EXHIBIT 2.1 CONFIDENTIAL TREATMENT REQUESTED BY QLT INC. ASSET PURCHASE AGREEMENT AMONG QLT USA, INC., AND TOLMAR, INC. AND DILLFORD COMPANY S.A. TABLE OF CONTENTS

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Title: EXHIBIT 2.1 CONFIDENTIAL TREATMENT REQUESTED BY QLT INC. ASSET PURCHASE AGREEMENT AMONG QLT USA, INC., AND TOLMAR, INC. AND DILLFORD COMPANY S.A. TABLE OF CONTENTS
Governing Law: Colorado Date: 3/1/2007
Industry: Biotechnology and Drugs Law Firm: Morrison Foerster;Holme Roberts Sector: Healthcare

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EXHIBIT 2.1

CONFIDENTIAL TREATMENT REQUESTED BY QLT INC.

ASSET PURCHASE AGREEMENT

AMONG

QLT USA, INC.,

AND

TOLMAR, INC.

AND

DILLFORD COMPANY S.A.

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TABLE OF CONTENTS

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ARTICLE I DEFINITIONS.......................................................... 1

Section 1.01 Definitions...................................................... 1

ARTICLE II SALE AND PURCHASE OF ASSETS.......................................... 12

Section 2.01 Sale and Purchase................................................ 12

Section 2.02 Excluded Assets.................................................. 13

Section 2.03 Assumed Liabilities.............................................. 13

Section 2.04 Purchase Price................................................... 14

Section 2.05 Adjustments to Purchase Price.................................... 15

Section 2.06 Determination of Adjustments..................................... 16

Section 2.07 Transfer Taxes; Prorations....................................... 17

Section 2.08 Allocation of Purchase Price..................................... 17

Section 2.09 Assignment and Assumption........................................ 17

ARTICLE III THE CLOSING.......................................................... 18

Section 3.01 Time and Place of Closing........................................ 18

Section 3.02 Deliveries by Seller............................................. 18

Section 3.03 Deliveries by Buyer.............................................. 20

Section 3.04 Deliveries by the Parties........................................ 20

Section 3.05 Further Assurances............................................... 20

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER............................. 21

Section 4.01 Organization and Qualification................................... 21

Section 4.02 Authority........................................................ 21

Section 4.03 No Conflicts; Required Consents.................................. 22

Section 4.04 Financial Statements............................................. 22

Section 4.05 Absence of Changes............................................... 22

Section 4.06 Seller Contracts................................................. 23

Section 4.07 Title; Sufficiency; Condition of Assets.......................... 24

Section 4.08 Real Property.................................................... 24

Section 4.09 Intellectual Property............................................ 25

Section 4.10 Regulatory Compliance............................................ 28

Section 4.11 Suppliers........................................................ 29

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Section 4.12 Employees........................................................ 30

Section 4.13 Employee Benefit Plans........................................... 30

Section 4.14 Compliance with Legal Requirements; Governmental Approvals....... 30

Section 4.15 Litigation....................................................... 31

Section 4.16 Environmental Matters............................................ 31

Section 4.17 Taxes............................................................ 32

Section 4.18 Brokers.......................................................... 32

Section 4.19 Transactions with Affiliates..................................... 32

Section 4.20 Solvency......................................................... 33

Section 4.21 Inventory........................................................ 33

Section 4.22 Seller's Marketing Efforts....................................... 33

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 34

Section 5.01 Organization and Good Standing................................... 34

Section 5.02 Authority........................................................ 34

Section 5.03 No Conflicts; Required Consents.................................. 34

Section 5.04 Financial Capacity............................................... 35

Section 5.05 Brokers.......................................................... 35

Section 5.06 Debarment........................................................ 35

Section 5.07 Title Commitments................................................ 35

Section 5.08 Purchase in Good Faith........................................... 35

ARTICLE VI ADDITIONAL COVENANTS................................................. 36

Section 6.01 Transactions and Conduct of Business Pending the Closing......... 36

Section 6.02 Employee Matters................................................. 37

Section 6.03 401(k) Plan...................................................... 38

Section 6.04 Access to Information............................................ 39

Section 6.05 Notice of Certain Events......................................... 39

ARTICLE VII ADDITIONAL AGREEMENTS................................................ 40

Section 7.01 Confidentiality.................................................. 40

Section 7.02 Use of Proceeds.................................................. 41

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Section 7.03 No Shop and Non-Solicitation..................................... 41

Section 7.04 COBRA............................................................ 41

ARTICLE VIII TERMINATION OF AGREEMENT............................................. 42

Section 8.01 Grounds for Termination.......................................... 42

Section 8.02 Effect of Termination............................................ 42

ARTICLE IX INDEMNIFICATION...................................................... 42

Section 9.01 Survival of Representations and Warranties....................... 42

Section 9.02 Indemnification by Seller........................................ 42

Section 9.03 Indemnification by Buyer......................................... 43

Section 9.04 Environmental Indemnification.................................... 43

Section 9.05 Procedures for Indemnification; Buyer's Security Interest in

Escrow Amount.................................................... 44

Section 9.06 Limitations on Indemnification................................... 46

Section 9.07 Damages Limitations.............................................. 47

Section 9.08 Specific Performance............................................. 47

Section 9.09 Exclusive Remedy................................................. 47

Section 9.10 Characterization of Indemnification Payment...................... 48

Section 9.11 No Other Representation.......................................... 48

ARTICLE X MISCELLANEOUS........................................................ 48

Section 10.01 Amendments and Waivers........................................... 48

Section 10.02 Notices.......................................................... 48

Section 10.03 Applicable Law................................................... 49

Section 10.04 Exhibits and Schedules........................................... 50

Section 10.05 Assignments; Successors and Assigns.............................. 50

Section 10.06 No Third-Party Beneficiaries..................................... 50

Section 10.07 Counterparts..................................................... 50

Section 10.08 Severability..................................................... 50

Section 10.09 Entire Agreement................................................. 50

Section 10.10 Interpretation................................................... 50

Section 10.11 Construction..................................................... 51

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Section 10.12 Expenses of the Parties.......................................... 51

Section 10.13 Jurisdiction; Service of Process................................. 51

Section 10.14 Waiver of Jury Trial............................................. 51

Section 10.15 Recovery of Fees by Prevailing Party............................. 52

Section 10.16 Seller Disclosure Schedule....................................... 52

Section 10.17 Time of the Essence.............................................. 52

Exhibits

Form of Aczone(R) Manufacturing and Supply Agreement............................. Exhibit A

Form of Assignment and Assumption Agreement...................................... Exhibit B

Form of Atrigel(R) Manufacturing and Supply Agreement............................ Exhibit C

Form of Eligard(R) Manufacturing and Supply Agreement............................ Exhibit D

Form of Escrow Agreement......................................................... Exhibit E

Form of Governmental Approval Assignments........................................ Exhibit F

Form of Guarantee Agreement...................................................... Exhibit G

Form of Deed of Trust and Fixture Filing......................................... Exhibit H

Form of Non-Competition Agreement................................................ Exhibit I

