exv10w1



 






Exhibit 10.1



certain
material (indicated by an asterisk) has been omitted from this
document pursuant to a request
for confidential treatment. the omitted material has been filed separately with the securities and exchange
commission





 

 






EXECUTION COPY



PRODUCT ACQUISITION AGREEMENT


by and between


VALEANT PHARMACEUTICALS NORTH AMERICA


(as buyer)


and


INTERMUNE, INC.


(as seller)



 

 





November 28, 2005



 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Section	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE I -
	 	DEFINITIONS	 	 	1	 
	Section 1.1.
	 	Defined Terms	 	 	 1	 
	Section 1.2.
	 	Construction	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE II -
	 	THE TRANSACTION	 	 	12	 
	 
	 	 	 	 	 	 
	Section 2.1.
	 	Transfer of Purchased Assets and Inventory.	 	 	12	 
	Section 2.2.
	 	Excluded Assets.	 	 	13	 
	Section 2.3.
	 	Assumed Liabilities	 	 	14	 
	Section 2.4.
	 	Excluded Liabilities.	 	 	14	 
	Section 2.5.
	 	Purchase Price and Inventory Cost	 	 	14	 
	Section 2.6.
	 	Risk of Loss	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE III -
	 	REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	16	 
	 
	 	 	 	 	 	 
	Section 3.1.
	 	Organization and Authority	 	 	16	 
	Section 3.2.
	 	Title to Purchased Assets and Inventory	 	 	16	 
	Section 3.3.
	 	Consents; No Violations.	 	 	16	 
	Section 3.4.
	 	Regulatory Approvals.	 	 	17	 
	Section 3.5.
	 	Compliance with Laws and Litigation.	 	 	17	 
	Section 3.6.
	 	No  Material Adverse Change.	 	 	17	 
	Section 3.7.
	 	Contracts.	 	 	18	 
	Section 3.8.
	 	Inventory and Returns.	 	 	18	 
	Section 3.9.
	 	Tax Matters	 	 	19	 
	Section 3.10.
	 	Intellectual Property.	 	 	19	 
	Section 3.11.
	 	Product Records	 	 	21	 
	Section 3.12.
	 	Brokers, Finders, etc.	 	 	21	 
	Section 3.13.
	 	Financial Statements.	 	 	21	 
	Section 3.14.
	 	Insurance.	 	 	21	 
	Section 3.15.
	 	Sufficiency	 	 	22	 
	Section 3.16.
	 	Government Multi-Product Contracts.	 	 	22	 
	Section 3.17.
	 	Regulatory Compliance	 	 	22	 
	Section 3.18.
	 	Product Registrations.	 	 	24	 
	Section 3.19.
	 	No Other Warranties	 	 	25	 
	Section 3.20.
	 	Adequacy of Disclosure	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE IV -
	 	REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	25	 
	 
	 	 	 	 	 	 
	Section 4.1.
	 	Organization and Authority	 	 	25	 
	Section 4.2.
	 	Consents; No Violations.	 	 	26	 
	Section 4.3.
	 	Brokers, Finders, etc.	 	 	26	 
	Section 4.4.
	 	Financing	 	 	26	 
	Section 4.5.
	 	Litigation	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE V -
	 	COVENANTS OF SELLER PRIOR TO CLOSING	 	 	26	 
	 
	 	 	 	 	 	 
	Section 5.1.
	 	Access to Information	 	 	26	 
	Section 5.2.
	 	Conduct of the Product Business.	 	 	27	 
	Section 5.3.
	 	Required Approvals and Consents	 	 	27	 
	Section 5.4.
	 	Notice of Default	 	 	27	 
	Section 5.5.
	 	No Negotiation	 	 	27	 
	Section 5.6.
	 	Reasonable Best Efforts	 	 	27	 
	Section 5.7.
	 	Transition Activities.	 	 	27	 






-i-









 






	 	 	 	 	 	 	 
	Section	 	 	 	Page
	 
	ARTICLE VI -
	 	COVENANTS OF BUYER PRIOR TO CLOSING	 	 	28	 
	 
	 	 	 	 	 	 
	Section 6.1.
	 	Required Approvals and Consents	 	 	28	 
	Section 6.2.
	 	Notice of Default	 	 	28	 
	Section 6.3.
	 	Reasonable Best Efforts	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE VII -
	 	CLOSING AND TERMINATION	 	 	28	 
	 
	 	 	 	 	 	 
	Section 7.1.
	 	Closing	 	 	28	 
	Section 7.2.
	 	Conditions Precedent to Obligations of Buyer and Seller	 	 	29	 
	Section 7.3.
	 	Conditions Precedent to Buyer’s Obligations	 	 	29	 
	Section 7.4.
	 	Conditions Precedent to Seller’s Obligations	 	 	30	 
	Section 7.5.
	 	Closing Deliveries.	 	 	31	 
	Section 7.6.
	 	Termination	 	 	32	 
	Section 7.7.
	 	Procedure and Effect of Termination	 	 	32	 
	 
	 	 	 	 	 	 
	ARTICLE VIII -
	 	CERTAIN OTHER  COVENANTS	 	 	33	 
	 
	 	 	 	 	 	 
	Section 8.1.
	 	HSR Filings	 	 	33	 
	Section 8.2.
	 	Inventory Cost Adjustment	 	 	33	 
	Section 8.3.
	 	Product Returns, Rebates and Chargebacks	 	 	35	 
	Section 8.4.
	 	Transitional Trademark License.	 	 	37	 
	Section 8.5.
	 	Customer Billing	 	 	38	 
	Section 8.6.
	 	Covenant Not To Compete	 	 	39	 
	Section 8.7.
	 	Cooperation.	 	 	39	 
	Section 8.8.
	 	Clinical Trials	 	 	39	 
	Section 8.9.
	 	Employees	 	 	39	 
	Section 8.10.
	 	Tax Matters.	 	 	40	 
	Section 8.11.
	 	Notice to Customers	 	 	41	 
	Section 8.12.
	 	Assistance in Supply of Product	 	 	41	 
	Section 8.13.
	 	Adverse Experience Reports	 	 	41	 
	Section 8.14.
	 	Regulatory Matters.	 	 	41	 
	Section 8.15.
	 	Differentiation of Product	 	 	42	 
	Section 8.16.
	 	[***]	 	 	42	 
	Section 8.17.
	 	Books and Records	 	 	43	 
	Section 8.18.
	 	Non-Exclusive License	 	 	43	 
	Section 8.19.
	 	Assistance Regarding Required SEC Financial Disclosures	 	 	44	 
	 
	 	 	 	 	 	 
	ARTICLE IX -
	 	INDEMNIFICATION	 	 	44	 
	 
	 	 	 	 	 	 
	Section 9.1.
	 	Survival of Representations and  Warranties	 	 	44	 
	Section 9.2.
	 	Indemnification.	 	 	44	 
	Section 9.3.
	 	Indemnification Procedures.	 	 	46	 
	Section 9.4.
	 	Limitations.	 	 	48	 
	Section 9.5.
	 	Right of Setoff	 	 	48	 
	 
	 	 	 	 	 	 
	ARTICLE X -
	 	MISCELLANEOUS PROVISIONS	 	 	48	 
	 
	 	 	 	 	 	 
	Section 10.1.
	 	Confidentiality and Publicity.	 	 	48	 
	Section 10.2.
	 	Notices	 	 	50	 
	Section 10.3.
	 	Modification; Waiver	 	 	51	 
	Section 10.4.
	 	Expenses	 	 	51	 
	Section 10.5.
	 	Entire Agreement	 	 	51	 
	Section 10.6.
	 	Assignment	 	 	51	 
	Section 10.7.
	 	Third Parties	 	 	52	 
	Section 10.8.
	 	Waiver	 	 	52	 
	Section 10.9.
	 	Severability	 	 	52	 
	Section 10.10.
	 	Governing Law	 	 	52	 








 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confident treatment
has been requested with requested with respect to the omitted portions.




-ii-









 










	 	 	 	 	 	 	 
	Section	 	 	 	Page
	 
	Section 10.11.
	 	Headings	 	 	52	 
	Section 10.12.
	 	Execution in Counterparts	 	 	52	 
	Section 10.13.
	 	Force Majeure	 	 	52	 
	Section 10.14.
	 	Relationship of the Parties	 	 	53	 
	Section 10.15.
	 	Arbitration	 	 	53	 






-iii-









 





PRODUCT ACQUISITION AGREEMENT




     This PRODUCT ACQUISITION AGREEMENT (as amended from time to time, the “Agreement”),
dated November 28, 2005 (the “Execution Date”), is made and entered into by and between
VALEANT PHARMACEUTICALS NORTH AMERICA, a Delaware corporation (the “Buyer”), and INTERMUNE,
INC., a Delaware corporation (the “Seller”). Buyer and Seller are sometimes collectively
referred to herein as the “Parties” and separately as a “Party.”



RECITALS




     WHEREAS, Seller is a biopharmaceutical company focused on developing and commercializing
innovative therapies in hepatology and pulmonology;



     WHEREAS, Buyer is a global, research-based, specialty pharmaceutical company that discovers,
develops, manufactures and markets pharmaceutical products, primarily in the areas of neurology,
dermatology and infectious disease;



     WHEREAS, Seller has determined that the sale of certain products and product related rights at
this time is consistent with its current business strategy;



     WHEREAS, Buyer has determined that the acquisition of those certain products and product
related rights at this time is consistent with its current business strategy; and



     WHEREAS, Seller desires to sell such products and product related rights to Buyer, and Buyer
desires to purchase such products and product related rights from Seller, on the terms and
conditions set forth herein.



     NOW, THEREFORE, in consideration of the promises, representations, warranties, covenants and
agreements contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree
as follows:



ARTICLE I — DEFINITIONS




     Section 1.1. Defined Terms. For the purposes of this Agreement, the following words
and phrases shall have the following meanings whether in the singular or the plural:



     “Affiliate” shall mean any Person which controls, is controlled by, or is under common
control with the applicable Person. For purposes of this definition, “control” shall mean: (a) in
the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the
stock or shares (or such lesser percentage which is the maximum allowed to be owned by a foreign
corporation in a particular jurisdiction) entitled to vote for the election of directors or
otherwise having the power to vote on or direct the affairs of such Person; and (b) in the case of



-1-









 




non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the
equity interest or the power to direct the management and policies of such non-corporate entities.




     “AGHC Trial” shall mean the AGHC-002 (IND #11,599) Phase 2, randomized, dose-ranging, open
label study of safety and tolerability of consensus interferon-alpha (CIFN) plus interferon
gamma-1b (IFN-y 1b) with or without Ribavirin (RBV) in the treatment of patients with chronic
Hepatitis C who are nonresponders to pegylated-interferon-a (2a or 2b) plus RBV.



     “Agreement” shall have the meaning set forth in the first paragraph of this Agreement.



     “Amgen” means Amgen Inc.



     “Amgen Agreements” means the Amgen License Agreement, Amgen Assignment, Assumption and
Consent Agreement, and Amgen Quality Agreement.



     “Amgen Assignment, Assumption and Consent Agreement” means the Assignment, Assumption
and Consent Agreement, dated June 15, 2001, by and among Amgen, InterMune, and Yamanouchi Europe,
B.V.



     “Amgen Consent” means that certain consent, in the form agreed upon by Buyer and
Seller on or prior to the date hereof, to be executed by Amgen, Buyer and Seller pursuant to which
Amgen consents to Seller assigning to Buyer the Amgen Agreements.



     “Amgen License Agreement” shall mean that certain License and Commercialization
Agreement, dated June 15, 2001, by and between Amgen, Inc. and Seller, as amended from time to
time, including but not limited to that certain Amendment No. 1, dated April 24, 2002, that certain
Amendment Number 2, dated December 31, 2004, and that certain Amendment No. Three, dated January
13, 2005.



     “Amgen License Rights” shall mean all of the rights of Seller, including but not
limited to Seller’s rights as licensee and sublicensee, under the Amgen License Agreement.



     “Amgen Quality Agreement” means the Quality Agreement, dated March 22, 2002, between
Amgen and Seller.



     “Ancillary Agreements” shall have the meaning set forth in Section 7.3(g).



     “Applicable Law” shall mean all applicable provisions of all statutes, laws, rules,
regulations, administrative codes, ordinances, decrees, orders, decisions, guidance documents,
injunctions, awards, judgments, and permits and licenses of or from Governmental Authorities
relating to or governing the use or regulation of the subject item, including, where applicable,
Tax Law.



     “Asset Acquisition Statement” shall have the meaning set forth in Section
8.10(a).



-2-









 





     “Assumed Liabilities” shall mean the Liabilities set forth in Section 2.3.



     “Basket” shall have the meaning set forth in Section 9.4(a).



     “BI Austria” means Boehringer Ingelheim Austria GmbH.



     “BI Austria Agreement” means that certain Data Transfer, Clinical Trial and Market
Supply Agreement, dated November 3, 2005, by and between BI Austria and Seller, as amended from
time to time



     “Bill of Sale” shall have the meaning set forth in Section 7.5(a)(i).



     “BLA” means the application for Infergen prepared pursuant to applicable FDA
Regulations and filed with the FDA for authorization to market Infergen within the United States.



     “Business Day” means a day, which is not a Saturday, a Sunday, or a statutory holiday
in the United States.



     “Buyer” shall have the meaning set forth in the first paragraph of this Agreement.



     “Buyer Indemnitee” shall have the meaning set forth in Section 9.2(a).



     “Buyer Labeling” means the printed labels, labeling and packaging materials, including
printed carton, container labels and package inserts, used by Buyer and bearing Buyer’s name for,
or in connection with, packaging of Infergen.



     “Buyer Losses” shall have the meaning set forth in Section 9.2(a).



     “Buyer Proprietary Information” shall have the meaning set forth in Section
10.1(b).



     “Buyer’s Closing Certificate” shall have the meaning set forth in Section
7.4(c).



     “Cap” shall have the meaning set forth in Section 9.4(a).



     “Cardinal Health Acknowledgement” means that certain written acknowledgement from
Cardinal Health, in form and substance reasonably acceptable to Buyer, pursuant to which Cardinal
Health shall acknowledge and agree to continue to provide to Seller, for the benefit of Buyer,
through ninety days following the Closing, the same services, including but not limited to
inventory storage, distribution, accounts payable and accounts receivable services, at the same
cost as Cardinal Health is currently providing to Seller under that certain Distribution Services
Agreement, dated January 15, 1999.



-3-









 





     “Chargeback Claims” shall have the meaning set forth in Section 8.3(d).



     “Clinical Trials” shall mean, collectively, the IRHC-001 Trial, the IRHC-002 Trial,
the IRHC-003 Trial, and the IST Trials.



     “Clinical Trial Inventory” shall mean the pharmaceutical products listed on
Schedule 1.1, being the pharmaceutical products held in inventory, estimated as of [***],
by Seller for use by Seller in the Clinical Trials and transferred to Buyer on the Closing Date in
accordance with Section 2.1(d); provided, however, that Clinical Trial Inventory shall not
include such amounts of pharmaceutical products as required by Seller to complete the AGHC
Trial. 



     “Closing” shall have the meaning set forth in Section 7.1.



     “Closing Date” shall have the meaning set forth in Section 7.1.



     “Closing Payment” shall have the meaning set forth in Section 2.5(a).



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



     “Confidentiality Agreement” shall have the meaning set forth in Section 10.1.



     “Contract” shall mean any agreement, contract, lease, consensual obligation, promise,
or undertaking (whether written or oral), to which Seller is a party that relates exclusively to
the Product, the Product Business, the Purchased Assets, or the Assumed Liabilities, or which are
necessary for the conduct of the Product Business as conducted by the Seller.



     “Effective Time” shall have the meaning set forth in Section 7.1.



     “Encumbrance” shall mean claims, security interests, liens, pledges, charges, escrows,
options, proxies, rights of first refusal, preemptive rights, mortgages, hypothecations,
assessments, prior assignments, title retention agreements, conditional sales agreements,
indentures, deeds of trust, leases, levys or security agreements of any kind whatsoever imposed
upon the subject property or item.



     “Estimated Inventory Cost” shall have the meaning set forth in Section
8.2(b).



     “Estimated Inventory Statement” shall have the meaning set forth in Section
8.2(a).



     “Execution Date” shall mean the date set forth in the first paragraph of this
Agreement.



     “Excluded Assets” shall mean all assets and properties of Seller, other than the
Purchased Assets, Other Intellectual Property, Inventory (subject to the Inventory Cap), and
Clinical Trial Inventory.





 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.





-4-









 





     “Excluded Intellectual Property” shall mean all Intellectual Property owned or
controlled by Seller other than the Product Intellectual Property and the Other Intellectual
Property.



     “Excluded Liabilities” shall mean all Liabilities or obligations of Seller (other than
the Assumed Liabilities), including any obligation or Liability of Seller created as a result of
this Agreement and those items set forth on Schedule 2.4(a).



     “FDA” means the United States Food and Drug Administration.



     “FSS” shall have the meaning set forth in Section 8.3(d).



     “Government Multi-Product Contracts” means all written contracts or agreements by
which Seller dispenses Infergen through a government agency, together with other pharmaceutical
products of Seller.



     “Governmental Authority” means the government of the applicable country in the
Territory and any state, province, municipality or other political subdivision thereof or therein,
or any court, tribunal, agency, department, board, instrumentality, authority or commission
(including regulatory and administrative bodies) of any of the foregoing.



     “HSR Act” shall mean the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.



     “Indemnification Claim Notice” shall have the meaning set forth in Section
8.2(b).



     “Indemnified Party” shall have the meaning set forth in Section 8.2(b).




     “Indemnifying Party” shall have the meaning set forth in Section 8.2(b).



     “Indemnitee(s)” shall mean either a Buyer Indemnitee or Seller Indemnitee, as the case
may be.



     “Infergen” shall mean the finished pharmaceutical product containing interferon
alfacon-1 in the formulation sold by Seller under the trademark Infergen® prior to the Closing.



     “Instruments of Transfer” shall mean such instruments and documents in addition to the
Ancillary Agreements that are necessary pursuant to Applicable Law to effectuate and consummate the
transactions contemplated hereby, including, bills of sale, assumption agreements, assignment and
assumption of contracts and other conveyance documents in the forms agreed-upon in good faith by
the Parties.



