ASSET PURCHASE AND LICENSE AGREEMENT

Exhibit 10.1

EXECUTION COPY

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “***”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.

ASSET PURCHASE AND LICENSE AGREEMENT

BETWEEN

AVANIR PHARMACEUTICALS INC.

XENEREX BIOSCIENCES INC.

EMERGENT PRODUCT DEVELOPMENT GAITHERSBURG INC.

AND

EMERGENT BIOSOLUTIONS INC.

Dated as of March 6, 2008

ASSET PURCHASE AND LICENSE AGREEMENT

     This Asset Purchase and License Agreement is entered into as of March 6, 2008 (the “Agreement”) by and between Emergent Product Development Gaithersburg Inc., a Delaware corporation (“Buyer”), Emergent BioSolutions Inc., a Delaware corporation (“Buyer Parent”), Avanir Pharmaceuticals Inc., a California corporation (“Seller Parent”), and Xenerex Biosciences Inc., a California corporation (“Seller” and, together with Seller Parent, the “Sellers”). Each party to this Agreement is sometimes referred to herein as a “Party” or collectively, the “Parties.” Capitalized terms used in this Agreement shall have the meanings ascribed to them where defined or in Article IX.

INTRODUCTION

     WHEREAS, Seller Parent is a pharmaceutical company focused on developing, acquiring and commercializing therapeutic products for the treatment of chronic diseases; and

     WHEREAS, Seller is a wholly-owned subsidiary of Seller Parent; and

     WHEREAS, Seller owns the Product and Sellers desire to transfer ownership of the Product and certain rights related to the Product Line Operations to Buyer; and

     WHEREAS, Buyer is the wholly-owned subsidiary of Emergent BioSolutions Inc. and as an inducement to the Sellers to enter into the transactions contemplated by this Agreement, Buyer Parent will concurrently with the execution hereof enter into this agreement with the Sellers whereby Buyer Parent will assure payment of all of the financial obligations of the Buyer; and

     WHEREAS, upon the terms and subject to the conditions of this Agreement, Sellers wish to sell the Acquired Assets (including the Product and the Product Line Operations), license the Xenerex Technology for use in the Anthrax Field, and assign the Assumed Liabilities to Buyer, and Buyer wishes to purchase the Acquired Assets (including the Product and the Product Line Operations), license the Xenerex Technology and assume the Assumed Liabilities from Seller.

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

ARTICLE I

     1.1 Purchase and Sale of Assets . Upon the terms and subject to conditions of this Agreement, Buyer shall purchase from Seller, and Seller shall sell, transfer, convey, license,

assign and deliver to Buyer, at the Closing, for the consideration specified below in Article II , all of its right, title and interest in, to and under the Acquired Assets.

     1.2 Assumption of Liabilities .

          (a) Upon the terms and subject to the conditions of this Agreement, Buyer shall assume and become responsible for, from and after the Closing, the Assumed Liabilities.

          (b) Notwithstanding the terms of Section 1.2(a) or any other provision of this Agreement to the contrary, Buyer shall not assume or become responsible for, and Seller shall remain liable for, the Retained Liabilities.

     1.3 Consent of Third Parties .

          (a) Assigned Contracts . On the Closing Date, Seller shall assign to Buyer, and Buyer shall assume, the Assigned Contracts to the extent provided in this Agreement. The list of all Assigned Contracts is set forth in Schedule 1.3(a) hereto. To the extent that the assignment of all or any portion of any Assigned Contract shall require the consent of the other party thereto or any other third party, this Agreement shall not constitute an agreement to assign any such Assigned Contract if an attempted assignment without any such consent would constitute a breach or violation thereof. In order, however, to seek to provide Buyer the full realization and value of every Assigned Contract of the character described in the immediately preceding sentence (i) as soon as practicable after the Closing, Seller and Buyer shall cooperate, in all reasonable respects, to obtain any necessary consents to the assignment of the Assigned Contracts, provided that neither Party shall be required to make any payments or agree to any material undertakings in connection therewith, and (ii) until all such consents are obtained or all such Assigned Contracts expire or are terminated, Seller and Buyer shall cooperate, in all reasonable respects, to provide to Buyer the benefits under the Assigned Contracts (with Buyer entitled to all the gains and responsible for all the losses, Taxes, liabilities and/or obligations thereunder). In connection with clause (ii) of this Section 1.3(a), if requested in writing by Buyer, Seller shall, at Buyer’s cost and expense, seek to enforce for the benefit of Buyer all claims or rights of Seller arising under the Assigned Contracts, and Buyer shall perform and comply with, at Buyer’s cost, all of Seller’s obligations under the Assigned Contracts as if Buyer was Seller thereunder.

