Document:

exv10w1

 

Exhibit 10.1

5 June 2006

CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

BETWEEN

HUMAN GENOME SCIENCES, INC.

AND

NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.

 

 

     THIS EXCLUSIVE LICENSE AGREEMENT is made effective as of the 5th day of June
2006 (“Effective Date”) by and between Human Genome Sciences, Inc., a Delaware corporation having
its principal place of business at 14200 Shady Grove Road, Rockville, Maryland 20850 (“HGS”), and
Novartis International Pharmaceutical Ltd., a Bermuda corporation having its principal place of
business at Hurst Holme, 12 Trott Road, Hamilton, HM 11, Bermuda (“NVS”). HGS and NVS are each
referred to individually as a “Party” and together as the “Parties.”

RECITALS

WHEREAS, HGS has developed Albuferon (as defined below).

WHEREAS, NVS possesses certain capabilities in the development and commercialization of
pharmaceutical products and desires to apply those capabilities to Albuferon.

WHEREAS, NVS and HGS desire to engage in a collaborative effort to develop and commercialize
Albuferon, upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms and
conditions hereafter set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, HGS and NVS hereby agree as follows:

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ARTICLE 1

DEFINITIONS

The following terms shall have the following meanings as used in this Agreement:

1.1 “AB” shall mean Aventis Behring LLC.

1.2 “AB License” shall mean the Amended and Restated License Agreement dated September 8, 2000
between HGS and AB, as may be amended from time to time.

1.3 “AB Royalty” shall have the meaning set forth in Section 7.4.

1.4 “Accounting Standards” shall mean, with respect to HGS, US GAAP (United States Generally
Accepted Accounting Principles) and, with respect to NVS, the IFRS (International Financial
Reporting Standards), in each case, as generally and consistently applied throughout the Party’s
organization.

1.5 “Affiliate” shall mean any corporation, firm, partnership or other legal entity, which directly
or indirectly owns, is owned by or is under common ownership with a Party to the extent of at least
fifty percent (50%) of the equity (or such lesser percentage which is the maximum allowed to be
owned by a foreign corporation in a particular jurisdiction) having the power to vote on or direct
the affairs of the entity and any person, firm, partnership, corporation or other entity actually
controlled by, controlling or under common control with a Party.

1.6 “Albuferon” shall mean a polypeptide having an interferon-alpha molecule (or any variants,
analogs, homologs, derivatives, modifications, mutants or fragments thereof, including
species-specific modifications thereof) genetically fused to

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recombinant human albumin (or any variants, analogs, homologs, derivatives, modifications, mutants
or fragments thereof, including species-specific modifications thereof) as a single polypeptide
chain. For the sake of clarity, Albuferon shall include, but not be limited to, interferon alpha
2a and 2b, but shall not include other non-interferon-alpha molecules, such as interferon-beta or
interferon-gamma.

1.7 “Albuferon Know-How” shall mean any proprietary information, data, know-how or materials,
relating to the research, development, registration, marketing, use or sale of Albuferon, which
prior to or as of the Effective Date have been developed by or on behalf of HGS or are in HGS’
possession or control through a license or otherwise.

1.8 “Albuferon Patent Rights” shall mean any Patent Rights related to Albuferon which are owned or
controlled by HGS or which HGS otherwise has the right to sublicense or transfer rights thereto as
of the Effective Date, including the Patent Rights listed in Appendix A attached hereto and
incorporated herein by reference and any Patent Rights related thereto.

1.9 “Albumin Fusion Know-How” shall mean any proprietary information, data, know-how or materials
relating to human albumin based fusion technology which prior to or as of the Effective Date are
developed by or on behalf of HGS or in HGS’ possession or control through license or otherwise.
Albumin Fusion Know-How shall include Albuferon Know-How.

1.10 “Albumin Fusion Patent Rights” shall mean any and all Patent Rights relating to human albumin
based fusion technology which are owned or controlled by HGS or which HGS otherwise has the right
to sublicense or transfer rights thereto as of the Effective Date, including the Patent Rights
listed in Appendix B attached hereto and incorporated

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herein by reference and any Patent Rights related thereto. Albumin Fusion Patent Rights shall
include the Genentech Patent Rights.

1.11 “Alliance Manager” shall mean a senior representative having a general understanding of
pharmaceutical development and commercialization issues appointed by each Party to act as its
alliance manger under this Agreement.

1.12 “BLA” shall mean, with respect to the United States, a Biologics License Application (or its
equivalent) filed with the United States Food and Drug Administration, or any successor entity,
(“FDA”) seeking authorization to market a Collaboration Product in the United States, and with
respect to any country outside the United States, an application submitted to the relevant
Regulatory Authorities seeking authorization to market a Collaboration Product in such country.

1.13 “Calendar Year” shall mean each successive period of twelve (12) months commencing on January
1 and ending on December 31, for so long as this Agreement is in effect and “Calendar Quarter”
shall mean each successive period of three (3) months commencing on January 1, April 1, July 1 and
October 1.

1.14 “cGMP” shall mean current good manufacturing practices as required by the United States Food
and Drug Administration (“FDA”) under provisions of 21 C.F.R. parts 210 and 211 (as the same may be
amended) and all applicable FDA rules, regulations, orders and guidances, and the requirements with
respect to current good manufacturing practices prescribed by the European Community under
provisions of “The Rules Governing Medicinal Products in the European Community, Volume 4, Good
Manufacturing Practices, Annex 13, Manufacture of investigational medicinal products, July 2003,”
as each may, from time to time, be amended.

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1.15 “Collaboration Product” shall mean any product that contains Albuferon, for all indications
and in all dosage forms, delivery systems, formulations, presentations, line extensions and package
configurations thereof, the manufacture, sale or use of which would, but for the licenses granted
under this Agreement, infringe a Valid Claim of the HGS Patent Rights or is based on, embodies or
incorporates HGS Know-How.

1.16 “Commercially Reasonable Efforts” shall mean, with respect to the research, development,
manufacture or commercialization of a Collaboration Product, efforts and resources that would be
used by a Party consistent with its normal business practices for a similar product, with respect
to such activity taking into account, without limitation, matters such as efficacy and safety
profile of any such product, the development stage of the product, the commercial potential of the
product, the degree of technical complexity and the scientific characteristics of the product, the
competitiveness of alternative products that are in the marketplace or under development, and the
patent and other intellectual property and proprietary position of any product. Subject to the
foregoing, Commercially Reasonable Efforts requires that: (i) each Party promptly assigns
responsibility for such obligations to specific employees who are held accountable for progress and
monitor such progress on an on-going basis, (ii) each Party sets and consistently seeks to achieve
the objectives assigned to such Party as set forth in the Development Plan and Marketing Plan, and
(iii) each Party consistently makes and implements decisions and allocates resources designed to
meet such objectives.

1.17 “Commercialization” shall mean all activities regarding the sale, manufacture for sale,
marketing, distribution and promotion of a Collaboration Product, and any pre-

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marketing or post-marketing studies not directed at obtaining or maintaining Regulatory Approvals.

1.18 “Competitive Product” shall mean [***].

1.19 “Co-Promotion” shall mean those Commercialization activities undertaken by NVS and HGS to
implement the marketing plans and strategies with respect to the Collaboration Products under a
single trademark in the United States. When used as a verb, “Co-Promote” shall mean to engage in
such activities.

1.20 “Confidential Information” shall mean all technical and scientific know-how and information,
pre-clinical and clinical trial results, computer programs, knowledge, technology, means, methods,
processes, practices, formulas, techniques, procedures, technical assistance, designs, drawings,
apparatus, written and oral representations of data, specifications, assembly procedures,
schematics and other valuable information of whatever nature and all other scientific, clinical,
regulatory, marketing, financial and commercial information or data, whether communicated in
writing, verbally or electronically, which is provided by a Party to the other Party in connection
with this Agreement.

1.21 “Cost of Goods Sold” or “COGS” shall mean the fully allocated cost of Manufacturing a
Collaboration Product and/or Albuferon expressed on a per unit basis, as such costs are
specifically allocated to such Collaboration Product and/or Albuferon and as computed in accordance
with the Party’s Accounting Standards as consistently applied through the Party’s organization,
including the following:

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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     (a) Materials cost, which means the price paid for raw material, intermediates, components and
finished goods which are purchased from outside vendors, at the price invoiced by such outside
vendors, as well as any freight and duty where applicable;

     (b) Direct labor costs, which means the allocable employment cost of all personnel engaged in
the Manufacture of the Collaboration Product and/or Albuferon including, without limitation, salary
and employee benefits within the relevant manufacturing operating unit wherein allocable employment
costs shall mean only those direct labor costs applied to the actual Manufacture thereof;

     (c) Other direct costs and factory overhead costs, which means the cost of specific activities
that are provided by support functions directly related to manufacturing of a Collaboration Product
and/or Albuferon, either on or off-site. Overhead costs include expenses associated with quality
assurance testing, quality compliance, stability testing, batch review, equipment maintenance
costs, manufacturing utilities, waste removal, storage, transportation, insurance for the factory,
its contents or other directly related items, factory management (including materials management)
and administrative expenses, factory facilities costs including lease and capital costs,
environmental engineering and property taxes. These expenses shall be reasonably allocated to the
Manufacture of Collaboration Product and/or Albuferon on a pro rata basis based on the allocation
methodology appropriate at the Manufacturing site. Such expenses shall exclude costs of any unused
manufacturing capacity but may include capacity reserved for the manufacturing of Collaboration
Product and/or Albuferon as agreed upon the Parties. Overhead shall not include general corporate
activities, including, by way of

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example only, executive management, investor relations, business development, legal affairs,
human resources and finance.

     (d) Depreciation costs, which represent the annual amortization of original purchase costs
reasonably allocated to the Manufacture of Collaboration Product on a pro rata basis based on the
allocation methodology appropriate under the Accounting Standards and applied at the Manufacturing
site over the useful life of the asset, and

     (e) the Out-of-Pocket Costs of freight and tariffs and other expenses associated with
transporting Collaboration Product and/or Albuferon from the source of manufacture to a designated
customer, inclusive of any interim points of delivery, but excluding (i) any such costs which are
separately invoiced (including any separately itemized costs included in a single invoice) to a
customer.

     For the purposes of this Section 1.21 “Manufacture” or “Manufacturing” shall mean all
activities directly related to the manufacture of the Collaboration Product and/or Albuferon,
including, without limitation, the planning, purchasing, manufacture, transportation, processing,
compounding, quality assurance testing, quality control, regulatory compliance, storage and
maintenance of cell banks, manufacture and testing of future cell banks, waste disposal, sample
retention, formulation, stability testing, storage, filling, packaging, labeling, leafleting,
release and dispatch and such other matters in each case as specifically applicable to the relevant
Collaboration Product and/or Albuferon.

     For the sake of clarity, if a cost is an addition to the COGS calculation herein, such cost
shall not also be accounted for as a deduction in the Net Sales calculation and vice versa.

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1.22 “Detail” or “Detailing” shall mean, with respect to a Collaboration Product, the communication
by a Sales Representative to a member of the Target Audience (a) involving face-to-face contact,
(b) describing in a fair and balanced manner the Regulatory Authority-approved indicated uses and
other relevant characteristics of such Collaboration Product, (c) using the Promotional Materials
in an effort to increase the Target Audience prescribing and/or hospital ordering preferences of a
Collaboration Product for its Regulatory Authority-approved indicated uses, and (d) made at the
Target Audience member’s office, in a hospital or other place where the Target Audience member
normally issues prescriptions where the principal objective is to place an emphasis, either primary
or secondary, on a Collaboration Product and not simply to discuss a Collaboration Product with a
member of the Target Audience. For the avoidance of doubt, discussions at conventions, congresses
and meetings of key opinion leaders organized by a Party shall not constitute “Details” or
“Detailing”.

1.23 “Detail Cost” shall mean the specific dollar amount agreed upon by the Parties (proposed via
the JCC and approved by the JEC) for each Primary Detail and for each Secondary Detail conducted by
a Sales Representative.

1.24 “Detail Requirements” shall have the meaning set forth in Section 5.3.2.

1.25 “Development” shall mean activities relating to the development of a Collaboration Product,
including the conduct of all pre-clinical and clinical trials and the submission of all Regulatory
Applications for all Regulatory Approvals necessary for the Commercialization of a Collaboration
Product, including any post-marketing studies directed at obtaining or maintaining Regulatory
Approvals.

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1.26 “Development Expenses” shall mean, the FTE Costs and Out-of-Pocket Costs incurred by or on
behalf of a Party or any of its Affiliates during the Term that are specifically identifiable or
reasonably allocable to the Development activities for the Collaboration Product, which Development
activities are set forth in the approved Development Plan or are otherwise proposed by the JDC and
approved in advance by the JEC. Subject to the foregoing, Development Costs shall include such
costs in connection with the following activities:

          1.26.1 pre-clinical activity costs such as toxicology and formulation development, test method
development, stability testing, quality assurance, quality control development and statistical
analysis;

          1.26.2 clinical costs;

          1.26.3 regulatory expenses relating to the conduct of clinical trials, wherever performed, of
a Collaboration Product and the costs of preparing and filing any Regulatory Applications necessary
for any Regulatory Approvals;

          1.26.4 (i) manufacturing costs for Collaboration Product for use in clinical trials and any
pre-clinical activities in support thereof calculated on a basis substantially equivalent to the
calculation of COGS set out above, (ii) costs for the manufacture, purchase or packaging of
comparators or placebo for use in clinical trials (with the manufacturing costs for comparators or
placebo to be determined in the same manner as manufacturing costs are determined for any
Collaboration Product) and (iii) direct costs and expenses of disposal of drugs and other supplies
used in such clinical trials and pre-clinical activities; and

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          1.26.5 manufacturing costs for the development of the manufacturing process for a
Collaboration Product, scale-up, manufacturing process validation, manufacturing improvements and
qualification and validation of Third Party contract manufacturers.

          1.26.6 For the avoidance of doubt, no cost or expense item included in Development Expenses
shall include any internal profit margins or similar markups (it being understood that personnel
costs determined based on the FTE Rate will not be considered to include any internal profit
margins or similar markups).

1.27 “Development Plan” shall mean the plan designed to achieve the Development of the
Collaboration Product, including the budget for the Development Expenses (including all FTE Costs
and Out-of-Pocket Costs) by activity and the nature, number and schedule of Development activities.
The initial Development Plan for the Collaboration Product is attached hereto as Appendix C, and
may be amended in accordance with the terms of this Agreement.

1.28 “Field” shall mean all therapeutic, diagnostic and prophylactic indications in humans and
animals.

1.29 “First Commercial Sale” shall mean, with respect to any Collaboration Product in any single
country, the first sale of such Collaboration Product by HGS, NVS, its Affiliates, or Permitted
Sublicensees to a Third Party for end use or consumption in that country.

1.30 “First Indication” shall mean the Hepatitis C indication or another general disease area which
the JEC agrees upon.

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1.31 “FTE Costs” shall mean the direct and indirect costs of internal scientific, medical or
technical personnel (including expenses such as personnel expense, travel expenses and
infrastructure costs but for the avoidance of doubt, not including the costs of managerial,
financial, legal or business development personnel) engaged in such efforts, which costs shall be
determined based on the FTE Rate.

1.32 “FTE Rate” shall mean a rate of [***] per annum for the time of an employee for a full-time
equivalent scientific person year (consisting of a total of 2,000 hours per annum) of work, to be
pro-rated on a daily basis if necessary (per annum amount to be divided by 250 to produce the rate
per whole day consisting of eight hours); such rate to exclude managerial activities and be
restricted to scientific work related directly to the project. For the avoidance of doubt, such
rate to include all travel expenses.

1.33 “Genentech” shall mean Genentech, Inc.

1.34 “Genentech License” shall mean that license agreement by and among Delta , Genentech, Inc. and
Mitsubishi Chemical Corporation dated November 8, 1991, as amended by letter agreement dated April
5, 1996, and as may be further amended from time to time.

1.35 “Genentech Patent Rights” shall mean any Patent Rights which are owned or controlled by HGS or
which HGS otherwise has the right to sublicense or transfer rights thereto as of the Effective Date
or thereafter during the Term, including the Patent Rights listed in Appendix B, Part 3. Genentech
Patent Rights shall also include all United States and foreign Patent Rights entitled to the
priorities of any of the Patent Rights listed in Appendix B Part 3.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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1.36 “Genentech Royalty” shall have the meaning set forth in Section 7.5.

1.37 “HGS Arising Know-How” shall mean any proprietary improvements, modifications, and adaptations
(whether patentable or otherwise) to any part of the HGS Collaboration Technology or any other
information, data or materials relating to Albuferon or albumin based fusion technology, which is
developed by or on behalf of HGS or is in HGS’ possession or control through a license or otherwise
during the Term of this Agreement (other than the Albumin Fusion Know-How).

1.38 “HGS Arising Patent Rights” shall mean any Patent Rights relating to Albuferon or albumin
based fusion technology (including any Patent Rights containing claims that cover patentable HGS
Arising Know-How), which is owned or controlled by HGS or which HGS otherwise has the right to
sublicense or transfer rights thereto during the Term of this Agreement (other than the Albuferon
Patent Rights and Albumin Fusion Patent Rights). Appendices A and B will be updated annually,
including by adding any HGS Arising Patent Rights.

1.39 “HGS Collaboration Technology” shall mean HGS Patent Rights and HGS Know-How, but shall not
include Manufacturing Technology.

1.40 “HGS Know-How” shall mean Albumin Fusion Know-How and HGS Arising Know-How.

1.41 “HGS Net Royalty Rate” shall mean the royalty rate payable by NVS to HGS hereunder minus the
amount of royalty to cover the royalty rate payable by HGS for the AB Royalty and the Genentech
Royalty.

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1.42 “HGS Patent Rights” shall mean Albumin Fusion Patent Rights, Albuferon Patent Rights, and HGS
Arising Patent Rights.

1.43 “IND” shall mean an investigational new drug application filed in the United States with the
FDA as more fully defined in 21 C.F.R. Section 312.3 for a Collaboration Product.

1.44 “Insolvency Event” shall mean, in relation to either Party, any one of the following: (a) that
Party shall file in any court or agency pursuant to any statute or regulation of any state or
country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for
the appointment of a receiver or trustee of the Party or of its assets; (b) that Party is the
subject of voluntary or involuntary bankruptcy proceedings instituted on behalf of or against such
Party (except for involuntary bankruptcy proceedings which are dismissed within sixty (60) days);
(c) an administrative receiver, receiver and manager, interim receiver, custodian, sequestrator or
similar officer is appointed in respect of that Party; (d) a notice shall have been issued to
convene a meeting for the purpose of passing a resolution to wind up that Party, or such a
resolution shall have been passed other than a resolution for the solvent reconstruction or
reorganization of that Party; or (e) a resolution shall have been passed by that Party or that
Party’s directors to make an application for an administration order or to appoint an
administrator.

1.45 “JCC” shall mean the Joint Commercial Committee.

1.46 “JDC” shall mean the Joint Development Committee.

1.47 “JEC” shall mean the Joint Executive Committee.

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1.48 “Joint Arising Know-How” shall mean any proprietary improvements, modifications, and
adaptations (whether patentable or otherwise) to any part of the HGS Collaboration Technology or
Manufacturing Technology which is developed during the Term of this Agreement by or on behalf of
HGS and NVS jointly.

1.49 “Joint Arising Patent Rights” shall mean any Patent Rights containing claims that specifically
cover patentable Joint Arising Know-How.

1.50 “Major EU Markets” shall mean the United Kingdom, France, Germany, Italy and Spain.

1.51 “Manufacturing Technology” shall mean any proprietary information, data or materials relating
to the processes, techniques and specifications for the manufacture of any Collaboration Product,
including the preparation, synthesis, culture, recovery, analytical assay, purification,
formulation and quality control processes, techniques and specifications, which is developed by or
on behalf of HGS or which is in HGS’ possession or control through license or otherwise as of the
Effective Date or thereafter during the Term of this Agreement, including any improvements,
modifications, and adaptations to the same which are developed by or on behalf of HGS during the
Term of this Agreement. For purposes of clarification, the Research Materials (as defined below)
shall be considered Manufacturing Technology.

1.52 “Marketing Approval” shall mean the receipt of all Regulatory Approvals (including pricing
reimbursement approval in the relevant country or region) required to place the Collaboration
Product on the market for sale and use in the applicable country or region.

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1.53 “Marketing Expenses” shall mean, excluding any Development Expenses, all Out-of Pocket Costs
incurred by or on behalf of a Party or any of its Affiliates during the Term of this Agreement that
are specifically identifiable or reasonably allocable to the Commercialization of the Collaboration
Product in the United States (including the associated Detail Costs), which are set forth in the
approved Marketing Plan or are otherwise proposed by the JCC and approved in advance by the JEC.
Subject to the foregoing, Marketing Expenses shall include such costs in connection with the
following activities: marketing (pre and post launch), advertising, sampling and promoting a
Collaboration Product, including educational expenses, medical educational activities, scientific
operations organizations, speakers’ programs and symposia, and joint marketing and sales meetings;
primary and secondary market research; Promotional Materials; Samples; and pre-marketing or
post-marketing studies not directed at obtaining or maintaining Regulatory Approvals. For the sake
of clarity, Marketing Expenses shall not include FTE Costs incurred internally by the Parties or
any subcontracted personnel that are not approved as Out-of-Pocket Costs by the JEC in advance.
For the avoidance of doubt, no cost or expense item included in Marketing Expenses shall include
any internal profit margins or similar markups (it being understood that personnel costs determined
based on the Detail Costs will not be considered to include any internal profit margins or similar
markups).

1.54 “Marketing Plan” shall mean for the Collaboration Product a plan and budget of Marketing
Expenses by activity, including the nature, number and schedule of Commercialization activities,
for the Co-Promotion of the Collaboration Products in the United States as developed by the JCC and
approved by the JEC.

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1.55 “NVS Arising Know-How” shall mean any proprietary improvements, modifications, and adaptations
(whether patentable or otherwise) to any part of the HGS Collaboration Technology or Manufacturing
Technology which is developed during the Term of this Agreement and pursuant to this Agreement by
or on behalf of NVS or its Affiliates or sublicensees.

1.56 “NVS Arising Patent Rights” shall mean any Patent Rights containing claims that cover
patentable NVS Arising Know-How.

1.57 “Net Profit” shall mean Net Sales in the United States minus the Cost of Goods and the
Marketing Expenses of the Collaboration Products.

1.58 “Net Sales” with respect to any Collaboration Product shall mean the gross amount invoiced by
or on behalf of a Party, its Affiliates or sublicensees for that Collaboration Product sold to
Third Parties other than sublicensees in bona fide, arms-length transactions, less customary
deductions, determined in accordance with the Party’s Accounting Standards as generally and
consistently applied by the Party, to the extent included in the gross invoiced sales price of the
Collaboration Product or otherwise directly paid or incurred by the Party, or its Affiliates or
sublicensees with respect to the sale of such Collaboration, such as:

     (a) Free Goods;

     (b) Cash Discounts;

     (c) Direct to Customer Discounts;

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     (d) Credits, allowances, rebates or chargebacks given or made to a customer for retroactive
price reductions (including rebates similar to Medicaid);

     (e) Discount Card Programs;

     (f) Amounts repaid or credited by reasons of defects, rejection recalls, returns;

     (g) Tariffs, duties, excise, sales, value-added and other taxes (other than taxes based on
income);

     (h) Delayed Ship Order Credits;

     (i) All insurance expenses included in the invoice price;

     (j) Actual amounts credited for uncollectible amounts on previously sold products (provided in
no event shall such offset be greater than one-half of one percent of Net Sales); and

     (k) Any other reduction or specifically identifiable amounts included in the Collaboration
Product’s gross invoice that should be credited for reasons substantially equivalent to those
listed above;

     Any of the items set forth above that would otherwise be deducted from the invoice price in the
calculation of Net Sales but which are separately charged to Third Parties shall not be deducted
from the invoice price in the calculation of Net Sales. In the case of any sale or other disposal
of a Collaboration Product between or among a Party and its Affiliates, or sublicensees, for
resale, Net Sales shall be calculated as above only on the value charged or invoiced on the first
arm’s-length sale thereafter to a Third Party. In the case

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of any sale or other disposal for value, such as barter or counter-trade, of any Collaboration
Product, or part thereof, other than in an arm’s length transaction exclusively for money, Net
Sales shall be calculated as above on the value of the non-cash consideration received or the fair
market price (if higher) of the Collaboration Product in the country of sale or disposal.
Transfers of Samples of the Collaboration Product such as for physician samples and indigent
patient and similar programs (including registration samples) will not be included for purposes of
determining Net Sales.

In the event the Collaboration Product is sold in a finished dosage form containing Albuferon in
combination with one or more other active ingredients (a “Combination Product”), the Net Sales of
the Collaboration Product, for the purposes of determining royalty payments, shall be determined by
multiplying the Net Sales (as defined above in this Section) of the Combination Product by the
fraction, A/(A+B) where A is the weighted (by sales volume) average sale price in the particular
country of the Collaboration Product when sold separately in finished form and B is the weighted
average sale price in that country of the other product(s) sold separately in finished form. In
the event that such average sale price cannot be determined for both the Collaboration Product and
the other product(s) in combination, Net Sales for purposes of determining royalty payments shall
be agreed by the parties based on the relative value contributed by each component, such agreement
shall not be unreasonably withheld.

1.59 “Non-Competition Period” shall mean, on a country-by-country basis, the period beginning on
the Effective Date and ending on the earlier of (a) [***] after the

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

20

 

Effective Date, and (b) the expiration or termination of this Agreement with respect to each
country.

1.60 “Non-Global Development Activities” shall mean clinical studies or other trials outside the
Development Plan that are intended to produce data or information for use to secure Marketing
Approval solely in territories outside of the United States and are not part of the global
development activities or activities used to produce data or information intended to be used for
registration purposes on a worldwide basis. An example of Non-Global Development Activities would
include in Japan ethnic sensitivity clinical trials used to demonstrate that the Collaboration
Product has substantially similar safety and efficacy characteristics in Japan as demonstrated in
the global registration clinical trials.

1.61 “Out-of-Pocket Costs” shall mean direct project related expenses paid or payable to Third
Parties and specifically identifiable and incurred to develop and/or commercialize the Product in
the Territory (including items such as general laboratory supplies used in the Development); such
expenses to have been recorded as income statement items in accordance with the Party’s Accounting
Standards and for the avoidance of doubt, not including pre-paid amounts (until such amounts are
used), capital expenditures or travel expenses.

1.62 “Patent Rights” means all patents, including all divisionals, continuations, substitutions,
continuations-in-part, re-examinations, reissues, additions, renewals, extensions, registrations,
and supplemental protection certificates and the like of any of the foregoing as well as
applications of any of the foregoing.

1.63 “Permitted Sublicensee” shall mean the holder of any sublicense granted in writing pursuant to
Article 2 of this Agreement.

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1.64 “Phase I Clinical Study” shall mean a human clinical study in any country conducted in
accordance with good clinical practices (“GCPs”) in a small number of healthy volunteers or
patients designed or intended to establish an initial safety profile, pharmacodynamics or
pharmacokinetics of product, or that would otherwise satisfy the requirements of 21 CFR §312.21(a)
or any successor regulation thereto or foreign equivalents.

1.65 “Phase IIb Clinical Study” shall mean a human clinical trial in any country that is conducted
in accordance with GCPs and is intended to evaluate the effectiveness of a product in dose
escalation for a particular indication or indications in patients with the disease or indication
under study for purposes of identifying the appropriate dose for a Phase III Clinical Study, or
that would otherwise satisfy the requirements of 21 CFR §312.21(b) or any successor regulation
thereto or foreign equivalents.

1.66 “Phase III Clinical Study” shall mean a human clinical trial in any country that is conducted
in accordance with GCPs and the results of which could be used as pivotal to establish safety and
efficacy of a product as a basis for a Marketing Approval application submitted to the FDA or the
appropriate Regulatory Authority of such other country, or that would otherwise satisfy the
requirements of 21 CFR §312.21(c), or any successor regulation thereto or foreign equivalents.

1.67 “Primary Detail” shall mean a Detail for a Collaboration Product in which such Collaboration
Product receives the predominant portion of emphasis and time (at least sixty percent (60%) of the
time) during the Detail (i.e., no other product receives more emphasis or time during the Detail).

22

 

1.68 “Promotional Materials” shall mean all written, printed, video or graphic advertising,
promotional, educational and communication materials (other than Collaboration Product labeling)
for marketing, advertising and promotion of the Collaboration Products for use (a) by a Sales
Representative or (b) as an advertisements, direct mail piece, or via the internet or any other
manner of delivery of information, in accordance with the terms of the applicable Marketing Plan.

1.69 “Regulatory Application” shall mean any application or request necessary for the development,
manufacture, distribution, marketing, promotion, offer for sale, use, import, export, sale,
reimbursement or pricing of a Collaboration Product, including but not limited to, any applications
or requests for: (i) approval of Collaboration Product, including any BLAs, and supplements and
amendments thereto; (ii) pre- and post-approval marketing authorizations (including any
applications for prerequisite manufacturing approval or authorization related thereto); (iii)
labeling approval; (iv) technical, medical and scientific licenses; and (v) registrations or
authorizations from any national, regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity necessary for the development, manufacture,
distribution, marketing, promotion, offer for sale, use, import, export or sale of Collaboration
Product.

1.70 “Regulatory Approval” shall mean any official approvals by a Regulatory Authority (including
pricing reimbursement approvals) in a country or region which are required for the use and/or sale
of a Collaboration Product in that country or region including applicable development, manufacture,
distribution, marketing, promotion, offer for sale, use, importation, exportation, sale, pricing
and reimbursement approvals.

23

 

1.71 “Regulatory Authority” shall mean any applicable government regulatory authority involved in
granting Regulatory Approvals for the development, manufacture, distribution, marketing, promotion,
offer for sale, use, import, export, sale, reimbursement or pricing of any Collaboration Product,
including, in the United States, the FDA and in the EU, the European Medicines Agency (“EMEA”), or
any successor entities.

1.72 “Research Materials” shall mean those materials set forth in Appendix D, attached hereto and
incorporated herein by reference.

1.73 “Royalty Term” shall have the meaning set forth in Section 7.3(c).

1.74 “Sales Representative” shall mean a professional pharmaceutical sales representative engaged
or employed by either Party to conduct primarily Detailing and other promotional efforts with
respect to the Collaboration Products and who has been trained by either Party in accordance with a
training protocol to be agreed upon by the Parties.

1.75 “Samples” shall mean Collaboration Product packaged and distributed for free to members of the
Target Audience as a complimentary trial for use with patients.

1.76 “Secondary Detail” shall mean a Detail for a Collaboration Product in which such Collaboration
Product receives the second most emphasis and time (at least [***] percent ([***]) of the time)
during the Detail (i.e., at most, only one other product receives greater emphasis and time during
the Detail).

1.77 “Target Audience” shall mean the physicians or other health care professionals with authority
to prescribe a pharmaceutical product or issue hospital orders for a

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

24

 

pharmaceutical product, as may be amended from time to time as proposed by the JCC and approved by
the JEC.

1.78 “Term” shall have the meaning set out in Section 15.1.

1.79 “Territory” shall mean worldwide.

1.80 “Third Party” shall mean any person or entity other than HGS, NVS, their respective
Affiliates, or their employees.

1.81 “United States” shall mean the United States of America and its territories and possessions.

1.82 “Valid Claim” shall mean a claim of an issued, unexpired patent included in the HGS Patent
Rights, which claim has not lapsed, been abandoned, been revoked or been held to be invalid or
unenforceable by a final judgment of a court or other governmental agency or competent jurisdiction
from which no appeal can be or is taken within the time allowed for appeal and which has not been
admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise.

1.83 Interpretation. In this Agreement unless otherwise specified: (a) “includes” and “including”
shall mean includes and including without limitation; (b) references to a Party includes its
permitted assignees and/or the respective successors in title to substantially the whole of its
undertaking; (c) a statute or statutory instrument or any of their provisions is to be construed as
a reference to that statute or statutory instrument or such provision as the same may have been or
may from time to time hereafter be amended or re-enacted; (d) words denoting the singular shall
include the plural and vice versa and words denoting any gender shall include all genders; (e) the
Appendices and

25

 

other attachments form part of the operative provisions of this Agreement and references to this
Agreement shall, unless the context otherwise requires, include references to the Appendices and
attachments; (f) the headings in this Agreement are for information purposes only and shall not be
considered in the interpretation of this Agreement; and (g) general words shall not be given a
restrictive interpretation by reason of their being preceded or followed by words indicating a
particular class of acts, matters or things.

ARTICLE 2

LICENSES

2.1 License Grants.

     (a) Co-Development License. Subject to the terms of this Agreement, HGS hereby grants to NVS
an exclusive (except as to HGS and its Affiliates and sublicensees in accordance with the terms of
this Agreement), sublicensable license under the HGS Collaboration Technology to Develop
Collaboration Products for Commercialization in the Territory in the Field.

     (b) Commercialization License. Subject to the terms of this Agreement, HGS hereby grants to
NVS an exclusive (except in the United States as to HGS and its Affiliates and sublicensees in
accordance with the terms of this Agreement) royalty-bearing and sublicensable license under the
HGS Collaboration Technology to make, have made, use, have used, sell, have sold, offer for sale,
import, have imported and otherwise Commercialize Collaboration Products in the Territory in the
Field.

26

 

     (c) Subject to the terms of this Agreement, including HGS’ rights to manufacture Collaboration
Product in accordance with Article 11, HGS hereby grants to NVS an exclusive, royalty-bearing
license under the Manufacturing Technology and under any Patent Rights and other intellectual
property rights which may arise that are directed thereto, to develop, have developed, use, make,
have made, have used, sell, have sold, offer for sale, import, have imported and otherwise
Commercialize the Collaboration Products in the Territory in the Field.

2.2 License Grants for Arising Patent Rights and Know-How.

     (a) Subject to the terms of this Agreement, NVS hereby grants to HGS, an exclusive (except as
to NVS and its Affiliates and sublicensees in accordance with the terms of this Agreement),
sublicensable license under the NVS Arising Patent Rights, NVS Arising Know-How and NVS rights in
the Joint Arising Patent Rights and Joint Arising Know-How to develop, have developed, make, have
made, use, have used, sell, have sold, offer for sale, import, have imported and otherwise
Commercialize Collaboration Products in the United States in the Field.

