Q1 2001 10Q Exh10_??




 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the "Agreement") is made and entered into as
of December 15, 2000 by and between Chiron Corporation, a Delaware corporation
with offices at 4560 Horton Street, Emeryville, California 94608 ("Chiron") and
Cell Genesys, Inc., a Delaware corporation with offices at 342 Lakeside Drive,
Foster City, California 94404 ("Purchaser").

RECITALS


	Chiron has a leasehold interest in certain facilities located in San Diego,
California. 
	Purchaser wishes to acquire from Chiron, and Chiron wishes to transfer
to Purchaser, all of Chiron's interest in such facilities, as well as certain
other assets relating to such facilities, all as more fully set forth herein.




NOW, THEREFORE, in consideration of the premises and of the mutual agreements
contained herein, the parties agree as follows:




ARTICLE I

DEFINITIONS

Section 1.1.
Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth
below:

"11055 Roselle Lease" means that certain Standard Industrial Lease -
Net, dated December 10, 1993, between Dow Chemical Employees Retirement Trust as
lessor and Chiron as lessee for the lease of certain premises located at 11055
Roselle Street, San Diego, California 92121, as amended by the First Amendment
to Standard Industrial Lease dated March 20, 1996.

"11075 Roselle Lease" means that certain Standard Industrial Lease
- Net, dated June 15, 1992, between Dow Chemical Employees Retirement Trust as
lessor and Chiron as lessee for the lease of certain premises located at 11075
Roselle Street, San Diego, California 92121, as amended by the First Amendment
to Standard Industrial Lease dated March 20, 1996.

"11180 Roselle Lease" means that certain Standard
Industrial/Commercial Multi-Tenant Lease - Modified Net between JBC Sorrento
West, LLC, as successor-in-interest to Frontier II Properties Limited
Partnership, as lessor, and Chiron, as lessee, for the lease of certain premises
located at 11180 Roselle Street, San Diego, California 92121, as amended by the
First Amendment to Standard Industrial/Commercial Multi-Tenant Lease - Modified
Net dated July 1, 2000, and by the Subordination, Nondisturbance and Attornment
Agreement dated as of July 17, 2000.

"Acquired Assets" has the meaning set forth in Section 2.1.

"Affiliate" means, with respect to any person or entity, any other
person or entity that, directly or indirectly, controls, is controlled by or is
under common control with such person or entity. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any person or entity, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that person or entity, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding anything to the contrary set forth
herein, it is understood that Novartis AG is not and shall not be deemed to be
an Affiliate of Chiron.

"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement between Chiron and Purchaser in the form attached as
Exhibit A.

"Assumed Liabilities" has the meaning set forth in Section 3.1.

"Bill of Sale" means a bill of sale by Chiron in the form attached as
Exhibit B.

"Cash Payment" has the meaning set forth in Section 5.1.

"Chiron Patent Rights" means the patents and patent applications
listed on Annex F and all foreign equivalents, their priority applications, and
all national and regional patent applications filed either from such patent
applications or priority applications or from an application claiming priority
from either of these, including divisionals, disclosures, continuations,
continuations-in-parts, reexaminations, patents issuing thereon and any
extensions or restorations, including reissues, in any country, and any patent
or other patent right that issues on or is based on the foregoing.

"Critical Systems" means the systems set forth in Annex G.

"Diligence Representations" means the representations and warranties
of Chiron set forth in Sections 8.6, 8.7, 8.8, 8.9 and 8.10. 

"Effective Date" means January 1, 2000.

"Environmental Law" means any applicable law, regulation, code,
license, permit, authorization, order, judgment, decree or injunction
promulgated, issued or required by any Governmental Authority (i) for the
protection of the environment (including air, water, soil and natural resources)
or (ii) regulating the use, storage, handling, exposure to, release or
disposal of Hazardous Substances.

"Equipment" has the meaning set forth in Section 2.1(b).

"Facilities Know-How" means all know-how and technical information
relating to the design, calibration, validation, operation or maintenance of the
Premises or the Equipment, including, without limitation, the know-how embodied
in the Standard Operating Procedures and Item Specifications described in parts
2 and 3 of Annex E, and the validation documents described in part 1 of Annex E;
provided, that notwithstanding anything to the contrary contained herein,
"Facilities Know-How" shall not include any know-how or technical information
relating to the manufacture of specific products (including research, pre-
clinical, clinical and commercial products) or components of such products.

"Field" means therapeutic or prophylactic products for the treatment
of disease or other medical conditions in humans using a gene therapy vector
encoding a gene, gene fragment, or nucleic acid sequence encoding a mutein.

"Governmental Authority" means any United States federal, state or
local or foreign governmental entity, authority, or instrumentality of competent
jurisdiction, including any court or administrative agency, or any supranational
authority of competent jurisdiction.

"Hazardous Substance" means any substance to the extent listed,
defined, designated or classified as hazardous, toxic, explosive, carcinogenic,
mutagenic, radioactive or otherwise a hazard to human health or the environment
under any Environmental Law including petroleum and any derivative or by-product
thereof.

