EXHIBIT 10.34

 
 

ASSET PURCHASE AGREEMENT

between

BIOMIMETIC THERAPEUTICS, INC.

and

LUITPOLD PHARMACEUTICALS, INC.

Dated as of December 14, 2007

 
 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

ARTICLE I PURCHASE AND SALE

 

2

Section 1.1

 

Purchase and Sale of Assets

 

2

Section 1.2

 

Excluded Assets

 

3

Section 1.3

 

Liabilities

 

5

Section 1.4

 

Limitation on Assignment of Purchased Assets

 

5

 

 

 

 

 

ARTICLE II PURCHASE PRICE; CLOSING

 

5

Section 2.1

 

Purchase Price

 

5

Section 2.2

 

Closing

 

7

Section 2.3

 

Deliveries by Buyer

 

7

Section 2.4

 

Deliveries by Seller

 

8

 

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

 

9

Section 3.1

 

Organization and Qualification

 

9

Section 3.2

 

Authorization

 

9

Section 3.3

 

Non-Contravention

 

10

Section 3.4

 

Consents

 

10

Section 3.5

 

Records; Liabilities

 

10

Section 3.6

 

Compliance with Law

 

10

Section 3.7

 

Litigation

 

11

Section 3.8

 

Absence of Changes

 

11

Section 3.9

 

Sufficiency of Assets

 

12

Section 3.10

 

Title and Condition to Property

 

12

Section 3.11

 

Intellectual Property

 

12

Section 3.12

 

Inventory

 

13

Section 3.13

 

Business Contracts

 

13

Section 3.14

 

Solvency

 

14

Section 3.15

 

Prohibited Payments

 

14

Section 3.16

 

Relations with Suppliers and Customers

 

14

Section 3.17

 

Tax Matters

 

14

Section 3.18

 

Proxy Statement

 

14

Section 3.19

 

Finders’ Fees

 

15

Section 3.20

 

Disclosure

 

15

 

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

 

15

Section 4.1

 

Organization

 

15

Section 4.2

 

Authorization

 

15

Section 4.3

 

Non-Contravention

 

16

Section 4.4

 

Finders’ Fees

 

16

Section 4.5

 

Financing

 

16

 

 

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ARTICLE V PRE-CLOSING COVENANTS

 

16

Section 5.1

 

Access and Information

 

16

Section 5.2

 

Conduct of Business

 

16

Section 5.3

 

Efforts to Close

 

17

Section 5.4

 

Notification

 

18

Section 5.5

 

Acquisition Proposals

 

18

Section 5.6

 

Employees

 

18

Section 5.7

 

Preparation of Proxy Statement.

 

19

Section 5.8

 

Approval of Stockholders.

 

19

 

 

 

 

 

ARTICLE VI CONDITIONS TO CLOSING

 

19

Section 6.1

 

Conditions to the Obligations of Buyer

 

19

Section 6.2

 

Conditions to the Obligations of Seller

 

20

 

 

 

 

 

ARTICLE VII POST-CLOSING COVENANTS

 

21

Section 7.1

 

Further Assurances

 

21

Section 7.2

 

Business Relationships

 

21

Section 7.3

 

Non-Competition.

 

21

Section 7.4

 

Confidentiality

 

22

Section 7.5

 

Non-Disparagement

 

23

Section 7.6

 

Orthovita; Patheon.

 

23

Section 7.7

 

Trademarks

 

23

Section 7.8

 

Sublicense Fees

 

23

Section 7.9

 

rhPDGF-BB Solution

 

24

Section 7.10

 

Regulatory Matters

 

24

Section 7.11

 

Transition Services

 

25

Section 7.12

 

Business Confidential Information; Business Records

 

26

Section 7.13

 

Inventory

 

26

 

 

 

 

 

ARTICLE VIII TAX MATTERS

 

27

Section 8.1

 

Seller Liability for Taxes

 

27

Section 8.2

 

Buyer Liability for Taxes

 

27

Section 8.3

 

Proration of Taxes

 

27

Section 8.4

 

Transfer Taxes

 

28

Section 8.5

 

Allocation

 

28

 

 

 

 

 

ARTICLE IX SURVIVAL; INDEMNIFICATION; CERTAIN REMEDIES

 

29

Section 9.1

 

Survival

 

29

Section 9.2

 

Indemnification by Seller

 

29

Section 9.3

 

Indemnification by Buyer

 

29

Section 9.4

 

Third Party Claim Indemnification Procedures

 

29

Section 9.5

 

Direct Claims

 

31

Section 9.6

 

Consequential Damages and Limitations

 

31

Section 9.7

 

Payments

 

32

Section 9.8

 

Right of Setoff

 

33

Section 9.9

 

Effect of Waiver of Condition

 

33

 

 

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ARTICLE X TERMINATION

 

33

Section 10.1

 

Termination

 

33

Section 10.2

 

Effect of Termination

 

33

 

 

 

 

 

ARTICLE XI MISCELLANEOUS

 

34

Section 11.1

 

Notices

 

34

Section 11.2

 

Amendment; Waiver

 

35

Section 11.3

 

No Assignment or Benefit to Third Parties

 

35

Section 11.4

 

Entire Agreement

 

35

Section 11.5

 

Announcements and Disclosures

 

36

Section 11.6

 

Expenses

 

36

Section 11.7

 

Governing Law

 

37

Section 11.8

 

Counterparts

 

37

Section 11.9

 

Headings

 

37

Section 11.10

 

No Drafting Presumption

 

37

Section 11.11

 

Severability

 

37

Section 11.12

 

Specific Performance

 

37

Section 11.13

 

Compliance with Bulk Sales Laws Requirements

 

38

 

 

 

 

 

ARTICLE XII DEFINITIONS

 

38

Section 12.1

 

Certain Definitions

 

38

Section 12.2

 

Other Definitional and Construction Provisions

 

43

 

 

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EXHIBITS AND SCHEDULES

EXHIBITS

 

Exhibit A

 

-

 

Restated Sublicense Agreement

Exhibit B

 

-

 

Manufacturing Termination Agreement

Exhibit C

 

-

 

R&D Termination Agreement

Exhibit D

 

-

 

Trademark License and Concurrent Use Agreement

Exhibit E-1

 

-

 

IND Transfer Acknowledgment Letter

Exhibit E-2

 

-

 

IND Transfer Letter

Exhibit F

 

-

 

Supply Agreement

Exhibit G

 

-

 

Assignment and Assumption Agreement

Exhibit H

 

-

 

Bill of Sale

Exhibit I

 

-

 

Intellectual Property Assignment Agreement

Exhibit J-1

 

-

 

Press Release (Signing)

Exhibit J-2

 

-

 

Press Release (Closing)

Exhibit K

 

-

 

Exclusive License Agreement

Exhibit L-1

 

-

 

PMA Transfer Letter for GEM 21S (Seller)

Exhibit L-2

 

-

 

PMA Transfer Letter for GEM 21S (Buyer)

Exhibit L-3

 

-

 

FDA Form 3514 for PMA Transfer of GEM 21S

Exhibit M

 

-

 

Canadian Medical Device License Transfer Letter for GEM 21S

Exhibit N-1

 

-

 

FDA ** Transfer for ** (Seller)

Exhibit N-2

 

-

 

FDA ** Transfer for ** (Buyer)

Exhibit N-3

 

-

 

FDA Form ** for ** Transfer of **

 

 

 

 

 

SCHEDULES

 

 

 

 

 

 

 

 

 

Schedule 1.1(a)

 

-

 

Business Machinery

Schedule 1.1(b)

 

-

 

Business Contracts

Schedule 1.1(c)

 

-

 

PDGF

Schedule 1.1(d)(ii)

 

-

 

Trademarks

Schedule 1.1(e)

 

-

 

Business Records

Schedule 1.1(f)

 

-

 

Business Permits

Schedule 3.4

 

-

 

Seller Consents

Schedule 3.7

 

-

 

Litigation

Schedule 3.11(b)

 

-

 

Registered Business Intellectual Property

Schedule 3.13

 

-

 

Business Contracts

Schedule 3.16

 

-

 

Relations with Suppliers and Customers

Schedule 7.13

 

-

 

Estimated GEM 21S Inventory

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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ASSET PURCHASE AGREEMENT, dated as of December 14, 2007, between BioMimetic
Therapeutics, Inc., a Delaware corporation (“Seller”), and Luitpold
Pharmaceuticals, Inc., a New York corporation (“Buyer”).

WITNESSETH:

WHEREAS, Seller is engaged in a number of lines of business, and one such line
of business is the orofacial therapeutic business (the “Business”), including,
without limitation the research, design, development, manufacture,
commercialization, licensing, marketing, promotion and distribution of fully
synthetic regeneration systems that combine a tissue growth factor, recombinant
human Platelet-Derived Growth Factor BB (“rhPDGF-BB”), with a synthetic bone
matrix, beta-tricalcium phosphate (“ß-TCP”) for applications above the neck in
humans, and such regeneration systems include, without limitation, GEM 21S®
Growth-factor Enhanced Matrix (“GEM 21S”), GEM ONJ (PDGF used in the absence of
a matrix to treat osteonecrosis of the jaw) (“GEM ONJ”), and **;

WHEREAS, pursuant to an Exclusive Sublicense Agreement dated as of December 9,
2003 (the “Sublicense Agreement”), Seller has granted to Buyer sublicense rights
under intellectual property that Seller licenses from ZymoGenetics, Inc. and
co-owns with and licenses from Harvard College; Seller has granted Buyer certain
rights to the improvements relating to GEM 21S; and Buyer has undertaken
responsibility for the worldwide sale and distribution of GEM 21S for
periodontal and cranio-maxillofacial applications, all on the terms and subject
to the conditions thereof;

WHEREAS, pursuant to a Manufacturing and Supply Agreement dated as of December
9, 2003 (the “Manufacturing Agreement”), Buyer is obligated to purchase all of
its requirements for GEM 21S from Seller and Seller is obligated to meet such
requirements, all on the terms and subject to the conditions thereof;

WHEREAS, pursuant to a Research, Development and Marketing Agreement dated as of
December 9, 2003 (the “R&D Agreement”), Seller is obligated to support Buyer’s
marketing of products subject to the Sublicense Agreement and Manufacturing
Agreement, and Buyer is obligated to make certain milestone payments to Seller,
all on the terms and subject to the conditions thereof;

WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from
Seller all of its assets primarily related to the Business (other than the
Excluded Assets), on the terms and subject to the conditions hereinafter
provided;

WHEREAS, in connection with such purchase and sale, the parties wish to amend
the Sublicense Agreement and terminate the Manufacturing Agreement and the R&D
Agreement, on the terms and subject to the conditions hereinafter provided; and

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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WHEREAS, Seller desires to license to Buyer, and Buyer desires to license from
Seller, certain intellectual property rights in order to make use of the
Purchased Assets in that portion of the Business comprised of the Field, all on
the terms and subject to the conditions of the Exclusive License Agreement to be
executed in connection with this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and undertakings contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows
(Article XII contains definitions of certain terms used in this Agreement):

ARTICLE I

PURCHASE AND SALE

Section 1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions set forth herein, at the Closing, Seller shall sell, convey,
transfer, assign and deliver to Buyer, and Buyer shall purchase from Seller, all
of Seller’s right, title and interest in and to the assets of Seller primarily
related to the Business (collectively, the “Purchased Assets”), free and clear
of all Encumbrances, including without limitation the following:

(a) Machinery and Equipment. All machinery, equipment, spare parts, tooling and
manufacturing fixtures primarily related to the Business (the “Business
Machinery”), as set forth on Schedule 1.1(a).

(b) Contracts. The Contracts set forth on Schedule 1.1(b) (the “Business
Contracts”).

(c) Inventory. All inventories of finished goods, work in progress, raw
materials and components used primarily for the production of or constituting
GEM 21S and the amount of PDGF set forth on Schedule 1.1(c) (collectively, the
“GEM 21S Inventory”).

(d) Intellectual Property. All Intellectual Property Rights primarily related to
the Business other than the Intellectual Property Rights licensed to Buyer
pursuant to the Restated Sublicense Agreement and the Exclusive License
Agreement (collectively, the “Business Intellectual Property”), including
without limitation the following:

(i) all copyrights, copyright registrations and copyright applications,
copyrightable works, renewals, extensions, reversions, restorations and all
other corresponding rights

(ii) all trade dress and trade names, logos, trademarks and service marks and
related registrations and applications, including any intent to use
applications, supplemental registrations and any renewals or extensions, all
other indicia of commercial source or origin, and all goodwill associated with
any of the foregoing, including, without limitation, those set forth on Schedule
1.1(d)(ii);

(iii) all technical data, know how, trade secrets, confidential business
information, manufacturing and production processes and techniques, business
methods, research

 

 

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and development information, financial, marketing and business data, pricing and
cost information, business and marketing plans, and customer, distributor,
reseller and supplier lists and information and other correspondence, records,
documentation and proprietary information (“Business Confidential Information”);

(iv) all tangible embodiments of any of the foregoing, in any form and in any
media; and

(v) all versions, releases, upgrades, derivatives, combinations, enhancements
and improvements of any of the foregoing.

(e) Business Records. All books and records to the extent they contain Business
Confidential Information, including working papers and files, all purchase order
based arrangements, supplier lists (including supplier cost information and
agreements), manuals, instructions, labeling including electronic files, design
drawings, business plans and other plans and specifications, sales literature,
current price lists and discounts, promotional signs and literature, marketing
and sales programs and materials, clinical trial data, and manufacturing and
quality control records and procedures, in each case to the extent primarily
related to the Business (the “Business Records”), including, without limitation,
the information set forth on Schedule 1.1(e).

(f) Permits. All permits, approvals, authorizations, licenses, license
applications, registrations and other rights granted by Governmental Authorities
(including all authorizations under the FDA Act, the Public Health Services Act,
the Controlled Substances Act and the regulations of the FDA and the United
States Drug Enforcement Administration promulgated thereunder) held by Seller to
test, manufacture, supply or distribute GEM 21S, GEM ONJ or ** or to otherwise
use the Purchased Assets or operate the Business (collectively, the “Business
Permits”), including, without limitation, those set forth on Schedule 1.1(f),
but excluding standard business licenses not related primarily to the Business.