     (b) Subject to the terms of this Agreement, HGS hereby grants to NVS, an exclusive (except in
the United States as to HGS and its Affiliates and sublicensees in accordance with the terms of
this Agreement), sublicensable license under HGS’ rights in the Joint Arising Patent Rights and
Joint Arising Know-How to develop, have developed, make, have made, use, have used, sell, have
sold, offer for sale, import, have imported and otherwise Commercialize Collaboration Products in
the Territory in the Field.

     (c) NVS hereby grants to HGS a non-exclusive, sublicensable, license to use NVS Arising
Know-How and NVS Arising Patent Rights solely for use with the

27

 

development and commercialization of albumin fusion based products, other than Collaboration
Products, in its albumin fusion portfolio and in connection with its Albumin Fusion Know-How and
Patent Rights. For the sake of clarity, this grant shall not include any manufacturing technology,
other intellectual property owned by or developed by or on behalf of NVS outside the scope of the
work performed by or on behalf of NVS under this Agreement or which does not solely pertain to the
manufacture of albumin fusion proteins.

2.3 HGS hereby grants to NVS an exclusive license (except as to HGS and its Affiliates and
sublicensees in accordance with the terms of this Agreement) to use the trademark
AlbuferonTM in connection with the Collaboration Products in the Territory. HGS shall
be the sole owner of such trademark and shall continue to have the right to use such trademark in
connection with the Collaboration Products in the United States. HGS shall be responsible for the
filing, prosecution and maintenance of the trademark AlbuferonTM and all Out-of-Pocket
Costs associated therewith shall be shared equally by the Parties.

2.4 Sublicensing

          2.4.1 Neither Party shall license any Third Party rights to HGS Collaboration Technology,
Manufacturing Technology, HGS Arising Patent Rights, HGS Arising Know-how, Joint Arising Patent
Rights or Joint Arising Know-How, all in relation to any Collaboration Product, except as
authorized under Article 2 or under Article 11 with respect to HGS’ rights to manufacture
Collaboration Product.

          2.4.2 NVS. NVS shall have the right to sublicense to a Third Party any of the licenses
granted under this Article 2 through written sublicense agreements in the

28

 

Territory; provided, however, that if NVS wishes to sublicense its rights under this Agreement
in its entirety to a Third Party (a) in the Territory as a whole, or (b) in the United States, the
EU or Japan as a whole, NVS shall obtain HGS’ prior approval, which shall not be unreasonably
withheld. NVS shall provide HGS in writing with the name of any Third Party sublicensees and
confirmation that the terms of such sublicense agreement are consistent with the terms contained
herein. NVS shall remain responsible to HGS under this Agreement for the activities undertaken by
its Third Party sublicensees in connection with this Agreement (each such Third Party to be
considered a “Permitted Sublicensee”). NVS acknowledges its obligations to AB under Section 2.1.3
of the AB License and further acknowledges AB’s right to terminate the AB License with respect to
any sublicensee for a breach of the applicable terms of this Agreement by NVS.

          2.4.3 Development in the United States. In the United States, either Party may sublicense (or
license) to a Third Party rights with respect to specific Development activities to be undertaken
as approved in the Development Plan.

          2.4.4 HGS. HGS shall have no right to license further any of the know-how or Patent Rights
licensed to NVS hereunder or to sublicense the licenses granted by NVS to HGS under this Article 2
with respect to the Commercialization or Co-Promotion of the Collaboration Products in the United
States, other than as allowed under Section 5.3.5, or as allowed under Article 11 (with respect to
manufacture of Collaboration Product), or with the prior written consent of NVS, which shall not be
unreasonably withheld. In the event of any such license or sublicense, HGS shall provide NVS in
writing with the name of any such proposed Third Party licensee or sublicensee (referred to as a
“sublicensee”) and confirmation that the terms of such agreement are consistent

29

 

with the terms contained herein. HGS shall remain responsible to NVS under this Agreement for
the activities undertaken by its Third Party sublicensees in connection with this Agreement

2.5 During the Non-Competition Period, neither Party will, directly or indirectly, commercialize
any product, other than Collaboration Product, which comprises [***].

2.6 During the Term of this Agreement, without the prior written consent of NVS, HGS will not,
directly or indirectly, license, assign or otherwise dispose of any of its rights in (a) the HGS
Collaboration Technology (other than the Albuferon Patent Rights), Manufacturing Technology or
Collaboration Products that affects the rights and licenses granted to NVS or (b) the Albuferon
Patent Rights to the extent that such licensed, assigned, or disposed of rights relate to
Collaboration Product. HGS will not agree to any amendment or modification to the AB License or
Genentech License that adversely affects the rights and licenses granted to NVS without the prior
written consent of NVS. Subject to the foregoing terms of this Article 2 and the terms of this
Agreement, HGS retains the right to research, develop, manufacture and commercialize, and to grant
licenses and other rights under the HGS Collaboration Technology and Manufacturing Technology to
manufacture and commercialize products other than Albuferon or any other Collaboration Product.

2.7 Each Party hereby covenants not to sue the other Party for any use of intellectual property
owned by such Party where such intellectual property is used to undertake the Development or
Commercialization of a Collaboration Product under this Agreement and not specifically included in
this Agreement.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

30

 

ARTICLE 3

GOVERNANCE OF DEVELOPMENT AND COMMERCIALIZATION OF

COLLABORATION PRODUCTS

3.1 Joint Executive Committee.

          3.1.1 Members. HGS and NVS will establish a joint executive committee (the “Joint Executive
Committee” or “JEC”) made up of six (6) senior executives (three (3) representatives to be
appointed by NVS and three (3) representatives to be appointed by HGS). The members of the JEC as
of the Effective Date are set out in Appendix E. HGS and NVS will co-chair the JEC. One JEC
member from each Party shall act as the main point of contact for the collaboration under this
Agreement and will be responsible for facilitating the flow of information and otherwise promoting
communication, coordination and collaboration within and among the JEC, JDC and JCC and between the
Parties (for NVS, this member will be the Alliance Manager).

          3.1.2 Responsibilities. The JEC shall perform the following functions: (a) manage and oversee
the Development and Commercialization of the Collaboration Products pursuant to the terms of this
Agreement; (b) review and approve the Development Plans and the Marketing Plans for Collaboration
Products and any material amendments to the Development Plans and Marketing Plans (including the
associated budgets); (c) at each meeting of the JEC, review a comparison of actual Development
Expenses and Marketing Expenses to the budgeted Development Expenses and Marketing Expenses for the
year-to-date, as current as practicable to a date immediately prior to the date of the meeting; (d)
review and approve the progress of the other committees; (e) review and approve the trademarks for
use in the United States; (f) review and approve “go/no-go” decisions and other matters referred to
the JEC, including

31

 

the continued Development of a particular Collaboration Product; (g) resolve disputes,
disagreements and deadlocks unresolved by the other committees; (h) provide overall strategic
oversight for the Collaboration Product (including potential combination products, development
strategy and positioning and key messages for the Collaboration Product), (i) approving the pricing
for the Collaboration Product for the United States as proposed by the JCC, (j) review publicity
and publication planning; and (k) have such other responsibilities as may be assigned to the JEC
pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

          3.1.3 Meetings. The JEC shall meet at least three (3) times during every Calendar Year (at
least one time per Calendar Year in person), and more frequently as NVS and HGS deem appropriate or
as required to resolve disputes, disagreements or deadlocks in the other committees, on such dates,
and at such places and times, as such Parties shall agree; provided that the Parties shall endeavor
to have the first meeting of the JEC within thirty (30) days after the establishment of the JEC.
Meetings of the JEC that are held in person shall alternate between offices of NVS and HGS, or such
other place as such Parties may agree. The members of the JEC also may convene or be polled or
consulted from time to time by means of telecommunications, video conferences, electronic mail or
correspondence, as deemed necessary or appropriate. Meetings of the JEC may be held in person or
by teleconference or video conference, as may be determined by the JEC. NVS and HGS each may, on
advance written notice to the other Party, invite non-member representatives of such Party to
attend meetings of the JEC.

          3.1.4 Decision Making. All decisions of the JEC shall be made by unanimous vote, with each
Party having one vote. Reasonable efforts will be made to

32

 

come to a consensus decision. At least one (1) representative from each Party shall be present
to represent a quorum for voting purposes. With respect to any dispute between the Parties, if the
JEC cannot reach consensus within ten (10) business days after the matter has been brought to the
JEC’s attention, then such issue shall be referred to the Chief Executive Officer of HGS and the
Chief Executive Officer of NVS for Commercialization issues and the NVS Head of Development for
Development issues (the “Officers”) for resolution. If the Officers of HGS and NVS cannot agree to
resolve a dispute relating to global Development issues within thirty (30) days following its
referral to the Officers, then the Parties will proceed under the most current approved Development
Plan and either Party may refer the dispute to mediation in accordance with Section 18.2. If the
Officers of HGS and NVS cannot agree to resolve a dispute relating to Commercialization issues in
the United States within thirty (30) days following its referral to the Officers, then the Parties
will proceed under the most current approved Marketing Plan and either Party may refer the dispute
to arbitration in accordance with Section 18.3. All decisions with respect to commercialization
outside the United States shall be made by NVS and NVS will have final decision-making authority
with respect to disputes related to commercialization outside the United States. For all other
disputes, if the Officers of HGS and NVS cannot resolve such dispute within thirty (30) days
following its referral to the Officers, then either Party may refer such dispute to arbitration in
accordance with the terms of Article 18 herein.

3.2 Joint Development Committee.

          3.2.1 Members. Within thirty (30) days after the Effective Date, the Parties shall establish
a development committee (the “Joint Development Committee”),

33

 

and NVS and HGS shall designate an equal number of representatives, up to a maximum total of
twelve (12) members on such Joint Development Committee with an equal number from each Party. HGS
and NVS will co-chair the JDC. The representation of the parties on the JDC shall consist of
representatives from the minimum following functions: Technical Development, Manufacturing,
Project Management, Regulatory, Commercial and Clinical. Each of NVS and HGS may replace any or
all of its representatives on the Joint Development Committee at any time upon written notice to
the other Party. Such representatives shall include individuals who have the relevant Development
and Commercialization experience and expertise in pharmaceutical drug development.

          3.2.2 Responsibilities. The JDC will perform the following functions: (a) evaluate the
scientific and commercial feasibility for, and direct, any subsequent development of Collaboration
Product for any/all indications and/or additional dosage forms in the Territory, and recommend and
approve the budget for the Development Expenses, (b) manage and oversee the preparation and
implementation of the Development Plans and (c) approve the Target Product Profile for the
Collaboration Product, which will include clinical and commercial attributes, for each indication,
(d) each year beginning with the first full Calendar Year after the Effective Date, update and
amend the initial Development Plan for the following Calendar Year so that it can submit such
proposed Development Plans to the Joint Executive Committee by the end of October of such year for
review and approval; (e) determine whether the Collaboration Product achieved the mutually agreed
Target Product Profile; (f) review and recommend to the Joint Executive Committee any material
amendments or modifications to the Development Plans; (g) coordinate and monitor regulatory
strategy and activities for the

34

 

Collaboration Products in accordance with Article 10; (h) at each meeting of the Joint
Development Committee, review a comparison of actual Development Expenses to the budgeted
Development Expenses in the Development Plan for the year-to-date, as current as practicable to a
date immediately prior to the date of the meeting; (i) review and recommend to the Joint Executive
Committee “go/no-go” decisions for the Development of Collaboration Products; and (j) have such
other responsibilities as may be assigned to the Joint Development Committee pursuant to this
Agreement or as may be mutually agreed upon by the Parties from time to time.

          3.2.3 Meetings. The Joint Development Committee shall meet at least once during every Calendar
Quarter, and more frequently as NVS and HGS deem appropriate or as reasonably requested by either
such Party, on such dates, and at such places and times, as such Parties shall agree; provided that
the Parties shall endeavor to have the first meeting of the Joint Development Committee within
thirty (30) days after the establishment of the Joint Development Committee. Meetings of the Joint
Development Committee in person shall alternate between the offices of NVS and HGS, or such other
place as the Parties may agree. The JDC may also hold meetings by teleconference or video
conference as may be determined by the JDC. The members of the Joint Development Committee also
may convene or be polled or consulted from time to time by means of telecommunications, video
conferences, electronic mail or correspondence, as deemed necessary or appropriate. NVS and HGS
each may, on advance written notice to the other Party, invite non-member representatives of such
Party to attend meetings of the Joint Development Committee.

35

 

          3.2.4 Development Budget. The Joint Development Committee shall review on a quarterly basis
the actual Development Expenses against the budget for such expenses in the applicable Calendar
Year. If in the course of its quarterly review of Development Expenses, the Joint Development
Committee should determine for any Collaboration Product that for any study or activity the actual
amounts incurred are likely to be higher than budgeted, the Joint Development Committee shall
review the reasons for such potential overrun and determine whether such overrun is appropriate. If
the Joint Development Committee determines that such overrun is appropriate, the Joint Development
Committee will agree on a revised budget for such Development Expenses for such Collaboration
Product for subsequent approval by the Joint Executive Committee. If the JDC determines that such
overrun is not appropriate, the JDC will take such actions as required to remedy the situation and
the Party incurring such excess Development Expenses shall be solely responsible for any portion of
such expenses that are in excess of the lower of (a) [***] of the approved budget for the
particular study or activity, (b) [***] of the approved budget for the particular Calendar Quarter
and (c) [***], unless otherwise mutually agreed in writing by the Parties.

          3.2.5 Decision Making. All decisions of the JDC shall be made by unanimous vote, with each
Party having one vote. Reasonable efforts will be made to come to a consensus decision, but any
matters that cannot be resolved by the JDC will be presented to the JEC for resolution. At least
one (1) representative from each Party shall be present to represent a quorum for voting purposes.

          3.2.6 Within thirty (30) days of the Effective Date, the JDC will establish a manufacturing
subcommittee to negotiate and agree upon the Supply

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

36

 

Agreement, monitor clinical supply issues, coordinate the auditing of suppliers and advise the
JDC on other manufacturing and supply issues.

3.3 Joint Commercial Committee.

          3.3.1 Members. At a time agreed upon by the JEC, the Parties shall form a Joint Commercial
Committee (JCC) for the United States. The Parties shall each designate up to a maximum total of
eight (8) members on such JCC with an equal number from each Party. Membership shall include
representation from among each Party’s commercial development and finance departments. The JCC
shall be co-chaired by NVS and HGS.

          3.3.2 Responsibilities. The purpose of the initial meeting shall be to review the current
status of the commercialization of Collaboration Product in the United States, prepare the
Marketing Plan, and agree on an operational charter that shall set forth the principles and
guidelines for the governance of the JCC. Furthermore, the JCC shall (i) determine and establish,
and as required from time to time to modify, the Marketing Plan for Collaboration Product in the
United States; (ii) oversee the commercialization of Collaboration Product in the United States
including proposing the pricing for the Collaboration Product for approval by the JEC; (iii)
proposing the trademarks for the Collaboration Product in the United States for approval by the
JEC; and (iv) review ex-US commercialization issues that will have an impact on Commercialization
in the United States in accordance with Section 5.6.2.

          3.3.3 Meetings. The first meeting of the JCC shall occur within thirty (30) days after the
formation of the JCC. Thereafter, meetings shall be held once a Calendar Quarter. The location of
such meetings shall alternate between sites selected by

37

 

NVS and HGS, unless otherwise agreed upon between the Parties. JCC meetings need not
necessarily be face-to-face meetings but, upon the agreement of both Parties, can be via other
methods of communication such as teleconferences and/or videoconference. NVS and HGS each may, on
advance written notice to the other Party, invite non-member representatives of such Party to
attend meetings of the JCC.

          3.3.4 Marketing Budget. The JCC shall review on a quarterly basis the actual Marketing
Expenses against the budget for such expenses in the applicable Calendar Year. If in the course of
its quarterly review of Marketing Expenses, the JCC should determine for any Collaboration Product
that for any study or activity the actual amounts incurred are likely to be higher than budgeted,
the JCC shall review the reasons for such potential overrun and determine whether such overrun is
appropriate. If the JCC determines that such overrun is appropriate, the JCC will agree on a
revised budget for such Marketing Expenses for such Collaboration Product for subsequent approval
by the JEC. If the JCC determines that such overrun is not appropriate, the JCC will take such
actions as required to remedy the situation and the Party incurring such excess Marketing Expenses
shall be solely responsible for any portion of such expenses that are in excess of the lower of (a)
[***] of the approved budget for the particular study or activity and (b) [***] of the approved
budget for the particular Calendar Quarter, unless otherwise mutually agreed in writing by the
Parties.

          3.3.5 Decision Making. All decisions of the JCC shall be made by unanimous vote, with each
Party having one vote. Reasonable efforts will be made to come to a consensus decision, but any
matters that cannot be resolved by the JCC will be

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

38

 

presented to the JEC for resolution. At least one (1) representative from each Party shall be
present to represent a quorum for voting purposes.

3.4 Minutes of Committee Meetings. The Parties will agree upon a standard format for the minutes of
the committee meetings. Definitive minutes of all committee meetings shall be finalized no later
than thirty (30) business days after the meeting to which the minutes pertain as follows:

          3.4.1 Distribution of Minutes. Within ten (10) business days after a committee meeting, the
secretary of such committee (which shall alternate between a NVS and HGS member on
meeting-to-meeting basis) shall prepare and distribute to all members of such committee draft
minutes of the meeting. Such minutes shall provide a list of any issues yet to be resolved, either
within such committee or through the relevant resolution process.

          3.4.2 Review of Minutes. The Party not providing the initial draft minutes shall have ten (10)
business days after receiving such draft minutes to collect comments thereon and provide them to
the secretary of such committee that prepared the initial draft minutes.

          3.4.3 Discussion of Comments. Upon the expiration of such second ten (10) business day period,
the Parties shall have an additional ten (10) business days to discuss each other’s comments and
finalize the minutes.

          3.4.4 Expenses. Each Party shall be responsible for all costs and expenses for its members and
other representatives to attend meetings of, and otherwise participate on, a committee, including
all travel and related costs and expenses.

39

 

However, Out-of-Pocket Costs that are attributable to both Parties in respect of such meetings
(e.g., meeting rooms, meeting services and related costs) will be shared on an equal basis by the
Parties.

ARTICLE 4

DEVELOPMENT OF COLLABORATION PRODUCTS

4.1 Responsibilities of the Parties. Subject to the general oversight of the Joint Development
Committee, and subject in all instances to the specific provisions relating to regulatory matters
referred to in Article 10, the Parties shall use Commercially Reasonable Efforts to Develop the
Collaboration Products for Commercialization and to perform the Development activities assigned to
it pursuant to the Development Plan, all in accordance with the applicable Development Plan, for a
Collaboration Product. For the avoidance of doubt, NVS will control all Non-Global Development
Activities.

4.2 Development Plans. The initial Development Plan for all Development activities for the
Collaboration Product, which the Parties hereby approve, is attached to this Agreement as Appendix
C. Prior to the end of each Calendar Year beginning with the first full Calendar Year after the
Effective Date, the Joint Development Committee shall update and amend the initial Development Plan
and prepare the Development Plan for the Collaboration Product for the following Calendar Year so
that it can submit such proposed Development Plan to the JEC by the end of October of such year for
review and approval.

          4.2.1 Criteria for Development Plans. The Development Plan for each Collaboration Product
shall contain at a minimum a list and description of preclinical and clinical activities, timelines
for the performance of studies in support of the Development

40

 

activities for such Collaboration Product and which Party bears responsibility for such
activities and a budget for the Development Expenses to complete such Development activities.

          4.2.2 Implementation of Development Plans. Each Party will inform the Joint Development
Committee of ongoing implementation of the Development Plan and consider timely recommendations for
improving the Development Plan. In connection with the preparation and implementation of the
Development Plan, HGS and NVS will make available to the Joint Development Committee any
information then in their possession pertaining to the Collaboration Products useful for such
Development activities. For Non-Global Development Activities undertaken by NVS, the oversight of
the JDC shall not include the timing and budget related to such activities.

          4.2.3 Development Budgets. The Development budget for the Development of the Collaboration
Products shall be set forth in the Development Plan. Such Development budget shall be sufficient to
fund the agreed studies and related activities necessary to obtain Marketing Approval for such
Collaboration Product and generate data otherwise necessary for Commercialization as agreed by the
JEC. For the avoidance of doubt, expenses for Non-Global Development Activities will not be
included in the Development Plan budget or included as Development Expenses.

          4.2.4 Payment of Expenses; Development Expense. Subject to each Party’s relative percentage
to fund Development Expenses and Reconciliation as provided in Article 6, each Party shall be
responsible to pay for all Development Expenses incurred in performing its obligations in
connection with any Development activities under a Development Plan. Each Party shall track such
Development Expenses, including by

41

 

identifying Development Expenses by Collaboration Product by Indication being Developed.

ARTICLE 5

CO-PROMOTION, DETAILING AND COMMERCIALIZATION

5.1 Marketing Plans. General. The JCC shall be responsible for preparing and implementing a
Marketing Plan for the Commercialization of each Collaboration Product in the United States. Each
Marketing Plan shall define the goals and objectives for Commercializing the Collaboration Products
in the pertinent Calendar Year in the United States consistent with the applicable Development
Plan.

          5.1.1 Initial Marketing Plan. At a time determined by the JEC, the JCC shall prepare the
Marketing Plan for the Commercialization activities for the Collaboration Product, which such
Marketing Plan shall include the minimum Detail Requirements and the budgeted Marketing Expenses.

          5.1.2 Updated Marketing Plan. Each year beginning with the first full Calendar Year after the
Effective Date, the JCC shall amend and update the Marketing Plan for submission of such proposed
Marketing Plan to the JEC by the end of October of such year for review and approval.

          5.1.3 Contents of Each Marketing Plan. Each Marketing Plan shall encompass the planned
Commercialization strategy in the United States and the corresponding budgeted Marketing Expenses
for at least one (1) Calendar Years and shall contain at a minimum, unless determined otherwise by
the JEC: (a) pricing, trademarks, publications, partnering, KOLs, market research and strategy,
including market size,

42

 

dynamics, growth, customer segmentation, competitive analysis and Collaboration Product
positioning; (b) sales forecast for the next Calendar Year; (c) medical education plan, advertising
and promotion programs and strategies, including sales literature, promotional premiums, media
plans, symposia and speaker programs; (d) sales plans and activity, including sales force training,
and for each Party, development of appropriate sales training materials, and strategy and budget
for Samples; (e) phase IV Studies to be conducted, which studies shall be included in the
then-current Marketing Plan; (f) identification of the total minimum Details required to support
the Collaboration Product, a firm indication of the number of Sales Representatives and Details to
be provided by each Party in such period; (g) distribution activities; and (h) which Party shall be
responsible for such Marketing activities.

          5.1.4 Budget for Marketing Expenses. Each Marketing Plan shall set forth the total budget for
Marketing Expenses for such Collaboration Product. Such Marketing Expense budget shall be
sufficient to fund the agreed pre-launch, launch and related activities necessary to optimize
Commercialization of each Collaboration Product. In the event that Marketing Expenses incurred by a
Party exceed the budgeted Marketing Expenses, the JCC shall attempt to address the issue in
accordance with Section 3.3.4.

5.2 Commercialization Responsibilities in the United States.

          5.2.1 Joint Responsibilities. HGS and NVS will jointly manage medical affairs activities
related to the launching and marketing of the Collaboration Products, including medical sciences
liaisons and drug information requirements. The activities may be conducted by parallel groups in
each Party with coordination through the JCC. Any other Commercialization activities in the United
States that are not specified as the

43

 

responsibility of HGS or NVS under this Agreement or the Marketing Plan will be jointly
conducted by the Parties with direction from the JCC.

          5.2.2 HGS Responsibilities. (a) HGS shall have the sole right and responsibility to record
and collect payment for sales of Collaboration Products throughout the United States; and (b) HGS
shall use Commercially Reasonable Efforts to employ an appropriate management infrastructure to
supervise the Sales Representatives required to oversee HGS’ obligations to perform Detail
Requirements and marketing staff of sufficient size to establish, maintain and implement the
Marketing Plan for the Collaboration Products.

          5.2.3 NVS Responsibilities. (a) NVS will lead the pharmacovigilance efforts with involvement
from HGS; (b) NVS shall use Commercially Reasonable Efforts to employ an appropriate management
infrastructure to supervise the Sales Representatives required to oversee NVS’ obligations to
perform Detail Requirements and marketing staff of sufficient size to establish, maintain and
implement the Marketing Plan for the Collaboration Products; and (c) NVS will be responsible for
all managed care and key account management activities associated with Collaboration Products,
subject to if NVS is not able to include Collaboration Product in its managed care contracts, HGS
shall have the right to execute and maintain its own managed care contracts for Collaboration
Product subject to the review and approval of the JCC.

5.3 Detailing Efforts.

          5.3.1 Any Co-Promotion activities conducted by the Parties shall be conducted in accordance
with the Marketing Plan and as directed by the JCC. The Parties shall only use promotional
materials, advertising and literature approved by the

44

 

JCC. The Parties shall market, Detail and Co-Promote the Collaboration Products in accordance
with the terms of this Agreement and the relevant Marketing Plan. No Party shall be required to
undertake any activity under this Agreement which it believes, in good faith, would violate any
Laws.

          5.3.2 Detailing and Marketing Requirements. The JCC shall determine the targeted number of
total Details and Primary Details to be performed by each Party during each Calendar Year and the
Target Audience for such Details (the “Detail Requirements”). Unless otherwise agreed by the JEC,
each Party is responsible for fifty percent (50%) of the Detail Requirements.

               (i) In the case where each Party is responsible for performing approximately fifty percent
(50%) of the Detail Requirements, if a Party cannot perform its agreed percentage of the Detail
Requirements, the other party will have the right (but not the obligation) to perform the shortfall
of Details. In the event that the performing party performs more than fifty percent (50%) of the
Detail Requirements, the excess Detail Costs shall be reimbursed to the performing party by the
non-performing Party. If a Party cannot perform at least [***] of the Detail Requirements, the
other Party will have the right (but not the obligation) to perform the shortfall of Details. In
addition, the excess Detail Costs shall be reimbursed to the performing Party by the non-performing
Party and the share of the Net Profits will be adjusted with the performing Party receiving an
additional percentage of the Net Profit equal to [***]. In addition, if the non-performing Party
does not perform at least [***]. If NVS is the terminating Party, NVS shall have the exclusive
right to commercialize the Collaboration Products on a worldwide basis (including booking sales in
the United States) and the royalty rate

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

45

 

applicable to Net Sales of the Collaboration Products in the United States will be equal to
[***] of the Net Sales in the United States; provided, however, [***]. For the purposes of
determining the percentage of Detail Requirements performed by each Party, a Primary Detail shall
be considered one (1) Detail and a Secondary Detail shall be considered as one-half (1/2) of a
Detail. If HGS is the terminating Party, HGS may terminate the Co-Promotion in the United States
and this Agreement shall remain in effect for the Territory outside of the United States in
accordance with its terms.

               (ii) If the JEC decides that one party will perform less than fifty percent (50%) of the
Detail Requirements, the JEC will also decide what changes to subsection (i) above are appropriate
but cannot determine that the shortfall figure discussed in Subsection (i) above will be less than
the lesser of (a) [***] or (b) within [***] percentage points of the agreed upon Detail
Requirements to be performed by the Party.

               (iii) The right to terminate the Co-Promotion in the United States under this
Section 5.3.2
shall not limit a Party’s right to terminate this Agreement in its entirety for a material breach
under Section 15.3(a).

          5.3.3 Detailing Reports. Each Party shall keep complete and accurate records of all Details
performed by its sales force in Co-Promoting in the United States. Within forty (40) days
following the end of each Calendar Quarter, each Party shall provide the JCC with a report setting
forth, in such detail and form as the JCC shall require (the “Internal Detailing Report”), based
upon each Party’s internal Detailing reporting system, the total number of Details, Primary Details
and Secondary Details actually performed by such Party, segmented by physician specialty of the
Target

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

46

 

Audience during the immediately preceding Calendar Quarter. The Parties will cooperate
through the JCC to establish compatible Detail reporting and tracking mechanisms for the
Co-Promotion of the Product to allow for communication of the Detailing efforts between the
Parties.

          5.3.4 Records and Audits Pertaining to Details. Not more than once per calendar year, each
Party or its internationally reputable authorized independent public accountant or internationally
reputable audit firm shall have the right to engage the other Party’s independent public
accountant, at reasonable times and upon providing reasonable notice, to audit the Detail records
of the other Party relating to Co-Promotion of Collaboration Product pursuant to this Agreement
with respect to the twelve (12) Calendar Quarters prior to the date of such request (provided that
such data may only be audited one time). The Party requesting the audit shall bear the cost of
such audit and shall make the results of any such examination available to the other Party.

          5.3.5 Each Party will perform the detailing through an internal sales force. However, HGS or
NVS may subcontract a sales force, the personnel of which are trained and managed by the Party and
dedicated solely to performing Detailing efforts for such Party; provided, however, that in the
case of HGS, the purpose of subcontracting is to build an internal sales force where more than
[***] of the subcontracted sales force is intended to transition to become employees of HGS to
continue to Promote the Collaboration Product in the United States.

5.4 Training and Standards.

          5.4.1 Training Plans. The JCC shall develop training plans for the Collaboration Product. NVS
and HGS shall, each at its own expense, comply with the

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

47

 

training plan contained in any Marketing Plan which is otherwise consistent with provisions of
this Agreement. Each Party will be responsible for supervising, training and maintaining its Sales
Representatives as may be required to Detail the Collaboration Products as provided herein or in
the applicable Marketing Plan, such training to include a reasonable proficiency examination
relevant to the Collaboration Products given at least annually for all Sales Representatives who
will be engaged in Detailing, at such Party’s own cost and expense. HGS shall have the right to
participate in the training programs of NVS, and NVS shall have the right to participate in the
training programs of HGS, for the purpose of ensuring overall consistency in the training programs
for the Collaboration Products. Any costs and expenses incurred by either Party (including
internal and external costs and expenses) in training the sales force of the other Party will be
shared equally by the Parties.

          5.4.2 Assistance. The Parties shall work together to prepare any and all training materials
relating to Collaboration Products for use in connection with the training of its Sales
Representatives, including but not limited to learning units and any other printed, audio and video
training materials. The Parties shall share the costs of the development of such training materials
as Marketing Expenses.

          5.4.3 Training of Sales Representatives. All Sales Representatives of a Party have received,
or will receive in a timely manner, appropriate training on proper marketing and sales techniques
to be used in promoting pharmaceutical products in accordance with applicable Laws.

          5.4.4 Performance Standards. Each Party’s Sales Representatives shall meet the performance
standards established by the JCC with the minimum being the

48

 

customary performance standards NVS uses for its sales force (“Sales Force Performance
Standards”). In the event that either Party does not meet the Sales Force Performance Standards in
any Calendar Quarter (“Non-Performing Party”), the other Party may notify the Non-Performing Party
of the failure and require that the Non-Performing Party implement a plan to remedy such failure
for the forthcoming Calendar Quarters. If the Non-Performing Party fails to meet the Sales Force
Performance Standards for another [***] consecutive Calendar Quarters within the four following
Calendar Quarters, the other Party may terminate the Co-Promotion in the United States. If NVS is
the terminating Party, NVS shall have the exclusive right to commercialize the Collaboration
Products on a worldwide basis (including booking sales in the United States) and the royalty rate
applicable to Net Sales of the Collaboration Products in the United States will be equal to [***]
(for annual US Net Sales of less than [***] million), [***] (for annual US Net Sales greater than
[***] million and less than [***]) and [***] (for annual US Net Sales greater than [***]) of the
Net Sales in the United States; provided, however, [***]. The right to terminate the Co-Promotion
in the United States under this Section 5.4.4 shall not limit a Party’s right to terminate this
Agreement in its entirety for a material breach under Section 15.3(a).

          5.4.5 Joint Marketing and Sales Meetings. The Parties shall plan and implement periodic joint
sales and marketing meeting, including a national launch meeting, for the Collaboration Product.

5.5 Compliance

          5.5.1 Each Party shall cause its sales representatives responsible for Detailing and
Co-Promoting the Collaboration Product in the Territory to comply with all

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

49

 

federal, state, provincial, territorial, governmental and local laws, rules and regulations
applicable to the promotion and marketing of Collaboration Product, including, without limitation,
with respect to the U.S., the Federal Food, Drug and Cosmetics Act of 1938, as amended, and the
Prescription Drug Marketing Act of 1987, as amended (“PDMA”).

          5.5.2 Each Party warrants and represents that its Sales Representatives responsible for
Co-Promoting Collaboration Product in the United States under this Agreement shall:

     (i) limit claims of efficacy and safety for Collaboration Product in the relevant
country of the Territory to those that are (A) consistent with the approved promotional
claims in the Marketing Plan and (B) consistent with the FDA-approved (or relevant
Regulatory Authority-approved, whichever is applicable) prescribing information for
Collaboration Product in such country;

     (ii) not add, delete or modify claims of efficacy and safety in the Promotion of
Collaboration Product under this Agreement from those claims of efficacy and safety that
are contained in the Marketing Plan and that are consistent with the FDA-approved (or
relevant Regulatory Authority-approved, whichever is applicable) prescribing information
and with applicable law;

     (iii) not make any material changes in promotional materials and literature approved
by the JCC, and

     (iv) Detail Collaboration Product under this Agreement in adherence to the Marketing
Plan and to applicable legal requirements.

50

 

          5.5.3 Each Party shall cause, and shall maintain written procedures to ensure that all of its
Sales Representatives comply with all applicable laws, rules and regulations relating to the
storage and distribution of, and accountability for, Samples of Collaboration Product. Any and all
records, reports or other documentation with respect to samples of Collaboration Product for
distribution in the Territory shall be maintained by each Party for as long as required by the
PDMA, but in no event less than three (3) years. Each Party shall fully cooperate with the other
in production and delivery of any such documentation as may be requested or required by the FDA
and/or any other governmental authority.

          5.5.4 Each Party shall cause its sales representatives to act in accordance with the highest
standards of the industry and in a professional, ethical and lawful manner and consistent with the
Commercially Reasonable Efforts used by each Party to Commercialize the Product.