"Indemnified Representations" means, in the case of Chiron, the
representations and warranties of Chiron set forth in Section 8.1, 8.2, 8.3, 8.4
and 8.5 and, in the case of Purchaser, the representations and warranties of
Purchaser set forth in Article 9.

"Knowledge of Chiron" means the actual knowledge of any of Chiron's
executive officers, Jessica M. Hoover (Chiron's Vice President and Associate
General Counsel) or the General Manager of the Premises.

"Leases" means the 11075 Roselle Lease, the 11055 Roselle Lease, and
the 11180 Roselle Lease.

"Premises" means the premises leased to Chiron under the Leases.

"Purchase Price" has the meaning set forth in Section 5.2.

"Related Agreements" means the Bill of Sale, the Assignment and
Assumption Agreement, and each of the other instruments and documents
contemplated hereby and thereby.

"Research Programs" means all of Chiron's research and development
programs in the field of gene therapy, including, without limitation, its
research and development programs relating to factor VIII deficiency in humans
(Factor VIII), prevention or treatment of infection from human immunodeficiency
virus (HIV), prevention or treatment of infection from hepatitis B virus (HBV),
human gamma interferon (hgIFN), thymidine kinase derived from herpes simplex
virus (HSV-tk) and TR-TAT, and includes, without limitation, all patents, patent
applications, know-how, Biological Materials, data, regulatory filings
(including IND's), and Third Party agreements (including licenses, collaboration
agreements and clinical study agreements) arising out of or relating to such
programs.

"Third Party" means any person or entity other than Chiron, Purchaser
or any of their respective Affiliates.

"Use of the Premises" means the use of the Premises for research and
development of gene therapy products as has been used by Chiron.

ARTICLE II









SALE AND PURCHASE OF
ASSETS


Section 2.1.





Sale and Purchase of Assets.
On the terms and conditions set forth in this Agreement, at the Closing Chiron
shall sell, assign, convey, transfer and deliver to Purchaser,
and 
Purchaser shall purchase and acquire from Chiron, all of
Chiron's right, title 
and interest in and to the following assets, as the same
shall exist as of the Closing Date (the "Acquired
Assets"):





	the Leases and the related security lease deposits for such Leases;
	all furniture, fixtures, equipment, machinery, supplies, vehicles, spare
parts, tools, and other tangible property located on the Premises and interior
and exterior building improvements to the Premises, including, without
limitation, those described on Annex A hereto (the "Equipment");
	the Facilities Know-How;
	any and all governmental permits, licenses, validations, consents,
certificates, registrations, approvals, exemptions, and other authorizations
relating solely to the Premises, including, without limitation, those listed on
Annex B hereto (the "Facilities Permits"); 
	the raw materials listed on Annex C hereto (the "Raw Materials"); 
	the service contracts listed on Annex D hereto (the "Service
Contracts");
	the records listed on Annex E hereto (the "Acquired Records"); and
	all Third Party guaranties, warranties and rights to repair relating solely
to the Premises or the Furniture and Equipment. 










Section 2.2.
Excluded Assets.
Notwithstanding anything to the contrary contained in this Agreement, Purchaser
shall not acquire any of Chiron's right, title or interest in any of the
following (the "Excluded
Assets"):




	any patents and patent applications;
	other than the Facilities Know-How, any know-how, technical information,
processes, procedures, compositions, devices, methods, formulae, protocols,
data, techniques, inventions, ideas, trade secrets, developments, discoveries,
drawings, techniques, and models, including, without limitation, information
relating to manufacturing processes or process development;
	any Research Program;
	any licenses or agreements pursuant to which Chiron has any rights to or
interest in any Third Party patents, patent applications or know-how;
	any biological materials and chemical compounds, including, without
limitation, reagents, vectors (viral and nonviral), plasmids, genes, probes,
nucleic acids containing the above, hosts, polypeptides, proteins, antibodies,
hybridomas, cells, cell lines, viruses, and fragments of any of the foregoing,
as well as preclinical or clinical samples obtained from animals or humans;
	any inventory of raw materials, work-in-process and finished goods, other
than the Raw Materials;
	any data arising out of research, preclinical and clinical studies;
	any laboratory notebooks and meeting minutes;
	any trademarks, service marks, trade names or copyrights; 
	subject to the allocation of expenses in Section 3.3 below, the prepaid
expenses; 
	any books of account, general ledgers, invoices, accounts payable, papers
and all other books and records, other than the Acquired Records.





Section 2.3.





Assignment of Certain
Contracts. Notwithstanding anything to the contrary contained
herein, this Agreement shall not constitute an agreement to assign any contract
or permit included among the Acquired Assets if such an assignment, without the
consent of a Third Party thereto, would constitute a breach or other default
thereunder. Chiron and Purchaser shall use commercially reasonable efforts (but
without any payment of money or any other consideration by Chiron as
consideration for such consent) to obtain any such Third Party consent. If any
such Third Party consent is not obtained for any such contract, Chiron and
Purchaser shall cooperate in a mutually agreeable
arrangement under which Purchaser would obtain the benefits and assume the
obligations under such contract in accordance with this Agreement, including
sub-contracting, sub-licensing, or sub-leasing (to the extent permissible under
such
contract).