(g) Claims. All claims, causes of action, lawsuits, judgments, demands,
warranties and indemnities of any nature available to, being pursued by or
capable of being pursued, in each case that are primarily related to the
Business.

(h) Goodwill. All of the goodwill associated with the Business.

Section 1.2 Excluded Assets. Notwithstanding the provisions of Section 1.1, the
assets, rights and privileges set forth in this Section 1.2 are excluded from
the Purchased Assets (the “Excluded Assets”).

(a) Cash. All cash in hand, cash equivalents, investments (including equity
interests in any Affiliates) and bank accounts.

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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(b) Accounts Receivable. All accounts and notes receivable.

(c) Deposits. All deposits, advances and manufacturer and supplier rebates under
the Business Contracts.

(d) Intellectual Property. All Intellectual Property Rights to be licensed to
Buyer under the Exclusive License Agreement or the Restated Sublicense
Agreement. All Intellectual Property Rights not used primarily in the Business,
including Intellectual Property Rights licensed to Seller, all patents and
applications for patents and all related reissues, reexaminations, divisions,
renewals, extensions, provisionals, interferences, and continuations, and all
industrial designs, industrial models, utility models, certificates of invention
and other indices of ownership, and any related registrations and applications,
including national and multinational statutory invention registrations.

(e) Real Property. All real property or interests in real property and all
buildings, structures, fixtures and improvements located thereon, and all
privileges, rights, easements and appurtenances belonging to or for the benefit
thereof.

(f) Contracts. All Contracts that are not Business Contracts.

(g) Tax and Personnel Records. All tax and personnel records.

(h) Tax Refunds. All refunds and rights to refunds related to Taxes relating to
periods prior to the Closing Date.

(i) Computer Hardware. All computers and computer hardware.

(j) Computer Software. All computer software including, but not limited to, all
source code, object or executable code, firmware, operating systems and
specifications, software compilations, software implementations of algorithms,
software tool sets, compilers, software models and methodologies, development
tools, files, records, technical drawings, and data relating thereto.

(k) Data. All databases and data collections, and all rights in the same, in
each case that do not contain Business Confidential Information.

(l) Business Records. All books and records not containing Business Confidential
Information, including each of the following that do not contain Business
Confidential Information: working papers and files, all purchase order based
arrangements, supplier lists (including supplier cost information and
agreements), manuals, instructions, labeling including electronic files, design
drawings, business plans and other plans and specifications, sales literature,
current price lists and discounts, promotional signs and literature, marketing
and sales programs and materials, clinical trial data, and manufacturing and
quality control records and procedures.

(m) Insurance Policies. All insurance policies of Seller or rights thereunder or
proceeds thereof.

 

 

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(n) Claims. All claims, actions, deposits, prepayments, refunds, causes of
action, rights of recovery, rights of set off and rights of recoupment of any
kind or nature (including any such item relating to Taxes) relating to the
excluded assets listed in this Section 1.2.

Section 1.3 Liabilities. On the terms and subject to the conditions set forth
herein, at the Closing, Buyer shall assume from Seller all obligations and
liabilities under the Business Contracts assigned to Buyer to the extent such
obligations and liabilities accrue following the Closing Date (collectively, the
“Assumed Liabilities”). Buyer shall not assume any obligations and liabilities
not expressly included with the definition of Assumed Liabilities (collectively,
the “Excluded Liabilities”).

Section 1.4 Limitation on Assignment of Purchased Assets. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any Purchased Asset or any right thereunder if an
attempted assignment, without the consent of, or other action by, any third
party, would constitute a breach or other contravention thereof or in any way
adversely affect the rights of Buyer or Seller or any of their respective
Affiliates thereunder. Subject to any express provisions set forth in this
Agreement, prior to and following the Closing, Seller will use its commercially
reasonable efforts to obtain any third party consent or third party action
necessary in connection with the potential transfer of any of the Business
Contracts, Business Permits or the Purchased Assets. If any such consent or
other action is not obtained prior to the Closing, Seller will, at Seller’s sole
expense, use reasonable best efforts to provide Buyer with the benefits
thereunder in accordance with this Agreement to the maximum extent permitted by
applicable Law (it being understood, however, that except as othewise expressly
provided in this Agreement, Seller shall not be responsible for the expenses
associated with Buyer’s obtaining for the Business any permits, approvals,
authorizations, licenses, license applications, registrations or other rights
from Governmental Authorities). Buyer shall cooperate with Seller in such
efforts and, to the extent that Buyer receives such benefits, Buyer shall be
responsible for the corresponding obligations thereunder. Once any consent is
received, Seller shall assign, transfer, convey and deliver such Purchased Asset
to Buyer at no additional cost. Seller shall promptly notify Buyer of any oral
or written communication that Seller receives from any counterparty to a
Business Contract relating to Seller’s request to obtain consent to assign the
Business Contract to Buyer or othewise relating to the transactions contemplated
hereby and shall periodically update Buyer on Seller’s attempts to obtain any
required consent, in each case both before and after the Closing.

ARTICLE II

PURCHASE PRICE; CLOSING

Section 2.1 Purchase Price.

(a) On the terms and subject to the conditions set forth herein, in
consideration of the sale of the Purchased Assets and for Seller’s other
agreements hereunder, Buyer shall pay to Seller the Inventory Amount as provided
in Section 2.1(b) and the Installment Amount (collectively with the Inventory
Amount, the “Purchase Price”) as provided in Section 2.1(c). All payments of
Purchase Price shall be made on the date due in immediately available

 

 

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funds in accordance with wire instructions to be provided by Seller not less
than two (2) Business Days prior to the due date of such payment.

(b) The “Inventory Amount” shall mean an amount equal to Seller’s direct costs
paid to third parties that are not Affiliates of Buyer for the acquisition
and/or manufacture of the GEM 21S Inventory (including testing, shipping, and
storage, but excluding any overhead, lost batches, write downs for expired
materials or the like), all as evidenced by copies of documentation from the
third parties delivered by Seller to Buyer within thirty (30) days of Closing in
accordance with Section 7.13 hereof. Subject to Section 7.13(b) hereof, Buyer
shall pay the Inventory Amount within the earlier of sixty (60) days following
the Closing Date or thirty (30) days following receipt of such cost
documentation.

(c) The “Installment Amount” shall mean the sum of Forty Million Dollars
($40,000,000), payable as set forth in this Section 2.1(c). **

(i) Fifteen Million Dollars ($15,000,000) shall be paid at the Closing.

(ii) Fifteen Million Dollars ($15,000,000) shall be paid upon the earlier of (I)
Seller’s compliance with Sections 2.4(h), 7.10(b) and 7.12 hereof, and (II) the
sixtieth (60th) day following the Closing Date.

(iii) Three Million Dollars ($3,000,000) shall be paid upon Buyer’s submission
to the FDA of a supplement to the PMA Application to allow Buyer’s manufacturing
facility to produce GEM 21S (the “GEM 21S Manufacturing Approval”); provided,
however, that if Seller has not complied with Sections 2.4(h), 7.10(b) and 7.12
hereof by such date, the payment shall be deferred until such time as Seller has
so complied; provided, further, that notwithstanding the foregoing such payment
shall in all events be made by the first day of the eighteenth (18th) month
following the Closing Date.

(iv) Three Million Dollars ($3,000,000) shall be paid upon Buyer’s receipt of
the GEM 21S Manufacturing Approval; provided, however, that if Seller has not
complied with Sections 2.4(h), 7.10(b) and 7.12 by such date, the payment shall
be deferred until such time as Buyer has so complied; provided, further, that
notwithstanding the foregoing such payment shall in all events be made by the
first day of the eighteenth (18th) month following the Closing Date.

(v) Two Million Five Hundred Thousand Dollars ($2,500,000) shall be paid upon
the earlier to occur of (A) thirty (30) days following receipt by Buyer of
approval from the FDA of the PMA Application for ** (or another product
containing ** or otherwise reasonably acceptable to Buyer) for use in the Field,
(B) thirty (30) days following the date on which Buyer abandons the development
of **, and (C) December 31, 2009.

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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(vi) One Million Five Hundred Thousand Dollars ($1,500,000) shall be paid upon
the earlier to occur of (A) thirty (30) days following receipt by Buyer of a New
Drug Application Approval from the FDA of GEM ONJ (or another product comprising
a syringe of PDGF packaged without a matrix or otherwise reasonably acceptable
to Buyer) for use in the Field, (B) thirty (30) days following the date on which
Buyer abandons the development of GEM ONJ, and (C) December 31, 2009.

Buyer will promptly notify Seller following the occurrence of each of the
following:

(a) Buyer’s submission to the FDA of the request for the GEM 21S Manufacturing
Approval;

(b) Buyer’s receipt of the GEM 21S Manufacturing Approval;

(c) Buyer’s receipt of approval from the FDA of the PMA Application for ** (or
another product ** or otherwise reasonably acceptable to Buyer) for use in the
Field, or Buyer’s abandonment of the development of **; or

(d) Buyer’s receipt of a New Drug Application Approval from the FDA of GEM ONJ
(or another product comprising a syringe of PDGF packaged without a matrix or
otherwise reasonably acceptable to Buyer) for use in the Field, or Buyer’s
abandonment of the development of GEM ONJ, as applicable.

Section 2.2 Closing. The Closing shall take place at the offices of Sheppard,
Mullin, Richter & Hampton LLP, 1300 I Street, N.W., 11th Floor East, Washington,
DC 20005 at 10:00 A.M. (local time), on the second (2nd) Business Day following
the date on which the conditions set forth in Article VI (other than those
conditions that by their nature are to be satisfied at the Closing but subject
to the fulfillment or waiver of those conditions) have been satisfied or waived,
or at such other time and place as the parties hereto may mutually agree, but in
no event sooner than January 4, 2008. The date on which the Closing occurs is
called the “Closing Date.”

Section 2.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller
(at Buyer’s costs and expense) the following:

(a) the portion of the Purchase Price payable at Closing in accordance with
Section 2.1;

(b) an Amended and Restated Exclusive Sublicense Agreement in the form of
Exhibit A hereto (the “Restated Sublicense Agreement”), executed by Buyer;

(c) a Manufacturing Termination Agreement in the form of Exhibit B hereto (the
“Manufacturing Termination Agreement”), executed by Buyer;

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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(d) an R&D Termination Agreement in the form of Exhibit C hereto (the “R&D
Termination Agreement”), executed by Buyer;

(e) a Trademark License-Back Agreement in the form of Exhibit D hereto (the
“Trademark License-Back Agreement”), executed by Buyer;

(f) an orphan drug designation transfer acknowledgement letter for GEM ONJ
substantially in the form of Exhibit E-1, executed by Buyer;

(g) an acknowledgment of each of the documents referenced in Sections 2.4(g) and
2.4(h);

(h) a Supply Agreement in the form of Exhibit F hereto for the purchase by Buyer
from Seller of rhPDGF in full ** bottles (the “Supply Agreement”), executed by
Buyer; and

(i) an Assignment and Assumption Agreement in the form of Exhibit G hereto (the
“Assignment and Assumption Agreement”), executed by Buyer.

(j) An Exclusive License Agreement in the form of Exhibit K hereto (the
“Exclusive License Agreement”), executed by Buyer.

Section 2.4 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer
(at Seller’s costs and expense), and shall put Buyer into full possession of,
the Purchased Assets and shall execute (where applicable) and deliver to Buyer
the following:

(a) the Restated Sublicense Agreement, executed by Seller;

(b) the Manufacturing Termination Agreement, executed by Seller;

(c) the R&D Termination Agreement, executed by Seller;

(d) the Trademark License-Back Agreement, executed by Seller;

(e) the Supply Agreement, executed by Seller;

(f) a letter transferring the orphan drug designation for osteonecrosis of the
jaw to Buyer substantially in the form of Exhibit E-2 hereto, executed by
Seller;

(g) a PMA transfer letter for GEM 21S and FDA Form 3514 substantially in the
form of Exhibit L hereto, executed by Seller;

(h) a transfer letter for the Canadian Medical Device License for GEM 21S
substantially in the form of Exhibit M hereto; and a transfer of the FDA ** for
** substantially in the form of Exhibit N hereto, in each case executed by
Seller;

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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(i) a preliminary schedule of the items to be included within the GEM 21S
Inventory, including the lot number, manufacture date and expiration date of
each such item, and all material relevant information relating to the condition
and cost to Seller thereof (which schedule and related information shall be
reasonably acceptable to Buyer in all respects), prepared in good faith and
executed by Seller;

(j) a Bill of Sale in the form of Exhibit H hereto, executed by Seller;

(k) assignments for the Business Intellectual Property, in the applicable form
included in Exhibit I hereto, executed by Seller;

(l) the Assignment and Assumption Agreement, executed by Seller;

(m) such other instruments of transfer, assumptions, filings or documents, in
form and substance reasonably satisfactory to Buyer, as may be required to give
effect to this Agreement;

(n) a certificate of the Secretary of Seller, dated the Closing Date, certifying
the incumbency and genuineness of the signatures of each officer of Seller
executing this Agreement and the Ancillary Agreements;

(o) a good standing certificate of Seller from the State of Delaware, dated
within seven (7) Business Days prior to the Closing Date; and

(p) the Exclusive License Agreement, executed by Seller.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

As a material inducement to Buyer to enter into this Agreement, with the
understanding that Buyer will be relying thereon in consummating the
transactions contemplated hereunder, Seller hereby represents and warrants to
Buyer that the statements contained in this Article III are true and correct on
the date hereof and as of the Closing as though made at the Closing.

Section 3.1 Organization and Qualification. Seller is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own, lease and operate its
assets, and to carry on its business as currently conducted. Seller is duly
qualified or licensed to do business as a foreign corporation where required and
is in good standing in every jurisdiction in which the character or location of
its properties and assets owned, leased or operated by Seller or the nature of
the business conducted by Seller requires such qualification or licensing.