          5.6 Commercialization Responsibility Outside the United States.

          5.6.1 For the avoidance of doubt, the provisions set out above under Clauses 5.1-5.5 only
apply to Commercialization of the Collaboration Product within the United States, unless expressly
stated otherwise.

          5.6.2 NVS will be responsible for and have sole control over the commercialization of the
Collaboration Product outside of the United States. NVS will provide to the JCC an annual
high-level marketing plan for the Territory outside the United States. At each JCC meeting, NVS
will provide a summary of the status of the commercialization efforts outside the United States.
The JCC will have a standing agenda item to discuss any ex-US commercialization issues that affect
the US and vice

51

 

versa. To the extent required, NVS will coordinate with the JCC in relevant activities, such
as with respect to the branding and product description of the Collaboration Product and, if
necessary, NVS and HGS will establish joint teams to calibrate relevant activities. For the
avoidance of doubt, NVS shall have sole discretion over decisions relating to commercialization of
the Collaboration Product outside the US (including decisions on pricing and reimbursement).

          5.6.3 In the event that NVS elects to have a Third Party co-promote a Collaboration Product
outside of the United States, NVS shall first inform HGS. HGS will then be provided a reasonable
opportunity to present a proposal for the co-promotion of the Collaboration Product in the
applicable country or countries. NVS will consider such proposal in good faith, and if NVS
decides, in its sole discretion, to accept the proposal, the Parties will negotiate in good faith a
mutually acceptable addendum to this Agreement to reflect such co-promotion activities, appropriate
financial terms and other requirements. However, NVS will not be obligated to enter into any
co-promotion arrangement with HGS outside the United States.

          5.6.4 NVS shall have the sole right and responsibility to record and collect payment for sales
of Collaboration Products outside the United States.

          5.6.5 NVS warrants and represents that its Sales Representatives responsible for sales of
Collaboration Product in the Territory outside the United States under this Agreement shall:

     (i) limit claims of efficacy and safety for Collaboration Product in the relevant
country of the Territory to those that are consistent with the relevant

52

 

Regulatory Authority-approved prescribing information for Collaboration Product in
such country;

     (ii) not add, delete or modify claims of efficacy and safety in the Promotion of
Collaboration Product under this Agreement from those claims of efficacy and safety that
are consistent with the relevant Regulatory Authority-approved prescribing information and
with applicable law;

     (iii) Detail Collaboration Product under this Agreement in adherence to applicable
legal requirements.

ARTICLE 6

DEVELOPMENT AND COMMERCIALIZATION PAYMENTS AND REPORTS

6.1 Costs and Expenses; Payments.

          6.1.1 Co-Development Expenses. During the Term of this Agreement, HGS and NVS shall share
equally the Development Expenses of all Development activities under the Development Plan for the
Collaboration Product in the Territory. NVS and HGS shall each pay fifty percent (50%) of any
Development Expenses that are associated with global development activities or activities to
produce data or information intended to be used for registration purposes on a worldwide basis,
including, for example, the EU and the United States, subject to reconciliation in Section 6.4.3.
NVS will be solely responsible for development expenses associated with Non-Global Development
Activities. Additionally, upon the first dosing of a patient in the first Phase III Clinical Study
approved in the Development Plan, NVS will pay to HGS a non-refundable, non-creditable
reimbursement for development costs incurred by HGS prior

53

 

to the Effective Date totaling [***] within [***] days of the receipt of an invoice from HGS.

          6.1.2 Marketing Expenses in the United States. HGS shall be responsible and pay for fifty
percent (50%) and NVS shall be responsible and pay for fifty percent (50%) of the Marketing
Expenses (including Detailing Costs) for Commercialization of the Collaboration Products in the
United States under the Marketing Plan, regardless of where such expenses are incurred.

          6.1.3 Commercialization Funding in the Territory outside of the United States. NVS shall be
solely responsible and pay for one hundred percent (100%) of the Marketing Expenses for
Commercialization of the Collaboration Products in the Territory outside of the United States.

          6.2 Sharing Net Profits in the United States. HGS and NVS will share equally (50/50) in the Net
Profits from sales of Collaboration Product in the United States. For the avoidance of doubt,
during the period the Parties are co-promoting the Collaboration Products in the United States, NVS
will have no obligation to pay royalties on Net Sales of the Collaboration Products in the United
States.

          6.3 Notwithstanding anything to the contrary contained in this Agreement, each Party shall have no
obligation to make any milestone payments, license fees/payments, or any other type of payments or
fees which are not expressly stated hereunder to the other Party under this Agreement.

6.4 Reports.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

54

 

          6.4.1 NVS Report. Within thirty-five (35) days after the end of each Calendar Quarter, NVS
shall submit to HGS a written report (each, a “NVS Report”) setting forth in reasonable detail the
following items during such Calendar Quarter (where such items are necessary in order to determine
the financial reconciliation or the appropriate payment to a Party):

               (i) Development Expenses incurred by NVS;

               (ii) Marketing Expenses incurred by NVS;

               (iii) COGS for the Collaboration Product (except for any COGS separately reimbursed under a
supply agreement between the Parties);

               (iv) Royalties, if any, paid by NVS to Third Parties;

               (v) Detail Costs for the Collaboration Product; and

               (vi) Net Sales of Collaboration Products.

          6.4.2 HGS Report. Within thirty-five (35) days after the end of each Calendar Quarter, HGS
shall submit to NVS a written report (each, an “HGS Report”) setting forth in reasonable detail the
following items during such Calendar Quarter (where such items are necessary in order to determine
the financial reconciliation or the appropriate payment to a Party):

               (i) Development Expenses incurred by HGS;

               (ii) Marketing Expenses incurred by HGS;

55

 

               (iii) COGS for the Collaboration Product including the markup (except for any COGS separately
reimbursed under a supply agreement between the Parties);

               (iv) Royalties, if any, paid by HGS to Third Parties;

               (v) Detail Costs for the Collaboration Product; and

               (vi) Net Sales of Collaboration Product.

          6.4.3 Financial Reconciliation. Within forty-five (45) days after the end of each Calendar
Quarter, commencing with first Calendar Quarter during which the Effective Date occurs, HGS shall,
using the NVS Report and the HGS Report, prepare a reconciliation report for the Collaboration
Product (the “Reconciliation Report”) which shall show the Development Expenses either Party may
owe the other, Marketing Expenses, Costs of Goods, Royalties and Detail Costs and the resulting Net
Profit, if any, owed by HGS to NVS or by NVS to HGS, as the case may be. Such Reconciliation
Report will be provided to the JEC for approval. Such approval must occur within ten (10) days of
receipt thereof. After approval of the Reconciliation Report by the JEC, NVS or HGS, as the case
may be, shall invoice the other within ten (10) days of approval and such other Party shall pay the
applicable net amount within thirty (30) days of receipt of the applicable invoice.

ARTICLE 7

UPFRONT AND MILESTONE PAYMENTS AND ROYALTIES

7.1 In partial consideration for the licenses and rights granted to NVS hereunder, NVS shall pay to
HGS a non-refundable, non-creditable, upfront license fee of Forty-Five

56

 

Million US Dollars ($45,000,000.00). HGS shall invoice such amount on or after the Effective Date
and such payment shall be due and payable within thirty (30) days of NVS’ receipt of such invoice.

7.2 Milestone Payments.

     (a) First Indication Milestones. Upon the first achievement of the following milestone events
by HGS, NVS, Affiliates or its Permitted Sublicensees under this Agreement for the First Indication
only for the Collaboration Product arising hereunder, HGS shall invoice and NVS shall pay the
following one-time milestone payments:

	 	 	 
	Milestone Event	 	First Indication
	(a) [***]
	 	 U.S. $[***]
	(b) [***]
	 	U.S. $[***]
	(c) [***]
	 	U.S. $[***]
	(d) [***]
	 	U.S. $[***]
	(e) [***]
	 	U.S. $[***]
	(f) [***]
	 	U.S. $[***]
	[***]
	 	U.S. $[***]

     (b) Net Sales Milestones for sales of Collaboration Products. Upon the first achievement of
the following milestone events for the cumulative Net Sales of all Collaboration Products in any
Calendar Year in the Territory under this Agreement, NVS shall pay HGS the following one-time
milestone payments:

	 	 	 
	Milestone Event	 	Amount
	First Calendar Year in which annual Net Sales exceed [***]
	 	[***]
	First Calendar Year in which annual Net Sales exceed [***]
	 	[***]
	First Calendar Year in which annual Net Sales exceed [***]
	 	[***]
	First Calendar Year in which annual Net Sales exceed [***]
	 	[***]
	Total Net Sales Milestones
	 	[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

57

 

     (c) If NVS achieves any of the milestone events stated above in Section 7.2(a) and (b), NVS
shall notify HGS in writing within thirty (30) days on the achievement of any milestone event
stated above. Upon achievement by HGS or NVS of a milestone, HGS shall send NVS a written invoice
for the applicable milestone payment. The milestone payments set forth in Sections 7.2(a) and
7.2(b) shall be payable within thirty (30) days after the day on which NVS receives HGS’ invoice
therefor.

     (d) Each milestone payment in Section 7.2(a) and 7.2(b) will be made only one time under this
Agreement, regardless of how many times each such milestone is achieved for a Collaboration Product
for the First Indication.

     (e) Milestone payments payable pursuant to this Section 7.2 are not creditable against the
royalties set forth in Section 7.3.

     (f) In the event that a Collaboration Product is replaced by a back-up or follow-up
Collaboration Product in the First Indication, such back-up or follow-up Collaboration Product will
only trigger milestones which were not achieved by the previous Collaboration Product that such
back-up or follow-up Collaboration Product has replaced. In addition, no milestone payments will
be due for the development and commercialization of Collaboration Products for other indications.

7.3 Royalties payable by NVS in the Territory outside the United States.

58

 

     (a) Subject always to all other applicable provisions of this Agreement, in partial
consideration for the licenses granted in Article 2, NVS shall pay to HGS royalties on Net Sales of
Collaboration Products by NVS and its Affiliates and Permitted Sublicensees in any Calendar Year in
the Territory outside the United States (“Ex-US Net Sales”) at the following rates:

	 	 	 	 	 
	Net Sales in Calendar Year	 	Royalty Rate [***]
	[***]
	 	 	[***]	%
	[***]
	 	 	[***]	%
	[***]
	 	 	[***]	%

     (b) Upon expiration of or any other reason for the non-applicability or reduction of the
Genentech Royalty with respect to any particular Net Sales, the royalty rate set out above will
[***]. Furthermore, upon expiration of or any other reason for the non-applicability or reduction
of the AB Royalty, with respect to any particular Net Sales, the royalty rate set out above will
[***].

     (c) Applicability of Royalty Obligations. The royalty described in Section 7.3(a) shall be
payable on Net Sales beginning with the First Commercial Sale, on a country-by-country and
product-by-product basis, until the date which is the later of (i) [***] after the First Commercial
Sale and (ii) the date upon which there is no existing Valid Claim [***]. Following the Royalty
Term on a product-by-product and country-by-country basis, NVS’ licenses with respect to such
Collaboration Products shall

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

59

 

continue in effect, but become fully paid-up, royalty-free, transferable, perpetual and
irrevocable.

     (d) During the Royalty Term, in any country in which there is no existing Valid Claim within
the HGS Patent Rights claiming Albuferon in the country of sale and at the time of sale, NVS shall
pay a royalty in respect of the HGS Know-How licensed hereunder equal to [***] of the HGS Net
Royalty Rate set forth in Section 7.3(a) above on the Ex-US Net Sales of such Product in such
country. The reduced royalty rate for such Net Sales shall be equal to [***] average royalty rate
on the Ex-US Net Sales. An example of this calculation is set out in Appendix G.

7.4 AB Royalties. On behalf of both Parties, HGS shall pay to AB a royalty of [***] of Net Sales
of the Collaboration Products worldwide pursuant to and in accordance with the AB License (“AB
Royalty”) for so long as required by the terms of the AB License. For the purposes of the AB
royalty, if the Collaboration Product is sold as a Combination Product and the Net Sales are
calculated using Combination Product Net Sales, [***]. In the United States, the AB Royalty will
be considered as a Marketing Expense in the determination of the Net Profit and shared by the
Parties. Such royalty shall only be payable as long as required by the terms of the AB License.

7.5 Genentech Royalties. On behalf of both parties hereto, HGS shall pay to Genentech a royalty of
[***] of Net Sales of the Collaboration Products worldwide pursuant to and in accordance with the
AB and Genentech Licenses (“Genentech Royalty”). For the purposes of the Genentech royalty, if the
Collaboration Product is sold as a Combination Product and the Net Sales are calculated using
Combination Product Net Sales, [***]. In the United States, the Genentech Royalty will be
considered as a

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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Marketing Expense in the determination of the Net Profit and shared by the Parties. Such
royalty shall only be payable as long as required by the terms of the AB and Genentech License.

7.6 Sublicensee payments. If NVS sublicenses its rights to the Collaboration Product in the
Territory, HGS will receive the payments and royalties to which is entitled pursuant to Articles 6
and 7 of this Agreement.

7.7 Third Party Royalties excluding the AB and Genentech Royalties. [***]. If NVS and HGS deem it
necessary to acquire a royalty-bearing license from any Third Party in order to develop,
manufacture or commercialize a Collaboration Product, then the Parties shall [***].

7.8 Competitive Products. In the event a Competitive Product is marketed by a Third Party in any
country outside of the United States and the Net Sales of the Collaboration Product in such country
in any Calendar Year are reduced below a level of [***] as compared with the Net Sales of such
Collaboration Product in the preceding Calendar Year in such country, then the HGS Net Royalty
rates applicable to the Collaboration Product in such country for the remainder of the Royalty Term
shall be reduced by [***] in addition to any other reductions or deductions available to NVS. The
deduction shall not apply to the portion of the royalty that corresponds to the amount HGS owes as
the AB and Genentech Royalties where applicable pursuant to the AB and Genentech Agreements. The
reduced royalty rate shall be calculated in the same manner as the reduced royalty contemplated by
Clause 7.3(d) and Appendix G.

7.9 Beginning with the Calendar Quarter of the First Commercial Sale of the Collaboration Product
in Territory outside the United States, within forty-five (45) days

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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after the end of each Calendar Quarter in which there are Net Sales, NVS shall submit a
written report to HGS stating the amount of Net Sales in such calendar quarter and the amount of
royalty due hereunder with respect to such Net Sales. Such written report shall describe, unless
otherwise agreed by AB and to the extent reasonably practicable for NVS in accordance with its
then-current global reporting and accounting system, for each calendar quarter the aggregate gross
sales and Net Sales of Collaboration Products by country, including the Net Sales in the local
currency and the corresponding U.S. Dollar amount, place of manufacture, number, description and
the total royalty due.

ARTICLE 8

PAYMENTS AND AUDITS

     8.1 If a Party does not make any payments due under this Agreement at the times that they are due,
then the non-paying Party shall pay interest on each late payment, to the extent permitted by
applicable law, at a rate of [***] percentage points [***] over the annual USD LIBOR (3 months),
for the date on which such payment becomes delinquent, calculated daily.

     8.2 All payments shall be made in U.S. dollars. With respect to amounts invoiced or incurred in a
currency other than United States Dollars, all such amounts shall be expressed both in the currency
in which the amount was invoiced or incurred and in the United States Dollar equivalent. With
respect to NVS, the United States Dollar equivalent shall be calculated using NVS’ then-current
standard exchange rate methodology applied in its external reporting (which is ultimately based on
official rates such as Reuters and the European Central Bank) for the conversion of foreign
currency sales into United States Dollars. With respect to HGS, the United States Dollar

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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equivalent shall be calculated using HGS’ then current standard exchange rate
methodology applied in its external reporting (which is ultimately based on official rates such as
the Wall Street Journal or Reuters) for the conversion of foreign currency sales or other relevant
charges or costs into United States Dollars.

8.3 Each Party shall provide to the other Party an invoice for all amounts due to it under this
Agreement substantially in the form set out in Appendix F. Unless otherwise noted, payments on
such invoices shall be made within thirty (30) days of the Party’s receipt of the applicable
invoice.

8.4 Payments to each Party shall be made by electronic wire transfer of immediately available funds
to the account of the Party, as designated in writing to the other Party.

8.5 Each Party shall be responsible for any and all taxes levied on account of amounts it receives
under this Agreement. If a Party is required by law, rule or regulation to withhold taxes from the
types of payments due to the other Party hereunder, such Party shall (a) deduct those taxes from
the amount otherwise remittable to the other Party hereunder, (b) pay such taxes to the proper
taxing authority and (c) send evidence of the obligation together with proof of payment to the
other Party within ninety (90) days following such payment.

8.6 No part of any amount payable to NVS or HGS under this Agreement may be reduced due to any
counterclaim, set-off, adjustment or other right which a Party might have against the other Party,
any Third Party or otherwise.

8.7 Each Party shall keep complete, true and accurate records of the Net Sales for not less than
three (3) years following the end of the Calendar Quarter in which such sales

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were made. Each Party shall make such records available to an internationally reputable
independent certified public accountant or internationally reputable audit firm representing the
auditing Party, who will not be unreasonably rejected by the non-auditing Party, provided that such
representative has entered into a confidentiality agreement with the non-auditing Party limiting
the use of such records to verification of the accuracy of payments due hereunder and prohibiting
the disclosure of information in such records to the auditing Party or to any Third Party for any
purpose. Audits of such records shall be conducted no more frequently than annually (and once with
respect to each period of time being audited) and upon at least thirty (30) days prior written
notice during reasonable business hours. Audits shall be limited to results in the twelve (12)
Calendar Quarters prior to audit notification. Such accountant shall provide the non-auditing
Party with a copy of any written report prepared or given to the auditing Party in connection with
such audits. Any claims of underpayment or overpayment will be submitted to the non-auditing Party
within thirty (30) days of the final written report. All such audits shall be conducted at the
auditing Party’s cost and expenses; provided, however, that if the audit reveals an underpayment to
the auditing Party of more than [***], the non-auditing Party shall pay for the cost and expense of
the audit.

ARTICLE 9

DILIGENCE.

9.1 The parties acknowledge that lack of commercially reasonable efforts in Development and/or
Commercialization of a Collaboration Product will diminish the value of this Agreement to both HGS
and NVS. Accordingly, HGS and NVS shall each use Commercially Reasonable Efforts to perform their
respective obligations under the Agreement.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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9.2 Each Party shall perform, or cause to be performed, any and all of its obligations as set forth
in this Agreement, including those obligations identified in this Article 9, in compliance in all
material respects with all applicable laws.

9.3 In addition to the other diligence requirements in this Article 9, HGS and NVS shall each use
Commercially Reasonable Efforts to obtain Marketing Approvals as expeditiously as reasonably
practicable to market at least one Collaboration Product in the United States, Japan and in each
Major EU Market, and following such approval, to Commercialize the Collaboration Product in such
country.

9.4 Each Party will use Commercially Reasonable Efforts to maximize the commercial potential of the
Collaboration Products on a global basis.

ARTICLE 10

REGULATORY MATTERS

10.1 Regulatory Filings.

          10.1.1 HGS shall be responsible for obtaining, registering and maintaining all regulatory
and/or governmental filings necessary to develop, register and market a Collaboration Product in
the United States, including the IND and BLA. HGS shall obtain, register and maintain such
Regulatory Approvals and Applications in accordance with the Development Plan and as directed by
the JDC. NVS shall be responsible for obtaining, registering and maintaining all regulatory
and/or governmental filings necessary to develop, register and market a Collaboration Product in
the Territory outside of the United States, including MAAs and to the extent agreed upon by the JDC
clinical trial authorization (CTAs). Notwithstanding the foregoing, NVS will be

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responsible for compiling the Common Technical Document (CTD) on a worldwide basis with
appropriate participation from HGS as determined by the JDC.

          10.1.2 Each Party shall have primary responsibility for clinical drug development activities
related to studies designated as its responsibility under the Development Plan, and as directed by
the JDC, including the submission and maintenance of parallel investigational new drug applications
and CTAs with cross references, as necessary, to the other Party’s Regulatory Applications or
Regulatory Approvals. Each Party shall hold the database and be the lead on data entry,
statistics, quality assurance and writing on all studies designated as its responsibility under the
Development Plan. Notwithstanding the foregoing, the Parties will agree upon using compatible
database formats to allow for the merging of each Party’s database with the other for analytical
and reporting purposes.

          10.1.3 Each Party shall promptly provide to the other Party copies of any material documents
or other correspondence received from the Regulatory Authorities (including any minutes of material
meetings or teleconferences) pertaining to the development or commercialization of Collaboration
Product in the Territory and upon request will provide the other with full access to its regulatory
documentation relating to the Collaboration Products and will authorize the relevant Regulatory
Authority to provide such access.

          10.1.4 Each Party shall be allowed to attend and participate in material meetings with
Regulatory Authorities significant for the global Development Plan for the Collaboration Products.
The Party scheduling such negotiations and meetings shall

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attempt to coordinate with the other Party in order to allow such other Party the ability to
attend and participate in such negotiations and meetings.

          10.1.5 Each Party shall have the right to cross-reference and use the regulatory filings of
the other Party for the purposes of obtaining, maintaining and defending Regulatory Approvals for
the Collaboration Product.

10.2 Each Party shall fulfill and discharge all obligations under applicable governmental law, rule
or regulation or otherwise, as well as procedures ensuring timely compliance with all laws, rules
and regulations as are reasonable in accordance with accepted business practices and legal
requirements to maintain the authorization and/or ability to manufacture, finish, package, store
and label Collaboration Product in the Territory, and to import, sell, or market Collaboration
Product in the Territory, including, without limitation, the following:

          10.2.1 The maintenance of all Regulatory Approvals necessary for the manufacture, finishing
and labeling of Collaboration Product in the Territory in accordance with cGMP, and for the use and
marketing of Collaboration Product for all approved indications including, without limitation,
maintaining such records and filing such reports as may be required under the provisions of all
applicable laws and regulations including all advertising and promotional literature and labeling
relating to Collaboration Product.

          10.2.2 The procedures for sharing and reporting of adverse events encountered by each Party
for Collaboration Product in the Territory shall be as set forth in a pharmacovigilance agreement
agreed to between the Parties, which shall be entered into by the Parties within [***] days of the
Effective Date.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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          10.2.3 NVS shall lead the pharmacovigilance efforts and shall create a global safety database
which shall include all serious adverse events from clinical trials, all spontaneous adverse
events and other relevant clinical safety information relating to Collaboration Product, in
accordance with procedures set forth in the agreed pharmacovigilance agreement. Such information
shall be shared with and made readily available to HGS.

10.3 In accordance with Section 14.3, both Parties shall be permitted to publish on its clinical
trial register summaries of results of all clinical trials conducted by either Party with respect
to the Collaboration Product after the Effective Date of this Agreement without being required to
obtain the other Party’s approval.

ARTICLE 11

SUPPLY; MANUFACTURE OF COLLABORATION PRODUCT

11.1 Manufacture and Supply of Albuferon. Subject to the terms and conditions of this Agreement and
the Supply Agreement (defined below), HGS shall be responsible to supply, or to obtain supply, for
worldwide requirements of Albuferon to enable the Parties to fulfill their obligations to Develop
and Commercialize Collaboration Products under this Agreement.

11.2 Manufacture and Supply of Collaboration Product. NVS shall be responsible to supply, or to
obtain supply, for worldwide commercial requirements of Collaboration Product. The Parties shall
jointly be responsible, working together through the relevant committee, for the development
program and supply of clinical materials of Collaboration Product for Development and through
development scale-up and BLA enabling activities. The Development Plan for Collaboration Product
will outline roles

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and responsibilities pertaining to Collaboration Product development and be approved by the JDC.

11.3 Supply Agreement. The manufacture and supply of Albuferon and the Collaboration Product to be
provided by the Parties hereunder shall be subject to a separate supply and quality agreement
(“Supply Agreement”) to be negotiated between the parties hereto within [***] of the Effective
Date. Such Supply Agreement shall include any and all standard and customary terms addressing all
aspects of the manufacturing process for Albuferon and the Collaboration Product and the
responsibilities of each Party with respect thereto, including the establishment of a manufacturing
subcommittee of the JDC (or as a standalone committee if agreed by the Parties), audit provisions
for confirming COGS and possible COGS reduction incentives/programs. If the Parties do not agree
upon the terms of a Supply Agreement, such dispute shall be subject to the provisions of Section 18
herein. The Supply Agreement shall also contain provisions that in the event that an issue arises
while HGS is manufacturing supplies of Albuferon and/or NVS is manufacturing supplies of
Collaboration Product which would significantly impact the supplying Party’s ability to deliver the
mutually agreed amount of Albuferon and/or Collaboration Product to the mutually agreed quality
specifications, including issues related to capacity, safety or quality, then the Parties must meet
to consider and mutually determine via the manufacturing sub-committee of the JDC what reasonable
manufacturing alternatives are available to the Parties, including, but not limited to, granting
the other Party the right to manufacture Albuferon or Collaboration Product, as the case may be or,
if such other Party is not capable or willing to manufacture, to have a Third Party manufacture
Albuferon or the Collaboration Product. In the United States, all Collaboration Product

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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labels, commercial packs and promotional material in the Territory shall contain the HGS and NVS
names and logos in equal prominence to the extent legally permissible. If requested by NVS, the
Supply Agreement will also set forth the process for establishing a second source of supply for
Albuferon.

11.4 A forecast for Development and Commercialization of the Collaboration Products shall be
prepared and periodically updated by the JCC (and the JDC during development) and coordinated with
the applicable Development and Marketing Plans for Collaboration Products through the Joint
Commercial Committee and through the Joint Executive Committee for Commercialization.

11.5 Cost of Supply.

          11.5.1 For the commercial supply of Albuferon in the United States, HGS shall supply Albuferon
to NVS (FCA, Incoterms 2000) [***], and NVS shall be responsible for shipping, insurance and other
related expenses. For the commercial supply of Collaboration Product in the United States, NVS
shall supply such Collaboration Product [***]. For the development supply of the Collaboration
Product, each Party will supply Albuferon and the Collaboration Product [***].

          11.5.2 For the commercial supply of Albuferon in the Territory outside of the United States,
HGS shall supply such Collaboration Product to NVS (FCA, Incoterms 2000) [***], and NVS shall be
responsible for shipping, insurance and other related expenses. Such price shall be subject to
adjustments based on [***].

11.6 NVS acknowledges that the Research Materials represent a significant investment on the part of
HGS. NVS acknowledges that the Research Materials, if transferred to

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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NVS hereunder, in Appendix D are transferred solely to permit NVS to commercially manufacture
Collaboration Products and agrees to retain control thereof. For the purposes of this Section
11.6, “commercially manufacture” shall mean the manufacture of supplies of the Collaboration
Product for Phase I Clinical Studies, Phase II Clinical Studies and Phase III Clinical Studies as
well as the manufacture of commercial supplies of the Collaboration Product for sale in the
Territory. Furthermore, NVS agrees to retain control of the Research Materials and to transfer the
Research Materials to any Third Party only for the purposes of manufacturing Collaboration Product
for NVS. NVS shall inform HGS upon any transfer of the Research Materials to a Third Party, which
notification may be provided through the JDC, JCC or JEC. If NVS breaches this provision relating
to the transfer of the Research Materials to a Third Party and such breach is considered a breach
of the AB License by HGS, HGS shall have the option to terminate this Agreement forthwith,
notwithstanding the notice provision in Section 15.3.

ARTICLE 12

PATENTS

12.1 Subject to the license grants in Article 2 herein, HGS owns or controls the Albumin Fusion
Know-How, Albumin Fusion Patent Rights, Albuferon Patent Rights and Manufacturing Technology and
all HGS Arising Patent Rights and HGS Arising Know-How and NVS owns or controls the NVS Arising
Patent Rights and NVS Arising Know-How. Joint Arising Know-How and Joint Arising Patent Rights
shall be jointly owned by HGS and NVS. Subject to the licenses and other provisions of this
Agreement, each Party may use and sublicense the Joint Arising Know-how and Joint Arising Patent
Rights as it determines, without any required approvals from or accounting to the other Party.

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12.2 NVS will prepare, file, prosecute and maintain Joint Arising Patent Rights and NVS Arising
Patent Rights. In the event that NVS intends to abandon or decline responsibility for any or all
of Joint or NVS Arising Patent Rights, NVS shall provide reasonable prior written notice to HGS of
such intention to abandon or decline responsibility, and HGS shall have the right, at its own
expense, to file, prosecute and maintain such Joint or NVS Arising Patent Rights.

12.3 HGS Responsibilities.

     (a) Albumin Fusion Patent Rights, Albuferon Patent Rights and HGS Arising Patent Rights. HGS,
or the Party who bears such responsibility under the AB License, will prepare, file, prosecute and
maintain all Albumin Fusion Patent Rights, Albuferon Patent Rights and HGS Arising Patent Rights.
HGS shall, in a timely fashion, provide NVS with copies of all written correspondence with the
United States Patent and Trademark Office and all substantive communications from foreign patent
offices pertaining to the filing, prosecution and maintenance of the Albumin Fusion Patent Rights
(to the extent related to Collaboration Product), the Albuferon Patent Rights and the HGS Arising
Patent Rights, and shall provide NVS with a timely and adequate opportunity to review and provide
written comments on such matters which shall be reasonably taken into account by HGS or the outside
counsel prosecuting such patent rights. HGS shall keep NVS advised on a quarterly basis, through
the JEC, on the status of pending patent applications, including the grant of any Albumin Fusion
Patent Rights (to the extent related to Collaboration Product), Albuferon Patent Rights and HGS
Arising Patent Rights. NVS may identify in writing to HGS certain countries in which NVS desires
that HGS, or the party who bears such responsibility under the AB License,

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file, prosecute and maintain certain Albumin Fusion Patent Rights (to the extent related to
Collaboration Product), Albuferon Patent Rights and/or HGS Arising Patent Rights. In the case of
the Albumin Fusion Patent Rights (to the extent related to Collaboration Product), Albuferon Patent
Rights and/or HGS Arising Patent Rights, including those HGS Arising Patent Rights for which HGS
bears responsibility under the AB License, HGS shall thereafter file, prosecute and maintain such
Albumin Fusion Patent Rights (to the extent related to Collaboration Product), Albuferon Patent
Rights and/or HGS Arising Patent Rights in such country or countries. If HGS decides not to file,
prosecute or maintain the Albumin Fusion Patent Rights (to the extent related to Collaboration
Product), Albuferon Patent Rights or the HGS Arising Patent Rights in such countries identified by
NVS and provided that HGS has the right to grant such right to NVS, HGS shall notify NVS of such
decision in a timely fashion, and upon NVS request, HGS, in collaboration with NVS and using
outside counsel mutually acceptable to HGS and NVS, shall file, prosecute and maintain such Albumin
Fusion Patent Rights (to the extent related to Collaboration Product), Albuferon Patent Rights
and/or HGS Arising Patent Rights in those countries and such Patent Rights will not be considered
in determining whether any royalty is payable by NVS to HGS (or for determining the Royalty Term)
under this Agreement; NVS shall responsible for all external costs and expenses relating to the
preparation, filing, prosecution and maintenance of such Patent Rights. HGS shall at all times
during its filing, prosecution, and maintenance of the Albumin Fusion Patent Rights (to the extent
related to Collaboration Product), Albuferon Patent Rights and HGS Arising Patent Rights, use
Commercially Reasonable Efforts to protect the commercial value of and maintain the Albumin Fusion
Patent Rights, Albuferon Patent Rights and the HGS Arising Patent Rights.

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     (b) Manufacturing Technology. HGS shall have the right, but not the obligation, to file,
prosecute and maintain all patent rights owned or controlled by HGS which claim the Manufacturing
Technology; provided however, HGS only has the right if AB does not have the right and
responsibility under the AB License. To the extent HGS has the right to file, prosecute and
maintain those Patent Rights owned or controlled by HGS which claim the Manufacturing Technology,
and to the extent such Patent Rights are directly related to the manufacture of Albuferon, NVS may
identify in writing to HGS certain countries in which NVS desires that HGS file, prosecute and
maintain such patent rights. HGS shall thereafter file, prosecute and maintain such patent rights
which claim the Manufacturing Technology in such country or countries. If HGS does not file,
prosecute and maintain such patent rights in such countries identified by NVS and provided that HGS
has the right to grant such right to NVS, NVS shall have the right to file, prosecute and maintain
such patent rights in those countries.

     (c) All information, papers, and other materials provided by either Party to the other in
accordance with this Section 12 shall be subject to the confidentiality provisions of this
Agreement. The Parties shall share equally all external costs and expenses relating to the
preparation, filing, prosecution and maintenance of the Albuferon Patent Rights relating to
Collaboration Products. Otherwise, the Party controlling the preparation, filing, prosecution and
maintenance of the Patent Rights shall be responsible for all costs related thereto. If outside
counsel costs are incurred in connection with the preparation, filing, prosecution and maintenance
of Albumin Fusion Patent Rights, Albuferon Patent Rights and HGS Arising Patent Rights, such
outside counsel shall be mutually acceptable to both HGS and NVS. The Parties hereby agree that
Finnegan Henderson Farabow

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Garrett & Dunner LLP is acceptable as outside counsel for the purposes of this Section 12.3.

12.4 Enforcement.

     (a) In the event that either NVS or HGS becomes aware of any infringement of any issued patent
with the Patent Rights (except with respect to the Genentech Patent Rights) which infringement
involves the HGS Collaboration Technology and/or Manufacturing Technology to which NVS has an
exclusive license, it will notify the other Party in writing to that effect. Any such notice shall
include evidence to support an allegation of infringement by such Third Party.

     (b) Under the AB License, AB (or its assignee) has the first right (but not the obligation) to
bring suit to abate any infringement or misappropriation of the Albumin Fusion Patent Rights,
Albuferon Patent Rights and HGS Arising Patent Rights (to the extent such are jointly owned by HGS
and AB). NVS will reasonably cooperate with AB in preparing and presenting any such suit or action.