ARTICLE III









ASSUMPTION OF
LIABILITIES


Section 3.1.





Assumed Liabilities. On to
the terms and conditions set forth in this Agreement, at the Closing Chiron shall assign and transfer
to Purchaser, and Purchaser shall unconditionally assume and undertake to pay,
perform and discharge, any and
all liabilities (other than the Excluded Liabilities) relating to the Acquired
Assets that are incurred after the Closing, including, without limitation,
obligations under the Leases and the Service Contracts (the "Assumed
Liabilities").


Section 3.2.





Excluded Liabilities.
Notwithstanding anything to the contrary contained herein, Purchaser shall not
assume any liabilities relating to the Acquired
Assets that are incurred any time prior to the Closing (the "Excluded
Liabilities").


Section 3.3.Allocation of Expenses. Without in any way limiting
the generality of the foregoing, and notwithstanding anything to the contrary
contained herein, the following expenses shall be apportioned between Purchaser
and Chiron as of the Effective Date: (i) rent and other charges under the
Leases, including without limitation, real property taxes, insurance,
maintenance, janitorial, common area expenses, and the like, (ii) utilities,
(iii) amounts payable under the Service Contracts, (iii) personal property
taxes, and (iv) similar recurring charges. Prior to the Closing, Chiron and
Purchaser shall jointly prepare a preliminary closing statement allocating such
expenses. If any of the allocations cannot be calculated accurately prior to
Closing, then they shall be calculated as soon after the Closing as feasible.
Either party owing the other a sum of money based on such subsequent
calculation(s) shall pay said sum to the other within ten (10) days after
delivery of a bill therefor.

ARTICLE IV

EMPLOYEES AND EMPLOYEE BENEFITS

Section 4.1 Employment. On the Closing Date, Chiron shall
terminate the employment of each employee listed on Schedule 4.1 who is employed
by Chiron on the Closing Date (the "Facilities Employees") and Purchaser shall
offer employment to each Facilities Employee in the same or a comparable
position and at an initial rate of base salary or wages at least equal to such
employee's rate of base salary or wages at Chiron as set forth in Schedule 4.1.
 . Nothing herein shall be construed as limiting the ability of Purchaser to
terminate the employment of any such employee following the Closing, subject to
the provisions of Section 4.2. 

Section 4.2 Severance Benefits. For a period of twelve months
following the Closing Date, Purchaser shall provide to the Facilities Employees
who are terminated due to a work force reduction or job elimination during such
twelve month period, severance benefits no less favorable to such employees than
the severance benefits Purchaser provides to its own employees with similar
levels of responsibility (giving full credit for such employee's period of
service with Chiron) and, in addition, shall pay such employee a lump sum amount
as severance wages equal to the greater of (i) the lump sumthe amount of such
employee's salary continuation severance benefit for wages underas more
particularly described in the introductory paragraph before Section 1 and
Section 1, under the section titled "HOW THE PLAN WORKS" of the Chiron's
severance plan, dated as of October 15, 1998, as set forth in Schedule 4.2, and
(ii) the cash severance benefit for wages provided under Purchaser's plan. No
other provisions of Chiron's severance plan will apply.

Section 4.3 Other Employee Benefits. For a period of twelve months
following the Closing Date, Purchaser shall provide the Facilities Employees
with employee benefit plans, programs, policies and arrangements which are (a)
no less favorable in the aggregate than the benefit plans, programs, policies
and arrangements provided by Chiron prior to the Closing and (b) in the
aggregate substantially comparable to the benefit plans, programs, policies or
arrangements provided by Purchaser to its other employees with similar levels of
responsibility. Each such employee benefit plan, program, policy or arrangement
shall give full credit for each participant's period of service with Chiron and
its predecessors prior to the Closing Date, to the extent such service was
credited under Chiron's benefit plans, for purposes of determining eligibility,
vesting (except in the case of vesting for options to be granted by Purchaser,
which will commence on the date of the grant of such option) and the amount of
benefits (including subsidies relating to such benefits), unless such credit
would result in a duplication of benefits. Each such employee welfare benefit
plan shall (i) give full credit for deductibles and out-of-pocket expenses under
Chiron's benefit plans with respect to the current plan year toward any
deductibles for the remainder of the plan year during which the Closing occurs,
and (ii) shall waive any pre-existing condition limitation for any employee
covered under a Chiron benefit plan (which is a group health plan) immediately
prior to the Closing Date. 

Section 4.4 401(k) Plan. Chiron and Purchaser shall arrange for a
trust-to-trust transfer of the account balances of the Facilities Employees from
the 401(k) trust fund maintained pursuant to Chiron's 401(k) plan to the 401(k)
trust fund maintained pursuant to Purchaser'to Purchaser's 401(k) plan.

Section 4.5 Pre-Closing Liabilities. Chiron shall retain, and
Purchaser shall not assume, any and all liabilities and obligations arising out
of the employment of the Facilities Employees by Chiron prior to the Closing
Date, including, without limitation, (a) salaries and wages, (b) bonuses,
and (c) accrued but unused personal time off (PTO). Notwithstanding
anything to the contrary contained herein, Purchaser shall reimburse Chiron for
100% of the salaries and wages (but not any other employee compensation or
benefits) of the Facilities Employees incurred on or after the Effective Date up
to and including the Closing Date.