Section 3.2 Authorization. Seller has the full corporate power and authority to
enter into this Agreement and the Ancillary Agreements and to carry out the
transactions contemplated herein and therein. Subject to obtaining the
Stockholders’ Approval if the Opinion Condition is not satisfied, the Board of
Directors of Seller has taken all action required by applicable Law and Seller’s
certificate of incorporation and bylaws and otherwise to duly and validly
authorize and approve the execution, delivery and performance by Seller of this
Agreement, the Ancillary

 

 

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Agreements and the consummation by Seller of the transactions contemplated
herein and therein. Without limiting the foregoing, unless the Opinion Condition
is not satisfied (in which case Stockholders’ Approval shall be required),
neither the execution, delivery or performance by Seller of this Agreement or
the Ancillary Agreements, nor the consummation by Seller of the transactions
contemplated herein and therein, requires the approval of the stockholders of
Seller under applicable Law, Seller’s certificate of incorporation or bylaws, or
otherwise. This Agreement has been duly and validly executed and delivered by
Seller and assuming the due authorization, execution and delivery by Buyer of
this Agreement and the Ancillary Agreements and Seller’s execution of the
Ancillary Agreements at Closing, constitute or will constitute the legal, valid
and binding obligations of Seller, enforceable against it in accordance with
their respective terms.

Section 3.3 Non-Contravention. Neither the execution, delivery or performance by
Seller of this Agreement or the Ancillary Agreements nor the consummation of the
transactions contemplated herein and therein will (a) violate Seller’s
certificate of incorporation or bylaws, (b) violate any provision of applicable
Law in any material respect, (c) result in the creation or imposition of any
Encumbrance on any of the Purchased Assets or (d) assuming all Seller Consents
are obtained, constitute a default under (with or without due notice or lapse of
time or both), result in the loss of any material benefit under, or give rise to
any right of termination, cancellation, increased payments or acceleration
under, any terms, conditions or provisions of any note, bond, lease, mortgage,
indenture, license, contract, franchise, permit, instrument or other agreement
or obligation to which Seller is a party, or by which any of Seller’s properties
or assets may be bound.

Section 3.4 Consents. Schedule 3.4 sets forth each consent, approval, order and
authorization of or from, and registration, notification, declaration or filing
with any Person, including without limitation any Governmental Authority, that
is required in connection with the execution, delivery or performance of this
Agreement or the Ancillary Agreements by Seller or the consummation by Seller of
the transactions contemplated herein and therein (the “Seller Consents”). To the
Knowledge of Seller, there are no facts or circumstances that would prevent or
materially delay obtaining any of Seller Consents.

Section 3.5 Records; Liabilities. All accounts, books and ledgers of Seller
related to the Business are complete and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein. Seller does not have
any material liabilities or obligations related to the Business (whether
accrued, absolute, contingent, unliquidated or otherwise, whether due or to
become due, whether known or unknown, and regardless of when asserted), except
for liabilities incurred in the ordinary course of business or as set forth on
Schedule 3.7.

Section 3.6 Compliance with Law.

(a) Seller has conducted its business in compliance with all applicable Laws in
all material respects. No Governmental Authority has notified Seller that it has
violated any Law or that it is the subject of any investigation, and to the
Knowledge of Seller there are no grounds for the same.

(b) Seller is in possession of all the Business Permits and the Business Permits
are valid and in full force and effect. No Governmental Authority has notified
Seller of any facts or circumstances which are likely to lead to any suspension,
loss of or material modification to

 

 

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any Business Permit or refusal by a Governmental Authority to renew or accept
for filing any Business Permit on terms less advantageous, individually or in
the aggregate, to Seller than the terms of those currently in force and, to the
Knowledge of Seller, there are no facts or circumstances providing grounds for
the same.

(c) All applications, submissions, information, claims, reports and statistics,
and other data and conclusions derived therefrom, utilized as the basis for or
submitted in connection with any and all requests for a Business Permit of the
FDA or other Governmental Authority, when submitted to the FDA or other
Governmental Authority were (to the Knowledge of Seller in the case of any such
materials prepared by a third party) true, complete and correct in all material
respects as of the date of submission and any legally necessary or required
updates, changes, corrections or modifications to such applications,
submissions, information, claims, reports or statistics have been submitted to
the FDA and other Governmental Authority.

(d) All pre-clinical and clinical trials conducted by or under the authority of
Seller were and are being conducted (to the Knowledge of Seller where conducted
by a third party) in material compliance with all applicable Laws promulgated by
the FDA and other applicable Governmental Authorities relating thereto.

(e) Seller is not aware, nor has it received notice, of any investigations,
audits, actions or other proceedings pending with respect to a violation by
Seller of the FDA Act or other applicable Law, and, to the Knowledge of Seller,
there are no facts or circumstances existing that would reasonably be expected
to serve as a basis for such an investigation, audit, action or other
proceeding.

(f) No Governmental Authority has commenced or, to the Knowledge of Seller,
threatened to initiate any action to withdraw the Business Permits or request
the recall of any products produced thereunder, nor has Seller received any
notice to such effect and, to the Knowledge of Seller, there are no grounds for
such action.

(g) Neither Seller nor, to the Knowledge of Seller, any of its employees or
agents, in their capacities as such, have been disqualified or debarred by the
FDA, pursuant to 21 USC. § § 335(a) or (b), or been charged with or convicted
under the Laws of the United States for conduct relating to the development or
approval, or otherwise relating to the regulation of, any product under the
Generic Drug Enforcement Act of 1992, or any other relevant Law or been
debarred, disqualified or convicted under or for any equivalent or similar
applicable foreign Law.

Section 3.7 Litigation. There is no pending or, to the Knowledge of Seller,
threatened suit, claim, action, proceeding or investigation arising out of the
conduct by Seller of the Business and, to the Knowledge of Seller, there is no
basis for the same, except as set forth on Schedule 3.7. There are no
outstanding orders of any Governmental Authority that apply to Seller’s
business. There is not any suit, claim, action, proceeding or investigation by
Seller pending, or which Seller intends to initiate, against any other Person.

Section 3.8 Absence of Changes. Since December 31, 2006, Seller has conducted
the Business only in the ordinary course, and the Business has not experienced
any event or condition, and to Seller’s Knowledge no event or condition is
threatened, that, individually or in the aggregate, has had or is reasonably
likely to have, a Material Adverse Effect. Since

 

 

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December 31, 2006, none of the actions or events prohibited or circumscribed by
Section 5.2 have been taken or have occurred, except as expressly permitted by
this Agreement.

Section 3.9 Sufficiency of Assets. The Purchased Assets, together with the
Intellectual Property Rights to be licensed to Buyer under the Restated
Sublicense Agreement and the Exclusive License Agreement and the rights granted
under the Supply Agreement, constitute all the assets, properties and rights of
Seller primarily related to the Business and that are otherwise primarily used
by Seller to operate and conduct the Business and constitute all assets
currently used by Seller to operate and conduct the Business as currently
conducted, in each case other than employees, facilities, working capital and
the Excluded Assets.

Section 3.10 Title and Condition to Property. Seller has, and at the Closing
Seller will transfer to Buyer, good title to the Purchased Assets, free and
clear of all Encumbrances. No Affiliate of Seller has any interest in the
Purchased Assets. Each item of Business Machinery is in good repair and good
operating condition, ordinary wear and tear excepted, is suitable for immediate
use in the ordinary course of business and is free from latent and patent
defects.

Section 3.11 Intellectual Property.

(a) Schedule 1.1(d)(ii) lists all Business Intellectual Property that is
registered with, has been applied for, or has been issued by the U.S. Patent and
Trademark Office or a corresponding foreign Governmental Authority.

(b) Schedule 3.11(b) lists each agreement pursuant to which Seller licenses
Intellectual Property Rights primarily related to the Business (other than
off-the-shelf software) and identifies the applicable agreement.

(c) Except to the extent included in the Restated Sublicense Agreement or the
Exclusive License Agreement, Seller does not own, possess, hold, or otherwise
have rights in, any (i) patents, patent applications or any related reissues,
reexaminations, divisions, renewals, extensions, provisionals, interferences and
continuations of the foregoing and (ii) industrial designs, industrial models,
utility models, certificates of invention or other indices of invention
ownership, or any related registrations and applications or applications, in
each case referred to in clause (i) and (ii) above to the extent primarily
related to the Business.

(d) Seller has delivered or made available to Buyer complete and accurate copies
of all material correspondence, litigation documents, agreements, file histories
and office actions relating to the Business Intellectual Property.

(e) Seller owns free and clear of any Encumbrances and possesses all right,
title and interest, or holds a valid license, in and to all Business
Intellectual Property. To Seller’s Knowledge the Business Intellectual Property
owned or licensed by Seller constitutes all the Business Intellectual Property
necessary to the conduct of the Business as it is currently conducted.

(f) Seller has taken all reasonable measures to protect the secrecy,
confidentiality and value of the Business Intellectual Property. All necessary
registration, maintenance and renewal fees currently due in connection with any
currently registered or applied for Business Intellectual Property have been
paid, all formal legal requirements

 

 

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(including the timely post-registration applications) relating to any material
Business Intellectual Property currently registered or applied for have been
made, and all necessary documents, recordations and certificates in connection
with Business Intellectual Property have been filed with the relevant patent,
trademark or other authorities in the U.S. or foreign jurisdictions, as the case
may be, for the purposes of perfecting and maintaining the currently registered
or applied for Business Intellectual Property. No Business Intellectual Property
or product, technology or service of the Business is subject to any proceeding
or outstanding decree, order, judgment, agreement or stipulation that restricts
in any manner the use, transfer or licensing thereof by Seller or may affect the
validity, use or enforceability of such Business Intellectual Property.

(g) No personnel, including employees, agents, consultants and contractors, of
Seller who have contributed to or participated in the conception or development,
or both, of the Business Intellectual Property had or has any ownership interest
therein, Seller being the full, effective, sole and exclusive and original
ownership of all tangible and intangible property thereby arising.

(h) The operation of the Business or the Business Intellectual Property has not
as of or prior to the date of this Agreement infringed, misappropriated or
conflicted with, and will not as of the Closing Date have infringed,
misappropriated or conflicted with, or have been alleged in writing to infringe,
misappropriate or conflict with any Intellectual Property Right of any other
Person. To the Knowledge of Seller, no third party is infringing any Business
Intellectual Property Right of Seller.

(i) To Seller’s Knowledge all clinical trial data included in the Purchased
Assets was collected and maintained in accordance with the applicable clinical
trial agreement.

(j) Other than trademarks containing the words GEM OS, GEM LT, GEM C or that are
included in the Purchased Assets, Seller does not own any right, title or
interest in or to any trademarks containing the word GEM.

(k) The proceeding referred to in Schedule 3.7 hereof does not involve any
pending or threatened claims relating to Intellectual Property Rights.

(l) The schedule of trademarks that will be attached to Exhibit I will be true,
correct and complete.

Section 3.12 Inventory. Each item included in the GEM 21S Inventory and each
test sample and item of clinical trial supplies included in the Purchased Assets
is in good condition and usable or saleable (as applicable) in the ordinary
course of business for the purposes for which intended. The quantities of the
GEM 21S Inventory are not excessive and are reasonable in the present
circumstances of Seller. The Schedule to be delivered pursuant to Schedule 7.13,
when delivered, will be true, accurate and complete.

Section 3.13 Business Contracts. Seller has delivered to Buyer true, accurate
and complete copies of the Business Contracts. Except as set forth in Schedule
3.13, the Business Contracts constitute all the agreements entered into by
Seller that are primarily related to the Business and are not Excluded Assets.
The Business Contracts constitute valid and binding obligations of Seller and
all other parties thereto, and are in full force and effect. Neither Seller nor
to the Knowledge of Seller the other parties to the Business Contracts are in
default

 

 

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thereunder, and Seller has not received or given notice of any default
thereunder from or to any of the other parties thereto. Seller has the ability,
subject only to any limitation or restriction set forth in the Business
Contracts, to assign its rights under the Business Contracts to Buyer in
accordance with this Agreement on terms and conditions no less favorable than
those in effect on the date hereof.

Section 3.14 Solvency. Seller is not now insolvent and will not be rendered
insolvent by any of the transactions contemplated hereby. Immediately after
giving effect to the consummation of the transactions contemplated hereby: (i)
Seller will be able to pay its liabilities as they become due in the usual
course of its business; (ii) Seller will not have unreasonably small capital
with which to conduct its present or proposed business; and (iii) Seller will
have assets (calculated at fair market value) that exceed its liabilities.

Section 3.15 Prohibited Payments. Seller has not (i) made or agreed to make any
contribution, payment or gift to any government official, employee or agent
where the contribution, payment or gift or the purpose thereof was illegal, (ii)
established or maintained any unrecorded fund or asset for any purpose or made
any false entries on the books and records of Seller for any reason, or (iii)
made or agreed to make any contribution, or reimbursed any political gift or
contribution made by any other Person, to any candidate for public office.

Section 3.16 Relations with Suppliers and Customers. Except as set forth in
Schedule 3.16, Seller has not received notice from any supplier or customer of
the Business to the effect that, and, to the Knowledge of Seller, there is no
reason to believe that, any supplier or customer of the Business will stop,
materially decrease the rate of, or materially change the terms (whether related
to payment, price or otherwise) with respect to, supplying or purchasing
materials, products or services to or from Seller, as applicable. Seller’s
relationship with the suppliers and customers of the Business is good in all
material respects.

Section 3.17 Tax Matters.

(a) Seller has filed or will have filed on a timely, complete and accurate basis
all Tax Returns required to be filed by Seller under applicable Laws, and Seller
has or will have timely paid all Taxes due on or prior to the date hereof
(whether or not reflected on such Tax Returns), except where Seller’s failure to
file or pay would not result in any Encumbrances for Taxes on the Purchased
Assets.

(b) There are no Encumbrances for Taxes on the Purchased Assets except for
statutory liens for current Taxes not yet due and payable.