Form of Pledge Agreement......................................................... Exhibit J

Form of Promissory Note.......................................................... Exhibit K

Form of Security Agreement....................................................... Exhibit L

Form of Transition Service Agreement............................................. Exhibit M

Form of Pre-Closing Certificate.................................................. Exhibit 2.06(a)

Form of General Assignment and Bill of Sale...................................... Exhibit 3.02(a)

Form of Patent Assignment........................................................ Exhibit 3.02(b)-1

Form of Trademark Assignment..................................................... Exhibit 3.02(b)-2

Form of Special Warranty Deed.................................................... Exhibit 3.02(c)

Form of FIRPTA Affidavit......................................................... Exhibit 3.02(h)

Form of Opinion.................................................................. Exhibit 3.02(k)

Form of Press Release............................................................ Exhibit 7.01(c)

Seller Disclosure Schedules

Dental Products.................................................................. Schedule 2.01(b)

Deposits and Advances............................................................ Schedule 2.01(c)

Generic Dermatology Products..................................................... Schedule 2.01(d)

Governmental Approvals........................................................... Schedule 2.01(e)

Transferred Inventory............................................................ Schedule 2.01(g)

Owned and leased Vehicles........................................................ Schedule 2.01(h)

Personal Property (including all Tools, Machinery and Equipment)................. Schedule 2.01(i)

Personal Property Leases......................................................... Schedule 2.01(j)

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<S> <C>

Real Property.................................................................... Schedule 2.01(k)

Seller Contracts/Key Contracts................................................... Schedule 2.01(l)

Seller Intellectual Property..................................................... Schedule 2.01(m)

Excluded Assets.................................................................. Schedule 2.02(e)

Excluded Liabilities............................................................. Schedule 2.03

Allocation of Purchase Price..................................................... Schedule 2.08

Seller's Required Consents....................................................... Schedule 4.03

Pro Forma Income Statement....................................................... Schedule 4.04

Absence of Changes............................................................... Schedule 4.05

Additional Assets to be Purchased by Buyer....................................... Schedule 4.07

Regulatory Compliance............................................................ Schedule 4.10

Suppliers........................................................................ Schedule 4.11

List of Current Employees........................................................ Schedule 4.12(a)

Employee Legal Issues............................................................ Schedule 4.12(b)

Claims by Employees.............................................................. Schedule 4.12(c)

Employee Benefit Plans........................................................... Schedule 4.13

Environmental Matters............................................................ Schedule 4.16

Transactions with Affiliates..................................................... Schedule 4.19

Seller's Transactions and Conduct of Business.................................... Schedule 6.01

List of Key Employees............................................................ Schedule 6.02(a)

Employee Benefit Plans for Transferred Employees................................. Schedule 6.02(c)

401(k) Plan Participation for Transferred Employees.............................. Schedule 6.03(a)

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT is made as of December 20, 2006 (the

"Effective Date"), by and among Tolmar, Inc., a Delaware corporation ("Buyer")

and a newly formed wholly-owned subsidiary of Dillford Company S.A., a Uruguayan

sociedad anonima ("Parent"), Parent and QLT USA, Inc., a Delaware corporation

("Seller"). Buyer, Parent and Seller are sometimes referred to herein

individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, Seller is engaged in the business of, among other things,

developing and manufacturing topical generic dermatology products pursuant to

the Sandoz Agreement and dental products for distribution in the United States,

Canada and certain other countries; and

WHEREAS, Seller owns and operates an approximately 60,000 square foot

manufacturing facility located in Fort Collins, Colorado, at which Seller

manufactures the topical generic dermatology products and dental products, as

well as other pharmaceutical products; and

WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell

to Buyer; substantially all of the assets, properties, rights and claims related

to the topical generic dermatology business, the Dental Business and the

Manufacturing Facility on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual

representations, warranties, covenants and promises contained herein, the

adequacy and sufficiency of which are hereby acknowledged, the Parties hereto

agree as follows:

AGREEMENT

ARTICLE I

DEFINITIONS

Section 1.01 DEFINITIONS.

(a) The following terms shall have the following meanings for the

purposes of this Agreement:

"Aczone(R) Manufacturing and Supply Agreement" means that certain

manufacturing and supply agreement between Seller and Buyer in the form attached

hereto as Exhibit A, which the Parties intend to be an entirely independent,

separate and severable agreement from this Agreement.

"Affiliate" means, with respect to any specified Person, (a) any other

Person that, directly or indirectly, owns or controls, is under common ownership

or control with, or is owned or controlled by, such specified Person, (b) any

other Person that is a director, officer or partner or

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is, directly or indirectly, the beneficial owner of ten percent (10%) or more of

any class of equity securities of the specified Person or a Person described in

clause (a) of this paragraph, or (c) another Person of which the specified

Person is a director, officer or partner or is, directly or indirectly, the

beneficial owner of ten percent (10%) or more of any class of equity securities.

"Agreement" means this Asset Purchase Agreement (including the Seller

Disclosure Schedule and all other schedules and exhibits attached hereto), as

amended from time to time.

"Assignment and Assumption Agreement" means the assignment and assumption

agreement covering all of the Assumed Liabilities in the form attached hereto as

Exhibit B.

"Atrigel(R) Manufacturing and Supply Agreement" means that certain

manufacturing and supply agreement between Seller and Buyer in the form attached

hereto as Exhibit C, which the Parties intend to be an entirely independent,

separate and severable agreement from this Agreement.

"Books and Records" means all books, files, papers, agreements,

correspondence, databases, information systems, programs, software, documents

and records relating to the Purchased Assets or the Assumed Liabilities,

primarily used in the Business, on whatever medium; but excluding batch records

and similar manufacturing records that Seller is required to maintain under

applicable Legal Requirements and those relating to the Excluded Assets.

"Business" means the Generic Dermatology Business, the Dental Business and

the Manufacturing Business, but excluding the Excluded Assets.

"Business Day" means any day other than (a) a Saturday or a Sunday or (b) a

day on which commercial banks located in Denver, Colorado are generally closed

for business.

"Closing" means the consummation of the Transaction.

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

"Consent" means any approval, consent, ratification, permission, waiver or

authorization (including any Governmental Approval).

"Contract" means any agreement, contract, consensual obligation, promise,

understanding, arrangement, commitment or undertaking of any nature (whether

written or oral and whether express or implied).

"Conveyance Document" means any and all deeds, bills of sale, assignments

and other good and sufficient instruments of transfer, conveyance and assignment

to effect or evidence the sale, conveyance, assignment, transfer, and delivery

of the Purchased Assets to Buyer and to vest in Buyer title to the Purchased

Assets in accordance with the terms of this Agreement.

"Copyrights" means all registered and unregistered copyrights, including

such rights in and to all works of authorship and all other rights of a similar

nature corresponding thereto throughout the world, whether published or

unpublished, including associated rights to prepare,

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reproduce, perform, make derivative works of, display and distribute copyrighted

works and copies, compilations and derivative works thereof.