          (b) Registrations and Applicable Permits . On the Closing Date, Seller shall assign or transfer to Buyer, and Buyer shall assume, the Registrations and Applicable Permits to the extent provided in this Agreement. To the extent that the assignment or transfer of all or any portion of any Registration or Applicable Permit shall require the consent of the other party thereto or any other third party, this Agreement shall not constitute an agreement to assign or transfer any such Registration or Applicable Permit if an attempted assignment or transfer without any such consent would constitute a breach or violation thereof. In order, however, to seek to provide Buyer the full realization and value of the Registrations and Applicable Permits (a) as soon as practicable after the Closing, Seller shall use commercially reasonable efforts to obtain and Buyer shall cooperate, in all reasonable respects to obtain any necessary consents to the assignment of the Registrations and Applicable Permits, provided that neither Party shall be required to make any payments or agree to any material undertakings in connection therewith,

and (b) until all such consents are obtained or all such Registrations and Applicable Permits expire or are terminated, Seller and Buyer shall cooperate, in all reasonable respects, to provide to Buyer the benefits under the Registrations and Applicable Permits.

     1.4 Asset License . Sellers hereby grants to Buyer an exclusive (even as to Sellers) limited to the Anthrax Field, worldwide, perpetual license under the Xenerex Technology to Develop and Commercialize Products intended for use in the Anthrax Field, with the right to grant sublicenses (the “Asset License”). Any sublicense granted to a Third Party, shall be in writing and include provisions which obligate such a party to comply with all the terms and conditions of this Agreement. Buyer shall remain fully responsible to Sellers for performance of this Agreement.

     1.5 Third Party Agreements . Seller shall be solely responsible for all obligations under the agreements listed in Schedule 1.5 (each such agreement a “Third Party Agreement”). Seller shall maintain the Third Party Agreements in good standing and not take any actions (or omit or fail to take any actions) which would result in a breach of any of such Third Party Agreements other than as contemplated by this section. Seller agrees that it shall not amend, modify or supplement or take any action or inaction with respect to any of the Third Party Agreements in any manner that would materially adversely affect Buyer’s rights under this Agreement without the consent of Buyer, such consent not to be unreasonably withheld or delayed. In the alternative, Seller may arrange for the assignment of such Third Party Agreements (with the consent of the applicable third party licensor, if required) to Buyer at no transactional expense to Buyer. In addition, Seller shall not sell, assign (except as permitted in Section 10.4 hereof), convey, pledge, hypothecate or otherwise transfer any of the Third Party Agreements or Seller’s rights or obligations thereunder, or otherwise make any commitments or offers in a manner that materially conflicts with Buyer’s rights hereunder without the consent of Buyer, such consent not to be unreasonably withheld or delayed. Seller shall immediately notify Buyer upon receipt by Seller of any notice from a licensor under any Third Party Agreements of such licensor’s intent to (i) terminate Seller’s rights that are sublicensed to Buyer hereunder, or (ii) exercise its respective rights or remedies thereunder, or (iii) otherwise take any other action, in each case that would reasonably be expected to materially and adversely affect Buyer’s rights. This provision shall not affect, in any manner, the parties’ rights to assign this Agreement or rights to the Xenerex Technology not transferred under this Agreement as provided for in Section 10.4 of this Agreement.

     1.6 Technology Transfer . Sellers shall, as reasonably requested by Buyer, furnish Buyer with copies of, and provide Buyer with ongoing access to, all information or documentation in the control of Sellers or any of their Affiliates relating to, or necessary or useful to exploit the Product, which information and documentation includes, but is not limited to: (i) all Seller Know-How and (ii) all data, documentation and information relating to or that may be necessary or useful for the filing of an Investigational New Drug Application, a Biologics License Application or their foreign counterparts for any product having the Product as an active ingredient (including all databases, toxicology reports, and other regulatory, scientific and safety information). Sellers shall make available to Buyer appropriate personnel of Sellers and any of their Affiliates as reasonably requested by Buyer from time to time, to assist in the effectuation of the technology transfer contemplated by Section 6.3, at Seller’s expense for the four-week period following the Closing, not to exceed eight (8) hours per week during such

period (with any out-of-pocket expenses incurred during such period by the Seller’s representatives and approved by Buyer in writing to be reimbursed by Buyer to Seller), and at Buyer’s expense thereafter. Sellers hereby assign to Buyer their rights in any regulatory filings for products having the Product as an active ingredient, to the extent any such regulatory filings exist. Sellers agree to work diligently and in good faith to complete the transfers set forth in this Section 1.6 from Seller to Buyer.

     1.7 Further Assurances . At any time and from time to time after the Closing, at the reasonable request of Buyer and without further consideration, Sellers shall execute and deliver such other instruments of sale, transfer, conveyance and assignment and take such actions as Buyer may reasonably request to transfer, convey and assign to Buyer, and to confirm Buyer’s rights to, title in and ownership of, the Acquired Assets and to place Buyer in actual possession and operating control thereof.