     “Intellectual Property” shall mean all domestic and foreign (i) trademarks, trademark
registrations, trademark applications, service marks, service mark registrations, service mark
applications, business marks, brand names, trade names, trade dress, names, logos and slogans,
internet domains and URLs, and all goodwill associated therewith; (ii) patents, patent rights,



-5-









 




provisional patent applications, patent applications, designs, registered designs, registered
design applications, industrial designs, industrial design applications and industrial design
registrations, including any and all divisions, continuations, continuations in part, extensions,
substitutions, renewals, registrations, revalidations, reexaminations, reissues or additions,
including supplementary certificates of protection, of or to any of the foregoing items; (iii)
copyrights, copyright registrations, copyright applications, original works of authorship fixed in
any tangible medium of expression, including literary works (including all forms and types of
computer software, including all source code, object code, firmware, development tools, files,
records and data, and all documentation related to any of the foregoing), musical, dramatic,
pictorial, graphic and sculptured works; (iv) trade secrets, technology, discoveries and
improvements, know how, proprietary rights, formulae, confidential and proprietary information,
technical information, techniques, inventions, designs, drawings, procedures, processes, models,
formulations, manuals and systems, whether or not patentable or copyrightable, including all
biological, chemical, biochemical, toxicological, pharmacological and metabolic material and
information and data relating thereto and formulation, clinical, analytical and stability
information and data which have actual or potential commercial value and are not available in the
public domain; and (v) all other intellectual property or proprietary rights, in each case whether
or not subject to statutory registration or protection.




     “Inventory” shall mean the Infergen owned or controlled by Seller for Seller’s
marketing and sale in the Territory, which (i) are in finished dosage form, including Seller’s
trade dress, (ii) are of a quality usable and salable in the ordinary course of business, (iii)
comprise unsold lots, and (iv) as of the Closing Date, have at least two-thirds of their shelf life
remaining. For the avoidance of doubt, for purposes of this Agreement, unless otherwise expressly
stated herein, the term “Inventory” shall not include (and, among other things, Buyer shall not be
required to purchase pursuant hereto) the Clinical Trial Inventory or any Infergen which does not
satisfy all of the foregoing conditions. For the avoidance of doubt, for purposes of this
Agreement, the term “Inventory” shall include Infergen held in inventory by Seller and acquired by
Seller from Amgen under Purchase Order No. 6273; provided, that such Infergen otherwise
satisfies all of the conditions of subparagraphs (i)-(iv) above and is subject to the Inventory
Cap, all as otherwise provided in this Agreement.



     “Inventory Cap” shall have the meaning set forth in Section 2.1(b).



     “Inventory Cost” shall have the meaning set forth in Section 8.2(b).



     “Inventory Statement” shall have the meaning set forth in Section 8.2(b).



     “IP Assignment” shall have the meaning set forth in Section 7.5(a)(i).



     “IRHC-001 Trial” means the randomized, open-label, phase III investigational research
study (identified as IRHC-001) designed by and initiated by Seller as of the date hereof to
evaluate the safety and efficacy of daily administration of Infergen plus ribavirin versus no



-6-









 




treatment in patients infected with the hepatitis C virus (HCV) who have not responded to
previous combination therapy with pegylated interferon alfa plus ribavirin.




     “IRHC-002 Trial” means the randomized, open-label phase III investigational research
study (identified as IRHC-002) designed by and initiated by Seller as of the date hereof to
evaluate the safety and efficacy of two dose levels of daily Infergen plus ribavirin in patients
infected with the hepatitis C virus (HCV) who failed to achieve virologic response after previous
pegylated interferon alfa plus ribavirin therapy and during at least 24 weeks of no treatment in
the IRHC-001 Trial.



     “IRHC-003 Trial” means the single arm study of daily Infergen plus ribavirin in
patients infected with the hepatitis C virus (HCV) as designed and presented in the briefing
package prepared and submitted to FDA on September 22, 2005 in
connection with a meeting with
the Division of Antiviral Drug Products held on October 24, 2005.



     “IRS” means the United States Internal Revenue Service.



     “IST Trials” means all investigator-sponsored trials with respect to Infergen as set
forth on Section 3.17(j) of the Seller Disclosure Schedule.



     “Knowledge of the Buyer” or “to Buyer’s Knowledge” or any similar such statement shall
mean that an executive officer or director of Buyer, or a key employee of Buyer directly involved
on behalf of Buyer in the transactions contemplated herein, either (i) has or had actual knowledge
of a fact or matter, or (ii) could reasonably be expected to have become aware of the fact or
matter had he or she conducted a reasonable investigation regarding the accuracy of the subject
representation or warranty.



     “Knowledge of the Seller” or “to Seller’s Knowledge” or any similar such statement
shall mean that an executive officer or director of Seller, or a key employee of Seller directly
involved in the Product Business, either (i) has or had actual knowledge of a fact or matter, or
(ii) could reasonably be expected to have become aware of the fact or matter had he or she
conducted a reasonable investigation regarding the accuracy of the subject representation or
warranty.



     “Liability” shall mean, collectively, any indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, choate or inchoate, liquidated or unliquidated, secured or unsecured, direct or indirect,
matured or unmatured, or absolute, contingent or otherwise, including any product liability.



     “Material Adverse Change” means any change, event or occurrence that has, or has had,
or is reasonably likely to have, a Material Adverse Effect; provided, however, that
for purposes hereof, the commencement of, threatened commencement of, or announced intention to
commence any action or investigation of the Product Business prior to the Closing by the
U.S.



-7-









 




Department of Justice, the Office of the Inspector General, or any other Governmental
Authority shall constitute a Material Adverse Change.




     “Material Adverse Effect” means a material adverse effect upon (i) the business,
financial condition or results of operations of the Product Business or the Purchased Assets, or
(ii) the ability of a Party to consummate the transactions contemplated by this Agreement, other
than (a) any change, effect, event or condition that arises from changes in general economic
conditions or conditions affecting the pharmaceutical industry generally, or (b) such changes,
events or conditions resulting from the announcement of, or the consummation of, the transactions
contemplated hereby.



     “Material Consents” shall have the meaning set forth in Section 7.3(c).



     “Nektar Agreements” means the (i) Development, Licensing and Manufacturing Agreement
dated as of June 20, 2002 by and between Seller and Nektar Therapeutics (successor-in-interest to
Shearwater Corporation) and (ii) Collaborative Research Agreement dated as of December 19, 2001 by
and between Seller and Nektar Therapeutics (successor-in-interest to Shearwater Corporation).



     “[***]” shall have the meaning set forth in Section 8.16(a).



     “[***]” shall have the meaning set forth in Section 8.16(a).



     “[***]” shall have the meaning set forth in Section 8.16(b).



     “Other Intellectual Property” shall mean the Intellectual Property listed on
Schedule 2.1(c), being that certain Intellectual Property owned by Seller as of the
Execution Date that is not included within the Purchased Assets but that will be conveyed to Buyer
as of the Effective Time in accordance with Section 2.1(c).



     “Party” or “Parties” shall have the meaning set forth in the first paragraph
of this Agreement.



     “Permitted Encumbrances” means (i) the Encumbrances and exceptions set forth in
Section 3.2 of the Seller Disclosure Schedule, and (ii) liens imposed by any Governmental
Authority for Taxes not yet due and payable, or for Taxes that Seller is contesting in good faith.



     “Person” shall mean any natural person, corporation, unincorporated organization,
partnership, association, joint stock company, joint venture, limited liability company, trust or
government, or any agency or political subdivision of any government, or any other entity.



     “Prime Rate” shall mean the rate of interest that Citibank N.A. lists as its prime
lending rate on the last day of the applicable calendar quarter, or if such rate is not available,
the prime





 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.






-8-









 





lending rate listed in the New York City, USA version of The Wall Street Journal on the last
day of the applicable calendar quarter.



     “Product” shall mean any finished pharmaceutical product containing interferon
alphacon-1, including Infergen.



     “Product Business” shall mean the manufacturing, using, developing, promoting,
selling, offering to sell, or importing of Infergen for sale in the Territory as currently being
conducted by Seller; provided, however, that Product Business shall not include the development of
Infergen in combination with Actimmune.



     “Product Copyrights” means, as owned, licensed or controlled by Seller and exclusively
related to the Product Business, the copyrights (whether or not registered) and registrations and
applications for registration or renewals thereof, including all derivative works, moral rights,
renewals, extensions, reversions or restorations associated with such copyrights, now or hereafter
provided by law, regardless of the medium of fixation or means of expression, and all goodwill
associated therewith listed on Section 3.10(b)(iii) of the Seller Disclosure Schedule.



     “Product Domains” means, as owned, licensed or controlled by Seller and exclusively
related to the Product Business, the internet domains and URLs in the Territory, listed on
Section 3.10(b)(iv) of the Seller Disclosure Schedule.



     “Product Intellectual Property” shall mean the Amgen License Rights, Product
Copyrights, Product Domains, Product Know-How, Product Patents, Product Trademarks, and Product
Trade Dress, listed on Sections 3.10(b)(i) to (iv) of the Seller Disclosure
Schedule.



     “Product Know How” means, as owned, licensed or controlled by Seller and exclusively
related to the Product Business, including as developed in connection with the Clinical Trials, the
research and development information, validation methods and procedures, unpatented inventions,
know-how, trade secrets, technical or other data or information, or other materials, methods,
procedures, processes, materials, developments or technology, including all biological, chemical,
clinical, manufacturing and other information or data, other than such know-how which is or becomes
the subject of a patent or of a provisional or filed patent application.



     “Product Patents” means, as owned, licensed or controlled by Seller and exclusively
related to the Product Business, the patents, patent applications, provisional patent applications
and similar instruments (including any and all substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, extensions, reexaminations, patents of addition,
supplementary protection certificates, inventors’ certificates, pediatric data package exclusivity
extensions, divisions, re-filings, continuations and continuations-in-part thereof, or the like) as
well as any foreign equivalents thereof (including certificates of invention and any applications
therefor), listed on Section 3.10(b)(i) of the Seller Disclosure Schedule.



-9-









 





     “Product Records” shall mean all files, documents, instruments, papers, books and
records owned or controlled by Seller, whether in electronic or tangible form, to the extent
relating to the Product Business, including any pricing lists, customer lists, vendor lists,
financial data, research and development files, marketing materials (if any), regulatory files,
adverse event reports and files, clinical studies and all documentation relating to the Product
Intellectual Property, but excluding any such items to the extent that any Applicable Law prohibits
their transfer. Notwithstanding the foregoing, prior to delivering or making the Product Records
available to Buyer, Seller shall be entitled to redact from the Product Records any information
that does not relate exclusively to the Product Business.



     “Product Registrations” shall mean all applications (including the BLA), new drug
applications, abbreviated new drug applications, new drug submissions, and any comparable
applications and submissions, together with any and all supplements or modifications or amendments
thereto, whether existing, pending, withdrawn or in draft form, together with all correspondence to
or from any Governmental Authority with respect thereto, prepared and submitted to any Governmental
Authority in the Territory with respect to Infergen.



     “Product Returns” shall have the meaning set forth in Section 8.3(a).



     “Product Trade Dress” means, as owned, licensed or controlled by Seller, the trade
dress, logos and designs exclusively related to the Product Business, listed on Section
3.10(b)(ii) of the Seller Disclosure Schedule.



     “Product Trademarks” means, as owned, licensed or controlled by Seller and exclusively
related to the Product Business, the trademarks, service marks, logos, slogans and trade names
(whether or not registered), in the Territory, including all variations, derivations, combinations,
registrations and applications for registration or renewals of the foregoing and all goodwill
associated therewith, listed on Section 3.10(b)(ii) of the Seller Disclosure Schedule.



     “Promotional Materials” shall mean, to the extent exclusively related to the Product
Business, all advertising, promotional, selling and marketing materials in written or electronic
form existing as of the Closing and owned or controlled and in the possession of Seller.



     “Purchased Assets” shall mean, collectively, the Contracts, Regulatory Approvals,
Promotional Materials, Product Records and the Product Intellectual Property.



     “Purchase Price” shall have the meaning set forth in Section 2.5.



     “Regulatory Approvals” shall mean, as exclusively related to Infergen in the Territory
and/or Seller’s operation of the Product Business, all material permits, licenses, certificates,
approvals, Product Registrations, filings and authorizations issued by any Governmental Authority
to Seller or its representatives.



     “Returns” means all returns (including information returns), declarations, reports,
statements, schedules, notices, forms, declarations and other documents or information filed with



-10-









 




or submitted to, or required under a Tax Law to be filed with or submitted to a Governmental
Authority in respect of Taxes or any Tax Law relating to any Tax (and “Return” means any
one of the foregoing Returns).




     “Schedules” shall refer to the schedules to this Agreement which are hereby
incorporated by reference into this Agreement.



     “Seller” shall have the meaning set forth in the first paragraph of this Agreement.



     “Seller Disclosure Schedule” shall have the meaning set forth in the first paragraph
of Article III.



     “Seller Indemnitee” shall have the meaning set forth in Section 9.2(b).



     “Seller Losses” shall have the meaning set forth in Section 9.2(b).



     “Seller Marks” shall mean all Trademarks and trade dress owned, licensed or controlled
by Seller, aside from the Product Trademarks and Product Trade Dress, that are used in connection
with the Product Business and the Assumed Liabilities as of the Execution Date.



     “Seller Proprietary Information” shall have the meaning set forth in Section
10.1(c).



     “Seller’s Closing Certificate” shall have the meaning set forth in Section
7.3(e).



     “Statement of Allocation” shall have the meaning set forth in Section
8.10(a).



     “[***]” means, in an [***], the [***]with [***] by both [***] at [***].



     “Taxes” means, with respect to the Territory, all federal, state, local, foreign and
other income, net income, gross income, gross receipts, sales, use, ad valorem, transfer, capital
stock, franchise, profits, license, service, add on or alternative minimum tax, occupancy,
withholding, payroll, fringe benefits, employment, employees’ income withholding, foreign or
domestic withholding, unemployment, disability, excise, severance, stamp, value added, occupation,
premium, property (including, real property and personal property taxes and any assessments,
special or otherwise), environmental, windfall profits, customs, duties or other taxes, fees,
assessments, levies, tariffs, or charges of any kind that are in the nature of a tax, together
with any interest and any penalties, additions to tax or additional amounts with respect thereto
(and “Tax” means any one of the foregoing Taxes).



     “Tax Law” means, with respect to the Territory, a statute, law, regulation or
administrative rule or judicial opinion enacted, issued or
promulgated for the determination,
imposition, assessment or collection of any Tax.




 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confident treatment
has been requested with requested with respect to the omitted portions.



-11-









 





     “Termination Notice” shall have the meaning set forth in Section 8.16(c).



     “Territory” means the United States of America, Canada and their respective
territories and possessions.



     “Third Party” shall mean any Person other than Buyer or Seller, or an Affiliate of
either of them.



     “Trademarks” means all trademarks, service marks, logos, slogans and trade names
(whether or not registered), in the Territory, including all variations, derivations, combinations,
registrations and applications for registration or renewals of the foregoing and all goodwill
associated therewith.



     “Transfer Taxes” shall have the meaning set forth in Section 8.10(b).



     “Treasury Regulations” shall mean the income tax regulations issued under the Code.



     “Valid Claim” shall mean shall mean a claim in any (i) unexpired and issued patent in
the Product Patents rights that has not been (a) held permanently revoked, unenforceable or invalid
by a final unappealable decision of a court or government agency of competent jurisdiction over
such claim or (b) admitted to be invalid or unenforceable through disclaimers, consent decrees or
otherwise, or (ii) pending patent application in the Product Patents rights that has been on file
with the applicable patent office for not more than five (5) years and for which there has been
reasonably consistent activity to advance to issuance of a patent.



     Section 1.2. Construction. Unless the context of this Agreement otherwise requires:
(a) words of any gender include each other gender; (b) “dollars” refers to U.S. dollars; (c) words
using the singular or plural number also include the plural or singular number, respectively; (d)
the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire
Agreement; (e) the terms “Article,” “Section” or “Exhibit” refer to the specified Article, Section
or Exhibit of this Agreement; and (f) the term “including” or any variation thereof means
“including without limitation” or any variation thereof and shall not be construed to limit any
general statement which it follows to the specific or similar items or matters immediately
following it, unless otherwise expressly stated.



ARTICLE II — THE TRANSACTION




     Section 2.1. Transfer of Purchased Assets, Inventory, Other Intellectual Property and
Clinical Trial Inventory.



            (a) Purchase and Sale of Purchased Assets. At the Effective Time, on the terms and
subject to the conditions hereof and in reliance upon the representations, warranties and covenants
contained herein and in consideration of the Purchase Price paid to Seller by Buyer, Seller will
sell, convey, transfer, assign and deliver to the Buyer, and the Buyer will purchase, take delivery
of and acquire from Seller, all of Seller’s right, title and interest in and to the Purchased
Assets.



-12-









 





               (b) Purchase and Sale of Inventory. At the Effective Time, on the terms and subject
to the conditions hereof and in reliance upon the representations, warranties and covenants
contained herein and in consideration of the Inventory Cost paid to Seller by Buyer, Seller will
sell, convey, transfer, assign and deliver to the Buyer, and the Buyer will purchase and acquire
from Seller, all of Seller’s right, title and interest in and to the Inventory; provided, however,
Buyer shall only be required to purchase up to $6.5 million of Inventory hereunder (the
“Inventory Cap”) and Seller shall retain all Inventory (other than the Clinical Trial
Inventory) in excess of the Inventory Cap.