(c) Seller is not required to file a Tax Return with respect to the Business,
the Purchased Assets or the Assumed Liabilities in any jurisdiction outside the
United States, except where Seller’s failure to file or pay would not result in
any Encumbrances for Taxes on the Purchased Assets.

Section 3.18 Proxy Statement. The representations and warranties contained in
this Section 3.18 shall be applicable only if the Opinion Condition is not
satisfied.

(a) At the time the Proxy Statement is filed with the Securities and Exchange
Commission (“SEC”), at any time it is amended or supplemented and at the time it
is first mailed to the stockholders of Seller, the Proxy Statement, as amended
or supplemented, will not contain any untrue statement of a

 

 

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material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Seller in this Section 3.18(b) with
respect to statements (or omissions) made (or left out) or incorporated by
reference therein about Buyer, or based on information supplied by Buyer (or
failed to be supplied) for inclusion or incorporation by reference in such
documents.

(b) Without limiting Section 3.18(a), each document required to be filed by
Seller with the SEC or required to be distributed or otherwise disseminated by
Seller to Seller’s stockholders in connection with the transactions contemplated
hereby and any amendments or supplements thereto, when filed, distributed or
disseminated, as applicable, will comply in all material respects with the
applicable requirements of the Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.

Section 3.19 Finders’ Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Seller who might be entitled to any fee or commission from Buyer in
connection with the transactions contemplated hereby.

Section 3.20 Disclosure. No representation, statement, or information provided
by Seller in this Article III contains or will contain any intentional
misrepresentation of a material fact or intentionally omits or will omit a
material fact that would negatively impact Buyer’s ability to commercialize
product in the Field and the Business. Except as otherwise expressly set forth
in Article III, all Purchased Assets are conveyed “AS IS”.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller as of the date hereof and as of the
Closing as follows:

Section 4.1 Organization. Buyer is duly organized, validly existing and in good
standing under the laws of the State of New York, and has all requisite
corporate power and authority required to carry on its business as now
conducted. Buyer is duly qualified or licensed to do business as a foreign
corporation where required and is in good standing in every jurisdiction in
which the character or location of its properties and assets owned, leased or
operated by Buyer or the nature of the business conducted by Buyer requires such
qualification or licensing.

Section 4.2 Authorization. Buyer has the full corporate power and authority to
enter into this Agreement and the Ancillary Agreements and to carry out the
transactions contemplated herein and therein. The Board of Directors of Buyer
has taken all action required by Law and Buyer’s certificate of incorporation
and bylaws and otherwise to duly and validly authorize and approve the
execution, delivery and performance by Buyer of this Agreement, the Ancillary
Agreements and the consummation by Buyer of the transactions contemplated herein
and therein and no other corporate proceedings on the part of Buyer are, or will
be, necessary to authorize this Agreement, the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements have been duly and validly

 

 

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executed and delivered by Buyer and assuming the due authorization, execution
and delivery by Buyer of this Agreement and the Ancillary Agreements, constitute
the legal, valid and binding obligations of Buyer, enforceable against it in
accordance with their respective terms.

Section 4.3 Non-Contravention. Neither the execution, delivery or performance by
Buyer of this Agreement or the Ancillary Agreements nor the consummation of the
transactions contemplated herein and therein will (a) violate Buyer’s
certificate of incorporation or bylaws, (b) violate any provision of applicable
Law, or (c) constitute a default under (with or without due notice or lapse of
time or both), result in the loss of any material benefit under, or give rise to
any right of termination, cancellation, increased payments or acceleration
under, any terms, conditions or provisions of any note, bond, lease, mortgage,
indenture, license, contract, franchise, permit, instrument or other agreement
or obligation to which Buyer is a party, or by which any of Buyer’s properties
or assets may be bound.

Section 4.4 Finders’ Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission from Seller in
connection with the transactions contemplated hereby.

Section 4.5 Financing. Buyer has, or has available to it, sufficient financial
resources so as to enable Buyer to satisfy its financial obligations under this
Agreement without recourse to any outside financing other than such outside
financing as Buyer has secured access to as of the date of this Agreement.

ARTICLE V

PRE-CLOSING COVENANTS

Section 5.1 Access and Information. During the period from the date hereof to
the Closing, and subject to the terms of the Confidentiality Agreement, Seller
shall (i) afford Buyer and its representatives access, during regular business
hours and upon reasonable advance notice, to the assets, books, records and
employees of the Business, (ii) furnish, or cause to be furnished, to Buyer any
financial and operating data and other information that is available with
respect to the Business as Buyer from time to time reasonably requests,
(iii) instruct its employees, counsel and agents to cooperate in a reasonable
manner with Buyer in its investigation of the Business, and (iv) facilitate
meetings between Buyer and the other parties to the Business Contracts, Becton
Dickinson and Company and AAI Development Services. Buyer and its
representatives will conduct their investigation so as to minimize disruption to
Seller’s business and operations; will not directly or indirectly contact any
employee or third party with whom Seller transacts business with respect to the
transactions contemplated by this Agreement except pursuant to subsection (iv)
above; and will direct all requests for access and information to Earl Douglas,
General Counsel, or Hans Kestler, Senior Director, Orofacial Healthcare.

Section 5.2 Conduct of Business. During the period from the date hereof to the
Closing, except as otherwise contemplated by this Agreement or as Buyer
otherwise agrees in writing in advance, Seller shall conduct the Business in the
ordinary course and use its commercially reasonable efforts to preserve intact
the Business and its relationship with its employees, suppliers and other
business relations. During the period from the date hereof to the

 

 

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Closing, except as otherwise contemplated by this Agreement or as Buyer shall
otherwise consent in writing, Seller shall not:

(a) sell, lease, license, transfer or dispose of any assets of the Business
other than in the ordinary course of business;

(b) terminate or extend or modify any Business Contract or contract relating to
the supply of bulk PDGF or any other contract primarily related to the Business;

(c) dispose of or permit to lapse any rights in, to or for the use of any
Business Intellectual Property, or disclose to any Person not an employee of
Seller any Business Intellectual Property not heretofore a matter of public
knowledge, except pursuant to judicial or administrative process;

(d) settle any claims, actions, arbitrations, disputes or other proceedings
relating primarily to the Business other than those set forth on Schedule 3.7;

(e) cancel or compromise any material debt or claim or waive any rights of
material value to the Business without the Business receiving a realizable
benefit of similar or greater value, or voluntarily suffer any extraordinary
loss;

(f) do any other act which would cause any representation or warranty of Seller
in this Agreement to be or become untrue in any material respect or
intentionally omit to take any action necessary to prevent any such
representation or warranty from being untrue in any material respect at such
time; or

(g) authorize or enter into any agreement or commitment with respect to any of
the foregoing.

Section 5.3 Efforts to Close.

(a) During the period from the date hereof to the Closing, Seller and Buyer
shall cooperate and use their respective reasonable efforts to fulfill as
promptly as practicable the conditions precedent to the other party’s
obligations hereunder, including securing as promptly as practicable all
consents, approvals, waivers and authorizations required in connection with the
transactions contemplated hereby. Without limiting the generality of the
foregoing, Buyer and Seller will cooperate in making all filings and submissions
required by any applicable Laws and in filing any additional information
requested as soon as practicable after receipt of such request therefor. Subject
to applicable Laws and the instructions of any Governmental Authority, Seller
and Buyer each shall keep the other apprised of the status of matters relating
to completion of the transactions contemplated hereby, including promptly
furnishing the other with copies of notices or other communications received by
Seller and Buyer, as the case may be, from any third party and/or any
Governmental Authority with respect to such transactions.

(b) Each of Buyer and Seller shall (i) promptly notify the other party of any
written communication to that party from any Governmental Authority relating to
the Purchased Assets and, subject to applicable Law, permit the other party to
review in advance any proposed written communication to any of the foregoing,
(ii) not agree to participate in any substantive meeting or discussion with any
Governmental Authority in respect of any filings, investigation or

 

 

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inquiry concerning the Purchased Assets unless it consults with the other party
in advance and, to the extent permitted by such Governmental Authority, gives
the other party the opportunity to attend and participate thereat, and (iii) to
the extent permitted under applicable Law, furnish the other party with copies
of all correspondence, filings, and written communications between such party
and any Governmental Authority with respect to this Agreement and the
transactions contemplated hereby (unless the furnishing of such information
would (1) violate the provisions of any applicable Law or any confidentiality
agreement or (2) cause the loss of the attorney-client privilege with respect
thereto; provided that each such party shall use its reasonable commercial
efforts to promptly communicate to the other party the substance of any such
communication, whether by redacting parts of such material communication or
otherwise, so that such communication would not violate applicable Law or cause
the loss of the attorney-client privilege with respect thereto).

(c) Seller acknowledges that certain of the trademarks included in the Purchased
Assets are registered in its prior corporate name and that Buyer may prepare for
Seller’s signature and file prior to or after the Closing with the applicable
Governmental Authorities documentation to correct the name. Seller agrees to
promptly reimburse Buyer for all filing fees and foreign legal counsel fees
incurred by Buyer to effect the foregoing.

(d) Except as otherwise provided herein, the obligations of the parties under
this Section 5.3 shall not include any requirement of the parties to expend
money (other than normal legal and professional fees), commence or participate
in any litigation or offer or grant any accommodation (financial or otherwise)
to any third Person.

Section 5.4 Notification. During the period from the date hereof to the Closing,
Seller shall promptly notify Buyer in writing if Seller becomes aware of any
fact or condition that causes or constitutes a material breach of any of
Seller’s representations and warranties or covenants or the occurrence of any
event that may make the satisfaction of the conditions in Article VI impossible
or unlikely. No such disclosure shall affect any rights of Buyer under Articles
VI or IX.

Section 5.5 Acquisition Proposals. Until the earlier of the termination of this
Agreement and the Closing (the “No Shop Period”), Seller shall not, directly or
indirectly, solicit, initiate or encourage any inquiry, proposal or offer from,
or engage in any negotiations or discussions regarding any such inquiry,
proposal or offer with, any third party (other than Buyer) regarding any direct
or indirect acquisition of the Business or its assets (other than a purchase of
assets in the ordinary course of business) or any other transaction involving
Seller or the Business that could jeopardize the transactions contemplated by
this Agreement (any such transaction being a “Third Party Transaction”). Seller
agrees that if, during the No Shop Period, it receives any proposal for any
Third Party Transaction or any request for nonpublic information in connection
with such a proposal, or for access to Seller’s books or records, or its
properties by any Person that is considering making or has made, such a
proposal, Seller will as promptly as practicable notify Buyer thereof,
disclosing the identity of the Person making the proposal and describing in
reasonable detail the terms and conditions of such proposal.

Section 5.6 Employees. Seller acknowledges and agrees that Buyer shall have the
right, but not the obligation, to solicit and hire any and all of Seller’s
employees (past or present) to perform services for Buyer, in each case without
any restrictions on Buyer whatsoever.

 

 

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Section 5.7 Preparation of Proxy Statement. Unless the Opinion Condition is
satisfied, Seller shall prepare and file with the SEC a proxy statement on the
required form for the purpose of soliciting the Stockholders’ Approval (the
“Proxy Statement”) as soon as reasonably practicable after there date hereof,
and shall use its reasonable best efforts to have the Proxy Statement cleared by
the SEC. If at any time prior to the Closing Date any event shall occur that
should be set forth in an amendment of or a supplement to the Proxy Statement,
Seller shall prepare and file with the SEC such amendment or supplement as soon
thereafter as is reasonably practicable. Seller shall notify Buyer of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information, and shall provide to Buyer promptly copies of all
correspondence between Seller or any representative of Seller and the SEC with
respect to the Proxy Statement. Seller shall give Buyer and its counsel the
opportunity to review the Proxy Statement and all responses to requests for
additional information by and replies to comments of the SEC before being filed
with, or sent to, the SEC. Seller shall use its reasonable best efforts, after
consultation with Buyer, to respond promptly to all such comments of and
requests by the SEC and to cause the Proxy Statement to be mailed to Seller’s
stockholders entitled to vote at the Stockholders’ Meeting at the earliest
practicable time.

Section 5.8 Approval of Stockholders. Unless the Opinion Condition is satisfied,
Seller shall, through its Board of Directors, duly call, give notice of, convene
and hold a meeting of its stockholders (the “Stockholders’ Meeting”) for the
purpose of voting on approving the transactions contemplated hereby (the
“Stockholders’ Approval”) as soon as reasonably practicable after there date
hereof. Seller shall, through its Board of Directors, include in the Proxy
Statement the recommendation of the Board of Directors of Seller that the
stockholders of Seller approve the transactions contemplated hereby, and shall
use its reasonable best efforts to obtain such approval.

ARTICLE VI

CONDITIONS TO CLOSING

Section 6.1 Conditions to the Obligations of Buyer. The obligation of Buyer to
effect the Closing is subject to the satisfaction (or waiver) prior to the
Closing of the following conditions:

(a) Representations and Warranties. Each of the representations and warranties
of Seller contained herein shall be true and correct in all material respects as
of the date hereof and as of the Closing as if made on and as of the Closing.

(b) Covenants. Each of the covenants and agreements of Seller to be performed on
or prior to the Closing shall have been duly performed in all material respects.

(c) Material Adverse Effect. Since the date of this Agreement, there shall not
have occurred a Material Adverse Effect.

(d) Deliveries. Seller shall have delivered to Buyer all of the agreements and
other documents required to be delivered pursuant to Section 2.4.

 

 

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(e) Stockholders’ Approval. (i) The Stockholders’ Approval shall have been
obtained or (ii) Buyer shall have received on or prior to January 11, 2007 a
written opinion of Delaware counsel to Seller that the Stockholders’ Approval is
not required under Seller’s certificate of incorporation, bylaws or applicable
Law and which opinion is otherwise acceptable to Buyer (the “Opinion
Condition”).

(f) Certificate. Buyer shall have received a certificate, signed by a duly
authorized officer of Seller and dated the Closing Date, to the effect that the
conditions set forth in Sections 6.1(a) through (e) have been satisfied.