     (c) If AB declines to initiate a suit to abate any infringement or misappropriation, then HGS
shall have the first right (but not the obligation), using counsel of its choice, to bring suit to
abate any infringement or misappropriation of the Albumin Fusion Patent Rights, Albuferon Patent
Rights and HGS Arising Patent Rights. HGS shall also have the first right (but not the
obligation), using counsel of its choice, to bring suit to abate any infringement or
misappropriation of the Manufacturing Technology. NVS will reasonably cooperate with HGS in
preparing and presenting any such suit or action. In the United States, both Parties will equally
share the costs and expenses of such suit and any recovery or damages derived from such an action
or suit

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shall be deemed Net Profit. In the Territory outside of the United States, the Party bringing
the claim shall bear responsibility for all costs and expenses and any recovery or damages derived
from such an action or suit (after the parties are reimbursed for their costs and expenses) shall
be paid to NVS and considered Net Sales for purposes of calculating the royalties due under this
Agreement.

     (d) If HGS does not initiate a suit to abate any infringement or misappropriation in
accordance with Section 12.4(c) within ninety (90) days of acquiring the right to do so in the
applicable country or countries, then NVS may do so. HGS shall reasonably cooperate with NVS in
preparing and presenting such action or suit. In the United States, both Parties will equally share
the costs and expenses of such suit and any recovery or damages derived from such an action or suit
shall be deemed Net Profit. In the Territory outside of the United States, the Party bringing the
claim shall bear responsibility for all costs and expenses and any recovery or damages derived from
such an action or suit (after the parties are reimbursed for their costs and expenses) shall be
paid to NVS and considered Net Sales for purposes of calculating the royalties due under this
Agreement.

     (e) NVS shall have the right (but not the obligation) to bring suit to abate any infringement
or misappropriation of the Joint Arising Patent Rights. HGS will reasonably cooperate with NVS in
preparing and presenting any such action or suit. In the United States, both parties will equally
share the costs and expenses of such suit and any recovery or damages derived from such an action
or suit shall be deemed Net Profit. In the Territory outside of the United States, NVS shall bear
responsibility for all costs and expenses and any recovery or damages derived from such an action
or suit relating to

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the Joint Arising Patent Rights (after the parties are reimbursed for their costs and
expenses) shall be considered Net Sales for purposes of calculating the royalties due under this
Agreement.

     (f) If NVS does not initiate a suit to abate any infringement within ninety (90) days after
receiving notice thereof, HGS shall have the right, but not the obligation, using counsel of its
choice, to bring suit to abate any infringement or misappropriation of the Joint Arising Patent
Rights. NVS will reasonably cooperate with HGS in preparing and presenting any such suit or
action. In the United States, both parties will equally share the costs and expenses of such suit
and any recovery or damages derived from such an action or suit shall be deemed Net Profit. In the
Territory outside of the United States, the Party bringing the suit shall bear responsibility for
all costs and expenses and any recovery or damages derived from such an action or suit (after the
parties are reimbursed for their costs and expenses) shall be paid to NVS and considered Net Sales
for purposes of calculating the royalties due under this Agreement.

     (g) Neither Party may enter into any settlement without the prior consent of the other Party,
which shall not be unreasonably withheld, and may not make any statement, which admits that any of
the HGS Patent Rights is invalid or unenforceable.

12.5 Defense. In the event of the institution of any suit, opposition, or interference by a Third
Party against HGS or NVS related to the HGS Patent Rights, the Party being sued shall promptly
notify the other Party in writing. The Party being sued may, in its absolute discretion (subject
to consent in certain circumstances described below), choose to defend, settle, and/or respond to,
such suit at its own expense. Furthermore, if both Parties are sued, each may, in its absolute
discretion(subject to consent in certain
 

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circumstances described below), choose to defend, settle, and/or respond to, such suit at its own
expense. HGS and NVS shall provide reasonable assistance to one another and reasonably cooperate
in any such litigation at the other’s request at the expense of the requesting Party, provided,
however, that neither Party may enter into any settlement without the prior consent of the other
Party if such settlement would affect the other Party’s interests in and to the relevant Patent
Rights or would impose any financial or other obligation on the other Party. Such consent shall
not be unreasonably withheld.

12.6 For the intellectual property rights licensed in the Genentech Patents Rights, the Parties
acknowledge that the Third Party licensors may control the right to bring suit and as a result,
HGS’ and NVS’ rights may be limited, and the Third Parties may have the sole right to control such
action.

12.7 Drug Price Competition and Patent Term Restoration Act. The Parties agree to cooperate in an
effort to avoid loss of any Patent Rights which may otherwise be available to the Parties hereto
under the provisions of the Drug Price Competition and Patent Term Restoration Act of 1984 or
comparable laws outside the US, including by executing any documents as may be reasonably required.
In particular, the Parties shall cooperate with each other in obtaining patent term restoration or
supplemental protection certificates or their equivalents in any country and region where
applicable to Collaboration Products. HGS shall provide all reasonable assistance to NVS,
including permitting NVS to proceed with applications for such in the name of HGS, if so required.
The Parties shall cooperate in determining, if applicable, which of the Patent Rights the Parties
will attempt to extend, which determination shall be made by the JEC. HGS shall provide reasonable
assistance to NVS, including by executing any required documents

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and providing any relevant patent information to NVS, so that NVS, as Regulatory Filing applicant,
may inform the relevant Regulatory Authority.

ARTICLE 13

CONFIDENTIALITY

13.1 During the longer of the Term of this Agreement and [***] years from the date of disclosure
(except with respect to the Confidential Information included in the Research Materials, for which
the obligations will last for as long as such Confidential Information remains proprietary), each
Party shall maintain in confidence the Confidential Information of the other Party, and shall not
disclose, use or grant the use of the Confidential Information of the other Party except on a
need-to-know basis to such Party’s Affiliates, directors, officers and employees, such Party’s
Third Party licensors of intellectual property rights (sub)licensed hereunder, and such Party’s
subcontractors, professional consultants and collaborators, to the extent such disclosure is
reasonably necessary in connection with such Party’s activities as expressly authorized by this
Agreement. To the extent that disclosure to any person is authorized by this Agreement, prior to
disclosure, the Party shall ensure that such person is bound by confidentiality obligations with
respect to Confidential Information at least as stringent as this Agreement. Each Party shall
notify the other Party promptly upon discovery of any unauthorized use or disclosure of the other
Party’s Confidential Information.

13.2 Notwithstanding the foregoing, the confidentiality obligations of Section 13.1 shall not
include any information that: (a) is or hereafter becomes part of the public domain by public use,
publication, general knowledge or the like through no wrongful act, fault or negligence on the part
of receiving Party; (b) can be demonstrated by

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documentation or other competent proof to have been in the receiving Party’s possession prior to
disclosure by the disclosing Party; (c) is subsequently received by the receiving Party from a
Third Party who is not bound by any obligation of confidentiality with respect to said information;
(d) is generally made available to Third Parties by disclosing Party without restriction on
disclosure; or (e) is independently developed by or for the receiving Party without reference to
the disclosing Party’s Confidential Information.

13.3 The confidentiality obligations under Section 13.1 shall not apply to the extent that a Party
is required to disclose information by applicable law, regulation or order of a governmental agency
or a court of competent jurisdiction, including disclosures required under rules promulgated by the
United States Securities and Exchange Commission; provided, however, that to the extent
practicable, such Party (a) shall provide advance written notice thereof to the other Party and
consult with the other Party prior to such disclosure with respect thereto, and (b) shall provide
the other Party with reasonable assistance, as requested by the other Party, to object to any such
disclosure or to request confidential treatment thereof, and (c) shall take reasonable action to
avoid and/or minimize the extent of such disclosure.

13.4 In addition to disclosures allowed under Section 13.1, each Party may disclose Confidential
Information belonging to the other Party to the extent such disclosure is necessary in the
following instances: (i) filing or prosecuting Patent Rights as permitted by this Agreement; (ii)
regulatory filings for Collaboration Products such Party has a license or right to develop
hereunder; and (iii) prosecuting or defending litigation as permitted by this Agreement.

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ARTICLE 14

PUBLICATIONS AND PUBLICITY

14.1 No public announcement relating to this Agreement or disclosing any of the terms of this
Agreement and/or relating to the Collaboration Products, shall be made, either directly or
indirectly, by any Party without first obtaining the approval of the JCC or JDC (as appropriate to
the subject matter of the announcement) or the other Party (including where the announcement
relates to the terms of this Agreement). The JCC, JDC or the Parties will agree upon the nature
and text of such announcement, such agreement and/or approval not to be unreasonably withheld. The
Party desiring to make any such public announcement shall inform the JDC, JCC or other Party, as
appropriate, of the proposed announcement or disclosure at least ten (10) business days prior to
public release, and shall provide the other Party with a written copy thereof, in order to allow
such other Party to comment upon such announcement or disclosure, subject to the provisions of the
previous sentence.

14.2 Notwithstanding the foregoing, (a) NVS may make public announcements in relation to the
Collaboration Products solely in connection with its Commercialization outside the United States as
it deems appropriate so long as such announcements are not inconsistent with the JCC approved
announcements; and (b) HGS may make public announcements that include listing Albuferon in its
portfolio of albumin fusion products.

14.3 Furthermore, if a Party desires to make any scientific publication, the publishing Party shall
inform the JDC and the other Party of the proposed publication at least thirty (30) days before the
planned submission date of such publication, and shall provide such other Party with a written copy
thereof, in order to allow such Party to comment upon

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such publication, and shall consider in good faith the incorporation of its comments into such
publication. In the event any such publication is determined by the parties to be relevant to its
intellectual property position, the publishing Party shall delay such publication for a period
sufficient (but in no event greater than an additional ninety (90) days) to allow the Party who
bears such responsibility hereunder to take the steps necessary to protect such intellectual
property, including the filing of any patent applications.

14.4 Other than with respect to trademarks licensed under this Agreement, neither Party shall
mention or otherwise use the name, insignia, symbol, trademark, trade name or logotype of the other
Party (or any abbreviation or adaptation thereof) in any publication, press release, promotional
material or other form of publicity without the prior written approval of such other Party in each
instance. The restrictions imposed by this Section shall not prohibit either Party from making any
disclosure identifying the other Party that is required by applicable law.

14.5 Notwithstanding anything to the contrary herein, neither Party may publish or otherwise
publicly disclose Confidential Information included in the Research Materials without the prior
written consent of the other Party. If a Party wishes to publish or otherwise publicly disclose
such Confidential Information, the Party shall submit the proposed disclosure to the other Party
for review prior to submission for publication or presentation. The publishing Party shall delete
the other Party’s Confidential Information and specific references to the Research Materials from
such disclosure, if requested to do so by the other Party. The publishing Party further agrees
that such disclosure shall not

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be presented or submitted for publication until written permission is received from the other
Party, which permission shall not be unreasonably withheld.

ARTICLE 15

TERM AND TERMINATION

15.1 This Agreement will start on the Effective Date and remain in effect, on a country-by-country
and product-by-product basis, until the later of (a) the expiration of the obligation of NVS to pay
royalties in accordance with Article 7 and (b) the date the Parties cease to Co-Promote the
Collaboration Products in the United States; unless otherwise terminated under this Article 15
(“Term”).

15.2 Termination by NVS.

     (a) NVS may terminate this Agreement and all of NVS’ obligations with respect to Collaboration
Products under this Agreement at any time for any reason, or for no reason at all, upon [***] prior
written notice to HGS.

     (b) NVS may terminate this Agreement and all of NVS’ obligations with respect to Collaboration
Products under this Agreement upon [***] prior written notice (after discussion at the JEC) in the
event that (i) NVS determines in good faith, and upon the basis of competent scientific evidence,
that there are material safety risks associated with the Collaboration Product or (ii) the
Collaboration Product is not approved by the FDA or EMEA after the Parties have exercised
Commercially Reasonable Efforts to obtain such approval.

     (c) In the case of any termination by NVS under this Clause 15.2, NVS and HGS will agree to a
wind-down plan covering the orderly transition or termination of

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activities under the Development Plan and/or Marketing Plan during the relevant termination
notice period (“Wind-Down Period”). NVS will be responsible for its share of the Development and
Marketing Expenses actually incurred in connection with the plan and non-cancelable obligations
incurred during the Wind-Down Period. The Parties agree that neither Party will initiate any new
projects or activities during the Wind-Down Period for which it will seek funding or reimbursement
from the other Party, that the total costs for the activities undertaken during the Wind-Down
Period will not exceed the amount agreed to by the Parties under the Development Plan and/or
Marketing Plan for such Wind-Down Period and that the Parties shall use commercially reasonable
efforts to minimize the costs for the Wind-Down Period. NVS will be under no obligation to pay any
milestone payments to the extent the applicable milestones are achieved during the Wind-Down
Period. Notwithstanding the foregoing, NVS will not be responsible for ongoing costs incurred
during the Wind-Down Period if HGS agrees to an agreement with a new collaborator for the
Collaboration Product during the Wind-Down Period.

15.3 Termination Upon Material Breach.

     (a) If either Party commits a material breach of this Agreement, the non-breaching Party shall
have the right to give written notice to the breaching Party specifying the claimed particulars of
such breach, and in the event such material breach is not cured within [***] days after such
notice, the non-breaching Party shall have the right thereafter to terminate this Agreement
immediately by giving written notice to the breaching Party to such effect; provided, however, that
if such breach is capable of being cured but cannot be cured within such [***] day period and the
breaching Party initiates actions to cure such breach within such period and thereafter diligently
pursues such

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actions, the breaching Party shall have such additional period as is reasonable in the
circumstances to cure such breach. Any termination by any Party under this Clause and the effects
of termination provided herein shall be without prejudice to any damages or other legal or
equitable remedies to which it may be entitled from the other Party.

     (b) Either HGS or NVS may terminate this Agreement on written notice if an Insolvency Event
occurs in relation to the other Party. In any event when a Party first becomes aware of the likely
occurrence of any Insolvency Event in regard to that Party, it shall promptly so notify the other
Party in sufficient time to give the other Party sufficient notice to protect its interests under
this Agreement.

15.4 Effects of Termination by HGS for NVS Breach or Termination by NVS Without Cause. If HGS
terminates this Agreement in accordance with Section 15.3 or if NVS terminates this Agreement for
convenience in accordance with Section 15.2, then (i) all rights and licenses granted by either
Party to the other hereunder shall immediately terminate, and neither Party shall have any right to
any continued use of the Patent Rights and Know-how of the other Party; (ii) NVS, upon request of
HGS and free of charge, shall execute any document reasonably necessary to transfer to HGS all
reasonably available data, information, results, clinical trials, regulatory documents, support
documentation and supplies developed by or on behalf of NVS under this Agreement necessary for HGS
to continue the Development or Commercialization of the Collaboration Product, including all
applications submitted to, or approvals obtained from, any Regulatory Authority for purposes of
seeking Marketing Approval for the Collaboration Product, or for making, using or selling the
Collaboration Product, and (iii) to the extent reasonably available, any studies in progress
pursuant to the Development

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Plan shall be transferred to HGS in a manner that allows such studies to continue uninterrupted to
the extent reasonable and practical, and (iv) NVS shall grant to HGS a non-exclusive, royalty-free,
fully paid up, fully sublicensable license to use the NVS Arising Know-How and NVS Arising Patent
Rights relating specifically and primarily to Albuferon and necessary to use, sell, make, have
made, or import Collaboration Product solely for such purpose. NVS shall not be liable to HGS for
any reason whatsoever as a consequence of any license from NVS or HGS’ utilizing any information or
documents conveyed as provided in this Section. Upon such a termination of this Agreement, NVS
shall be entitled, during the [***] days following the termination of this Agreement, to finish any
work-in-progress and to sell any inventory of the Collaboration Product that remains on hand as of
the date of the termination, so long as NVS pays HGS the royalties applicable to said subsequent
sales in accordance with the terms and conditions set forth in this Agreement. Except as expressly
provided in this Section, upon termination by NVS pursuant to Section 15.2, NVS shall not incur any
additional costs, expenses or liabilities of any kind under this Agreement except for those costs,
expenses or liabilities which have matured and accrued as of the effective date of the termination.

15.5 Effects of Termination by NVS for HGS Breach. If NVS terminates this Agreement in accordance
with Section 15.3, (i) any licenses granted by NVS to HGS shall immediately terminate and HGS shall
have no right to any continued use of any NVS intellectual property; (ii) HGS, upon request of NVS
and free of charge, shall execute any document reasonably necessary to transfer to NVS all
reasonably available data, information, results, clinical trials, regulatory documents, support
documentation and supplies necessary for NVS to continue the Development or Commercialization of
the Collaboration Product, including all applications submitted to, or approvals obtained

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from, any Regulatory Authority for purposes of seeking Marketing Approval for the Collaboration
Product, or for making, using or selling the Collaboration Product, and (iii) to the extent
reasonably available, any studies in progress pursuant to the Development Plan shall be transferred
to NVS in a manner that allows such studies to continue uninterrupted to the extent reasonable and
practical; (iv) the licenses granted by HGS to NVS under the HGS Collaboration Technology,
Manufacturing Technology, HGS Arising Patent Rights and HGS Arising Know-how will continue as
exclusive, transferable, perpetual and irrevocable licenses, in consideration of which NVS will pay
HGS milestone and royalty payments on the same terms as set forth in this Agreement; (v) the
Co-Promotion of the Product in the United States will cease and NVS will have the full exclusive
license rights (including with respect to HGS) in the full Territory and the royalty payable by NVS
and its Affiliates and sublicensees on Net Sales of Collaboration Products in the United States
shall be equal to (a) [***].

15.6 Insolvency. All rights and licenses granted under or pursuant to this Agreement by NVS or HGS
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy
Code, licenses of right to “intellectual property” as defined under Section 101 of the U.S.
Bankruptcy Code. The parties agree that the parties, as licensees of such rights under this
Agreement, shall retain and may fully exercise all of their rights and elections under the U.S.
Bankruptcy Code. The parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against either Party under the U.S. Bankruptcy Code, the Party hereto that is not
a party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such intellectual property,
which, if not already in the non-subject Party’s possession, shall be promptly delivered to it (a)
upon

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any such commencement of a bankruptcy proceeding upon the non-subject Party’s written request
therefor, unless the Party subject to such proceeding elects to continue to perform all of its
obligations under this Agreement or (b) if not delivered under (a) above, following the rejection
of this Agreement by or on behalf of the Party subject to such proceeding upon written request
therefor by the non-subject Party.

15.7 Divestiture by a Party. If in connection with any proposed acquisition or merger or inquiry
of a Governmental Authority, a Party (the “Divesting Party”) determines that in order to facilitate
clearance or obtain approval from any Governmental Authority with responsibility for enforcing
antitrust or competition laws regarding such acquisition or merger or inquiry, it would be
advisable, in the Divesting Party’s business judgment, to assign or sublicense or otherwise
transfer (any such assignment, sublicense or transfer, a “Divestiture Transaction”) the Divesting
Party’s rights and obligations under this Agreement to any third party, the Divesting Party shall
notify the other Party (the “Non-Divesting Party”) thereof (“Notice of Divestiture”). If the
Divesting Party provides such notice in accordance with this Section, the Non-Divesting Party shall
have a period of [***] to determine whether it wishes to negotiate an Agreement for such
Collaboration Product. If the Non-Divesting Party elects to exercise its right to negotiate, the
Parties shall thereafter have [***] to negotiate in good faith and finalize the terms of an
agreement. If the Parties are not able to finalize such agreement during such [***] period, then
the Divesting Party will be free to offer the Collaboration Product to potential Third Party
sublicensees; provided, that the Divesting Party may not enter into an agreement with any Third
Party on financial terms that, taken as a whole, are less favorable to the Non-Divesting Party than
those last offered by the Divesting Party without first offering such terms to the Non-Divesting
Party.

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15.8 Effects of Termination pursuant to Section 15.1. Upon expiration of this Agreement in
accordance with Section 15.1, then all rights and licenses granted by HGS to NVS hereunder shall
continue as fully-paid up, royalty-free, perpetual, transferable, irrevocable rights.

15.9 The right of either Party to terminate this Agreement as herein above provided shall not be
affected in any way by its waiver of or failure to take action with respect to any previous
default. Any such termination shall be without prejudice to any further rights and remedies vested
in the parties. The license rights granted herein shall survive the bankruptcy or reorganization of
either Party.

15.10 Expiration or termination of this Agreement for any reason, except as otherwise stated under
this Agreement, shall be without prejudice to:

     (a) Articles 13, 17, 18 and 19; which shall survive termination or expiration in accordance
with their respective terms; and

     (b) either Party’s obligation to make any payments due pursuant to this Agreement which accrue
prior to termination, and at the time of termination, all such payments due shall be made in full.

ARTICLE 16

REPRESENTATIONS & WARRANTIES, COVENANTS

16.1 Each Party hereby represents and warrants that:

     (a) it is a corporation duly organized and validly existing under the law of the state of its
incorporation;

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     (b) it has the full legal right and authority to enter into and perform all of the duties and
obligations contemplated under this Agreement attributed to such Party, and to convey the rights
and licenses granted to the other Party herein;

     (c) the execution, delivery and performance of this Agreement by it has been duly authorized
by all requisite corporate action;

     (d) it has not entered into as of the Effective Date, and shall not at any time thereafter
enter into any agreement, understanding, or other obligation or commitment which would prevent or
conflict or otherwise encumber or interfere with the exercise of any of the rights or licenses
expressly granted to the other Party hereunder; and

     (e) Other than the notification requirements under the HSR Act , no government authorization,
consent, approval, license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any
applicable laws, rules or regulations currently in effect, is or will be necessary for, or in
connection with, the transaction contemplated by this Agreement, or for the performance by it of
its obligations under this Agreement.

16.2 HGS hereby represents and warrants to NVS that:

     (a) it is the exclusive licensee of or owns or controls all right, title and interest in and
to the Patent Rights as defined herein and listed in Appendix A and Appendix B (as updated from
time to time) and the HGS Collaboration Technology and Manufacturing Technology for any use of
Collaboration Product and HGS has the right to grant to NVS the licenses under (and to disclose to
NVS) the HGS Collaboration

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Technology and Manufacturing Technology that it purports to grant hereunder and has not
granted any Third Party rights that would interfere or be inconsistent with Novartis’ rights
hereunder;

     (b) to its knowledge, except as set forth in Appendix A and B, the Collaboration Technology
and Manufacturing Technology are not subject to any existing royalty or other payment obligations;

     (c) it is not aware of any other patents, know-how or other intellectual property owned by
HGS, its Affiliates, AB or Genentech, other than that which is licensed hereunder to NVS, which are
necessary or critical for the research, development, manufacture, use and/or commercialization of
Albuferon and the Collaboration Products as contemplated hereunder;

     (d) as of the Effective Date, to its knowledge, the issued patents in the HGS Collaboration
Technology and Manufacturing Technology are valid and enforceable and it is not aware of any
action, suit, inquiry, investigation or other proceeding threatened, pending, or ongoing brought by
HGS, AB, Genentech or by any other Third Party that challenges or threatens the validity or
enforceability of any of the HGS Collaboration Technology or Manufacturing Technology or that
alleges the use of the HGS Collaboration Technology and Manufacturing Technology and the
development, manufacture commercialization and use of the Collaboration Products would infringe or
misappropriate the intellectual property or intellectual property rights of any Third Party (and it
has not received any notice alleging such an infringement or misappropriation). In the event that
HGS becomes aware of any such action or proceeding, it shall immediately notify NVS in writing;

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     (e) it has filed and prosecuted the Patent Rights owned by HGS within the HGS Collaboration
Technology and Manufacturing Technology in good faith and complied with all duties of disclosure
with respect thereto and, except as set forth in Appendices A and B, it is listed in the records of
the appropriate governmental agencies as the sole and exclusive owner of record for each such
Patent Right;

     (f) it has provided NVS with true and complete copies of all contracts, agreements,
understandings, arrangements and commitments with AB, Genentech, and any other Third Party
pertaining to any part of the HGS Collaboration Technology and the Manufacturing Technology and the
use, transfer, access to, disclosure of, or grant of any right, title, interest or license in or to
the same, solely as it relates to Collaboration Product; and

     (g) it has obtained from all individuals who participated in any respect in the invention or
authorship of any of the HGS Collaboration Technology or Manufacturing Technology effective
assignments of all ownership rights of such individuals in such, either pursuant to written
agreement or by operation of law.

16.3 HGS hereby covenants that at no time during the term of this Agreement shall HGS assign,
transfer, encumber or grant rights in or with respect to any portion or all of the HGS
Collaboration Technology, Manufacturing Technology, HGS Arising Know-how or HGS Arising Patent
Rights inconsistent with the grants and other rights reserved to NVS under this Agreement,
provided, however, this covenant shall not affect the absolute right of HGS to transfer title to
such HGS Collaboration Technology, Manufacturing Technology, HGS Arising Know-How, HGS Arising
Patent Rights or its

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interest in Joint Arising Know-How and Joint Arising Patent Rights or to any successor to all or
substantially all of that portion of HGS’ business relating to Albuferon.

16.4 NVS covenants that at no time during the term of this Agreement shall NVS assign, transfer,
encumber or grant rights in or with respect to Collaboration Product inconsistent with the grants
and other rights reserved to HGS under this Agreement; provided, however, this covenant shall not
affect the absolute right of NVS to transfer title to its exclusive licensed rights under this
Agreement to any successor to all or substantially all of that portion of NVS’ business relating to
Albuferon.

16.5 Each Party hereby represents and warrants to the other Party that it is insured for products
liability and general liability, and that it has and will maintain those coverages and other
self-insured liability coverages in accordance with standard and prudent practices in the
pharmaceutical industry for products such as the Collaboration Products.

16.6 EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE 16, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED
AS A WARRANTY THAT ANY PATENT RIGHTS INCLUDED WITHIN THE LICENSES GRANTED HEREUNDER IS VALID OR
ENFORCEABLE OR THAT THE OTHER PARTY’S EXERCISE OF THE LICENSED PATENT RIGHTS AND OTHER INTELLECTUAL
PROPERTY DOES NOT INFRINGE ANY PATENT RIGHTS OF THIRD PARTIES.

16.7 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATION NOR
EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR

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PURPOSE, NON-INFRINGEMENT OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED.

ARTICLE 17

INDEMNIFICATION

17.1 Indemnification by NVS.

          17.1.1 NVS shall defend, indemnify and hold harmless HGS and each of its respective directors,
officers, shareholders, agents and employees (collectively, the “HGS Indemnitees”), from and
against any and all liability, loss, damages, costs and expenses, including reasonable attorneys’
fees and expenses (collectively, the “Costs”) resulting from any lawsuit or other legal proceeding
brought by a Third Party asserting any legal claim, demand, or judgment (“Claims”) (i) arising out
of NVS performance of specific activities, operations or services to the extent specifically
allocated to NVS hereunder; or (ii) arising out of the handling, storage, design, manufacture,
testing, transportation, advertising, promotion, distribution, sale, use, treatment or disposal of
the Collaboration Product by or on behalf of NVS or any Third Party granted rights by NVS, its
Affiliates or its Permitted Sublicensees. NVS’ obligation to defend, indemnify and hold harmless
shall include Claims, whether for money damages or equitable relief by reason of alleged personal
injury (including death) to any person or alleged property damage; provided, however, the indemnity
provided hereunder shall not under any circumstances extend to any Cost or Claim asserted against
an HGS Indemnitee to the extent such Cost or Claim is attributable to the negligence, willful
misconduct or material breach of this Agreement of or by HGS, its Affiliates or sublicensees or any
HGS Indemnitee. NVS shall have the exclusive right to control the defense of any action
 

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which is to be indemnified in whole by NVS hereunder, including the right to select counsel
reasonably acceptable to HGS to defend HGS Indemnitees and to settle such action; provided that,
without the written consent of HGS (which shall not be unreasonably withheld or delayed), NVS shall
not agree to settle any claim against an HGS Indemnitee to the extent such settlement would
adversely affect HGS’ rights or obligations or such settlement consists of obligations other than
the payment of money. The provisions of this section shall survive and remain in full force and
effect after any termination, expiration or cancellation of this Agreement and NVS’ obligation
hereunder shall apply whether or not such Claims are rightfully brought.

          17.1.2 NVS shall be responsible for a percentage of all Costs resulting from any Claims (i)
arising out of the joint Development (as described in Article 6) or joint Commercialization (as
described in Article 6) of a Collaboration Product or (ii) brought against any HGS Indemnitee
alleging infringement or misappropriation of the intellectual property rights of any Third Party to
the extent based upon or attributable to the Collaboration Product, except, in each case, to the
extent resulting from the negligence or willful misconduct of HGS, its Affiliates or sublicensees
or any HGS Indemnitee. The amount for which NVS shall indemnify HGS pursuant to this Section shall
be equal to fifty percent (50%) of the Costs.

17.2 Indemnification by HGS.

          17.2.1 HGS shall defend, indemnify and hold harmless NVS and each of its respective directors,
officers, shareholders, agents and employees (“NVS Indemnitees”), from and against any and all
liability, loss, damages, costs and expenses, including reasonable attorneys’ fees and expenses
(collectively, the “Costs”), resulting

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from any lawsuit or other legal proceeding brought by a Third Party asserting any legal claim,
demand, or judgment (“Claims”) (i) arising out of HGS’ performance of specific activities,
operations or services to the extent specifically allocated to HGS hereunder; or (ii) arising out
of the handling, storage, design, manufacture, testing, transportation, advertising, promotion,
distribution, sale, use, treatment or disposal of the Collaboration Product by or on behalf of HGS
or any Third Party granted rights by HGS, its Affiliates or its Permitted Sublicensees. HGS’
obligation to defend, indemnify and hold harmless shall include Claims, whether for money damages
or equitable relief by reason of alleged personal injury (including death) to any person or alleged
property damage; provided, however, that the indemnity provided hereunder shall not under any
circumstances extend to any Cost or Claim asserted against a NVS Indemnitee to the extent such Cost
or Claim is attributable to the negligence, willful misconduct or material breach of this Agreement
of or by NVS, its Affiliates or sublicensees or any NVS Indemnitee. HGS shall have the exclusive
right to control the defense of any action which is to be indemnified in whole by HGS hereunder,
including the right to select counsel reasonably acceptable to NVS to defend NVS Indemnitees and to
settle such action; provided that, without the written consent of NVS (which shall not be
unreasonably withheld or delayed), HGS shall not agree to settle any claim against a NVS Indemnitee
to the extent such settlement would adversely affect NVS’ rights or obligations or such settlement
consists of obligations other than the payment of money.

     17.2.2 HGS shall be responsible for a percentage of all Costs resulting from any Claims (i)
arising out of the joint Development (as described in Article 6) or joint Commercialization (as
described in Article 6) of a Collaboration Product or (ii) brought against any NVS Indemnitee
alleging infringement or misappropriation of the

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intellectual property rights of any Third Party to the extent based upon or attributable to
the Collaboration Product, except, in each case, to the extent resulting from the negligence or
willful misconduct of NVS, its Affiliates or sublicensees or any NVS Indemnitee. The amount for
which HGS shall indemnify NVS pursuant to this Section shall be equal to fifty percent (50%) of the
Costs.

17.3 A Party will promptly notify the indemnifying Party of receipt of notice of any such claim or
suit and shall cooperate fully with the indemnifying Party in the defense of all such claims or
suits. Failure of an indemnified Party to provide notice of a claim to the indemnifying Party shall
affect indemnified Party’s right to indemnification only to the extent that such failure has a
material adverse effect on the indemnifying Party’s ability to defend or the nature or the amount
of the liability. The indemnifying Party shall have the right to assume the defense of any suit or
claim related to the liability if it has assumed responsibility for the suit or claim in writing;
however, if in the reasonable judgment of the indemnified Party, such suit or claim involves an
issue or matter which could have an adverse effect on the business operations or assets of such
indemnified Party, the indemnified Party may waive its rights to indemnity under this Agreement and
control the defense or settlement thereof, but in no event shall any such waiver be construed as a
waiver of any indemnification rights the indemnified Party may have at law or in equity. If the
indemnifying Party defends the suit or claim, the indemnified Party may participate in (but not
control) the defense thereof at its sole cost and expense.

17.4 Product Liability Claims. Notwithstanding anything to the foregoing, any and all liability,
loss, damages, costs and expenses, including reasonable attorneys’ fees and expenses (“Costs”),
resulting from any lawsuit or other legal proceeding brought by a

97

 

Third Party asserting any Claims arising out of the death of or injury to a Third Party caused by
the use or sale of the Collaboration Products in the Territory except where due to the negligence
or willful misconduct of one of the Parties hereto, shall be shared equally by HGS and NVS.

17.5 Mitigation of Costs. Each indemnified Party will take and will procure that its Affiliates
take all such reasonable steps and action as are necessary or as the indemnifying Party may
reasonably require in order to mitigate any Costs included under this Section 17. Nothing in this
Agreement shall or shall be deemed to relieve any Party of any common law or other duty to mitigate
any losses incurred by it.

17.6 Special, Indirect and Other Losses. EXCEPT FOR THIRD PARTY CLAIMS INDEMNIFIED UNDER THIS
SECTION 17, NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE IN CONTRACT, TORT, NEGLIGENCE
BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR FOR ANY ECONOMIC LOSS OR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY.

ARTICLE 18

DISPUTE RESOLUTION

18.1 All disputes between the parties arising under this Agreement shall be in the first instance
referred to the JEC and then the Officers for resolution in accordance with Section 3.1.4.

18.2 As set out in Section 3.1.4, if the Parties cannot resolve a dispute relating to a Development
issue, HGS and NVS will identify and agree upon a panel of external scientific experts (or other
appropriate external experts for the nature of the dispute) to

98

 

review the dispute. Any decisions of the panel shall not be binding on the parties and either HGS
or NVS will still have the right to submit such dispute to arbitration, as stated below.

18.3 If the dispute is not fully resolved pursuant to Section 18.1 or Section 18.2, the dispute may
be referred by either Party for arbitration in accordance under the guidelines of the American
Arbitration Association (“AAA”) in New York, New York under the commercial rules then in effect for
AAA, except as otherwise provided for herein. Upon request of the Arbitrator, the parties will
mutually agree upon a scientific or technical and commercial expert to assist the Arbitrator with
any technical issues.