"Damages" means and includes any loss, damage, injury, Liability, claim,

demand, settlement, judgment, award, fine, penalty, Tax, fee (including all

reasonable legal fees, accounting fees, expert fees or advisory fees), charge,

cost (including any cost of investigation) or expense of any nature.

"Dental Business" means all of Seller's right, title, interest and

obligations to develop, manufacture and sell the Dental Products, together with

all Contracts and Governmental Approvals for or relating primarily to such

Dental Products.

"Dental Products" means those products as listed on Schedule 2.01(b).

"Deposits and Advances" means performance and other bonds, security and

other deposits, advance payments, prepaid credits and deferred charges primarily

used in or primarily related to the Business, all of which are listed on

Schedule 2.01(c).

"Earn-Out Event" means the receipt by Buyer of a firm purchase order from

Seller or Seller's licensee or sublicensee to manufacture the Aczone product in

a quantity equal to [**] or more of the sales forecasted (by Seller or Seller's

licensee) for the twelve month period immediately following the commercial

launch of the Aczone product in the United States of America, pursuant to and in

accordance with the terms of the Aczone(R) Manufacturing and Supply Agreement at

any time after the Effective Date and prior to [**].

"Eligard(R) Manufacturing and Supply Agreement" means that certain

manufacturing and supply agreement between Seller and Buyer in the form attached

hereto as Exhibit D, which the Parties intend to be an entirely independent,

separate and severable agreement from this Agreement.

"Encumbrance" means any lien, pledge, hypothecation, charge, mortgage,

security interest, encumbrance, trust, claim, preference, right of possession,

lease, tenancy, license, encroachment, covenant, Order, option, right of first

refusal, preemptive right, exception, reservation, limitation or impairment.

"Entity" means any corporation (including any non-profit corporation),

general partnership, limited partnership, limited liability partnership, joint

venture, estate, trust or company (including any limited liability company or

joint stock company).

"Environmental Laws" means all federal, state and local statutes,

regulations, orders, and applicable rules of common law relating to pollution or

protection of the environment, including, without limitation, those relating to

Releases or threatened Releases of Hazardous Materials or otherwise relating to

the presence, production, generation, manufacture, processing, disposal,

distribution, labeling, testing, control, cleanup, use, treatment, storage,

transport or handling of Hazardous Materials.

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** Confidential Treatment Requested.

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"Environmental Permits" means any permit, approval, identification, number,

license and other authorization required under any applicable Environmental

Laws.

"ERISA" means the Employee Retirement Income Security Act of 1974, as

amended.

"Escrow Agreement" means the escrow and security agreement between Buyer,

Seller and the Escrow Agent in the form attached hereto as Exhibit E.

"Excluded Transferred Inventory" means (a) all raw materials, work in

process and finished goods related to the Excluded Assets, wherever located and

whether held by Seller or third parties, which inventory shall remain the

property of Seller, but, to the extent located at the Manufacturing Facility,

shall remain located at the Manufacturing Facility for the benefit of Seller as

more specifically described in the Manufacturing and Supply Agreements, (b) all

inventory for Calcipotriene, and (c) all inventory for Fluticasone with a Net

Book Value in excess of [**].

"GAAP" means United States generally accepted accounting principles in

effect on the date on which they are to be applied pursuant to this Agreement,

applied consistently throughout the relevant periods.

"Generic Dermatology Business" means all of Seller's right, title, interest

and obligations to develop and manufacture the Generic Dermatology Products

pursuant to, and as more specifically set forth in, the Sandoz Agreement,

together with all Contracts and Governmental Approvals for or relating primarily

to the Generic Dermatology Products.

"Generic Dermatology Products" means those products listed on Schedule

2.01(d).

"Governmental Approval" means any: (a) permit, license, certificate,

concession, approval, consent, ratification, permission, clearance,

confirmation, exemption, waiver or authorization issued, granted, given or

otherwise made available by or under the authority of any Governmental Authority

or pursuant to any Legal Requirement; or (b) right under any Contract with any

Governmental Authority.

"Governmental Approval Assignments" means those assignments necessary to

transfer the Governmental Approvals in the form attached hereto as Exhibit F.

"Governmental Authority" means the: (a) government of the United States or

any state, commonwealth, territory, county, municipality, district or other

jurisdiction of any nature; (b) federal, state, local, municipal or other

government; (c) governmental or quasi governmental authority of any nature

(including any governmental division, subdivision, department, agency, bureau,

branch, office, commission, council, board, instrumentality, officer, official,

representative, organization, unit, body or Entity and any court or other

tribunal); or (d) individual, Entity or body exercising, or entitled to

exercise, any executive, legislative, judicial, administrative, regulatory,

police, military or taxing or arbitral authority or power of any nature.

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** Confidential Treatment Requested.

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"Guarantee Agreement" means that certain guarantee agreement in the form

attached hereto as Exhibit G between Parent and Seller under which Parent shall

irrevocably and unconditionally guarantee Buyer's obligations under the

Promissory Note and Security Agreement.

"Hazardous Materials" means all substances defined as Hazardous Substances,

Pollutants or Contaminants in the National Oil and Hazardous Substances

Pollution Contingency Plan, 40 C.F.R. Section 300.5, any petroleum,

hydrocarbons, petroleum products and any components, fractions, or derivatives

thereof, and any other substance, chemical, waste or material that is otherwise

regulated under any Environmental Law, including any that were used or generated

in the Manufacturing Business during the Pre-Closing Period.

"Independent Accounting Firm" means any big "four" accounting firm that

does not currently represent a Party or another independent accounting firm of

international reputation mutually acceptable to Buyer and Seller.

"Intellectual Property Rights" means any or all rights in and to

intellectual property and analogous intangible property rights, including,

without limitation, (a) Patents, Trade Secrets, Copyrights, and Trademarks, (b)

any rights similar, corresponding or equivalent to any of the foregoing anywhere

in the world, and (c) all rights thereunder (including the right to enforcement

for past infringements thereof), remedies related there to (including remedies

relating to past infringements thereof), and rights to protection of interests

therein under the laws of all jurisdictions.

"IRS" means the Internal Revenue Service.

"Key Contract" means those Seller Contracts designated as key contracts on

Schedule 2.01(l).

"Knowledge" or a similar statement qualifying a statement by the Seller's

knowledge means, when capitalized, actual knowledge of Michael R. Duncan, David

R. Speights, Sean F. Moriarty, Joe Winslow, Judy Goldberg or James Munro, after

reasonable investigation in the Ordinary Course of their respective duties.

"Legal Requirement" means any federal, state, local, municipal or other

law, statute, constitution, ordinance, code, Order, edict, decree, proclamation,

treaty, convention, rule, regulation, permit, ruling, directive, pronouncement,

requirement (licensing or otherwise), specification, determination or decision

that is, has been enacted, adopted, passed, approved, promulgated, made,

implemented or otherwise put into effect by or under the authority of any

Governmental Authority.

"Liability" means any debt, obligation, duty or liability of any nature,

including without limitation, a contingent debt or liability, regardless of

whether such debt, obligation, duty or liability would be required to be

disclosed on a balance sheet prepared in accordance with GAAP and regardless of

whether such debt, obligation, duty or liability is immediately due and payable.