               (c) Transfer of Other Intellectual Property. At the Effective Time, on the terms and
subject to the conditions hereof, Seller shall convey, transfer, assign and deliver to Buyer, at no
additional cost to Buyer, and Buyer shall acquire from Seller, all of Seller’s rights, title, and
interest in and to the Other Intellectual Property. Notwithstanding the foregoing, Buyer hereby
grants Seller a non-exclusive, fully paid-up and royalty free license to the Other Intellectual
Property solely for activities permitted by Section 8.6 of this Agreement. If Buyer elects
to prosecute the Other Intellectual Property, Buyer will assume responsibility for such prosecution
and will promptly provide Seller with copies of official prosecution correspondence and provide
Seller with reasonable time to consider and comment upon prosecution strategy, such comments to be
considered by Buyer in good faith. In the event Buyer decides to abandon any patent or patent
application included in the Other Intellectual Property, Buyer will give Seller at least thirty
(30) days prior written notice to decide whether or not Seller wishes to assume responsibility for
such patent or patent application, in which case Buyer shall assign and transfer such patent or
patent application back to Seller.




               (d) Transfer of Clinical Trial Inventory. At the Effective Time, on the terms and
subject to the conditions hereof, Seller shall convey, transfer, assign and deliver to Buyer, at no
additional cost to Buyer, and Buyer shall acquire from Seller, all of Seller’s rights, title, and
interest in and to the Clinical Trial Inventory. On the weekend immediately preceding the Closing
Date, Seller shall temporarily halt the use of pharmaceutical products to be used by Seller in the
Clinical Trials, in order to allow Seller to conduct a review of those of its locations at which
pharmaceutical products used by Seller in the Clinical Trials are located in order to determine the
exact quantities of Clinical Trials Inventory that will be transferred to Buyer hereunder, and
Seller shall provide Buyer with an itemized list of the Clinical Trials Inventory the next Business
Day.




     Section 2.2. Excluded Assets.



               (a) Excluded Assets. The Parties acknowledge and agree that Seller is not selling,
conveying, transferring, delivering, assigning any rights whatsoever to the Excluded Assets to
Buyer, and Buyer is not purchasing, taking delivery of or acquiring any rights whatsoever to the
Excluded Assets from Seller.



               (b) Excluded Intellectual Property. Buyer expressly acknowledges it is not acquiring
any rights whatsoever to the Excluded Intellectual Property, including the “InterMune” name or any
variations and derivatives thereof and any other logos or trademarks of Seller not included in the
Product Intellectual Property, or the Other Intellectual Property, other than the



-13-









 







limited rights to use the Seller Marks for the limited transition period pursuant to the
provisions of Section 8.4 and other than as specifically provided in Section 8.18.



     Section 2.3. Assumed Liabilities. As of the Effective Time, Buyer shall assume and
agree to pay, perform or otherwise discharge, in accordance with their respective terms and subject
to the respective conditions thereof, only the following Liabilities (collectively, the
“Assumed Liabilities”):



               (a) Any Liability arising after the Effective Time under any Contract listed on Schedule
2.3(a) (other than any Liability arising out of or relating to a breach of such Contract which
occurred prior to the Effective Time);



               (b) Any Liability arising after the Effective Time under any Contract which was entered into
by Seller after the Execution Date in accordance with the provisions of Section 5.2 (other
than any Liability arising out of or relating to a breach of such Contract which occurred prior to
the Effective Time); and



               (c) Any other Liability specifically set forth on Schedule 2.3(c) hereto.


For avoidance of doubt, nothing in this Section 2.3 is intended to, or shall be interpreted to,
limit or otherwise reduce the Liabilities of Buyer as they may occur and/or exist after the
Effective Time solely by virtue of Buyer’s ownership of the Purchased Assets or operation of the
Product Business, but rather, this Section 2.3 is solely intended to identify and provide for the
assumption by Buyer of those Liabilities of Seller that are specifically assumed by Buyer hereunder
and which, but for such assumption, would remain Liabilities of Seller.




     Section 2.4. Excluded Liabilities.



               (a) The Parties hereby acknowledge and agree that, other than the Assumed Liabilities, Buyer
shall not be responsible for, assume, or be obligated to pay, perform or otherwise discharge any
Liabilities of Seller, whether or not related to the Product Business, including any Excluded
Liabilities as set forth on Schedule 2.4(a). The Parties acknowledge that in no event
shall the foregoing sentence be construed to limit Buyer’s obligations under Article IX.



               (b) The Parties hereby acknowledge and agree Seller shall not be responsible for, assume, or
be obligated to pay, perform or otherwise discharge any obligations or liabilities of Buyer. The
Parties acknowledge that in no event shall the foregoing sentence be construed to limit Seller’s
obligations under Article IX.



     Section 2.5. Purchase Price and Inventory Cost. In addition to the assumption by
Buyer of the Assumed Liabilities pursuant to Section 2.3, Buyer will pay to Seller (x) the
payments set forth in Section 2.5(a) to 2.5(e) below for the Purchased Assets (the
“Purchase Price”), and (y) the Inventory Cost for the Inventory, as follows:



               (a) On the Closing Date, Buyer (or its Affiliates) will transfer to Seller in accordance with the
written instructions provided to Buyer by Seller, (i) One Hundred Thirteen



-14-









 




Million Five Hundred Thousand Dollars ($113,500,000) (the “Closing Payment”), plus (ii) the
Estimated Inventory Cost for the Inventory. Thereafter, the final Inventory Cost will be
determined and a final reconciliation payment with respect thereto will be made in accordance with
Section 8.2;




               (b) Buyer will transfer to Seller in accordance with the written instructions provided to
Buyer by Seller, a one time cash milestone payment of Five Million Dollars ($5,000,000) within five
(5) Business Days of the completion of the key tables and listings generated from the locked
clinical database following the last patient visit in the IRHC-001 Trial;



               (c) Buyer will transfer to Seller in accordance with the written instructions provided to
Buyer by Seller, a one time cash milestone payment of Ten Million Dollars ($10,000,000) within five
(5) Business Days of [***] of a [***] to the [***] of [***] in [***] with [***]; provided, however,
that if [***] has not [***], in lieu of such $10 million milestone payment, a one-time cash
milestone payment will be paid no later than January 15, 2010 as follows:




          (i) if, upon completion of the IRHC-001 Trial, the [***] in [***] [***] of the IRHC-001
Trial is [***] or [***]([***]%), Buyer will have no obligation to pay a milestone payment
pursuant to this Section 2.5(c);




          (ii) if, upon completion of the IRHC-001 Trial, the [***] the [***] of [***] of the
IRHC-001 Trial is [***] or [***] ([***]%) but [***] ([***]%), the cash milestone payment
will equal Five Million Dollars ($5,000,000);




          (iii) if, upon completion of the IRHC-001 Trial, the [***] the [***] of [***] of the
IRHC-001 Trial is [***] or [***] ([***]%) but [***] ([***]%), the cash milestone payment
will equal Ten Million Dollars ($10,000,000); and




          (iv) if, upon completion of the IRHC-001 Trial, [***] the [***] of [***] of the
IRHC-001 Trial is [***] or [***] ([***]%), the cash milestone payment will equal Fifteen
Million Dollars ($15,000,000).



               (d) Buyer will transfer to Seller in accordance with the written instructions provided to
Buyer by Seller, a one time cash milestone payment of Two Million Euros (€2,000,000) on January 15,
2007 in connection with the [***] of the [***].



     Section 2.6. Risk of Loss. Until the Effective Time, any loss of or damage to the
Purchased Assets, and Inventory from fire, flood, casualty or any other similar occurrence shall be
the sole responsibility of Seller. As of the Effective Time, title to the Purchased Assets, and
Inventory shall be transferred to Buyer. After the Effective Time, Buyer shall bear all risk of
loss associated with the Purchased Assets and Inventory and shall be solely responsible for



 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confident treatment
has been requested with requested with respect to the omitted portions.



-15-









 




procuring adequate insurance to protect the Purchased Assets and Inventory against any such loss.




ARTICLE III — REPRESENTATIONS AND WARRANTIES OF SELLER




     Seller represents and warrants to Buyer that the following representations and warranties are
true and correct as of the Execution Date and shall be reaffirmed at Closing pursuant to
Section 7.3(a), subject in each case to the attached disclosure schedules supplied by
Seller to Buyer and dated as of the date hereof (the “Seller Disclosure Schedule “) and
provided that each exception set forth in such Seller Disclosure Schedule shall be deemed to
qualify only such representation and warranty that is specifically identified (by cross reference
or otherwise) in any specific section of the Seller Disclosure Schedule.



     Section 3.1. Organization and Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. Seller has full
corporate power and corporate authority to execute and deliver this Agreement and the Ancillary
Agreements, and the transactions contemplated hereby and thereby, and effect the transactions
contemplated hereby and thereby and has duly authorized the execution, delivery and performance of
this Agreement and the Ancillary Agreements and transactions or documents contemplated thereby by
all necessary corporate action. Seller has all corporate power and corporate authority necessary
to own its assets and carry on the Product Business as currently being conducted by Seller. This
Agreement and the Ancillary Agreements are the valid and legally binding obligations of Seller,
enforceable against it in accordance with their terms, subject to applicable bankruptcy moratorium,
reorganization, insolvency and similar laws of general application relating to or affecting the
rights and remedies of creditors generally and to general equitable principles (regardless of
whether in equity or at law).



     Section 3.2. Title to Purchased Assets and Inventory. Seller has good and marketable
title to the Purchased Assets and Inventory free and clear of any Encumbrances, except for the
Permitted Encumbrances. Seller has not received any notice of any adverse claims of ownership to
or right to use the Purchased Assets or Inventory, and to Seller’s Knowledge, no facts or
circumstances exist which would provide a reasonable basis for any such adverse claim of ownership
or right to use any of the Purchased Assets or Inventory.



     Section 3.3. Consents; No Violations.



               (a) Except for the requisite filings under the HSR Act and the expiration or termination of
the waiting period thereunder, and except for all filings and other actions contemplated by this
Agreement and the Ancillary Agreements (including the necessary transfer of filings, notices and
approvals required to transfer the Regulatory Approvals from Seller to Buyer) (the
“Consents”), the execution, delivery and performance by Seller of this Agreement and the
Ancillary Agreements and the consummation by Seller of the transactions contemplated hereby and
thereby will not require any notice to, filing with, or the consent, approval or authorization of,
any Person or Governmental Authority.



               (b) Neither the execution and delivery of this Agreement or the Ancillary Agreements nor the
consummation of the transactions contemplated hereby or thereby will



-16-









 




(i) violate or result in a breach or result in the acceleration or termination of, or the
creation in any Third Party of the right to accelerate, terminate, modify or cancel, any Contract
listed on Section 3.7 of the Seller Disclosure Schedule, (ii) conflict with, violate or
result in a breach of any provision of the certificate of incorporation or by-laws of Seller, or
(iii) conflict with or violate in any material respect Applicable Law.




     Section 3.4. Regulatory Approvals.



               (a) Section 3.4(a) of the Seller Disclosure Schedule sets forth a complete and correct
list of all applications (including the BLA), new drug applications, abbreviated new drug
applications, new drug submissions and any comparable applications and submissions in the Territory
with respect to the Product. Seller has provided to Buyer complete and correct copies of the
Regulatory Approvals or Buyer has had access to such copies of the Regulatory Approvals. The
Regulatory Approvals are in full force and effect and have been duly and validly issued.



               (b) Seller has all Regulatory Approvals necessary for or used to carry on the Product Business
as being conducted by Seller as of the Execution Date and which are required by Applicable Law.



               (c) Seller is in compliance with all of the Regulatory Approvals listed on Section
3.4(a) of the Seller Disclosure Schedule, and, since the time Seller acquired its rights in the
Product, Seller has not received any notification, written or oral, from any Third Party with
respect to any alleged or possible violation with respect to any such Regulatory Approvals, and to
Seller’s Knowledge, there are no facts or circumstances that would form a reasonable basis for any
such violation.



     Section 3.5. Compliance with Laws and Litigation.



               (a) Except with respect to any matter relating to or arising from Regulatory Approvals (which
is addressed in Section 3.4), with respect to the Product Business, the Purchased Assets,
the Inventory and the Assumed Liabilities, Seller is in compliance with all Applicable Law, except
where such noncompliance would not reasonably be expected to have a Material Adverse Effect.



               (b) There are no lawsuits, claims or any civil, administrative or criminal actions, suits, or
proceedings or governmental investigations, including any action or investigation by the U.S.
Department of Justice, Office of the Inspector General, or any Governmental Authority, existing,
pending, or to the Knowledge of Seller, threatened, with respect to the Product Business, the
Purchased Assets or the Assumed Liabilities or with respect to this Agreement or the transactions
contemplated hereby. Seller is not subject to any decree or order of any Governmental Authority
that would reasonably be expected to impair or delay its ability to perform its obligations under
this Agreement.



     Section 3.6. No Material Adverse Change.



               (a) Since January 1, 2005, there has not been any Material Adverse Change and no event has
occurred or circumstance exists that would reasonably be expected to result in such a Material
Adverse Change.



-17-









 





               (b) Since January 1, 2005, Seller has, consistent with the conduct of the Product Business
during the two (2) years prior to the Execution Date: (i) continued and conducted the Product
Business in Seller’s ordinary and usual course of business, and (ii) maintained its relationships
with suppliers, distributors, customers and others having material business relationships with
Seller related to the Product Business.



     Section 3.7. Contracts.



               (a) Section 3.7 of the Seller Disclosure Schedule sets forth a complete and correct
list of each of the Contracts (i) which involve payments totaling $50,000 or more, or (ii) which
are otherwise material to the Product Business. Such Contracts are all of the Contracts necessary
to conduct the Product Business. Seller has delivered to or made available to Buyer true and
complete copies of all such Contracts and any other contracts or agreements identified in
Section 3.7 of the Seller Disclosure Schedule. All such Contracts to which Seller is a
party are, as to Seller (and, as to the other parties thereto, to the Knowledge of Seller), legal,
valid and binding agreements in full force and effect and enforceable in accordance with its terms
(subject to applicable bankruptcy moratorium, reorganization, insolvency and similar laws of
general application relating to or affecting the rights and remedies of creditors generally and to
general equitable principles (regardless of whether in equity or at law)).



               (b) Seller is not in material breach or default, and no event has occurred that with notice or
lapse of time would constitute a material breach or default by Seller permitting termination,
modification, or acceleration, under any Contract set forth on Section 3.7 of the Seller
Disclosure Schedule. To the Knowledge of Seller, no other party to any Contract is in material
breach or default under, or has repudiated any material provision of, any Contract set forth on
Section 3.7 of the Seller Disclosure Schedule.



               (c) The Amgen Agreements are all of the Contracts between Seller and Amgen that pertain to the
Product.



     Section 3.8. Inventory and Returns.



               (a) Section 3.8(a) of the Seller Disclosure Schedule sets forth a complete and correct
list of Seller’s Inventory as of November 4, 2005. The Inventory consists of finished goods usable
and salable by Seller in the ordinary course of business. The Inventory has been produced or
manufactured in accordance with all Applicable Law and Product Registrations.



               (b) Since January 1, 2005, other than entering into the Contracts with specialty pharmacies
for the direct sales by Seller to such pharmacies of Infergen and entering into distribution
Contracts or amendments to existing distribution Contracts with two wholesalers, Seller has not (i)
materially altered its distribution practices or terms with respect to Infergen, or (ii) materially
altered its activities and practices with respect to inventory levels of Infergen maintained at the
wholesale, chain, institutional or retail levels in any material respect.



               (c) As of the Closing Date, the aggregate dollar value of the inventory of Infergen (the
“Aggregate Inventory Value”) maintained by (a) Cardinal Health, McKesson, and AmeriSource
Bergen (collectively, “Seller’s Principal Wholesalers”), and (b) the specialty pharmacies
with which Seller has a contractual relationship, will not exceed the Maximum



-18-









 




Inventory Amount. For purposes hereof, (i) the “Aggregate Inventory Value” shall be
calculated by multiplying the number of units of inventory of Infergen maintained by Seller’s
Principal Wholesalers and the specialty pharmacies as of the Closing Date by the wholesale
acquisition cost (“WAC”) for such units as of the Closing Date, and (ii) the “Maximum
Inventory Amount” shall mean the amount equal to: (x) the weekly average of the aggregate number of
units of each SKU shipped by all of Seller’s Principal Wholesalers in the previous
[***]([***])[***] multiplied by (y) [***] ([***]) [***], multiplied by (z) the WAC for each unit.




               (d) Section 3.8(d) of the Seller Disclosure Schedule sets forth, on a [***] basis, the
returns of Infergen for [***] ([***]) [***].



     Section 3.9. Tax Matters. There are no Encumbrances on any of the Purchased Assets
or the Inventory that arose in connection with any failure (or alleged failure) to pay any Tax, and
Seller has no Knowledge of any basis for assertion of any claims attributable to Taxes which, if
adversely determined, would reasonably be expected to result in any such Encumbrance.



     Section 3.10. Intellectual Property.



               (a) Seller is the owner, licensee or sub licensee (as applicable), free and clear of any
Encumbrance, except for the Permitted Encumbrances, of all right, title and interest in and to the
Product Intellectual Property.



               (b) Sections 3.10(b)(i)-(iv) of the Seller Disclosure Schedule set forth a true and
complete list of the Intellectual Property owned, licensed or controlled by Seller covering the
Product Business.



               (c) The activities of Seller, if any, relating to the development, manufacture, marketing,
use, sale, distribution, import, export or other commercial exploitation of Infergen by Seller, in
each case in connection with the operation of the Product Business, do not infringe upon,
misappropriate, violate, dilute (with respect to any trademarks, trade names, brand names and
service marks) or otherwise constitute the unauthorized use of, the Intellectual Property rights of
any third party; (ii) no claim is pending or, to the Knowledge of Seller, threatened against Seller
alleging any of the foregoing; and (iii) to the Knowledge of Seller, no right, license, lease,
consent or other agreement is required with respect to any Product Intellectual Property for the
conduct of the Product Business other than those included in the Purchased Assets.



               (d) To the actual knowledge of an executive officer or director of Seller, or a key employee
of Seller directly involved on behalf of Seller in the transactions contemplated herein (the
“Actual Knowledge of Seller”), none of the Product Patents is involved in any litigation, reissue,
interference, reexamination, or opposition, and there has been no threat or other indication that
any such proceeding will hereafter be commenced. To the Actual Knowledge of Seller, the Product
Patents (excluding patent applications) (i) are in good standing,





 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.






-19-









 




(ii) are all without challenge of any kind, (iii) are valid and enforceable, and (iv) have not
been adjudged invalid or unenforceable in whole or in part.




