practicable after the Closing, Seller and Buyer shall cooperate, in all
reasonable respects, to obtain any necessary consents to the assignment of the
Assigned Contracts, provided that neither Party shall be required to make any
payments or agree to any material undertakings in connection therewith, and
(ii) until all such consents are obtained or all such Assigned Contracts expire
or are terminated, Seller and Buyer shall cooperate, in all reasonable respects,
to provide to Buyer the benefits under the Assigned Contracts (with Buyer
entitled to all the gains and responsible for all the losses, Taxes, liabilities
and/or obligations thereunder). In connection with clause (ii) of this
Section 1.3(a), if requested in writing by Buyer, Seller shall, at Buyer’s cost
and expense, seek to enforce for the benefit of Buyer all claims or rights of
Seller arising under the Assigned Contracts, and Buyer shall perform and comply
with, at Buyer’s cost, all of Seller’s obligations under the Assigned Contracts
as if Buyer was Seller thereunder.
          (b) Registrations and Applicable Permits. On the Closing Date, Seller
shall assign or transfer to Buyer, and Buyer shall assume, the Registrations and
Applicable Permits to the extent provided in this Agreement. To the extent that
the assignment or transfer of all or any portion of any Registration or
Applicable Permit shall require the consent of the other party thereto or any
other third party, this Agreement shall not constitute an agreement to assign or
transfer any such Registration or Applicable Permit if an attempted assignment
or transfer without any such consent would constitute a breach or violation
thereof. In order, however, to seek to provide Buyer the full realization and
value of the Registrations and Applicable Permits (a) as soon as practicable
after the Closing, Seller shall use commercially reasonable efforts to obtain
and Buyer shall cooperate, in all reasonable respects to obtain any necessary
consents to the assignment of the Registrations and Applicable Permits, provided
that neither Party shall be required to make any payments or agree to any
material undertakings in connection therewith,

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and (b) until all such consents are obtained or all such Registrations and
Applicable Permits expire or are terminated, Seller and Buyer shall cooperate,
in all reasonable respects, to provide to Buyer the benefits under the
Registrations and Applicable Permits.
     1.4 Asset License. Sellers hereby grants to Buyer an exclusive (even as to
Sellers) limited to the Anthrax Field, worldwide, perpetual license under the
Xenerex Technology to Develop and Commercialize Products intended for use in the
Anthrax Field, with the right to grant sublicenses (the “Asset License”). Any
sublicense granted to a Third Party, shall be in writing and include provisions
which obligate such a party to comply with all the terms and conditions of this
Agreement. Buyer shall remain fully responsible to Sellers for performance of
this Agreement.
     1.5 Third Party Agreements. Seller shall be solely responsible for all
obligations under the agreements listed in Schedule 1.5 (each such agreement a
“Third Party Agreement”). Seller shall maintain the Third Party Agreements in
good standing and not take any actions (or omit or fail to take any actions)
which would result in a breach of any of such Third Party Agreements other than
as contemplated by this section. Seller agrees that it shall not amend, modify
or supplement or take any action or inaction with respect to any of the Third
Party Agreements in any manner that would materially adversely affect Buyer’s
rights under this Agreement without the consent of Buyer, such consent not to be
unreasonably withheld or delayed. In the alternative, Seller may arrange for the
assignment of such Third Party Agreements (with the consent of the applicable
third party licensor, if required) to Buyer at no transactional expense to
Buyer. In addition, Seller shall not sell, assign (except as permitted in
Section 10.4 hereof), convey, pledge, hypothecate or otherwise transfer any of
the Third Party Agreements or Seller’s rights or obligations thereunder, or
otherwise make any commitments or offers in a manner that materially conflicts
with Buyer’s rights hereunder without the consent of Buyer, such consent not to
be unreasonably withheld or delayed. Seller shall immediately notify Buyer upon
receipt by Seller of any notice from a licensor under any Third Party Agreements
of such licensor’s intent to (i) terminate Seller’s rights that are sublicensed
to Buyer hereunder, or (ii) exercise its respective rights or remedies
thereunder, or (iii) otherwise take any other action, in each case that would
reasonably be expected to materially and adversely affect Buyer’s rights. This
provision shall not affect, in any manner, the parties’ rights to assign this
Agreement or rights to the Xenerex Technology not transferred under this
Agreement as provided for in Section 10.4 of this Agreement.
     1.6 Technology Transfer. Sellers shall, as reasonably requested by Buyer,
furnish Buyer with copies of, and provide Buyer with ongoing access to, all
information or documentation in the control of Sellers or any of their
Affiliates relating to, or necessary or useful to exploit the Product, which
information and documentation includes, but is not limited to: (i) all Seller
Know-How and (ii) all data, documentation and information relating to or that
may be necessary or useful for the filing of an Investigational New Drug
Application, a Biologics License Application or their foreign counterparts for
any product having the Product as an active ingredient (including all databases,
toxicology reports, and other regulatory, scientific and safety information).
Sellers shall make available to Buyer appropriate personnel of Sellers and any
of their Affiliates as reasonably requested by Buyer from time to time, to
assist in the effectuation of the technology transfer contemplated by
Section 6.3, at Seller’s expense for the four-week period following the Closing,
not to exceed eight (8) hours per week during such

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period (with any out-of-pocket expenses incurred during such period by the
Seller’s representatives and approved by Buyer in writing to be reimbursed by
Buyer to Seller), and at Buyer’s expense thereafter. Sellers hereby assign to
Buyer their rights in any regulatory filings for products having the Product as
an active ingredient, to the extent any such regulatory filings exist. Sellers
agree to work diligently and in good faith to complete the transfers set forth
in this Section 1.6 from Seller to Buyer.
     1.7 Further Assurances. At any time and from time to time after the
Closing, at the reasonable request of Buyer and without further consideration,
Sellers shall execute and deliver such other instruments of sale, transfer,
conveyance and assignment and take such actions as Buyer may reasonably request
to transfer, convey and assign to Buyer, and to confirm Buyer’s rights to, title
in and ownership of, the Acquired Assets and to place Buyer in actual possession
and operating control thereof.
ARTICLE II
PURCHASE PRICE; ADDITIONAL PAYMENTS
     2.1 Execution Date Payment. In consideration of the transactions
contemplated by this Agreement, Buyer shall assume the Assumed Liabilities and
pay to Seller, by wire transfer of immediately available funds directly to an
account designated by Seller $100,000 (the “Execution Date Payment”) and make
the additional payments, if applicable, set forth in this Article II. The
parties acknowledge that Buyer previously paid a non-refundable amount of
$50,000 (the “Proposal Payment”) in conjunction with the submission of the
Proposal on November 7, 2007 and that such amount shall constitute part of the
purchase price for the Acquired Assets. Buyer Parent agrees to be jointly and
severally liable for the complete and prompt payment of Buyer’s payment
obligations under this Agreement.
     2.2 GMP Payment. In addition to any other amounts due hereunder, upon
release by AppTec of the GMP Clinical Materials to Buyer and Buyer’s written
acceptance thereof (which acceptance will not be unreasonably withheld,
conditioned or delayed), Buyer shall, upon receipt of Seller’s invoice, promptly
pay to Seller, by wire transfer of immediately available funds directly to an
account designated by Seller $100,000 (the “GMP Payment”).
     2.3 Milestone Payments. Subject to the achievement of the following, Buyer
shall, upon receipt of Seller’s invoice, promptly pay to Seller:
          (a) In addition to any other amounts due hereunder, upon the terms and
subject to the conditions set forth herein, upon the receipt of official
notification of an award of a grant or contract (a copy of such notification to
be promptly provided to the Sellers) from NIAID (excluding grants or contracts
for Commercial Sales) with respect to AVP-21D9 in response to the Proposal (the
“NIAID Grant”):

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  (i)   $* * * if the aggregate amount of the NIAID Grant award is equal to or
greater than $* * *; or     (ii)   $* * * if the aggregate amount of the NIAID
Grant award is less than $* * *.

In the event the Buyer does not receive a NIAID Grant in response to the
Proposal, upon the acceptance by Buyer or any Affiliate of a grant or contract
from NIAID (excluding grants or contracts for Commercial Sales) with respect to
AVP-21D9 in response to any proposal other than the Proposal:

  (i)   $* * * if the aggregate amount of the NIAID Grant award is equal to or
greater than $* * *; or     (ii)   $* * * if the aggregate amount of the NIAID
Grant award is less than $* * * but greater than $* * *.

Buyer shall make only one payment to Seller under this Section 2.3(a). The
payment under subsections (i) and (ii) above shall be payable only one time. In
no event shall aggregate payments due under this Section 2.3(a) exceed $* * *.
          (b) If (and only if) Buyer or any Affiliate receives aggregate
payments from the NIAID pursuant to the NIAID Grant of at least $* * * , Buyer
shall promptly pay Seller, in addition to all other amounts payable under this
Article II, an amount equal to $* * *. The payment due under this Section 2.3(b)
is a one-time payment and shall only be paid upon receipt of the first $* * *
paid under the NIAID Grant.
          (c) If (and only if) Buyer, any Affiliate or any sublicensee achieves
Net Sales of at least $* * * (for the avoidance of doubt, the $* * * of Net
Sales does not include the $* * * NIAID Grant described in clause (b) above),
Buyer shall promptly pay Seller, in addition to all other amounts payable under
this Article II, an amount equal to $* * *. The payment due under this Section
2.3(c) is a one-time payment and shall only be paid upon receipt of the first $*
* * of Net Sales.
     2.4 Sales-Based Contingent Purchase Price Payments.
          (a) In addition to any other amounts due under Article II, upon the
terms and subject to the conditions set forth herein, in consideration of the
sale, transfer, conveyance, assignment and delivery of the Acquired Assets,
Buyer shall pay, or cause to be paid, to Seller quarterly payments in arrears in
accordance with this Section 2.4(a) and Section 2.4(b) (the “Sales-Based
Contingent Purchase Price Payments”) based upon cumulative Net Sales of the
Product or any product or antibody made, produced, manufactured or sublicensed
under the Asset License. The payments shall be determined in accordance with the
following scale:
 

* * *    Confidential Information, indicated by [***], has been omitted from
this filing and filed separately with the Securities and Exchange Commission.

5

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               (i) until the amount of cumulative Net Sales is equal to $* * *,
* * * percent (* * *%) of such Net Sales;
               (ii) for that portion of cumulative Net Sales equal to or greater
than
$* * * but less than $* * * , * * * percent (* * *%) of such Net Sales; and
               (iii) for that portion of cumulative Net Sales equal to or
greater than $* * * but less than $* * *, *** percent (***%) of such Net Sales;
and
               (iv) for that portion of cumulative Net Sales equal to or greater
than $* * *, * * * percent (* * *%) of such Net Sales.
          (b) Payment and Reports.
               (i) Quarterly Payment Reports. Buyer shall deliver to Seller,
within forty-five (45) days after the end of each calendar quarter, a written
accounting of Net Sales during the prior calendar quarter. Such quarterly
reports shall indicate (i) gross sales of Product, an itemization of deductions
made to gross sales to reach Net Sales, Net Sales and cumulative Net Sales, and
(ii) the calculation of payment amounts owed to Seller from such gross sales and
Net Sales. Buyer shall deliver amounts due pursuant to Section 2.4(a) to Seller
for each calendar quarter concurrently with the delivery to Seller of the
accounting for such calendar quarter.
               (ii) Audits. Buyer shall keep, and shall require its Affiliates
and its and their sublicensees to keep, records of the latest three (3) years
relating to gross sales and Net Sales. For the sole purpose of verifying the
reports provided for in Section 2.4(b), Buyer further agrees to permit such
records to be examined by an independent accounting firm selected by Seller at
Seller’s cost and expense and in the location(s) where such records are
maintained by Buyer and its Affiliates upon reasonable notice, during regular
business hours and without unreasonable disruption to Buyer’s and its
Affiliates’ operations. Unless Seller obtains the prior written consent of
Buyer, which consent shall not be unreasonably withheld, such accounting firms
must be selected from U.S. accounting firms that are AICPA registered accounting
firms. Such audit shall not be performed more frequently than once per calendar
year nor more frequently than once with respect to records covering any specific
period of time. Seller shall provide a copy of the results (and backup) of such
review promptly after Seller receives such results. If the review reflects an
underpayment to Seller, Buyer shall promptly remit such underpayment to Seller,
Together with a rate of interest equal to an annual percentage rate of nine
percent (9%), provided, that if Buyer notifies Seller that Buyer disagrees with
the determination of the underpayment amount and if thereafter the Parties are
unable to agree in good faith as to such underpayment amount, then such matter
shall be referred to a mutually agreed independent auditor or valuation expert
for resolution, and the determination of such auditor or valuation expert shall
be conclusive and binding on the parties. If the underpayment is equal to or
greater than ten percent (10%) of the amount that was otherwise due, Seller
shall be entitled to have Buyer pay all of the costs of such review, including
the cost of the independent auditor.
 