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"Manufacturing and Supply Agreements" means the Eligard(R) Manufacturing

and Supply Agreement, the Atrigel(R) Manufacturing and Supply Agreement and the

Aczone(R) Manufacturing and Supply Agreement.

"Manufacturing Business" means Seller's manufacture of the products

comprising the Generic Dermatology Business, the Dental Business and other

pharmaceutical products at the Manufacturing Facility.

"Manufacturing Facility" means the manufacturing facility located in Fort

Collins, Colorado comprised of approximately 60,000 sq. ft situated on

approximately eight (8) acres of land owned by Seller.

"Material Adverse Effect" means any circumstance, change, development or

event that has had, or is reasonably likely to have, a material adverse effect

on the business, assets, condition (financial or otherwise), operations or

results of operations of the Business taken as a whole, other than with respect

to any matters which, directly or indirectly, relate to or result from (a)

public or industry knowledge relating to the Transaction, (b) changes in GAAP or

regulatory accounting requirements, (c) changes generally adversely affecting

the United States economy or the generic pharmaceutical industry, or (d) war,

acts of terrorism or the outbreak of hostilities.

"Mortgage" means that certain deed of trust and fixture filing in the form

attached hereto as Exhibit H.

"Net Book Value" means the net book value of an asset calculated in

accordance with GAAP.

"No Shop Period" means that period of time commencing on the Effective Date

and ending on the Closing Date.

"Non-Competition Agreement" means that certain non-competition agreement

between Seller and Buyer in the form attached hereto as Exhibit I.

"Order" means any temporary, preliminary or permanent order, judgment,

injunction, edict, decree, ruling, pronouncement, determination, decision,

verdict, stipulation, subpoena, writ or award that is or has been issued, made,

entered, rendered or otherwise put into effect by or under the authority of any

Governmental Authority.

"Ordinary Course of Business" or "Ordinary Course" means occurrences in the

ordinary course of the Business, consistent with past practices (other than as a

result of a violation of Law or breach of contract).

"Owned and Leased Vehicles" means all vehicles owned by Seller and all

rights in vehicle leases to which Seller is a party, in either case that are

primarily used in the Business, all of which are listed on Schedule 2.01(h).

"Patents" means all United States and foreign patents and utility models

and applications therefor (including all reissues, divisions, re-examinations,

renewals, extensions, provisionals, continuations and continuations-in-part

thereof), and all equivalent or similar rights anywhere in

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the world in inventions and discoveries, including, without limitation,

invention disclosures related to the Business or any Purchased Assets or Assumed

Liabilities and generated in connection with the Business, all as set forth on

Schedule 2.01(m).

"Permitted Encumbrance" means each of the following Encumbrances: (a) liens

for taxes, assessments and governmental charges that are not due and payable as

of the Closing Date or are being contested in good faith; (b) pledges or

deposits made in the Ordinary Course of Business, for which an adjustment is set

forth on Exhibit 2.06(a); (c) liens of mechanics, materialmen, warehousemen or

other like liens securing obligations incurred in the Ordinary Course of

Business that are not due and payable as of the Closing Date or are being

contested in good faith; (d) similar liens and encumbrances which are incurred

in the Ordinary Course of Business and which do not in the aggregate materially

detract from the value of any Purchased Asset or materially impair the use

thereof in the operation of the Business; (e) zoning laws and ordinances and

similar Legal Requirements regulating the use or occupancy of any parcel of Real

Property or the activities conducted thereon that are imposed by any

Governmental Authority having jurisdiction over such Real Property; (f) rights

reserved to any Governmental Authority to regulate the affected property; and

(g) as to any parcel of Real Property, any easements, rights-of-way, servitudes,

permits, restrictions and minor imperfections or irregularities in title which

are reflected in the public records and which do not individually or in the

aggregate interfere with the right or ability to own, use, occupy or operate the

Real Property or to convey good, marketable and indefeasible title to such Real

Property.

"Person" means any individual, Entity or Governmental Authority.

"Personal Property" means personal property, office furnishings, supplies,

tools, machinery, equipment and other tangible personal property primarily used

in the Business and located at the Manufacturing Facility, including the

Personal Property listed on Schedule 2.01(i).

"Personal Property Leases" means rights in leases of Personal Property to

which Seller is a party or by which any of the Personal Property is bound, all

of which are listed on Schedule 2.01(j).

"Pledge Agreement" means that stock pledge agreement between Parent and

Seller in the form attached hereto as Exhibit J.

"Post-Closing Period" means any taxable period beginning after the close of

business on the Closing Date or, in the case of any tax period which includes

any time before and after the close of business on the Closing Date, the portion

of such period beginning after the close of business on the Closing Date.

"Pre-Closing Period" means any taxable period ending at or before the close

of business on the Closing Date or, in the case of any taxable period which

includes any time before and after the close of business on the Closing Date,

the portion of such period at or before the close of business on the Closing

Date.

"Proceeding" means any action, suit, litigation, arbitration, proceeding

(including any civil, criminal, administrative, investigative or appellate

proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination

or investigation that is or has been commenced,

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brought, conducted or heard at law or in equity or before any Governmental

Authority or any arbitrator or arbitration panel.

"Promissory Note" means that certain secured promissory note, in the form

attached hereto as Exhibit K, in the aggregate principal amount of Eight Million

Four Hundred Thousand Dollars ($8,400,000).

"QLT USA Products" means the products to be manufactured by Buyer for

Seller under the Manufacturing and Supply Agreements, including all know-how,

Patents, regulatory approvals and other assets related thereto.

"Real Property" means that certain parcel of land located in Fort Collins,

Colorado, in the County of Larimer, State of Colorado, consisting of

approximately eight (8) acres as more particularly described on Schedule

2.01(k), together with all easements and interests appurtenant thereto

including, but not limited to, any streets or other public ways adjacent to the

Real Property and any appurtenant development rights or water or mineral rights.

"Real Property Improvements" means all improvements located on the Real

Property, including the Manufacturing Facility.

"Real Property Lease" means rights in real estate leases primarily used in

the Business to which Seller is a party.

"Receivables" means all accounts and notes receivable, checks and

negotiable instruments payable to Seller arising out of or relating to the

Business.

"Release" means any release, spill, emission, discharge, leaking, pumping,

pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration

of Hazardous Materials.

"Representatives" means officers, directors, employees, attorneys,

accountants, advisors and agents of a Party.

"Sandoz Agreement" means, collectively, that certain Collaboration, License

and Supply Agreement between Seller, and Sandoz Inc. (formerly know as Geneva

Pharmaceuticals, Inc.) dated August 28, 2000, as subsequently amended by

Amendment No. 1 to Collaboration, License and Supply Agreement dated July 17,

2003, as subsequently amended by Amendment No. 2 to Collaboration, License and

Supply Agreement dated November 11, 2004, including QLT USA's rights under that

certain Common Interest Agreement, dated June 27, 2006, between QLT USA and

Sandoz Inc.