18.4 A Party shall notify the other in writing should it intend to initiate arbitration. The
parties shall select, by mutual agreement, one arbitrator, with an expertise in the subject matter
of this Agreement, within a time period of [***] after receipt of such notice. Should no
arbitrator be chosen within such period, then each Party shall select an arbitrator within [***]
after the end of such period and the two arbitrators will select a mutually agreeable third
arbitrator within [***]. Within [***] after the third and presiding arbitrator has been confirmed,
the Parties shall exchange all documents in their respective possession that are relevant to the
issues in dispute and not protected from disclosure by attorney-client privilege or other immunity.
Each Party shall also be permitted to take sworn oral deposition of individuals, such depositions
to be scheduled by mutual agreement and concluded within [***] after the exchange of documents
described above. At least [***] prior to the first scheduled hearing date, the Parties shall
identify the witnesses that they intend to present at the arbitration hearing and the documentation
on which they intend to rely. The Parties shall use their Commercially

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COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

99

 

Reasonable Efforts to conclude the arbitration hearings within [***] following the confirmation of
the third and presiding arbitrator and in accordance with the timelines set out above; provided,
however, that the Parties may reasonably agree, or the arbitrators may set, different timelines
(shorter or longer) based on the nature and scope of the dispute. The arbitrators shall issue
their decision (including grounds and reasoning) in writing no later than [***] following the
conclusion of the last arbitration hearing.

18.5 Unless otherwise agreed to by the parties, the arbitrator shall make such decisions based on
the following factors in descending order of importance: (a) consistency with the provisions of
this Agreement; (b) consistency with the intent of the parties as reflected in this Agreement; and
(c) customary and reasonable provisions included in comparable agreements.

18.6 The decision of the arbitrator will be binding upon the parties without the right of appeal,
and judgment upon the decision may be entered in any court having jurisdiction thereof. The parties
shall share equally the reasonable documented cost of such arbitration proceeding, but not the
individual cost of the parties in participating in such proceeding.

ARTICLE 19

MISCELLANEOUS

19.1 This Agreement sets forth the complete, final and exclusive agreement and all the covenants,
promises, agreements, warranties, representations, conditions and understandings between the
parties hereto and supersedes and terminates all prior agreements and understandings between the
parties related to its subject matter. There are no covenants, promises, agreements, warranties,
representations, conditions or

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understandings, either oral or written, between the Parties other than as are set forth herein and
therein. No subsequent alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties unless reduced to writing and signed by an authorized officer of each Party.

19.2 Both parties shall be excused from the performance of their obligations under this Agreement
to the extent that such performance is prevented by force majeure and the nonperforming Party
promptly provides notice of the prevention to the other Party. Such excuse shall be continued so
long as the condition constituting force majeure continues and the nonperforming Party takes
reasonable efforts to remove the condition. For purposes of this Agreement, force majeure shall
include conditions beyond the control of the Parties, including without limitation, an act of God,
voluntary or involuntary compliance with any regulation, law or order of any government, war, civil
commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake, storm or like
catastrophe; provided, however, the payment of invoices due and owing prior to such force majeure
event shall not be delayed by the payor because such a force majeure event affecting the payor;
provided, further, that in the event the suspension of performance continues for [***] after the
date of the occurrence, and such failure to perform would constitute a material breach of this
Agreement in the absence of such force majeure, the other Party may terminate this Agreement as if
such failure were a material breach pursuant to Section 15.3(a).

19.3 Any notice required or permitted to be given under this Agreement shall be in writing, shall
specifically refer to this Agreement and shall be deemed to have been

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sufficiently given for all purposes upon the date of receipt if mailed by first class certified or
registered mail, postage prepaid, express delivery service or personally delivered or upon the date
of a confirmed facsimile transfer. Unless otherwise specified in writing, the mailing addresses of
the Parties shall be as described below.

For HGS:

Human Genome Sciences, Inc.

14200 Shady Grove Road

Rockville, MD 20850

Attn: General Counsel

With a Copy to: Chief Commercial Officer

	 	 	 
	For NVS:
	Novartis International Pharmaceutical Ltd.
	Hurst Holme
	12 Trott Road
	Hamilton HM 11
	Bermuda
	Attention: General Manager
	With a copy to:

	 	Novartis Pharma AG
	 

	 	Lichtstrasse 35
	 

	 	4056 Basel, Switzerland
	 

	 	Attn: Head, Legal Department

19.4 Whenever provision is made in this Agreement for either Party to secure the consent or
approval of the other, that consent or approval shall not unreasonably be withheld or delayed, and
whenever in this Agreement provisions are made for one Party to object to or disapprove a matter,
such objection or disapproval shall not unreasonably be exercised.

102

 

19.5 Neither Party may assign or transfer this Agreement or any rights or obligations hereunder
without the prior written consent of the other Party, except that either Party may make such an
assignment without the other Party’s consent to Affiliates or to a successor to substantially all
of the pharmaceutical business of the assigning Party relating to the subject matter of this
Agreement, whether in a merger, sale of stock, sale of assets or other transaction. Any permitted
successor or assignee of rights and/or obligations hereunder shall, in writing to the non-assigning
or non-transferring Party, expressly assume performance of such rights and/or obligations. This
Agreement shall be binding upon and inure to the benefit of the successors or permitted assignees
of the respective parties. Any assignment or attempted assignment by either Party in violation of
the tenets of this Section 19.5 shall be null and void and of no legal effect.

19.6 Each of HGS and NVS acknowledges that obligations under this Agreement may be performed by
Affiliates of HGS and NVS. Each of HGS and NVS guarantee performance of this Agreement by its
Affiliates.

19.7 This Agreement may be executed in two or more counterparts’, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

19.8 Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all
such other acts, as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.

19.9 If anyone or more of the provisions of this Agreement is held to be invalid or unenforceable,
the provision shall be considered severed from this Agreement and shall not serve to invalidate any
remaining provisions hereof. The Parties shall make a good

103

 

faith effort to replace any invalid or unenforceable provision with a valid and enforceable one
such that the objectives contemplated by the Parties when entering this Agreement may be realized.

19.10 This Agreement shall be governed by and construed in accordance with the laws of the State of
New York, as if executed and fully performed within New York, excluding any conflicts or choice of
law rule or principle that might otherwise refer construction or interpretation of this agreement
to the substantive law of another jurisdiction. Subject to Article 18,any disputes under this
Agreement shall be subject to the exclusive jurisdiction and venue of the state courts and the
Federal courts located in New York, New York, and the parties hereby consent to the personal and
exclusive jurisdiction and venue of these courts for such purposes.

19.11 Any delay in enforcing a Party’s rights under this Agreement or any waiver as to a particular
default or other matter shall not constitute a waiver of such Party’s rights to the future
enforcement of its rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.

19.12 Relationship of the Parties. Nothing contained in this Agreement shall be deemed to
constitute a partnership, joint venture, or legal entity of any type between HGS and NVS, or to
constitute one as the agent of the other. Moreover, each Party agrees not to construe this
Agreement, or any of the transactions contemplated hereby, as a partnership for any tax purposes.
Each Party shall act solely as an independent contractor, and nothing in this Agreement shall be
construed to give any Party the power or authority to act for, bind, or commit the other.

104

 

19.13 No Third Party Beneficiary Rights. The provisions of this Agreement are for the sole benefit
of the Parties and their successors and permitted assigns, and they shall not be construed as
conferring any rights to any Third Party, except as otherwise expressly provided in Clause 17 (with
respect to the Indemnitees of each Party). Except as expressly provided in Clause 17, no person
who is not a Party to this Agreement (including any employee, officer, agent, representative or
subcontractor of either Party) shall have the right to enforce any term of this Agreement which
expressly or by implication confers a benefit on that person without the express prior agreement in
writing of the Parties.

19.14 Expenses. Except as otherwise expressly provided in this Agreement, each Party shall pay the
fees and expenses of its respective lawyers and other experts and all other expenses and costs
incurred by such Party incidental to the negotiation, preparation, execution and delivery of this
Agreement.

105

 

     IN WITNESS WHEREOF, the parties, through their authorized officers, have executed this
Agreement as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	HUMAN GENOME SCIENCES, INC.	 	 	 	NOVARTIS INTERNATIONAL	 	 
	 	 	 	 	 	 	PHARMACEUTICAL LTD.	 	 
	By:

	 	/s/ H. Thomas Watkins
	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	H. Thomas Watkins	 	 	 	 	 	 	 	 	 	 
	 

	 	Chief Executive Officer
	 	 	 	 	 	 	 	/s/ Emil Block	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	(Printed Name)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Member of the Board of Directors	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	(Title)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	/s/ Michael Jones	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	(Printed Name)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Member of the Board of Directors	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	(Title)	 	 

106

 

Appendix A

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REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Appendix B

[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Appendix C

[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Appendix D

[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Appendix E

[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Appendix F

[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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Appendix G

[***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

113exv10w2

 

Exhibit 10.2

AGREEMENT OF PURCHASE AND SALE

(9911 Belward Campus Drive & Traville Property, Rockville Maryland)

     This Agreement of Purchase and Sale (“Agreement”) is made as of the 2nd day of May
2006 (“Effective Date”) between Human Genome Sciences, Inc., a Delaware corporation (“Seller”), and
BioMed Realty, L.P., a Maryland limited partnership (“Purchaser”).

RECITALS

     A. Belward Property. Belward C LLC, a Maryland limited liability company (“Belward”),
is the owner of the following property (collectively, the “Belward Property”):

     (i) approximately nine and one-half acres of land located at 9911 Belward Campus Drive,
Rockville, Maryland, as more fully described in Exhibit A-1 attached hereto (the
“Belward Land”), which is improved by a building containing approximately 289,912 gross
square feet of laboratory manufacturing space (the “Belward Building”); and all other right,
title and interest in and to (1) all and singular the rights, benefits, privileges,
easements, tenements, hereditaments, and appurtenances thereon or in anyway appertaining to
such Belward Land; and (2) all strips and gores and any land lying in the bed of any street,
road or alley, open or proposed, adjoining such Belward Land (all of the foregoing
collectively, the “Belward Real Property”);

     (ii) all other tangible property (including each item of equipment, machinery,
furniture, art work, furnishings, office equipment and supplies stored onsite) listed on
Schedule 1-A attached hereto (all of the foregoing property, together with any
replacements for such property as permitted under this Agreement, collectively, the “Belward
Other Property”); and

     (iii) all intangible personal property of Belward now or hereafter used exclusively in
connection with the operation, ownership, maintenance, management, or occupancy of the
Belward Real Property; the plans and specifications for the improvements; warranties,
indemnities, applications, permits, approvals and licenses (to the extent applicable in any
way to the above referenced Belward Real Property or the Belward Other Property and
assignable) and all intellectual property necessary to operate or maintain the Belward Other
Property; and insurance proceeds and condemnation awards or claims thereto (other than tax
refunds and credits applicable to any period before the Belward Closing Date and all other
property listed on Schedule 1-B attached hereto and cash and deposits, bonds or
other security), including, without limitation, the items listed on Schedule 1-C
attached hereto (all of the foregoing collectively, the “Belward Intangible Personal
Property”). For the avoidance of doubt, Belward Intangible Personal Property shall not
include any product licenses or manufacturing processes associated with Seller’s
bio-pharmaceutical products.

 

 

     B. Existing Belward Lease. Seller is the sole tenant of the Belward Property pursuant
to that certain Lease dated as of November 7, 2001 by and between Genome Statutory Trust 2001 A, a
Connecticut Statutory Trust, as Lessor and Seller, as Lessee, as memorialized and supplemented by a
certain Memorandum of Lease and Lease Supplement dated as of November 7, 2001 and recorded on
November 15, 2001 in Liber 19984 at Folio 298, and by a certain Amendment to Memorandum of Lease
and Lease Supplement dated as of December 14, 2001 and recorded on December 19, 2001 in Liber 20183
at Folio 254, as the same has been further modified, bifurcated and supplemented by a certain
Memorandum of Modification to and Bifurcation of Lease and Memorandum of Lease dated on or about
June 30, 2003, and recorded on July 8, 2003 in Liber 24406 at Folio 383, and as the same has been
further amended and restated by a certain First Amended and Restated Memorandum of Lease and Lease
Supplement (C Lot) dated on or about June 30, 2003 and recorded on July 3, 2003 in Liber 24406 at
Folio 517 (collectively, the “Existing Belward Lease”).

     C. Belward Membership Interests. Seller holds 100% of the beneficial interest in
Belward (the “Belward Membership Interests”).

     D. Seller Belward Property and Seller Retained Property. Seller is the owner of: (a)
all of the tangible property listed on Schedule 1-D attached hereto (all of the foregoing
property, together with any replacements for such property as permitted under this Agreement,
collectively, the “Seller Belward Property”), which generally consists of property that is
necessary for the operation and maintenance of the Building, and (b) all of the tangible property
listed on Schedule 1-E attached hereto (all of the foregoing property, together with any
replacements for such property as permitted under this Agreement, collectively, the “Seller
Retained Property”), which generally consists of general manufacturing equipment and equipment
engineered to Seller’s specifications.

     E. Traville Property. Traville LLC, a Maryland limited liability company (“Traville”
and, together with Belward, the “Property Entities”), is the owner of the following property
(collectively, the “Traville Property” and, together with the Belward Property, the “Properties”):

     (i) approximately 50 acres of land located on the parcel known as “the Traville
Property”, bounded by Shady Grove Road and Darnestown Road, Rockville, Maryland as more
fully described in Exhibit A-2 attached hereto (the “Traville Land”), that is
comprised of:

     (1) approximately 12 acres of land, as more fully described on Exhibit
A-3 attached hereto (the “Traville HQ Land”) which are improved by three
buildings (the “Traville HQ Buildings”) containing approximately 635,058 gross
square feet of laboratory and office space which is currently leased by Wachovia
Development Corporation, a North Carolina corporation (“Wachovia”) to Seller
pursuant the Traville Sublease (as defined below), and all other right, title and
interest in and to (A) all and singular the rights, benefits, privileges, easements,
tenements, hereditaments, and appurtenances thereon or in anyway appertaining to
such Traville HQ Land; and (B) all strips and gores and any land lying in the bed of
any street, road or alley, open or proposed, adjoining such Traville HQ

 

 

Land (all of the foregoing, including the Traville HQ Land and the Traville HQ
Buildings, the “Traville HQ Real Property”), and

     (2) approximately 38 acres of land, as more fully described on Exhibit
A-4 attached hereto (the “Traville Future Development Land”); and all other
right, title and interest in and to (A) all and singular the rights, benefits,
privileges, easements, tenements, hereditaments, and appurtenances thereon or in
anyway appertaining to such Traville Future Development Land; and (B) all strips and
gores and any land lying in the bed of any street, road or alley, open or proposed,
adjoining such Traville Future Development Land (all of the foregoing, including the
Traville Future Development Land, the “Traville Future Development Real Property”
and, together with the Traville HQ Real Property, the “Traville Real Property” and,
together with the Belward Real Property, the “Real Property”);

(ii) Traville Other Property.

     (1) all tangible property (including each item of equipment, machinery,
furniture, art work; furnishings, office equipment and supplies stored onsite)
listed on Schedule 1-F attached hereto (all of the foregoing property,
together with any replacements for such property as permitted under this Agreement,
collectively, the “Traville HQ Other Property”), and

     (2) all tangible property (including each item of equipment, machinery,
furniture, art work; furnishings, office equipment and supplies stored onsite)
listed on Schedule 1-G attached hereto (all of the foregoing property,
together with any replacements for such property as permitted under this Agreement,
collectively, the “Traville Future Development Other Property” and, collectively
with the Belward Other Property and the Traville HQ Other Property, the “Other
Property”); and

(iii) Traville Intangible Personal Property.

     (1) all intangible personal property of Traville now or hereafter used
exclusively in connection with the operation, ownership, maintenance, management, or
occupancy of the Traville HQ Real Property; the plans and specifications for the
improvements; warranties, indemnities, applications, permits, approvals and licenses
(to the extent applicable in any way to the above referenced Traville HQ Real
Property or the Traville HQ Other Property and assignable) and all intellectual
property necessary to operate or maintain the Traville HQ Other Property; and
insurance proceeds and condemnation awards or claims thereto (other than tax refunds
applicable to any period before the Traville Closing Date and all other property
listed on Schedule 1-H attached hereto and cash and deposits, bonds or other
security), including, without limitation, the items described on Schedule
1-I attached hereto (all of the foregoing, collectively, the “Traville HQ
Intangible Personal Property”). For the avoidance of doubt, Traville HQ Intangible
Personal Property shall not include any product licenses or manufacturing processes
associated with Seller’s bio-pharmaceutical products, and

 

 

     (2) all intangible personal property now or hereafter used exclusively in
connection with the operation, ownership, maintenance, management, or occupancy of
the Traville Future Development Real Property; the plans and specifications for the
improvements; warranties, indemnities, applications, permits, approvals and licenses
(to the extent applicable in any way to the above referenced Traville Future
Development Real Property or the Traville Future Development Other Property and
assignable) and all intellectual property necessary to operate or maintain the
Traville Future Development Other Property; and insurance proceeds and condemnation
awards or claims thereto (other than tax refunds applicable to any period before the
Traville Closing Date and all other property listed on Schedule 1-J attached
hereto and cash and deposits, bonds or other security), including, without
limitation, the items described on Schedule 1-K attached hereto (all of the
foregoing, collectively, the “Traville Future Development Intangible Property” and,
collectively with the Belward Intangible Personal Property and the Traville HQ
Intangible Personal Property, the “Intangible Personal Property”).

     F. Traville HQ Real Property. Traville, as landlord, and Wachovia, as tenant, entered
into that certain Amended and Restated Ground Lease, pursuant to which Traville leased the Traville
HQ Land to Wachovia (the “Traville Ground Lease”). Wachovia subleased the entire Traville HQ Real
Property to Seller pursuant to that certain Amended and Restated Lease Agreement dated June 30,
2003 (the “Traville Sublease” and, together with the Belward Lease and the Traville Ground Lease,
the “Existing Leases”).

     G. Traville Membership Interests. Seller holds 100% of the beneficial interest in
Traville (the “Traville Membership Interests”).

     H. Seller Traville Property. Seller is the owner of all of the tangible property
(including each item of equipment, machinery, furniture, art work, furnishings, office equipment
and supplies stored onsite) listed on Schedule 1-L attached hereto (collectively, the
“Seller Traville Property” and, together with the Seller Belward Property, the “Seller Owned
Property”).

     I. Equipment Leases. Seller leases certain personal property (including each item of
equipment, machinery, furniture and furnishings) listed on Schedule 1-M attached hereto
(collectively, the “Leased Equipment”), pursuant to: (a) that certain Master Lease Agreement dated
June 26, 1993, by and between Tenant and General Electric Capital Corporation (“General Electric”),
(b) that certain BioTech Equipment Schedule No. 008 dated December 31, 2003 by and between Tenant
and General Electric, (c) that certain BioTech Equipment Schedule No. 009 undated [2004] under
Master Lease dated June 26, 1998, by and between Tenant and General Electric, (d) that certain
Master Equipment Lease Agreement dated December 31, 2003, by and between Key Equipment Finance
(“Key”) and Tenant and Equipment Schedule No. 1 attached thereto, (e) that certain Equipment
Schedule No. 2 dated December 31, 2003, by and between Tenant and Key, (f) that certain Equipment
Schedule No. 3 dated June 28, 2004, by and between Tenant and Key, and (g) that certain Equipment
Schedule No. 4 dated June 29, 2004, by and between Tenant and Key (collectively, the “Equipment
Leases”).

     J. Purpose. The parties are entering into this Agreement to provide for Seller to
sell

 

 

to Purchaser, and Purchaser to purchase from Seller, all of the Belward Membership Interests
and the Traville Membership Interests. In addition, (i) the parties intend to terminate the
Existing Belward Lease and to enter into a new lease agreement to be entered into between Seller,
as tenant, and Belward, as landlord, at the Belward Closing (the “Belward Lease”), pursuant to
which Seller will be the sole tenant at the Belward Property, and (ii) the parties intend to
terminate each of the Existing Leases and enter into a new lease agreement to be entered into
between Seller, as tenant, and Traville, as landlord, at the Closing (the “Traville Lease” and,
together with the Belward Lease, the “Subject Leases”), pursuant to which Seller will be the sole
tenant at the Belward Property and the Traville HQ Real Property.

AGREEMENT

     In consideration of the foregoing and of the covenants and conditions hereinafter set forth,
and intending to be legally bound hereby, the parties hereto agree:

ARTICLE 1. MEMBERSHIP INTERESTS / PURCHASE PRICE

     1.1. Membership Interests. Subject to the terms and conditions of this Agreement, Seller
hereby agrees to assign, sell, transfer, convey and set over to Purchaser, and Purchaser hereby
purchases and accepts the following property: (a) all of Seller’s right, title and interest in the
Belward Membership Interests, free and clear of all liens, encumbrances, claims, rights or
liabilities in favor of any other party of any kind or nature whatsoever; and (b) all of Seller’s
right, title and interest in the Traville Membership Interests, free and clear of all liens,
encumbrances, claims, rights or liabilities in favor of any other party of any kind or nature
whatsoever (collectively, the “Membership Interests”).

     1.2. Purchase Price. The total purchase price to be paid to Seller by Purchaser for
the Membership Interests shall be Four Hundred Twenty-Five Million Dollars ($425,000,000) (the
“Purchase Price”). The parties agree that the Purchase Price shall be allocated as follows: (a)
Two Hundred Million Dollars ($200,000,000) for the Belward Membership Interests (the “Belward
Purchase Price”); (b) Twenty-Five Million Dollars ($25,000,000) for the Traville Membership
Interests (the “Traville Purchase Price”), it being understood that following the acquisition of
the Traville Membership Interests, Purchaser shall acquire the Traville HQ Building from Wachovia
along with Wachovia’s interests as lessee under the Traville Ground Lease for Two Hundred Million
Dollars ($200,000,000) (the “Wachovia Termination Payment”).

     1.3. Deposit of Earnest Money. Within two (2) Business Days after the Effective Date,
Purchaser shall deposit Twenty Million Dollars ($20,000,000) in cash as a good faith non-refundable
deposit (such amount, including any interest earned thereon, the “Earnest Money”) with the Escrow
Agent (as defined below). For purposes of this Agreement, a “Business Day” shall mean any day of
the year other than any Saturday or Sunday or any other day on which banks located in Montgomery
County, Maryland generally are closed for business. The Escrow Agent shall hold and disburse the
Earnest Money in accordance with the escrow provisions in Exhibit B. The Earnest Money
shall be non-
refundable, except as otherwise provided herein. Seller agrees that it shall not deliver any
instruction to the Escrow Agent calling for disbursement of the Earnest Money to Seller except
following delivery of notice to Purchaser and Escrow Agent of a Purchaser default hereunder and
following the expiration of any

 

 

applicable cure period or as otherwise expressly provided in this
Agreement, and Seller further agrees to provide Purchaser with a copy of such disbursement
instruction concurrently with the delivery thereof to the Escrow Agent. Provided such supplemental
escrow instructions are not in conflict with this Agreement as it may be amended in writing from
time to time, Seller and Purchaser agree to execute such supplemental escrow instructions as may be
appropriate to enable Escrow Agent to comply with the terms of this Agreement.

     1.4. Title Company and Escrow Agent. The “Escrow Agent” and “Title Company” are:
LandAmerica Commercial Services, 31 Light Street, Suite 500, Baltimore, Maryland 21202, Attn: Nancy
Dodson Sacci (Tel #: (410) 752-7070; Fax #: (410) 752-7043.

     1.5. Closing Date. The “Closing Date” shall mean: (a) with respect to the Belward
Property, May 24, 2006 (the “Belward Closing Date”); provided, however, the parties
may mutually agree in writing to close on an earlier date by delivering to Escrow Agent before the
initially scheduled Belward Closing Date a written notice executed by Purchaser and Seller setting
forth the new Belward Closing Date, and (b) with respect to the Traville Property, June 23, 2006
(the “Traville Closing Date”); provided, however, the parties may mutually agree in
writing to close on an earlier date by delivering to Escrow Agent before the initially scheduled
Traville Closing Date a written notice executed by Purchaser and Seller setting forth the new
Traville Closing Date.

     1.6. Right of First Refusal. From and after the Belward Closing Date, Seller
hereby grants to Purchaser the following:

          (a) a right of first refusal for approximately 3 acres of land located in Rockville, Maryland
as more fully described in Exhibit A-5 attached hereto, which is improved by a building
containing approximately 51,181 gross square feet of laboratory and office space within one
building (the “Q Building”) in accordance with the terms and conditions of the Option Agreement
attached hereto as Exhibit S (the “Q Building Option Agreement”); and

          (b) a right of first refusal for approximately 9.98 acres of land located in Rockville,
Maryland as more fully described in Exhibit A-6 attached hereto, which is improved by a
building containing approximately 127,000 gross square feet of laboratory manufacturing space and
office space within one building (the “Pilot Plant” and, together with the Q Building, the “Option
Parcels”) in accordance with the terms and conditions of the Option Agreement attached hereto as
Exhibit T (the “Pilot Plant Option Agreement”).

     1.7. Allocation of Purchase Price.

          (a) The Purchase Price (plus any assumed liabilities to the extent properly taken into account
under the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury regulations
promulgated thereunder), shall be allocated among the assets of the Property Entities (the
“Allocation”). Purchaser and Seller shall use their best efforts to reasonably determine such
Allocation.

          (b) Purchaser and Seller agree to (i) be bound by the Allocation, (ii) act in accordance with
the Allocation in the preparation of all financial statements and the filing of any and all
returns, declarations, reports, claims for refund, information returns or statements relating to
any Tax (as defined in (c) below), including any schedules or attachments thereto and

 

 

including any
amendments thereof (each, a “Tax Return” and collectively, “Tax Returns”), including, without
limitation, filing Form 8594 with their United States federal income Tax Return for the taxable
year that includes the respective Closing Date and in the course of any Tax audit, Tax review or
Tax litigation relating thereto, and (iii) take no position and cause their Affiliates to take no
position inconsistent with the Allocation for income Tax purposes, including United States federal
and state income Tax and foreign income Tax, unless otherwise required pursuant to a
“determination” within the meaning of Section 1313(a) of the Code. Not later than thirty (30) days
prior to the filing of their respective Forms 8594 relating to this transaction, each of Purchaser
and Seller shall deliver to the other a copy of its Form 8594.

          (c) For purposes of this Agreement, the term “Tax” shall mean any federal, state, local or
foreign income, gross receipts, franchise, estimated, alternative, minimum, add-on minimum, sales,
use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation,
premium, windfall profit, environmental, customs duties, real property, personal property, capital
stock, intangibles, withholding, social security, unemployment, disability, payroll, license,
employee or other tax or levy, of any kind whatsoever, including any interest, penalties, or
additions to tax in respect of the foregoing whether disputed or not.

ARTICLE 2. INSPECTION

     2.1. Seller’s Delivery of Specified Documents. Subject to the terms and provisions of the
Confidentiality Agreement dated as of February 9, 2006 by and between Seller and Purchaser (the
“Confidentiality Agreement”), to the extent such items are in Seller’s, any Property Entity’s or
its property manager’s possession or control, Seller shall: (a) provide or make available to
Purchaser at each Property or at Seller’s office: (i) the information and documents set forth on
Exhibit C-1 attached hereto (the “Property Information”) for each Property within five (5)
days after the Effective Date, and (ii) the information and documents set forth on Exhibit
C-2 regarding the Traville and Belward (the “Entity Information” and, together with the
Property Information, the “Pertinent Information”) within five (5) days after the Effective Date;
and (b) deliver to Purchaser a property diligence questionnaire for each Property completed by
Seller in good faith, without any intentional misstatement of material fact, substantially in the
form of Exhibit D attached hereto within ten (10) days after the Effective Date. Seller
agrees to cooperate with Purchaser and make copies, at Seller’s expense, of such documentation as
Purchaser may request during the course of Purchaser’s review of the Pertinent Information. The
terms “Operating Statements,” “Commission Schedule” and “Contracts” are defined in Exhibit
C-1. Seller shall have the continuing obligation during the pendency of this Agreement to
provide Purchaser with any
document described above and coming into Seller’s, any Property Entity’s or its property manager’s
possession or produced by or for Seller after the initial delivery of the Pertinent Information.

     2.2. Due Diligence. Purchaser shall have until May 2, 2006 (the “Due Diligence Period”) in
which to examine, inspect, and investigate the Properties and all matters concerning the Property
Entities, and, in Purchaser’s sole and absolute judgment and discretion, to determine whether the
Property, the Property Entities, the Pertinent Information and Seller are satisfactory to Purchaser
to proceed with this transaction. Purchaser may terminate this Agreement pursuant to this
Section 2.2 for any reason by giving written notice of termination to Seller on or before
the last day of the Due Diligence Period, and in the event Purchaser terminates this Agreement,
Purchaser shall promptly thereafter return to Seller all documents that Seller shall have provided

 

 

to Purchaser in connection with the Properties. Upon such termination, the Earnest Money shall be
refunded to Purchaser immediately upon request, and all further rights and obligations of the
parties under this Agreement shall terminate except for those that expressly survive such
termination. This Agreement shall continue in full force and effect if Purchaser does not give the
written notice of termination prior to the expiration of the Due Diligence Period. Purchaser shall
have the right to terminate this Agreement prior to the expiration of the Due Diligence Period for
both of the Properties. Purchaser shall not have the right to terminate this Agreement for only
one of the Properties. In the event Purchaser elects to terminate this Agreement pursuant to this
Section 2.2, Purchaser shall return to Seller all copies of the Pertinent Information in
Purchaser’s custody or control together with a copy of all due diligence studies performed by or on
behalf of Purchaser with respect to the Properties. PURCHASER ACKNOWLEDGES THAT IT HAS COMPLETED
ITS DUE DILIGENCE AND HAS ELECTED TO PROCEED WITH THIS TRANSACTION.

     2.3. Access. Upon reasonable notice to Seller and in accordance with the terms and
conditions of that certain Right of Entry Agreement dated as of April 10, 2006, by and among
Seller, Purchaser, Traville and Belward, Purchaser and its agents, employees, consultants, lenders
and representatives shall have reasonable access to the Properties and all books and records that
are in any Property Entity’s possession or control or that are for the Properties and in Seller’s
or its property manager’s possession or control for the purpose of conducting surveys, appraisals,
architectural, engineering, structural, mechanical, geotechnical, physical, soil and environmental
inspections and tests, and any other inspections, studies, or tests reasonably required by
Purchaser, including, without limitation, evaluating access, utilities, subdivision and zoning of
the Properties.

     2.4. Contracts. Schedule 2.4 sets forth a complete and accurate list of any and
all contracts to which either Property Entity is a party (“Contracts”). With respect to each such
Contract, Seller shall either: (a) terminate such Contract prior to the respective Closing Date; or
(b) cause the respective Property Entity to assign its rights and obligations under such Contract
to Seller prior to the respective Closing Date.

     2.5. Intentionally Omitted.

     2.6. Easements. This Agreement and the Traville Closing hereunder is contingent upon
Purchaser and Seller at Closing executing and delivering a reciprocal easement agreement (the
“Reciprocal Easement Agreement”) which shall provide for the easements referred to in Exhibit
W attached hereto. Seller and Purchaser shall use their respective good faith efforts to
negotiate the terms and conditions of the easements over the Traville HQ Land and the Traville
Future Development Land. The Reciprocal Easement Agreement shall provide, among other things, (i)
easements in favor of Seller with respect to the Traville Future Development Land and (ii) upon
Seller exercising its option to purchase the Traville HQ Property pursuant to the Traville Option
Agreement, easements in favor of Purchaser with respect to the Traville HQ Land. In the event the
form of the Reciprocal Easement Agreement is not so agreed upon, Purchaser may elect, in its sole
discretion, to terminate this Purchase Agreement by providing Seller written notice of such
election. Upon such termination, the Earnest Money shall be refunded to Purchaser immediately upon
request, and all further rights and obligations of the parties under this Agreement shall terminate
except for those that expressly survive such termination. At such time as the Reciprocal Easement
Agreement is approved by Seller and

 

 

Purchaser, the form shall be attached hereto as substitute
Exhibit W. In lieu of the foregoing, Seller and Purchaser may agree that prior to the
Traville Closing Date, Traville may record a Declaration in the Land Records of Montgomery County,
Maryland creating the easements hereinabove referred to, subject to prior written approval of
Purchaser.

ARTICLE 3. TITLE AND SURVEY REVIEW

     3.1. Title Commitment and Survey. Seller shall cause to be delivered to Purchaser on or
prior to the date that is five (5) days after the Effective Date, any existing survey for each of
the Belward Real Property and the Traville Real Property in Seller’s or any Property Entity’s
possession or control. Purchaser may, in its sole discretion, obtain a new ALTA-ACSM Urban survey
of the Property (the “Survey”), including a certification addressed to Purchaser, substantially in
the form attached hereto as Exhibit F. The Survey shall plot all plotable easements
benefiting the Property. Within ten (10) days after the Effective Date, Purchaser shall order a
current, effective commitment to issue the title insurance products described in Sections
5.2(h) and 5.2(i) (the “Title Commitments”) for each of the Belward Real Property and
the Traville Real Property issued by the Title Company. Prior to the respective Closing Date,
Purchaser shall order a date-down of the Title Commitments to the date of the request. If there
are any new exceptions on either Title Commitment, then Seller shall work with the Title Company
and Purchaser to remove or modify the new exceptions in accordance with Section 3.3.

     3.2. UCC Commitment. Within ten (10) days after the Effective Date, Purchaser shall order
a UCC search with the applicable Secretary of State for each of Seller and the Property Entities.
On the date that is fifteen (15) days before the expiration of the Due Diligence Period, the Title
Company shall
deliver to Purchaser a current effective commitment for UCC insurance for each of the Belward
Membership Interests (the “Belward UCC Commitment”) and the Traville Membership Interests (the
“Traville UCC Commitment” and, together with the Belward UCC Commitment, the “UCC Commitments”),
pursuant to which the Title Company shall commit to insure such non-real estate assets for
validity, enforceability, and protection against fraud and forgery. The Title Commitments, the
documents referred to therein, the UCC Commitments and the Surveys are referred to herein
collectively as the “Title Documents.”