ARTICLE II

PURCHASE PRICE; ADDITIONAL PAYMENTS

     2.1 Execution Date Payment . In consideration of the transactions contemplated by this Agreement, Buyer shall assume the Assumed Liabilities and pay to Seller, by wire transfer of immediately available funds directly to an account designated by Seller $100,000 (the “ Execution Date Payment ”) and make the additional payments, if applicable, set forth in this Article II. The parties acknowledge that Buyer previously paid a non-refundable amount of $50,000 (the “ Proposal Payment ”) in conjunction with the submission of the Proposal on November 7, 2007 and that such amount shall constitute part of the purchase price for the Acquired Assets. Buyer Parent agrees to be jointly and severally liable for the complete and prompt payment of Buyer’s payment obligations under this Agreement.

     2.2 GMP Payment . In addition to any other amounts due hereunder, upon release by AppTec of the GMP Clinical Materials to Buyer and Buyer’s written acceptance thereof (which acceptance will not be unreasonably withheld, conditioned or delayed), Buyer shall, upon receipt of Seller’s invoice, promptly pay to Seller, by wire transfer of immediately available funds directly to an account designated by Seller $100,000 (the “ GMP Payment ”).

     2.3 Milestone Payments . Subject to the achievement of the following, Buyer shall, upon receipt of Seller’s invoice, promptly pay to Seller:

          (a) In addition to any other amounts due hereunder, upon the terms and subject to the conditions set forth herein, upon the receipt of official notification of an award of a grant or contract (a copy of such notification to be promptly provided to the Sellers) from NIAID (excluding grants or contracts for Commercial Sales) with respect to AVP-21D9 in response to the Proposal (the “ NIAID Grant ”):

	(i)		$ * * * if the aggregate amount of the NIAID Grant award is equal to or greater than $* * *; or
	(ii)		$* * * if the aggregate amount of the NIAID Grant award is less than $* * *.

In the event the Buyer does not receive a NIAID Grant in response to the Proposal, upon the acceptance by Buyer or any Affiliate of a grant or contract from NIAID (excluding grants or contracts for Commercial Sales) with respect to AVP-21D9 in response to any proposal other than the Proposal:

	(i)		$* * * if the aggregate amount of the NIAID Grant award is equal to or greater than $* * *; or
	(ii)		$* * * if the aggregate amount of the NIAID Grant award is less than $* * * but greater than $* * *.

Buyer shall make only one payment to Seller under this Section 2.3(a). The payment under subsections (i) and (ii) above shall be payable only one time. In no event shall aggregate payments due under this Section 2.3(a) exceed $* * *.

          (b) If (and only if) Buyer or any Affiliate receives aggregate payments from the NIAID pursuant to the NIAID Grant of at least $* * * , Buyer shall promptly pay Seller, in addition to all other amounts payable under this Article II, an amount equal to $* * *. The payment due under this Section 2.3(b) is a one-time payment and shall only be paid upon receipt of the first $* * * paid under the NIAID Grant.

          (c) If (and only if) Buyer, any Affiliate or any sublicensee achieves Net Sales of at least $* * * (for the avoidance of doubt, the $* * * of Net Sales does not include the $* * * NIAID Grant described in clause (b) above), Buyer shall promptly pay Seller, in addition to all other amounts payable under this Article II, an amount equal to $* * *. The payment due under this Section 2.3(c) is a one-time payment and shall only be paid upon receipt of the first $* * * of Net Sales.

     2.4 Sales-Based Contingent Purchase Price Payments .

          (a) In addition to any other amounts due under Article II, upon the terms and subject to the conditions set forth herein, in consideration of the sale, transfer, conveyance, assignment and delivery of the Acquired Assets, Buyer shall pay, or cause to be paid, to Seller quarterly payments in arrears in accordance with this Section 2.4(a) and Section 2.4(b) (the “ Sales-Based Contingent Purchase Price Payments ”) based upon cumulative Net Sales of the Product or any product or antibody made, produced, manufactured or sublicensed under the Asset License. The payments shall be determined in accordance with the following scale:

               (i) until the amount of cumulative Net Sales is equal to $ ^{* * *} , * * * percent (* * *%) of such Net Sales;

               (ii) for that portion of cumulative Net Sales equal to or greater than
$* * * but less than $* * * , * * * percent (* * *%) of such Net Sales; and

               (iii) for that portion of cumulative Net Sales equal to or greater than $* * * but less than $* * *, *** percent (***%) of such Net Sales; and

               (iv) for that portion of cumulative Net Sales equal to or greater than $* * *, * * * percent (* * *%) of such Net Sales.

          (b) Payment and Reports .