Section 4.6Meetings with Employees. From the date hereof until
the Closing Date, Chiron shall permit Purchaser and its authorized
representatives, at reasonable times and with reasonable prior notice, to meet
with the employees listed in Schedule 4.1 for the purpose of integration
planning. Purchaser acknowledges and agrees that there can be no assurance that
such employees will not accept employment with a Third Party prior to the
Closing Date.

Section 4.7Non-Solicitation. For a period of eighteen months
following the Closing Date, Chiron shall not hire any Facilities Employee then
employed by the Purchaser.









ARTICLE V

PURCHASE
PRICE


Section 5.1.





Purchase Price. In
consideration of the sale, assignment, conveyance, transfer and delivery of the
Acquired Assets, on the Closing Date Purchaser shall pay to Chiron by wire
transfer of immediately available funds to such bank account as Chiron shall
specify in writing the sum of $4,825,000 (Four Million Eight Hundred Twenty
Five Thousand Dollars) (the "Purchase
Price")
 plus the aggregate amount of the security lease deposits.

Section 5.2.





Allocation of Purchase
Price. The parties agree to allocate the Purchase Price among the Acquired
Assets for all purposes (including financial accounting and tax purposes) in
accordance with an allocation to be proposed by Purchaser promptly after
Closing, and which Chiron shall approve, such approval not to be unreasonably
withheld. Except to the extent otherwise required by applicable law, Chiron and
Purchaser shall make all tax returns, reports,
forms, declarations, claims and other statements in a manner consistent with
such agreed allocation and shall not make any inconsistent statement or
adjustment on any returns or during the course of any Internal Revenue Service
or other tax
audit.


ARTICLE VI

COVENANTS

Section 6.1Environmental and Validation Due
Diligence. Until January 5, 2001, Chiron shall afford Purchaser and its
authorized representatives, at reasonable times and with reasonable prior
notice, access to the Premises, books, records, and personnel of Chiron as is
reasonably necessary to permit Purchaser to confirm the accuracy of Chiron's
representations and warranties set forth in Section 8.7 and 8.10.

Section 6.2Possession of Premises. Subject to Section 7.2(d),
possession of the Premises shall be delivered to Purchaser at the Closing in the
condition existing on the Closing Date. Subject to Section 7.2(d), in the event
of any loss of or damage to the Premises or the Equipment between the date
hereof and Closing, no adjustment shall be made to the Purchase Price; provided,
that at the Closing, Chiron shall assign to Purchaser all of its right title and
interest in the proceeds of any casualty insurance policy for such loss or
damage.

Section 6.3Transfer Taxes. Any transfer or similar tax payable as
a consequence of this transaction shall be shared equally by Chiron and
Purchaser.

Section 6.4Other Covenant. The parties hereby agree to
use their commercially reasonable efforts to promptly fulfill their respective
conditions to Closing set forth in Section 7.2 or 7.3, as applicable.



ARTICLE VII

CLOSING


Section 7.1.
Closing. The closing (the "Closing") of the transactions contemplated
hereby shall occur as of 12:01 a.m. on January 8, 2001 (if all the
conditions set forth in this Article VII are satisfied or waived), or if not on
such date, at the offices of Morrison & Foerster LLP in San Francisco as
soon as possible following the satisfaction or waiver of the conditions set
forth in this Article VII. The date on which the Closing actually occurs is
herein referred to as the "Closing Date."

Section 7.2 Conditions to the Obligations of Purchaser. The
obligations of Purchaser to purchase and pay for the Acquired Assets and
consummate the other transactions contemplated by this Agreement are subject to
the satisfaction at or prior to the Closing of the conditions set forth in this
Section 7.2, any one or more of which may be waived, in whole or in part, by
Purchaser:




	Governmental Restraints. There shall not be in effect any (i)
statute, rule, regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order by any Governmental Authority
preventing or delaying the purchase and sale of the Acquired Assets or the
consummation of the transactions contemplated hereby, or (ii) any pending or
threatened suit, action or proceeding by any Governmental Authority challenging
or seeking to restrain, delay or prohibit the purchase and sale of the Acquired
Assets or any of the transactions contemplated by this Agreement.

	Accuracy of Representations. The representations and warranties
of Chiron made in Article VIII shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of the Closing, and
Purchaser shall have received a certificate, dated the Closing Date, of the
Chief Financial Officer of Chiron to that effect. 

	Performance of Covenants. Chiron shall have performed and
complied in all material respects with all covenants and agreements contained in
this Agreement that are required to be performed or complied with at or prior to
the Closing, and Purchaser shall have received a certificate, dated the Closing
Date, of the Chief Financial Officer of Chiron that effect.

	Condition of Premises and Equipment. There shall not have been
any loss of or damage to the Premises or Equipment between the date of this
Agreement and Closing which would have a material adverse effect on the Use of
the Premises.