               (e) To the Actual Knowledge of Seller, none of the Product Trademarks, Product Copyrights or
Product Domains or registrations or applications to use or register such items are involved in any
cancellation, nullification, interference, conflict, concurrent use or opposition proceeding, and
there has been no threat or other indication that any such proceeding will hereafter be commenced.



               (f) No legal proceedings are pending, or to the Actual Knowledge of Seller are threatened,
against Seller (i) based upon, challenging or seeking to deny or restrict the use of any of the
Product Intellectual Property, (ii) alleging that any services provided by, processes used by, or
products manufactured or sold or to be manufactured or sold by Seller in relation to the Product
Business infringe or misappropriate any Intellectual Property right of any third party, or (iii)
alleging that the Amgen License Rights conflict with the terms of any third party license or other
agreement.



               (g) To the Actual Knowledge of Seller, all maintenance fees, annuity fees or renewal fee
payment for each jurisdiction in which each patent, patent application, trademark, trademark
application, trade name, trade name registration, brand name, brand name registration, service
mark, service mark registration, copyright, copyright application, domain name or domain name
application included within the Product Intellectual Property has issued or is pending have been
timely paid.



               (h) To the Knowledge of Seller, no third party is engaging in any activity that infringes or
misappropriates the Product Intellectual Property. Seller is not a party to any agreement granting
rights by Seller to any third party with respect to the Product Intellectual Property.



               (i) Seller has, with respect to the Product Business, used commercially reasonable efforts to
maintain its trade secrets in confidence.



               (j) To the Knowledge of Seller, there has been no misappropriation of any trade secrets or
other confidential information of Seller with respect to the Product Business.



               (k) All employees of, consultants to or vendors of Seller with access to confidential
information with respect to the Product Business are parties to written agreements under which each
such employee, consultant or vendor is obligated to maintain the confidentiality of confidential
information of Seller. To the Knowledge of Seller, none of the employees, consultants or vendors
of Seller or any of its subsidiaries is in violation of such agreements.



               (l) The execution, delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in or give rise to any right of termination or
other right to impair or limit, or otherwise result in a breach of, any of Seller’s rights to own
or retain a license to any of the Product Intellectual Property.





-20-









 






     Section 3.11. Product Records. All of the Product Records have been made available by Seller to Buyer for
examination, are complete and correct in all material respects and have been maintained in
accordance with sound business practices.



     Section 3.12. Brokers, Finders, etc. Seller has not employed any broker, finder,
consultant or other intermediary in connection with the transactions contemplated by this Agreement
and the Ancillary Agreements who would have a valid claim for a fee or commission from Buyer in
connection with such transactions by reason of any action taken by or on behalf of Seller.



     Section 3.13. Financial Statements.



          (a) Each form, report, schedule and document required to be filed by Seller under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) since January 1, 2003
(collectively, the “Seller SEC Filings” and individually, a “Seller SEC Filing”), solely
with respect to the Product Business, (i) did, as of its date, comply in all material respects with
the requirements of the Exchange Act and (ii) did not, at the time it was filed, contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.




          (b) Each of the consolidated financial statements (including in each case, any notes thereto)
contained in any Seller SEC Filing, solely to the extent each relates to the Product Business, (i)
was prepared in accordance with GAAP applied (except as may be indicated in the notes thereto and,
in the case of unaudited quarterly financial statements, as permitted by Form 10-Q under the
Exchange Act) on a consistent basis throughout the periods indicated, and (ii) presented fairly the
consolidated financial position, results of operations and cash flows of Seller as of the
respective dates thereof and for the respective periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which did not result in a
Material Adverse Effect).




     Section 3.14. Insurance.



          (a) Seller maintains, and shall continue to maintain at its sole cost and expense on an
uninterrupted basis for a period of at least [***] following the Effective Time, product liability
and other insurance on a primary and non-contributory basis for itself in amounts, respectively,
which are reasonable and customary in the United States consumer healthcare industry for companies
of comparable size and activities at the place of business of Seller, provided that the product
liability insurance amounts are not, and shall not at any time be allowed to be, less than
[***]($[***]) per occurrence (or per claim) and [***]($[***]) in the aggregate limit of liability
per year. Such insurance insures against, and at all times shall insure against, all liability,
including personal injury, product liability, physical injury, clinical development liabilities,
and property damage arising out of the development, manufacture, sale, distribution, or marketing
of the Product.




          (b) There are no material claims currently made against any of the insurance policies of Seller
relating to the Product Business, no material impairment of the amounts of






 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.



-21-











 









coverage required thereunder, and Seller has no Knowledge of any reasonable basis for any such
claims.




     Section 3.15. Sufficiency. The Purchased Assets together with the Assumed
Liabilities, the Inventory, and Buyer’s rights under this Agreement, and the other Ancillary
Agreements, constitute all of the material assets that are necessary for Buyer to operate the
Product Business as of and after the Closing in a substantially similar manner as the Product
Business was operated by Seller for the two (2) years prior to the Effective Time; provided,
however, for the avoidance of doubt, such representation and warranty shall exclude any and all
assets and capabilities that a comparable company in the global pharmaceutical business should
customarily be capable of providing in connection with the operation of a business such as the
Product Business, including internal and external infrastructure, manufacturing equipment and
facilities, business permits and licenses, professional services, trade and distribution networks,
personnel, facilities, factories and other property, promotional and brand strategies, and
financing.



     Section 3.16. Government Multi-Product Contracts.



          (a) Seller is not a party to any managed care contracts or other sales contracts pursuant to
which Seller is required to provide or honor discounts, rebates, charge backs, or similar price
breaks in connection with selling Infergen.




          (b) Seller has made available to Buyer copies of all Government Multi-Product Contracts;
provided that such copies may have been redacted to prevent disclosure of information not related
to Infergen. After the Effective Time, Buyer shall honor and perform all Liabilities of Seller
arising after the Effective Time under and pursuant to each Government Multi-Product Contract
(other than any Liability arising out of or relating to a breach of such Government Multi-Product
Contract which occurred prior to the Effective Time) with respect to supplying Infergen to the
applicable party pursuant to such Government Multi-Product Contract until such time as Seller has
terminated each such Government Multi-Product Contract as provided below. Seller agrees that after
the Effective Time it will not take any action with respect to any Government Multi-Product
Contract that would extend the term of such Government Multi-Product contract with respect to
Infergen, create or agree to any additional obligations with respect to Infergen, or otherwise
adversely affect Buyer or the Product Business, without the prior written consent of Buyer,
although Seller may enter into a separate agreement with such government party, provided that such
agreements do not contain any provisions relating to Infergen or the Product Business. Seller
further agrees that Seller shall terminate the rights and obligations of Seller with respect to the
Product under each such Government Multi-Product Contract, to the extent permitted by the terms
thereof, as soon as practicable after the Effective Time.




     Section 3.17. Regulatory Compliance. To the extent applicable to Infergen in the
Territory:



          (a) To the Knowledge of Seller, Infergen has been developed, labeled, stored, tested and
distributed in compliance with all applicable requirements under the Federal Food Drug and Cosmetic
Act 21 U.S.C. §§301 et. seq., its implementing regulations, and all similar Applicable Laws,
including those relating to investigational use, premarket clearance and





-22-









 







applications or abbreviated applications to market a new product, except for noncompliance
which, individually or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.




          (b) All preclinical trials and clinical trials conducted by or, to the Knowledge of Seller, on
behalf of Seller with respect to Infergen have been, and are being, conducted in compliance with
the applicable requirements of Good Laboratory Practice and Good Clinical Practice requirements
contained in 21 C.F.R. Part 58 and Part 312 and all applicable requirements relating to protection
of human subjects contained in 21 C.F.R. Parts 50, 54, and 56, and all similar Applicable Laws,
except for noncompliance which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.




          (c) To the Knowledge of Seller, with respect to Infergen (i) all manufacturing operations
conducted for the benefit of Seller have been and are being conducted in compliance with the FDA’s
current Good Manufacturing Practice regulations for drug products, including 21 C.F.R. Parts 210
and 211, and all similar Applicable Laws, except for noncompliance which, individually or in the
aggregate, would not have, or be reasonably likely to have, a Material Adverse Effect; and (ii)
Seller is in compliance with all registration and listing requirements set forth in 21 U.S.C. §360
and 21 C.F.R. Part 207, and all similar Applicable Laws, except for noncompliance which,
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.




          (d) Since the date of acquisition of Infergen (or rights thereto) by Seller, Infergen has not
been recalled, suspended or discontinued as a result of any action by the FDA or any other foreign
Governmental Authority within the Territory, by Seller or by any licensee, distributor or marketer
of Infergen, in the United States or, to the Knowledge of Seller, outside of the United States and
within the Territory.




          (e) Seller has not received any notice that the FDA or any other Governmental Authority has
commenced, or threatened to initiate, any action to withdraw approval or request the recall of
Infergen, or commenced, or threatened to initiate, any action to enjoin or place restrictions on
the production of Infergen.




          (f) To the Knowledge of Seller, there are no facts, circumstances or conditions that would be
sufficient to presently, or solely with the passage of time in the ordinary course of business,
provide a reasonable basis for a recall, suspension or discontinuance of Infergen.




          (g) With respect to any new drug application, investigational new drug application or similar
state or foreign regulatory application with respect to Infergen, Seller is in compliance with 21
U.S.C. §§355 or 21 C.F.R. Parts 312 or 314, respectively (and all similar Applicable Laws), and all
terms and conditions of such licenses or applications, except for any such failure or failures to
be in compliance which individually or in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect. As to Infergen, Seller and its officers, employees or
agents have included in each applicable application, where required, the certification described in
21 U.S.C. § 335a(k)(l) and each such certification was true, complete and correct in all material
respects when made.




-23-









 








          (h) With respect to Infergen or the Product Business, Seller has not committed any act, made
any statement or failed to make any statement that would reasonably be expected to provide a basis
for the FDA to invoke its policy with respect to “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any
amendments thereto. Additionally, none of Seller or any of its officers, key employees or agents
have been convicted of any crime or engaged in any conduct that has resulted, or would reasonably
be expected to result, in debarment under 21 U.S.C. Section 335a or any similar state law or
regulation under 42 U.S.C. Section 1320a-7.




          (i) Seller has delivered to Buyer or made available to Buyer copies of all adverse experience
reports received by Seller with respect to Infergen.




          (j) Section 3.17(j) of the Seller Disclosure Schedule sets forth a true and correct
list of all IST Trials conducted by or on behalf of Seller as of the date hereof.




          (k) Seller has not received any notice from the U.S. Department of Justice, the Office of the
Inspector General or any other Governmental Authority that such Governmental Authority has
commenced, threatened or intends to commence any action or investigation with respect to the
Product Business, and there are no facts, circumstances or conditions that would be sufficient to
presently, or solely with the passage of time in the ordinary course of business, provide a
reasonable basis for any such action or investigation.




     Section 3.18. Product Registrations.



          (a) Section 3.4(a) of the Seller Disclosure Schedule sets forth a complete and correct
list of all applications (including the BLA), new drug applications, abbreviated new drug
applications, new drug submissions and any comparable applications and submissions in the Territory
with respect to Infergen. Seller owns the Product Registrations and no other party has any rights
thereto. The FDA approval for Infergen is in good standing, has not been revoked, rescinded,
amended or modified, and to Seller’s Knowledge, no event has occurred or notification been received
by Seller from the FDA, a notified body or any other party that would materially adversely affect
or otherwise jeopardize the FDA approval status of Infergen. To the Knowledge of Seller, no
applications made or other materials submitted by Seller to the FDA or a notified body with respect
to Infergen contained an untrue statement of material fact when submitted, or omitted to state a
material fact within Seller’s Knowledge when submitted which was required to be stated therein or
necessary in order to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.




          (b) The Product Registration files of Seller have been maintained in accordance with
reasonable industry standards. Seller has in its possession or control, or has access to, copies
of all the material documentation filed in connection with filings made by Seller for regulatory
approval or registration of Infergen, including the complete regulatory chronology for each Product
Registration (if applicable).




          (c) Seller has not received any Paragraph IV Notification under U.S.C. 355(j)(2)(B) relative
to any patents listed in any Product Registration held by Seller. In addition,






-24-









 







Seller has not received any notice regarding, and otherwise has no Knowledge of, any plans by
any third party to file product registration relative to Product Registration held by Seller.




     Section 3.19. No Other Warranties. Except as expressly provided in this Agreement
and the Ancillary Agreements, Seller does not make any representation or warranty about the
Product, the Purchased Assets, the Inventory, the Clinical Trial Inventory, the Other Intellectual
Property, the Assumed Liabilities or the Product Business, whatsoever. WITHOUT LIMITING THE
FOREGOING, BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE
ANCILLARY AGREEMENTS, (A) THE PURCHASED ASSETS, INVENTORY, CLINICAL TRIAL INVENTORY AND OTHER
INTELLECTUAL PROPERTY, ARE BEING TRANSFERRED “AS IS”, (B) SELLER MAKES NO REPRESENTATION OR
WARRANTY OF ANY KIND OR AS BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND (C) SELLER
SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, WARRANT OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF NONINFRINGEMENT.



     Section 3.20. Adequacy of Disclosure. To the Knowledge of Seller, there are no
material facts that have specific application to the Product Business, the Purchased Assets, the
Inventory, or the Assumed Liabilities that would reasonably be expected to have a Material Adverse
Effect that have not been set forth in this Agreement or the Seller Disclosure Schedules.



ARTICLE IV —




REPRESENTATIONS AND WARRANTIES OF BUYER




     Buyer represents and warrants to Seller that the following representations and warranties are
true and correct as of the Execution Date to be reaffirmed at Closing pursuant to Section
7.4(a), subject in each case to the attached Schedules of Buyer and provided that each
exception set forth in such Schedules shall be deemed to qualify only such representation and
warranty that is specifically identified (by cross reference or otherwise) in any specific
schedule.



     Section 4.1. Organization and Authority. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. Buyer has full
corporate power and corporate authority to execute and deliver this Agreement and the Ancillary
Agreements, and the transactions contemplated hereby and thereby, and effect the transactions
contemplated hereby and thereby and has duly authorized the execution, delivery and performance of
this Agreement and the Ancillary Agreements and transactions or documents contemplated thereby by
all necessary corporate action. Buyer has all corporate power and corporate authority necessary to
carry on its business as is currently being conducted. This Agreement and the Ancillary Agreements
are the valid and legally binding obligations of Buyer, enforceable against it in accordance with
their terms, subject to applicable bankruptcy moratorium, reorganization, insolvency and similar
laws of general application relating to or affecting the rights and remedies of creditors generally
and to general equitable principles (regardless of whether in equity or at law).



-25-









 





     Section 4.2. Consents; No Violations.



          (a) Except for the requisite filings under the HSR Act and the expiration or termination of
the waiting period thereunder, and except for all filings and other actions contemplated by this
Agreement and the Ancillary Agreements (including the necessary transfer of filings, notices and
approvals required to transfer the Regulatory Approvals from Seller to Buyer), the execution,
delivery and performance by Buyer of this Agreement and the Ancillary Agreements and the
consummation by Buyer of the transactions contemplated hereby and thereby will not require any
notice to, filing with, or the consent, approval or authorization of, any Person or Governmental
Authority.




          (b) Neither the execution and delivery of this Agreement or the Ancillary Agreements nor the
consummation of the transactions contemplated hereby or thereby will (i) violate or result in a
breach or result in the acceleration or termination of, or the creation in any Third Party of the
right to accelerate, terminate, modify or cancel, any indenture, contract, lease, sublease, loan
agreement, note or other obligation or liability to which Buyer is a party or is bound, (ii)
conflict with, violate or result in a breach of any provision of the articles of incorporation or
by-laws of Buyer, or (iii) conflict with or violate in any material respect Applicable Law.




     Section 4.3. Brokers, Finders, etc. Buyer and its Affiliates have not employed any
broker, finder, consultant or other intermediary in connection with the transactions contemplated
by this Agreement and the Ancillary Agreements who would have a valid claim for a fee or commission
from Seller in connection with such transactions by reason of any action taken by or on behalf of
Buyer.



     Section 4.4. Financing. Buyer will have funds sufficient to pay the Purchase Price
and the Estimated Inventory Cost on the dates that such payments are due under this Agreement.



     Section 4.5. Litigation. There are no lawsuits, claims or any civil, administrative
or criminal actions, suits, or proceedings or governmental investigations existing, pending, or to
the Knowledge of Buyer, threatened, with respect to this Agreement or the transactions contemplated
hereby. Buyer is not subject to any decree or order of any Governmental Authority that would
impair or delay its ability to perform its obligations under this Agreement or the Ancillary
Agreements.



ARTICLE V — COVENANTS OF SELLER PRIOR TO CLOSING




     Section 5.1. Access to Information. Between the Execution Date and the Effective
Time, Seller shall, subject to any Applicable Law, (i) afford Buyer and its representatives access,
during regular business hours and upon reasonable agreed upon times, to Seller’s personnel,
properties, Contracts, Regulatory Approvals, the Product Records and all other information and
materials pertaining to the Product Business (with the ability to photocopy such materials),
provided that such access shall not unreasonably interfere with Seller’s business and operations;
and (ii) otherwise cooperate with and assist Buyer in its review and assessment of the Product and
the Product Business.



-26-









 





     Section 5.2. Conduct of the Product Business.



          (a) Between the Execution Date and the Effective Time, except as otherwise set forth on
Schedule 5.2 or as contemplated by this Agreement or consented to in writing by the Buyer,
Seller shall, consistent with its conduct of the Product Business during the twelve (12) months
prior to the Execution Date: (i) continue and conduct the Product Business in Seller’s ordinary and
usual course of business, (ii) preserve intact the market for Infergen and the goodwill associated
with Infergen and the Product Intellectual Property, (iii) preserve in full force and effect all
material Contracts, and (iv) continue to maintain its relationships with suppliers, distributors,
customers and others having material business relationships with it related to the Product
Business.