"Security Agreement" means that certain security agreement between Buyer

and Seller in the form attached hereto as Exhibit L.

"Security Documents" means the Promissory Note, the Security Agreement, the

Pledge Agreement, the Guarantee and the Mortgage.

"Seller Assigned Intellectual Property" means all Seller Intellectual

Property owned by Seller and exclusively related to the Business, the Purchased

Assets, or the Assumed Liabilities.

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<PAGE>

"Seller Assigned Intellectual Property Contracts" means all Seller

Intellectual Property Contracts under which Seller has acquired or been granted,

or granted or conveyed, any license, permission or other right to utilize any

Seller Intellectual Property exclusively related to the Business, the Purchased

Assets, or the Assumed Liabilities.

"Seller Contracts" means collectively all Contracts and rights under any

and all Contracts to which Seller is a party or is subject or by which Seller is

bound solely in connection with the Business or to which the Business is

subject, all of which are listed on Schedule 2.01(l).

"Seller Intellectual Property" means all Intellectual Property Rights

necessary for the Business as presently conducted, including, without

limitation, as applicable, the manufacture, use, sale and other enjoyment of the

Seller Products and the use of the Purchased Assets as currently utilized in the

Business, but excluding software licenses for generally available software used

in the Business that either requires consent, license or payment of a fee to

assign.

"Seller Intellectual Property Contract" means any Contract under which

Seller has acquired or been granted, or is granted or conveyed, any license,

permission or other right to utilize any Seller Intellectual Property.

"Seller Licensed Intellectual Property" means all Seller Intellectual

Property not exclusively related to the Business, the Purchased Assets, or the

Assumed Liabilities.

"Seller Products" means the Generic Dermatology Products and the Dental

Products.

"Tax" or "Taxes" means (a) any net income, alternative or add-on minimum

tax, gross income, gross receipts, sales, use, ad valorem, value added,

transfer, franchise, profits, license, withholding, payroll, employment, excise,

severance, stamp, occupation, premium, property, environmental or windfall

profit tax, custom, duty or other tax, governmental fee or other like assessment

or charge of any kind whatsoever, together with any interest, penalty,

addition-to-tax or additional amount imposed by any Governmental Authority

(domestic or foreign) responsible for the imposition of any such tax, (b) any

Liability of Seller for the payment of any amount of the type described in

clause (a) above as a result of being a member of an affiliated, consolidated,

combined or unitary group, and (c) any Liability of Seller for the payment of

any amount as a result of being party to any tax sharing agreement or with

respect to the payment of any amounts of the type described in clauses (a) or

(b) above as a result of any express or implied obligation to indemnify any

other Person.

"Tax Authority" means Governmental Authority responsible for the

imposition, assessment or collection of any Tax.

"Tax Return" means any return, statement, declaration, notice, certificate

or other document that is or has been filed with or submitted to, or required to

be filed with or submitted to, any Governmental Authority in connection with the

determination, assessment, collection or payment of any Tax or in connection

with the administration, implementation or enforcement of or compliance with any

Legal Requirement related to any Tax.

"Trade Secrets" means all trade secrets and other rights in know-how and

confidential or proprietary information under applicable law throughout the

world, including, without limitation

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(financial, business, processing, manufacturing or marketing information, new

developments, inventions, processes, and ideas), and all other proprietary

information, in all such cases, that provide Seller with advantages over

competitors who do not know or use it, as well as any and all documentation

thereof (including all related lists, papers, blueprints, drawings or

descriptions or identities of compositions, formulae, diaries, notebooks,

specifications, designs, methods of manufacture and methods of processing,

software, technical information, and compilations) and all associated claims and

rights related thereto (excluding, for the avoidance of doubt, rights subject to

issued or published Patents, Copyrights in published works, and Trademarks).

"Trademarks" means any and all registered and unregistered trademarks,

service marks, and general intangibles of a similar nature (including, without

limitation, all logos, trade names, corporate names, trade dress, slogans, and

product names), as well as all Internet domain names and addresses and

general-use e-mail addresses, and all goodwill associated therewith throughout

the world.

"Transaction" or "Transactions" means, collectively, the transactions

contemplated by this Agreement.

"Transaction Documents" means this Agreement, all Exhibits and attachments

thereto, and all other agreements, certificates, instruments, documents and

writings delivered by Parent, Buyer and/or Seller in connection with the

Transaction.

"Transfer Taxes" means all federal, state, local or foreign sales, use,

transfer, real property transfer, mortgage recording, stamp duty, value-added or

similar Taxes that may be imposed in connection with the transfer of Purchased

Assets or assumption of Assumed Liabilities, together with any interest,

additions to Tax or penalties with respect thereto and any interest in respect

of such additions to Tax or penalties.

"Transferred Inventory" means all inventory of Seller Products and all raw

materials, work in process and finished goods primarily used in the Business

(other than the Excluded Transferred Inventory), wherever located and whether

held by Seller or third parties, all of which is listed on Schedule 2.01(g)

(which Schedule 2.01(g) describes such Transferred Inventory in reasonable

detail and includes the following information with respect to each item of

Transferred Inventory: inventory date, book value, item number and description,

type, unit of measure, unit cost, stock room location, total quantity, total

cost, manufacturing date, and expiration date), but excluding the Excluded

Transferred Inventory.

"Transition Services Agreement" means that certain transition services

agreement between Buyer and Seller in the form attached hereto as Exhibit M.

(b) Each of the following terms is defined in the section set forth

opposite such term below:

<TABLE>

<S> <C>

Assumed Liabilities Section 2.03

Bankruptcy Code Section 5.07(e)

Biologic Section 4.10(a)

Burrill Section 4.18

Buyer Preamble

</TABLE>

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<PAGE>

<TABLE>

<S> <C>

Buyer Damages Section 9.02

Buyer Defined Contribution Plan Section 6.03(a)

Buyer Welfare Benefit Plans Section 6.02(d)

Buyer's Basket Section 9.06(b)(i)

Buyer's Indemnification Cap Section 9.06(b)(ii)

Claim Notice Section 9.05(a)(i)(A)

Closing Date Section 3.01

COBRA Qualified Beneficiaries Section 7.04

Drug Section 4.10(a)

Effective Date Preamble

Employees Section 4.12(a)

Escrow Section 2.04(b)

Escrow Agent Section 2.04(b)

Escrow Amount Section 2.04(b)

Escrow Payment Section 2.04(b)

Escrow Percentage Section 2.04(b)

Excluded Assets Section 2.02

Excluded Liabilities Section 2.03

FDA Section 4.14

FDCA Section 4.14

General Assignment and Bill of Sale Section 3.02(a)

Indemnitee Section 9.05(a)(i)

Indemnitor Section 9.05(a)(i)

Initial Payment Section 2.04(a)(i)

Notice Period Section 9.05(a)(i)(B)

Parent Preamble

Parties Preamble

Party Preamble

Permits Section 4.14

Post-Closing Certificate Section 2.06(b)

Pre-Closing Certificate Section 2.06(a)

Pro Forma Income Statement Section 4.04

Purchase Price Section 2.04(a)