               (i)  Quarterly Payment Reports . Buyer shall deliver to Seller, within forty-five (45) days after the end of each calendar quarter, a written accounting of Net Sales during the prior calendar quarter. Such quarterly reports shall indicate (i) gross sales of Product, an itemization of deductions made to gross sales to reach Net Sales, Net Sales and cumulative Net Sales, and (ii) the calculation of payment amounts owed to Seller from such gross sales and Net Sales. Buyer shall deliver amounts due pursuant to Section 2.4(a) to Seller for each calendar quarter concurrently with the delivery to Seller of the accounting for such calendar quarter.

               (ii)  Audits . Buyer shall keep, and shall require its Affiliates and its and their sublicensees to keep, records of the latest three (3) years relating to gross sales and Net Sales. For the sole purpose of verifying the reports provided for in Section 2.4(b), Buyer further agrees to permit such records to be examined by an independent accounting firm selected by Seller at Seller’s cost and expense and in the location(s) where such records are maintained by Buyer and its Affiliates upon reasonable notice, during regular business hours and without unreasonable disruption to Buyer’s and its Affiliates’ operations. Unless Seller obtains the prior written consent of Buyer, which consent shall not be unreasonably withheld, such accounting firms must be selected from U.S. accounting firms that are AICPA registered accounting firms. Such audit shall not be performed more frequently than once per calendar year nor more frequently than once with respect to records covering any specific period of time. Seller shall provide a copy of the results (and backup) of such review promptly after Seller receives such results. If the review reflects an underpayment to Seller, Buyer shall promptly remit such underpayment to Seller, Together with a rate of interest equal to an annual percentage rate of nine percent (9%), provided , that if Buyer notifies Seller that Buyer disagrees with the determination of the underpayment amount and if thereafter the Parties are unable to agree in good faith as to such underpayment amount, then such matter shall be referred to a mutually agreed independent auditor or valuation expert for resolution, and the determination of such auditor or valuation expert shall be conclusive and binding on the parties. If the underpayment is equal to or greater than ten percent (10%) of the amount that was otherwise due, Seller shall be entitled to have Buyer pay all of the costs of such review, including the cost of the independent auditor.

          (c) Adjustments to Payments .

               (i) If, in any calendar quarter, sales of Follow-On Biological Products reach *** percent (***%) worldwide market share (calculated on a unit basis), then, the payment owed under Section 2.4 for Net Sales shall be decreased by *** percent (***%) for the remainder of the time period that payments are due pursuant to Section 2.4.

               (ii) On a country-by-country basis, Buyer may reduce the amount of any payments otherwise due to Seller under this Section 2.4 with respect to Net Sales in such country by up to ^{* * *} percent (* * *%) of any royalties or other amounts paid to Third Party(ies) to permit the Development or Commercialization of the Product (or any amounts paid to such Third Party(ies) in settlement of a claim of infringement by the Product).

          (d) Duration of Payments . The amounts payable under this Section 2.4 shall be paid on a country-by-country basis until the earlier of (i) seven (7) years following the first Commercial Sale of the Product in such country or (ii) expiration or discontinuation of the last to expire Valid Claim that Covers the Development or Commercialization of the Product in such country.

ARTICLE III

CLOSING

     3.1 Closing . Upon the terms and subject to the conditions of this Agreement, the Closing shall take place concurrently with the execution of this Agreement by the Parties hereto (the “ Closing Date ”). The Parties to this Agreement will exchange (or cause to be exchanged) at the Closing the funds, agreements, instruments, certificates and other documents, and do, or cause to be done, all of the things respectively required of each Party as specified in Sections 3.2(a) and 3.2(b)

     3.2 Transactions at Closing .

          (a) Seller’s Actions and Deliveries . At the Closing, Seller shall:

               (i) execute and deliver to Buyer this Agreement;

               (ii) execute and deliver to Buyer a bill of sale in the form attached hereto as Exhibit A ;

               (iii) execute and deliver to Buyer one or more patent assignments in the form attached hereto as Exhibit B ;

               (iv) execute and deliver such other instruments of conveyance as Buyer may reasonably request in order to effect the sale, transfer, conveyance, assignment and license to Buyer of valid ownership of the Acquired Assets;

               (v) deliver to Buyer, or otherwise put Buyer in possession and control of, all of the Acquired Assets of a tangible nature;

               (vi) execute and deliver to each other a cross-receipt evidencing the transactions referred to in this Section 3.2(a); and

               (vii) execute and deliver an Incumbency and Officer’s Certificate from each of Seller and Seller Parent in form and substance reasonably satisfactory to Buyer.