          (b) Between the Execution Date and the Effective Time, Seller shall not (i) take any
affirmative action, or fail to take any reasonable action within its control, which would resonably
be expected to (A) cause Seller to violate Section 5.2(a), or (B) have a Material Adverse Effect;
(ii) make any modifications to any material Contract; or (iii) allow the levels of raw materials,
supplies, or other materials instrumental in the manufacture of Infergen or the Inventory to vary
materially from the levels thereof customarily maintained.




     Section 5.3. Required Approvals and Consents. As soon as practicable after the
Execution Date, Seller shall make all filings required to be made in order to consummate the
transactions contemplated herein, including all filings under the HSR Act in accordance with
Section 8.1. Seller shall also cooperate with Buyer with respect to all filings that Buyer elects
to make. Seller shall use its commercially reasonable efforts to obtain all required Third Party
Consents, including all Material Consents required to effect the assignment of the Contracts to
Buyer.



     Section 5.4. Notice of Default. Between the Execution Date and the Effective Time,
Seller shall promptly notify Buyer in writing if Seller becomes aware of any fact or condition that
constitutes, or could reasonably be expected to cause, a breach of a representation, warranty or
covenant of Seller under this Agreement. Any such notice or disclosure shall not be deemed to
amend or supplement Seller’s disclosure under Article III or any schedule hereto, or to
correct or cure any misrepresentation, breach of warranty or breach of covenant.



     Section 5.5. No Negotiation. Between the Execution Date and the Effective Time,
Seller shall not directly or indirectly solicit, initiate, encourage or entertain any inquiries or
proposals, discuss or negotiate with, provide any information to, or consider the merits of any
inquiries or proposals from any Person (other than Buyer) relating to any transaction involving, in
whole or in part, the Product Business or the Product, or that would otherwise compromise Seller’s
ability to consummate the transactions contemplated in this Agreement and the Ancillary Agreements.
Seller shall immediately notify Buyer in the event Seller receives any inquiries regarding any such
transactions.



     Section 5.6. Reasonable Best Efforts. Seller shall use its reasonable best efforts
to cause the conditions in Section 7.2 and 7.3 to be satisfied.



     Section 5.7. Transition Activities.



-27-









 





          (a) Between the Execution Date and the Effective Time, Seller shall promptly furnish Buyer
with such reasonable sample quantities of any Promotional Materials that Seller may have utilized
in connection with the Product Business during the twelve (12) month period prior to the Execution
Date, for use by Buyer in preparing its own Promotional Materials. In that regard, Seller shall
and hereby does grant Buyer a non-exclusive, non-transferable, non-sublicensable, royalty free,
paid-up license in the Territory to use Seller’s Promotional Materials in connection with creating
Buyer’s Promotional Materials. All costs and expenses incurred by Buyer with respect to creating
its own Promotional Materials shall be borne by Buyer.




          (b) No later than five (5) Business Days prior to Closing, the Parties shall enter into a
Transition Services Agreement, to be effective immediately after the Effective Time, substantially
in the form attached hereto as Exhibit 5.7 providing for the services specified therein pursuant to
which Seller shall perform certain transitional services for Buyer in accordance with the terms
thereof.




     Section 5.8. Notice of Government Investigations. Between the Execution Date and the
Effective Time, Seller shall promptly notify Buyer in writing if Seller has received any notice
from the U.S. Department of Justice, the Office of the Inspector General or any other Governmental
Authority that such Governmental Authority has commenced, threatened or intends to commence any
action or investigation with respect to the Product Business.



ARTICLE VI — COVENANTS OF BUYER PRIOR TO CLOSING




     Section 6.1. Required Approvals and Consents. As soon as practicable after the
Execution Date, Buyer shall make all filings required to be made in order to consummate the
transactions contemplated herein, including all filings under the HSR Act in accordance with
Section 8.1. Buyer shall also cooperate with Seller with respect to all filings that Seller is
required to make.



     Section 6.2. Notice of Default. Between the Execution Date and the Effective Time,
Buyer shall promptly notify Seller in writing if Buyer becomes aware of any fact or condition that
constitutes, or could reasonably be expected to cause, a breach of a representation, warranty or
covenant of Buyer under this Agreement. Any such notice or disclosure shall not be deemed to amend
or supplement Seller’s disclosure under Article IV or any schedule hereto, or to correct or
cure any misrepresentation, breach of warranty or breach of covenant.



     Section 6.3. Reasonable Best Efforts. Buyer shall use its reasonable best efforts to
cause the conditions in Section 7.2 and 7.4 to be satisfied.



ARTICLE VII — CLOSING AND TERMINATION




     Section 7.1. Closing. The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place commencing at 10:00 a.m., Pacific Standard Time, on the
later of (i) December 30, 2005, or (ii) the date that is two (2) Business Days following the
termination of the applicable waiting period under the HSR Act, unless another time or date is
agreed to by the Parties (the “Closing Date”). The Closing shall be deemed to have
occurred at 11:59 PM (EST) on the Closing Date (the “Effective Time”.)



-28-









 





     Section 7.2. Conditions Precedent to Obligations of Buyer and Seller. The respective
obligations of Buyer and Seller to consummate the transactions contemplated by this Agreement on
the Closing Date are subject to the satisfaction or waiver at or prior to the Closing Date of the
following condition:



          (a) Litigation. No preliminary or permanent injunction or other order shall have been
issued by any court or by any governmental or regulatory agency, body or authority which enjoins,
restrains, prohibits or makes illegal pursuant to Applicable Law the transactions contemplated by
this Agreement on the Closing Date; and




          (b) HSR Clearance. Any waiting period (and any extension thereof) under the HSR Act
applicable to the transactions contemplated by this Agreement shall have expired or been
terminated.




     Section 7.3. Conditions Precedent to Buyer’s Obligations. Buyer’s obligations to
consummate the transactions contemplated by this Agreement and the Ancillary Agreements shall be
subject to the fulfillment of each of the following additional conditions, any one or more of which
may be waived, at Buyer’s sole discretion, in writing by the Buyer:



          (a) Representations and Warranties. The representations and warranties of Seller
contained in Article III that are qualified as to materiality shall be true and correct as of the
Execution Date and as of the Effective Time, and the representations and warranties of Seller
contained in Article III that are not qualified as to materiality, shall be true and correct in all
material respects as of the Execution Date and as of the Effective Time.




          (b) Performance. Seller shall have performed and complied in all material respects
with each of the covenants, agreements and obligations Seller is required to perform under this
Agreement on or before the Closing.




          (c) Material Consents. Each of the consents, including the Amgen Consent, listed on
Schedule 7.3(c) (the “Material Consents”) shall have been obtained and shall be in
full force and effect.




          (d) Audited Financial Statements. Seller shall have caused to be prepared and
delivered to Buyer on or before the Closing (i) an audited income statement, statement of cash
flow, and balance sheet for the Product Business as of and for the twelve months ended December 31,
2004 (the “2004 Audited Financials”) and (ii) an income statement, statement of cash flow
and balance sheet for the Product Business as of and for the nine months ended September 30, 2005
(the “2005 Stub Financials”).




          (e) No Material Adverse Change. At any time after the Execution Date, there has not
been any Material Adverse Change, and no event has occurred or circumstance exists that would
reasonably be expected to result in such a Material Adverse Change.




          (f) Closing Certificate. Seller shall have delivered to Buyer a certificate
(“Seller’s Closing Certificate”), dated as of the Closing Date and executed by a duly
elected, qualified and acting officer of Seller certifying:




-29-









 









     (i) attached thereto is a complete and correct copy of resolutions adopted by the board
of directors of Seller authorizing the execution, delivery and performance of this Agreement
and the Ancillary Agreements executed in connection herewith by Seller, and that such
resolutions, approvals and consents have not been amended or modified in any respect and
remain in full force and effect as of the date thereof (or, in the alternative, a statement
to the effect that no such board of directors approval is necessary regarding the execution,
delivery and performance of this Agreement and the Ancillary Agreements); and




     (ii) the due organization and good standing of Seller; and




     (iii) the conditions specified in Section 7.2 and this Section 7.3 have been
fulfilled.



          (g) Ancillary Agreements. Seller shall have duly executed and delivered to Buyer the
ancillary agreements listed on Schedule 7.3(g) in the form agreed by the Parties (together
with any additional Instruments of Transfer, the “Ancillary Agreements”).




     Section 7.4. Conditions Precedent to Seller’s Obligations. Seller’s obligation to
consummate the transactions contemplated hereby shall be subject to the fulfillment of each of the
following additional conditions, any one or more of which may be waived, at Seller’s sole
discretion, in writing by Seller:



          (a) Representations and Warranties. The representations and warranties of Buyer
contained in Article IV that are qualified as to materiality shall be true and correct as of the
Execution Date and as of the Effective Time, and the representations and warranties of Buyer
contained in Article IV that are not qualified as to materiality, shall be true and correct in all
material respects as of the Execution Date and as of the Effective Time.




          (b) Performance. Buyer shall have performed and complied in all material respects
with each of the covenants, agreements and obligations Buyer is required to perform under this
Agreement on or before the Closing.




          (c) Closing Certificate. Buyer shall have delivered to Seller a certificate
(“Buyer’s Closing Certificate”), dated as of the Closing Date and executed by a duly
elected, qualified and acting officer of Buyer certifying:





     (i) attached thereto is a complete and correct copy of resolutions adopted by the board
of directors of Buyer authorizing the execution, delivery and performance of this Agreement
and the Ancillary Agreements executed in connection herewith by Buyer, and that such
resolutions, approvals and consents have not been amended or modified in any respect and
remain in full force and effect as of the date thereof (or, in the alternative, a statement
to the effect that no such board of directors approval is necessary regarding the execution,
delivery and performance of this Agreement and the Ancillary Agreements); and




     (ii) the due organization and good standing of Buyer; and



-30-









 






     (iii) the conditions specified in Section 7.2 and this Section 7.4 have
been fulfilled.



          (d) Ancillary Agreements. Buyer shall have duly executed and delivered the Ancillary
Agreements to Seller.




     Section 7.5. Closing Deliveries.



          (a) At the Closing, Seller shall deliver or cause to be delivered to Buyer executed copies of
the following:





     (i) Executed copies of the bill of sale, assignment and assumption agreement with
respect to the Purchased Assets and the Inventory and Assumed Liabilities substantially in
the form attached hereto as Exhibit 7.5(a)(i) (the “Bill of Sale”);




     (ii) Executed copies of the intellectual property assignment documentation necessary to
transfer to Buyer the Product Intellectual Property, substantially in the form attached
hereto as Exhibit 7.5(a)(ii) (the “IP Assignments”);




     (iii) Executed copies of the Material Consents (including the Amgen Consent and the
Cardinal Health Acknowledgment);




     (iv) A copy of the 2004 Audited Financials and 2005 Stub Financials.




     (v) Executed copies of the Ancillary Agreements;




     (vi) Executed copies of any other Instruments of Transfer reasonably requested by
Buyer; and




     (vii) Executed copies of such other documents as may be reasonably necessary or
appropriate to consummate the transactions contemplated hereby.



          (b) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following:





     (i) The Closing Payment;




     (ii) The Estimated Inventory Cost;




     (iii) Executed copies of the Ancillary Agreements;




     (iv) Executed copies of any other Instruments of Transfer reasonably requested by
Seller;




     (v) To the extent required, executed copies of any of the Material Consents (including
the Amgen Consent); and




     (vi) Executed copies of such other documents as may be reasonably necessary or
appropriate to consummate the transactions contemplated hereby.



-31-









 





     Section 7.6. Termination. This Agreement may be terminated:



          (a) at any time before the Closing Date by mutual written consent of Buyer and Seller; or




          (b) by either Buyer or Seller, in writing, if the transactions contemplated hereby have not
been consummated on or before January 31, 2006 (as such date may be extended pursuant to
Section 7.1), provided that such failure is not due to the failure of the Party seeking to
terminate this Agreement to comply in all material respects with its obligations under this
Agreement, including the failure of the Party seeking to terminate this Agreement to satisfy its
closing conditions set forth in this Article VII; or




          (c) by Seller, in writing, if:





     (i) any of the conditions set forth in Section 7.2 or 7.4 has not been
satisfied as of the Closing Date, or shall become impossible to fulfill, other than for
reasons within the reasonable control of Seller, and such conditions shall not have been
waived by Seller (in its sole discretion); or




     (ii) a material breach of any provision of this Agreement has been committed by Buyer,
such breach has not been waived by Seller and such breach is not cured by Buyer within ten
(10) days after written notice thereof or, in the reasonable determination of Seller, is
incapable of being cured by Buyer; or



          (d) by Buyer, in writing, if:





     (i) any of the conditions set forth in Section 7.2 or 7.3 has not been
satisfied as of the Closing Date, or shall become impossible to fulfill, other than for
reasons within the reasonable control of the Buyer, and such conditions shall not have been
waived by Buyer (in its sole discretion); or




     (ii) a material breach of any provision of this Agreement has been committed by Seller,
such breach has not been waived by Buyer and such breach is not cured by Seller within ten
(10) days after written notice thereof or, in the reasonable determination of Buyer, is
incapable of being cured by Seller.



     Section 7.7. Procedure and Effect of Termination. Upon termination of this Agreement
by Seller or Buyer pursuant to Section 7.5, written notice thereof shall forthwith be
given to the other Party and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned without further action by any of the Parties. Termination of this
Agreement shall terminate all outstanding obligations and liabilities between the Parties arising
from this Agreement except those described in: (i) this Section 7.7, ARTICLE IX, and
Section 10.1; (ii) the Confidentiality Agreement; and (iii) any other provisions of this Agreement
which by their nature are intended to survive any such termination.



-32-









 





ARTICLE VIII — CERTAIN OTHER COVENANTS




     Section 8.1. HSR Filings. If required pursuant to Applicable Law, each of Seller and
Buyer undertakes and agrees to file as soon as practicable, and in any event no later than ten
(10) business days after the Execution Date, a Notification and Report Form under the HSR Act with
the United States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice. As deemed advisable, each of Seller and Buyer shall respond as promptly as
practicable to any inquiries or requests received from any Governmental Authority in the Territory
for additional information or documentation. Each Party shall (a) promptly notify the other Party
of any written communication to that Party or its Affiliates from any Governmental Authority and,
subject to Applicable Law, permit the other Party or the other Party’s counsel to review in advance
any proposed written communication to any of the foregoing; (b) not participate, or permit its
Affiliates to participate, in any substantive meeting or discussion with any Governmental Authority
in respect of any filings, investigation or inquiry concerning this Agreement unless it consults
with the other Party in advance and, to the extent permitted by such Governmental Authority in the
Territory, gives the other Party the opportunity to attend and participate thereat; and (c) with
the exception of business documents deemed confidential by the Buyer (including documents submitted
as attachments to each of the Buyer’s Notification and Report Form under the HSR Act), furnish
Seller with copies of all correspondence, filings, and communication (and memoranda setting forth
the substance thereof) between Buyer (its affiliates, and its respective representatives) on the
one hand, and any Governmental Authority or members of their respective staffs on the other hand,
with respect to this Agreement. Buyer and Seller shall share equally any required HSR Act filing
fees related to this transaction.



     Section 8.2. Inventory Cost Adjustment.



          (a) On the weekend immediately preceding the Closing Date, Seller shall temporarily halt all
shipments of Infergen in the Territory, in order to allow Seller to conduct a review of those of
its locations at which Inventory is located in order to derive a reasonably accurate estimate of
the quantities of Inventory that will be outstanding at such locations as of the Closing Date, and
Seller shall provide Buyer with such good faith written estimate (the “Estimated Inventory
Statement”) by Midnight (PST) of the next Business Day. Seller shall be entitled to resume
shipments of Infergen in the Territory starting on such next Business Day and continue such
shipments through the day immediately preceding the Closing Date.




          (b) Seller shall also deliver to Buyer, together with the Estimated Inventory Statement, a
good faith written estimate of the Inventory Cost (the “Estimated Inventory Cost”) as
determined pursuant to Schedule 8.2(b) (which details the per-unit Inventory purchase
price), and Buyer shall pay an amount equal to the Estimated Inventory Cost to Seller on the
Closing Date pursuant to the terms of this Agreement. Thereafter, the Inventory Cost shall be
finally determined as described below:





     (i) On the Closing Date, Seller shall deliver the Inventory to Buyer at the locations
set forth in the Inventory Statement (as such term is defined below).




     (ii) Within thirty (30) days after the Closing Date, Seller shall deliver a written
statement (the “Inventory Statement”) of the amount, location, lot and batch



-33-









 






numbers of the Inventory provided to Buyer on the Closing Date and Seller shall
calculate the actual cost of the Inventory (the “Inventory Cost”) provided to Buyer
on the Closing Date pursuant to Schedule 8.2(b) which details the per-unit Inventory
cost.




     (iii) If Buyer agrees with the Inventory Statement, it shall within thirty (30) days
after receipt thereof, so notify Seller; however, if Buyer disputes the amounts or Inventory
Cost (or the calculation thereof) reflected in the Inventory Statement, Buyer shall notify
Seller in writing of its dispute, setting forth in reasonable detail, the basis for such
dispute, within thirty (30) days after Seller’s delivery of the Inventory Statement to
Buyer. The Parties shall, for a period not to exceed one (1) week, negotiate in good faith
to resolve such dispute, and, in the event a resolution is not reached, within 2 Business
Days after the end of such one (1) week period Seller and Buyer shall submit the items
remaining in dispute for resolution to a mutually acceptable independent accounting firm of
international reputation for resolution by such firm within a one (1) week period. Such
accounting firm’s decision shall be binding upon the Parties and the resulting Inventory
Statement and Inventory Cost shall be final and binding upon the Parties. The Parties shall
equally split the reasonable fees and expenses of such accounting firm associated with the
resolution of such dispute.




     (iv) The Inventory Statement and the Inventory Cost shall be deemed final upon the
earlier of (A) Buyer’s notice to Seller that it accepts the Inventory Statement, (B) thirty
(30) days after delivery of the Inventory Statement if Buyer fails to notify Seller of a
dispute within thirty (30) days after Seller’s delivery of the Inventory Statement to Buyer
or (C) the resolution of any disputes as described in Section 8.2(c).