(g) No Proceedings. There shall not be pending or threatened any suit, action or
proceeding challenging or seeking to restrain, limit or prohibit any
transactions contemplated hereby.

(h) No Law. No Law shall be in effect prohibiting the transactions contemplated
hereby.

Section 6.2 Conditions to the Obligations of Seller. The obligation of Seller to
effect the Closing is subject to the satisfaction (or waiver) prior to the
Closing of the following conditions:

(a) Representations and Warranties. Each of the representations and warranties
of Buyer contained herein shall be true and correct in all material respects as
of the date hereof and as of the Closing as if made on and as of the Closing.

(b) Covenants. Each of the covenants and agreements of Buyer to be performed on
or prior to the Closing shall have been duly performed in all material respects.

(c) Deliveries. Buyer shall have delivered to Seller all of the agreements and
other documents required to be delivered pursuant to Section 2.3.

(d) Certificate. Seller shall have received a certificate, signed by a duly
authorized officer of Buyer and dated the Closing Date, to the effect that the
conditions set forth in Sections 6.2(a), (b) and (c) have been satisfied.

(e) Stockholders’ Approval. Unless the Opinion Condition has been satisfied, the
Stockholders’ Approval shall have been obtained.

(f) Milestone Payment. Buyer shall have paid Five Million Dollars ($5,000,000)
to Seller in satisfaction of the milestone payment due under Section 4.5(b) of
the Exclusive Sublicense Agreement.

(g) No Proceedings. There shall not be pending or overtly threatened any suit,
action or proceeding challenging or seeking to restrain, limit or prohibit any
transactions contemplated hereby.

(h) No Law. No Law shall be in effect prohibiting the transactions contemplated
hereby.

 

 

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ARTICLE VII

POST-CLOSING COVENANTS

Section 7.1 Further Assurances. From and after the Closing, each party shall
promptly execute, acknowledge and deliver any other assurances or documents or
instruments of transfer reasonably requested by the other party and necessary
for the requesting party to satisfy its obligations hereunder or to obtain the
benefits of the transactions contemplated hereby, all at the expense of the
requesting party. Without limiting the generality of the foregoing, to the
extent that Buyer or Seller discovers following Closing that any asset that was
intended to be transferred pursuant to this Agreement was not transferred at
Closing, Seller shall promptly assign and transfer to Buyer all of Seller’s
right, title and interest in such asset.

Section 7.2 Business Relationships. From and after the Closing, Seller will
cooperate with Buyer at Buyer’s expense in its efforts to continue and maintain
for the benefit of Buyer those business relationships of Seller relating to the
Business. Without limiting the foregoing, Seller shall use commercially
reasonable efforts to arrange for meetings between each of the other parties to
the Business Contracts, ** and **, on the one hand, and Buyer, on the other
hand, to be convened no later than thirty days following the date hereof. From
and after the Closing, Seller will refer to Buyer all inquiries relating to the
Business.

Section 7.3 Non-Competition.

(a) Seller agrees that from and after the Closing and until the ** anniversary
thereof, neither Seller nor any Affiliate thereof (which term, for purposes of
this Section 7.3 includes any Person that acquires all or a substantial portion
of the assets of Seller, but subject to Section 7.3(d)) shall, directly or
indirectly:

(i) engage or invest in, own, manage, operate, finance, control or participate
in the ownership, management, operation, financing or control of, or render
services to, any Person engaged in, the Business (or any part thereof) within
the Field or any business competitive within the Field with the Business (or any
part thereof) or with any of its products within the Field anywhere in the
world;

(ii) induce or attempt to induce any customer, supplier, licensee or other
business relation of Buyer to cease doing business within the Field with Buyer
or in any way interfere with the relationship between any such customer,
supplier, licensee or other business relationship with Buyer; or

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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(iii) induce or attempt to induce any current or future employee of Buyer to
leave the employ of Buyer, in any way interfere with the relationship between
Buyer and any current or future employee of Buyer or employ or otherwise engage
as an employee, independent contractor or otherwise any current or future
employee of Buyer; provided, however, that neither a general solicitation or
advertisement not specifically targeted to or reasonably expected to target any
employee or independent contractor of Buyer nor the hiring of any such person as
a result of such general solicitation or advertisement will in and of itself be
deemed to violate this clause (iii).

(b) If Seller violates any provision of this Section 7.3, the term of the
restricted period shall be tolled effective the date of the first violation and
shall commence to run only upon the earlier of (i) the date that Seller ceases
violating such provision or (ii) upon grant of relief to Buyer by a court of
competent jurisdiction for all damages incurred, whether equitable or at law,
with the term of the restricted period, solely as it relates to such covenant,
reduced only by the time between the commencement of the restricted period,
solely as it relates to such provision, and the first violation of such
covenant.

(c) If any provision contained in this Section 7.3 is held by any court or
arbitrator of competent jurisdiction to be unenforceable because of the duration
of such provision, the geographic area covered thereby or otherwise, the court
or arbitrator making such determination shall have the power to, and is hereby
directed by the parties to, reduce the duration or geographic area of such
provision or otherwise modify such provision to the extent necessary to be
enforceable, and, in its reduced or modified form, such provision shall be
enforceable.

(d) The provisions of this Section 7.3 shall terminate in the event that (i)
Buyer fails to make any payment of the Purchase Price in accordance with Section
2.1 hereof within 15 Business Days of the date due hereunder or (ii) an
unaffiliated third party that has an existing business in any part of the Field
acquires Seller in a transaction that constitutes a Change of Control.

Section 7.4 Confidentiality. From and after the Closing, Seller and its
Affiliates will hold all Business Confidential Information within the Field in
the strictest confidence, and will refrain from using any Business Confidential
Information within the Field during the term of the Exclusive License Agreement.
From and after the Closing, Buyer and its Affiliates will hold all information
disclosed to Buyer by Seller that is not Business Confidential Information in
the strictest confidence (the “Other Confidential Information”), and will
refrain from using any Other Confidential Information. If Seller or any
Affiliate thereof, or Buyer or any Affiliate thereof, is ever required to
disclose any Business Confidential Information or Other Confidential
Information, the party required to so disclose shall notify the other party
promptly of the disclosure requirement so that the other party may seek an
appropriate protective order or waive compliance with this Section 7.4. If, in
the absence of a protective order or the receipt of a waiver hereunder, such
party, on the written advice of counsel, is compelled to disclose any Business
Confidential Information or Other Confidential Information or else stand liable
for contempt, then such party may disclose the Business Confidential Information
or Other Confidential Information (and only such portion of the Business
Confidential Information or Other Confidential Information) as is required to be
disclosed); provided, however, that such party will use its commercially
reasonable efforts to obtain, at the request of the other party, an

 

 

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order or other assurance (as such other party may designate) that confidential
treatment will be accorded to such portion of the Business Confidential
Information or Other Confidential Information required to be disclosed.

Section 7.5 Non-Disparagement. From and after the Closing Date, neither Seller
nor any Affiliate thereof shall make or solicit or encourage others to make or
solicit directly or indirectly any derogatory or negative statement or
communication about Buyer or the Business or the products thereof. From and
after the Closing Date, neither Buyer nor any Affiliate thereof shall make or
solicit or encourage others to make or solicit directly or indirectly any
derogatory or negative statement or communication about Seller or its business
or the products thereof.

Section 7.6 Orthovita; Patheon.

(a) In the event that Seller is unable to assign to Buyer all of Seller’s right,
title and interest in and to Seller’s Supply Agreement with Orthovita, Inc.
(“Orthovita”) relating to the purchase of bulk non-sterile Beta-TCP, Seller will
at Buyer’s request and on Buyer’s behalf continue to purchase Beta-TCP from
Orthovita pursuant to such Supply Agreement at Buyer’s expense and shall cause
all such product to be shipped directly from Orthovita to Buyer.

(b) In the event that Seller is unable to assign to Buyer all of Seller’s right,
title and interest in and to Seller’s Manufacturing Services Agreement with
Patheon UK Limited (“Patheon”), Seller will at Buyer’s request and on Buyer’s
behalf continue to purchase products from Patheon pursuant to such agreement at
Buyer’s expense and shall cause all such product to be shipped directly from
Patheon to Buyer.

Section 7.7 Trademarks. Promptly following the Closing, Seller shall file such
documentation with the applicable Governmental Authorities and take such other
actions or inactions as shall be necessary to evidence Seller’s abandonment of
all trademark registrations and trademark applications of Seller that contain
the word “GEM” that are not transferred or otherwise assigned to Buyer pursuant
to this Agreement, and shall furnish to Buyer a copy of the documents that
Seller files with Governmental Authorities to evidence the abandonment (if
applicable) and shall furnish such other documents evidencing instructions to
Seller’s agents advising them to abandon such trademarks by taking no further
action with respect to the registration or application. On and after the
Closing, except as otherwise permitted under the Trademark License-Back
Agreement, Seller shall not use, directly or indirectly, any trademarks that
contain the word “GEM.”

Section 7.8 Sublicense Fees. Promptly following the Closing, Buyer shall
directly pay any sublicense or distributor fees required to be paid to the
licensor under either the ZymoGenetics License Agreement or the Harvard License
Agreement, to the extent such payments are required under the Restated
Sublicense Agreement and in each case only after deducting sublicense or
distribution fee amounts otherwise payable by Buyer to Seller under the Restated
Sublicense Agreement (it being the intent of the Parties hereto that Buyer shall
not be required to make the same payment to Seller and to the Licensor pursuant
to this Section 7.8); provided, however, that Seller shall be responsible for
all other payments due under ZymoGenetics License Agreement or Harvard License
Agreement. Seller hereby agrees that it shall not amend either the Zymogenetics
License Agreement or the Harvard License Agreement

 

 

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in a manner that would require Buyer to make any payments contemplated under
this Section 7.8.

Section 7.9 rhPDGF-BB Solution. On the terms and subject to the conditions of
this Section 7.9, at Buyer’s expense, Buyer shall use commercially reasonable
efforts to fill in vials for Seller one batch of ** of rhPDGF-BB solution within
three months following the date (the “Qualification Date”) on which Buyer’s PDGF
manufacturing and fill operation has obtained all necessary permits and other
authorizations, and is otherwise equipped, to produce clinical supplies of
rhPDGF-BB in such quantity, and shall use commercially reasonable efforts to
manufacture three more batches of ** of rhPDGF-BB solution as soon as reasonably
practicable thereafter. Buyer shall package such solution into vials and shall
deliver the vials to Seller at Seller’s risk and expense. It shall be a
condition to Buyer’s obligations under this Section 7.9 that Seller furnish to
Buyer the PDGF, stoppers, vials and other components and consumables necessary
for the production runs. In performing its obligations under this Section 7.9,
Buyer shall use commercially reasonable efforts to cause the Qualification Date
to occur prior to the second anniversary of the Closing Date. If the
Qualification Date does not occur prior to the second anniversary of the Closing
Date, the provisions of this Section 7.9 shall become void.

Section 7.10 Regulatory Matters.

(a) For a period of ** following the Closing, at Buyer’s expense Seller shall
comply with all reasonable requests of Buyer for assistance in its efforts to
qualify its manufacturing operation with the FDA and obtain the GEM 21S
Manufacturing Approval within ** following the Closing. From and after the
Closing, Buyer shall exercise commercially reasonable efforts to satisfy the
conditions precedent to the payments required by Sections 2.1(c)(iii) and (iv).

(b) By no later than **, Seller will provide Buyer with the ** through **, in a
form reasonably suitable for Buyer to submit to the FDA in a supplement to the
GEM 21S PMA Application.

(c) From and after the Closing, Seller shall use its best efforts, including
without limitation undertaking any necessary studies to obtain the approval of
the European Medical Agency (the “EMEA”) for GEM 21S (the “EU Approval”). Buyer
will promptly provide to Seller all information in Buyer’s possession reasonably
required for Seller to obtain the EU Approval. With the approval of Seller,
Buyer may provide its services or those of its consultants to assist Seller in
obtaining the EU Approval; it being agreed that Buyer may deduct any reasonable
external and internal costs associated with such assistance from the milestone
payments due under the R&D Termination Agreement.

(d) Seller acknowledges that from and after the Closing, Buyer will create,
manage and file in Buyer’s name and subject to Buyer’s approval (not to be
unreasonably withheld) a request with the ** in ** for approval of GEM 21S.

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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(e) From and after the Closing, the parties shall:

(i) Upon request provide cross references to each others filings with respect to
IDEs, INDAs NDAs, PMAs (and non-US counterparts thereof) and related filings
with Governmental Authorities, which will be unrestricted except as to the Field
of use and any third-party restrictions relating to New Technology;

(ii) be required to assist each other by providing existing documents that might
be needed for registration of Licensed Products in the Field (in the case of
Seller assisting Buyer) and out of the Field (in the case of Buyer assisting
Seller);

(iii) share all information submitted to the FDA or other Governmental
Authorities regarding new products with application within the Field or with
scientific or medical significance within the Field, including information
relating to all clinical studies and pre-clinical testing; and

(iv) cooperate with regard to quality, pharmacovigilance, product complaint and
recall matters.

(f) From and after the Closing, Buyer shall exercise commercially reasonable
efforts in developing and obtaining approval for ** and GEM ONJ products that
will trigger the payments required by Section 2.1(c)(v) and (vi) and shall
provide Seller with reports every ** as to its progress in studying and
obtaining approval of these products.

(g) At all times following the Closing, Seller shall provide Buyer with access
to and copies of all analytical methods used by Seller in connection with
Licensed Products.

Section 7.11 Transition Services.

(a) During the ** period following the Closing, Seller shall provide Buyer with
reasonable assistance (i) in connection with any action required in respect of,
or any filing with, any Governmental Authority, or any actions, consents,
approvals or waivers required by any third parties, in connection with the
consummation of the transactions contemplated hereby or in connection with the
manufacture of the Licensed Products, and (ii) in taking such actions or making
any filings or furnishing any information in Seller’s possession as may be
necessary or desirable to meet regulatory obligations under applicable Law in
connection with the Licensed Products (including, without limitation,
discussions of specific regulatory issues and responses to issues raised, or
requests made, by Government Authorities during the Pre-clinical and clinical
development of Licensed Products).