          (b) Buyer’s Actions and Deliveries . At the Closing Buyer shall:

               (i) execute and deliver to Sellers this Agreement;

               (ii) execute and deliver to Seller an instrument of assumption in the form attached hereto as Exhibit C ;

               (iii) execute and deliver such other instruments as Sellers may reasonably request in order to effect the assumption by Buyer of the Assumed Liabilities;

               (iv) pay to Seller, payable by wire transfer of immediately available funds to an account designated by Seller, the Execution Date Payment;

               (v) execute and deliver to each other a cross-receipt evidencing the transactions referred to in this Section 3.2(b); and

               (vi) execute and deliver an Incumbency and Officer’s Certificate from each of Buyer and Buyer Parent in form and substance reasonably satisfactory to Sellers.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER PARENT

     Each of the Sellers, jointly and severally, represents and warrants to Buyer that, except as set forth in the Disclosure Schedule, the statements contained in this Article IV are true and correct. The Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered sections and subsections contained in this Article IV. The disclosures in any section or subsection of the Disclosure Schedule shall qualify the corresponding section or subsection in this Article IV as well as any other section or subsection to which the nature of the disclosure made relates but only to the extent it is reasonably apparent from a reading of the disclosure that such disclosure is applicable to such other section and subsection. Nothing in the Disclosure Schedules is intended to broaden the scope of any representation, warranty or covenant of Sellers contained in this Agreement. The inclusion of any information in the Disclosure Schedules (or any update thereto) shall not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material to the Business, has resulted in or would result in a Material Adverse Effect or is outside the Ordinary Course of Business.

     4.1 Organization, Qualification and Corporate Power . Each of the Sellers is a corporation duly organized, validly existing and in corporate and tax good standing under the laws of the State of California. Seller has all requisite corporate power and authority to own, lease and operate, as applicable, the Acquired Assets.

     4.2 Authorization of Transaction . Each of the Sellers has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party and to perform its obligations hereunder and thereunder. The execution and delivery by each of the Sellers of this Agreement and the Ancillary Agreements to which it is a party and the performance by each of the Sellers of this Agreement and each Ancillary Agreement to which it is a party and the consummation by each of the Sellers of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of each of the respective Sellers. Each of this Agreement and the Ancillary Agreements has been duly and validly executed and delivered by each of Sellers that is a party thereto and constitutes a valid and binding obligation of Sellers, enforceable against each of the Sellers in accordance with its terms except as may be limited by the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

     4.3 Noncontravention . Except as disclosed on Schedule 4.3(c), neither the execution and delivery by Sellers of this Agreement or any of the Ancillary Agreements, nor the consummation by Sellers of the transactions contemplated hereby or thereby, does or will (a) conflict with or violate any provision of the Articles of Incorporation or by-laws of either of the Sellers, (b) require on the part of either of the Sellers any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which either of the Sellers is a party or by which either of the Sellers is bound or to which any of its assets is subject, (d) result in the imposition of any Lien upon any of the Acquired Assets or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Seller or any of its respective properties or assets.

     4.4 Absence of Certain Changes . Between December 31, 2006 and the date of this Agreement, there has not been with respect to the Product Line Operations:

          (a) any Material Adverse Effect, except that Sellers have reorganized and downsized their operations and have terminated the employment of all personnel working on the Product Line Operations and the Xenerex Technology except for one person, and Sellers have greatly reduced the amount of laboratory and research space used for the development of the Product Line Operations and the Xenerex Technology, resulting in a substantial slowdown in development efforts;

          (b) any incurrence, assumption or guarantee of any material Liability in the Ordinary Course of Business other than restructuring and other restructuring charges for

personnel and facilities incurred in connection with the downsizing described in Section 4.4(a); or

          (c) any material transaction, agreement or event except as described in Section 4.4(a) outside the Ordinary Course of Business.

     4.5 Taxes . There are no Liens for Taxes upon the Acquired Assets except those relating to Taxes that are not yet due and payable.

     4.6 Ownership and Condition of Assets .

          (a) Except with respect to Product Line Intellectual Property (which is subject to Section 4.7) and the Books and Records, Seller is the true, lawful and sole owner, and has good title to the Product and Seller’s rights in the Assigned Contracts (subject to the rights of each counterparty in such Assigned Contracts), free and clear of all Liens. Upon execution and delivery by Seller to Buyer of the instruments of conveyance referred to in Section 3.2, Buyer will become the true, lawful and sole owner of, and will receive good title to, the Product and Seller’s rights in the Assigned Contracts (subject to the rights of each counterparty in such Assigned Contracts), free and clear of all Liens.

          (b) Seller has the lawful right to use the Books and Records. Upon execution and delivery by Seller to Buyer of the instruments of conveyance referred to in Section 3.2, Buyer will have the lawful right to use the Books and Records.

          (c) The Acquired Assets, together with the assets licensed pursuant to the license set forth in Section 1.4 are sufficient for the conduct of the Product Line Operations except that Seller does not have any right to Commercialize any Product other than AVP-21D9. Each tangible Acquired Asset is free from material defects, has been maintained in accordance with normal industry practice, and is in good operating condition and repair (subject to normal wear and tear).