     (v) Within five (5) Business Days after the Inventory Statement and the Inventory Cost
are deemed final, a payment shall be made as follows:




     (A) In the event the amount of the final Inventory Cost reflected on the
Inventory Statement is less than the Estimated Inventory Cost, then Seller shall
remit payment of the amount equal to such difference to Buyer; or




     (B) In the event the amount of the final Inventory Cost reflected on the
Inventory Statement exceeds the Estimated Inventory Cost, then Buyer shall remit
payment of the amount equal to such difference to Seller.



          (c) Notwithstanding anything herein to the contrary, Buyer shall not be required to purchase
any Inventory in excess of the Inventory Cap. For avoidance of doubt, any Inventory (other than
the Clinical Trials Inventory) held by Seller at the Effective Time in excess of the Inventory Cap
shall constitute an Excluded Asset.




          (d) Seller shall not sell any Inventory in the Territory after the Effective Time, and Buyer
shall be entitled to sell the Inventory in the Territory as of and after the Effective Time.





-34-









 








Section 8.3. Product Returns, Rebates and Chargebacks.



          (a) Product Returns.




          (i) For a three (3) year period following the Closing, Seller shall be financially
responsible for all costs associated with any customer or wholesaler returns of expired,
damaged, defective, or other unsalable Infergen (“Product Returns”) for any Infergen
that was shipped on or before the Closing Date. Buyer shall be financially responsible for
all costs associated with any Product Returns of any Infergen shipped after the Closing
Date. Seller shall have delivered to Buyer at and as of the Closing Date a schedule
containing the lot number and units per lot of Infergen that were distributed by Seller
prior to Closing. Any Product Returns will be made in accordance with Buyer’s returned
goods policy at the time of such Product Return, unless otherwise mutually agreed by Buyer
and Seller. By agreeing to process the Product Returns for the benefit of Seller, Buyer
does not agree to assume any liability associated with such Product Returns, but is
providing a service as an accommodation to Seller and to minimize confusion on the part of
customers.




          (ii) Except as set forth herein, Buyer shall be responsible for processing all Product
Returns received after the Closing Date irrespective of when and by whom the returned
Infergen was shipped. Product Return processing shall include the destruction of all
returned Infergen by Buyer, or the customer, as applicable. Buyer agrees to only issue
return credits for Infergen shipped by Seller prior to the Closing Date at such time that
Buyer has received the returned Infergen from the customer, unless Seller agrees to waive
the customer return of Infergen.




          (iii) Each Party agrees it will not take, directly or indirectly, any action that would
provide any incentive or otherwise induce or motivate customers to return Infergen, except
as the parties may otherwise mutually agree.




          (b) Government Rebates.





          (i) Seller shall be responsible for all rebates pursuant to any government rebate
programs with respect to government claims for Infergen indicating Seller’s NDC numbers and
sold by Seller prior to the Effective Time including, but not limited to, rebates related to
Infergen dispensed within [***] ([***]) [***] following the Effective Date (the
“Government Rebate Tail Period”) (it being understood and agreed that the dispense
date contained in any report from a state rebate program shall be used for purposes of
determining the date of such claim).




          (ii) Buyer shall be responsible for all rebates pursuant to any government rebate
programs with respect to government claims for Infergen indicating Seller’s or Buyer’s NDC
numbers and sold subsequent to the Effective Time, excluding rebates relating to Infergen
dispensed during the Government Rebate Tail Period (it being understood and agreed that the
dispense date contained in any report from a state rebate program shall be used for purposes
of determining the date of such claim).





 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.





-35-









 





          (c) Commercial Rebates.





     (i) Seller shall be responsible for all commercial rebates with respect to Infergen
sold prior to the Effective Time. Notwithstanding the foregoing, Buyer and Seller agree
that (a) Seller’s financial liability for the commercial rebates during the period from the
Effective Time through [***] ([***]) [***] thereafter shall be limited to those commercial
customers with which Seller has a rebate obligation as of the Effective Time and (b) any
such payments by Seller shall be made on the terms and conditions comparable to Seller’s
rebate obligations as of the Effective Time with respect to each commercial customer and
shall be based on Seller’s terms of agreement with the respective contract, as such terms of
agreement existed as of the Effective Time. Seller shall utilize records from third party
rebate administrators to demonstrate which rebates relate to Infergen sold prior to the
Effective Time for purposes of determining Seller’s obligation.




     (ii) Any rebates for Infergen sold subsequent to the Effective Time will be the
liability of Buyer. To the extent that Seller processes such claims, Buyer shall reimburse
Seller within thirty (30) days of receipt of invoices that describe the requested payments
in reasonable detail.



          (d) Chargeback Claims.





     (i) Seller shall be financially responsible for all chargeback claims related to
Infergen sold prior to the Effective Time (the “Chargeback Claims”). Buyer shall
process and be financially liable for all Chargeback Claims related to Infergen sold
subsequent to the Effective Time. Notwithstanding the foregoing, the parties acknowledge
that the VA National Acquisition Center must approve the removal of Infergen from Seller’s
Federal Supply Schedule (“FSS”) before the responsibility of processing such rebates
is transferred from Seller to Buyer. Until such approval is obtained, Seller shall continue
to be responsible for processing the FSS chargebacks on Buyer’s behalf, and Buyer shall
reimburse Seller for same. Buyer and Seller agree that (i) Seller’s financial liability for
the Chargeback Claims shall be limited to those commercial customers with which Seller has
chargeback obligations as of the Effective Time, and (ii) any such chargebacks issued by
Seller shall be made on terms and conditions comparable to Seller’s obligations as of the
Closing with respect to each customer and shall be based on Seller’s terms of respective
agreements as of the Effective Time. Seller shall utilize records from third party rebate
administrators to demonstrate which chargebacks relate to Infergen sold prior to the
Effective Time for purposes of determining Seller’s obligation.




     (ii) To the extent that Seller processes Chargeback Claims which are the responsibility
of Buyer, Buyer shall reimburse Seller within thirty (30) days of receipt of invoices that
describe the requested payments in reasonable detail.



          (e) Procedures. Within fifteen (15) days after the end of each calendar quarter, Buyer
shall submit to Seller an invoice and supporting documentation relative to all Product Returns,
Government Rebates, Commercial Rebates and Chargeback Claims received during the preceding calendar
quarter for which Seller is financially responsible. Such invoice






 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.




-36-









 









and the supporting documentation shall set forth the following detail: (i) where applicable, the
stock-keeping-unit number and lot code of returned Infergen (the “Returned Product”) and
the date the Returned Product or claim for applicable rebate or chargeback was received by Buyer,
if applicable; (ii) the name and address of the customer returning such Returned Product or making
such claim; (iii) the reason given by such customer for the return or claim if applicable; (iv) the
cost of performing such return or processing and paying such claim, provided, however, with
respect to returns, such cost shall include only the cost of replacing, or refunding the allegedly
defective Infergen, plus any reasonable shipping costs associated with such return, plus a [***]
([***]%) processing and destruction fee. Unless Seller contests such invoice in accordance
herewith, Seller shall remit the total invoiced amount to Buyer within ten (10) days after its
receipt of such invoice. In the event Seller in good faith disagrees with such invoice, the
Parties shall, for a period not to exceed one (1) month , negotiate in good faith to resolve such
dispute, and, in the event a resolution is not reached, within two (2) Business Days after the end
of such one (1) month period Seller and Buyer shall submit the items remaining in dispute for
resolution to a mutually acceptable independent arbitrator for resolution by such arbitrator with a
one (1) month period. In the event the Parties cannot mutually agree on an independent
arbitrator, Buyer and Seller shall each select an independent arbitrator. These independent
arbitrators shall then select a third arbitrator to resolve the dispute. The decision of the
arbitrator shall be binding upon the Parties and the resulting determination shall be final and
binding upon the Parties. The Parties shall equally split the reasonable fees and expenses of any
arbitrator associated with the resolution of such dispute.




     Section 8.4. Transitional Trademark License.



          (a) As of the Effective Time and for a period of up to twenty four months (24) months after
the Closing Date, Seller hereby grants to Buyer (or its Affiliates responsible for operating the
Product Business after Closing or any third-party manufacturers utilized by Buyer in connection
with the Product Business after the Closing Date), and Buyer hereby accepts, a non-exclusive,
non-transferable, non-sublicensable (except with respect to such third-party manufacturers or
Buyer’s Affiliates), royalty-free, paid-up, license in the Territory under the Seller Marks, for
use solely in connection with (i) Buyer’s sale of the Inventory in the Territory, and (ii) Buyer’s
use of the Promotional Materials existing as of the Closing Date and transferred to Buyer as part
of the Purchased Assets, and (iii) the labeling on the Infergen manufactured by or on behalf on
Buyer as of and after the Effective Time; provided, however, that such license is being granted
solely for transitional purposes and Buyer shall therefore, notwithstanding the time period
provided for above, use its commercially reasonable efforts to as quickly as is reasonably possible
cease its use of the Seller Marks after the Effective Time, but in no event later than twenty four
months (24) months after the Closing Date, or such later date (not to exceed an additional three
(3) months) as may be agreed-to by Seller, in its sole discretion, in the event Buyer is unable to
revise the labeling on the Infergen to remove the applicable Seller Marks due to governmental and
regulatory laws and regulations.




          (b) To the extent that Buyer is utilizing the transitional trademark license of this Section
8.4, Buyer shall not (i) add any other labels or marks to, or otherwise alter, the Seller Marks
as used in the Product Business as of the Closing Date (except as required by law); (ii) change in
any way the style of the Seller Marks as used in the Product Business as of the Closing






 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.




-37-









 









Date; or (iii) otherwise use the Seller Marks in any manner other than as specifically provided in
this Section 8.4.



          (c) Buyer acknowledges Seller’s ownership of the Seller Marks, shall do
nothing inconsistent with such ownership, agrees that all use of the Seller Marks by Buyer shall
inure to the benefit and be on behalf of Seller, and agrees not to challenge Seller’s title to the
Seller Marks. Nothing in this Agreement shall give Buyer any right, title or interest in the
Seller Marks other than the right to use the Seller Marks strictly in accordance with this
Section 8.4. All use of the Seller Marks by Buyer under this Section 8.4 shall
conform to the standards followed by Seller in operating the Product Business prior to the Closing
Date, and Seller shall have the right to review the standards used by Buyer to operate the Product
Business after the Closing Date to ensure Buyer’s compliance with this requirement related to the
Seller Marks.




          (d) Buyer shall not have the right to, and shall not, sublicense, assign, pledge, grant or
otherwise encumber or transfer to any Third Party any rights licensed by Seller to Buyer under
this Section 8.4 without Seller’s prior written consent. The Parties understand and agree
that, in addition to all other legal remedies, Seller shall be entitled to immediate injunctive
relief in order to enforce the terms of this Section 8.4.




          (e) Nothing in this Section 8.4, or any other provision of this Agreement or any
provision of the Ancillary Agreements, shall grant the Buyer any rights in any of Seller’s Internet
domain names, registrations or applications for registration, or renewals thereof, registered in
the United States or any other country or jurisdiction throughout the world, except as such
Internet domain names, registrations or applications for registration, or renewals thereof are
included as part of the Purchased Assets.




          (f) Following the Closing, Buyer shall promptly and at its own expense use commercially
reasonable efforts to obtain such FDA approvals necessary for Buyer Labeling for the Infergen to be
manufactured after the Closing and, promptly comply with such FDA approvals upon receipt thereof.




     Section 8.5. Customer Billing. In the event that Seller or any of its Affiliates
receives payment after the Closing Date on invoices relating to the Product Business operated by
the Buyer or sales of products or services rendered by Buyer on or after the Effective Time, Seller
will promptly notify Buyer of such receipt and will promptly remit, or will cause such Affiliate to
promptly remit, such payment to Buyer without depositing such payment in an account of Seller, or
such Affiliate, unless in error, and Seller, or such Affiliate, shall not be entitled to offset
such payment against any payments due Seller from Buyer. In the event Seller receives an invoice
or request for payment relating to the operation of the Product Business on or after the Effective
Time, or with respect to any Assumed Liability, Seller will promptly notify Buyer of such request
or invoice and forward the invoice and all other appropriate information to Buyer for payment. In
the event Buyer or any of its Affiliates receive payment after the Effective Time on invoices
issued by Seller relating to an Excluded Asset (such as Seller’s accounts receivable as of the
Effective Time) or relating to product sold or services rendered by businesses other than the
Product Business or the Purchased Assets, Buyer will promptly notify Seller of such receipt and
will promptly remit, or will cause such Affiliate to promptly remit, such payment to Seller without
depositing such payment in an account of Buyer, or such Affiliate, unless in error, and Buyer, or
such Affiliate, shall not be entitled to offset such payment against any payments due Buyer from
Seller.



-38-









 





     Section 8.6. Covenant Not To Compete. Seller hereby agrees that for a period ending
on the later of (a) [***] ([***]) [***] after the Closing Date and (b) the [***] the [***], Seller
shall not, directly or indirectly, alone, as a licensor, or otherwise in conjunction with other
Persons, develop, manufacture, license-in, market, sell or otherwise distribute in the Territory
for human use, or assist any other Person in developing, manufacturing, licensing-in, marketing,
selling or otherwise distributing in the Territory for human use, any Competing Product, either
alone or in combination, whether such Competing Product is available with or without a
prescription. For purposes hereof, “Competing Product” means any product containing
interferon alfacon-1 as an active ingredient, [***] that [***] is [***] the [***]. Notwithstanding
this Section 8.6, Seller shall have the right to conclude its ongoing clinical trials with respect
to the combination of the Product with the pharmaceutical product currently marketed by Seller
under the trademark Actimmune®.



     Section 8.7. Cooperation.



          (a) After the Execution Date, the Parties shall cooperate reasonably with each other in
connection with any reasonable actions required to be taken with respect to their respective
obligations under this Agreement and the Ancillary Agreements, and shall (i) furnish upon
reasonable request to each other such further information, and (ii) execute and deliver to each
other such other reasonable documents, and (iii) do such other acts, all as the other Party may
reasonably request for the purpose of carrying out the provisions of this Agreement (and the
Ancillary Agreements) and the transactions contemplated hereby and thereby.




          (b) Seller will promptly notify Buyer, and Buyer will notify Seller, as applicable and in
writing, of any event or fact which represents a material breach of any of their respective
representations, warranties, covenants or agreements hereunder.




     Section 8.8. Clinical Trials. As of the Effective Time, Buyer shall take over and
assume, from and after the Effective Time, (a) all of Seller’s duties and responsibilities relative
to the ongoing conduct of the Clinical Trials from and after the Effective Time, in accordance with
the protocols therefore (other than such duties and responsibilities which Seller agrees to perform
on behalf of and as Buyer’s agent from and after the Effective Time) and (b) all costs, expenses
and Liabilities associated with conducting the Clinical Trials from and after the Effective Time
(other than any Liability arising out of or relating to the conduct of the Clinical Trials by
Seller prior to the Effective Time), all as described in more detail in the Transition Services
Agreement.



     Section 8.9. Employees. Buyer anticipates it will offer employment to certain personnel
of Seller directly related to the Product Business. Notwithstanding the foregoing, Buyer shall not
be obligated to offer employment to any employees of Seller nor to offer employment to or hire any
specific number of Seller’s employees, and any such offer of employment shall be on terms and
conditions as Buyer, in its sole discretion, shall determine, without regard to the terms and
conditions under which any employees of Seller have been employed prior to the Closing Date. Buyer
shall have no obligation of any kind or nature for any compensation or benefits of any kind or
nature with respect to the employees or consultants of Seller for any services rendered or
otherwise arising on or before the Closing Date, including,





 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.





-39-









 




any Liability and cost associated with the termination by Seller of any employee or consultant of
Seller.




     Section 8.10. Tax Matters.



          (a) U.S. Statement of Allocation. Buyer and Seller acknowledge their mutual
obligations pursuant to Section 1060 of the Code to timely file IRS Form 8594 with each of their
respective federal income tax returns (the “Asset Acquisition Statement”). Accordingly,
Buyer and Seller agree to cooperate in the preparation of the Asset Acquisition Statement for
timely filing in each of their respective U.S. federal income tax returns in accordance with a
written statement (the “Statement of Allocation”), in form and substance reasonably
acceptable to Buyer and Seller, setting forth an allocation of the Purchase Price (which for such
purpose shall be increased by the amount of the Assumed Liabilities) among the Purchased Assets (as
applicable for each Statement of Allocation) and the Inventory Cost among the Inventory in
accordance with the provisions of Section 1060 of the Code and the Treasury Regulations. No later
than ten (10) days prior to the Closing Date, Buyer shall prepare and deliver to Seller a proposed
Statement of Allocation. If Seller approves the Statement of Allocation, then, unless otherwise
prohibited by law, all federal, state and local income Tax returns of Buyer and Seller shall be
filed consistently with the allocations made pursuant to the Statement of Allocation. If Seller
does not approve the Statement of Allocation, Buyer and Seller shall make good faith efforts to
agree on the allocation of the consideration among the Purchased Assets. If Buyer and Seller, after
good faith negotiations, cannot agree on the allocation of the consideration within one hundred
twenty (120) days following the Closing Date, then no Statement of Allocation shall be prepared,
and each Party shall prepare and file its returns in accordance with its own allocations.




          (b) Seller and Buyer shall provide reasonable cooperation and information to each other in
connection with (i) the preparation or filing of any Return, amended Return, Tax election, Tax
consent or certification, or any claim for a Tax refund, (ii) any determination of liability for
Taxes, and (iii) any audit, examination or other proceeding in respect of Taxes exclusively related
to the Product Business. Any information obtained under this Section 8.10 shall be kept
confidential pursuant to Section 10.1, except as may be otherwise necessary in connection with the
filing of Returns, claims for a Tax refund or in conducting any audit, examination or other
proceeding in respect of Taxes. In addition, upon request, Seller shall provide Buyer with an
income tax withholding statement in a form reasonably acceptable to Buyer.