	Closing Deliveries of Chiron. At the Closing, Chiron  shall deliver to Purchaser:



	The Bill of Sale, duly executed by Chiron; 
	The Assignment and Assumption Agreement, duly executed by Chiron; and
	Possession of the Premises.








Section 7.3Conditions to the Obligations of Chiron. The
obligations of Chiron to sell and assign the Acquired Assets to Purchaser and
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of the conditions set forth in this
Section 7.3, any one or more of which may be waived, in whole or in part, by
Chiron:




	Governmental Restraints. There shall not be in effect any (i)
statute, rule, regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order by any Governmental Authority
preventing or delaying the purchase and sale of the Acquired Assets or the
consummation of the transactions contemplated by this Agreement, or (ii) pending
or threatened suit, action or proceeding by any Governmental Authority
challenging or seeking to restrain, delay or prohibit the purchase and sale of
the Acquired Assets or any of the other transactions contemplated by this
Agreement.

	Accuracy of Representations. The representations and warranties
of Purchaser made in this Agreement shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of the Closing, and
Chiron shall have received a certificate, dated the Closing Date, of the Chief
Financial Officer of Purchaser to that effect. 

	Performance of Covenants. Purchaser shall have performed and
complied in all material respects with all covenants and agreements contained in
this Agreement that are required to be performed or complied with at or prior to
the Closing, and Chiron shall have received a certificate, dated the Closing
Date, of the Chief Financial Officer of Purchaser to that effect.

	Closing Deliveries of Chiron. At the Closing, Purchaser
shall deliver to Chiron: 



	A wire transfer of immediately available funds in the amount of the
Purchase Price; and
	The Assignment and Assumption Agreement, duly executed by
Purchaser.










ARTICLE VIII









REPRESENTATIONS AND WARRANTIES OF
CHIRON


Chiron hereby represents and warrants to Purchaser as follows:

Section 8.1.





Organization and Good
Standing. Chiron is a corporation duly organized, validly existing and in
good standing under the laws of the State of
Delaware.


Section 8.2.





Authority. Chiron has all
requisite corporate power and authority to own or lease
the Acquired Assets and to enter into and to perform its obligations under this
Agreement and each of the Related Agreements. The execution, delivery and performance
of this Agreement and the Related Agreements by Chiron and the consummation by
Chiron of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of
Chiron. This Agreement and the Related Agreements have been duly executed
and delivered by Chiron
and constitute the valid and binding obligations of Chiron, enforceable against
Chiron in accordance with their terms, except as such enforceability may be
limited at any time by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights in general and by general principles of
equity.


Section 8.3.





Governmental Approvals.
Except as set forth in Schedule 8.3, no approval, order or authorization of, or
filing or registration with, allowance by, or consent of or notification to any
Governmental Authority, is required to be obtained or made by Chiron in
connection with the execution and delivery by Chiron of this Agreement, the
performance of the obligations of Chiron hereunder or the consummation by Chiron
of the transactions
contemplated
hereby.


Section 8.4.





Brokers, Finders and Agents.
Chiron is not directly or indirectly obligated to anyone acting as a broker,
finder, investment banker or in any other similar capacity in connection with
this Agreement or the transactions contemplated
hereby.


Section 8.5.





Title.
At Closing, Chiron will deliver to Purchaser good and
marketable title to, or a valid leasehold interest in, the Acquired Assets, free
and clear of all liens of any kind or nature whatsoever, except for current governmental charges or levies which are not
yet due and payable.


Section 8.6No Breach. Each Lease is in full force and effect and
there is no material breach by Chiron thereunder. To the Knowledge of Chiron,
none of the landlords is in material breach of the respective Leases.

Section 8.7Environmental Matters. Except as would not be
material to the continued Use of the Premises, (i) Chiron has conducted all
of its activities on the Premises in compliance with all Environmental Laws;
(ii) Chiron has not received any written notices from any Governmental
Authority alleging the violation of or liability under any applicable
Environmental Laws arising out of Chiron's activities on the Premises other than
for matters that have been fully resolved; (iii) Chiron has not released,
spilled or disposed of any Hazardous Substance on the Premises, except in
compliance with applicable Environmental Laws and in a manner which did not
result in contamination of the Premises or the soil, groundwater, air or
building materials thereof; (iv) Chiron has not received any written claim
or notice regarding potential responsibility for Hazardous Substance off-site
disposal pursuant to the Federal Comprehensive Environmental Response,
Compensation, and Liability Act or other Environmental Law arising out of
Chiron's activities on the Premises; and (v) the Premises (including the
soil, groundwater, surface water, air and building materials thereof) are not
contaminated with any Hazardous Substance. As used herein, "contamination" means
a level of Hazardous Substance which requires a report to any governmental
authority or any investigation or remediation under Environmental Laws.

Section 8.8Condemnation Proceedings. To the Knowledge of
Chiron, there is no material condemnation proceeding pending or threatened with
respect to the Premises. 

 

Section 8.9Zoning and Land Use Laws. . The Use of the Premises
is permitted under applicable zoning and land use laws in all material respects.
To the Knowledge of Chiron, there is no zoning or land use regulation proceeding
pending or threatened with respect to the Premises which, if determined
adversely to Chiron, would have a material adverse effect on the Use of the
Premises.