* * *    Confidential Information, indicated by [***], has been omitted from
this filing and filed separately with the Securities and Exchange Commission.

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          (c) Adjustments to Payments.
               (i) If, in any calendar quarter, sales of Follow-On Biological
Products reach *** percent (***%) worldwide market share (calculated on a unit
basis), then, the payment owed under Section 2.4 for Net Sales shall be
decreased by *** percent (***%) for the remainder of the time period that
payments are due pursuant to Section 2.4.
               (ii) On a country-by-country basis, Buyer may reduce the amount
of any payments otherwise due to Seller under this Section 2.4 with respect to
Net Sales in such country by up to * * * percent (* * *%) of any royalties or
other amounts paid to Third Party(ies) to permit the Development or
Commercialization of the Product (or any amounts paid to such Third Party(ies)
in settlement of a claim of infringement by the Product).
          (d) Duration of Payments. The amounts payable under this Section 2.4
shall be paid on a country-by-country basis until the earlier of (i) seven
(7) years following the first Commercial Sale of the Product in such country or
(ii) expiration or discontinuation of the last to expire Valid Claim that Covers
the Development or Commercialization of the Product in such country.
ARTICLE III
CLOSING
     3.1 Closing. Upon the terms and subject to the conditions of this
Agreement, the Closing shall take place concurrently with the execution of this
Agreement by the Parties hereto (the “Closing Date”). The Parties to this
Agreement will exchange (or cause to be exchanged) at the Closing the funds,
agreements, instruments, certificates and other documents, and do, or cause to
be done, all of the things respectively required of each Party as specified in
Sections 3.2(a) and 3.2(b)
     3.2 Transactions at Closing.
          (a) Seller’s Actions and Deliveries. At the Closing, Seller shall:
               (i) execute and deliver to Buyer this Agreement;
               (ii) execute and deliver to Buyer a bill of sale in the form
attached hereto as Exhibit A;
               (iii) execute and deliver to Buyer one or more patent assignments
in the form attached hereto as Exhibit B;
               (iv) execute and deliver such other instruments of conveyance as
Buyer may reasonably request in order to effect the sale, transfer, conveyance,
assignment and license to Buyer of valid ownership of the Acquired Assets;
 

* * *    Confidential Information, indicated by [***], has been omitted from
this filing and filed separately with the Securities and Exchange Commission.

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               (v) deliver to Buyer, or otherwise put Buyer in possession and
control of, all of the Acquired Assets of a tangible nature;
               (vi) execute and deliver to each other a cross-receipt evidencing
the transactions referred to in this Section 3.2(a); and
               (vii) execute and deliver an Incumbency and Officer’s Certificate
from each of Seller and Seller Parent in form and substance reasonably
satisfactory to Buyer.
          (b) Buyer’s Actions and Deliveries. At the Closing Buyer shall:
               (i) execute and deliver to Sellers this Agreement;
               (ii) execute and deliver to Seller an instrument of assumption in
the form attached hereto as Exhibit C;
               (iii) execute and deliver such other instruments as Sellers may
reasonably request in order to effect the assumption by Buyer of the Assumed
Liabilities;
               (iv) pay to Seller, payable by wire transfer of immediately
available funds to an account designated by Seller, the Execution Date Payment;
               (v) execute and deliver to each other a cross-receipt evidencing
the transactions referred to in this Section 3.2(b); and
               (vi) execute and deliver an Incumbency and Officer’s Certificate
from each of Buyer and Buyer Parent in form and substance reasonably
satisfactory to Sellers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER PARENT
     Each of the Sellers, jointly and severally, represents and warrants to
Buyer that, except as set forth in the Disclosure Schedule, the statements
contained in this Article IV are true and correct. The Disclosure Schedule shall
be arranged in sections and subsections corresponding to the numbered sections
and subsections contained in this Article IV. The disclosures in any section or
subsection of the Disclosure Schedule shall qualify the corresponding section or
subsection in this Article IV as well as any other section or subsection to
which the nature of the disclosure made relates but only to the extent it is
reasonably apparent from a reading of the disclosure that such disclosure is
applicable to such other section and subsection. Nothing in the Disclosure
Schedules is intended to broaden the scope of any representation, warranty or
covenant of Sellers contained in this Agreement. The inclusion of any
information in the Disclosure Schedules (or any update thereto) shall not be
deemed to be an admission or acknowledgment, in and of itself, that such
information is required by the terms hereof to be disclosed, is material to the
Business, has resulted in or would result in a Material Adverse Effect or is
outside the Ordinary Course of Business.

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     4.1 Organization, Qualification and Corporate Power. Each of the Sellers is
a corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of California. Seller has all requisite
corporate power and authority to own, lease and operate, as applicable, the
Acquired Assets.
     4.2 Authorization of Transaction. Each of the Sellers has all requisite
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to perform its obligations hereunder and
thereunder. The execution and delivery by each of the Sellers of this Agreement
and the Ancillary Agreements to which it is a party and the performance by each
of the Sellers of this Agreement and each Ancillary Agreement to which it is a
party and the consummation by each of the Sellers of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of each of the respective Sellers. Each
of this Agreement and the Ancillary Agreements has been duly and validly
executed and delivered by each of Sellers that is a party thereto and
constitutes a valid and binding obligation of Sellers, enforceable against each
of the Sellers in accordance with its terms except as may be limited by the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting creditors’ rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
     4.3 Noncontravention. Except as disclosed on Schedule 4.3(c), neither the
execution and delivery by Sellers of this Agreement or any of the Ancillary
Agreements, nor the consummation by Sellers of the transactions contemplated
hereby or thereby, does or will (a) conflict with or violate any provision of
the Articles of Incorporation or by-laws of either of the Sellers, (b) require
on the part of either of the Sellers any notice to or filing with, or any
permit, authorization, consent or approval of, any Governmental Entity,
(c) conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party the right to terminate, modify or cancel,
or require any notice, consent or waiver under, any contract or instrument to
which either of the Sellers is a party or by which either of the Sellers is
bound or to which any of its assets is subject, (d) result in the imposition of
any Lien upon any of the Acquired Assets or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Seller or any of
its respective properties or assets.
     4.4 Absence of Certain Changes. Between December 31, 2006 and the date of
this Agreement, there has not been with respect to the Product Line Operations:
          (a) any Material Adverse Effect, except that Sellers have reorganized
and downsized their operations and have terminated the employment of all
personnel working on the Product Line Operations and the Xenerex Technology
except for one person, and Sellers have greatly reduced the amount of laboratory
and research space used for the development of the Product Line Operations and
the Xenerex Technology, resulting in a substantial slowdown in development
efforts;
          (b) any incurrence, assumption or guarantee of any material Liability
in the Ordinary Course of Business other than restructuring and other
restructuring charges for

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personnel and facilities incurred in connection with the downsizing described in
Section 4.4(a); or
          (c) any material transaction, agreement or event except as described
in Section 4.4(a) outside the Ordinary Course of Business.
     4.5 Taxes. There are no Liens for Taxes upon the Acquired Assets except
those relating to Taxes that are not yet due and payable.
     4.6 Ownership and Condition of Assets.
          (a) Except with respect to Product Line Intellectual Property (which
is subject to Section 4.7) and the Books and Records, Seller is the true, lawful
and sole owner, and has good title to the Product and Seller’s rights in the
Assigned Contracts (subject to the rights of each counterparty in such Assigned
Contracts), free and clear of all Liens. Upon execution and delivery by Seller
to Buyer of the instruments of conveyance referred to in Section 3.2, Buyer will
become the true, lawful and sole owner of, and will receive good title to, the
Product and Seller’s rights in the Assigned Contracts (subject to the rights of
each counterparty in such Assigned Contracts), free and clear of all Liens.
          (b) Seller has the lawful right to use the Books and Records. Upon
execution and delivery by Seller to Buyer of the instruments of conveyance
referred to in Section 3.2, Buyer will have the lawful right to use the Books
and Records.
          (c) The Acquired Assets, together with the assets licensed pursuant to
the license set forth in Section 1.4 are sufficient for the conduct of the
Product Line Operations except that Seller does not have any right to
Commercialize any Product other than AVP-21D9. Each tangible Acquired Asset is
free from material defects, has been maintained in accordance with normal
industry practice, and is in good operating condition and repair (subject to
normal wear and tear).
     4.7 Intellectual Property. Notwithstanding anything to the contrary set
forth in this Agreement, the representations set forth in this Section 4.7
constitute Seller Parent’s and Seller’s sole representations with respect to
Product Line Intellectual Property, except for the representations set forth in
Sections 4.2, 4.3, 4.5, and 4.10.
          (a) Ownership; Sufficiency. The AVP Anthrax Patents constitute all
patents and patent applications owned by Sellers necessary or useful for the
exploitation of the Product and the conduct of the Product Line Operations.
Section 4.7(a) of the Disclosure Schedule lists, with respect to the AVP Anthrax
Patents, the applicable application or patent number, title, and jurisdiction in
which filing was made, date of filing or issuance. Seller is the owner of and
has good title to the AVP Anthrax Patents in existence as of the Closing Date,
free and clear of any Lien. All assignments to the Seller of AVP Anthrax Patents
in existence as of the Closing Date have been properly executed and recorded.
All issuance, renewal, maintenance and other payments that are or have become
due with respect thereto have been timely paid by or on behalf of Seller. The
AVP Anthrax Patents will be owned by the Buyer immediately following the

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Closing on the same terms and conditions as they were held by the Seller
immediately prior to the Closing.
          (b) Prosecution Matters. Subject to 4.7(a), there are no inventorship
challenges, opposition or nullity proceedings or interferences declared,
commenced or provoked, or to the knowledge of Seller, threatened, with respect
to any AVP Anthrax Patents in existence as of the Closing Date. In Application
No. 11/041,763, the Seller copied claims from U.S. Patent Publication No.
20060258842, published on November 16, 2006 to Groen et al. and PCT Publication
No. WO 2005/120567, published on December 22, 2005 to Groen et al. (IQ
Corporation), which claims were subsequently cancelled. Seller and entities
involved in the prosecution of the AVP Anthrax Patents (such as Seller’s
attorneys, inventors, agents) have complied with their duty of candor and
disclosure to the United States Patent and Trademark Office and any foreign
patent office requiring such disclosure with respect to all patent applications
filed by or on behalf of Seller and have made no material misrepresentation in
such applications. To the extent that patent applications are pending, Seller
may still be in the process submitting Information Disclosure Statements in the
United States, or equivalent submissions in Foreign Patent Offices.
          (c) Protection Measures. Seller has taken reasonable measures to
protect the proprietary nature of the Product Line Intellectual Property, and to
maintain in confidence all trade secrets and information comprising a part
thereof. To the Knowledge of the Seller, there has been no: (i) unauthorized
disclosure of any third party proprietary information in the possession, custody
or control of Seller, or (ii) breach of Seller’s security procedures wherein
information has been disclosed to a third person.
          (d) Non-infringement of Third Party Rights. To the knowledge of the
Seller, the Product Line Operations do not infringe or violate, or constitute a
misappropriation of, any Patents and Know-How rights of any Third Party. Sellers
have not received any complaint, claim or notice, or threat of any of the
foregoing (including any notification that a license under any patent is or may
be required. Sellers have provided or made available to Buyer copies of all
complaints, claims, notices or threats concerning any alleged infringement by
the Product, in its possession.
          (e) Infringement of Seller’s Rights. To the knowledge of Seller, no
third party (including, without limitation, any current or former employee,
founder, inventor of any Product Line Patent, or consultant to Seller) is
infringing, violating or misappropriating any of the Product Line Intellectual
Property. Sellers have provided or made available to Buyer copies of all
complaints, claims, notices or threats concerning the infringement, violation or
misappropriation of any Product Line Intellectual Property.
          (f) Outbound IP Agreements. Section 4.7(f) of the Disclosure Schedule
identifies each license, covenant or other agreement pursuant to which Seller
has assigned, transferred, licensed, distributed or otherwise granted any right
or access to any person or entity, or covenanted not to assert any right, with
respect to any past, existing or future Product Line Intellectual Property.
Neither of the Sellers is a member of or party to any patent pool, industry
standards body, trade association or other organization pursuant to the rules of
which it is obligated to license any existing or future Product Line
Intellectual Property to any person.