Purchased Assets Section 2.01

Required Consents Section 4.03

Restricted Asset Section 2.09(a)

Seller Preamble

Seller Damages Section 9.03

Seller Disclosure Schedule ARTICLE IV

Seller Plans Section 4.13

Seller Registered Intellectual Property Rights Section 4.09(a)

Seller's Basket Section 9.06(a)(i)

Seller's Indemnification Cap Section 9.06(a)(ii)

Survival Date Section 9.01

Third Party Acquisition Section 6.03

Title Commitments Section 5.07

</TABLE>

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<PAGE>

<TABLE>

<S> <C>

Title Company Section 5.07

Title Policies Section 3.02(l)

Transferred Employee Section 6.02(a)

</TABLE>

ARTICLE II

SALE AND PURCHASE OF ASSETS

Section 2.01 SALE AND PURCHASE. Subject to the terms and conditions set

forth in this Agreement, at the Closing, Seller shall sell, transfer, convey,

assign and deliver to Buyer, and Buyer shall purchase from Seller, all of

Seller's right, title and interest in the assets, properties, goodwill and

rights of Seller primarily used in the Business, other than the Excluded Assets

(collectively, the "Purchased Assets"), including the following:

(a) the Books and Records;

(b) the Dental Products;

(d) the Generic Dermatology Products;

(e) the Governmental Approvals (and pending applications therefor)

necessary to conduct the Business, all of which are listed on Schedule

2.01(e);

(f) the Real Property Improvements;

(g) the Transferred Inventory;

(h) the Owned and Leased Vehicles;

(i) the Personal Property;

(j) the Personal Property Leases;

(k) the Real Property;

(l) the Seller Contracts and Seller Assigned Intellectual Property

Contracts;

(m) the Seller Assigned Intellectual Property;

(n) all goodwill generated by or associated with the Business; and

(o) all other assets, properties, rights and claims (excluding

Intellectual Property Rights not otherwise included in subsections (a)

through (n) above) primarily used in the Business, including, without

limitation, all pending claims under any insurance policy of Seller to the

extent such claims relate to damage to any Purchased Asset, to any Assumed

Liability, or to the Business.

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<PAGE>

Section 2.02 EXCLUDED ASSETS. Notwithstanding the provisions of Section

2.01, the Purchased Assets shall not include the following (collectively, the

"Excluded Assets"):

(a) cash, cash equivalents, marketable securities and Receivables;

(b) any intercompany or intracompany receivable cash balances between

Seller and any of its Affiliates or between any of its Affiliates;

stock transfer records, or other records related to the corporate

organization of Seller;

(d) the Seller Plans and contracts of insurance for employee group

medical, dental and life insurance plans and all insurance policies and

rights and claims thereunder;

(e) the assets listed on Schedule 2.02(e);

(f) subject to Section 2.01(o), all insurance policies and rights and

claims thereunder;

(g) all personnel records (but at the Closing Seller shall deliver to

Buyer copies of all such excluded records relating to the Transferred

Employees, other than any employee medical or other records that Seller is

prohibited from disclosing to Seller under applicable Legal Requirements)

and other records, including batch records and similar manufacturing

records that Seller is required to maintain in its possession under

applicable Legal Requirements (but at the Closing Seller shall deliver to

Buyer copies of all such batch records and similar manufacturing records

relating to the Purchased Assets or the Assumed Liabilities, primarily used

in the Business, other than any such records that Seller is prohibited from

disclosing to Seller under applicable Legal Requirements);

(h) all rights of Seller under the Transaction Documents;

(i) the Excluded Transferred Inventory; and

(j) all assets, of whatever nature, not primarily used in the

Business, including, without limitation, the QLT USA Products and all

polymer manufacturing equipment, contracts to purchase raw materials,

license, distribution and contract manufacturing agreements for or related

to the QLT USA Products. For the avoidance of doubt, all assets not

specifically set forth on the Schedules referenced in Section 2.01 of this

Agreement shall be deemed Excluded Assets.

Section 2.03 ASSUMED LIABILITIES. Subject to the terms and conditions of

this Agreement, at the Closing, Seller shall assign, and Buyer shall assume, the

Assumed Liabilities. For the purposes of this Agreement, the "Assumed

Liabilities" shall mean only the following Liabilities of Seller, and in any

event shall not include any Excluded Liabilities: (a) all accrued Liabilities of

the Business for which Buyer receives a credit under Section 2.05, (b) those

obligations and Liabilities attributable to periods after Closing under the

Seller Contracts and Governmental Approvals (and pending applications therefor)

that are included in the Purchased

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<PAGE>

Assets, (c) other obligations and Liabilities of Seller only to the extent that

there shall be an adjustment in favor of Buyer with respect thereto pursuant to

Section 2.05, (d) all obligations and liabilities arising out of Buyer's

ownership of the Purchased Assets or operation of the Business after Closing,

and (e) all Liabilities arising after the Closing attributable to the

Transferred Employees. Except only for Assumed Liabilities, Buyer does not

assume, and shall not have any responsibility for, any liabilities or

obligations of Seller, including but not limited to Liabilities or obligations

associated with Excluded Assets (collectively, the "Excluded Liabilities").

Without limiting the generality of the foregoing, Buyer does not assume, and

shall not have any responsibility for, any Liabilities or obligations of Seller

arising from or relating to any of the Excluded Liabilities set forth on

Schedule 2.03.

Section 2.04 PURCHASE PRICE.

(a) Subject to the terms of this Agreement, as full consideration for

the sale, transfer, conveyance, assignment and delivery of the Purchased

Assets and the execution and delivery of the Transaction Documents by

Seller to Buyer, Buyer shall pay to Seller Twenty-Two Million Dollars

($22,000,000), as such sum may be adjusted pursuant to the provisions of

this Agreement (the "Purchase Price"). The Purchase Price, plus or minus

prorations and other adjustments pursuant to this Agreement, shall be paid

to Seller as follows:

(i) on the Effective Date, Buyer shall deposit with the Escrow

Agent a sum equal to Twelve Million Six Hundred Thousand Dollars

($12,600,000) (the "Initial Payment"), in immediately available U.S.

funds. On the Closing Date the Initial Payment, less the Escrow

Percentage (which shall be remain deposited with the Escrow Agent as

described in Section 2.04(b)) shall be delivered to Seller and

credited against the Purchase Price, and all interest accrued on the

Initial Payment while deposited with the Escrow Agent shall be

delivered to Buyer;

(ii) no later than February 28, 2007, Buyer shall pay to Seller

Four Million Two Hundred Thousand Dollars ($4,200,000), less the

Escrow Percentage (which shall be deposited with the Escrow Agent as

described in Section 2.04(b)), by wire transfer of immediately

available U.S. funds, provided that Buyer may elect to prepay such

amount at any time, in whole or in part, without premium or penalty;

(iii) no later than March 31, 2007, Buyer shall pay to Seller

Four Million Two Hundred Thousand Dollars ($4,200,000), less the

Escrow Percentage (which shall be deposited with the Escrow Agent as

described in Section 2.04(b)), by wire transfer of immediately

available U.S. funds, provided that Buyer may elect to prepay such

amount at any time, in whole or in part, without premium or penalty;

and

(iv) within ten (10) Business Days following the occurrence of

the Earn-Out Event, Buyer shall pay to Seller One Million Dollars

($1,000,000) by wire transfer of immediately available U.S. funds;

provided, however, that if the

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<PAGE>

Earn-Out Event does not occur, then Buyer shall have no obligation to

make such payment to Seller and the Purchase Price shall be reduced

accordingly.