Section 8.10Validation. Chiron has validated the Premises and the
Equipment for manufacture of the clinical supplies of gene therapy products
Chiron has been producing in the Premises in accordance with Good Manufacturing
Practices as set forth in the United States Code of Federal Regulations, except
for validations the lack of which would not have a material adverse effect on
the Use of the Premises.

ARTICLE IX

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Section 9.1.Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.

Section 9.2.Authority. Purchaser has all requisite corporate power
and authority to own or lease the Acquired Assets and to enter into and to
perform its obligations under this Agreement and each of the Related Agreements.
The execution, delivery and performance of this Agreement and the Related
Agreements by Purchaser and the consummation by Purchaser of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement and the Related
Agreements have been duly executed and delivered by Purchaser and constitute the
valid and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their terms, except as such enforceability may be limited at any
time by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights in general and by
general principles of equity.

Section 9.3.Governmental Approvals. Except as set forth in
Schedule 9.3, no approval, order or authorization of, or filing or registration
with, allowance by, or consent of or notification to any Governmental Authority,
is required to be obtained or made by Purchaser in connection with the execution
and delivery by Purchaser of this Agreement, the performance of the obligations
of Purchaser hereunder or the consummation by Purchaser of the transactions
contemplated hereby.

Section 9.4.Brokers, Finders and Agents. Purchaser is not directly
or indirectly obligated to anyone acting as a broker, finder, investment banker
or in any other similar capacity in connection with this Agreement or the
transactions contemplated hereby.

ARTICLE X



INDEMNIFICATION

Section 10.1.





Survival. The Diligence
Representations shall expire at the Closing and thereafter shall have no further
force and effect. The Indemnified Representations shall expire on the date one
year following the Closing Date and thereafter shall have no further force and
effect. 


Section 10.2.





Indemnification by Chiron.





 Subject to the expiration of the applicable period set forth
in Section 10.1, Chiron shall indemnify, defend and hold harmless Purchaser, its
Affiliates and each of their directors, officers, employees and agents from and
against any and all losses, liabilities, damages or expenses, including, without
limitation, reasonable fees and disbursements of legal counsel (collectively,
"Losses") arising out of or relating to (a) the Excluded Liabilities, (b) any
material inaccuracy of Chiron's Indemnified Representations, or (c) any material
breach by Chiron of any of its covenants or obligations contained in this
Agreement or any of the Related Agreements. Chiron's liability under this
Section shall not exceed the Purchase Price. 

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, CHIRON DISCLAIMS ALL
REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED ASSETS, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE. THE ACQUIRED ASSETS SHALL BE PURCHASED AND SOLD "AS
IS, WHERE IS" AND WITHOUT RECOURSE TO CHIRON OF ANY KIND. 

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT,
CHIRON SHALL NOT INDEMNIFY PURCHASER AGAINST ANY LOSSES ARISING OUT OF OR
RELATING TO ENVIRONMENTAL LAWS OR THE CONDITION OF THE PREMISES (INCLUDING THE
SOIL, GROUNDWATER, SURFACE WATER, AIR OR BUILDING MATERIALS THEREOF) OR THE
CONDITION OF THE ACQUIRED ASSETS AT OR PRIOR TO CLOSING.

For the avoidance of doubt: the Diligence Representations shall not
survive the Closing, and are provided solely to enable Purchaser to conduct the
additional due diligence investigation described in Section 6.2. Purchaser's
sole remedy for any inaccuracy of such representations and warranties shall be
to terminate this Agreement pursuant to Section 12.1. 

Section 10.3.


Indemnification by Purchaser.





 Subject to the expiration of the applicable period set forth
in Section 10.1, Purchaser shall indemnify, defend and hold harmless Chiron, its
Affiliates and each of their directors, officers, employees and agents from and
against any and all Losses arising out of or relating to (a) the Assumed
Liabilities, (b) any material inaccuracy of Purchaser's Indemnified
Representations, or (c) any material breach by Purchaser of any of its covenants
or obligations contained in this Agreement or any of the Related Agreements.