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          (g) Inbound IP Agreements. Section 4.7(g) of the Disclosure Schedule
identifies each agreement, contract, assignment or other instrument between
Seller and a third party which are part of the Acquired Assets.
          (h) Employee and Inventor Assignments. Schedule 4.7(h) identifies each
employee of Seller materially involved in the research or development of the
Product, and any inventor of the AVP Anthrax Patents has executed a valid and
binding written agreement expressly or in substance assigning to Seller all
right, title and interest in any inventions and works of authorship, whether or
not patentable, invented, created, developed, conceived and/or reduced to
practice during the term of such employee’s employment and all Patents and
Know-How rights therein.
          (i) Support and Funding. The U.S. Government may have certain rights
to the AVP Anthrax Patents by virtue of one or more Grants Received. Except as
set forth on Schedule 4.7(i) of the Disclosure Schedule, Seller has not received
any direct support, funding, resources or assistance from any federal, state,
local or foreign governmental or quasi-governmental agency or funding source in
connection with the development or exploitation of the Product or conduct of the
Product Line Operations or any facilities or equipment used in connection
therewith.
     4.8 Biological Materials. To Seller’s Knowledge, the Biological Materials
listed on Schedule 9.1(d) constitute all of the Biological Materials. To
Sellers’ Knowledge, all Biological Materials in the possession of AppTec have
been developed, produced and stored in accordance with Good Laboratory Practices
as defined by the U.S. Food and Drug Administration (“GLP”).
     4.9 Contracts. Seller has made available or delivered to Buyer a complete
and accurate copy of each Assigned Contract. The Assigned Contracts include all
of the contracts and agreements to which Seller or any of its Affiliates is a
party that relate primarily or exclusively to the Product Line Operations.
Neither Seller nor any of its Affiliates is a party to or bound by any contract,
agreement or arrangement (written or oral) that is material to the Product Line
Operations, except for the Assigned Contracts. All of the Assigned Contracts are
in full force and effect. All of the Assigned Contracts are valid and binding
and are enforceable in accordance with their terms against Seller and, to
Seller’s Knowledge, all other parties thereto. Except as set forth in
Section 4.9 of the Disclosure Schedule, all of the Assigned Contracts are freely
assignable to Buyer pursuant to this Agreement without the consent of any party
thereto. To the knowledge of Seller, no condition exists or event has occurred
as a result of action or inaction by Seller or any other person that, with
notice or lapse of time or both, would constitute (a) default of any Assigned
Contract by Seller, or any other party thereto or (b) a basis for force majeure
or other claim of excusable delay or non-performance under any Assigned Contract
against Seller or against any other party thereto.
     4.10 Litigation. There is no action, suit, litigation, proceeding, claim,
governmental investigation or administrative action pending or, to Seller’s
Knowledge, threatened directly or indirectly involving the Product, the Product
Line Operations, the Acquired Assets, any Assigned Contract or the transactions
contemplated hereby or by any of the Ancillary Agreements, which has had or
would, individually or in the aggregate, reasonably be expected to cause a
Material Adverse Effect.

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     4.11 Permits. All permits, licenses, franchises or authorizations from any
Governmental Entity that are required for the Product Line Operations are listed
on Schedule 4.11 (collectively, the “Applicable Permits”) and are valid and in
full force and effect and Seller is not in violation of or in default under any
Applicable Permit. No suspension or cancellation of any such Applicable Permit
has been threatened in writing.
     4.12 Legal Compliance. Seller is, and has since December 31, 2005 been, in
material compliance with all applicable laws (including rules and regulations
thereunder) of any Governmental Entity, relating to the Product Line Operations,
the Acquired Assets and the use of the Acquired Assets.
     4.13 Regulatory Compliance.
          (a) Seller has delivered or made available to Buyer true, correct and
complete copies of all material written communications between Seller, on the
one hand, any applicable Medical Product Regulatory Authority on the other hand,
relating to the Product, including copies of any pre-Investigational New Drug
Application meeting packages submitted by Seller for the Product, and any
similar state or foreign regulatory submission made by or on behalf of Seller,
including all supplements and amendments thereto. There have been no meetings or
oral discussions between Seller, on the one hand, any applicable Medical Product
Regulatory Authority on the other hand, relating to the Product.
          (b) The conduct of the production and Development activities related
to the Product Line Operations has been conducted in material compliance with
current Good Manufacturing Practices and other applicable rules and regulations
of the FDA. Buyer acknowledges and Seller represents that Product scale up has
been outsourced to Third Parties. Sellers agree to require vendors to conduct
studies to be performed under the U01 in accordance with Good Laboratory
Practices.
          (c) Seller has not been and is not, and to Sellers Knowledge none of
its subcontractors engaged in the Development or production of the product have
been or is, subject to any adverse FDA inspection, finding of deficiency,
finding of non-compliance, warning, investigation, penalty for corrective or
remedial action or other compliance or enforcement action relating to Seller’s
operations, the Product, or any of Seller’s other products.
          (d) Neither Seller nor any of Seller’s officers, employees or agents
acting for Seller is subject to any pending or threatened investigation by
(A) the FDA pursuant to its “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities” policy set forth in 56 Fed. Reg. 46191
(September 10, 1991) or any amendments thereto, (B) the Department of Health and
Human Services Office of Inspector General, Department of Justice, or other
Governmental Entity pursuant to the Federal Anti-Kickback Statute (42 U.S.C.
§1320a-7(b)), or the Federal False Claims Act, or similar state or foreign law.
Neither Seller nor any of Seller’s officers, employees or agents acting for
Seller has committed any act, made any statement or failed to make any statement
that would reasonably be expected to provide a basis for action under any of the
statutes, regulations or policy referred to in the preceding sentence. Neither
Seller nor any of Seller’s officers, employees or agents acting for Seller has
been convicted of any crime or engaged in any conduct that would reasonably be
expected to result in (A)

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debarment under 21 U.S.C. §335a or any similar state or foreign law or
(B) exclusion under 42 U.S.C. §1320a-7 or any similar state or foreign law.
     4.14 Environmental Matters.
          (a) Seller and the conduct of the Product Line Operations are and have
been in compliance with applicable Environmental Laws, except for any failure to
comply with Environmental Laws that would not reasonably be expected to result
in a Material Adverse Effect.
          (b) There is no pending or, to the knowledge of Seller, threatened
action, suit, notice of violation or judicial or administrative proceeding,
investigation or claim relating to Environmental Matters, including Off-Site
Liabilities or any violation of Environmental Law, involving the Product Line
Operations, or any property currently, or, to the knowledge of Seller, formerly
owned or operated by Seller in connection with the Product Line Operations.
     4.15 Specifications. The specifications included in Schedule 4.15 of the
Disclosure Schedule (the “Specifications”) are the specifications that are used
by Seller to produce AVP-21D9 at a 100 liter scale as of the date hereof, and
the GMP Clinical Materials to be released by Apptec shall satisfy the
Specifications.
     4.16 Clinical and Scientific Data.
          (a) To Sellers’ knowledge, Seller has made available to Buyer all
available pre-clinical study data, including raw data and reports, created by
Seller, or any third party on behalf of Seller relating to the Product
(“Scientific Data”) and in Seller’s possession. Seller will following the
Closing, continue to take commercially reasonable steps to make available or
assist Buyer in obtaining access to all Scientific Data.
          (b) Seller either owns and has possession, or has the right to use and
full rights of access to, all Scientific Data.
          (c) There have been no human clinical studies conducted in connection
with the Product.
          (d) The Proposal is materially consistent with the Scientific Data.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT
     Buyer and Buyer Parent, as the case may be, represent and warrant to Seller
as follows:
     5.1 Organization and Corporate Power. Buyer and Buyer Parent are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer and Buyer Parent have all requisite
corporate power and authority to carry on the businesses in which they are
engaged and to own and use the properties owned and used by them.

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     5.2 Authorization of the Transaction. Buyer and Buyer Parent have all
requisite power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to perform their respective obligations hereunder and
thereunder. The execution and delivery by Buyer and Buyer Parent of this
Agreement and the Ancillary Agreements and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Buyer and Buyer
Parent. This Agreement and the Ancillary Agreements have been duly and validly
executed and delivered by Buyer and Buyer Parent and constitute valid and
binding obligations of Buyer and Buyer Parent enforceable against them in
accordance with their respective terms.
     5.3 Noncontravention. Neither the execution and delivery by Buyer and Buyer
Parent of this Agreement or the Ancillary Agreements, nor the consummation by
Buyer and Buyer Parent of the transactions contemplated hereby or thereby, will
(a) conflict with or violate any provision of the Certificate of Incorporation
or by-laws of Buyer or Buyer Parent, (b) require on the part of Buyer or Buyer
Parent any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (c) conflict with, result in breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of obligations under, create in any party any right to terminate,
modify or cancel, or require any notice, consent or waiver under, any contract
or instrument to which Buyer or Buyer Parent is a party or by which it is bound
or to which any of its assets is subject, except for (i) any conflict, breach,
default, acceleration, termination, modification or cancellation which would not
adversely affect the consummation of the transactions contemplated hereby or
(ii) any notice, consent or waiver the absence of which would not reasonably be
expected to adversely affect or delay the consummation of the transactions
contemplated hereby, or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer, Buyer Parent or any of their
respective properties or assets.
     5.4 Compliance with Applicable Law. Buyer conducts its business in
compliance with all applicable laws, except for violations, if any, which would
not, individually or in the aggregate, reasonably be expected to materially
affect or delay the ability of Buyer to consummate the transactions contemplated
hereby.
     5.5 Litigation. There is no material action, suit, litigation, proceeding,
claim or investigation pending, or to the knowledge of Buyer, threatened that is
reasonably likely to adversely affect or delay Buyer’s or Buyer Parent’s
performance under this Agreement or the consummation of the transactions
contemplated herein.
     5.6 Brokers’ Fees. Buyer does not have any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.