     3.3. Title Review and Cure. During the Due Diligence Period, Purchaser shall review
title to each Property as disclosed by the Title Documents. Purchaser shall be entitled to object
to any title matters shown in the Title Documents, in its sole discretion, by a written notice of
objections delivered to Seller on or before the expiration of the Due Diligence Period. Purchaser
shall notify Seller before the expiration of the Due Diligence Period which title exceptions
(excluding survey matters), if any, will not be accepted by Purchaser (the “Title Notice”). If
Purchaser fails to notify Seller in writing of its disapproval of any exceptions before the
expiration of the Due Diligence Period, Purchaser shall be deemed to have approved the condition of
title to the Real Property. If Purchaser notifies Seller in writing that Purchaser objects to any
exceptions to title, Seller shall have three (3) Business Days after receipt of the Title Notice to
notify Purchaser of either of the following: (a) that Seller will remove such objectionable
exceptions from title on or before the Closing; or (b) that Seller elects not to cause such
exceptions to be removed. If Seller fails to notify Purchaser within such three (3) Business Day
period, then Seller shall be deemed to have made an election under the foregoing clause (a).
Notwithstanding the foregoing or any other provision of this Agreement, all monetary obligations
(including, without limitation, mechanics and materialmens liens or claims thereof,

 

 

any liens or
encumbrances that secure obligations for borrowed money and any exceptions or encumbrances to title
which are created by or through Seller after the Effective Date) disclosed in the Title Commitment
constituting a lien against the Real Property are to be satisfied by Seller before Closing other
than Taxes that are not yet due and payable, and Seller shall, at Seller’s sole cost and expense,
cause each Property to be vested in the respective Property Entity to the satisfaction of the Title
Company so that the Title Company will insure that such Property Entity has fee title to the
respective Real Property. With respect to any other objections, Seller will reasonably cooperate
with Purchaser in curing such objections. The procurement by Seller of a commitment for the
issuance of the respective Title Policies (as defined in Section 5.2(i) hereof) or an
endorsement thereto insuring Purchaser, in a manner acceptable to Purchaser, against any title
exception which was disapproved pursuant to this Section 3.3 shall be deemed a cure by
Seller of such disapproval. If Seller gives Purchaser notice under clause (b) above, Purchaser
shall have three (3) Business Days after the date of such notice in which to notify Seller that
Purchaser will nevertheless proceed with the purchase in accordance with the provisions of this
Agreement and take title to the Property subject to such exceptions, or that Purchaser will
terminate this Agreement and receive a refund of the Earnest Money. If after the expiration of the
Due Diligence Period the Title Company revises either Title Commitment or any of the UCC
Commitments, or the surveyor revises either Survey, to add or modify exceptions, or to add or
modify the conditions to obtaining any endorsement requested by Purchaser during the Due Diligence
Period, then Purchaser may terminate this Agreement and receive a refund of the Earnest Money if
the provision for their removal or modification satisfactory to Purchaser is not made. In such
case, the respective Closing Date shall be extended for up to ten (10) days in order for Purchaser
and Seller to determine if such
exception can be resolved and to give Purchaser the opportunity to terminate this Agreement
and receive a refund of the Earnest Money if the exception is not removed. PURCHASER ACKNOWLEDGES
THAT IT HAS COMPLETED ITS REVIEW OF THE TITLE DOCUMENTS AND DOES NOT OBJECT TO ANY TITLE MATTERS
RELATED THEREIN.

     3.4. Permitted Exceptions and Endorsements. “Permitted Exceptions” means the following
exceptions approved or deemed approved by Purchaser pursuant to this Agreement: real estate taxes
not yet due and payable; tenants in possession as tenants only under the Subject Leases, and that
certain Conservation Easement Agreement recorded December 30, 1994 in Liber 13178, Folio 412, by
and among Michele Rosenfeld, Associate General Counsel of the Maryland-National Capital Park and
Planning Commission, pursuant to which the Property is subject to the Agreement by Owners’
Dedication on the plat recorded as Plat No. 20556 and all other exceptions listed in the Title
Commitment. For the avoidance of doubt, the general exceptions in the Title Commitments will be
removed upon issuance of the ALTA extended coverage title policy to be issued in this transaction
and are not Permitted Exceptions. “Customary Endorsements” shall mean, to the extent such
endorsements are available under the laws of the state in which the Properties are located: (a)
owner’s comprehensive; (b) access; (c) survey (accuracy of survey); (d) location (survey legal
matches title legal); (e) separate tax lot; (f) subdivision map act; (g) zoning 3.1, with parking
and loading docks; (h) mechanic’s lien; (i) deletion of creditors’ rights exception; (j)
endorsement over environmental protection liens; (k) utilities endorsement; (l) non-imputation
endorsement (the knowledge of any prior buyer, member or beneficial interest holder is not imputed
to Seller); and (m) fairway endorsement (the Title Company treats the title policy as though
nothing has changed even though a member of the insured assigns its membership interests, but the
identity of the insured does not change). In addition, Purchaser shall have the right to request
such other endorsements as Purchaser may

 

 

require during the Due Diligence Period based on its
review of the Title Commitments and Surveys. If agreed to by the parties prior to the applicable
Closing Date, Permitted Exceptions may include (i) a memorandum of the Belward Option Agreement,
(ii) a memorandum of the Traville Option Agreement, and (iii) a memorandum of the right of first
refusal which incorporates the substantive terms of Article 30 of the Traville Lease, and the
Declaration referred to in Section 2.6 of this Agreement, each memorandum shall be in form
and substance satisfactory to Purchaser and Seller.

     3.5. ALTA Statement. Seller shall execute at Closing an ALTA Statement (Owner’s Affidavit)
and any other documents, undertakings or agreements customarily required by the Title Company to
enable it to issue the Title Policy in accordance with the provisions of this Agreement.

ARTICLE 4. OPERATIONS AND RISK OF LOSS

     4.1. Closing of Transactions. Seller shall perform, execute and deliver, any further
actions, documents and will obtain such consents, as may be reasonably necessary to cause the
Belward Property to be vested in Belward and the Traville Property to be vested in Traville.

          4.1.1. On or before the Belward Closing Date, Seller shall cause each of the leases that
affects any portion of the Belward Property, other than the Belward Lease and the Equipment Leases,
to be terminated (including the Existing Belward Lease), and each party under any such lease to
which Belward is a party shall have released Belward from all obligations and liabilities under
such Lease. In addition, Seller shall cause each of the Contracts which Seller elects to terminate
pursuant to Section 2.4, to be terminated. Each party under each of the Contracts to which
Belward is a party shall have released Belward from all obligations and liabilities under such
Contract. Seller shall further perform, execute and deliver, any further actions, documents and
will obtain such consents, as may be reasonably necessary to cause the following to occur
concurrently with the Belward Closing Date, Seller’s conveyance of the Belward Membership Interests
to Purchaser.

          4.1.2. On or before the Traville Closing Date, Seller shall cause each of the leases that
affects any portion of the Traville Property, other than the Traville Lease and the Equipment
Leases, to be terminated (including the Traville Sublease and the Traville Ground Lease), and each
party under any such lease to which Traville is a party shall have released Traville from all
obligations and liabilities under such Lease. Wachovia shall have terminated all of its rights and
interest in the Traville Ground Lease to Traville and shall have released Traville from all
obligations and liabilities under such Traville Ground Lease. In addition, Seller shall cause each
of the Contracts which Seller elects to terminate pursuant to Section 2.4, to be
terminated. Each party under each of the Contracts to which Traville is a party shall have
released Traville from all obligations and liabilities under such Contract. Seller shall further
perform, execute and deliver, any further actions, documents and will obtain such consents, as may
be reasonably necessary to cause the following to occur concurrently with the Traville Closing
Date, Seller’s conveyance of the Traville Membership Interests to Purchaser. At or before the
Traville Closing, Seller shall cause Traville to be released from all obligations and liabilities
under the Equipment Leases.

     4.2. Ongoing Operations. During the pendency of this Agreement:

 

 

          (a) LLC Agreements. Seller shall not amend, supplement, terminate, waive any default
under, grant concessions regarding, or otherwise modify in any manner without Purchaser’s consent,
the LLC Agreements except that the LLC Agreements may be modified to provide that the membership
interests are governed by Article 8 of the Maryland UCC and to provide for the issuance of
certificates representing such membership interests. Seller shall neither enter into any contract
or agreement nor act or refrain from acting in such a way that could jeopardize Seller’s membership
interest in the Property Entities or its ability to transfer to Purchaser clear title to all of the
membership interests therein.

          (b) Preservation of Business. Subject to Section 4.2(e), Seller shall, and
shall cause each Property Entity to, (i) cause each Property to be operated only in the ordinary
and usual course of business and consistent with past practice, shall preserve intact such
Property, the Seller Owned Property, the Seller Retained Property and the Leased Equipment,
preserve the good will and advantageous relationships of Seller and each of the Property Entities
with customers, suppliers, independent contractors, employees and other persons or entities
material to the operation of its business, (ii) perform its obligations under leases and other
agreements
affecting such Property, the Seller Owned Property, the Seller Retained Property and the
Leased Equipment, and (iii) not take any action or omission which would cause any of the
representations or warranties of Seller contained herein to become inaccurate or any of the
covenants of Seller to be breached. Seller will neither cause nor permit any Property Entity to
engage in any practice, take any action, or enter into any transaction outside of the ordinary
course of business.

          (c) Maintenance of Insurance. Seller shall continue to carry and cause each Property
Entity to carry its existing insurance through the respective Closing Date, and shall not allow any
breach, default, termination or cancellation of such insurance policies or agreements to occur or
exist.

          (d) New Contracts. Subject to Section 4.2(e), Without Purchaser’s prior
written consent in each instance, Seller shall neither, and shall cause each Property Entity to
neither, enter into nor amend, terminate, waive any default under, grant concessions regarding, nor
otherwise modify in any manner without Purchaser’s consent, any contract or agreement that will be
an obligation affecting either Property or binding on Purchaser or any Property Entity after the
Closing.

          (e) Leasing Arrangements. Seller shall have the right to enter into a Lease or sublet
the Property; provided, however, Purchaser’s prior written consent shall be
required, which consent shall be given in Purchaser’s sole and absolute discretion, if assuming the
Closing were to occur, such lease or sublease could jeopardize the status of BioMed Realty Trust,
Inc., a Maryland corporation, as a real estate investment trust as further described in Section
8.1(j) hereof. In the event Seller requests such consent from Purchaser, Purchaser shall
respond in writing within five (5) business days.

          (f) Equipment Leases. Seller shall maintain in existence each of the Equipment Leases
and shall neither permit a default thereunder nor exercise any option to purchase the equipment
thereunder.

 

 

          (g) Seller Owned Property and Seller Retained Property. Seller shall maintain the
Seller Owned Property and the Seller Retained Property in good condition and repair, reasonable
wear and tear excepted, and not permit any mechanic’s or materialmen’s liens to be levied against,
or any other liens or encumbrances to encumber, the Seller Owned Property or the Seller Retained
Property without Purchaser’s prior written consent, which consent shall be given in Purchaser’s
sole and absolute discretion. Seller shall not sell, encumber or transfer any of the Seller Owned
Property or the Seller Retained Property (other than as is prudent in the ordinary course of
operating the Properties, provided, however, that Seller shall replace such Seller Owned Property
or the Seller Retained Property with a comparable item of equal quality and quantity as existed as
of the time of such removal, provided, further, that Seller may from time to time move such
property to other Seller facilities in Montgomery County, Maryland so long as Seller replaces such
property with comparable item of equal quality and quantity as existed as of the time of such
removal prior to the expiration of the respective lease term for either the Belward Lease or the
Traville Lease, as the case may be). Seller shall cause the exhibits and schedules attached to the
bills of sale and leases to be delivered on the respective Closing Date to be revised to reflect
the location of such replacement property.

          (h) Removal and Replacement of Property. Seller shall not, and shall cause each
Property Entity not to, remove any Other Property, Seller Retained Property, Seller Owned Property
or Leased Equipment (other than as is prudent in the ordinary course of operating the Properties,
provided, however, Seller shall replace such Other Property, Seller Retained Property, Seller Owned
Property or Leased Equipment with a comparable item of equal quality and quantity as existed as of
the time of such removal at or before the end of the respective lease term for either the Belward
Lease or the Traville Lease, as the case may be). Seller shall cause the exhibits and schedules
attached to the bills of sale and leases to be delivered on the respective Closing Date to be
revised to reflect the location of such replacement property.

          (i) Maintenance of Permits. Seller and each of the Property Entities shall maintain
in existence all licenses, permits and approvals, if any, in its name necessary or reasonably
appropriate to the ownership and occupancy of either Property. On or before the Closing Date for a
Property Entity, Seller shall transfer to Purchaser any and all licenses, permits or approvals
relating to the ownership and/or occupancy of the Property that are in Seller’s name with respect
to the respective Property.

          (j) Loan. At Purchaser’s request, Seller shall, and Seller shall cause each of the
Property Entities to, reasonably cooperate (at no material additional cost to Seller that Purchaser
does not agree to bear) with any requirements of Purchaser’s lenders in connection with any debt or
equity financing obtained or to be obtained by Purchaser in connection with this transaction or
either Property, including, without limitation, delivering opinions, subordination and
non-disturbance agreements and such other documents as may be reasonably requested by Purchaser in
connection with this transaction. In the event Purchaser obtains such financing, Purchaser shall
use reasonable efforts to cause each of Purchaser’s lenders to execute and deliver to Seller a
Subordination, Nondisturbance, Attornment and Agreement (“SNDA”) in form and substance reasonably
acceptable to Purchaser’s lenders and Seller, which SNDA shall reference Seller’s option to
purchase the respective Property pursuant to each of the Belward Option Agreement and the Traville
Option Agreement.

 

 

          (k) Exclusive Negotiations. In the absence of a Purchaser default, Seller shall, and
Seller shall cause each of the Property Entities to: (i) remove each Property from the market, and
(ii) not actively solicit the submission of any proposal or offer from any person related to the
acquisition of the Properties or the Membership Interests nor participate in any discussions or
negotiations regarding, or facilitating in any other manner any effort or attempt by any person
regarding, the sale or acquisition of any of the Properties or the Membership Interests.

          (l) Taxes. Seller shall not permit the Property Entities to, and the Properties
Entities shall not, without the prior written consent of Purchaser, make or change any material
election in respect of Taxes (including any election to be treated as an association taxable as a
corporation for federal, state or local tax purposes), adopt or change any accounting method or
period in respect of Taxes, enter into any tax-sharing, allocation, compensation or like agreement,
settle any claim or assessment in respect of Taxes, request any tax ruling or consent to any
extension or waiver of the limitation period applicable to any claim or assessment in respect of
Taxes.

     4.3. Damage; Condemnation.
As between Seller and Purchaser, all risk of loss with respect to the Properties shall remain
with Seller until the respective Closing Date, when full risk of loss with respect to the
respective Property shall pass to Purchaser. Seller shall promptly give Purchaser written notice
of any damage to either Property, describing such damage, whether such damage is covered by
insurance and the estimated cost of repairing such damage. Seller shall promptly give Purchaser
notice of any eminent domain proceedings that are contemplated, threatened or instituted with
respect to either Property (“Eminent Domain”).

          (i) If the aggregate cost of repair or replacement or the value of the Eminent Domain
(collectively, “repair and/or replacement”) with respect to either Property is One Million Dollars
($1,000,000.00) or less, in the opinion of Purchaser’s and Seller’s respective engineering
consultants, Purchaser shall close on the subject Property and take the Property as diminished by
such events with an assignment by Seller of any casualty insurance proceeds or condemnation
proceeds and the payment by Seller to Purchaser of any applicable deductible amounts, less any
amounts reasonably incurred by Seller to repair such Property (together with a credit from Seller
to Purchaser of the full amount of any deductible not paid directly by Seller and the amount of any
repair and/or replacement not covered by such proceeds).

          (ii) If the aggregate cost of repair and/or replacement to a Property is greater than One
Million Dollars ($1,000,000.00), in the opinion of Purchaser’s and Seller’s respective engineering
consultants, then Purchaser, at its sole option, may elect either to: (a) terminate this Agreement
as to the respective Property by written notice to Seller and the Escrow Agent, in which event the
Earnest Money shall be returned to Purchaser and neither party shall have any further liability to
the other hereunder, except for those liabilities that expressly survive a termination of this
Agreement; or (b) proceed to close and take the Property as diminished by such events, together
with an assignment of Seller’s casualty insurance proceeds or condemnation proceeds and the payment
by Seller to Purchaser or any applicable deductible amounts, less any amounts reasonably incurred
by Seller to repair either Property (together with a credit from Seller to Purchaser of the full
amount of any deductible not paid directly by Seller and the amount of any repair and/or
replacement not covered by such proceeds).

 

 

          (iii) If a dispute arises between Seller and Purchaser with respect to the cost of repair
and/or replacement for the matters set forth in this Section, an engineer designated by Seller and
an engineer designated by Purchaser shall within five (5) business days select an independent
engineer licensed to practice in Maryland who shall resolve such dispute within ten (10) business
days after being retained by Purchaser. All fees, costs and expenses of such third engineer so
selected shall be shared equally by Purchaser and Seller. In such case, the respective Closing
Date shall be extended for up to twenty (20) days in order for Purchaser and Seller to resolve such
dispute.

          (iv) A casualty or condemnation with respect to one Property shall affect neither Purchaser’s
and Seller’s obligation to close on the other Property nor Seller’s obligation to execute the
Subject Lease with respect to the other Property.

          (v) If any Seller Owned Property or Seller Retained Property is damaged, destroyed or subject
to condemnation, then Seller shall promptly repair or replace such Seller Owned Property or Seller
Retained Property with a comparable item of equal quality and
quantity as existed as of the time of such damage, destruction or condemnation. Seller’s
obligations under this Section 4.3(v) shall survive the respective Closing.

ARTICLE 5. CONDITIONS PRECEDENT; DEFAULT AND REMEDIES

     5.1. Conditions to Seller’s Obligation to Close. In addition to all other conditions set
forth herein, the obligation of Seller to consummate the transactions contemplated hereunder shall
be contingent upon the satisfaction of the conditions set forth below in this Section 5.1.
If Seller elects separate Closings in accordance with Section 1.5, then the conditions set
forth in this Section 5.1 shall apply separately to each of the Belward Closing and the
Traville Closing.

          (a) Representations. Purchaser’s representations and warranties contained herein
shall be true and correct in all material respects as of the date of this Agreement and the
respective Closing Date;

          (b) Performance. As of the respective Closing Date, Purchaser shall have performed
its obligations hereunder and all deliveries to be made by Purchaser at such Closing have been
tendered; and

          (c) Other Condition. Any other condition set forth in this Agreement to Seller’s
obligation to close shall have been satisfied by the applicable date.

     5.2. Conditions to Purchaser’s Obligation to Close. In addition to all other conditions
set forth herein, the obligation of Purchaser to consummate the transactions contemplated hereunder
shall be contingent upon the satisfaction of the conditions set forth below in this Section
5.2. If separate Closings are elected by Seller in accordance with Section 1.5, then
the conditions set forth in this Section 5.2 shall apply separately to each of the Belward
Closing and the Traville Closing.

          (a) Representations. Seller’s and the Property Entities’ representations and
warranties contained herein and in the applicable Seller’s Closing Certificate shall be true and
correct in all material respects as of the date of this Agreement and the respective Closing Date.
The schedules of all liabilities (contingent or otherwise) for the respective Property attached to

 

 

the applicable Seller’s Closing Certificate shall not show additional assets or liabilities beyond
those shown on the Liabilities Schedule approved by Purchaser during the Due Diligence Period,
unless otherwise approved by Purchaser in its sole discretion.

          (b) Performance. As of the respective Closing Date, each of Seller and the Property
Entities shall have performed their obligations hereunder and all deliveries to be made by Seller
at such Closing have been tendered;

          (c) Default. As of the respective Closing Date, Seller shall not be in default under
any agreement to be assigned to, or obligation to be assumed by, Purchaser under this Agreement;

          (d) Property Entity Default. As of the respective Closing Date, neither Property
Entity shall be in default under any Contract or any other agreement to be retained by such
Property Entity after such Closing Date;

          (e) Physical Condition. The physical condition of the respective Property, the Seller
Owned Property, the Seller Retained Property and the Leased Equipment shall be substantially the
same on the respective Closing Date as on the Effective Date, reasonable wear and tear excepted,
unless the alteration of said physical condition is the result of a casualty loss or proceeding in
eminent domain, in which case the provisions of Section 4.3 shall govern;

          (f) Financial Condition. The financial condition of Seller and each of the Property
Entities (each individually and not in the aggregate) on the respective Closing Date shall be
substantially the same as the financial condition of Seller and each of the Property Entities (each
individually and not in the aggregate) on the Effective Date after taking into account Seller’s
operating losses from continuing operations;

          (g) Lease Condition. As of the respective Closing Date for any Property Entity, (1)
Seller and Purchaser shall have executed the Subject Lease with respect to the respective Property,
(2) the Subject Lease with respect to the respective Property shall be in full force and effect,
(3) Seller shall be the sole tenant with respect to the respective Property, and (4) Purchaser
shall have received assurances acceptable to Purchaser in its sole and absolute discretion that on
the consummation of the respective Closing, all of the leases affecting any portion of the
respective Property, other than the Subject Lease, including each of the Existing Leases with
respect to the respective Property, shall have been terminated and each party under any such lease
to which such Property Entity is a party shall have released such Property Entity from all
obligations and liabilities under such lease;

          (h) Belward Title. Seller shall have executed all such documents and agreements
required by the Title Company to vest the Belward Building and the Belward Real Property in
Belward. Upon the sole condition of payment of the premium by Purchaser, at the Belward Closing,
the Title Company shall be irrevocably committed to issue to Purchaser an ALTA Owner’s Policy of
title insurance (Revised 10-13-70 and 10-17-84), with extended coverage (i.e., with ALTA General
Exceptions deleted), dated as of the Belward Closing Date, in the amount of $200,000,000, insuring
Belward and Purchaser, not individually, but solely as the owner of 100% of the membership
interests in Belward, as owner of good, marketable and

 

 

indefeasible fee simple title to the Belward
Property, subject only to the Permitted Exceptions, and containing the Customary Endorsements (the
“Belward Title Policy”); and

          (i) Traville Title. Seller and/or Wachovia, as the case may be, shall have executed
all such documents and agreements required by the Title Company to vest the Traville HQ Building
and the Traville HQ Real Property in Traville. Upon the sole condition of payment of the premium
by Purchaser, at the Traville Closing, the Title Company shall be irrevocably committed to issue to
Purchaser, an ALTA Owner’s Policy of title insurance (Revised 10-13-70 and 10-17-84), with extended
coverage (i.e., with ALTA General Exceptions deleted), dated as of the Traville Closing Date, in
the amount of $225,000,000, insuring Traville and Purchaser, not individually, but solely as the
owner of 100% of the membership interests in Traville, as owner of good, marketable and
indefeasible fee simple title to the Traville Property, subject only to the
Permitted Exceptions, and containing the Customary Endorsements (the “Traville Title Policy”
and, together with the Belward Title Policy, the “Title Policies”);

          (j) Belward UCC Title Insurance. Upon the sole condition of payment of the premium by
Purchaser, at the Belward Closing, the Title Company shall be irrevocably committed to issue to
Purchaser the Belward UCC Commitment provided for in Section 3.2 hereof, free and clear of
all liens, Permitted Exceptions, encumbrances, claims, rights or liabilities in favor of any other
party of any kind or nature whatsoever (“Belward UCC Title Policy”);

          (k) Traville UCC Title Insurance. Upon the sole condition of payment of the premium
by Purchaser, at the Traville Closing, the Title Company shall be irrevocably committed to issue to
Purchaser the Traville UCC Commitment provided for in Section 3.2 hereof, free and clear of
all liens, permitted exceptions, encumbrances, claims, rights or liabilities in favor of any other
party of any kind or nature whatsoever (“Traville UCC Title Policy” and, together with the Belward
Title Policy, the “UCC Title Policy”).

          (l) Bankruptcy. No proceeding shall have been commenced against Seller or any
Property Entity under the federal Bankruptcy Code or any state law for relief of debtors;

          (m) Moratorium. No moratorium, statute or regulation of any governmental agency or
order or ruling of any court shall have been enacted, adopted, or issued which would materially
adversely affect Purchaser’s or any Property Entity’s use or development of either Property;

          (n) Property Entities. Except as provided in this Agreement, there shall not have
occurred since the Effective Date, any material change (including without limitation the initiation
of any material litigation or other adversarial proceeding or the incurrence of any liability) in
or relating to the business or operation of the Property Entities or their financial condition, and
Seller shall not have taken, and Seller shall have not permitted the Property Entities to have
taken, any action which would constitute a breach of this Agreement. No claim shall have been
filed or threatened against Seller or the Property Entities seeking to prevent or set aside the
Closing or seeking damages or compensation if the Closing occurs. The financial condition of
Seller and the Property Entities shall be substantially the same on the respective Closing Date as
on the date of execution of this Agreement after taking into account such Property Entity’s
operating losses from continuing operations;

 

 

          (o) Other Condition. Any other condition set forth in this Agreement to Purchaser’s
obligation to close shall have been satisfied by the applicable date.

     5.3. Failure of Condition Precedent. So long as a party is not in default beyond
applicable notice and cure periods hereunder, if any condition to such party’s obligation to
proceed with the Closing hereunder has not been satisfied as of the respective Closing Date or
other applicable date and such condition is not cured within five (5) Business Days after receipt
of notice of default from the non-defaulting party; such non-defaulting party may, in its sole
discretion, either (a) terminate this Agreement by delivering written notice to the other party on
or before the respective Closing Date or other applicable date, whereupon: (i) if such termination
occurs prior to the expiration of the Due Diligence Period,
then the Earnest Money shall be returned to Purchaser, (ii) if such termination occurs subsequent
to the termination of the Due Diligence Period and Purchaser is in breach of its obligations under
this Agreement, then the provisions of Section 5.4 shall apply, or (iii) if such
termination occurs subsequent to the termination of the Due Diligence Period and Seller is in
breach of its obligations under this Agreement, then the provisions of Section 5.5 shall
apply, or (b) elect to close, notwithstanding the non-satisfaction of such condition, in which
event such party shall be deemed to have waived any such condition. The foregoing shall not be
construed as diminishing the respective rights of the parties under Sections 5.4(b) and
5.5(b).

     5.4. Purchaser’s Defaults; Seller’s Remedies.

          (a) In the event of a breach by Purchaser of its obligations under this Agreement after the
expiration of the Due Diligence Period, which breach is not cured within five (5) Business Days
after Purchaser’s receipt of notice of default from Seller (provided that no such cure period shall
extend the respective Closing Date or apply for a breach of the obligation to close by such Closing
Date) and Seller is willing, ready and able to perform its obligations hereunder, is not in default
hereunder and shall have performed all of the obligations required of Seller as of the date
Purchaser receives the notice of default from Seller, Seller’s sole remedy shall be to terminate
this Agreement and retain all Earnest Money and any earnings thereon as liquidated damages, not as
a penalty. PURCHASER AND SELLER AGREE THAT IT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO
QUANTIFY THE ACTUAL DAMAGES TO SELLER IN THE EVENT OF A BREACH BY PURCHASER AFTER THE EXPIRATION OF
THE DUE DILIGENCE PERIOD, THAT THE AMOUNT OF ALL EARNEST MONEY IS A REASONABLE ESTIMATE OF SUCH
ACTUAL DAMAGES, AND THAT SELLER’S EXCLUSIVE REMEDY IN THE EVENT OF A BREACH BY PURCHASER AFTER THE
EXPIRATION OF THE DUE DILIGENCE PERIOD SHALL BE TO RETAIN ALL EARNEST MONEY AND EARNINGS THEREON AS
LIQUIDATED DAMAGES.

	 	 	 	 	 	 	 
	 

	 	 

Initials of Seller
	 	 

Initials of Purchaser
	 	 

          (b) Subject to Section 9.23, after Closing, in the event of a breach by Purchaser of
its obligations under this Agreement that survive Closing, Seller may exercise any rights and
remedies available at law or in equity.

 

 

     5.5. Seller’s Defaults; Purchaser’s Remedies.

          (a) In the event of a breach by Seller of its obligations under this Agreement, which breach
is not cured within five (5) Business Days after Seller’s receipt of notice of default from
Purchaser (provided that no such cure period shall extend the respective Closing Date or apply for
a breach of the obligation to close by such Closing Date), Purchaser may elect only one of the
following two remedies: (i) terminate this Agreement and receive: (1) a refund of the Earnest Money
and any earnings thereon, plus (2) in the case of an intentional breach by Seller, liquidated
damages in the amount of two million dollars ($2,000,000), plus (3) reimbursement from Seller for
Purchaser’s reasonable out of pocket costs incurred in connection with the negotiation of this
Agreement, Purchaser’s diligence with respect to the Properties, and
Purchaser’s actions in furtherance of the transactions contemplated by this Agreement
(provided that said sum recoverable as reimbursement shall not exceed two hundred and fifty
thousand dollars ($250,000)); or (ii) enforce specific performance of this Agreement against
Seller, including the right to recover reasonable attorneys’ fees and to seek recovery pursuant to
Section 9.1 of this Agreement. Purchaser’s election of remedies shall be made within 10
Business Days following Seller’s failure to cure. PURCHASER AND SELLER AGREE THAT IT WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO QUANTIFY THE ACTUAL DAMAGES TO PURCHASER IN THE EVENT OF A
BREACH BY SELLER, THAT THE AMOUNTS SET FORTH ABOVE ARE A REASONABLE ESTIMATE OF SUCH ACTUAL
DAMAGES.

	 	 	 	 	 	 	 
	 

	 	 

Initials of Seller
	 	 

Initials of Purchaser
	 	 

          (b) Subject to Sections 8.3, 8.4 and 9.23, after Closing, in the event
of a breach by Seller of its obligations under this Agreement that survive Closing, Purchaser may
exercise any rights and remedies available at law or in equity.

ARTICLE 6. CLOSING

     6.1. Closing Date. The consummation of the transactions contemplated herein (the
“Closing”) shall occur as follows.

     6.2. Belward Closing. The consummation of the transactions contemplated herein with
respect to the Belward Membership Interests (the “Belward Closing”) shall occur on the Belward
Closing Date at the office of the Escrow Agent through the escrow with the Escrow Agent. The
Earnest Money shall be retained by the Escrow Agent as security for Purchaser’s performance under
the Purchase Agreement with respect to the Traville Membership Interests. Funds shall be deposited
into and held by Escrow Agent in a closing escrow account with a bank satisfactory to Purchaser and
Seller. Upon satisfaction or completion of all closing conditions and deliveries, the parties
shall direct the Escrow Agent to immediately deliver, and if appropriate, record, the closing
documents to the appropriate parties and make disbursements according to the Belward Closing
Statement executed by Seller and Purchaser. Provided such supplemental escrow instructions are not
in conflict with this Agreement as it may be amended in writing from time to time, Seller and
Purchaser agree to execute such supplemental escrow instructions as may be appropriate to enable
Escrow Agent to comply with the terms of this

 

 

Agreement. The parties understand that the Closing
shall occur by escrow in Bethesda, Maryland requiring that all necessary deliveries to escrow must
be completed by 9:00 AM on the Belward Closing Date.

          (a) Seller’s Deliveries in Escrow. Prior to 9:00 AM on the Belward Closing Date,
Seller shall deliver in escrow to the Escrow Agent four (4) counterpart originals of each of the
following:

          (i) Organizational Documents. A certified copy of the Articles of Organization
(and any amendments thereto) of Belward and a certificate of good standing for Belward, each
issued by the Secretary of State of the State of Maryland, dated no earlier than seven (7)
days prior to the Belward Closing Date;

          (ii) Assignment of Belward Membership Interests. The Assignment of Belward
Membership Interests, in the form attached hereto as Exhibit G, executed by Seller;

          (iii) Belward Lease. The Belward Lease, substantially in the form of
Exhibit H attached hereto, executed by Seller;

          (iv) Opinion. An opinion of counsel for Seller, addressed to Purchaser and
Purchaser’s lender, if any, that have been identified to Seller and dated the Belward
Closing Date, in form and substance reasonably acceptable to Purchaser, covering (1) the
subjects set forth in Sections 8.1(a), (c) and (d), (2) the valid transfer by Seller
to Purchaser of the ownership of the Belward Membership Interests, and (3) to such counsel’s
knowledge, the Belward Membership Interests are free and clear of all Liens, subject to
customary limitations, assumptions and qualifications. The opinion shall state that it may
be relied upon by counsel to Purchaser in connection with any legal opinion that may be
required to be given by counsel to Purchaser in connection with any debt or equity financing
obtained or to be obtained by Purchaser;

          (v) Seller’s Closing Certificate. A certificate, substantially in the form of
Exhibit I attached hereto (the “Belward Closing Certificate”), executed by Seller
for the Belward Closing;

          (vi) Authority. Evidence of the existence, organization and authority of each
of Seller and Belward and of the authority of the persons executing documents on behalf of
Seller and Belward reasonably satisfactory to the Escrow Agent and the Title Company;

          (vii) Indemnity. A mechanic’s lien indemnity executed by Seller, if required,
in form and substance reasonably satisfactory to Escrow Agent and the Title Company;

          (viii) FIRPTA Certificate. A certificate in form and substance reasonably
satisfactory to Purchaser, duly executed and acknowledged by Seller, certifying that the
transactions contemplated by this Agreement are exempt from withholdings under Section 1445
of the Code;

 

 

          (ix) Belward Bill of Sale. A Bill of Sale for the Seller Belward Property
substantially in the form of Exhibit N attached hereto (“Belward Bill of Sale”), executed
and acknowledged by Seller;

          (x) Belward Option Agreement. An Option Agreement substantially in the form of
Exhibit O attached hereto (“Belward Option Agreement”), executed by Seller or, in the
alternative, an executed original of the pre-closing Belward Option Agreement between Seller
and Belward;

          (xi) Memorandum of Belward Option Agreement. A memorandum of the Belward
Option Agreement, in recordable form, to be recorded in Montgomery County, Maryland, in form
and substance reasonably satisfactory to Purchaser and Seller (“Memorandum of Belward Option
Agreement”), executed and acknowledged by Seller or, in the alternative, a recorded
memorandum of the Belward Option Agreement between Seller and Belward;

          (xii) Terminations. Terminations effective no later than the Belward Closing
Date of each Contract which Seller elected to terminate pursuant to Section 2.4,
pursuant to which Belward is released from all of its obligations and liabilities under such
Contracts;

          (xiii) Belward Lease Terminations. Terminations effective no later than the
Belward Closing Date of the Existing Belward Lease, pursuant to which Belward is released
from all of its obligations and liabilities under the Existing Belward Lease and otherwise
in form and substance reasonably acceptable to Purchaser;

          (xiv) Termination of Deed of Trust. The termination of that certain Deed of
Trust and Security Agreement dated November 7, 2001, from Genome Statutory Trust 2001A to
Wells Fargo Bank Northwest, N.A., as amended and modified;

          (xv) Q Building Option Agreement. The Q Building Option Agreement
substantially in the form of Exhibit S attached hereto, executed by Seller;

          (xvi) Memorandum of Q Building Option Agreement. A memorandum of the Q
Building Option Agreement in recordable form, to be recorded in Montgomery County, Maryland,
in form and substance reasonably satisfactory to Purchaser and Seller (“Memorandum of Q
Building Option Agreement”), executed and acknowledged by Seller;

          (xvii) Pilot Plant Option Agreement. The Pilot Plant Option Agreement
substantially in the form of Exhibit T attached hereto, executed and acknowledged by Seller;

          (xviii) Memorandum of Pilot Plant Option Agreement. A memorandum of the Pilot
Plant Option Agreement in recordable form, to be recorded in Montgomery County, Maryland, in
form and substance reasonably satisfactory to Purchaser and Seller (“Memorandum of Pilot
Plant Option Agreement”), executed and acknowledged by Seller;

 

 

          (xix) Security Agreement. The Security Agreement, substantially in the form of
Exhibit V, executed by Seller;

          (xx) Tax Clearance Certificates. At the Belward Closing, Seller and the
Property Entities shall use their reasonable best efforts to provide Purchaser with such
clearance certificates or similar document(s) which may be required by any state taxing
authority to relieve Purchaser of any obligation to withhold any portion of the payments to
Seller pursuant to this Agreement;

          (xxi) Amended and Restated Belward LLC Agreement. If requested by Purchaser,
(1) the Amended and Restated Belward LLC Agreement naming Purchaser as “Managing Member” and
the holder of the 100% of the membership interests in Belward, executed by Seller, and (2)
the amendment to the Articles of Organization of Belward; and

          (xxii) Other Deliveries. Any other Closing deliveries required to be made by
or on behalf of Seller or any Property Entity hereunder or reasonably required to effect the
Closing of this transaction consistent with this Agreement.