(b) During the ** period following the Closing, Seller shall provide reasonable
manufacturing and scientific support to Buyer to facilitate Buyer’s efforts to
commercialize the License Products, including, without limitation, by providing
to Buyer reasonably satisfactory technology transfer services, expertise and
know-how, and making

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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available to Buyer employees, studies (including all manufacturing and stability
studies and all ** studies) and development know-how, to assist Buyer in
commercializing the Licensed Products. Seller shall continue to provide such
services following the one-year period but only upon the request of Buyer and
subject to Buyer’s payment to Seller of fees therefor that are reasonably
acceptable to Seller.

(c) From and after the Closing, Seller shall cooperate with Buyer at Buyer’s
expense to effect the transfer or reissuance of any permits, approvals or
licenses to Buyer (or its designee) required in connection with the transactions
contemplated hereunder or the commercialization of the Licensed Products.

(d) Upon request, Seller shall introduce Buyer to any requested third party
suppliers, vendors, researchers and consultants used by Seller in connection
with the License Products within ** days after the Closing Date, and Seller
shall use reasonable efforts to transition all such relationships and related
rights that relate primarily to the Business from Seller to Buyer.
Notwithstanding the foregoing, Seller shall have no obligation to introduce
Buyer to **.

(e) From and after closing until and such time as Buyer becomes ISO certified
and the amendment to the Canadian Medical Device License for GEM 21S is approved
by the Medical Devices Bureau of Health Canada to permit Buyer to manufacture
GEM 21S for the Canadian market, but in no event beyond the ** anniversary of
the Closing, Seller shall, acting as Buyer’s agent and upon Buyer’s request,
release GEM 21S for distribution in Canada, at a price of ** per lot (i.e. one
production run); provided that Seller shall not charge Buyer for the first **
lots. Buyer agrees to indemnify, defend and hold harmless Seller for any losses
or claims directly or indirectly relating to or arising out of any Canadian
distribution under this Section 7.11(e), except to the extent constituting
fraud, gross negligence or willful misconduct by Seller.

Section 7.12 Business Confidential Information; Business Records. At Closing,
Seller shall transfer to Buyer all Business Confidential Information under
Section 1.1(d) and all Business Records included in Schedule 1.1(e); provided
that Seller shall be permitted to maintain copies of all such Business
Confidential Information and Business Records for use in its business outside
the Field.

Section 7.13 Inventory.

(a) Within ** days of the Closing Date, Seller shall provide Buyer with a final
schedule of items included within the GEM 21S Inventory (the “Final Inventory
Schedule”), including, to the extent available, the lot number, manufacture date
and expiration date of each such item, and all relevant information relating to
the condition and cost to Seller thereof. The Inventory Amount reflected in such
final GEM 21S Inventory schedule shall not exceed the amount set forth on
Schedule 7.13 by more than** percent (**%).

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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(b) Following the Closing, Seller will provide Buyer and its representatives
with access to the records and work papers of Seller, and will use its
reasonable best efforts to provide Buyer and its representatives with access to
the GEM21S Inventory, to the extent reasonably related to Buyer’s evaluation and
confirmation of the Final Inventory Schedule, the determination of the items
included in the Final Inventory Schedule or the resolution of any dispute with
respect thereto. Within ** days after the delivery of the Final Delivery
Schedule, Buyer shall notify Seller as to whether Buyer disagrees with the Final
Inventory Schedule. If the Buyer does not notify Seller of its disagreement
within such ** period, then Buyer shall be deemed to have accepted the
calculations and the amount set forth in the Final Inventory Schedule. If any
notice of disagreement is timely provided in accordance with this Section
7.13(b), Seller and Buyer shall each use commercially reasonable efforts for a
period of ** days thereafter (or such longer period as they may mutually agree)
to resolve any disagreements with respect to the Final Inventory Schedule. If,
at the end of such period, Seller and Buyer are unable to resolve any
disagreements as to items in the Final Inventory Schedule, then the parties
shall engage a nationally-recognized accounting firm (the “Auditor”) to resolve
any remaining disagreements. The Auditor shall be charged with determining as
promptly as practicable, but in any event within thirty (30) days after the date
on which such dispute is referred to the Auditor, whether and to what extent the
Final Inventory Schedule requires adjustment. The fees and expenses of the
Auditor shall be shared equally by Seller and Buyer.

ARTICLE VIII

TAX MATTERS

Section 8.1 Seller Liability for Taxes. Seller shall be liable for (A) any Taxes
imposed with respect to the Business, any of the Purchased Assets or any of the
Assumed Liabilities, or any income or gain derived with respect thereto for the
taxable periods, or portions thereof, ended on or before the Closing Date,
(B) Losses directly or indirectly relating to or arising out of any liability
for Taxes imposed with respect to the Business, any of the Purchased Assets or
any of the Assumed Liabilities, or any income or gain derived with respect
thereto for the taxable periods, or portions thereof, ended on or before the
Closing Date, and (C) any Transfer Taxes for which Seller is liable pursuant to
Section 8.4.

Section 8.2 Buyer Liability for Taxes. Buyer shall be liable for (A) any Taxes
imposed with respect to the Business, any of the Purchased Assets or any of the
Assumed Liabilities, or any income or gains derived with respect thereto for any
taxable period, or portion thereof, beginning after the Closing Date, and
(B) Losses directly or indirectly relating to or arising out of any liability
for Taxes imposed with respect to the Business, any of the Purchased Assets or
any of the Assumed Liabilities, or any income or gains derived with respect
thereto for any taxable period, or portion thereof, beginning after the Closing
Date.

Section 8.3 Proration of Taxes. To the extent necessary to determine the
liability for Taxes for a portion of a taxable year or period that begins before
and ends after the Closing Date, the determination of the Taxes for the portion
of the year or period ending on, and the portion of

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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the year or period beginning after, the Closing Date shall be determined by
assuming that the taxable year or period ended as of the close of business on
the Closing Date, except that those annual property taxes and exemptions,
allowances or deductions that are calculated on an annual basis shall be
prorated on a time basis. For purposes of this Section 8.3, any extraordinary
transaction outside the ordinary course of business that occurs on the Closing
Date but after the Closing shall be considered to occur on the day following the
Closing Date.

Section 8.4 Transfer Taxes. All federal, state, local or foreign or other
excise, sales, use, value added, transfer (including real property transfer or
gains), stamp, documentary, filing, recordation and other similar taxes and fees
that may be imposed or assessed as a result of the transactions contemplated
hereby, together with any interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties (“Transfer Taxes”),
shall be borne by Seller.

Section 8.5 Allocation.

(a) The Purchase Price and any other consideration for the Purchased Assets, as
determined for United States federal income tax purposes pursuant to Treasury
Regulations § 1.1060 1(c) (the “Tax Purchase Price”), shall be allocated for
such purposes as provided in Treasury Regulations § 1.1060-1(c) and the Treasury
Regulations referred to therein in the manner specified in Section 8.5(b)
hereof. Buyer and Seller shall execute and file all federal income Tax Returns
in a manner consistent with any allocations agreed or determined pursuant hereto
and shall not take any position in any other Tax Return, before any Governmental
Authority, or in any tax proceeding that is inconsistent with any such
allocation, except pursuant to a final “determination” (as defined in Section
1313(a) of the Code or corresponding provision of state, local or foreign Law).
Buyer and Seller shall timely file any IRS Form 8594 and any other United States
federal income Tax Return prepared in a manner consistent with the allocations
agreed or determined pursuant hereto and shall file any other Tax Return with
any state, local or foreign Governmental Authority in a manner that is not
inconsistent therewith. Any redetermination of the Tax Purchase Price within the
meaning of Treasury Regulations § 1.338 7 shall be made as required thereby and
shall be taken into account by Buyer and Seller in carrying out the provisions
hereof and the preparation and filing of Tax Returns referred to above to the
extent applicable.

(b) As soon as reasonably practicable following the date of this Agreement, the
Buyer shall prepare and submit to Seller an allocation of the Tax Purchase Price
in accordance with Section 8.5(a) hereof. Such allocation shall be binding upon
the parties, provided that if Seller believes that such allocation is manifestly
incorrect it shall so inform Buyer and shall provide Buyer with the reasons for
its disagreement along with reasonably sufficient information to support the
reasons for Seller’s disagreement. The parties will endeavor in good faith to
resolve any such disagreement and if they fail to do so, the issue shall be
submitted to a mutually agreeable tax accountant from an independent “Big Four”
accounting firm for resolution.

 

 

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ARTICLE IX

SURVIVAL; INDEMNIFICATION; CERTAIN REMEDIES

Section 9.1 Survival. All representations and warranties of Seller contained in
this Agreement shall survive for three years following the Closing Date, other
than those contained in Section 3.1, 3.2 and 3.3, which shall survive
indefinitely, and other than those contained in Sections 3.9, 3.17 and the first
two sentences of Section 3.10, which shall survive until the expiration of the
applicable statute of limitations, giving effect to any extensions thereof. All
representations and warranties of Buyer contained in this Agreement shall
survive for one year following the Closing Date, other than those contained in
Section 4.1, 4.2 and 4.3, which shall survive indefinitely.

Section 9.2 Indemnification by Seller. Seller hereby agrees that from and after
the Closing it shall indemnify, defend and hold harmless Buyer, its Affiliates,
and their respective directors, officers, shareholders, partners, members,
attorneys, accountants, agents, representatives and employees and their heirs,
successors and permitted assigns, each in their capacity as such (the “Buyer
Indemnified Parties” and collectively with Seller Indemnified Parties, the
“Indemnified Parties”) from, against and in respect of any damages, losses,
charges, liabilities, claims, demands, actions, suits, proceedings, payments,
judgments, settlements, assessments, deficiencies, interest, penalties, and
costs and expenses (including reasonable attorneys’ fees and out of pocket
disbursements) (collectively, “Losses”) imposed on, sustained, incurred or
suffered by, or asserted against, any of the Buyer Indemnified Parties, whether
in respect of third party claims, claims between the parties hereto, or
otherwise, directly or indirectly relating to or arising out of (i)  any breach
or inaccuracy of any representation or warranty made by Seller contained in
Article III of this Agreement, (ii) any breach of any covenant or agreement of
Seller contained in this Agreement or any Ancillary Agreement, (iii) any of the
Excluded Liabilities, (iv) Seller’s operation of the Business prior to the
Closing, or (v) any Taxes imposed with respect to the Business, any of the
Purchased Assets or any of the Assumed Liabilities for any periods prior to the
Closing.

Section 9.3 Indemnification by Buyer. Buyer hereby agrees that from and after
the Closing it shall indemnify, defend and hold harmless Seller, its Affiliates,
and their respective directors, officers, shareholders, partners, members,
attorneys, accountants, agents, representatives and employees and their heirs,
successors and permitted assigns, each in their capacity as such (the “Seller
Indemnified Parties”) from, against and in respect of any Losses imposed on,
sustained, incurred or suffered by, or asserted against, any of Seller
Indemnified Parties, whether in respect of third party claims, claims between
the parties hereto, or otherwise, directly or indirectly relating to, arising
out of (i) any breach or inaccuracy of any representation or warranty made by
Buyer contained in Article IV of this Agreement, (ii) any breach of a covenant
or agreement of Buyer contained in this Agreement or any Ancillary Agreement, or
(iii) any of the Assumed Liabilities.

Section 9.4 Third Party Claim Indemnification Procedures.

(a) In the event that any written claim or demand for which an indemnifying
party (an “Indemnifying Party”) may have liability to any Indemnified Party
hereunder is asserted against or sought to be collected from any Indemnified
Party by a third party (a “Third Party Claim”), such Indemnified Party shall
promptly, but in no event more than ten days

 

 

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following such Indemnified Party’s receipt of a Third Party Claim, notify the
Indemnifying Party in writing of such Third Party Claim and the amount or the
estimated amount of damages sought thereunder to the extent then ascertainable
(which estimate shall not be conclusive of the final amount of such Third Party
Claim) (a “Claim Notice”); provided, however, that the failure timely to give a
Claim Notice shall affect the rights of an Indemnified Party hereunder only to
the extent that such failure has a material prejudicial effect on the defenses
or other rights available to the Indemnifying Party with respect to such Third
Party Claim or otherwise results in damages to the Indemnifying Party. The
Indemnifying Party shall have 30 days (or such lesser number of days set forth
in the Claim Notice as may be required by court proceeding in the event of a
litigated matter) after receipt of the Claim Notice (the “Notice Period”) to
notify the Indemnified Party that it desires to defend the Indemnified Party
against such Third Party Claim; it being understood that by assuming the defense
of a Third Party Claim the Indemnifying Party shall conclusively acknowledge
that it has an indemnity obligation with respect to such Third Party Claim.

(b) In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it desires to defend the Indemnified Party against
a Third Party Claim, the Indemnifying Party shall have the right to defend the
Indemnified Party by appropriate proceedings and shall have the sole power to
direct and control such defense, with counsel reasonably satisfactory to the
Indemnified Party at its expense. Once the Indemnifying Party has duly assumed
the defense of a Third Party Claim, the Indemnified Party shall have the right,
but not the obligation, to participate in any such defense and to employ
separate counsel of its choosing. The Indemnified Party shall participate in any
such defense at its expense unless (i) the Indemnifying Party and the
Indemnified Party are both named parties to the proceedings and counsel for the
Indemnified Party shall have reasonably concluded that representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, or (ii) the Indemnified Party assumes the
defense of a Third Party Claim after the Indemnifying Party has failed to
diligently pursue a Third Party Claim it has assumed, as provided in clause (i)
of the first sentence of Section 9.4(c). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, settle, compromise
or offer to settle or compromise any Third Party Claim on a basis that would
result in (1) the imposition of a consent order, injunction or decree that would
restrict the future activity or conduct of the Indemnified Party or any of its
Affiliates, (2) a finding or admission of a violation of Law or violation of the
rights of any Person by the Indemnified Party or any of its Affiliates, (3) a
finding or admission that would have an adverse effect on other claims made or
threatened against the Indemnified Party or any of its Affiliates, or (4) any
monetary liability of the Indemnified Party that will not be promptly paid or
reimbursed by the Indemnifying Party.