Section 10.4.Method of
Asserting Claims. All claims for indemnification by any party entitled to
indemnification hereunder (an "Indemnified Party") shall be asserted and
resolved as set forth in this Section 10.4. Any Indemnified Party seeking
indemnity shall notify the party from whom indemnification is sought (the
"Indemnifying Party") promptly, but in no event later than the 20th day after
receipt by the Indemnified Party of a Third Party claim or demand of such claim
or demand and the amount or the estimated amount thereof to the extent then
feasible; provided, however, that any failure to provide such
notice shall not constitute a waiver of the Indemnifying Party's indemnity
obligations hereunder except to the extent the Indemnifying Party is actually
materially prejudiced thereby. The Indemnifying Party shall have 30 days after
receipt of a demand for indemnification (the "Notice Period") to notify the
Indemnified Party (a) whether or not the Indemnifying Party disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (b) whether or not it desires to defend the
Indemnified Party against such claim or demand. . In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it desires to defend the Indemnified Party against such claim or demand, the
Indemnifying Party shall have the right to defend the Indemnified Party at the
Indemnifying Party's sole cost and expense and with counsel reasonably
satisfactory to the Indemnified Party. If the Indemnifying Party's right to
assume the defense is exercised, the Indemnifying Party shall be deemed to have
waived all rights to contest its liability to the Indemnified Party in respect
of such Third Party claim. The Indemnifying Party shall not settle or compromise
or consent to the entry of any judgment with respect to any Third Party claim
that it elects to defend without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld. If the right to assume
and control the defense is exercised, the Indemnified Party shall have the right
to participate in, but not control, such defense at its own expense and the
Indemnifying Party's indemnity obligations shall be deemed not to include
attorneys' fees and litigation expenses incurred in such participation by the
Indemnified Party after the assumption of the defense by the Indemnifying Party
in accordance with the terms hereof; provided, however, that the
Indemnified Party shall be entitled to employ one firm or separate counsel to
represent the Indemnified Party if, in the written opinion of counsel to the
Indemnified Party, a conflict of interest between the Indemnified Party and the
Indemnifying Party exists in respect of such claim or, in any event, for claims
seeking equitable relief from the Indemnified Party and in each such event, the
fees, costs and expenses of such firm or separate counsel shall be paid in full
by the Indemnifying Party. If the Indemnifying Party has not elected to assume
the defense of a Third Party claim within the Notice Period, the Indemnified
Party may defend and settle the claim for the account and cost of the
Indemnifying Party; provided, that the Indemnified Party will not settle
the Third Party claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld. The Indemnifying Party
upon demand will pay, or reimburse the Indemnified Party for payment of, all
costs and expenses (including reasonable fees and expenses of counsel) incurred
in the defense thereof. The Indemnified Party shall cooperate with the
Indemnifying Party and, subject to obtaining proper assurances of
confidentiality and privilege, shall make available to the Indemnifying Party
all pertinent information under the control of the Indemnified Party.


ARTICLE XI

CERTAIN INTELLECTUAL PROPERTY MATTERS

11.1Facilities Know-How. Purchaser hereby
grants to Chiron a paid-up non-exclusive irrevocable worldwide license, with the
right to grant sublicenses, under the Facilities Know-How to make, have made,
use and sell any and all products at any location other than the Premises.

11.2Exclusive Negotiations. . Chiron and Purchaser shall
negotiate in good faith for a period of six months from the date of this
Agreement (the "Exclusive Negotiation Period") regarding a possible grant by
Chiron to Purchaser of a license under one or more of the Chiron Patent Rights
in the Field. During the Exclusive Negotiation Period, neither Chiron nor any of
its directors, officers, employees or agents shall discuss or negotiate with, or
enter into any agreement with, any Third Party relating to the transfer to such
Third Party of any rights in the Chiron Patent Rights in the Field, including,
without limitation, any assignment of Chiron Patents Rights in the Field or
license under the Chiron Patent Rights in the Field. In the event the parties
have not reached an agreement by the end of the Exclusive Negotiation Period
despite their good faith efforts to reach agreement, Chiron shall have the right
to grant licenses to Third Parties under the Chiron Patent Rights in the Field
without further restriction hereunder. Notwithstanding anything to the contrary
contained herein, Chiron shall have the right at any time to discuss, negotiate
with, and enter into an agreement with, any Third Party relating to the transfer
to such Third Party of any of Chiron's Research Programs, which transfer may
include a license under Chiron Patent Rights in one or more of the Fields, or to
enter into a license agreement for a research program relating to zinc finger
proteins.

ARTICLE XII

TERMINATION

Section 12.1 Grounds for Termination. This Agreement may be terminated
at any time prior to Closing:

(a) Expiration. by Chiron or by Purchaser if the Closing shall not
have occurred on or before February 21, 2001 unless the failure to consummate
the Closing by such date shall be due to the failure of the party seeking to
terminate this Agreement to have fulfilled any of its obligations under this
Agreement; 

(b)Contravention of Law. by Chiron or by Purchaser if consummation
of the transactions contemplated hereby or by any of the Related Agreements
would violate any nonappealable final order, decree or judgment of any court or
Governmental Authority having competent jurisdiction; or

(c)Breach by Chiron. by Purchaser, if there has been a breach by
Chiron of any of its representation, warranty, covenant or agreement that would
give rise to the failure of the conditions to the obligations of Purchaser set
forth in Section 7.2(b) or Section 7.2(c), which breach has not been
cured within 30 days after written notice from Purchaser to Chiron of such
breach.

(d)Breach by Purchaser. by Chiron, if there has been a breach by
Purchaser of any representation, warranty, covenant or agreement that would give
rise to the failure of the conditions to the obligations of Chiron set forth in
Section 7.3(b) or Section 7.3(c), which breach cannot be or has not
been cured within 30 days after written notice from Chiron to Purchaser of such
breach.

Section 12.2Effect of Termination. If this Agreement is terminated
pursuant to Section 12.1, such termination shall be without liability of any
party (or any stockholder, director, officer, employee or agent of any party) to
any other party to this Agreement. 