          (b) Purchaser’s Deliveries in Escrow. Prior to 9:00 AM on the Belward Closing Date,
Purchaser shall deliver in escrow to the Escrow Agent four (4) counterpart originals of each of the
following:

          (i) Purchase Price. The Belward Purchase Price, plus or minus applicable
prorations, deposited by Purchaser with the Escrow Agent in immediate, same-day federal
funds wired for credit into the Escrow Agent’s escrow account;

          (ii) Assignment of Belward Membership Interests. The Assignment of Belward
Membership Interests, in the form attached hereto as Exhibit G, executed by
Purchaser;

          (iii) Belward Bill of Sale. Counterpart of the Belward Bill of Sale, executed
by Purchaser;

          (iv) Belward Option Agreement. If required pursuant to Section 6.2(a)(x)
above, counterpart of the Belward Option Agreement in recordable form to be recorded in
Montgomery County, Maryland, executed by Purchaser;

          (v) Memorandum of Belward Option Agreement. If required pursuant to Section
6.2(a)(xi) above, the Memorandum of Belward Option Agreement, executed and acknowledged by
Purchaser;

          (vi) Belward Lease. The Belward Lease, substantially in the form of
Exhibit H attached hereto, executed by Purchaser on behalf of Belward;

          (vii) Q Building Option Agreement. The Q Building Option Agreement
substantially in the form of Exhibit S attached hereto, executed and acknowledged by
Purchaser;

 

 

          (viii) Memorandum of Q Building Option Agreement. The Memorandum of Q Building
Option Agreement, executed and acknowledged by Purchaser;

          (ix) Pilot Plant Option Agreement. The Pilot Plant Option Agreement
substantially in the form of Exhibit T attached hereto, executed and acknowledged by
Purchaser;

          (x) Memorandum of Pilot Plant Option Agreement. The Memorandum of Pilot Plant
Option Agreement, executed and acknowledged by Purchaser;

          (xi) Security Agreement. The Security Agreement, substantially in the form of
Exhibit V, executed by Purchaser on behalf of Belward; and

          (xii) Other Deliveries. Any other Closing deliveries required to be made by or
on behalf of Purchaser hereunder or reasonably required to effect the Closing of this
transaction consistent with this Agreement.

     6.3. Traville Closing and Escrow. The consummation of the transactions contemplated
herein with respect to the Traville Membership Interests (the “Traville Closing”) shall occur on
the Traville Closing Date at the offices of the Escrow Agent through the money escrow with the
Escrow Agent. Funds shall be deposited into and held by Escrow Agent in a closing escrow account
with a bank satisfactory to Purchaser and Seller. Upon satisfaction or completion of all closing
conditions and deliveries (including the execution and delivery to the Escrow Agent of each of the
Traville Sublease Termination and the Traville Ground Lease Termination), the parties shall direct
the Escrow Agent to take the following steps in the following order: (a) deliver the Assignment of
Traville Membership Interests to Purchaser, (b) immediately record and deliver the closing
documents to the appropriate parties, and (c) make disbursements according to the Traville Closing
Statement executed by Seller and Purchaser and Wachovia, if required. Provided such supplemental
escrow instructions are not in conflict with this Agreement as it may be amended in writing from
time to time, Seller and Purchaser agree to execute such supplemental escrow instructions as may be
appropriate to enable Escrow Agent to comply with the terms of this Agreement. The parties
understand that the Closing shall occur in Bethesda, Maryland requiring that all necessary
deliveries to escrow must be completed by 9:00 AM on the Traville Closing Date.

          (a) Seller’s Deliveries in Escrow. Prior to 9:00 AM on the Traville Closing Date,
Seller shall deliver in escrow to the Escrow Agent four (4) counterpart originals of each of the
following:

          (i) Organizational Documents. A certified copy of the Articles of Organization
(or any amendments thereto) of Traville and a certificate of good standing for Traville,
each issued by the Secretary of State of the State of Maryland, dated no earlier than seven
(7) days prior to the Traville Closing Date;

          (ii) Assignment of Traville Membership Interests. The Assignment of Traville
Membership Interests, in the form attached hereto as Exhibit J, executed by Seller
(“Assignment of Traville Membership Interests”);

 

 

          (iii) Traville Lease. The Traville Lease, substantially in the form of
Exhibit K attached hereto, executed by Seller;

          (iv) Opinion. An opinion of counsel for Seller, addressed to Purchaser and
Purchaser’s lender, if any, that have been identified to Seller and dated the Traville
Closing Date, in form and substance reasonably acceptable to Purchaser, covering (1) the
subjects set forth in Sections 8.1(a), (c) and (d), (2) the valid transfer by
Seller to Purchaser of the ownership of the Traville Membership Interests, and (3) to such
counsel’s knowledge, the Traville Membership Interests are free and clear of all Liens,
subject to customary limitations, assumptions and qualifications. The opinion shall state
that it may be relied upon by counsel to Purchaser in connection with any legal opinion that
may be required to be given by counsel to Purchaser in connection with any debt or equity
financing obtained or to be obtained by Purchaser;

          (v) Seller’s Closing Certificate. A certificate, substantially in the form of
Exhibit L attached hereto (the “Traville Closing Certificate” and, together with the
Belward Closing Certificate, the “Seller’s Closing Certificates”), executed by Seller for
the Traville Closing;

          (vi) Authority. Evidence of the existence, organization and authority of each
of Seller and Traville and of the authority of the persons executing documents on behalf of
Seller and Traville reasonably satisfactory to the Escrow Agent and the Title Company; and

          (vii) Indemnity. A mechanic’s lien indemnity executed by Seller, if required,
in form and substance reasonably satisfactory to Escrow Agent and the Title Company;

          (viii) FIRPTA Certificate. A certificate in form and substance reasonably
satisfactory to Purchaser, duly executed and acknowledged by Seller and Wachovia, certifying
that the transactions contemplated by this Agreement are exempt from withholdings under
Section 1445 of the Code;

          (ix) Traville Bill of Sale. A Bill of Sale for the Seller Traville Property
substantially in the form of Exhibit P attached hereto (“Traville Bill of Sale”), executed
and acknowledged by Seller;

          (x) Traville Option Agreement. An Option Agreement for the Traville Property
and Memorandum of Option Agreement in recordable form, to be recorded in Montgomery County,
Maryland, substantially in the form of Exhibit Q attached hereto (“Traville Option
Agreement”), executed and acknowledged by Seller or, in the alternative, an executed
original of the Traville Option Agreement between Seller and Traville;

          (xi) Memorandum of Traville Option Agreement. A memorandum of the Traville
Option Agreement in recordable form, to be recorded in Montgomery County, Maryland, in form
and substance reasonably satisfactory to Purchaser and Seller (“Memorandum of Traville
Option Agreement”), executed and acknowledged by

 

 

Seller or, in the alternative, a recorded
memorandum of the Traville Option Agreement between Seller and Traville;

          (xii) Terminations. Terminations effective no later than the Traville Closing
Date of each Contract which Seller elected to terminate pursuant to Section 2.4,
pursuant to which Traville is released from all of its obligations and liabilities under
such Contracts, executed by Seller and each other party thereto;

          (xiii) Sublease Agreement Termination. A termination effective no later than
the Traville Closing Date of the Traville Sublease, pursuant to which Traville is released
from all of its obligations and liabilities under the Traville Sublease and otherwise in
form and substance reasonably acceptable to Purchaser, executed by Seller and Wachovia
(“Traville Sublease Termination”);

          (xiv) Traville Ground Lease Termination. A termination of the Traville Ground
Lease effective no later than the Traville Closing Date, pursuant to which the Traville
Ground Lease is terminated, Traville is released from all of its obligations and liabilities
under the Traville Ground Lease and otherwise in form and substance reasonably acceptable to
Purchaser, executed by Traville and Wachovia (“Traville Ground Lease Termination”);

          (xv) Right of Entry. The Right of Entry, in the form attached hereto as
Exhibit U, executed by Seller;

          (xvi) Reciprocal Easement Agreement. The Reciprocal Easement Agreement, in the
form attached hereto as Exhibit W, executed by Seller; and

          (xvii) Tax Clearance Certificates. At the Traville Closing, Seller and the
Property Entities shall use their reasonable best efforts to provide Purchaser with such
clearance certificates or similar document(s) which may be required by any state taxing
authority to relieve Purchaser of any obligation to withhold any portion of the payments to
Seller pursuant to this Agreement;

          (xviii) Amended and Restated Traville LLC Agreement. If requested by
Purchaser, (1) the Amended and Restated Traville LLC Agreement naming Purchaser as “Managing
Member” and the holder of the 100% of the membership interests in Traville, executed by
Seller, and (2) the amendment to the Articles of Organization of Traville; and

          (xix) Other Deliveries. Any other Closing deliveries required to be made by or
on behalf of Seller or any Property Entity hereunder or reasonably required to effect the
Closing of this transaction consistent with this Agreement.

          (b) Purchaser’s Deliveries in Escrow. Prior to 9:00 AM on the Traville Closing Date,
Purchaser shall deliver in escrow to the Escrow Agent four (4) counterpart originals of each of the
following:

          (i) Purchase Price. The Traville Purchase Price, less the Earnest Money that
is applied to the Traville Purchase Price, plus or minus applicable prorations,

 

 

deposited by
Purchaser with the Escrow Agent in immediate, same-day federal funds wired for credit into
the Escrow Agent’s escrow account.

          (ii) Wachovia Termination Payment. The Wachovia Termination Payment deposited
by Purchaser with the Escrow Agent in immediate, same-day federal funds wired for credit
into the Escrow Agent’s escrow account.

          (iii) Assignment of Traville Membership Interests. The Assignment of Traville
Membership Interests, in the form attached hereto as Exhibit J, executed by
Purchaser;

          (iv) Traville Bill of Sale. Counterpart of the Traville Bill of Sale, executed
by Purchaser;

          (v) Traville Option Agreement. If required pursuant to Section 6.2(b)(x)
above, counterpart of the Traville Option Agreement, executed by Purchaser;

          (vi) Memorandum of Traville Option Agreement. If required pursuant to Section
6.2(b)(xi) above, the Memorandum of Traville Option Agreement, executed and acknowledged by
Purchaser;

          (vii) Traville Lease. The Traville Lease, substantially in the form of
Exhibit K attached hereto, executed by Purchaser on behalf of Traville;

          (viii) Right of Entry. The Right of Entry, in the form attached hereto as
Exhibit U, executed by Purchaser on behalf of Traville;

          (ix) Reciprocal Easement Agreement. The Reciprocal Easement Agreement, in the
form attached hereto as Exhibit W, executed by Purchaser; and

          (x) Other Deliveries. Any other Closing deliveries required to be made by or
on behalf of Purchaser hereunder or reasonably required to effect the Closing of this
transaction consistent with this Agreement.

     6.4. Closing Statements/Closing Costs.

          (a) Seller and Purchaser shall deposit with the Escrow Agent executed Closing Statements
consistent with this Agreement in the form required by the Escrow Agent.

          (b) Seller and Purchaser shall execute such returns, questionnaires and other documents as
shall be required with regard to all applicable real property transaction taxes imposed by
applicable federal, state or local law or ordinance.

          (c) Seller shall pay the fees of any counsel representing Seller in connection with this
transaction. Seller shall also pay the following costs and expenses:

          (i) one-half of the escrow fee, if any, which may be charged by the Escrow Agent or the Title
Company;

 

 

          (ii) one-half of any excise, recording, deed, imposed transfer tax, documentary stamp tax or
similar tax which becomes payable by reason of the transfer of the Membership Interests under
applicable state or local law, including, without limitation, any real estate excise tax; and

          (iii) all of Seller’s recording fees in order to release any liens in connection with the
transactions contemplated hereby.

          (d) Purchaser shall pay the fees of any counsel representing Purchaser in connection with this
transaction. Purchaser shall also pay the following costs and expenses:

          (i) one-half of the escrow fee, if any, which may be charged by the Escrow Agent or the Title
Company;

          (ii) one-half of any excise, recording, deed, imposed transfer tax, documentary stamp tax or
similar tax which becomes payable by reason of the transfer of the Membership Interests under
applicable state or local law, including, without limitation, any real estate excise tax; and

          (iii) the cost of the Survey;

          (iv) the UCC title insurance premium for the UCC Title Policies;

          (v) the premium for the Title Policy for each of the Properties, the Customary Endorsements
and all other endorsements; and

          (vi) all other recording fees in order to effectuate the Closing.

     6.5. Transfer of Title. At Closing, Seller shall transfer title to 100% of the Membership
Interests in the Property Entities to Purchaser free and clear of all liens, encumbrances, claims
or liabilities of any kind or nature pursuant to the Assignments.

     6.6. Delivery of Books and Records. The following shall apply with respect to each
Closing: immediately after the respective Closing, Seller shall deliver to the offices of
Purchaser’s property manager: the original Contracts and the following to the extent the same are
in Seller’s, any Property Entity’s or its property manager’s possession or control: copies or
originals of all books and records of account, contracts, copies of correspondence with tenants and
suppliers, receipts for deposits, unpaid bills and other papers or documents which pertain to the
respective Property or the respective Property Entity; all permits and warranties; all advertising
materials, booklets, keys and other items, if any, used in the operation of such Property; and the
original “as-built” plans and specification; all other available plans and specifications; and all
operation manuals. Seller shall cooperate with Purchaser before and after Closing to transfer to
Purchaser any such information stored electronically.

     6.7. Recordation Taxes. Subject to Section 7.5, in the event Purchaser acquires a
fee interest in either the Belward Property or the Traville Property, Purchaser shall be
responsible for all transfer and recordation taxes in connection with such acquisition.

ARTICLE 7. PRORATIONS AND ADJUSTMENTS

 

 

     7.1. Prorations.
The following shall apply with respect to each Closing: at least five (5) days prior to the
respective Closing Date, Seller shall provide to Purchaser such information and verification
reasonably necessary to support the prorations and adjustments under this Article 7. To
the extent Seller pays such operating expenses, assessments, charges under Contracts and utility
charges with respect to such Property pursuant to an Existing Lease or as the sole occupant of the
Belward Building, Seller shall continue to be responsible for such charges pursuant to the terms
and provisions of the Subject Leases. All other assessments, charges under Contracts and utility
charges with respect to such Property shall be prorated between Seller and Purchaser, based on the
actual number of days in the applicable period, as of the close of the day immediately preceding
such Closing Date, with Seller bearing all such items to the extent attributable to the period
prior to such Closing Date and Purchaser bearing all such items to the extent attributable the
period commencing on such Closing Date. Taxes shall be allocated as set forth in Sections
7.5 and 9.19 hereof.

     7.2. Closing Statement. At least five (5) days prior to the: (a) Belward Closing Date,
Escrow Agent shall deliver to Seller and Purchaser a closing statement setting forth the prorations
and adjustments to the Purchase Price with respect to the Belward Property pursuant to Section
7.1 (the “Belward Closing Statement”); and (b) Traville Closing Date, Escrow Agent shall
deliver to Seller and Purchaser a closing statement setting forth the prorations and adjustments to
the Traville Purchase Price with respect to the Traville Property pursuant to Section 7.1
(the “Traville Closing Statement” and, together with the Belward Closing Statement, the “Closing
Statements”). Purchaser and Seller shall have two (2) Business Days after receipt of the
applicable Closing Statement to notify the other party in writing of any changes to such Closing
Statement. If either party fails to notify the other within such two (2) Business Day period, then
the parties shall have been deemed to have approved such Closing Statement. If Purchaser notifies
Seller within such two (2) Business Day period, then the parties shall endeavor in good faith to
cause the changes to be implemented in such Closing Statement.

     7.3. Sales Commissions. Seller shall pay a real estate commission to Scheer Partners, Inc.
(“Scheer”) upon the Belward Closing and the Traville Closing, pursuant to a separate broker’s
commission agreement between Scheer and Seller. Except as provided above, Seller and Purchaser
represent and warrant each to the other that they have not dealt with any other real estate broker,
sales person or finder in connection with this transaction. In the event of any claim for broker’s
or finder’s fees or commissions in connection with the negotiation, execution or consummation of
this Agreement or the transactions contemplated hereby, each party shall indemnify and hold
harmless the other party from and against any such claim based upon any statement, representation
or agreement of such party.

     7.4. Pre-Closing Expenses. Seller will not be delinquent in paying, and will not allow
either Property Entity under its Existing Lease to be delinquent in paying, all bills and invoices
for labor, goods, material and services of any kind relating to the respective Property and utility
charges (except if and to the
extent such utility charges are billed directly to tenants), relating to the period prior to such
Closing.

     7.5. Transfer Taxes. In the event that state or local transfer or recordation Taxes are
required to be paid under Maryland law as a result of the sale of the Belward Membership Interests
or the Traville Membership Interests, Seller hereby indemnifies Purchaser against one-half of any
transfer or recordation Taxes, reconveyance fees and other expenses payable pursuant

 

 

to this
transaction, should any be required. This indemnity shall survive the Closing. Seller shall file
in a timely fashion all Tax Returns relating to such Taxes.

ARTICLE 8. REPRESENTATIONS AND WARRANTIES

     8.1. Seller’s Representations and Warranties. As a material inducement to Purchaser to
execute this Agreement and consummate this transaction, Seller represents and warrants to Purchaser
that:

          (a) Organization and Authority. Seller has been duly organized, is validly existing,
and is in good standing as a Delaware corporation. Seller is in good standing and is qualified to
do business in the state in which the Properties are located. Seller has the full right and
authority and has obtained any and all consents required to enter into this Agreement and the
Subject Leases and to consummate or cause to be consummated the transactions contemplated hereby.
This Agreement has been, and all of the documents to be delivered by Seller at the Closing,
including the Subject Leases, will be, authorized and properly executed and constitute, or will
constitute, as appropriate, the valid and binding obligations of Seller, enforceable in accordance
with their terms.

          (b) Recitals. All matters set forth in the Recitals A, B, C, D, E, F, G, H, I and J
are true and correct in all material respects as of the date hereof.

          (c) Belward and Belward Membership Interests. Belward has been duly organized, is
validly existing, and is in good standing as a Maryland limited liability company. Belward is in
good standing and is qualified to do business in the state in which Belward Property is located.
Seller is the holder of 100% of the membership interests (and beneficial interests) in Belward,
free and clear of all liens, encumbrances, claims or liabilities of any kind or nature. There are
no membership interests in Belward other than the interests owned by Seller, and there has been no
amendment or other modification to the Belward LLC Agreement in effect as of the Effective Date,
nor has there been any revocation or termination of the same. Belward does not own, directly or
indirectly, any capital stock or other ownership interests in any person or entity. There are no
outstanding options, warrants, calls, rights, commitments or agreements obligating Seller or
Belward to issue, deliver or sell any membership interests or other equity interests or beneficial
interests in Belward, and there are no outstanding securities or other rights which are convertible
or exchangeable into any shares, membership interests or other equity interests or beneficial
interests in Belward. Neither Seller nor Belward is subject to any obligation to repurchase or
otherwise acquire or retire or to register any shares, membership interests or any other equity
interest or beneficial interest in Belward. Seller is not a party to any equity holder, member,
operating, voting or similar arrangements with respect to any shares,
membership interests or any other equity interests or beneficial interests in Belward and has
not granted a proxy, power of attorney or other authority with respect to any shares, membership
interests or any other equity of Belward to any other person or entity. No action has been taken
to affect a dissolution or in contemplation of a dissolution of Belward.

          (d) Traville and Traville Membership Interests. Traville has been duly organized, is
validly existing, and is in good standing as a Maryland limited liability company. Traville is in
good standing and is qualified to do business in the state in which Traville Property is located.
Seller is the holder of 100% of the membership interests (and beneficial interests) in

 

 

Traville,
free and clear of all liens, encumbrances, claims or liabilities of any kind or nature. There are
no membership interests in Traville other than the interests owned by Traville Sellers, and there
has been no amendment or other modification to the Traville LLC Agreement in effect as of the
Effective Date, nor has there been any revocation or termination of the same. Traville does not
own, directly or indirectly, any capital stock or other ownership interests in any person or
entity. There are no outstanding options, warrants, calls, rights, commitments or agreements
obligating Seller or Traville to issue, deliver or sale any membership interests or other equity
interests or beneficial interest in Traville, and there are no outstanding securities or other
rights which are convertible or exchangeable into any shares, membership interests or other equity
interests or beneficial interest in Traville. Neither Seller nor Traville is subject to any
obligation to repurchase or otherwise acquire or retire or to register any shares, membership
interests or any other equity interest or beneficial interest in Traville. Seller is not a party
to any equity holder, member, operating, voting or similar arrangements with respect to any shares,
membership interests or any other equity interests or beneficial interest in Traville and has not
granted a proxy, power of attorney or other authority with respect to any shares, membership
interests or any other equity of Traville to any other person or entity. No action has been taken
to affect a dissolution or in contemplation of a dissolution of Traville.

          (e) Conflicts and Pending Actions or Proceedings. There is no agreement to which
Seller or any Property Entity is a party or, to Seller’s Knowledge, binding on Seller or any
Property Entity which is in conflict with this Agreement or the Subject Leases, or which challenges
or impairs Seller’s ability to execute or perform its obligations under this Agreement or the
Subject Leases. There is not now pending or, to the best of Seller’s Knowledge, threatened, any
action, suit or proceeding before any court or governmental agency or body against (i) Seller that
would prevent Seller or the Property Entities from performing their obligations hereunder or
against or with respect to either Property or (ii) either Property Entity or that would affect the
Property Entities operations. Neither Seller nor any Property Entity is subject to any outstanding
injunction, judgment, order, decree or ruling. To Seller’s Knowledge, no condemnation, eminent
domain or similar proceedings are pending or threatened with regard to either Property. Seller and
the Property Entities have not received any notice and to Seller’s Knowledge, there are no pending
or threatened liens, special assessments, impositions or increases in assessed valuations to be
made against either Property.

          (f) No Violations. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance by Seller with the provisions
hereof will not, conflict with, result in any violation of or default (with or without notice or
lapse of time or both) under, give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the creation of any lien on
any of Seller’s or any of the Property Entities’ interests, rights or assets under:
(a) the Belward LLC Agreement or other organizational documents of Seller or Belward; (b) the
Traville LLC Agreement or other organizational documents of Seller or Traville; (c) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise, license or
other contract, agreement or instrument applicable to Seller or any Property Entity; or (d) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Seller, any
Property Entity or any of the Properties.

          (g) Belward Lease. Seller is the only tenant at the Belward Property under the
Existing Belward Lease. Seller has neither assigned the Existing Belward Lease nor sublet any

 

 

part
of the Belward Property and does not hold the Belward Property under an assignment or sublease.
All work to be performed for Seller under the Existing Belward Lease or any other agreement has
been performed as required and has been accepted by Seller, and all allowances to be paid to
Seller, including allowances for tenant improvements, moving expenses or other items, have been
paid. The Existing Belward Lease is in full force and effect, free from default and free from any
event which could become a default under the Existing Belward Lease and Seller has no claims
against the landlord or offsets or defenses against rent, and there are no disputes with the
landlord. Seller is not currently entitled to any rent abatement. There are no leasing or other
fees or commissions due, nor will any become due, in connection with the Existing Belward Lease,
any renewal or extension or expansion of the Existing Belward Lease or the termination of the
Existing Belward Lease, nor under any understanding or agreement with any party as to payment of
any leasing commissions or fees regarding future leases or as to the procuring of tenants. Seller
has the absolute right to terminate the Existing Belward Lease and shall terminate the Existing
Belward Lease prior to the Belward Closing Date.

          (h) Traville Ground Lease. Traville is the landlord under the Traville Ground Lease.
Traville has not assigned the Traville Ground Lease other than in connection with the Traville
Sublease. All work to be performed by Traville under Traville Ground Lease, and all allowances to
be paid to Wachovia, including allowances for tenant improvements, moving expenses or other items,
have been paid. The Traville Ground Lease is in full force and effect, free from default and free
from any event which could become a default under the Traville Ground Lease and to Seller’s
Knowledge, Wachovia has no claims against the landlord or offsets or defenses against rent, and
there are no disputes with the landlord. Wachovia is not currently entitled to any rent abatement.
There are no leasing or other fees or commissions (other than any fees or other expenses payable
to Wachovia or its attorneys in connection with the termination of the Traville Sublease, which
shall be at Seller’s sole cost and expense) due, nor will any become due, in connection with the
Traville Ground Lease or the termination of the Traville Ground Lease. Seller has the absolute
right to terminate the Traville Ground Lease prior to the Traville Closing Date.

          (i) Traville Sublease. Seller is the only occupant of the Traville HQ Real Property
under the Traville Sublease. Seller has not assigned the Traville Sublease to any other person or
entity. All work to be performed for Seller under Traville Lease or any other agreement has been
performed as required and has been accepted by Seller, and all allowances to be paid to Seller,
including allowances for tenant improvements, moving expenses or other items, have been paid. The
Traville Sublease is in full force and effect, free from default and free from any event which
could become a default under the Traville Sublease and Seller has no claims against the landlord or
offsets or defenses against rent, and there are no disputes with the landlord. Seller is not
currently entitled to any rent abatement. There are no leasing or other fees
or commissions (other than any fees or other expenses payable to Wachovia or its attorneys in
connection with the termination of the Traville Sublease, which shall be at Seller’s sole cost and
expense) due, nor will any become due, in connection with the Traville Sublease, any renewal or
extension or expansion of the Traville Sublease or the termination of the Traville Sublease, nor
under any understanding or agreement with any party as to payment of any leasing commissions or
fees regarding future leases or as to the procuring of tenants. Seller has the absolute right to
terminate the Traville Sublease and shall terminate the Traville Sublease prior to the Traville
Closing Date.

 

 

          (j) REIT Compliance. During the pendency of this Agreement, neither Property Entity
holds any assets other than those listed on Schedule 8.1(j) attached hereto. Specifically,
but without limitation, neither Property Entity owns or holds (i) any stock of or other ownership
interest in a corporation (or other entity treated for federal income tax purposes as an
association taxable as a corporation) or any ownership interest in a partnership, limited liability
company, trust or other entity, (ii) any debt instrument, (iii) any other security, warrant,
option, subscription agreement, or contract for the acquisition of a security within the meaning of
the Investment Company Act of 1940, as amended, or Code Section 856(c)(4), including without
limitation, any security described in Code Section 856(c)(4)(B)(iii)(II) or Code Section
856(c)(4)(B)(iii)(III), or (iv) any asset or other property that is stock in trade or other
property of a kind which would properly be included in inventory if on hand at the close of the
taxable year or property held primarily for sale to customers in the ordinary course of its trade
or business, within the meaning of Code Section 1221(a)(1). Neither Property Entity (1) owns or
operates a motel or hotel, or (2) conducts any business other than the business of owning and
operating the Properties. Neither Property Entity has received or is entitled to receive any
income from any source other than the Traville Ground Lease or the Existing Belward Lease.

          (k) Contracts; Operating Statements. The list of Contracts to be delivered to
Purchaser pursuant to this Agreement is or will be true, correct, and complete as of the date of
its delivery. The documents constituting the Contracts that are delivered to Purchaser are true,
correct and complete copies of all of the Contracts affecting either Property. Neither Seller nor,
to Seller’s Knowledge, the Property Entities or any other party is in default under any Contract.
The Operating Statements to be delivered to Purchaser pursuant to this Agreement will show all
items of income and expense (operating and capital) incurred in connection with Seller’s or the
Property Entities’ ownership, operation, and management of either Property for the periods
indicated and will be true, correct, and complete in all material respects.

          (l) Legal Compliance. Seller and the Property Entities have all material licenses,
permits and certificates necessary for the use and operation of the Properties and for the conduct
of the business of Seller and Property Entities, if any, as currently conducted on the respective
Properties, including, without limitation, all certificates of occupancy necessary for the lawful
occupancy of the Properties. Neither Seller nor the Property Entities have received written notice
that either Property or the use thereof or either Property Entity violates any governmental law or
regulation or any covenants or restrictions encumbering either Property. Neither Seller nor the
Property Entities have received any written notices of violations or alleged violations of any
laws, rules, regulations or codes, including building codes, with respect to the Properties which
have not been corrected to the satisfaction of the issuer of the notice.

          (m) Environmental. Except as set forth in the Schedule 8.1(m), neither Seller
nor any Property Entity has knowledge of, and has received no notice of, any violation of
Environmental Laws related to the Properties or the presence or release of Hazardous Materials on
or from the Properties except as disclosed in the Property Information. Neither Seller nor any
Property Entity, nor to Seller’s Knowledge, any tenant or other occupant, has used the Properties
or any part thereof for the release, generation, treatment, storage, handling or disposal of any
Hazardous Materials, in violation of any Environmental Laws. There are no underground storage
tanks located on the Properties. The term “Environmental Laws” includes without limitation the
Resource Conservation and Recovery Act and the Comprehensive Environmental Response Compensation
and Liability Act and other federal laws governing the environment as

 

 

in effect on the date of this
Agreement, together with their implementing regulations, guidelines, rules or orders as of the date
of this Agreement, and all state, regional, county, municipal and other local laws, regulations,
ordinances, rules or orders that are equivalent or similar to the federal laws recited above or
that purport to regulate Hazardous Materials. The term “Hazardous Materials” includes petroleum,
including crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel (or mixtures of natural gas or such synthetic gas), and any
substance, material, waste, pollutant or contaminant listed or defined as hazardous or toxic under
any Environmental Law.

          (n) Disclosure. Other than this Agreement, the documents delivered at Closing
pursuant hereto, the Permitted Exceptions, the Contracts, Section 30 and Exhibit C of the Real
Estate Sales Contract dated May 8, 2001, by and between Travilah Park Development Corporation, a
Maryland corporation, and Seller, as confirmed by the letter dated April 13, 2006, by the State of
Maryland Office of the Attorney General Educational Affairs Division, and the Amendment to Right of
Entry Agreement dated November 17, 2005, by and between the State of Maryland for the use of the
University System of Maryland on behalf of the USM Shady Grove Educational Center and Traville,
there are no contracts or agreements of any kind relating to the Properties or the Property
Entities to which either Property Entity is a party and which would be binding on such Property
Entity after the respective Closing. Copies of Pertinent Information delivered to Seller pursuant
to Section 2.1 hereof are or will be true, correct and complete. Seller has delivered to
Purchaser all books, notices, documents and agreements pertaining to the Properties or the Property
Entities that are in Seller’s, any Property Entity’s or its property manager’s possession. To
Seller’s actual knowledge, the Pertinent Information does not and shall not as of the applicable
Closing contain a material misstatement of fact or omit to state a fact necessary in order to make
the statements therein not misleading in any material respect. Seller is not aware of any current
fact or circumstance pertaining to the Property Entities or the condition of the Properties or the
Property Entities that (i) has not been disclosed to Purchaser, or will not be disclosed to
Purchaser pursuant to the Pertinent Information, and (ii) has a material adverse impact on either
Property or on either Property Entity or the membership interests in the Property Entities.
Notwithstanding the foregoing, Purchaser agrees that, so long as Seller discloses the foregoing
information in a manner which is not misleading in any material respect, Purchaser shall be fully
responsible for all information that is readily apparent from a review of the Phase One / Phase Two
Environmental Assessments delivered to Seller pursuant to Section 2.1, the Survey, the
Title Commitment and the Tenant Estoppels and/or any reports or studies obtained by Purchaser.