(c) The Indemnified Party shall have the right but not the obligation to assume
its own defense if (i) the Indemnifying Party elects not to defend the
Indemnified Party against a Third Party Claim, whether by not giving the
Indemnified Party timely notice of its desire to so defend or notifying
Indemnified Party that it will not provide a defense, (ii) the Indemnifying
Party, after assuming the defense of a Third Party Claim, fails to take
reasonable steps necessary to defend diligently such Third Party Claim within
ten days after receiving written notice from the Indemnified Party to the effect
that the Indemnifying Party has so failed, (iii) the claim for indemnification
involves any criminal proceeding, indictment or allegation against the
Indemnified Party, or (iv) the Indemnified Party has been advised by legal
counsel that there may be one or more legal defenses available to it which are
different from or additional to those

 

 

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available to the Indemnifying Party; it being understood that the Indemnified
Party’s right to indemnification for a Third Party Claim shall not be adversely
affected by assuming the defense of such Third Party Claim. The Indemnified
Party shall not settle a Third Party Claim without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.

(d) The Indemnified Party and the Indemnifying Party shall cooperate in order to
ensure the proper and adequate defense of a Third Party Claim, including by
providing access to each other’s relevant business records and other documents,
and employees; it being understood that the out-of-pocket costs and expenses of
the Indemnified Party relating thereto shall be Losses.

(e) The Indemnified Party and the Indemnifying Party shall use reasonable best
efforts to avoid production of confidential information (consistent with
applicable Law), and to cause all communications among employees, counsel and
others representing any party to a Third Party Claim to be made so as to
preserve any applicable attorney-client or work-product privileges.

Section 9.5 Direct Claims. If an Indemnified Party wishes to make a claim for
indemnification hereunder for a Loss that does not result from a Third Party
Claim (a “Direct Claim”), the Indemnified Party shall notify the Indemnifying
Party in writing of such Direct Claim, the amount or the estimated amount of
damages sought thereunder to the extent then ascertainable (which estimate shall
not be conclusive of the final amount of such Direct Claim), any other remedy
sought thereunder, any relevant time constraints relating thereto and, to the
extent practicable, any other material details pertaining thereto. The
Indemnifying Party shall have a period of 30 days within which to respond to
such Direct Claim. If the Indemnifying Party does not respond within such 30-day
period or rejects all or any part of the Direct Claim, the Indemnified Person
shall be free to seek enforcement of its rights to indemnification under this
Agreement with respect to such Direct Claim.

Section 9.6 Consequential Damages and Limitations. The parties acknowledge and
agree that, except with respect to claims for fraud or willful misconduct,
Losses exclude consequential, punitive, special, incidental and indirect
damages, and lost profits, and that THE INDEMNIFICATION OBLIGATIONS OF THE
PARTIES HERETO SHALL NOT EXTEND TO PUNITIVE LOSSES OR TO ANY INCIDENTAL,
CONSEQUENTIAL, SPECIAL OR INDIRECT LOSSES, INCLUDING BUSINESS INTERRUPTION, LOSS
OF FUTURE REVENUE, DIMINUTION IN VALUE, PROFITS OR INCOME, OR LOSS OF BUSINESS
REPUTATION OR OPPORTUNITY; provided that nothing in this Section 9.6 shall
preclude any recovery by an Indemnified Party against an Indemnifying Party for
Third Party Claims.

(a) Indemnification for Losses under Section 9.2(i) or 9.3(i) shall be payable
by Buyer or Seller hereunder only if the aggregate amount of all Losses
hereunder of the Seller Indemnified Parties or the Buyer Indemnified Parties, as
applicable, with respect to such Losses

 

 

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shall exceed **, and thereafter, the Seller Indemnified Parties or the Buyer
Indemnified Parties, as applicable, shall be entitled to make a claim for
indemnification for all Losses from the first dollar. The maximum aggregate
liability of the Buyer and Seller for indemnification claims for Losses under
Section 9.2(i) or 9.3(i) shall be an amount equal to **; provided, however, that
the limitations contained in this Section 9.6(b) shall not apply to claims for
breach of Section 3.1, 3.2, 3.3, 3.9, the first two sentences of Section 3.10,
Section 3.17, 4.1, 4.2 and 4.3 or actions for fraud or willful misconduct.

(b) Each party agrees that it shall, and shall cause the applicable Indemnified
Parties to, use its or their commercially reasonable efforts to secure payment
from insurance policies available and in existence that provide coverage with
respect to any Losses to be indemnified. The amount of any Losses recoverable by
a party under Article IX shall be reduced by the amount of any insurance
proceeds actually paid to, and received by, the Indemnified Party relating to
such claim. Each of the parties agrees to take all reasonable steps to mitigate
damages arising out of or relating to any matter for which such party is
entitled to indemnification under this Article IX to the extent reasonably
possible.

(c) By way of clarification, for purposes of determining the amount of Losses
imposed on, sustained, incurred or suffered by, or asserted against, any of the
Buyer Indemnified Parties relating to or arising out of any breach or inaccuracy
of any representation or warranty made by Seller contained in Article III of
this Agreement (but not for purposes of determining whether any such
representation and warranty was breached or is inaccurate), any qualifications
in the representation or warranty relating to materiality (including, without
limitation, a “Material Adverse Effect” qualification) shall be disregarded.

(d) Except for actions or claims for fraud or willful misconduct, the sole and
exclusive remedy of each party for monetary damages with respect to any and all
claims for any breach of any representation, warranty, covenant or other claim
arising out of or relating to this Agreement, whether arising in contract, tort
or otherwise, shall be the indemnification provisions of this Article IX,
provided, however, that the provisions of this Article IX shall not restrict the
right of any party to seek specific performance or other equitable remedies in
connection with any breach of any of the covenants contained in this Agreement
or any of the Ancillary Agreements.

Section 9.7 Payments. The Indemnifying Party shall pay all amounts payable
pursuant to this Article IX, by wire transfer of immediately available funds,
promptly following receipt from an Indemnified Party of a bill, together with
all accompanying reasonably detailed back-up documentation, for a Loss that is
the subject of indemnification hereunder, unless the Indemnifying Party in good
faith disputes the Loss, in which event it shall so notify the Indemnified
Party. In any event, the Indemnifying Party shall pay to the Indemnified Party,
by wire transfer of immediately available funds, the amount of any Loss for
which it is liable

 

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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hereunder no later than three days following any final determination of such
Loss and the Indemnifying Party’s liability therefor. A “final determination”
shall exist when (i) the parties to the dispute have reached an agreement in
writing, (ii) a court of competent jurisdiction shall have entered a final and
non-appealable order or judgment, or (iii) an arbitration or like panel shall
have rendered a final non-appealable determination with respect to disputes the
parties have agreed to submit thereto.

Section 9.8 Right of Setoff. Upon notice specifying in reasonable detail the
basis therefor, either party may set off any amount to which the other may be
entitled under this Article IX against amounts otherwise payable by such party
under this Agreement or any Ancillary Agreement. The exercise of such right of
setoff in good faith, whether or not ultimately determined to be justified, will
not constitute a breach of this Agreement or the Ancillary Agreement, as
applicable. Neither the exercise of nor the failure to exercise such right of
setoff will constitute an election of remedies or limit such party in any manner
in the enforcement of any other remedies that may be available to it.

Section 9.9 Effect of Waiver of Condition. Neither Buyer’s nor Seller’s right to
indemnity pursuant to this Article IX shall be adversely affected by its waiver
of a condition to closing set forth in Article VI unless such party makes clear
by the terms of its waiver that it is foreclosing its right to indemnity with
respect to the matter that is the subject of the waiver.

ARTICLE X

TERMINATION

Section 10.1 Termination. This Agreement may be terminated at any time prior to
the Closing:

(a) by written agreement of Buyer and Seller;

(b) by either Buyer or Seller (so long as the terminating party is not in
material breach of its obligations under this Agreement) by giving written
notice of such termination to the other party, if the Closing shall not have
occurred on or prior to January 11, 2008 (if the Opinion Condition is satisfied)
or April 4, 2008 (if the Opinion Condition is not satisfied).

(c) by Buyer, if Seller has committed a material breach of any provision of this
Agreement and not cured such breach within five (5) Business Days of notice of
such breach from Buyer; or

(d) by Seller if Buyer has committed a material breach of any provision of this
Agreement and not cured such breach within five (5) Business Days of notice of
such breach from Seller.

Section 10.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with Section 10.1, this Agreement shall thereafter
become void and have no effect, and neither party shall have any liability to
the other party, except that the provisions of this Section 10.2 and Article XI
(and any related definitional provisions set forth in Article XII) shall survive
such termination, and except that nothing in this Section 10.2 shall relieve any
party from liability for any breach of this Agreement that arose prior to such
termination.

 

 

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ARTICLE XI

MISCELLANEOUS

Section 11.1 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
followed by overnight mail, by overnight mail or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 11.1):

To Buyer:

 

Luitpold Pharmaceuticals, Inc.
One Luitpold Drive
Shirley, NY 11967

 

 

Facsimile:

(631) 924-8650

 

Attention:

Mary Jane Helenek, President and CEO

With a copy to (which shall not constitute notice to Buyer):

 

Sheppard, Mullin, Richter & Hampton LLP
1300 I Street, N.W.
11th Floor East, Washington, DC 20005

 

Facsimile:

202-218-0020

 

Attention:

Peter S. Reichertz, Esq.

   

Lucantonio N. Salvi, Esq.

To Seller:

 

BioMimetic Therapeutics, Inc.
389-A Nichol Mill Lane
Franklin, TN 37067

 

Facsimile:

615-844-1281

 

Attention:

Samuel Lynch, CEO

With a copy to:

 

BioMimetic Therapeutics, Inc.
389-A Nichol Mill Lane
Franklin, TN 37067

 

Facsimile:

615-236-4457

 

Attention:

General Counsel

 

 

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With a copy to (which shall not constitute notice to Seller):

 

Harwell Howard Hyne Gabbert & Manner, P.C.
315 Deaderick Street, Suite 1800
Nashville, Tennessee 37238

 

Facsimile:

615-251-1059

 

Attention:

Mark Manner

Section 11.2 Amendment; Waiver. Any provision of this Agreement may be amended
or waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by Buyer and Seller, or in the case of a waiver, by
the party or parties against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.

Section 11.3 No Assignment or Benefit to Third Parties. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, legal representatives and permitted assigns. Neither party may
assign any of its rights or delegate any of its obligations under this
Agreement, by operation of Law, change of control or otherwise, without the
prior written consent of the other party, except that (A) Buyer may assign or
otherwise transfer any or all of its rights and obligations under this Agreement
(i) to one or more direct or indirect subsidiaries or Affiliates, (ii) to a
purchaser of all or a substantial portion of the Business or the assets thereof,
regardless of the structure or form of the transaction or (iii) to its lenders
in connection with obtaining financing therefrom; provided that none of the
foregoing shall relieve Buyer of any of its obligations hereunder; and provided
further that in the event of any assignment to an unaffiliated third party
pursuant to clause (ii) above, Seller’s obligations under Section 7.11(b) shall
automatically expire and be of no further force or effect, and (B) following the
Closing, Seller may assign any or all of its rights and obligations under this
Agreement to a purchaser of all or a substantial portion of its business or
assets, regardless of the structure or form of the transaction, provided that
foregoing shall not relieve Seller of any of its obligations hereunder. Nothing
in this Agreement, express or implied, is intended to confer upon any Person
other than Buyer, Seller, the Indemnified Parties and their respective
successors, legal representatives and permitted assigns, any rights or remedies
under or by reason of this Agreement.

Section 11.4 Entire Agreement. This Agreement (including all Schedules and
Exhibits hereto) and the Ancillary Agreements contain the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all prior representations, warranties, agreements and understandings,
oral or written, with respect to such matters, except for the Confidentiality
Agreement, which shall remain in full force and effect until the Closing, at
which time it shall expire.

 

 

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Section 11.5 Announcements and Disclosures.

(a) The parties agree to jointly issue a press release in the form of Exhibit
J-1 hereto promptly following the execution of this Agreement and in the form of
Exhibit J-2 promptly following the Closing.

(b) Except as provided in Section 11.5(a) or as otherwise required by Law or the
rules of any applicable securities exchange or national market system, neither
Buyer nor Seller will, whether before or after the Closing, issue or cause the
publication of any other press release or make any other announcement or
disclosure (whether public or private) with respect to the transactions
contemplated hereby or the terms hereof (including, without limitation, the
Purchase Price or the royalties paid or to be paid to Seller under the Restated
Sublicense Agreement) without the written consent of the other party, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing,
Seller shall be permitted to make other disclosures with respect to the
transactions contemplated hereby that are brief and factual, and reflect the
content of the press releases referred to above. Such disclosures may include
SEC filings or investor presentations. Notwithstanding the restrictions set
forth above in this paragraph, Seller or Buyer shall be permitted to disclose
the terms of the transactions contemplated hereby and provide a full unredacted
copy of this Agreement and the Ancillary Agreements as part of any diligence
review by a potential acquirer subject to such potential unaffiliated acquirer
signing an appropriate confidentiality agreement in favor of Buyer and Seller.

(c) If a party is required by Law or the rules of any applicable securities
exchange or national market system to make any public announcement or other
disclosure with respect to the transactions contemplated hereby, such party
shall use all commercially reasonable efforts to preserve the confidentiality of
the transactions, including the terms hereof, and shall give the other party as
much advance written notice of such required disclosure as is reasonably
practicable. If a party is required by Law or the rules of any applicable
securities exchange or national market system to file this Agreement or any
Ancillary Agreement with the SEC or any other Governmental Authority, such party
shall seek confidential treatment thereof to the fullest extent permitted by
Law, shall provide the other party a copy of the confidential treatment request
far enough in advance of its filing to give the other party a meaningful
opportunity to comment thereon, and shall incorporate in such confidential
treatment request any reasonable comments of the other party.