(b) Without limiting the generality of Sections 2.04(a)(i) through

(iii), as security for the indemnification obligations of Seller under this

Agreement, concurrently with any payment made pursuant to Sections

2.04(a)(i) through (iii) Buyer shall deliver by wire transfer of

immediately available U.S. funds to SunTrust Bank, a Georgia banking

corporation, as escrow agent (the "Escrow Agent"), and Escrow Agent shall

retain, ten percent (10%) (the "Escrow Percentage") of each such payment of

Purchase Price payable by Buyer under Sections 2.04(a)(i) through (iii)

(each an "Escrow Payment"). The Escrow Payments shall be held in escrow

(the "Escrow") in accordance with the terms of the Escrow Agreement. For

the avoidance of doubt, at any time on or after the Closing Date the

aggregate Escrow Payments (collectively, the "Escrow Amount") held in

escrow shall not exceed ten percent (10%) of the aggregate Purchase Price

that would have been paid to Seller, absent the Escrow Payments.

obligations to make the payments set forth in Sections 2.04(a)(ii) through

(iii), at the Closing Buyer shall execute and deliver the Promissory Note,

the Security Agreement, the Mortgage, the Pledge Agreement and the

Guarantee Agreement. Upon Seller's receipt of the payment set forth in

Section 2.04(a)(iii), Seller shall promptly (and in any event within three

(3) Business Days) take all necessary and appropriate action to cause the

Promissory Note, the Security Agreement, the Mortgage, the Pledge Agreement

and the Guarantee Agreement to be terminated and any collateral secured

thereby to be released. If Buyer provides Seller with at least five (5)

Business Days notice before such payment is to be made, Seller shall

cooperate with Buyer to provide that such terminations and releases shall

occur substantially simultaneously with Seller's receipt of such payment.

Section 2.05 ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be

subject to adjustment as follows:

(a) The Purchase Price shall be adjusted on a pro rata basis as of the

Closing Date for all prepaid expenses (to the extent such prepayments may

accrue to Buyer's benefit), accrued expenses and Liabilities (including but

not limited to real and personal property Taxes), and prepaid income and

deposits, all as determined in accordance with Seller's past accounting

treatment thereof, consistently applied, and to reflect the principle that

all expenses and income attributable to the Business for the Pre-Closing

Period are for the account of Seller, and all expenses and income

attributable to the Business for the Post-Closing Period are for the

account of Buyer.

(b) There shall be credited to the account of Seller and become the

property of Buyer (but only to the extent that Buyer is entitled to the

benefit or value thereof after Closing), deposits relating to the Business

that are held by third parties as of the Closing Date for the account of

Seller or as security for Seller's performance of its obligations (other

than with respect to Excluded Assets and any other deposits the full

benefit of which will not be available to Buyer following the Closing),

including deposits on leases and deposits for utilities.

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<PAGE>

reflect the amount by which the Net Book Value of the Transferred Inventory

delivered to Buyer on the Closing Date is greater or less than [**].

(d) There shall be credited to the account of Buyer, [**] of the

Transfer Taxes paid by Buyer on behalf of Seller in accordance with Section

2.07(a).

Section 2.06 DETERMINATION OF ADJUSTMENTS. Preliminary and final

adjustments to the Purchase Price shall be determined as follows:

(a) On the Effective Date, Seller shall deliver to Buyer a report

substantially in the form attached hereto as Exhibit 2.06(a) (the

"Pre-Closing Certificate"), certified as to completeness and accuracy by

Seller, showing in detail the preliminary determination of the adjustments

referred to in Section 2.05, if any, calculated as of the Closing Date, and

any documents substantiating the adjustments proposed in the Pre-Closing

Certificate.

(b) Within thirty (30) days after Closing, Seller shall deliver to

Buyer a report (the "Post-Closing Certificate"), certified by Seller in the

same manner as the Pre-Closing Certificate, showing in detail the final

determination of all adjustments which were not calculated as of the

Closing Date and containing any corrections to the Pre-Closing Certificate,

together with any documents substantiating the adjustments proposed in the

Post-Closing Certificate. Buyer shall provide Seller with reasonable access

to all records which Buyer has in its possession and which are necessary

for Seller to prepare the Post-Closing Certificate.

Certificate, Buyer shall give Seller written notice of Buyer's objections,

if any, to the Post-Closing Certificate. If Buyer makes any such objection,

the Parties shall endeavor to resolve Buyer's objections within thirty (30)

days after Seller's receipt thereof. If Buyer and Seller are unable to

resolve such objections within such thirty (30)-day period, Seller and

Buyer shall cause the Independent Accounting Firm to resolve any remaining

disputed amounts within one hundred twenty (120) days after the Closing

Date. The determination of the Independent Accounting Firm shall be

conclusive and binding upon Seller and Buyer, and Seller and Buyer shall

bear equally the fees and expenses payable to the Independent Accounting

Firm in connection with such determination. Within (i) ninety (90) days

after the Closing Date, if Buyer does not timely object to the Post-Closing

Certificate, or if it does so but its objections are resolved within the

thirty (30)-day period provided above, or (ii) otherwise, within ten (10)

Business Days after Buyer's objections are resolved as provided above;

Buyer shall pay to Seller, or Seller shall pay to Buyer, as applicable, the

amount by which the Purchase Price as finally determined is more or less,

respectively, than the amount of the Purchase Price as estimated in the

Pre-Closing Certificate.

----------

** Confidential Treatment Requested.

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<PAGE>

Section 2.07 TRANSFER TAXES; PRORATIONS.

(a) Notwithstanding any Legal Requirements to the contrary, each of

Buyer and Seller shall be responsible for [**] of any and all Transfer

Taxes when due, and Buyer shall, at its own expense, file all necessary Tax

Returns and other documentation with respect to all such Transfer Taxes.

Buyer shall pay the full amount of such Transfer Taxes and the Purchase

Price shall be adjusted to reflect Buyer's payment of Seller's portion of

such Transfer Tax.

(b) Seller shall be responsible for and shall pay any Taxes arising or

resulting from or in connection with the conduct of the Business or the

ownership of the Purchased Assets attributable to the Pre-Closing Period.

Buyer shall be responsible for and shall pay any Taxes arising or resulting

from or in connection with the conduct of the Business or the ownership of

the Purchased Assets attributable to the Post-Closing Period.

Taxes (not including income Taxes) levied with respect to the Purchased

Assets or the Business for a taxable period which includes (but does not

end on) the Closing Date shall be apportioned between Buyer and Seller

based on the number of days included in such period through but excluding

the Closing Date and the number of days included in such period on and

after the Closing Date.