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ARTICLE VI
COVENANTS; OTHER AGREEMENTS
     6.1 Proprietary Information. From and after the Closing, Sellers shall not
disclose or make use of (except to pursue its rights, under this Agreement or
the Ancillary Agreements), and shall use their best efforts to cause all of its
Affiliates not to disclose or make use of, any knowledge, information or
documents of a confidential nature or not generally known to the public with
respect to Acquired Assets or Buyer or its business, except to the extent that
such knowledge, information or documents shall have become public knowledge
other than through improper disclosure by Seller or an Affiliate. Sellers shall
enforce, for the benefit of Buyer, all confidentiality, invention assignments
and similar agreements between either Seller or Seller Parent and any other
party relating to the Acquired Assets. Except with respect to the Xenerex
Technology not licensed or assets not sold under this Agreement, the Buyer shall
be entitled to assume the control of any litigation, action, arbitration or
proceeding in connection with the enforcement of any of the rights associated
with the Acquired Assets at Buyer’s expense. Notwithstanding the foregoing or
any other provision in this Agreement, Sellers may market, sell, hypothecate,
transfer or otherwise assign any asset or right not specifically sold,
transferred or licensed under this Agreement subject to Sellers’ confidentiality
and non-disclosure agreements.
     6.2 Tax Matters.
          (a) After the Closing Date, Buyer and Sellers shall cooperate in the
filing of any Tax returns or other Tax-related forms or reports, to the extent
such filing requires providing each other with necessary relevant records and
documents relating to the Acquired Assets or the Product, or providing
reasonable access to employees. Sellers and Buyer shall cooperate in the same
manner: (i) in defending or resolving any Tax audit, examination or tax-related
litigation relating to the Acquired Assets or the Product; and (ii) to minimize
any transfer, sales and use Taxes and notarial and registry fees and recording
costs.
          (b) All transfer, documentary, sales, use, stamp, registration and
other such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be paid by Buyer when due, and Buyer will,
at its own expense, file all necessary Tax returns and other documentation with
respect to such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees.
     6.3 Books and Records.
          (a) Sellers shall not destroy any Books and Records retained by them
without first providing Buyer with the opportunity to obtain or copy the portion
thereof at Buyer’s expense. Following the Closing, Sellers shall promptly make
available to Buyer all Books and Records that are discovered to be in the
possession of Sellers and that have not previously been furnished to the Buyer
at Buyer’s expense, provided that Seller may restrict Buyer’s right to access
attorney client privileged communications or work product if such restriction is
exercised by Sellers in a reasonable manner. Sellers may retain one copy of the
Books and Records for archival purposes only.

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          (b) Promptly upon request by Buyer made at any time following the
Closing Date, Sellers shall authorize the release to Buyer the portion of any
files pertaining to the Acquired Assets or the conduct of the Product Line
Operations held by any Governmental Entity.
          (c) The Parties agree that Sellers may maintain copies of the Other
Books and Records that are jointly necessary or useful for the exploitation of
the other Seller assets not sold transferred or licensed under this Agreement.
Such Other Books and Records are not exclusively transferred to the Buyer and
may be disclosed to, jointly transferred to or jointly licensed to other Third
Parties subject to the terms of this Agreement, provided that the party to which
such Other Books and Records are disclosed, transferred or licensed agrees to
not use such Other Books and Records to exploit any product in the Anthrax
Field.
     6.4 Use of Name. Except in the circumstances described in Section 8.3(a)
pertaining to Sellers’ disclosure obligations, compliance with this Agreement,
and for Sellers’ own internal reporting purposes, Sellers shall not use, and
shall not permit any Affiliate to use, the name AVP-21D9 or any name reasonably
similar thereto after the Closing Date in connection with any business related
to, competitive with, or an outgrowth of, the business conducted by Seller on
the date of this Agreement.
     6.5 Employees. Buyer shall be permitted to offer employment to any employee
of Sellers necessary for the operation of the Product Line Operations. Each of
the Sellers hereby consents to the hiring of any such employees by Buyer and
waives, with respect to the employment by Buyer of such employees, any claims or
rights it may have against Buyer or any such employee under any non-competition,
confidentiality or employment agreement.
     6.6 Patent Extension. Buyer shall be solely responsible for all patent term
extensions, including supplementary protection certificates and any other
extensions that are now or become available in the future, that are applicable
to any AVP Anthrax Patents. Upon Buyer’s request, Seller shall execute all
documents for such applications and take any additional action as Buyer
reasonably requests in connection therewith at Buyer’s expense. Except as
specifically set forth in this Agreement, Sellers shall have no further or
ongoing obligation to extend or maintain any of the AVP Anthrax Patents or to
support any Product Line Intellectual Property.
     6.7 Patent Prosecution. After the Closing Date, Buyer shall have the sole
right, obligation and option to file and prosecute any patent applications and
to maintain any patents included in the AVP Anthrax Patents, at Buyer’s cost and
expense. If and to the extent reasonably requested by Buyer, Sellers will
provide reasonable assistance to Buyer at Buyer’s expense in prosecuting any
administrative action brought by Buyer against a Third Party in order to oppose
or secure reexamination of a patent held by such Third Party that is deemed to
Cover exploitation of a Product, or defending any action brought against Buyer
by a Third Party asserting a patent alleged to Cover exploitation of a Product.
     6.8 Due Diligence Development and Commercialization Obligations. Buyer
agrees to use commercially reasonable efforts to Develop and Commercialize a
Product.
     6.9 Performance of the Outstanding Tasks Under Seller’s U01 Grant.

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          (a) Seller shall perform its remaining obligations under its current
U01 grant as required by the NIAID (the “Services”). The obligation to perform
the Services shall terminate upon completion of the Services as determined
jointly by the NIAID and Seller. In the course of performing the Services,
Seller shall consult with Gary Nabors, or any alternate contact specified by
Buyer (the “Emergent Contact”), and perform the Services in a collaborative
manner. Buyer agrees not to interpose or add any additional requirements to the
Services unless such additional requirements are required by the NIAID in
writing, agreed to in writing and in advance by Sellers, such agreement not to
be unreasonably withheld, delayed or conditioned (it being understood that if
the work is not required by the NIAID, Seller is not obligated to perform such
work). Sellers represent and warrant that the Services to be performed hereunder
by the Sellers will be performed in a competent, diligent and workmanlike
manner, and to the extent the work is done by Third Parties, Sellers shall
contract that the work will be performed in a competent, diligent and
workmanlike manner and using Good Laboratory Practices.
          (b) Any work requested by Buyer that expands the resources required to
perform the work required by NIAID, or the technology transfer work beyond what
will be provided by Seller to Buyer pursuant to Section 1.6, shall be paid for
by Buyer at a rate of one hundred fifty U.S. Dollars ($150) an hour, or fraction
thereof, pursuant to a mutually agreeable work order. Work performed shall be
acceptable to Buyer. Seller shall submit invoices on a monthly basis accompanied
by a timesheet detailing the hours worked and signed by an authorized
representative of the Seller. Buyer will reimburse Seller for reasonable
out-of-pocket expenses that have are accompanied by receipts submitted for
reimbursement with an invoice. Invoices will not be processed and paid unless
they refer to the applicable Accounting Code which Buyer shall provide in
advance of any work order. Invoices shall be payable within thirty (30) days of
receipt by Buyer.
          (c) Representatives of Sellers performing Services hereunder will not
receive employee benefits from Buyer, including but not limited to paid
vacation, sick leave or any insurance benefits.
          (d) All right, title, and interest in and to all reports, data,
information, documents, materials and inventions arising out of the direct
performance of Services provided hereunder, subject to any rights to such items
asserted by the U. S government or any agency thereof, shall belong to and be
the property of Buyer. Sellers agree, without further payment by Buyer, to make
any assignments, and shall cause any other employees or agents as applicable to
assign, and execute all documents necessary to effect Buyer’s title thereto in
all countries of the world. Furthermore, all documents and materials prepared by
Sellers in the performance of duties hereunder will constitute
works-made-for-hire and shall belong to and be the exclusive property of Buyer
and shall be surrendered by Sellers to Buyer upon completion of the Services.
Sellers hereby assign to Buyer all rights that Sellers may have to data,
information, documents, materials and inventions referred to in this paragraph.
          (e) In performing the Services, Sellers shall comply with all
applicable existing and future laws, rules and regulations.

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ARTICLE VII
INDEMNIFICATION
     7.1 Indemnification by Seller and Seller Parent. Seller and Seller Parent
shall, jointly and severally, indemnify Buyer in respect of, and hold Buyer
harmless against, Damages incurred or suffered by Buyer or any Affiliate thereof
resulting from, relating to or constituting:
          (a) any breach of any representation or warranty of either of the
Sellers contained in this Agreement, any Ancillary Agreement or any other
agreement or instrument furnished by either of the Sellers to Buyer pursuant to
this Agreement;
          (b) any failure to perform any covenant or agreement of either of the
Sellers contained in this Agreement, any Ancillary Agreement or any agreement or
instrument furnished by either of the Sellers to Buyer pursuant to this
Agreement;
          (c) any Retained Liabilities.
     7.2 Indemnification by Buyer. Buyer shall indemnify Seller in respect of,
and hold it harmless against, any and all Damages incurred or suffered by Seller
resulting from, relating to or constituting:
          (a) any breach of any representation or warranty of Buyer contained in
this Agreement, any Ancillary Agreement or any other agreement or instrument
furnished by Buyer to Sellers pursuant to this Agreement;
          (b) any failure to perform any covenant or agreement of Buyer
contained in this Agreement, any Ancillary Agreement or any other agreement or
instrument furnished by Buyer to Sellers pursuant to this Agreement; or
          (c) any Assumed Liabilities.
     7.3 Limitations on Indemnification.
          (a) Notwithstanding anything to the contrary set forth in this
Agreement, the right to indemnification under Section 7.1(a) shall, unless
otherwise explicitly stated in this Agreement, be subject to the following
limitations:
               (i) With respect to Damages arising of out of a breach of
Sections 4.1, 4.2, 5.1, and 5.2, Buyer and Seller shall be liable for all such
Damages suffered by the other Party.
               (ii) With respect to Damages arising of out of a breach of a
representation or warranty not expressly covered by Section 7.3(a)(i), Sellers
shall not be liable for any Damages suffered by Buyer unless the Damages arising
out of the applicable breach are in excess of $150,000 (the “Deductible”) at
which point Sellers shall be liable for 50% of all Damages in excess of the
Deductible, provided that Damages actually paid by Sellers shall not

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exceed the lesser of $800,000 or the aggregate amount actually paid by Buyer
pursuant to this agreement (the “Overall Cap”).
               (iii) Nothing in this Article VII shall be deemed to limit Buyer
Parent’s financial obligations set forth in this Agreement.
          (b) Except in the event of fraud or for the breach by Buyer of any
obligation to pay any amounts pursuant to Article II, the indemnification
provisions contained in this Article VII shall be the Parties’ exclusive remedy
for any inaccuracy in or breach of any representation, warranty, covenant or
obligation set forth in this Agreement or any Ancillary Agreement; provided,
however, that nothing contained in this Section 7.3 or elsewhere in this
Agreement shall limit the rights of a Party to seek or obtain injunctive relief
or any other equitable remedy to which such Party is otherwise entitled.
          (c) Following the Closing Date, each Indemnified Party agrees to use
commercially reasonable efforts to mitigate any Damages, including seeking
recovery (i) under any available insurance policy that would insure any claim
with respect to such Damages or (ii) from any third party. Subject to the
limitations contained herein, all costs and expenses reasonably incurred in
connection with such mitigation shall be Damages reimbursable as part of the
relevant indemnification claim. In the event that any Party receives a payment
with respect to any Damages, and thereafter such Party receives payment with
respect to such Damages from any insurer or other third party, such Party shall
pay to the other Party such amount received from such insurer or third party in
respect of such Damages for which the Party received an indemnification payment.
     7.4 Indemnification Claims.
          (a) An Indemnified Party shall give prompt written notification to the
Indemnifying Party of the commencement of any Third Party Action. In any event,
such notification shall be given within 20 days after receipt by the Indemnified
Party of notice of such Third Party Action, and shall describe in reasonable
detail (to the extent known by the Indemnified Party) the facts constituting the
basis for such Third Party Action and the amount of the claimed damages;
provided, however, that no delay or failure on the part of the Indemnified Party
in so notifying the Indemnifying Party shall relieve the Indemnifying Party of
any liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. Within 20 days after
delivery of such notification, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such Third
Party Action with counsel reasonably satisfactory to the Indemnified Party;
provided that (i) the Indemnifying Party may only assume control of such defense
if (A) it acknowledges in writing to the Indemnified Party that any damages,
fines, costs or other liabilities that may be assessed against the Indemnified
Party in connection with such Third Party Action constitute Damages for which
the Indemnified Party shall be indemnified pursuant to this Article VII and
(B) the ad damnum is less than or equal to the amount of Damages for which the
Indemnifying Party is liable under this Article VII and (ii) the Indemnifying
Party may not assume control of the defense of a Third Party Action if (i) the
Third Party Action involves criminal liability or seeks equitable relief against
the Indemnified Party or (ii) the Indemnified Party has different defenses