(d) Promptly following the Closing, Seller shall remove most references to GEM
21S from its website (including all references in the Clinical and Patient
areas) and GEM 21S package inserts; provided that Seller may reference GEM
products on its website or in its investor and public relations materials in a
manner consistent with Seller’s SEC or other regulatory filings, or in
references to Buyer’s products or in references to Seller’s historical
development work and in a manner consistent with the Trademark License-Back
Agreement.

(e) Any Seller public marketing release mentioning GEM 21S or other Licensed
Products must include a Buyer approved description of Osteohealth Company, a
division of Buyer.

Section 11.6 Expenses. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated by this Agreement are consummated,
each party

 

 

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shall bear all costs and expenses incurred in connection with performing its
obligations under, and otherwise in connection with, this Agreement.

Section 11.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law. Each party agrees that it shall bring any action or
proceeding in respect of any claim arising out of this Agreement (except for
claims for violation of any restrictive covenants contained herein) exclusively
in the United States District Court for the Southern District of New York or any
New York State court sitting in New York County (the “Chosen Courts”), and in
connection with such claims (i) irrevocably submits to the exclusive
jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in
any such action or proceeding in the Chosen Courts, (iii) waives any objection
that the Chosen Courts are an inconvenient forum or do not have jurisdiction
over any party hereto and (iv) agrees that service of process upon such party in
any such action or proceeding shall be effective if notice is given in
accordance with Section 11.1. Each party irrevocably waives any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.

Section 11.8 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission or e-mail with scan attachment) in two or
more counterparts, each of which when executed and delivered shall be deemed to
be an original but all of which taken together shall constitute one and the same
agreement.

Section 11.9 Headings. The heading references herein are for convenience
purposes only, and shall not be deemed to limit or affect any of the provisions
hereof.

Section 11.10 No Drafting Presumption. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party shall be
considered the draftsman.

Section 11.11 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

Section 11.12 Specific Performance. The parties acknowledge that there may be no
adequate remedy at law for a breach of this Agreement and that money damages may
not be an appropriate remedy for breach of this Agreement. Therefore, the
parties agree that each party has the right to injunctive relief and specific
performance of this Agreement in the event of any breach hereof in addition to
any rights it may have for damages. The remedies set forth in this Section 11.12
are cumulative and shall in no way limit any other remedy any party has at law,
in equity or pursuant hereto.

 

 

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Section 11.13 Compliance with Bulk Sales Laws Requirements. Buyer has agreed to
waive compliance with all applicable bulk sale transfer laws in connection with
the consummation of the transactions contemplated by this Agreement, and as a
condition to such waiver by Buyer, Seller will indemnify, defend and hold
harmless Buyer from any Loss as a result of non-compliance with such applicable
bulk sale transfer laws.

ARTICLE XII

DEFINITIONS

Section 12.1 Certain Definitions. As used in this Agreement, the following terms
have the meanings set forth below:

“Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by, or under common control with, such other Person as
of the date on which, or at any time during the period for which, the
determination of affiliation is being made. For purposes of this definition, the
term “control” (including the correlative meanings of the terms “controlled by”
and “under common control with”), as used with respect to any Person, means (i)
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise, or (ii) the
ownership, directly or indirectly, of no less than 50% of the voting securities
of such Person.

“Agreement” means this Asset Purchase Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.

“Ancillary Agreements” means, with respect to a party, the Restated Sublicense
Agreement, the Manufacturing Termination Agreement, the R&D Termination
Agreement and each other agreement to be delivered by such party pursuant
hereto.

“Assignment and Assumption Agreement” has the meaning set forth in Section
2.3(i).

“Assumed Liabilities” has the meaning set forth in Section 1.3.

“Auditor” has the meaning set forth in Section 7.13(b).

“ß-TCP” has the meaning set forth in the Recitals.

“Business” has the meaning set forth in the Recitals.

“Business Confidential Information” has the meaning set forth in Section
1.1(d)(iii).

“Business Contracts” has the meaning set forth in Section 1.1(b).

“Business Records” has the meaning set forth in Section 1.1(e).

“Business Day” means any day other than a Saturday, a Sunday or a day on which
banks in The City of New York are authorized or obligated by Law or executive
order to close.

 

 

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“Business Intellectual Property” has the meaning set forth in Section 1.1(d).

“Business Machinery” has the meaning set forth in Section 1.1(a).

“Business Permits” has the meaning set forth in Section 1.1(f).

“Buyer” has the meaning set forth in the Preamble.

“Buyer Indemnified Parties” has the meaning set forth in Section 9.2.

“Change of Control” means (a) any consolidation or merger of Seller with or into
any other entity, or any other corporate reorganization, in which the
shareholders of Seller immediately prior to the transaction own less than 50% of
Seller’s or the surviving entity’s, as applicable, voting power immediately
after such consolidation, merger or reorganization, (b) any tender offer or
other transaction to which Seller or its shareholders are a party in which in
excess of 50% of Seller’s voting power is transferred, or (c) any sale of all or
substantially all of the value of the assets of Seller.

“Chosen Courts” has the meaning set forth in Section 11.7.

“Claim Notice” has the meaning set forth in Section 9.4(a).

“Closing” means the consummation of the asset sale that is the subject of this
Agreement.

“Closing Date” has the meaning set forth in Section 2.2.

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” means that certain Confidentiality Agreement dated
May 29, 2007 between Buyer and Seller.

“Contracts” means agreements, contracts, leases and subleases, purchase orders,
arrangements, commitments and licenses, whether written or oral.

“Direct Claim” has the meaning set forth in Section 9.5.

“EMEA” has the meaning set forth in Section 7.10(c).

“Encumbrance” means any lien, pledge, charge, claim, encumbrance, security
interest, option, mortgage, easement, or other restriction or third party right
of any kind.

“EU Approval” has the meaning set forth in Section 7.10(c).

“Excluded Assets” has the meaning set forth in Section 1.2.

“Excluded Liabilities” has the meaning set forth in Section 1.3.

“Exclusive License Agreement” has the meaning set forth in Section 2.3(j).

 

 

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“FDA” means the U.S. Food and Drug Administration.

“Field” has the meaning given to the term Field of Use in the Restated
Sublicense Agreement.

“Final Inventory Schedule” has the meaning set forth in Section 7.13.

“GEM ONJ” has the meaning set forth in the Recitals.

“**” has the meaning set forth in the Recitals.

“GEM 21S” has the meaning set forth in the Recitals.

“GEM 21S Manufacturing Approval” has the meaning set forth in Section
2.1(c)(iii).

“GEM 21S Inventory” has the meaning set forth in Section 1.1(c).

“Governmental Authority” means any foreign, federal, state or local court,
administrative body or other governmental or quasi-governmental authority or
self-regulatory organization with competent jurisdiction.

“Harvard License Agreement” means the License Agreement dated April 10, 2001
between President and Fellows of Harvard College and Seller.

“IDE” means an Investigation Device Exemption.

“INDA” means an Investigational New Drug Application.

“Indemnified Parties” has the meaning set forth in Section 9.2.

“Indemnifying Party” has the meaning set forth in Section 9.4(a).

“Installment Amount” has the meaning set forth in Section 2.1(c).

“Intellectual Property Rights” means all rights in patents, patent applications
(whether provisional or non-provisional), trademarks (whether registered or
not), trademark applications, service mark registrations and service mark
applications, trade names, trade dress, logos, slogans, copyright applications,
registered copyrighted works and commercially significant unregistered
copyrightable works (including proprietary software, books, written materials,
prerecorded video or audio tapes, and other copyrightable works), technology,
software, trade secrets, know-how, technical documentation, specifications,
data, designs and other intellectual property and proprietary rights, other than
off-the-shelf computer programs.

“Inventory Amount” has the meaning set forth in Section 2.1(b).

**

REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

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“IRS” means the Internal Revenue Service.

“Knowledge” of Seller or any variant thereof means the actual knowledge after
due inquiry of (i) any director or officer of Seller (including without
limitation the Chief Executive Officer of Seller or any Vice President of
Seller) or (ii) Hans Kestler, Senior Director, Orofacial Healthcare, Leslie
Wisner-Lynch, R&D Director, Applied Research, Bruce Craney, Director of
Manufacturing or Sandra Williamson, Associate Director, Regulatory Affairs.

“Law” means any law, statute, ordinance, rule, regulation, code, order,
judgment, injunction or decree enacted, issued, promulgated, enforced or entered
by a Governmental Authority.

“Licensed Products” has the meaning given that term in the Restated Sublicense
Agreement.

“Losses” has the meaning set forth in Section 9.2.

“Manufacturing Agreement” has the meaning set forth in the Recitals.

“Material Adverse Effect” means an effect, circumstance or event that is
materially adverse to the business, assets, financial condition, results of
operations or prospects of the Business or Buyer’s ability to conduct the
Business following the Closing; provided that any such state of facts, change,
development, event, occurrence, effect or condition resulting from or arising
out of or in connection with any of the following, either alone or in
combination, shall not be taken into consideration for purposes of determining
whether a Material Adverse Effect has occurred or arisen: (a) the announcement
of this Agreement or the pendency of the transactions contemplated hereby, (b)
the performance by an entity of its obligations under this Agreement, or (c)
general economic conditions in any country where an entity’s business is
conducted to the extent that they do not disproportionately affect the entity
relative to other industry participants.

“NDA” means a New Drug Application.

“New Technology” has the meaning given that term in the Exclusive License
Agreement.

“No-Shop Period” has the meaning set forth in Section 5.5.

“Notice Period” has the meaning set forth in Section 9.4(a).

“Opinion Condition” has the meaning set forth in Section 6.1(e).

“Orthovita” has the meaning set forth in Section 7.6(a).

“Other Confidential Information” has the meaning set forth in Section 7.4.

“Patheon” has the meaning set forth in Section 7.6(b).

“PDGF” means recombinant platelet-derived growth factor BB.

 

 

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“Person” means an individual, a corporation, a partnership, an association, a
limited liability company, a Governmental Authority, a trust or other entity or
organization.

“PMA” means a Premarket Approval.

“Proxy Statement” has the meaning set forth in Section 5.7.

“Purchase Price” has the meaning set forth in Section 2.1(a).

“Purchased Assets” has the meaning set forth in Section 1.1.

“R&D Agreement” has the meaning set forth in the Recitals.

“R&D Termination Agreement” has the meaning set forth in Section 2.3(d).

“Manufacturing Termination Agreement” has the meaning set forth in Section
2.3(c).

“Restated Sublicense Agreement” has the meaning set forth in Section 2.3(b).

“rhPDGF-BB” has the meaning set forth in the Recitals.

“SEC” has the meaning set forth in Section 3.18(a).

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

“Seller Consents” has the meaning set forth in Section 3.4.

“Seller Indemnified Parties” has the meaning set forth in Section 9.3.

“Stockholders’ Approval” has the meaning set forth in Section 5.8.

“Stockholders’ Meeting” has the meaning set forth in Section 5.8.

“Sublicense Agreement” has the meaning set forth in the Recitals.

“Supply Agreement” has the meaning set forth in Section 2.3(h).

“Trademark License-Back Agreement” has the meaning set forth in Section 2.3(e).

“Tax Purchase Price” has the meaning set forth in Section 8.5.

“Tax Returns” means any return, report, information return or other document
(including any related or supporting information) filed or required to be filed
with any Governmental Authority in connection with the determination, assessment
or collection of any Tax or the administration of any Laws regulating, or
administrative requirements relating to, any Tax.

“Taxes” means (whether or not disputed) taxes of any kind, levies or other like
assessments, duties, imposts, charges or fees, including but not limited to (x)
all federal, state,

 

 

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local or foreign taxes, including all income, profits, capital gains, receipts,
corporate franchise, net worth, sales, use, value added, property, ad valorem,
intangible, unitary, transfer, stamp, documentary, payroll, employment,
estimated, excise, environmental, occupation, premium, property, customs,
duties, severance, windfall profits, franchise, license, withholding, social
security, unemployment, alternative or add-on minimum, recapture or other taxes,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, (y) any liability for payment of amounts described
in clause (x) as a result of transferee liability, under any agreement or
through operation of law, and (z) any liability for payment of amounts described
in clauses (x) or (y) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement or any practice,
policy or arrangement to indemnify any other person for taxes.

“Third Party Claim” has the meaning set forth in Section 9.4(a).

“Third Party Transaction” has the meaning set forth in Section 5.5.

“Transfer Taxes” has the meaning set forth in Section 8.4.

“ZymoGenetics License Agreement” means that certain Exclusive Patent License
Agreement dated March 28, 2001 between Seller and ZymoGenetics, Inc.

Section 12.2 Other Definitional and Construction Provisions. Unless the express
context otherwise requires:

(a) the words “hereof”, “herein”, and “hereunder” and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement;

(b) the term “primarily related to the Business” means primarily used for or in,
or otherwise primarily related to, the Business, as currently conducted;
provided, however, that any assets equally used in the Business and another
business of Seller shall not be deemed to be “primarily related to the
Business.”

(c) the terms defined in the singular have a comparable meaning when used in the
plural, and vice versa;

(d) the terms “Dollars” and “$” mean United States Dollars;

(e) references herein to a specific Section, Subsection or Schedule shall refer,
respectively, to Sections, Subsections or Schedules of this Agreement;

(f) wherever the word “include,” “includes,” or “including” is used in this
Agreement, it shall be deemed to be followed by the words “without limitation;”
and

(g) references herein to any gender includes each other gender.

 

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.

 

 

 

BIOMIMETIC THERAPEUTICS, INC.

 

By: 

/s/ Samuel Lynch

 

 

 

Name: Samuel E. Lynch D.M.D., D.M.Sc.

 

 

 

Title: President and CEO

 

 

 

 

 

LUITPOLD PHARMACEUTICALS, INC.

 

By: 

/s/ Mary Jane Helenek

 

 

 

Name: Mary Jane Helenek

 

 

 

Title: President and CEO

 

 

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