     4.7 Intellectual Property . Notwithstanding anything to the contrary set forth in this Agreement, the representations set forth in this Section 4.7 constitute Seller Parent’s and Seller’s sole representations with respect to Product Line Intellectual Property, except for the representations set forth in Sections 4.2, 4.3, 4.5, and 4.10.

          (a) Ownership; Sufficiency. The AVP Anthrax Patents constitute all patents and patent applications owned by Sellers necessary or useful for the exploitation of the Product and the conduct of the Product Line Operations. Section 4.7(a) of the Disclosure Schedule lists, with respect to the AVP Anthrax Patents, the applicable application or patent number, title, and jurisdiction in which filing was made, date of filing or issuance. Seller is the owner of and has good title to the AVP Anthrax Patents in existence as of the Closing Date, free and clear of any Lien. All assignments to the Seller of AVP Anthrax Patents in existence as of the Closing Date have been properly executed and recorded. All issuance, renewal, maintenance and other payments that are or have become due with respect thereto have been timely paid by or on behalf of Seller. The AVP Anthrax Patents will be owned by the Buyer immediately following the

Closing on the same terms and conditions as they were held by the Seller immediately prior to the Closing.

          (b) Prosecution Matters. Subject to 4.7(a), there are no inventorship challenges, opposition or nullity proceedings or interferences declared, commenced or provoked, or to the knowledge of Seller, threatened, with respect to any AVP Anthrax Patents in existence as of the Closing Date. In Application No. 11/041,763, the Seller copied claims from U.S. Patent Publication No. 20060258842, published on November 16, 2006 to Groen et al. and PCT Publication No. WO 2005/120567, published on December 22, 2005 to Groen et al. (IQ Corporation), which claims were subsequently cancelled. Seller and entities involved in the prosecution of the AVP Anthrax Patents (such as Seller’s attorneys, inventors, agents) have complied with their duty of candor and disclosure to the United States Patent and Trademark Office and any foreign patent office requiring such disclosure with respect to all patent applications filed by or on behalf of Seller and have made no material misrepresentation in such applications. To the extent that patent applications are pending, Seller may still be in the process submitting Information Disclosure Statements in the United States, or equivalent submissions in Foreign Patent Offices.

          (c) Protection Measures. Seller has taken reasonable measures to protect the proprietary nature of the Product Line Intellectual Property, and to maintain in confidence all trade secrets and information comprising a part thereof. To the Knowledge of the Seller, there has been no: (i) unauthorized disclosure of any third party proprietary information in the possession, custody or control of Seller, or (ii) breach of Seller’s security procedures wherein information has been disclosed to a third person.

          (d) Non-infringement of Third Party Rights. To the knowledge of the Seller, the Product Line Operations do not infringe or violate, or constitute a misappropriation of, any Patents and Know-How rights of any Third Party. Sellers have not received any complaint, claim or notice, or threat of any of the foregoing (including any notification that a license under any patent is or may be required. Sellers have provided or made available to Buyer copies of all complaints, claims, notices or threats concerning any alleged infringement by the Product, in its possession.

          (e) Infringement of Seller’s Rights. To the knowledge of Seller, no third party (including, without limitation, any current or former employee, founder, inventor of any Product Line Patent, or consultant to Seller) is infringing, violating or misappropriating any of the Product Line Intellectual Property. Sellers have provided or made available to Buyer copies of all complaints, claims, notices or threats concerning the infringement, violation or misappropriation of any Product Line Intellectual Property.

          (f) Outbound IP Agreements. Section 4.7(f) of the Disclosure Schedule identifies each license, covenant or other agreement pursuant to which Seller has assigned, transferred, licensed, distributed or otherwise granted any right or access to any person or entity, or covenanted not to assert any right, with respect to any past, existing or future Product Line Intellectual Property. Neither of the Sellers is a member of or party to any patent pool, industry standards body, trade association or other organization pursuant to the rules of which it is obligated to license any existing or future Product Line Intellectual Property to any person.

          (g) Inbound IP Agreements. Section 4.7(g) of the Disclosure Schedule identifies each agreement, contract, assignment or other instrument between Seller and a third party which are part of the Acquired Assets.

          (h) Employee and Inventor Assignments . Schedule 4.7(h) identifies each employee of Seller materially involved in the research or development of the Product, and any inventor of the AVP Anthrax Patents has executed a valid and binding written agreement expressly or in substance assigning to Seller all right, title and interest in any inventions and works of authorship, whether or not patentable, invented, created, developed, conceived and/or reduced to practice during the term of such employee’s employment and all Patents and Know-How rights therein.

          (i) Support and Funding . The U.S. Government may have certain rights to the AVP Anthrax Patents by virtue of one or more Grants Received. Except as set forth on Schedule 4.7(i) of the Disclosure Schedule, Seller has not received any direct support, funding, resources or assistance from any federal, state, local or foreign governmental or quasi-governmental agency or funding source in connection with the development or exploitation of the Product or conduct of the Product Line Operations or any facilities or equipment used in connection therewith.