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available to it with respect to such Third Party Action. If the Indemnifying
Party does not, or is not permitted under the terms hereof to, so assume control
of the defense of a Third Party Action, the Indemnified Party shall control such
defense. The non-Controlling Party may participate in such defense at its own
expense. The Controlling Party shall keep the non-Controlling Party reasonably
advised of the status of such Third Party Action and the defense thereof and
shall consider in good faith recommendations made by the non-Controlling Party
with respect thereto. The non-Controlling Party shall furnish the Controlling
Party with such information as it may have with respect to such Third Party
Action (including copies of any summons, complaint or other pleading which may
have been served on such party and any written claim, demand, invoice, billing
or other document evidencing or asserting the same) and shall otherwise
cooperate with and assist the Controlling Party in the defense of such Third
Party Action. The fees and expenses of counsel to the Indemnified Party with
respect to a Third Party Action shall be considered Damages for purposes of this
Agreement only if the Indemnified Party controls the defense of such Third Party
Action pursuant to the terms of this Section 7.4(d). The Indemnifying Party
shall not agree to any settlement of, or the entry of any judgment arising from,
any Third Party Action without the prior written consent of the Indemnified
Party, which shall not be unreasonably withheld, conditioned or delayed;
provided that the consent of the Indemnified Party shall not be required if
(i) such settlement is purely monetary and (ii) the Indemnifying Party agrees in
writing to pay any amounts payable pursuant to such settlement or judgment and
such settlement or judgment includes a complete release of the Indemnified Party
from further liability. The Indemnified Party shall not agree to any settlement
of, or the entry of any judgment arising from, any such Third Party Action
without the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld, conditioned or delayed.
          (b) In order to seek indemnification under this Article VII, an
Indemnified Party shall deliver a Claim Notice to the Indemnifying Party.
          (c) Within 20 days after delivery of a Claim Notice, the Indemnifying
Party shall deliver to the Indemnified Party a Response, in which the
Indemnifying Party shall: (i) agree that the Indemnified Party is entitled to
receive all of the Claimed Amount (in which case the Response shall be
accompanied by a payment by the Indemnifying Party to the Indemnified Party of
the Claimed Amount, by check or by wire transfer), (ii) agree that the
Indemnified Party is entitled to receive the Agreed Amount (in which case the
Response shall be accompanied by a payment by the Indemnifying Party to the
Indemnified Party of the Agreed Amount, by check or by wire transfer), or (iii)
dispute that the Indemnified Party is entitled to receive any of the Claimed
Amount.
          (d) If the Indemnifying Party delivers a Response to the Indemnified
Party indicating that there is an amount in Dispute, the Indemnifying Party and
the Indemnified Party shall attempt in good faith to resolve the Dispute related
to such amount. If the Indemnifying Party and the Indemnified Party resolve such
dispute in writing, then their resolution of such dispute shall be binding on
the Indemnifying Party and the Indemnified Party and a settlement agreement
stipulating the amount owed to the Indemnified Party (the “Stipulated Amount”)
shall be signed by the Indemnifying Party and the Indemnified Party. Within
three days after the execution of such settlement agreement, the Indemnifying
Party shall pay to the Indemnified Party the Stipulated Amount by check or by
wire transfer.

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          (e) If the Indemnifying Party and the Indemnified Party are unable to
resolve the dispute relating to any amount in Dispute during the 30-day period
commencing upon the delivery of the Response to the Indemnifying Party, then
either the Indemnifying Party or the Indemnified Party may submit the amount in
Dispute to binding arbitration in the State of California in accordance with the
JAMS Comprehensive Arbitration Rules and Procedures then in effect. Arbitration
will be conducted by one arbitrator, mutually selected by the Indemnified Party
and the Indemnifying Party; provided, however, that if the Indemnified Party and
the Indemnifying Party fail to mutually select an arbitrator within 15 business
days after the contested portion of the indemnification claim is submitted to
arbitration, then the arbitrator shall be selected by JAMS in accordance with
its Comprehensive Arbitration Rules and Procedures then in effect. The parties
agree to use commercially reasonable efforts to cause the arbitration hearing to
be conducted within 75 days after the appointment of the arbitrator, and to use
commercially reasonable efforts to cause the decision of the arbitrator to be
furnished within 15 days after the conclusion of the arbitration hearing. The
arbitrator’s authority shall be confined to: (i) whether the Indemnified Party
is entitled to recover the amount in Dispute (or a portion thereof), and the
portion of the amount in Dispute the Indemnified Party is entitled to recover;
and (ii) whether either party to the arbitration shall be required to bear and
pay all or a portion of the other party’s attorneys’ fees and other expenses
relating to the arbitration. The final decision of the arbitrator shall include
the dollar amount of the award to the Indemnified Party, if any (the “Award
Amount”), and shall be furnished in writing to the Indemnifying Party, the
Indemnified Party and shall constitute a conclusive determination of the issues
in question, binding upon the Indemnifying Party and the Indemnified Party.
Within three days following the receipt of the final award of the arbitrator
setting forth the Award Amount, if any, the Indemnifying Party shall pay to the
Indemnified Party the Award Amount by check or by wire transfer.
     7.5 Survival of Representations and Warranties. All representations and
warranties of the Parties shall (a) survive the Closing and (b) shall expire on
the date that is the twenty-four (24) month anniversary of the Closing Date,
except that (i) the representations and warranties set forth in Sections 4.1,
4.2, 4.3, 5.1, 5.2 and 5.3 shall survive the Closing without limitation and
(ii) the representations and warranties set forth in Sections 4.7, 4.13, 4.14,
4,15 and 4.16 shall survive until 30 days following expiration of all statutes
of limitation applicable to the matters referred to therein (with respect to
each of the foregoing, the “Designated Date”). If an Indemnified Party acting in
good faith delivers to an Indemnifying Party, either a Claim Notice or an
Expected Claim Notice prior to the applicable Designated Date, then the claim
asserted in such notice shall survive until such time as such claim is fully and
finally resolved in accordance with the provisions of Article VII. If the legal
proceeding or written claim with respect to which an Expected Claim Notice has
been given is definitively withdrawn or resolved in favor of the Indemnified
Party, the Indemnified Party shall promptly so notify the Indemnifying Party.
     7.6 Additional Limitations. Notwithstanding anything herein to the
contrary, in no event shall an Indemnified Party be entitled to any
consequential, punitive or special damages except in the event of fraud or
willful misconduct.
     7.7 Treatment of Indemnity Payments. Any payments made to an Indemnified
Party pursuant to this Article VII shall be treated as an adjustment to the
Purchase Price for tax purposes.

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ARTICLE VIII
CONFIDENTIAL INFORMATION
     8.1 Confidential Information. As used in this Agreement, the term
“Confidential Information” means all secret, confidential or proprietary
information or data, whether provided in written, oral, graphic, video,
computer, electronic or other form, provided pursuant to this Agreement or
generated pursuant to this Agreement by one Party (the “Disclosing Party”) to
the other Party (the “Receiving Party”), including information relating to the
Disclosing Party’s existing or proposed research, development efforts, patent
applications, business or products, and all notes, analyses, compilations,
studies, interpretations or other documents whether in tangible form or on
electronic or other data storage media, prepared by the Receiving Party and its
directors, managers, employees, independent contractors, agents or consultants
(collectively, “Representatives”), which contain, reflect or are based on, in
whole or in part, Confidential Information furnished to the Receiving Party or
its Representatives by the Disclosing Party or any to its Representatives, and
any other materials that have not been made available by the Disclosing Party to
the general public. Notwithstanding the foregoing sentence, Confidential
Information shall not include any information or materials that:
          (a) were already known to the Receiving Party (other than under an
obligation of confidentiality), at the time of disclosure by the Disclosing
Party;
          (b) were generally available to the public or otherwise part of the
public domain at the time of disclosure thereof to the Receiving Party;
          (c) became generally available to the public or otherwise part of the
public domain after disclosure or development thereof, as the case may be, and
other than through any act or omission of the Receiving Party in breach of the
Receiving Party’s confidentiality obligations under this Agreement;
          (d) were disclosed to a Party, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the Disclosing Party
not to disclose such information to others; or
          (e) were independently discovered or developed by or on behalf of the
Receiving Party without the use of the Confidential Information belonging to the
other Party.
     8.2 Confidentiality Obligations. Each Receiving Party shall keep all
Confidential Information received from the other Party with the same degree of
care it maintains the confidentiality of its own Confidential Information. The
Receiving Party shall not use such Confidential Information for any purpose
other than in performance of this Agreement or disclose the same to any other
Person other than to such of its and its Affiliates’ directors, managers,
employees, independent contractors, agents or consultants who have a need to
know such Confidential Information to implement the terms of this Agreement or
enforce its rights under this Agreement; provided, however, that a Receiving
Party shall advise any of its and its

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Affiliates’ directors, managers, employees, independent contractors, agents or
consultants who receives such Confidential Information of the confidential
nature thereof and of the obligations contained in this Agreement relating
thereto, and the Receiving Party shall be responsible for the compliance by such
Representatives with such obligations as if they had been a party hereto. Upon
termination of this Agreement, the Receiving Party shall return or destroy all
documents, tapes or other media containing Confidential Information of the
Disclosing Party that remain in the possession of the Receiving Party’s
Representatives. It is understood that receipt of Confidential Information under
this Agreement will not limit the Receiving Party from assigning its employees
to any particular job or task in any way it may choose, subject to the terms and
conditions of this Agreement.
     8.3 Permitted Disclosure and Use. Notwithstanding Section 8.2, either Party
may disclose Confidential Information belonging to the other Party only to the
extent such disclosure is reasonably necessary to: (a) comply with or enforce
any of the provisions of this Agreement; (b) comply with a bona fide legal
requirement (including by deposition, interrogatories, requests for information
or documents, subpoena, civil investigative demand, or similar legal process);
or (c) comply with applicable securities laws and regulations, applicable stock
exchange, New York Stock Exchange regulation or NASDAQ regulation. Seller may
disclose the terms of the license being granted pursuant to this Agreement by
Seller to a Third Party under a confidentiality or nondisclosure agreement in
connection with potential divestitures of the Sellers’ assets that are the
subject of the license. Seller may disclose to a Third Party under a
confidentiality or nondisclosure agreement regarding assets, business and
operations of the Sellers in connection with capital raising and other potential
transactions involving the Sellers’ assets that are not the subject of this
Agreement. If a Party deems it necessary to disclose Confidential Information
(other than disclosures being made under a confidentiality or nondisclosure
agreement in connection with capital raising and potential divestitures of the
Sellers’ assets as permitted by the previous two sentences) of the other Party
pursuant to this Section 8.3, such Party shall give prompt prior (to the extent
possible) notice of such disclosure to the other Party.
     8.4 Notification. The Receiving Party shall notify the Disclosing Party
promptly upon discovery of any unauthorized use or disclosure of the Disclosing
Party’s Confidential Information, and will cooperate with the Disclosing Party,
at the Disclosing Party’s expense, in any reasonably requested fashion to assist
the Disclosing Party to regain possession of such Confidential Information and
to prevent its further unauthorized use or disclosure.
     8.5 Confidentiality of this Agreement. Subject to the applicable
obligations required under securities laws as advised by Sellers’ outside
securities counsel and the provisions of Section 10.1, the terms of this
Agreement shall be Confidential Information of each Party and, as such, shall be
subject to the provisions of this Article VIII.
ARTICLE IX
DEFINITIONS

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     For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.
     “Acquired Assets” shall mean the following assets, properties and rights of
Seller existing as of the Closing:

  a)   all right, title and interest to the Product;     b)   all rights under
Assigned Contracts;     c)   all rights of Seller to Product Line Intellectual
Property;     d)   all Biological Materials listed on Schedule 9.1(d);     e)  
Applicable Permits listed on Schedule 4.11;     f)   all Anthrax Books and
Records and Other Books and Records; and     g)   all right, title and interest
to the assets listed on Schedule 9.1(g).