          (c) Buyer shall be solely responsible for all sales, use, transfer, value added and other
related Taxes (the “Transfer Taxes”), if any, arising out of the transfer by Seller of the
Purchased Assets, Inventory, Clinical Trial Inventory and Other Intellectual Property to Buyer
pursuant to this Agreement, it being acknowledged and specifically agreed, however, that Buyer
shall have no responsibility for, and Seller will be solely responsible for, any Tax payable on any
income or gain of Seller arising from the sale of the Purchased Assets and Inventory or otherwise
arising under this Agreement. Notwithstanding the foregoing, Seller hereby agrees to indemnify,
pursuant to the terms of Article IX hereof, and hold Buyer harmless against any Liability resulting
from any noncompliance by Seller with the provisions of any applicable bulk sale or bulk transfer
laws. Each Party shall make all commercially reasonable efforts and take such commercially
reasonable actions to avail itself of all available exemptions to or reductions of






-40-









 







such Transfer Taxes as reasonably requested by the other Party, and shall otherwise cooperate
with the other Party to avail itself of such exemptions to or reductions available pursuant to
Applicable Law.




          (d) Each Party shall be responsible for and shall pay all Taxes payable on any payments made
to such Party by the other Party, except as is otherwise set forth in Section 8.9(b).




          (e) If subsequent to the payment by the Buyer to Seller any amounts paid hereunder are
determined to be subject to withholding taxes by any taxing jurisdiction and payment of such taxes
is required by the Buyer, Seller agrees to reimburse Buyer for such amounts assessed and paid plus
interest.




          (f) Seller shall promptly after the Closing prepare and file all reports and Returns required
by Tax Law relating to the Product Business, the Purchased Assets, the Inventory and the Product as
owned or operated by Seller prior to and including the Effective Time.




     Section 8.11. Notice to Customers. Seller agrees to cooperate with Buyer, at Buyer’s
reasonable request, in the notification to customers of the transactions contemplated by this
Agreement and Seller agrees not to notify any customer of such transactions without the consent of
Buyer. Such notification shall be in such form as is reasonably satisfactory to both Buyer and
Seller as agreed to prior to Closing.



     Section 8.12. Assistance in Supply of Infergen. From and after the Effective Time,
Buyer shall supply to Seller any amount of Infergen reasonably requested by Seller solely for
purposes of Seller’s completion of its ongoing clinical trials with respect to the combination of
Infergen with the pharmaceutical product currently marketed by Seller under the trademark
Actimmune®; provided, however, Seller shall pay Buyer for all such Infergen.



     Section 8.13. Adverse Experience Reports. At a mutually agreed upon time after the
Effective Time, Seller shall provide Buyer with information relating to the investigation and
reporting of all adverse experiences regarding Infergen, including with respect to the use of
Infergen in both clinical studies, as well as spontaneous reports, prior to the Effective Time and
all other information which is materially relevant to the safe use of Infergen in Seller’s
possession as of the Effective Time. After the Effective Time, Seller shall promptly submit to
Buyer all adverse drug experience information or customer complaints brought to the attention of
Seller in respect of Infergen, as well as any material events and matters concerning or affecting
the safety or efficacy of Infergen. After the Effective Time, Buyer shall have all responsibility
for required reporting of adverse experiences for Infergen.



     Section 8.14. Regulatory Matters.



          (a) Except as expressly set forth in Section 8.7, from and after the Effective Time, Buyer, at its
cost, shall be solely responsible and liable for (i) taking all actions, paying all fees and
conducting all communication with the appropriate Governmental or Regulatory Authority required by
Law in respect of the Regulatory Approvals, including preparing and filing



-41-









 




all reports (including adverse drug experience reports) with the appropriate Governmental or
Regulatory Authority (whether Infergen is sold before or after transfer of such Regulatory
Approval), (ii) taking all actions and conducting all communication with third parties in respect
of Infergen sold pursuant to such Regulatory Approval (whether sold before or after transfer of
such Regulatory Approval), including responding to all complaints in respect thereof, including
complaints related to tampering or contamination, and (iii) investigating all complaints and
adverse drug experiences in respect of Infergen sold pursuant to such Regulatory Approval (whether
sold before or after transfer of such Regulatory Approval).




          (b) From and after the Effective Time, Seller promptly (and in any event within the time
periods required by Law) shall notify Buyer within three (3) Business Days if Seller receives a
complaint or a report of an adverse drug experience in respect of Infergen. In addition, Seller
shall cooperate with Buyer’s reasonable requests and use commercially reasonable efforts to assist
Buyer in connection with the investigation of and response to any complaint or adverse drug
experience related to Infergen sold by Seller.




          (c) From and after the Effective Time, Buyer, at its cost, shall be solely responsible and
liable for conducting all voluntary and involuntary recalls of units of Infergen sold pursuant to
such Regulatory Approval (whether sold before or after transfer of such Regulatory Approval),
including recalls required by any Governmental or Regulatory Authority and recalls of units of
Infergen sold by Seller deemed necessary by Seller in its reasonable discretion; provided, however,
that Seller shall reimburse Buyer for the reasonable expenses and costs of conducting recalls
relating to Infergen sold by or on behalf of Seller prior to the Closing, including the costs of
notifying customers, the costs associated with shipment of such recalled Infergen, the price paid
for such Inventory, and reasonable credits extended to customers in connection with the recall.
Seller promptly shall notify Buyer in the event that a recall of Infergen sold by Seller is
necessary.




          (d) Seller shall, within fifteen (15) days of the Closing, notify the FDA of the transfer of
the Regulatory Approvals to Buyer in accordance with all Applicable Laws.




     Section 8.15. Differentiation of Product. From and after the Effective Time, Buyer
shall institute appropriate procedures to ensure that products and goods of the Product Business
manufactured, finished or sold by, or on behalf of, Buyer can be distinguished from products and
goods of the Business manufactured, finished or sold by, or on behalf of, Seller.



     Section 8.16. [***]. Seller hereby grants to Buyer the [***] with respect to the
Nektar Agreements:



          (a) At any time prior to the commencement of the [***], provided that Seller shall have
incurred documented expenses of at least [***] in connection with its continued clinical
development of a pegylated formulation of alfacon-1 as contemplated under the Nektar Agreements,
Seller may [***] (“[***]”) to Buyer. Buyer will have [***] ([***]) [***] following receipt
of the [***] to inform Seller in writing whether it intends to [***] (the “[***] [***]”) to
[***] and [***] (the “[***]”) and to [***] for [***]






 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.




-42-









 









as listed in [***]  If Buyer elects to [***], Buyer shall pay Seller an amount
equal to [***]% of Seller’s documented expenses directly incurred in connection with the
development of the pegylated formulation of Infergen between the time of Closing and the [***]
date. Such expenses will not include any allocation of overhead of Seller. During such [***]
([***])-[***]period, Seller will cooperate with Buyer in connection with any reasonable inquiries
Buyer may have with respect to the clinical development program or the [***] of the [***]. In the
event Buyer determines to [***] the [***], the parties will cooperate to close the [***] and [***]
as soon as practicable following delivery of the [***]. Buyer shall be responsible for any and all
obligations arising [***] after the [***].




          (b) If Seller determines to [***] from a [***] to [***] any of the [***], Seller shall,
promptly after making such determination, [***] (an “[***]”) [***]. The [***] shall
disclose in reasonable detail the proposed [***] and will [***], [***] on [***] to those contained
in the [***]. Buyer may elect to [***] on the [***] contained in the [***] by delivering [***] of
such [***] to Seller within sixty (60) Business Days after delivery of the [***]. If Buyer elects
to [***], the [***] of such [***] shall be consummated as soon as practicable following Buyer’s
[***] of the [***]. Seller will afford Buyer with reasonable access to all necessary information
for Buyer to conduct any due diligence investigation Buyer reasonably determines to be necessary or
appropriate in [***]. In the event Buyer determines [***] to [***] the [***], Seller may [***]
with the [***] identified in the [***] on the terms and conditions specified in the [***] set forth
in this Section 8.16 shall be of no further force or effect.




          (c) If Seller in good faith determines to terminate its rights under the Nektar Agreements,
Seller shall, promptly after making such determination, deliver a written notice to Buyer.




     Section 8.17. Books and Records. At the Closing, or as soon as possible thereafter,
Seller shall transfer to Buyer the original copies of the Product Records. Seller may retain one
archival copy of the Product Records and Contracts solely for archival purposes or as required by
Applicable Law.



     Section 8.18. Non-Exclusive License. In the event Seller receives approval from the FDA
of a product with labeling providing for combination use of Infergen and Actimmune, Seller hereby
grants to Buyer an irrevocable, fully paid-up, royalty-free, perpetual, transferable, non-exclusive
license in the Territory to any Intellectual Property covering such combination therapy.
Furthermore, Seller hereby grants to Buyer an irrevocable, fully paid-up, royalty-free, perpetual,
transferable, non-exclusive license to any Intellectual Property owned or controlled by Seller
related to the Product which is not derived from the Amgen Agreements, and which is not assigned,
transferred or exclusively licensed to Buyer under this Agreement, if any; provided,





 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.





-43-









 




however, that any such license shall be limited to such rights as are necessary to make,
use, practice, market, sell or otherwise commercialize the Product in the Territory for any purpose
or approved indication, including any future approved indication, or as are necessary to exercise
or practice any rights, obligations or other licenses under this Agreement.




     Section 8.19. Assistance Regarding Required SEC Financial Disclosures.



          (a) Seller shall cause to be prepared and delivered to Buyer, on or before forty five (45)
days following the Closing, an audited income statement, statement of cash flow and balance sheet
for the Product Business as of and for the twelve month period ending December 31, 2005 (the
“2005 Audited Financials”). Buyer hereby agrees to reimburse Seller for one-half of
Seller’s costs and expenses associated with preparing the 2005 Audited Financials.




          (b) In addition to the foregoing, upon Buyer’s request, Seller shall from time to time prior
to and after Closing provide Buyer with such financial information relative to Seller, Infergen
and/or the Product Business as Buyer may reasonably require in order for Buyer to comply with
Buyer’s financial disclosure obligations under the rules and regulations of the Securities and
Exchange Commission relative to Buyer’s acquisition of the Product. Notwithstanding the foregoing,
Seller shall not be required to generate new financial reports or analysis, or reformat existing
reports or analysis, but rather shall only be required to provide the required financial
information to Buyer in the form currently maintained by Seller.




ARTICLE IX — INDEMNIFICATION




     Section 9.1. Survival of Representations and Warranties. Other than the
representations and warranties contained in Section 3.2, which shall survive indefinitely, and
those in Section 3.9 and Section 3.10, which shall survive for any applicable statute of
limitations, all representations and warranties made in this Agreement or any Ancillary Agreement
by Buyer or Seller shall survive the execution and delivery of this Agreement or the applicable
Ancillary Agreement and shall remain in full force and effect for a period of eighteen (18) months
following the Closing Date (unless a different applicable time period is set forth in such
representation, warranty or covenant), and shall be deemed to have been relied upon by each other
party hereto, notwithstanding any investigation made by or on behalf of such party; provided that
if notice of any claim for indemnification is given pursuant to Section 9.3 prior to such time and
such notice describes with specificity the circumstances with respect to which such indemnification
relates, such indemnification claim shall survive until such time as such claim is finally
resolved.



     Section 9.2. Indemnification.



          (a) Seller’s Indemnification Obligations. Seller shall indemnify, defend and hold
harmless Buyer and its Affiliates and their respective officers, directors, agents, and employees
(collectively, the “Buyer Indemnitees”) from and against any and all losses, liabilities,
claims, damages (including consequential damages), expenses (including costs of investigation and
defense and reasonable attorneys’ fees and expenses) or diminution of value (collectively,
“Buyer Losses”) to the extent that such Buyer Losses are based on, result from or arise in
connection with:




-44-









 









     (i) the breach of any representation or warranty made by Seller or a Seller Indemnitee
in this Agreement or any Ancillary Agreement;




     (ii) any failure of Seller or a Seller Indemnitee to duly to perform or observe any
provision, obligation, covenant or agreement to be performed or observed by Seller or a
Seller Indemnitee pursuant to this Agreement or any Ancillary Agreement;




     (iii) the Excluded Liabilities;




     (iv)
the operation of Seller’s business, including the Product Business prior
to the Closing (except with respect to Assumed Liabilities relating to such pre-Closing
operation); or




     (v) any Liability of Seller under the Amgen Agreements arising prior to the Effective
Time (including any Liability arising out of Seller’s operations prior to the Effective Time
irrespective of when such Liability is first asserted).


provided,
however, that Seller shall not be obligated to indemnify, defend or hold harmless any
Buyer Indemnitee under this Section 9.2(a) for any Buyer Losses incurred by a Buyer Indemnitee to
the extent arising out of or principally attributable to: (A) any act or omission by a Buyer
Indemnitee, which constitutes negligence, recklessness, gross negligence, or willful misconduct on
the part of such Buyer Indemnitee, or (B) the breach of any representation or warranty made by
Buyer or a Buyer Indemnitee in this Agreement or any Ancillary Agreement, or (C) any failure of
Buyer or a Buyer Indemnitee duly to perform or observe any provision, obligation, covenant or
agreement to be performed or observed by Buyer or a Buyer Indemnitee pursuant to this Agreement or
any Ancillary Agreement, or (D) the Assumed Liabilities.




          (b) Buyer’s Indemnification Obligations. Buyer shall indemnify, defend and hold
harmless Seller and its Affiliates and their respective officers, directors, agents and employees
(collectively, the “Seller Indemnitees”) from and against any and all losses, liabilities,
claims, damages, expenses (including costs of investigation and defense and reasonable attorneys’
fees and expenses), or diminution of value (collectively, “Seller Losses”) to the extent
that such Seller Losses are based on, result from, or arise in connection with:





     (i) the breach of any representation or warranty made by Buyer or a Buyer Indemnitee in
this Agreement or any Ancillary Agreement;




     (ii) any failure of Buyer or a Buyer Indemnitee duly to perform or observe any
provision, obligation, covenant or agreement to be performed or observed by Buyer or a Buyer
Indemnitee pursuant to this Agreement or any Ancillary Agreement;




     (iii) the Assumed Liabilities;




     (iv) the operation by Buyer of the Product Business following the Closing; or




     (v) any Liability of Buyer under the Amgen Agreements arising from and after the
Effective Time.



-45-









 




provided,
however, that Buyer shall not be obligated to indemnify, defend or hold harmless any
Seller Indemnitee under this Section 9.2(b) from any Seller Claim or for any Seller Losses incurred
by a Seller Indemnitee to the extent arising out of or principally attributable to: (A) any act or
omission by a Seller Indemnitee, which constitutes negligence, recklessness, gross negligence, or
willful misconduct on the part of such Seller Indemnitee, or (B) the breach of any representation
or warranty made by Seller or a Seller Indemnitee in this Agreement or any Ancillary Agreement, or
(C) any failure of Seller or a Seller Indemnitee to duly to perform or observe any provision,
obligation, covenant or agreement to be performed or observed by Seller or a Seller Indemnitee
pursuant to this Agreement or any Ancillary Agreement, or (D) the Excluded Liabilities.




     Section 9.3. Indemnification Procedures.



          (a) In the event a Party’s right to indemnification hereunder arises out of or results from a
Third Party claim (a “Third Party Claim”), each indemnified Party (the “Indemnified
Party”) shall notify the indemnifying Party (the “Indemnifying Party”) in writing (and
in reasonable detail) of the Third Party Claim within twenty (20) Business Days after receipt by
such Indemnified Party of notice of the Third Party Claim (the “Indemnification Claim
Notice”), or otherwise becoming aware of the existence or threatened existence thereof.
Failure to give such notice shall not constitute a defense, in whole or in part, to any claim by an
Indemnified Party hereunder except to the extent the rights of the Indemnifying Party are
materially prejudiced by such failure to give notice.




          (b) At its option, the Indemnifying Party may assume the defense of any Third Party Claim by
giving written notice to the Indemnified Party within thirty (30) days after the Indemnifying
Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party
Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying
Party is liable to indemnify any Indemnitee in respect of the Third Party Claim, nor shall it
constitute a waiver by the Indemnifying Party of any defenses it may assert against any
Indemnitee’s claim for indemnification. Upon assuming the defense of a Third Party Claim, the
Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal
counsel selected by the Indemnifying Party that is reasonably acceptable to the Indemnified Party.
In the event the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified
Party shall promptly deliver to the Indemnifying Party all original notices and documents
(including court papers) received by any Indemnitee in connection with the Third Party Claim.
Should the Indemnifying Party assume the defense of a Third Party Claim, except as provided in
Section 9.3(c) below, the Indemnifying Party shall not be liable to the Indemnified Party or any
other Indemnitee for any legal expenses subsequently incurred by such Indemnified Party or other
Indemnitee in connection with the analysis, defense or settlement of the Third Party Claim. In the
event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify,
defend or hold harmless an Indemnitee from and against the Third Party Claim, the Indemnified Party
shall reimburse the Indemnifying Party for any and all costs and expenses (including attorneys’
fees and costs of suit) and any Damages incurred by the Indemnifying Party in its defense of the
Third Party Claim with respect to such Indemnitee.




-46-









 








          (c) Without limiting Section 9.3(b), any Indemnitee shall be entitled to participate in, but
not control, the defense of such Third Party Claim and to employ counsel of its choice for such
purpose; provided, however, that such employment shall be at the Indemnitee’s own expense unless
(A) the employment thereof has been specifically authorized in advance by the Indemnifying Party in
writing, (B) the Indemnifying Party has failed to assume the defense and employ counsel in
accordance with Section 9.3(b) (in which case the Indemnified Party shall control the defense) or
(C) if the Indemnified Party and the Indemnifying Party are both named parties to the proceeding
and the Indemnified Party has reasonably concluded that there may be one or more legal defenses
that are different from or in addition to those available to the Indemnifying Party (in which case
the Indemnifying Party shall not have the right to assume the defense of such action on behalf of
the Indemnified Party and the Indemnifying Party shall be liable for all legal expenses incurred by
the Indemnified Party in furtherance thereof).