     4.8 Biological Materials . To Seller’s Knowledge, the Biological Materials listed on Schedule 9.1(d) constitute all of the Biological Materials. To Sellers’ Knowledge, all Biological Materials in the possession of AppTec have been developed, produced and stored in accordance with Good Laboratory Practices as defined by the U.S. Food and Drug Administration (“GLP”).

     4.9 Contracts . Seller has made available or delivered to Buyer a complete and accurate copy of each Assigned Contract. The Assigned Contracts include all of the contracts and agreements to which Seller or any of its Affiliates is a party that relate primarily or exclusively to the Product Line Operations. Neither Seller nor any of its Affiliates is a party to or bound by any contract, agreement or arrangement (written or oral) that is material to the Product Line Operations, except for the Assigned Contracts. All of the Assigned Contracts are in full force and effect. All of the Assigned Contracts are valid and binding and are enforceable in accordance with their terms against Seller and, to Seller’s Knowledge, all other parties thereto. Except as set forth in Section 4.9 of the Disclosure Schedule, all of the Assigned Contracts are freely assignable to Buyer pursuant to this Agreement without the consent of any party thereto. To the knowledge of Seller, no condition exists or event has occurred as a result of action or inaction by Seller or any other person that, with notice or lapse of time or both, would constitute (a) default of any Assigned Contract by Seller, or any other party thereto or (b) a basis for force majeure or other claim of excusable delay or non-performance under any Assigned Contract against Seller or against any other party thereto.

     4.10 Litigation . There is no action, suit, litigation, proceeding, claim, governmental investigation or administrative action pending or, to Seller’s Knowledge, threatened directly or indirectly involving the Product, the Product Line Operations, the Acquired Assets, any Assigned Contract or the transactions contemplated hereby or by any of the Ancillary Agreements, which has had or would, individually or in the aggregate, reasonably be expected to cause a Material Adverse Effect.

     4.11 Permits . All permits, licenses, franchises or authorizations from any Governmental Entity that are required for the Product Line Operations are listed on Schedule 4.11 (collectively, the “ Applicable Permits ”) and are valid and in full force and effect and Seller is not in violation of or in default under any Applicable Permit. No suspension or cancellation of any such Applicable Permit has been threatened in writing.

     4.12 Legal Compliance . Seller is, and has since December 31, 2005 been, in material compliance with all applicable laws (including rules and regulations thereunder) of any Governmental Entity, relating to the Product Line Operations, the Acquired Assets and the use of the Acquired Assets.

     4.13 Regulatory Compliance .

          (a) Seller has delivered or made available to Buyer true, correct and complete copies of all material written communications between Seller, on the one hand, any applicable Medical Product Regulatory Authority on the other hand, relating to the Product, including copies of any pre-Investigational New Drug Application meeting packages submitted by Seller for the Product, and any similar state or foreign regulatory submission made by or on behalf of Seller, including all supplements and amendments thereto. There have been no meetings or oral discussions between Seller, on the one hand, any applicable Medical Product Regulatory Authority on the other hand, relating to the Product.

          (b) The conduct of the production and Development activities related to the Product Line Operations has been conducted in material compliance with current Good Manufacturing Practices and other applicable rules and regulations of the FDA. Buyer acknowledges and Seller represents that Product scale up has been outsourced to Third Parties. Sellers agree to require vendors to conduct studies to be performed under the U01 in accordance with Good Laboratory Practices.

          (c) Seller has not been and is not, and to Sellers Knowledge none of its subcontractors engaged in the Development or production of the product have been or is, subject to any adverse FDA inspection, finding of deficiency, finding of non-compliance, warning, investigation, penalty for corrective or remedial action or other compliance or enforcement action relating to Seller’s operations, the Product, or any of Seller’s other products.

          (d) Neither Seller nor any of Seller’s officers, employees or agents acting for Seller is subject to any pending or threatened investigation by (A) the FDA pursuant to its “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” policy set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any amendments thereto, (B) the Department of Health and Human Services Office of Inspector General, Department of Justice, or other Governmental Entity pursuant to the Federal Anti-Kickback Statute (42 U.S.C. §1320a-7(b)), or the Federal False Claims Act, or similar state or foreign law. Neither Seller nor any of Seller’s officers, employees or agents acting for Seller has committed any act, made any statement or failed to make any statement that would reasonably be expected to provide a basis for action under any of the statutes, regulations or policy referred to in the preceding sentence. Neither Seller nor any of Seller’s officers, employees or agents acting for Seller has been convicted of any crime or engaged in any conduct that would reasonably be expected to result in (A)

debarment under 21 U.S.C. §335a or any similar state or foreign law or (B) exclusion under 42 U.S.C. §1320a-7 or any similar state or foreign law.