     “Affiliate” shall mean an affiliate, as defined in Rule 12b-2 under the
Securities Exchange Act of 1934.
     “Agreed Amount” shall mean part, but not all, of the Claimed Amount.
     “Ancillary Agreements” shall mean the bill of sale and other instruments of
conveyance referred to in Section 3.2(a), and the instrument of assumption and
other instruments referred to in Section 3.2(b).
     “Applicable Permits” is defined in Section 4.11.
     “Anthrax Books and Records” shall mean all books, records, accounts,
ledgers, files, documents, correspondence, manufacturing and procedural manuals,
Product Line Intellectual Property records, studies, reports and other printed
or written materials relating solely to the Product or the Product Line
Operations.
     “Anthrax Field” shall mean the treatment or prevention of infections,
diseases or conditions in humans caused by exposure to Bacillus anthracis.
     “Apptec” shall mean App Tec Laboratory Services, Inc. located in
Philadelphia Pennsylvania or any successor entity thereto.
     “Assigned Contracts” shall mean the contracts, licenses, agreements and
other instruments relating to the Product or the Product Line Operations set
forth on Schedule 1.3(a).
     “Assumed Liabilities” shall mean all Liabilities, whether or not accruing,
arising out of or relating to events or occurrences happening or conditions
existing, before, on or after the Closing

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Date, which relate directly to the Acquired Assets, other than Retained
Liabilities. Without limiting the foregoing, Assumed Liabilities include:
     (a) the Liabilities of Seller arising under the Assigned Contracts (other
than as a result of a breach thereunder prior to the Closing Date); and
     (b) the Liabilities arising from the Product excluding (i) tort claims
related to periods on or prior to the Closing Date, (ii) any and all Liability
for Taxes payable by Seller and any Taxes related to or associated with the
Product to the extent attributable to taxable periods on or before the Closing
Date, and (iii) claims arising under any violation or breach of law, rule or
regulation of any Governmental Entity to the extent attributable to periods on
or before the Closing Date.
     “AVP-1C6” shall mean the monoclonal antibody which binds to the protective
antigen of Bacillus anthracis having a heavy chain variable domain amino acid
sequence (VH) and a light chain variable domain amino acid sequence (VK) as
depicted as depicted in Figure 8 of U.S. Patent Application Publication
No. 2006-0246079.
     “AVP-21D9” shall mean the monoclonal antibody which binds to the protective
antigen of Bacillus anthracis having a heavy chain variable domain amino acid
sequence as depicted in Figure 5 and a light chain variable domain amino acid
sequence as depicted in Figure 6 of U.S. Patent Application Publication
No. 2006-0246079.
     “AVP-22G12” shall mean the monoclonal antibody which binds to the
protective antigen of Bacillus anthracis having a heavy chain variable domain
amino acid sequence (VH) and a light chain variable domain amino acid sequence
(VL) as depicted as depicted in Figure 10 of U.S. Patent Application Publication
No. 2006-0246079.
     “AVP-4H7” shall mean the monoclonal antibody which binds to the protective
antigen of Bacillus anthracis having a heavy chain variable domain amino acid
sequence (VH) and a light chain variable domain amino acid sequence (VL) as
depicted as depicted in Figure 9 of U.S. Patent Application Publication
No. 2006-0246079.
     “AVP Anthrax Patents” shall mean any existing or future patents which
disclose the Product or methods of making or using the Product in the Anthrax
Field, including those patents listed in Schedule 4.7(a) of the Disclosure
Schedule and any substitutions, divisions, continuations, continuations-in-part,
reissues, renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates and the like, and any provisional
applications, of those patents listed in Section 4.7(a) of the Disclosure
Schedule.
     “Biological Materials” shall mean media (other than commercially
available), cell banks, cDNA, vectors, plasmids, cell lines, and protein
antibodies directly related to the Product.
     “Biologics License Application” shall mean a biologics license application
filed with the FDA pursuant to 21 C.F.R §601 for the authorization to market a
biological product in the United States.

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     “Books and Records” shall mean Anthrax Books and Records and Other Books
and Records.
     “Buyer” shall have the meaning set forth in the first paragraph of this
Agreement.
     “CERCLA” shall mean the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
     “Claim Notice” shall mean written notification which contains (i) a
description of the Damages incurred or reasonably expected to be incurred by the
Indemnified Party and the Claimed Amount of such Damages, to the extent then
known, (ii) a statement that the Indemnified Party is entitled to
indemnification under Article VII for the Claimed Amount and a reasonable
explanation of the basis therefor, and (iii) a demand for payment in the amount
of such Damages.
     “Claimed Amount” shall mean the amount of any Damages incurred or
reasonably expected to be incurred by the Indemnified Party.
     “Closing” shall mean the closing of the transactions contemplated by this
Agreement.
     “Closing Date” is defined in Section 3.1.
     “Code” shall mean the Internal Revenue Code of 1986, as amended.
     “Combination Product” means any pharmaceutical product that includes both
(x) a Licensed Product and (y) other active ingredient(s).
     “Commercial Sale” means, the sale of (i) the Product or (ii) any product
Developed or Commercialized under a sublicense of the rights granted under the
Asset License in this Agreement, to a Third Party for end use consumption by
Buyer, any of its Affiliates, or by Buyer’s or its Affiliate’s sublicensees.
Commercial Sale excludes any sale or other distribution for use in a clinical
trial or other Development activity, for compassionate or named-patient use or
for test marketing.
     “Commercialization” or “Commercialize” means any activities directed to
producing, manufacturing, marketing, promoting, distributing, importing,
exporting or selling a Product.
     “Competitive Product” shall mean a pharmaceutical product incorporating a
monoclonal antibody used for the treatment and prevention of infections,
diseases or conditions in humans caused by exposure to Bacillus anthracis.
     “Controlling Party” shall mean the party controlling the defense of any
Third Party Action.
     “Cover,” “Covering” or “Covered” shall mean, with respect to a product,
that, but for a license granted to a Party under a Valid Claim, the Development
or Commercialization of such product would infringe such Valid Claim.

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     “Damages” shall mean any and all Liabilities, monetary damages, fines,
fees, penalties, interest obligations, deficiencies, losses and expenses
(including amounts paid in settlement, interest, court costs, costs of
investigators, fees and expenses of attorneys, accountants, financial advisors
and other experts, and other expenses of litigation). Notwithstanding anything
herein to the contrary the amount of any Damages for which indemnification is
provided shall be reduced to take account of any amounts for which an
indemnified party actually recovers against an insurance policy or against any
third party other than pursuant to this Agreement.
     “Development” or “Develop” shall mean all research, development, and
regulatory activities regarding the Product. This includes (a) research,
preclinical testing, toxicology, formulation, and clinical studies of the
Product; and (b) preparation, submission, review, and development of data or
information for the purpose of submission to a Governmental Entity to obtain
Regulatory Approval of the Product. Development shall include development and
regulatory activities for additional forms or formulations for the Product after
Regulatory Approval of the Product, including, post-approval clinical trials or
phase 4 clinical trials with respect to an approved indication.
     “Disclosure Schedule” shall mean the disclosure schedule provided by Seller
to Buyer on the date hereof.
     “Dispute” shall mean the dispute resulting if the Indemnifying Party in a
Response disputes its liability for all or part of the Claimed Amount.
     “Environmental Law” shall mean any federal, state or local law, statute,
rule, order, directive, judgment, Permit or regulation relating to the
environment, occupational health and safety, or exposure of persons or property
to Materials of Environmental Concern, including any statute, regulation,
administrative decision or order pertaining to: (i) the presence of or the
treatment, storage, disposal, generation, transportation, handling,
distribution, manufacture, processing, use, import, export, labeling, recycling,
registration, investigation or remediation of Materials of Environmental Concern
or documentation related to the foregoing; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release, threatened release,
or accidental release into the environment, the workplace or other areas of
Materials of Environmental Concern, including emissions, discharges, injections,
spills, escapes or dumping of Materials of Environmental Concern; (v) transfer
of interests in or control of real property which may be contaminated;
(vi) community or worker right-to-know disclosures with respect to Materials of
Environmental Concern; (vii) the protection of wild life, marine life and
wetlands, and endangered and threatened species; (viii) storage tanks, vessels,
containers, abandoned or discarded barrels and other closed receptacles; and
(ix) health and safety of employees and other persons. As used above, the term
“release” shall have the meaning set forth in CERCLA.
     “Environmental Matters” shall mean any Liability arising under
Environmental Law, whether arising under theories of contract, tort, negligence,
successor or enterprise liability, strict liability or other legal or equitable
theory, including (i) any failure to comply with an applicable Environmental Law
and (ii) any Liability arising from the presence of, release or threatened
release of, or exposure of persons or property to, Materials of Environmental
Concern at the Acquired Assets or elsewhere. As used above, the term “release”
shall have the meaning set forth in CERCLA.

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     “Expected Claim Notice” shall mean a notice that, as a result of a legal
proceeding instituted by or written claim made by a third party, an Indemnified
Party reasonably expects to incur Damages for which it is entitled to
indemnification under Article VII.
     “FDA” shall mean the United States Food and Drug Administration, or any
successor agency thereto.
     “Follow-On Biologic Product” shall mean a product developed by or on behalf
of a person or entity other than Buyer, its Affiliates or its or their
sublicensees (a) that contains an antibody having identical or substantially
identical amino acid sequences in its complementarity determining regions
(CDR’s) to the CDR amino acid sequences of the antibody that is the active
pharmaceutical ingredient in the Product; and (b) that has received regulatory
approval for use through any current or future regulatory approval process by
which the sponsor or the regulatory agency relies, in whole or in part, directly
or indirectly, upon the data supporting the Product.
     “GAAP” shall mean United States generally accepted accounting principles.
     “Governmental Entity” shall mean any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.
     “GMP Clinical Materials” shall mean the following provided by Seller for
review and inspection by Buyer’s authorized representatives:

  1)   All vials of the finished and released drug product (“FDP”) as contracted
with Apptec for delivery under the U01 Grant and authorized for release by
AppTec less a sufficient amount to enable Seller to complete its obligations
under the U01 Grant;     2)   AppTec’s documentation authorizing the release of
the FDP, which for the avoidance of doubt includes the Certificate of Analysis;
    3)   Seller’s toxin neutralization assay (“TNA”) potency results as
reflected in Seller’s report from tests performed by the Seller on a sample of
the FDP provided by Apptec;

     “Grants Received” shall mean U.S. Government funding provided to Seller
listed in Schedule 4.7(i).
     “Indemnified Party” shall mean a party entitled, or seeking to assert
rights, to indemnification under Article VII of this Agreement.
     “Indemnifying Party” shall mean the party from whom indemnification is
sought by the Indemnified Party.
     “Know-How” means inventions, discoveries, trade secrets, information,
experience, data, formulas, procedures, technology and results (whether or not
patentable), including without limitation discoveries, formulae, materials
including biological materials, practices, methods, processes, experience and
test data (including physical, chemical, biological, toxicological,
pharmacological, clinical, and veterinary data), control assays, product
specifications, analytical and quality control data.