Section 2.08 ALLOCATION OF PURCHASE PRICE. The Parties agree to allocate

the Purchase Price among the Purchased Assets as specified on Schedule 2.08. The

allocation of the Purchase Price set forth on Schedule 2.08 is intended to

comply with the requirements of Section 1060 of the Code. The Parties agree

that:

(a) such allocation was determined in an arm's length negotiation and

that none of the Parties shall take a position on any Tax Return (including

IRS Form 8594), before any Tax Authority or in any Proceeding that is in

any way inconsistent with such allocation without the written consent of

the other Party or unless specifically required pursuant to a determination

by an applicable Tax Authority;

(b) they shall cooperate with each other in connection with the

preparation, execution and filing of all Tax Returns related to such

allocation; and

any tax audit, controversy or litigation related to such allocation.

Section 2.09 ASSIGNMENT AND ASSUMPTION.

(a) Notwithstanding anything herein to the contrary, if an attempted

sale, assignment, transfer or delivery of any Purchased Asset would be

ineffective without the Consent of any third party, or if such an act would

violate the rights of any third party in such Purchased Asset or otherwise

affect adversely the rights of Buyer in such Purchased Asset, and the

applicable Consent has not been obtained on or prior to the Closing Date,

----------

** Confidential Treatment Requested.

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<PAGE>

this Agreement shall not constitute an actual or attempted sale,

assignment, transfer or delivery of such Purchased Asset (each, a

"Restricted Asset"). Unless and until any such Consent is obtained, such

Restricted Asset shall not constitute a Purchased Asset and any associated

Liability shall not constitute an Assumed Liability for any purpose

hereunder except to the extent provided in Section 2.09(c).

(b) In any such case, Seller shall use commercially reasonable efforts

to obtain, as soon as practicable, such Consent. Buyer shall cooperate

reasonably with Seller in obtaining such Consents, provided, that Buyer

shall not be required to pay any cash consideration therefor or give or

allow to remain in effect any guaranty, letter of credit, performance bond

or other financial assurance. As soon as such Consent is obtained, Seller

shall sell, transfer, convey, assign and deliver to Buyer, for no

additional consideration, all of Seller's right, title and interest in such

Restricted Asset, and such Restricted Asset shall constitute a Purchased

Asset and all associated Liabilities shall constitute Assumed Liabilities

for all purposes hereunder.

expense effect an alternate arrangement, in the form of a license,

sublease, operating agreement or other arrangement, in any case reasonably

satisfactory to Buyer, which results in Buyer receiving all the benefits

and bearing all the ordinary course costs, Liabilities and other

obligations with respect to each Restricted Asset, from the Closing Date

until such time as such Consent is obtained, that Buyer would have received

and borne, respectively, if such Restricted Asset had constituted a

Purchased Asset as of the Closing.

ARTICLE III

THE CLOSING

Section 3.01 TIME AND PLACE OF CLOSING. The Closing shall occur at the

offices of Morrison & Foerster LLP, 370 Seventeenth Street, Suite 5200, Denver,

Colorado 80202, at 10:00 a.m., local time, on December 22, 2006 or such other

date and time as is mutually agreed to by the Parties (the "Closing Date").

Section 3.02 DELIVERIES BY SELLER. On the Effective Date, Seller shall

deliver the following items (duly executed by Seller and notarized as

appropriate) to the Escrow Agent for delivery to Buyer at the Closing, all of

which shall be in form and substance reasonably acceptable to Buyer:

(a) General Assignment and Bill of Sale covering all of the applicable

Purchased Assets, substantially in the form attached hereto as Exhibit

3.02(a) (the "General Assignment and Bill of Sale");

(b) any and all documents necessary to properly assign, and to

properly record the assignment, to Buyer of all of Seller's right, title

and interest in and to the Seller Assigned Intellectual Property in the

United States in the forms attached hereto as Exhibit 3.02(b)-1 and

3.02(b)-2;

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<PAGE>

of all Encumbrances other than the Permitted Encumbrances in the form

attached hereto as Exhibit 3.02(c);

(d) the Governmental Approval Assignments;

(e) such other specific instruments of sale, transfer, conveyance and

assignment as Buyer may request;

(f) assignments of all Personal Property Leases;

(g) vehicle titles and assignments sufficient to transfer title to the

Owned and Leased Vehicles;

(h) an affidavit of Seller, under penalty of perjury, that Seller is

not a "foreign person" (as defined in the Foreign Investment in Real

Property Tax Act and applicable regulations) and that Buyer is not required

to withhold any portion of the consideration payable under this Agreement

under the provisions of such Act, in the form attached as Exhibit 3.02(h);

(i) the Required Consents for the Key Contracts and such other Seller

Contracts that have been obtained by Seller, duly executed by the

applicable third party, in form and substance reasonably satisfactory to

Buyer;

(j) with respect to any financing statements filed against any of the

Purchased Assets, UCC-3 termination statements;

(k) an opinion, dated as of the Closing Date, from Morrison & Foerster

LLP, Seller's legal counsel, substantially in the form attached hereto as

Exhibit 3.02(k);

(l) the irrevocable written commitment of the Title Company to deliver

to Buyer an ALTA 1992 standard form owner's policies of title insurance,

insuring a fee or leasehold interest, as applicable, in each parcel of the

Real Property, all premiums and charges for which shall have been paid by

Seller (the "Title Policies"), the premiums for additional endorsements or

extended coverage, to the extent requested by Buyer shall be paid by Buyer;

(m) a certificate of Seller's Secretary certifying as to: (i) the

certificate of incorporation and bylaws of Seller as in effect as of the

Effective Date, (ii) resolutions of Seller's stockholders and its board of

directors authorizing the execution, delivery and performance of this

Agreement and of all other Transaction Documents, and (iii) the incumbency

of Seller's officers executing this Agreement and all other Transaction

Documents; and

(n) a certificate from the Secretary of State of Colorado and Delaware

as to Seller's good standing.

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<PAGE>

Section 3.03 DELIVERIES BY BUYER. On the Effective Date, Buyer shall

deliver the following items (duly executed by Buyer and notarized as

appropriate) to the Escrow Agent for delivery to Seller at the Closing, all of

which shall be in a form and substance reasonably acceptable to Seller:

(a) the Initial Payment;

(b) a certificate of Buyer's Secretary certifying as to, as

applicable: (i) the certificate of incorporation and bylaws of Buyer as in

effect as of the Effective Date, (ii) resolutions of Buyer's and Parent's

stockholders, if applicable, and board of directors authorizing the

execution, delivery and performance of this Agreement and of all other

Transaction Documents, and (iii) the incumbency of Buyer's and Parent's

officers executing this Agreement and all other Transaction Documents;

(d) the Promissory Note and the Mortgage.

Section 3.04 DELIVERIES BY THE PARTIES. On the Effective Date, Parent,

Buyer and Seller, as applicable, shall deliver the following items (duly

executed by the applicable Party and notarized, as appropriate) to the Escrow

Agent f

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