     4.14 Environmental Matters .

          (a) Seller and the conduct of the Product Line Operations are and have been in compliance with applicable Environmental Laws, except for any failure to comply with Environmental Laws that would not reasonably be expected to result in a Material Adverse Effect.

          (b) There is no pending or, to the knowledge of Seller, threatened action, suit, notice of violation or judicial or administrative proceeding, investigation or claim relating to Environmental Matters, including Off-Site Liabilities or any violation of Environmental Law, involving the Product Line Operations, or any property currently, or, to the knowledge of Seller, formerly owned or operated by Seller in connection with the Product Line Operations.

     4.15 Specifications . The specifications included in Schedule 4.15 of the Disclosure Schedule (the “ Specifications ”) are the specifications that are used by Seller to produce AVP-21D9 at a 100 liter scale as of the date hereof, and the GMP Clinical Materials to be released by Apptec shall satisfy the Specifications.

     4.16 Clinical and Scientific Data.

          (a) To Sellers’ knowledge, Seller has made available to Buyer all available pre-clinical study data, including raw data and reports, created by Seller, or any third party on behalf of Seller relating to the Product (“Scientific Data”) and in Seller’s possession. Seller will following the Closing, continue to take commercially reasonable steps to make available or assist Buyer in obtaining access to all Scientific Data.

          (b) Seller either owns and has possession, or has the right to use and full rights of access to, all Scientific Data.

          (c) There have been no human clinical studies conducted in connection with the Product.

          (d) The Proposal is materially consistent with the Scientific Data.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT

     Buyer and Buyer Parent, as the case may be, represent and warrant to Seller as follows:

     5.1 Organization and Corporate Power . Buyer and Buyer Parent are corporations duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer and Buyer Parent have all requisite corporate power and authority to carry on the businesses in which they are engaged and to own and use the properties owned and used by them.

     5.2 Authorization of the Transaction . Buyer and Buyer Parent have all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform their respective obligations hereunder and thereunder. The execution and delivery by Buyer and Buyer Parent of this Agreement and the Ancillary Agreements and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Buyer and Buyer Parent. This Agreement and the Ancillary Agreements have been duly and validly executed and delivered by Buyer and Buyer Parent and constitute valid and binding obligations of Buyer and Buyer Parent enforceable against them in accordance with their respective terms.

     5.3 Noncontravention . Neither the execution and delivery by Buyer and Buyer Parent of this Agreement or the Ancillary Agreements, nor the consummation by Buyer and Buyer Parent of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Certificate of Incorporation or by-laws of Buyer or Buyer Parent, (b) require on the part of Buyer or Buyer Parent any filing with, or permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party any right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which Buyer or Buyer Parent is a party or by which it is bound or to which any of its assets is subject, except for (i) any conflict, breach, default, acceleration, termination, modification or cancellation which would not adversely affect the consummation of the transactions contemplated hereby or (ii) any notice, consent or waiver the absence of which would not reasonably be expected to adversely affect or delay the consummation of the transactions contemplated hereby, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Buyer, Buyer Parent or any of their respective properties or assets.

     5.4 Compliance with Applicable Law . Buyer conducts its business in compliance with all applicable laws, except for violations, if any, which would not, individually or in the aggregate, reasonably be expected to materially affect or delay the ability of Buyer to consummate the transactions contemplated hereby.

     5.5 Litigation . There is no material action, suit, litigation, proceeding, claim or investigation pending, or to the knowledge of Buyer, threatened that is reasonably likely to adversely affect or delay Buyer’s or Buyer Parent’s performance under this Agreement or the consummation of the transactions contemplated herein.

     5.6 Brokers’ Fees . Buyer does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

ARTICLE VI

COVENANTS; OTHER AGREEMENTS

     6.1 Proprietary Information . From and after the Closing, Sellers shall not disclose or make use of (except to pursue its rights, under this Agreement or the Ancillary Agreements), and shall use their best efforts to cause all of its Affiliates not to disclose or make use of, any knowledge, information or documents of a confidential nature or not generally known to the public with respect to Acquired Assets or Buyer or its business, except to the extent that such knowledge, information or documents shall have become public knowledge other than through improper disclosure by Seller or an Affiliate. Sellers shall enforce, for the benefit of Buyer, all confidentiality, invention assignments and similar agreements between either Seller or Seller Parent and any other party relating to the Acquired Assets. Except with respect to the Xenerex Technology not licensed or assets not sold under this Agreement, the Buyer shall be entitled to assume the control of any litigation, action, arbitration or proceeding in connection with the enforcement of any of the rights associated with the Acquired Assets at Buyer’s expense. Notwithstanding the foregoing or any other provision in this Agreement, Sellers may mar