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     “Investigational New Drug Application” shall mean an investigational new
drug application submitted to the FDA, or equivalent application submitted to a
regulatory authority in any regulatory jurisdiction outside the United States,
seeking authorization to test a biological product in humans in order to
generate data necessary for submission of a Biologics License Application or an
equivalent application in any regulatory jurisdiction outside the United States
     “Liabilities” shall mean all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including those arising under any contract, agreement,
arrangement, commitment or undertaking.
     “Liens” shall mean any mortgage, pledge, security interest, encumbrance,
charge, easement, reversion or purchase right (whether arising by contract or by
operation of law), other than (i) mechanic’s, materialmen’s, warehousemen’s,
landlords’, suppliers’ and similar liens, (ii) liens arising under worker’s
compensation, unemployment insurance, social security, retirement, and similar
legislation, (iii) unmatured Liens securing the payment of Taxes which are not
yet due and payable, and (iv) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the Ordinary Course of
Business of Seller and not material to Seller.
     “Licensed Product” means the Product as licensed or approved by any
applicable Regulatory Authority or any product Developed or Commercialized under
a sublicense of the rights granted under the Asset License in this Agreement.
     “Material Adverse Effect” shall mean any change or effect that is
materially adverse to the Product or the Product Line Operations, taken as a
whole in accordance with and as contemplated under this Agreement, other than
any change or effect arising out of (a) changes to the economy or financial
markets in general except to the extent such changes have a disproportionate
impact on the Product or the Product Line Operations, (b) conditions affecting
the industries in which the Product or the Product Line Operations participates
generally, except to the extent such conditions have a disproportionate impact
on the Product or the Product Line Operations, (c) actions taken by the Parties
pursuant to the transactions contemplated by this Agreement or (d) the
negotiation, execution or announcement of this Agreement and the transactions
contemplated hereby, including any impact thereof on relationships, contractual
or otherwise with customers, suppliers, distributors, consultants or employees.
     “Materials of Environmental Concern” shall mean any: pollutants,
contaminants or hazardous substances (as such terms are defined under CERCLA),
pesticides (as such term is defined under the Federal Insecticide, Fungicide and
Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined
under the Resource Conservation and Recovery Act), chemicals, other radioactive
or toxic materials, oil, petroleum and petroleum products (and fractions
thereof), or any other material (or article containing such material) listed or
subject to regulation under any law, statute, rule, regulation, order, Permit,
or directive due to its potential, directly or indirectly, to harm the
environment or the health of humans or other living beings.
     “Medical Product Regulatory Authority” means any Governmental Entity that
is concerned with the safety, efficacy, reliability, manufacture, investigation,
sale or marketing of pharmaceuticals, medical products, biologics or
biopharmaceuticals, including the FDA.

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     “NDA” shall mean a new drug application, submitted to the FDA for
commercial sale or use of the Product, including any supplements, amendments or
modifications thereto, or divisions thereof, submitted to or required by the
FDA.
     “Net Sales” shall mean with respect to the Product or any product or
antibody made, produced, manufactured or sublicensed under the Asset License,
the gross amount invoiced by Buyer or any of its Affiliates or any sublicensee
of Buyer or any of its Affiliates in respect of Commercial Sales of the Product
or other product by Buyer or any of its Affiliates (or such sublicensee) for
which delivery has been made to Third Parties (but, for the avoidance of doubt,
excluding amounts paid by NIAID in grants), in each case less the following
deductions:
          (a) normal and customary trade, cash and quantity discounts actually
allowed and taken directly with respect to such sales or dispositions (including
retrospective price reductions), and normal and customary inventory management
fees actually paid to wholesalers and reasonably allocated to Product;
          (b) tariffs, duties, excises and sales taxes imposed upon and paid
with respect to such sales or dispositions (which does not include income,
withholding or similar taxes);
          (c) normal and customary commissions actually paid to third party
distributors or selling representatives or agents (to the extent included in the
invoice);
          (d) amounts repaid or credited by reason of rejections, defects,
recalls or returns or because of adjustments, billing errors, or trial
prescriptions;
          (e) reasonably allocated freight, transportation, transit, logistics
and shipping insurance expenses; and
          (f) invoiced amounts that are written off as uncollectible in
accordance with Buyer’s accounting policies, as consistently applied.
     Such amounts shall be determined in accordance with GAAP, consistently
applied.
     In the event the Product is sold as part of a Combination Product, the Net
Sales from the Combination Product, for the purposes of determining royalty
payments, shall be determined by multiplying the Net Sales (as determined above)
of the Combination Product, during the applicable royalty reporting period, by
the fraction, A/(A+B), where A is the average sale price of the Product when
sold separately in finished form and B is the average sale price of the other
active ingredient(s) included in the Combination Product when sold separately in
finished form, in each case during the applicable royalty reporting period or,
if sales of both the Product and the other active ingredient(s) did not occur in
such period, then in the most recent royalty reporting period in which sales of
both occurred. In the event that such average sale price cannot be determined
for both the Product and all other active ingredient(s) included in such
Combination Product, Net Sales for the purposes of determining royalty payments
shall be calculated by multiplying the Net Sales of the Combination Product by
the fraction of C/(C+D) where C is the fair market value of the Product and D is
the fair market value of all other active ingredient(s) included in the
Combination Product. In such event, Buyer shall in good faith make a

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determination of the respective fair market values of the Product and all other
active ingredient(s) included in the Combination Product, and shall notify
Seller of such determination and provide Seller with data to support such
determination. Seller shall have the right to review such determination of fair
market values and, if Seller disagrees with such determination, to notify Buyer
of such disagreement within sixty (60) days after Buyer notifies Seller of such
determination. If Seller notifies Buyer that Seller disagrees with such
determination within such sixty (60) day period and if thereafter the Parties
are unable to agree in good faith as to such respective fair market values, then
such matter shall be referred to a mutually agreed independent Third Party with
experience regarding the pricing of pharmaceutical products for resolution, and
the determination of such Third Party shall be conclusive and binding on the
parties. If Seller does not notify Buyer that Seller disagrees with such
determination within such sixty (60) day period, such determination shall be
conclusive and binding on the Parties.
     “NIAID” shall mean the National Institute of Allergy and Infectious
Diseases.
     “NIAID Payments” shall mean the amounts payable by Buyer pursuant to
Section 2.3.
     “non-Controlling Party” shall mean the Party that does not Control the
defense of any Third Party Action.
     “Off-Site Liabilities” shall mean Environmental Matters resulting from any
transportation, treatment, storage, disposal or Release, or the arrangement
therefor, in connection with the Product Line Operations, of any Materials of
Environmental Concern, to or at any property, location, site or facility.
     “Ordinary Course of Business” shall mean the ordinary course of business
consistent with past custom and practice.
     “Other Books and Records” shall mean all books, records, accounts, ledgers,
files, documents, correspondence, manufacturing and procedural manuals, Product
Line Intellectual Property records, studies, reports and other printed or
written materials, other than the Anthrax Books and Records, necessary or useful
to exploit the Product or the Product Line Operations.
     “Parties” shall mean Buyer, Buyer Parent, Seller and Seller Parent. Party
means any of the foregoing.
     “Patent” means (a) all patents and patent applications in any country or
supranational jurisdiction, and (b) any substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations,
re-examinations, extensions, supplementary protection certificates and the like,
and any provisional applications, of any such patents or patent applications.
     “Product” shall mean the anthrax monoclonal antibodies AVP-21D9, AVP-1C6,
AVP-4H7, and AVP-22G12 as well as any anthrax monoclonal antibodies which would
be rendered unpatentable by the disclosure of the AVP Anthrax Patents, any
compositions of matter comprising the variable domains of these anthrax
monoclonal antibodies or any fragment or variants thereof, including any one or
more complementarity determining regions (CDR’s) of

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these anthrax monoclonal antibodies, or nucleic acids encoding any such anthrax
monoclonal antibodies or fragments.
     “Product Line Intellectual Property” shall mean all AVP Anthrax Patents and
Seller Know-How and any in-licenses necessary or useful to exploit the Product
and carry out Product Line Operations, including a royalty-free paid up internal
use license to the Xenerex Technology solely insofar as such technology may have
been used to identify the Product or may in the future be used to identify a
monoclonal antibody for use in the Anthrax Field. As set forth below, the
Xenerex Technology shall exclude the use of human splenocytes to make human
monoclonal antibodies, as claimed in U.S. Patent 5,958,765 and insofar as
claimed in any Patent that claims priority to or from U.S. Patent 5,958,765.
     “Product Line Operations” shall mean the research, development,
manufacturing, exploitation and sale of the Product as currently conducted.
     “Proposal” shall mean the proposal submitted to NIAID in response to Broad
Agency Announcement NIH-NIAID-DMID-08-20 “Development of Therapeutic Agents for
Select Biodefense Pathogens.”
     “Purchase Price” shall mean the Proposal Payment, the Execution Date
Payment, NIAID Payments, the GMP Payment, and the Sales-Based Contingent
Purchase Price Payments.
     “Registrations” shall mean the regulatory approvals, licenses and
applications held or made by Seller relating to the Product as listed on
Schedule 9.2, and all related correspondence, reports and other submissions to
Governmental Entities.
     “Regulatory Approval” shall mean the approvals (including any applicable
governmental price and reimbursement approvals), licenses, registrations or
authorizations of Regulatory Authorities necessary for the Commercialization of
a product in a country or territory.
     “Response” shall mean a written response containing the information
provided for in Section 7.3(c).
     “Retained Liabilities” means the following, and only the following,
Liabilities of Sellers which, notwithstanding any other provision of this
Agreement, will not be assumed by Buyer:
          (a) all Liabilities of Sellers to the extent not related to the
Acquired Assets other than as set forth in this definition;
          (b) all obligations and Liabilities of Sellers for the performance of
work required under the U01 Grant including, unless waived by the NIAID:

  •   New Zealand Rabbit tissue cross reactivity study;     •   viral clearance
study;     •   Apptec 100 liter scale development of the Product;

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  •   stability and other studies as agreed to between Seller and Apptec; and  
  •   four week single dose toxicology study in New Zealand White rabbits.