          (o) Intellectual Property. Schedule 8.1(o) sets forth a complete and accurate
list of all intellectual property rights that are owned by the Property Entities (the “Intellectual
Property Rights”). Except as set forth in the Schedule 8.1(o), to Seller’s Knowledge:
(i) the Property Entities hold valid and continuing authority in connection with the use of such
Intellectual Property Rights by the Property Entities; (ii) the conduct of the business of the
Property Entities and the use of the Intellectual Property Rights by the Property Entities do not
infringe any intellectual property rights or any other proprietary right of any person; (iii) the
Property Entities have not received any written notice from any other person pertaining to or
challenging the right of the Property Entities to use any of the Intellectual Property Rights; and
(iv) the Property Entities do not own or use any Intellectual Property Right pursuant to a license
and has not granted any Person any rights to use any of the Intellectual Property Rights. The
Intellectual Property Rights constitute all proprietary and technical information, trade secrets,

 

 

patents and patent rights, patent applications, supplier lists and other supplier information,
customer lists and other customer information, price lists, advertising and promotional materials,
field performance data, research materials, other proprietary intangibles, databases, processes,
technical know-how, business and product know-how, engineering and other drawings, designs, plans,
methods, engineering and manufacturing specifications, technology, inventions, processes, methods,
formulas, procedures, sales history, model numbers, literature and phone numbers, and operating and
quality control manuals and data necessary for the lawful conduct of their business as it is
currently being conducted.

          (p) Insurance. Seller maintains for each Property Entity insurance, with financially
sound and reputable insurers, covering such Property Entity in such amounts and covering such risks
as are, to Seller’s Knowledge, in accordance with normal industry practice for companies engaged in
businesses similar to the business and owning properties in the same general area in which the
Property Entities conducts their business. There is no material default with respect to any
provision contained in any policy or binder with respect to such insurance, nor has any Property
Entity failed to give any notice or present any claim under such policy or binder in due and timely
fashion.

          (q) Taxes.

          (i) Filing of Tax Returns and Payment of Taxes. Each of Seller and the
Property Entities has duly and timely filed with the appropriate taxing authorities all Tax
Returns required to be filed. All such Tax Returns filed are complete and accurate in all
material respects. All material Taxes owed by any of the Property Entities and Seller
(whether or not shown on any Tax Return) have been paid. Except as set forth on
Schedule 8.1(q), neither Seller nor either Property Entity is currently the
beneficiary of any extension of time within which to file any Tax Return. Except as set
forth on Schedule 8.1(q), no material claim has ever been made by an authority in a
jurisdiction where any of Property Entities does not file Tax Returns that such entity is or
may be subject to taxation by that jurisdiction.

          (ii) Audits, Investigations, Disputes or Claims. No deficiencies for Taxes
have been claimed, proposed or assessed by any Tax authority against Seller or the Property
Entities. Except as disclosed on Schedule 8.1(q), there are no pending or, to the
knowledge of Seller or the Property Entities, threatened audits, investigations, disputes or
claims or other actions for or relating to any liability for Taxes with respect to any of
Seller or the Property Entities, and there are no matters under discussion with any
governmental authorities, or known to any of Seller or the Property Entities, with respect
to Taxes that are likely to result in a material additional liability for Taxes with
respect to Seller or the Property Entities. Seller and the Property Entities have delivered
or made available to Purchaser complete and accurate copies of all examination reports and
statements of deficiencies assessed against or agreed to by any of Seller and the Property
Entities since December 31, 1998. Except as set forth on Schedule 8.1(q), neither
Seller nor the Property Entities has waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or deficiency.

          (iii) Taxes of Other Persons. Except as set forth on Schedule 8.1(q),
neither Seller nor the Property Entities has any liability for the Taxes of any person (1)

 

 

under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or
foreign law), (2) as a transferee or successor, (3) by contract, or (4) otherwise.

          (iv) Tax Sharing Agreements. There are no Tax-sharing agreements or similar
arrangements (including indemnity arrangements) with respect to or involving the Property
Entities, the Membership Interests, the assets of the Property Entities or the businesses
conducted by Seller or the Property Entities, and after the respective Closing Date, none of
the Property Entities, the Membership Interests, the assets of the Property Entities or the
businesses conducted by Seller or the Property Entities, shall be bound by any such
Tax-sharing agreements or similar arrangements or have any Liability thereunder for amounts
due in respect of periods prior to the respective Closing Date.

          (v) No Withholding. None of the transactions contemplated hereby are subject
to withholding under Section 1445 of the Code. Each of Seller and the Property Entities has
withheld and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor, stockholder or
other third party. The transactions contemplated herein are not subject to the tax
withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the
Code or of any other provision of law.

          (vi) LLC Tax Treatment. At all times since their formation, each of the
Property Entities have been an entity with a single owner that is disregarded as separate
from Seller for federal tax purposes, and up to and including the respective Closing Date,
each of the Property Entities will be an entity with a single owner that is disregarded as
separate from Seller for federal tax purposes. No Form 8832 has ever been filed with
respect to either of the Property Entities as other than a disregarded entity and, as of
such Closing Date, no such election shall have been made.

          (r) Single Purpose Entity. Belward was formed solely for the purpose of acquiring and
directly holding a fee ownership in the Belward Property and Traville was formed solely for the
purpose of holding a fee ownership in the Traville Property. Neither Property Entity has ever
conducted any business other than owning and operating its respective Property and leasing of its
respective Property. Neither Property Entity has ever made any loan to any other person or entity.
Neither Property Entity has ever been a party to any contract or agreement other than as set forth
on the list of Contracts to be delivered to Purchaser in accordance with Exhibit C-2.

          (s) Employees. Neither Property Entity currently has or at any time has had any
employees.

          (t) Subsidiaries. Neither Property Entity currently has, nor at any time has had, nor
as of the Closing Date will have, any subsidiaries of any kind, including, without limitation,
corporations, limited liability companies or partnerships.

          (u) Liabilities Schedule. Neither Property Entity has any liabilities (contingent or
otherwise) except as disclosed on Schedule 8.1(u) (the “Liabilities Schedule”). The
Liabilities Schedules fairly present in all material respects, as of the dates and for the periods
stated therein, the liabilities of each of the Property Entities. Neither Property Entity has any

 

 

liabilities or obligations of a nature required by GAAP to be disclosed in a financial statement or
balance sheet of such Property Entity, other than as reflected in the Liabilities Schedule.

          (v) ERISA. Seller is not and is not acting on behalf of an “employee benefit plan”
within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended, a “plan” within the meaning of Section 4975 of the Code or an entity deemed to hold “plan
assets” within the meaning of 29 C.F.R. § 2510.3-101 of any such employee benefit plan or plans.

          (w) No Commission. Other than a real estate commission to Scheer Partners, Inc. which
is paid by Seller pursuant to a separate broker’s commission agreement between Scheer Partners,
Inc. and Seller, neither Property Entity has dealt with, nor is dealing with, any real estate
broker, sales person or finder in connection with this transaction and no broker’s or finder’s fees
or commissions are payable by either Property Entity in connection with the negotiation, execution
or consummation of this Agreement. Seller and Purchaser hereby indemnify, protect and defend and
hold the other harmless from and against all losses, claims, costs, expenses and damages
(including, but not limited to, reasonable fees of counsel selected by the indemnified party)
resulting from the claims of any broker, finder or other such party, other than Scheer Partners,
Inc., claiming by, through or under the acts or agreements of the indemnifying party. The
obligations of the parties pursuant to this Section 8.1(w) shall survive Closing or any
termination of this Agreement.

          (x) Equipment Leases. Seller has not assigned any of the Equipment Leases to any
other person or entity. Each of the Equipment Leases is in full force and effect, free from
default and free from any event which could become a default under such Equipment Lease.

          (y) Seller Retained Property and Seller Owned Property. Seller owns the Seller
Retained Property and the Seller Owned Property free and clear of all liens, encumbrances, claims
or liabilities of any kind or nature other than the Traville Sublease. Seller has not assigned,
sold or conveyed any of the Seller Retained Property or Seller Owned Property to any other person
or entity. Seller has the absolute right to assign the Seller Owned Property and shall assign the
Seller Owned Property to Purchaser on the respective Closing Date.

     8.2. Purchaser’s Representations and Warranties. As a material inducement to Seller to
execute this Agreement and consummate this transaction, Purchaser represents and warrants to Seller
that:

          (a) Organization and Authority. Purchaser has been duly organized and is validly
existing as a Maryland limited partnership, in good standing and will be qualified to do business
in the state in which the Properties are located on the respective Closing Date. Subject only to
obtaining certain internal approvals on or before the expiration of the Due Diligence Period,
Purchaser has the full right and authority and has obtained any and all consents required to enter
into this Agreement and the Subject Leases and to consummate or cause to be consummated the
transactions contemplated hereby. This Agreement has been, and all of the documents to be
delivered by Purchaser at the Closing, including the Subject Leases, will be, authorized and
properly executed and constitutes, or will constitute, as appropriate, the valid and binding
obligation of Purchaser, enforceable in accordance with their terms.

 

 

          (b) Conflicts and Pending Action. There is no agreement to which Purchaser is a party
or to Purchaser’s Knowledge binding on Purchaser which is in conflict with this Agreement. There
is no action or proceeding pending or, to Purchaser’s Knowledge, threatened against Purchaser which
challenges or impairs Purchaser’s ability to execute or perform its obligations under this
Agreement.

     8.3. Survival of Representations and Warranties. The representations and warranties
set forth in this Article 8 are made as of the Effective Date and are remade as of the
respective Closing Date, and such representations and warranties (and any representations and
warranties in any other documents delivered to Purchaser pursuant to the provisions of this
Agreement) shall not be deemed to be merged into or waived by the instruments of Closing. Seller’s
representations and warranties with respect to each Property and each Closing shall survive the
respective Closing Date for a period of twelve (12) months from such date with respect to
Sections 8.1(a), (b), (g), (h), (i), (l),
(m), (n), (p) and (w), for period of two (2) years from such date
with respect to Sections 8.1(c), (d), (e), (f), (j),
(k), (o), (r), (t), (u), (v) and (w), and
for a period of 120 days after the expiration of the applicable statute of limitation with respect
to Section 8.1(q) (the “Survival Period”). No claim for a breach of any of Seller’s
representations and warranties, or the failure or default of a covenant or agreement of Seller,
shall be actionable or payable unless (a) the breach in question results from or is based on a
condition, state of facts, or other matter that was not disclosed on or before the respective
Closing Date to Purchaser by or on behalf of Seller in writing or not disclosed in the Pertinent
Information or on or before the respective Closing Date was not within Purchaser’s Knowledge, (b)
the valid claims for all such breaches collectively aggregate more than Two Hundred Fifty Thousand
Dollars ($250,000.00), in which event the full amount of such claims shall be actionable, and (c)
written notice containing a description of the specific nature of such breach shall have been given
by Purchaser to Seller before the expiration of the respective Survival Period and an action shall
have been commenced by Purchaser against Seller within fourteen (14) months after the respective
Closing. Seller shall neither knowingly nor intentionally perform any act, or permit any Property
Entity to perform any act, that could cause any said representations and warranties to become
untrue. Seller shall promptly notify Tenant as soon as it discovers that any representation or
warranty hereunder has become untrue. Notwithstanding anything contained in this Agreement to the
contrary:

          (i) If, prior to Closing, Purchaser knows that (1) any of Seller’s representations and
warranties are not true or correct in any material respect as of the Effective Date, or as of the
Closing Date (in each case, an “Incorrect Seller Representation”), or (2) that
Seller has failed to perform any material covenant and material agreement herein contained (an
“Unperformed Seller Covenant”), then within five (5) Business Days after Purchaser acquires
Purchaser’s Knowledge of such Incorrect Seller Representation or such Unperformed Seller Covenant,
as the case may be, Purchaser shall give Seller written notice describing the same (the “Purchaser
Note”), and Seller shall have five (5) Business Days from the date of receipt of the Purchaser’s
Notice to cure such Incorrect Seller Representation, or such Unperformed Seller Covenant, as the
case may be, and, if necessary, the respective Closing Date will be extended up to five (5)
Business Days in order to permit Seller to effect such cure. If Seller fails to effect such cure
within the aforesaid five (5) Business Day period, then Purchaser shall have the right to (a)
terminate this Agreement in accordance with the provisions of Section 5.5 hereof (including
a refund of the Earnest Money and any earnings thereon, plus liquidated damages and out of pocket
expenses as set forth in Section 5.5 hereof) or (b) seek specific performance in

 

 

accordance
with the provisions of Section 5.5 hereof. In such case, the respective Closing Date shall
be extended for up to ten (10) days to give Purchaser the opportunity to make such election.

          (ii) If prior to Closing, Purchaser knows of any Incorrect Seller Representation or
Unperformed Seller Covenant and Purchaser shall nevertheless proceed to Closing notwithstanding the
fact, Purchaser shall be deemed to have waived such Incorrect Seller Representation or Unperformed
Seller Covenant and Purchaser shall not be entitled to commence any action against Seller after
Closing due to such Incorrect Seller Representation or Unperformed Seller Covenant.

          (iii) All references in this Agreement to “Seller’s Knowledge,” “Seller’s actual knowledge,”
or words of similar import shall refer only to the actual (as opposed to deemed, imputed, or
constructive) present knowledge of Alain C. Cappeluti, Vice President, Financial Operations, and
Joe Morin, Vice President, Engineering, without inquiry. Messrs. Cappeluti and Morin are the
individuals most knowledgeable about the condition of the Properties. Notwithstanding any fact or
circumstance to the contrary, Seller’s Knowledge shall not be construed to refer to the knowledge
of any other person or entity. Messrs. Cappeluti and Morin are not parties to this Agreement and
under no circumstances shall either of them have personal liability whatsoever under this Agreement
or with respect to the transactions contemplated hereunder.

          (iv) All references in this Agreement to “Purchaser’s Knowledge,” “Purchaser’s actual
knowledge,” or words of similar import shall refer only to the actual (as opposed to deemed,
imputed, or constructive) present knowledge of Gary A. Kreitzer, without inquiry. Purchaser shall
also be deemed to have actual knowledge of all matters disclosed in the Pertinent Information.
Notwithstanding any fact or circumstance to the contrary, Purchaser’s Knowledge shall not be
construed to refer to the knowledge of any other person or entity. Mr. Kreitzer is not a party to
this Agreement and under no circumstances shall he have personal liability whatsoever under this
Agreement or with respect to the transactions contemplated hereunder.

     8.4. Properties Sold “As Is”.

          (i) General. Except as otherwise expressly provided in this Agreement or the
warranties of title provided in the agreements to be delivered by Seller to Purchaser at Closing
(the “Closing Agreements”), Seller hereby specifically disclaims any warranty (oral or written)
concerning (a) the nature and condition of the Properties and the suitability thereof for any and
all activities and uses that Purchaser may elect to conduct thereon; (b) the manner, construction,
condition, and state of repair or lack of repair of the Improvements; (c) the nature and extent of
any right-of-way, lien, encumbrance, license, reservation, condition or otherwise; (d) the
compliance of the Properties or their operation with any laws, it being specifically understood
that Purchaser shall have full opportunity, during the Due Diligence Period, to determine for
itself the environmental condition of the Properties; (e) the accuracy of completeness of any
statements, calculations, or conditions stated or set forth in Seller’s books and records
concerning the Properties; and (f) any other matter whatsoever except as expressly set forth in
this Agreement. Except as otherwise expressly provided in this Agreement or the Closing
Agreements, the transfer of the Properties and the Membership Interests as provided for herein is
made on a strictly “AS IS” “WHERE IS” “WITH ALL FAULTS” basis as of the Closing Date.

 

 

EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE CLOSING AGREEMENTS, PURCHASER EXPRESSLY
ACKNOWLEDGES THAT, IN CONSIDERATION OF THE AGREEMENTS OF SELLER IN THIS AGREEMENT, SELLER MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT IN
NO WAY LIMITED TO, ANY WARRANTY OF QUANTITY, QUALITY, CONDITION, HABITABILITY, MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, ANY IMPROVEMENTS LOCATED THEREON,
OR ANY SOIL CONDITIONS RELATED THERETO.

          (ii) No Reliance. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT IT IS NOT RELYING ON (AND
SELLER HEREBY DISCLAIMS AND RENOUNCES) ANY REPRESENTATIONS OR WARRANTIES MADE BY OR ON BEHALF OF
SELLER OF ANY KIND OR NATURE WHATSOEVER, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT
OR THE CLOSING AGREEMENTS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE CLOSING
AGREEMENTS, PURCHASER FOR ITSELF AND IT’S SUCCESSORS AND ASSIGNS, HEREBY RELEASES SELLER, AND ITS
SUCCESSORS AND ASSIGNS, FROM AND WAIVES ANY AND ALL CLAIMS AND LIABILITIES AGAINST SELLER FOR,
RELATED TO, OR IN CONNECTION WITH, ANY ENVIRONMENTAL CONDITION AT THE PROPERTIES (OR THE PRESENCE
OF ANY MATTER OR SUBSTANCE RELATING TO THE ENVIRONMENTAL CONDITION OF THE PROPERTY), INCLUDING, BUT
NOT LIMITED TO, CLAIMS AND/OR LIABILITIES RELATING TO (IN ANY MANNER WHATSOEVER) ANY HAZARDOUS,
TOXIC OR DANGEROUS MATERIALS OR SUBSTANCES LOCATED IN, AT, ABOUT, OR UNDER THE PROPERTIES, OR FOR
ANY AND ALL CLAIMS OR CAUSES OF ACTION (ACTUAL OR THREATENED) BASED ON, IN CONNECTION WITH, OR
ARISING OUT OF ENVIRONMENTAL LAW OR ANY OTHER CLAIM OR CAUSE OF ACTION (INCLUDING ANY FEDERAL OR
STATE BASED STATUTORY, REGULATORY, OR COMMON LAW CAUSE OF ACTION) RELATED TO ENVIRONMENTAL MATTERS
OR LIABILITY WITH RESPECT TO OR AFFECTING THE PROPERTIES. PURCHASER REPRESENTS TO SELLER THAT
PURCHASER HAS CONDUCTED, OR WILL CONDUCT BEFORE CLOSING, SUCH INVESTIGATIONS OF THE PROPERTIES WITH
QUALIFIED PROFESSIONALS OF ITS OWN SELECTION, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE
CONDITION OF THE PROPERTIES AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS SUBSTANCES ON OR DISCHARGED OR RELATED FROM THE PROPERTIES AND WILL RELY
SOLELY ON SAME AND NOT ON ANY INFORMATION PROVIDED BY OR ON BEHALF OF THE SELLER OR SELLER’S AGENTS
OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES, AND COVENANTS OF
SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE CLOSING AGREEMENTS. UPON CLOSING,
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE CLOSING AGREEMENTS, PURCHASER SHALL
ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND
ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S

 

 

INVESTIGATIONS, AND PURCHASER, ON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED, AND
RELEASED SELLER AND ITS SUCCESSORS AND ASSIGNS, FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS,
CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND
EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR
UNKNOWN), WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER, AT ANY TIME BY REASON OF
OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATION OF
ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER
ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES, OR MATTERS REGARDING THE PROPERTIES. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE CLOSING AGREEMENTS, PURCHASER HEREBY RELEASES SELLER
FROM ANY OBLIGATION OR RESPONSIBILITY FOR ANY CLEANUP, REMEDIATION, OR REMOVAL OF HAZARDOUS
SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTIES SHOULD THE SAME BE REQUIRED AFTER
THE CLOSING DATE.

          (iii) Inducement. PURCHASER ACKNOWLEDGES AND AGREES THAT THE PROVISIONS CONTAINED IN
THIS ARTICLE WERE A MATERIAL FACTOR IN SELLER’S ACCEPTANCE OF THE PURCHASE PRICE AND THAT SELLER
WAS UNWILLING TO SELL THE PROPERTIES OR THE MEMBERSHIP INTERESTS TO PURCHASER UNLESS SELLER IS
RELEASED AS EXPRESSLY SET FORTH ABOVE. PURCHASER WITH PURCHASER’S COUNSEL, HAS FULLY REVIEWED THE
DISCLAIMERS AND WAIVERS SET FORTH IN THIS AGREEMENT, AND UNDERSTANDS THE SIGNIFICANCE AND EFFECT
THEREOF. PURCHASER ACKNOWLEDGES AND AGREES THAT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN
THIS AGREEMENT ARE AN INTEGRAL PART OF THIS AGREEMENT, AND THAT SELLER WOULD NOT HAVE AGREED TO
SELL THE PROPERTIES OR THE MEMBERSHIP INTERESTS TO PURCHASER FOR THE PURCHASE PRICE WITHOUT THE
DISCLAIMER AND OTHER AGREEMENTS SET FORTH IN THIS AGREEMENT. THE TERMS AND CONDITIONS OF THIS
SECTION WILL EXPRESSLY SURVIVE THE CLOSING AND WILL NOT MERGE WITH THE
PROVISIONS OF THE CLOSING DOCUMENTS, INCLUDING, BUT NOT LIMITED TO, THE APPLICABLE CONVEYANCE
DOCUMENTS .

ARTICLE 9. MISCELLANEOUS

     9.1. Indemnification. Seller shall defend, indemnify and hold harmless Purchaser from and
against any liability, damages, claims or causes of action: (a) against the Property Entities
arising prior to the Closing Date, (b) against any challenge of the ownership of the Membership
Interests, or (c) as a result of a breach of Seller’s representations and warranties in this
Agreement or any instrument delivered pursuant to this Agreement, including, without limitation,
the Seller’s Closing Certificate. If Seller fails to discharge or undertake to defend against such
liability, upon receipt of written notice from Purchaser of such failure, Seller shall have fifteen
(15) days (the “Defense Cure Period”) to cure such failure by prosecuting such a defense. If
Seller fails to do so within the Defense Cure Period, then Purchaser may settle the same and
Seller’s liability to Purchaser shall be conclusively established by such settlement

 

 

provided that such settlement is entered into on commercially reasonable terms and conditions, the
amount of such liability to include both the settlement consideration and the costs and expenses
(including attorneys’ fees) incurred by Seller in effecting such settlement.

     9.2. Parties Bound. Neither party may assign this Agreement without the prior written
consent of the other, and any such prohibited assignment shall be void; provided, however, that
Purchaser may assign this Agreement without Seller’s consent to an Affiliate (including without
limitation BioMed Realty Trust, Inc). Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the respective legal representatives, successors, assigns, heirs,
and devisees of the parties. For the purposes of this paragraph, the term “Affiliate” means (a) an
entity that directly or indirectly controls, is controlled by or is under common control with
Purchaser or (b) a partnership or other entity in which Purchaser or an entity described in (a) is
a partner or other owner; and the term “control” means the power to direct the management of such
entity through voting rights, ownership or contractual obligations.

     9.3. Headings. The article and paragraph headings of this Agreement are for
convenience only and in no way limit or enlarge the scope or meaning of the language hereof.

     9.4. Expenses. Except as otherwise expressly provided herein, each party hereto shall
pay its own expenses incident to this Agreement and the transactions contemplated hereunder,
including all legal and accounting fees and disbursements. Any expenses incident to this Agreement
and the transactions contemplated hereunder that would be borne by the Property Entities shall
instead be born by Seller.

     9.5. Invalidity and Waiver. If any portion of this Agreement is held invalid or
inoperative, then so far as is reasonable and possible the remainder of this Agreement shall be
deemed valid and operative, and, to the greatest extent legally possible, effect shall be given to
the intent manifested by the portion held invalid or inoperative. The failure by either party to
enforce against the other any term or provision of this Agreement shall not be deemed to be a
waiver of such party’s right to enforce against the other party the same or any other such term or
provision in the future.

     9.6. Governing Law. This Agreement shall, in all respects, be governed, construed,
applied, and enforced in accordance with the law of the State of Maryland.

     9.7. Survival. The provisions of this Agreement and the obligations of the parties
not fully performed at any Closing shall survive such Closing and shall not be deemed to be merged
into or waived by the instruments of Closing. For the avoidance of doubt, this means that if this
Agreement terminates after the Belward Closing, but before the Traville Closing, then the
representations and warranties set forth herein with respect to the Belward Closing shall survive
such termination.

     9.8. No Third Party Beneficiary. This Agreement is not intended to give or confer any
benefits, rights, privileges, claims, actions, or remedies to any person or entity as a third party
beneficiary, decree, or otherwise.

     9.9. Entirety and Amendments. This Agreement embodies the entire agreement between
the parties and supersedes all prior agreements and understandings relating to the Properties or
the Property Entities. This Agreement may be amended or supplemented only in

 

 

writing by a non-electronic instrument executed by the party against whom enforcement is
sought. For the avoidance of doubt, copies of signed instruments that are electronically
transmitted constitute a writing for this purpose.

     9.10. Time of the Essence. Time is of the essence in the performance of this
Agreement.

     9.11. Time. All times, whenever specified herein, shall be prevailing local time in
Montgomery County, Maryland.

     9.12. Confidentiality. Subject to Section 9.13, Seller agrees to keep all
negotiations and the terms of this Agreement confidential, and shall not disclose such terms to any
person, without the prior written approval of Purchaser. The foregoing indemnity obligations shall
survive the termination of this Agreement and the Closing.

     9.13. Press Release. Until the Closing, neither Seller nor Purchaser will release or
cause or permit to be released any press notices, or publicity (oral or written) or advertising
promotion relating to, or otherwise announce or disclose or cause or permit to be announced or
disclosed, in any manner whatsoever, the terms, conditions or substance of this Agreement without
first obtaining the written consent of the other party except those disclosures that are required
by securities law(s), including the Securities Act of 1933, or contractual obligation (in which
case notice shall be timely provided to the other party of such requirement and disclosure). The
Seller and Purchaser shall cooperate in preparing the form and substance of any press notices. The
foregoing shall not preclude either party from discussing the substance or any relevant details of
such transactions with any of its attorneys, accountants, professional consultants, lenders,
partners, investors, or any prospective lender, partner or investor, as the case may be, or prevent
either party hereto, from complying with laws, rules, regulations and court orders, including
without limitation, governmental regulatory, disclosure, tax and reporting requirements, or from
Seller making disclosures in the ordinary course of its due diligence inspections and contacts with
third parties related thereto. Notwithstanding the foregoing but subject to any Confidentiality
Agreement, any party to this transaction (and each employee, agent or representative of the
foregoing) may disclose to any and all persons, without limitation of any kind, the tax treatment
and tax structure of the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to them relating to such tax treatment and tax structure except to the
extent maintaining such confidentiality is necessary to comply with any applicable federal or state
securities laws. The authorization in the preceding sentence is not intended to permit disclosure
of any other information unrelated to the tax treatment and tax structure of the transaction
including (without limitation) (a) any portion of the transaction documents or related materials to
the extent not related to the tax treatment or tax structure of the transaction, (b) the existence
or status of any negotiations unrelated to the tax issues, or (c) any other term or detail not
relevant to the tax treatment or the tax structure of the transaction.

     9.14. Attorneys’ Fees. Should either party employ attorneys to enforce judicially any
of the provisions hereof, the non-prevailing party agrees to pay the prevailing party all
reasonable costs, charges, and expenses, including reasonable attorneys’ fees, expended or incurred
by the prevailing party in connection with any such litigation.

 

 

     9.15. Notices. All notices required or permitted hereunder shall be in writing and
shall be served on the parties at the addresses set forth in Exhibit M. Any such notices
shall be either (a) sent by overnight delivery using a nationally recognized overnight courier, in
which case notice shall be deemed delivered one Business Day after deposit with such courier, (b)
sent by facsimile, in which case notice shall be deemed delivered upon transmission of such notice
with confirmed receipt by the sender’s machine on a Business Day during regular business hours (9
a.m.-6:00 p.m. eastern time), or (c) sent by personal delivery, in which case notice shall be
deemed delivered upon receipt or refusal of delivery. A party’s address may be changed by written
notice to the other party; provided, however, that no notice of a change of address shall be
effective until actual receipt of such notice. Copies of notices are for informational purposes
only, and a failure to give or receive copies of any notice shall not be deemed a failure to give
notice. The attorney for a party has the authority to send notices on behalf of such party.

     9.16. Construction. The parties acknowledge that the parties and their counsel have
reviewed and revised this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any exhibits or amendments hereto.

     9.17. Remedies Cumulative. Except as expressly provided to the contrary in this
Agreement, the remedies provided in this Agreement shall be cumulative and shall not preclude the
assertion or exercise of any other rights or remedies available by law, in equity or otherwise.

     9.18. Calculation of Time Periods. Unless otherwise specified, in computing any
period of time described herein, the day of the act or event after which the designated period of
time begins to run is not to be included and the last day of the period so computed is to be
included, unless such last day is a Saturday, Sunday or legal holiday for national banks in the
location where the Properties are located, in which event the period shall run until the end of the
next day which is neither a Saturday, Sunday, or legal holiday. The last day of any period of time
described herein and the time during any day by which an event must occur shall be deemed to end at
5 p.m.

     9.19. Tax Matters.

          (a) Books & Records; Cooperation. Purchaser, on one hand, and Seller, on the other
hand, agree to furnish or cause to be furnished to the other, upon request, as promptly as
practicable, such information and assistance relating to the Membership Interests and the assets of
the Property Entities, including, without limitation, access to books and records, as is reasonably
necessary for the filing of all Tax Returns by Purchaser, and the Property Entities, the making of
any election relating to Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Taxes. Each of Purchaser,
on one hand, and Seller, on the other hand, shall retain all books and records with respect to
Taxes pertaining to the Membership Interests and the assets of the Property Entities, for a period
of at least seven (7) years following the respective Closing Date. At the end of such period, each
party shall provide the other with at least ten (10) days prior written notice before transferring,
destroying or discarding any such books and records, during which period the party receiving such
notice can elect to take possession, at its own expense, of such books and records. Purchaser, on
one hand, and Seller, on the other hand, shall cooperate fully with the other in the conduct of any
audit, litigation or other proceeding relating to Taxes involving the Membership

 

 

Interests and the assets of the Property Entities. Purchaser, on one hand, and Seller, on the
other hand, further agree, upon request, to use their reasonable best efforts to obtain any
certificate or other document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).

          (b) Allocation of Taxes. Except as otherwise provided in Section 7.5 hereof
relating to Transfer Taxes, Seller shall be responsible for and shall promptly pay when due all
Taxes levied with respect to the Membership Interests and the assets of the Property Entities
attributable to any Tax period ending on or before the respective Closing Date and the portion of
any Straddle Period (as hereinafter defined) ending on such Closing Date (a “Pre-Closing Tax
Period”).

          All Taxes levied with respect to the Membership Interests and the assets of the Property
Entities for any Tax period beginning before and ending after the respective Closing Date (a
“Straddle Period”) shall be apportioned between the Pre-Closing Tax Period and any Tax period
beginning after such Closing Date and that portion of any Straddle Period beginning after such
Closing Date (a “Post-Closing Tax Period”), as follows:

          (i) in the case of any Taxes other than Taxes based upon or related to income or
receipts, the portion allocable to the Pre-Closing Tax Period shall be deemed to be the
amount of such Tax for the entire Straddle Period multiplied by a fraction the numerator of
which is the number of days in the Tax period ending on the respective Closing Date and the
denominator of which is the number of days in the entire Straddle Period, and

          (ii) in the case of any Tax based upon or related to income or receipts, the portion
allocable to the Pre-Closing Tax Period shall be deemed equal to the amount which would be
payable if the relevant Straddle Period ended on the respective Closing Date.

          Upon receipt of any bill for such Taxes relating to the Membership Interests or the assets of
the Property Entities, Purchaser, on one hand, and Seller, on the other hand, shall present a
statement to the other setting forth the amount of reimbursement to which each is entitled under
this Section 9.19 together with such supporting evidence as is reasonably necessary to
calculate the proration amount. The proration amount shall be paid by the party owing it to the
other within ten (10) days after delivery of such statement. In the event that Purchaser or Seller
shall make any payment for which it is entitled to reimbursement under this Section 9.19,
the applicable party shall make such reimbursement promptly but in no event later than ten (10)
days after the presentation of a statement setting forth the amount of reimbursement to which the
presenting party is entitled along with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement. Notwithstanding the foregoing, Purchaser shall not be
liable and Seller shall indemnify and hold Purchaser harmless for (i) any Taxes of Seller or the
Property Entities levied with respect to the Membership Interests and the assets of the Property
Entities attributable to Pre-Closing Tax Periods, or (ii) any other Taxes of Seller for any period.

 

 

          (c) Notices. Seller shall promptly notify Purchaser in writing upon receipt by Seller
of notice of any pending or threatened federal, state, local or foreign Tax audits or assessments
relating to the income, properties or operations of Seller that reasonably may be expected to
relate to the Membership Interests or the assets or business of the Property Entities.

          (d) Characterization of Indemnification Payments. Any indemnification payments made
to Purchaser or Seller pursuant to this Agreement shall constitute an adjustment of the
consideration paid under this Agreement for Tax purposes and shall be treated as such by Purchaser
and Seller on their Tax Returns to the extent permitted by law.

     9.20. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of such counterparts shall
constitute one Agreement. To facilitate execution of this Agreement, the parties may execute and
exchange by telephone facsimile counterparts of the signature pages.

     9.21. Further Assurances. In addition to the acts and deeds recited herein and
contemplated to be performed, executed or delivered by either party at Closing, each party agrees
to perform, execute and deliver, on or after the Closing any further actions, documents, and will
obtain such consents, as may be reasonably necessary or as may be reasonably requested to fully
effectuate the purposes, terms and conditions of this Agreement or to further perfect the
conveyance, transfer and assignment of the Membership Interests to Purchaser.

     9.22. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     9.23. Damages. The parties waive any and all rights they may have to punitive,
special, exemplary, or consequential damages, INCLUDING LOSS OF STOCK VALUE, in respect of any
dispute based on this AGREEMENT; provided, however, such waiver shall not apply to
THE RIGHT OF EITHER PARTY TO RECEIVE LIQUIDATED DAMAGES IN ACCORDANCE WITH Sections 5.4(a)
and 5.5(a) HEREOF.

     9.24. Disclosure Addendum. In connection with the execution of this Agreement,
Purchaser shall execute that certain Disclosure Addendum substantially in the form of Exhibit
R.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	SELLER:	 	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	HUMAN GENOME SCIENCES, INC.,	 	 	 	BIOMED REALTY, L.P.,	 	 
	a Delaware corporation	 	 	 	a Maryland limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	     /s/ H. THOMAS WATKINS
 

Name: H. Thomas Watkins
	 	 
	 	By
	 	     /s/ ALAN D. GOLD
 

     Name: Alan D. Gold
	 	 
	 

	 	Title: President and Chief
Executive Officer
	 	 	 	 	 	     Title: President and Chief Executive Officer	 	 

[SIGNATURE
PAGE: HGS PURCHASE AND SALE AGREEMENT]

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