ARTICLE XIII









GENERAL
PROVISIONS


Section 13.1.





Further Assurances.
From time
to time following the Closing, Chiron and Purchaser shall execute and deliver
such other instruments of conveyance and transfer and take such other
actions as
the other party may reasonably request in order to effect the transactions
contemplated
hereby.


Section 13.2.





Assignment. Neither party
shall convey, assign or otherwise transfer any of its rights or obligations
under this Agreement without the express written consent of
the other party, such
consent not to be unreasonably withheld or delayed.
 






Subject to the foregoing, this Agreement is binding upon and is
for the benefit of the parties hereto and their respective successors and
permitted assigns.

Section 13.3.No Third Party Beneficiaries. This Agreement
is not made for the
benefit of any person, firm, corporation or other entity not a party hereto,
and no person, firm, corporation or other entity
other than the parties hereto or their respective successors and permitted
assigns shall acquire or have any right, remedy or claim under or by virtue of
this Agreement.


Section 13.4.





Amendment. This Agreement
cannot be amended or modified except by a written agreement executed by the
parties
hereto.


Section 13.5.





Waiver. Any waiver by either
party of its rights hereunder shall be valid only if set forth in an instrument
in writing signed by such party thereby.


Section 13.6.





Fees and Expenses. Each of
the parties hereto shall pay, without right of reimbursement from the other, the
costs incurred by it incident to the performance of its obligations hereunder,
including, without limitation, the fees and disbursements of counsel,
accountants, financial advisors, experts and consultants
employed by the respective parties in connection
with the transactions contemplated hereby, whether or not the transactions
contemplated by this Agreement are
consummated.


Section 13.7.





Notices. Any notice,
request, instruction or other communication to be given hereunder by any party
to the others shall be in writing and shall be deemed to have been duly given
(i) on the date of delivery if delivered personally or by facsimile, (ii) on the
first business day following the date of dispatch if delivered by Federal
Express or other nationally reputable next-day courier service or (iii) on the
third business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such
notice.


	
(a) If to Purchaser:



	
 

	
Cell Genesys Inc.

342 Lakeside Drive

Foster City, California 94404

Attention: Robert H. Tidwell

Facsimile: (650) 349-5213






	
With a copy to:



	
 

	
Wilson Sonsini Goodrich & Rosati

650 Page Mill Road

Palo Alto, California 94304-1050

Attention: Debra Summers, Esq.

Facsimile: 650-493-6811






	
(b) If to Chiron:



	
 

	
Chiron Corporation

4560 Horton Street

Emeryville, California 94608-2916

Attention: Chief Executive Officer

Facsimile: (510) 654-5360






	
With a copy to:



	
 

	
Chiron Corporation

4560 Horton Street

Emeryville, California 94608-2916

Attention: General Counsel

Facsimile: (510) 654-5360









Section 13.8.





Captions. The Article,
Section and paragraph captions herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Unless otherwise specified, all
references herein to numbered Sections and Articles are to Sections and Articles
of this Agreement and all references herein to Exhibits, Annexes and Schedules
are to Exhibits, Annexes and Schedules to this
Agreement.


Section 13.9.





Entire Agreement. This
Agreement and the Related Agreements constitute the entire agreement between the
parties with respect to the subject matter hereof and this Agreement supersedes
all prior agreements or understandings of the parties relating
thereto.


Section 13.10.





Severability. If any
provision of this Agreement is determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remaining provisions hereof shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon any such
determination, the parties shall negotiate in good faith a suitable and
equitable substitute provision to effect the original intent of the
parties.


Section 13.11.





 . Public Announcement. .
For the period prior to the Closing, this Agreement and the Related Agreements
shall be distributed solely (a) to those employees and consultants of the
parties who have a need to know its contents and (b) as may be required by law,
order or regulation of a Governmental Authority. In the event disclosure is
required by any such law, regulation or order, the disclosing party shall
request that any disclosure be kept confidential and shall attempt to minimize
the disclosure of financialof financial terms or other confidential or
proprietary information. Subject to the foregoing, any party may publicly
announce the existence of this Agreement, the nonspecific financial terms, and
the impact of this Agreement upon the financial position of such party. The
parties shall consult with one another prior to any press release relating to
this Agreement.


Section 13.12.





Exhibits and Schedules. All
Exhibits, Annexes and Schedules attached hereto are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.


Section 13.13.





Governing Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of California applicable to contracts made and to be performed
entirely within such State, without regard to the conflicts of law principles of
such
State.


Section 13.14.





Submission to Jurisdiction.
The parties hereby irrevocably submit to the non-exclusive jurisdiction of any
federal or state court located within San Francisco, California over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action or proceeding related thereto may be
heard and determined in such courts. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto
agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.

Section 13.15.



Counterparts. This Agreement may be executed in any
number of separate counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts shall together constitute the
same
agreement.


[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first herein
above written.

 

	
CHIRON CORPORATION
	
CELL GENESYS INC.

	
 
	
 

	
 
	
 

	
By: ________________________________
	
By: ________________________________

	
James R. Sulat
	
Stephen Sherwin, M.D.

	
Chief Financial Officer
	
Chief Executive Officer