          (c) all amounts due and payable to Lonza Biologics PLC, Lonza Sales
AG, or any successors or assigns that have accrued on or prior to the date
hereof;
          (d) all liabilities and obligations to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement;
          (e) all Liabilities of Sellers for Taxes incurred, or arising out of
the conduct of the Product Line Operations through the Closing;
          (f) all Liabilities for wages, pensions, incentive compensation,
equity compensation, severance, retiree or other benefits, overtime, workers
compensation benefits, occupational safety and health liabilities and other
similar Liabilities in respect of Sellers’ employees relating to the period
through the Closing and in respect of employees of the Sellers who do not become
employed by Buyer as a result of the transactions contemplated by this
Agreement, whether relating to the period before or after the Closing;
          (g) all Liabilities of Sellers for costs and expenses (including legal
fees and expenses) that Sellers have incurred in connection with this Agreement
and the transactions contemplated hereby; and
          (h) any liability or obligation of Sellers under this Agreement and
the Ancillary Agreements.
     “Seller” shall have the meaning set forth in the first paragraph of this
Agreement.
     “Seller Know-How” shall mean Know-How controlled by Seller or its
Affiliates and reasonably necessary or useful for the development and
commercialization of the Product.
     “Seller Knowledge” whenever a phrase in this Agreement is qualified “to the
knowledge of Seller,” “ to Seller’s knowledge” or a similar phrase, it shall
mean, with respect to a fact, (a) the current actual knowledge of any of the
following individuals: Keith Katkin, Greg Flesher, Wolfgang Scholz, Randall
Kaye, and Neil Abdollahian and (b) the knowledge of such individuals obtained
after making inquiry of their direct reports most likely to have knowledge of
such fact; provided, however, that with respect to this subsection (b), with
respect to facts related to any in-licensed intellectual property, the knowledge
of Seller shall only relate to actually known facts.
     “Services” shall have the meaning set forth in Section 6.9 of this
Agreement.
     “Taxes” shall mean any and all taxes, charges, fees, duties, contributions,
levies or other similar assessments or liabilities in the nature of a tax,
including income, gross receipts, corporation, ad valorem, premium, value-added,
net worth, capital stock, capital gains, documentary, recapture, alternative or
add-on minimum, disability, estimated, registration, recording, excise, real
property, personal property, sales, use, license, lease, service, service use,

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transfer, withholding, employment, unemployment, insurance, social security,
national insurance, business license, business organization, environmental,
workers compensation, payroll, profits, severance, stamp, occupation, windfall
profits, customs duties, franchise and other taxes of any kind whatsoever
imposed by the United States of America or any state, local or foreign
Governmental Entity, and any interest, fines, penalties, assessments or
additions to tax imposed with respect to such items or any contest or dispute
thereof.
     “Tax Benefit” means, with respect to any Damages for which indemnity is
paid, all items of deduction, loss or credit arising out of any such Damages,
and in the case of any carryback of any such item, any interest received from
any Tax authority as a result of the carryback of such item.
     “Third Party” shall mean any person or entity other than a Party or its
Affiliates.
     “Third Party Action” shall mean any suit or proceeding by a person or
entity other than a Party for which indemnification may be sought by a Party
under Article VII.
     “U01 Grant” shall mean NIAID grant award number 1U01AI070493-01 awarded by
the U.S. National Institute of Allergy and Infectious Diseases of the National
Institutes of Health awarded on June 27, 2006, as amended.
     “Valid Claim” means a claim in any issued patent or pending patent
application in the patents included in the Acquired Assets, that such claim
(a) has not been held invalid or unenforceable by a non-appealed or
un-appealable decision of a Governmental Entity (b) has not been admitted
invalid through disclaimer or dedication to the public, or (c) has not expired,
been determined to be unenforceable, been cancelled, withdrawn, or abandoned.
     “Xenerex Technology” means Know-How or intellectual property owned, or
licensed, by Seller reasonably necessary or useful in connection with the
development or commercialization of pharmaceutical products incorporating human
monoclonal antibodies. For purposes of this Agreement, the Xenerex Technology
shall exclude the use of human splenocytes to make human monoclonal antibodies,
as claimed in U.S. Patent 5,958,765 and insofar as claimed in any Patent that
claims priority to or from U.S. Patent 5,958,765.
ARTICLE X
MISCELLANEOUS
     10.1 Publicity.
          (a) Generally. The Parties agree to the form of press release attached
as Exhibit E. With respect to any future press release to be issued in
connection with the transactions contemplated by this Agreement, and the Parties
will cooperate in the release thereof as soon as practicable after the execution
of this Agreement by the Parties. The Parties also recognize that each Party may
from time to time desire to issue additional press releases and make other
public statements or disclosures regarding the terms of this Agreement. In such
event, the Party desiring to issue an additional press release or make a public
statement or

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disclosure shall provide the other Party with a copy of the proposed press
release, statement or disclosure for review and approval in advance, which
advance approval shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, if the parties are unable to agree on the
disclosures on a timely basis to permit compliance with a party’s disclosure and
filing obligations under the securities laws of the United States, rules and
regulations of the Securities and Exchange Commission, or any applicable stock
exchange or NASDAQ regulation, the parties may nonetheless make such disclosures
as they are required to make after consultation with their outside securities
law counsel, provided that such disclosures shall not include any Specially
Designated Confidential Terms (defined below) for which confidential treatment
has been granted. Except as permitted by Section 8.3, no other public statement
or disclosure concerning the terms of this Agreement shall be made, either
directly or indirectly, by either Party hereto, without first obtaining the
approval of the other Party (which may be provided electronically). Once any
public statement or disclosure has been approved in accordance with this
Section 10.1, then either Party may appropriately communicate information
contained in such permitted statement or disclosure.
          (b) Confidential Treatment Request. The Parties agree that the royalty
rates set forth in Section 2.4 (the “Specially Designated Confidential Terms”)
are competitively sensitive information. In addition to the Parties’ general
agreement to keep the terms of this Agreement confidential, the Parties agree to
take additional measures to keep confidential the Specially Designated
Confidential Terms. The Parties agree that Buyer and Seller will make a one-time
request for confidential treatment of the Specially Designated Confidential
Terms (at a minimum) in connection with any filing of this Agreement as an
exhibit to any registration statement or periodic report filed with the
Securities and Exchange Commission, and will not disclose the Specially
Designated Confidential Terms in any such filing unless such request for
confidential treatment of the Specially Designated Confidential Terms is denied.
Any confidentiality request shall be submitted to and approved by the other
Party in advance of filing, such approval not to be unreasonably conditioned,
delayed, or withheld.
     10.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
     10.3 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof, and
supersedes all previous arrangements with respect to the subject matter hereof,
whether written or oral. Any amendment or modification to this Agreement shall
be made in writing signed by both Parties.
     10.4 Assignment. Neither Seller nor Buyer may assign this Agreement in
whole or in part without the consent of the other, except if such assignment
occurs in connection with the merger, consolidation, reorganization or similar
transaction sale or transfer of all or substantially all of the business and
assets of Sellers, on the one hand, or Buyer, on the other, to which the subject
matter of this Agreement pertains. Notwithstanding the foregoing, any Party may
assign its rights pursuant to this Agreement in whole or in part to an Affiliate
of such Party. For the avoidance of doubt, Seller may license, assign,
hypothecate, pledge or otherwise transfer or sell the Xenerex Technology, or
other rights of Sellers not sold or licensed under this Agreement, to

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Third Parties for applications or other uses that are not in the Anthrax Field
without the consent of Buyer, provided that the party to which Seller so
assigns, hypothecates, pledges or otherwise transfers the Xenerex Technology
agrees to be bound by the limited exclusive and non-exclusive license-related
obligations of Seller hereunder.
     10.5 Counterparts and Facsimile Signature. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. This Agreement
may be executed by facsimile signature.
     10.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
     10.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered (a) four
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or (b) one business day after it is sent for next
business day delivery via a reputable nationwide overnight courier service, or
(c) on the date on which delivered if sent by facsimile transmission, in each
case to the intended recipient as set forth below:

     
If to Seller or Seller Parent:
  Copy to:
 
   
Avanir Pharmaceuticals Inc.
  Knobbe Martens Olson & Bear LLP
101 Enterprise, Suite 300
  2040 Main Street, 14th Floor
Aliso Viejo, CA 92656
  Irvine, CA 92614-3641
 
   
Attn:
  Attn:
 
   
Gregory J. Flesher
  Salima Merani, Ph.D.
Vice President, Business Development
  Fax: 949-760-9502
Facsimile No.: (949) 643-6869
  Email: Salima.Merani@kmob.com
 
   
Christine Ocampo
   
Vice President, Finance
   
Facsimile No.: (949) 643-6807
   
 
   
If to Buyer or Buyer Parent:
   
 
   
Emergent BioSolutions Inc.
   
2273 Research Boulevard, Suite 400
   
Rockville, MD 20850
   
 
   
Attn: General Counsel
   
Facsimile No.: (301) 795-1899
   

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     Any Party may change its address by giving notice to the other Party in the
manner herein provided.
     10.8 Governing Law. This Agreement shall be construed and the respective
rights of the Parties determined according to the substantive laws of the State
of New York, notwithstanding the provisions governing conflict of laws under
such New York law to the contrary.
     10.9 Severability. If, under applicable law or regulation, any provision of
this Agreement is invalid or unenforceable, or otherwise directly or indirectly
affects the validity of any other material provision(s) of this Agreement (such
invalid or unenforceable provision, a “Severed Clause”), this Agreement shall
endure except for the Severed Clause. The Parties shall consult one another and
use reasonable efforts to agree upon a valid and enforceable provision that is a
reasonable substitute for the Severed Clause in view of the intent of this
Agreement.
     10.10 Expenses. Except as set forth in Article VII or as expressly provided
in this Agreement, each Party shall bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
     10.11 Submission to Jurisdiction. Except as provided with respect to the
resolution of Disputes in Section 7.4(e), each Party (a) submits to the
jurisdiction of any state or federal court sitting in the State of New York in
any action or proceeding arising out of or relating to this Agreement or the
Ancillary Agreements, (b) agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court, (c) waives any claim
of inconvenient forum or other challenge to venue in such court, (d) agrees not
to bring any action or proceeding arising out of or relating to this Agreement
or the Ancillary Agreements in any other court. Each party agrees to accept
service of any summons, complaint or other initial pleading made in the manner
provided for the giving of notices in Section 10.7, provided that nothing in
this Section 10.11 shall affect the right of either Party to serve such summons,
complaint or other initial pleading in any other manner permitted by law.
     10.12 Specific Performance. Each Party acknowledges and agrees that the
other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees that the other Party
shall be entitled to an injunction or other equitable relief to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
     10.13 Buyer Parent Payment Obligation. From and after the date of this
Agreement, Buyer Parent agrees to be jointly and severally liable for the
complete and prompt payment of all Buyer’s payment obligations under this
Agreement.

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     10.14 Construction.
          a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction or contra preferentum shall be applied against either Party.
          b) Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
          c) Any reference to any Article, Section or paragraph shall be deemed
to refer to an Article, Section or paragraph of this Agreement, unless the
context clearly indicates otherwise.
     10.15 No Implied Waivers; Rights Cumulative. No failure on the part of
Seller or Buyer to exercise, and no delay in exercising, any right, power,
remedy or privilege under this Agreement, or provided by statute or at law or in
equity or otherwise, shall impair, prejudice or constitute a waiver of any such
right, power, remedy or privilege or be construed as a waiver of any breach of
this Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

            EMERGENT PRODUCT DEVELOPMENT GAITHERSBURG INC.
      By:   /s/ Michael J. Langford         Name:   Michael J. Langford       
Title:   President, EPDG        Date:   March 6, 2008       
XENEREX BIOSCIENCES INC.
      By:   /s/ Keith A. Katkin         Name:   Keith A. Katkin        Title:  
President and CEO        Date:   3-6-08   

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            AVANIR PHARMACEUTICALS INC.
      By:   /s/ Keith A. Katkin         Name:   Keith A. Katkin        Title:  
President and CEO        Date:   3-6-08     

          Buyer Parent joins this Agreement
solely for purposes of making the
representations set forth in Article V
and agreeing to be jointly and severally liable
for complete and prompt payment of
all Buyer’s financial obligations set forth
in this Agreement.

EMERGENT BIOSOLUTIONS INC.
      By:   /s/ Daniel J. Abdun-Nabi         Name:   Daniel J. Abdun-Nabi       
Title:   President and COO        Date:   March 6, 2008       

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