          (d) With respect to any Buyer Losses or Seller Losses, as the case may be, relating solely to
the payment of money damages in connection with a Third Party Claim and that will not result in the
Indemnitee’s becoming subject to injunctive or other relief or otherwise materially adversely
affect the business of the Indemnitee in any manner, and as to which the Indemnifying Party shall
have acknowledged in writing the obligation to indemnify the Indemnitee hereunder, the Indemnifying
Party shall have the sole right to consent to the entry of any judgment, enter into any settlement
or otherwise dispose of such Buyer Losses or Seller Losses, as the case may be, on such terms as
the Indemnifying Party, in its reasonable discretion, shall deem appropriate; provided, however,
that the Indemnifying Party shall have obtained a full release from such Third Party in connection
with any such settlement or disposition. With respect to all other Buyer Losses or Seller Losses,
as the case may be, in connection with Third Party Claims, where the Indemnifying Party has assumed
the defense of the Third Party Claim in accordance with Section 9.3(b), the Indemnifying Party
shall have authority to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Buyer Losses or Seller Losses, as the case may be; provided that it
obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed). The Indemnifying Party shall not be liable for any settlement or other
disposition of Buyer Losses or Seller Losses, as the case may be, by an Indemnitee that is reached
without the written consent of the Indemnifying Party (which consent shall not be unreasonably
withheld or delayed). Regardless of whether the Indemnifying Party chooses to defend or prosecute
any Third Party Claim, no Indemnitee shall admit any liability with respect to, or settle,
compromise or discharge, any Third Party Claim without the prior written consent of the
Indemnifying Party which consent shall not be unreasonably withheld or delayed.




          (e) Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party
Claim, the Indemnified Party shall, and shall cause each other Indemnitee to, cooperate in the
defense or prosecution thereof and shall furnish such records, information and testimony, provide
such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as
may be reasonably requested in connection therewith. Such cooperation shall include access during
normal business hours afforded to the Indemnifying Party to, and reasonable retention by the
Indemnified Party of, records and information that are reasonably relevant to such Third Party
Claim, and making Indemnitees and other employees and agents available on a mutually convenient
basis to provide additional information andexplanation of any material provided hereunder, and the
Indemnifying Party shall reimburse the Indemnified





-47-









 








Party for all its reasonable out-of-pocket expenses in connection therewith. If the Indemnified
Party controls the defense of the claim, the Indemnifying Party shall cooperate with the
Indemnified Party on the terms described above.




     Section 9.4. Limitations.




          (a) The indemnification provided for in Section 9.2(a)(i) and Section
9.2(a)(ii) shall not apply unless and until the aggregate Buyer Losses for which Buyer seeks or
has sought indemnification hereunder, as stated in one or more claim notices, exceed a cumulative
aggregate of $[***] (the “Basket”), in which case the right to recover Buyer Losses shall
apply to the full amount of the Basket, and in no event shall the aggregate liability of Seller for
Buyer Losses pursuant to Sections 9.1(a)(i) and (ii) exceed $[***] (the
“Buyer’s Cap”); provided, however, that neither the Basket, nor the Buyer’s Cap, shall
apply to any indemnification claim (i) involving fraud or willful misrepresentation on the part of
Seller, (ii) based upon a breach of Sections [***], or (iii) under Section [***]




          (b) The indemnification provided for in Section 9.2(b)(i) and (ii) shall not
apply unless and until the aggregate Seller Losses for which Seller seeks or has sought
indemnification hereunder, as stated in one or more claim notices, exceed the Basket, in which case
the right to recover Seller Losses shall apply to the full amount of the Basket, and in no event
shall the aggregate liability of Buyer for Seller Losses pursuant to Sections 9.2(b)(i) and
(ii) exceed $[***] (“Seller’s Cap”); provided, however, that neither the Basket nor the
Seller’s Cap shall apply to any indemnification claim (i) involving fraud or willful
misrepresentation on the part of Buyer, (ii) based upon a breach of Sections [***], or
(iii) under Section [***].




          (c) Nothing in this Agreement shall (i) limit the right of any Party to seek specific
performance of, or equitable relief with respect to, another Party with respect to a breach of any
covenant or agreement set forth in this Agreement or (ii) be deemed a waiver by any Party to this
Agreement of any right or remedy which such Party may have at law or in equity based on any claim
of fraud.



     Section 9.5. Right of Setoff. Buyer may setoff any amount to which it is entitled
under this Article IX against amounts otherwise payable to Seller hereunder or under the Ancillary
Agreements, provided that any amount to be setoff is reasonably determined in good faith and is no
greater than any amount to which Buyer is entitled to under this Article IX. Neither the exercise
nor the failure to exercise such right of setoff shall constitute an election of remedies or limit
Buyer in any manner in the enforcement of any other remedies that may be available to it.



ARTICLE X — MISCELLANEOUS PROVISIONS




     Section 10.1. Confidentiality and Publicity.



          (a) The Mutual Confidential Disclosure between Seller and Buyer, dated July 14, 2005 (the
“Confidentiality Agreement”) is hereby incorporated in this Agreement as though






 




			
	***	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.





-48-









 









fully set forth herein. All Information provided to Recipient (or its representatives or
Affiliates) by the Discloser (or its representatives or Affiliates), as the case may be, shall be
shall be subject to and treated in accordance with the terms of the Confidentiality Agreement. As
used in this Section 10.1, the terms “Information”, “Recipient” and “Discloser” shall have
the meanings assigned to such terms in the Confidentiality Agreement. Upon the Effective Time, the
Confidentiality Agreement shall expire and be of no further force and effect with respect to all
Information relating to the Product Business, the Purchased Assets or the Assumed Liabilities;
provided, however, such expiration of the Confidentiality Agreement shall in no way prejudice or
adversely affect Seller’s or Buyer’s ability to seek damages, or any other remedy available to
Seller or Buyer, as appropriate, with respect to a violation by such other Party (or its Affiliates
or representatives) of the Confidentiality Agreement prior to or after the Effective Time. Upon
and after the Effective Time, the Confidentiality Agreement shall remain in full force and effect
pursuant to its terms with respect to all other Information that does not relate to the Product
Business, the Purchased Assets or the Assumed Liabilities.




          (b) From and after the Effective Time, all Information exclusively concerning the Product
Business, the Purchased Assets and the Assumed Liabilities (the “Buyer Proprietary
Information”) shall be used by Seller solely as required to perform its obligations, exercise
or enforce its rights under this Agreement (or any Ancillary Agreement), or comply with Applicable
Law, and for no other purpose. Seller shall not disclose, or permit the disclosure of, any of the
Buyer Proprietary Information to any Person except those Persons to whom such disclosure is
necessary to permit Seller to perform its obligations, exercise or enforce its rights under this
Agreement (or any Ancillary Agreement), or comply with Applicable Law. Seller shall treat, and
will cause its Affiliates and the directors, officers, employees, agents, representatives and
advisors of Seller or any of their Affiliates to treat, the Buyer Proprietary Information as
confidential, using the same degree of care as Seller normally employ to safeguard its own
confidential information from unauthorized use or disclosure, but in no event less than a
reasonable degree of care.




          (c) All Information obtained by Buyer (or its Affiliates or Representatives) from Seller (or
its Affiliates or Representatives) other than the Buyer Proprietary Information (the “Seller
Proprietary Information”) shall be used by Buyer solely as required to perform its obligations,
exercise or enforce its rights under this Agreement (or any Ancillary Agreement), or comply with
Applicable Law, and for no other purpose. Buyer shall not disclose, or permit the disclosure of,
any of Seller Proprietary Information to any person except those persons to whom such disclosure is
necessary to permit Buyer’s perform its obligations, exercise or enforce its rights under this
Agreement (or any Ancillary Agreement), or comply with Applicable Law. Buyer shall treat, and will
cause its Affiliates and the directors, officers, employees, agents, representatives and advisors
of Buyer or any of their Affiliates to treat, Seller Proprietary Information as confidential, using
the same degree of care as Buyer normally employ to safeguard its own confidential information from
unauthorized use or disclosure, but in no event less than a reasonable degree of care.




          (d) In the event either Party is requested pursuant to, or required by, Applicable Law to
disclose any of the other Party’s proprietary information (i.e., Seller Proprietary Information or
Buyer Proprietary Information, as applicable), it will notify the other Party in a timely manner so
that such Party may seek a protective order or other appropriate





-49-









 







remedy or, in such Party’s sole discretion, waive compliance with the confidentiality
provisions of this Agreement. Each Party will co-operate in all reasonable respects, in connection
with any reasonable actions to be taken for the foregoing purpose. In any event, the Party
requested or required to disclose such proprietary information may furnish it as requested or
required pursuant to Applicable Law (subject to any such protective order or other appropriate
remedy) without liability hereunder, provided that such Party furnishes only that portion of the
Confidential Information which such Party is advised by a reasoned opinion of its counsel is
legally required, and such Party exercises reasonable efforts to obtain reliable assurances that
confidential treatment will be accorded such proprietary information.




          (e) No public announcement or other disclosure concerning the existence of, terms, or subject
matter of this Agreement (and any Ancillary Agreement) and the transactions contemplated hereby and
thereby shall be made, either directly or indirectly, by any Party, without first obtaining the
approval of the other Party and agreement upon the nature and text of such public announcement or
other disclosure which such agreement and approval shall not be unreasonably withheld. The Party
desiring to make any such public announcement or other disclosure (including those which are
legally required) shall inform the other Party of the proposed announcement or disclosure in
reasonably sufficient time prior to public release, which shall be not less than fifteen (15) days
(or such shorter period as the Parties may agree upon in writing, or such shorter period applicable
to those public announcements or other disclosure which are legally required) prior to release of
such proposed public announcement or other disclosure, and shall provide the other Party with a
written copy thereof in order to allow such other Party to comment upon such public announcement or
other disclosure. Each Party agrees that it shall co-operate fully with the other with respect to
all disclosures regarding this Agreement and any Ancillary Agreement to any governmental or
regulatory agencies, including requests for confidential treatment of proprietary information of
either Party included in any such disclosure.




          (f) Nothing in this Section 10.1 shall be construed as preventing or in any way
inhibiting either Party from complying with Applicable Law governing activities and obligations
undertaken pursuant to this Agreement, in any manner which it reasonably deems appropriate,
including, for example, by disclosing to regulatory authorities confidential or other information
received from the other Party, subject to Section 10.1(e).




     Section 10.2. Notices. Notices required or permitted under this Agreement shall be
in writing and sent by overnight express mail (e.g., FedEx), or by facsimile confirmed by overnight
express mail (e.g., FedEx), (failure of such confirmation shall not affect the validity of such
notice by facsimile to the extent the receipt of such notice is confirmed by the act of the
receiving Party (e.g., a facsimile of the receiving Party submitting its receipt of such notice))
and shall be deemed to have been properly served to the addressee upon receipt of such written
communication, to the following addresses of the Parties:



-50-









 





     If to the Seller:


InterMune, Inc.

3280 Bayshore Boulevard

Brisbane, California 94005

Attention: General Counsel

Fax: (415) 466-2364




     with a copy to:


Latham & Watkins LLP

12636 High Bluff Drive, Suite 400

San Diego, California 92130

Attention: Faye H. Russell, Esq.

Fax: (858) 523-5450




     If to the Buyer:


Valeant Pharmaceuticals North America

3300 Hyland Avenue

Costa Mesa, California 92626

Attention: General Counsel

Fax: (714) 641-7206




     with a copy to:


Winstead Sechrest & Minick P.C.

1201 Elm, 5400 Renaissance Tower

Dallas, Texas 75270

Attention: Mark G. Johnson, Esq.

Fax: (214) 745-5390




     Section 10.3. Modification; Waiver. This Agreement may be modified only by a written
instrument executed by the Parties hereto specifically referencing this Agreement.



     Section 10.4. Expenses. All expenses, including the fees of any attorneys,
accountants, investment bankers or others engaged by a Party, incurred in connection with this
Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby, shall be
paid by the Party incurring such expenses.



     Section 10.5. Entire Agreement. The agreement of the Parties, which is comprised of
this Agreement, the Ancillary Agreements, the Confidentiality Agreement, the schedules and the
documents referred to herein, sets forth the entire agreement and understanding between the Parties
and supersedes any prior agreement or understanding, written or oral, relating to the subject
matter of this Agreement. All Schedules, appendices, and exhibits referred to in this Agreement
are incorporated herein by reference.



     Section 10.6. Assignment. This Agreement may not be assigned by either Party without the
prior written consent of the other Party; provided, however, that either Party shall



-51-









 




have the right to assign its rights and obligations under this Agreement to any of its Affiliates
or to any Third Party successor to all or substantially all of (i) its entire business, or (ii) its
consumer healthcare or pharmaceuticals business. In no event shall any assignment hereof to any
Affiliate or Third Party be deemed to relieve the assigning Party of its liabilities or obligations
to the other Party under this Agreement, and the assigning Party expressly acknowledges and agrees
that it shall remain fully and unconditionally obligated and responsible for the full and complete
performance of all of its obligations under the terms and conditions of this Agreement.




     Section 10.7. Third Parties. None of the provisions of this Agreement shall be for
the benefit of, or enforceable by, any Third Party.



     Section 10.8. Waiver. The waiver by either Party of a breach or a default of any
provision of this Agreement by the other Party shall not be construed as a waiver of any succeeding
breach of the same or any other provision, nor shall any delay or omission on the part of either
Party to exercise or avail itself of any right, power or privilege that it has or may have
hereunder operate as a waiver of any right, power or privilege by such Party.



     Section 10.9. Severability. If any part of this Agreement is declared invalid by any
legally governing authority having jurisdiction over either Party, then such declaration shall not
affect the remainder of the Agreement and the Parties shall revise the invalidated part in a manner
that will render such provision valid without impairing the Parties’ original intent.



     Section 10.10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its conflicts of laws
principles.



     Section 10.11. Headings. The headings are placed herein merely as a matter of
convenience and shall not affect the construction or interpretation of any of the provisions of
this Agreement.



     Section 10.12. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement. Each of the Parties agrees to accept and be bound by
facsimile signatures hereto.



     Section 10.13. Force Majeure. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of performance by the
defaulting Party if the failure is occasioned by government action, war, terrorism, fire,
explosion, flood, strike, lockout, embargo, shortage of materials or utilities, vendor failure to
supply, act of God, or any other cause beyond the control and without the fault or negligence of
the defaulting Party, provided that the Party claiming force majeure has exerted all reasonable
efforts to avoid or remedy such force majeure; provided, however, that in no event shall a Party be
required to settle any labor dispute or disturbance. Such excuse shall continue as long as the
condition preventing the performance continues. Upon cessation of such condition, the affected
Party shall promptly resume performance hereunder. Each Party agrees to give the other Party prompt
written notice of the occurrence of any such condition, the nature thereof, and the extent to which
the affected Party will be unable to perform its obligations hereunder. Each Party further agrees



-52-









 




to use all reasonable efforts to correct the condition as quickly as possible and to give the
other Party prompt written notice when it is again fully able to perform its obligations.




     Section 10.14. Relationship of the Parties. In making and performing this Agreement,
the Parties are acting, and intend to be treated, as independent entities and nothing contained in
this Agreement shall be construed or implied to create an agency, partnership, joint venture, or
employer and employee relationship between Buyer and Seller. Except as otherwise expressly
provided herein, neither Party may make any representation, warranty or commitment, whether express
or implied, on behalf of or incur any charges or expenses for or in the name of the other Party.
No Party shall be liable for the act of any other Party unless such act is expressly authorized in
writing by both Parties hereto.



     Section 10.15. Arbitration. Notwithstanding anything herein to the contrary, in the
event that there shall be a dispute among the Parties arising out of or relating to this Agreement,
including, without limitation, the indemnities provided in Article IX hereof, or the breach
thereof, the Parties agree that such dispute shall be finally resolved by binding arbitration in
accordance with the Commercial Arbitration Rules and Supplementary Procedures for Large Complex
Disputes of the American Arbitration Association (“AAA”), and judgment on the arbitration
award may be entered in any court having jurisdiction thereof. The arbitration shall be conducted
by a panel of three persons experienced in the pharmaceutical business: within thirty (30) days
after initiation of arbitration, each Party shall select one person to act as arbitrator and the
two Party-selected arbitrators shall select a third arbitrator within thirty (30) days of their
appointment. If the arbitrators selected by the Parties are unable or fail to agree upon the third
arbitrator, the third arbitrator shall be appointed by the AAA. Within 45 days of initiation of
arbitration, the Parties shall reach agreement upon and thereafter follow procedures assuring that
the arbitration will be concluded and the award rendered within no more than six months from
selection of the arbitrators. Failing such agreement, the AAA will design and the Parties will
follow procedures that meet such a time schedule. The arbitrators (i) shall not have any power or
authority to add to, alter, amend or modify the terms of this Agreement but shall specify rules
sufficient to allow reasonable discovery by the Parties; (ii) shall establish and enforce
appropriate rules to ensure that the proceedings, including the decision, be kept confidential and
that all confidential information of the Parties be kept confidential and be used for no purpose
other than the arbitration; (iii) shall have the power to enforce specifically this Agreement and
the terms and conditions hereof in addition to any other remedies at law or in equity; and (iv)
shall issue all decisions in writing. The place of arbitration shall be San Francisco, California,
and all proceedings and communications shall be in English. Either Party may apply to the
arbitrators for interim injunctive relief until the arbitration award is rendered or the
controversy is otherwise resolved. Either Party also may, without waiving any remedy under this
Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary
to protect the rights or property of that Party pending the arbitration award. The arbitrators
shall have no authority to award punitive or any other type of damages not measured by a Party’s
compensatory damages. Each Party shall bear its own costs and expenses and attorneys’ fees and an
equal share of the arbitrators’ fees and any administrative fees of arbitration. Except to the
extent necessary to confirm an award or as may be required by law, neither a Party nor an
arbitrator may disclose the existence, content, or results of an arbitration without the prior
written consent of both Parties. In no event shall an arbitration be initiated after



-53-









 




the date when commencement of a legal or equitable proceeding based on the dispute,
controversy or claim would be barred by the applicable California statute of limitations.




[signatures appear on the following page]




-54-









 





     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the
date first above written.



	 	 	 
	INTERMUNE, INC.
	 	 
	 
	 	 
	    /s/ Daniel G. Welch
 

By: Daniel G. Welch

	 	 
	Title: President and Chief Executive Officer
	 	 
	 
	 	 
	VALEANT PHARMACEUTICALS NORTH AMERICA
	 	 
	 
	 	 
	    /s/ Timothy C. Tyson
 

By: Timothy C. Tyson

	 	 
	Title: President