Exhibit 10.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

by and among

SCIELE PHARMA, INC.,

SP ACQUISITION CORP.,

ALLIANT PHARMACEUTICALS, INC.,

THE SHAREHOLDERS OF ALLIANT PHARMACEUTICALS, INC.,

and

JOHN N. KAPOOR, as the Shareholder Representative

 

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TABLE OF CONTENTS

 

 

Page

ARTICLE I

 

Definitions

 

1

Section 1.1

 

Certain Definitions

 

1

Section 1.2

 

Other Definitions

 

9

ARTICLE II

 

THE MERGER

 

9

Section 2.1

 

The Merger

 

9

Section 2.2

 

Time and Place of Closing

 

10

Section 2.3

 

Effective Time

 

10

Section 2.4

 

Effects of Merger

 

10

Section 2.5

 

Articles of Incorporation and Bylaws

 

10

Section 2.6

 

Directors

 

10

Section 2.7

 

Officers

 

10

Section 2.8

 

Name

 

10

ARTICLE III

 

MERGER CONSIDERATION; ADJUSTMENTS

 

11

Section 3.1

 

Conversion of Company Common Stock

 

11

Section 3.2

 

Adjusted Merger Payment

 

11

Section 3.3

 

Distribution of Adjusted Merger Payment

 

11

Section 3.4

 

Statement of Closing Date Indebtedness

 

12

Section 3.5

 

Treatment of Company Stock Options

 

12

Section 3.6

 

Escrow Amount

 

12

Section 3.7

 

Initial Working Capital Adjustment

 

13

Section 3.8

 

Payment

 

13

Section 3.9

 

Post-Closing Working Capital Adjustment

 

13

 

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ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

14

Section 4.1

 

Organization

 

14

Section 4.2

 

Authorization

 

15

Section 4.3

 

Absence of Restrictions and Conflicts

 

16

Section 4.4

 

Required Consents

 

16

Section 4.5

 

Real Property

 

16

Section 4.6

 

Personal Property

 

17

Section 4.7

 

Title to Assets

 

17

Section 4.8

 

Inventory

 

17

Section 4.9

 

Financial Statements

 

18

Section 4.10

 

No Undisclosed Liabilities

 

18

Section 4.11

 

Absence of Certain Changes

 

18

Section 4.12

 

Legal Proceedings

 

18

Section 4.13

 

Compliance with Law

 

19

Section 4.14

 

Contracts

 

19

Section 4.15

 

Tax Returns; Taxes

 

21

Section 4.16

 

Officers, Employees and Independent Contractors

 

24

Section 4.17

 

Company Benefit Plans

 

24

Section 4.18

 

Labor Relations

 

27

Section 4.19

 

Insurance Policies

 

28

Section 4.20

 

Environmental, Health and Safety Matters

 

28

Section 4.21

 

Intellectual Property

 

29

 

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Section 4.22

 

Software

 

30

Section 4.23

 

Related Party Transactions

 

31

Section 4.24

 

Customer and Supplier Relations

 

31

Section 4.25

 

Accounts Receivable

 

31

Section 4.26

 

Licenses

 

31

Section 4.27

 

Ethical Practices with Governmental Entities

 

32

Section 4.28

 

Product Warranties

 

32

Section 4.29

 

Brokers, Finders and Investment Bankers

 

32

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

 

32

Section 5.1

 

Authorization and Validity of Agreement

 

32

Section 5.2

 

Absence of Restrictions and Conflicts

 

33

Section 5.3

 

Ownership of Equity

 

33

Section 5.4

 

Legal Proceedings

 

33

Section 5.5

 

Amounts Owed to Shareholders

 

33

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF PARENT

 

33

Section 6.1

 

Organization

 

33

Section 6.2

 

Authorization

 

34

Section 6.3

 

Absence of Restrictions and Conflicts

 

34

Section 6.4

 

Brokers

 

34

Section 6.5

 

Availability of Funds

 

34

ARTICLE VII

 

CERTAIN COVENANTS AND AGREEMENTS

 

35

Section 7.1

 

Conduct of Business by the Company

 

35

 

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Section 7.2

 

Inspection and Access to Information

 

37

Section 7.3

 

Notices of Certain Events

 

38

Section 7.4

 

Interim Financials

 

39

Section 7.5

 

No Solicitation of Transactions

 

39

Section 7.6

 

Reasonable Efforts; Further Assurances; Cooperation

 

39

Section 7.7

 

Public Announcements

 

40

Section 7.8

 

Employee Matters

 

40

Section 7.9

 

Transfer Taxes; Expenses

 

41

Section 7.10

 

Non-Competition

 

41

Section 7.11

 

Tax Matters

 

43

Section 7.12

 

Customer Visits

 

46

Section 7.13

 

Director and Officer Liability and Indemnification

 

46

Section 7.14

 

Accounts and Notes Receivable

 

46

Section 7.15

 

Release

 

47

Section 7.16

 

Termination of Certain Agreements

 

47

Section 7.17

 

HSR Act

 

47

Section 7.18

 

Additional Obligations and Performance Payments

 

48

ARTICLE VIII

 

CONDITIONS TO CLOSING

 

49

Section 8.1

 

Conditions to Each Party’s Obligations

 

49

Section 8.2

 

Conditions to Obligations of the Parent

 

49

Section 8.3

 

Conditions to Obligations of the Shareholders

 

50

ARTICLE IX

 

CLOSING

 

52

 

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Section 9.1

 

Closing Location

 

52

Section 9.2

 

Company and Shareholder Closing Deliveries

 

52

Section 9.3

 

Parent Closing Deliveries

 

52

ARTICLE X

 

TERMINATION

 

53

Section 10.1

 

Termination

 

53

Section 10.2

 

Specific Performance and Other Remedies

 

53

Section 10.3

 

Effect of Termination

 

54

ARTICLE XI

 

INDEMNIFICATION

 

54

Section 11.1

 

Indemnification Obligations of the Key Shareholders and the Company

 

54

Section 11.2

 

Indemnification Obligations of Shareholders

 

54

Section 11.3

 

Indemnification Obligations of the Parent

 

55

Section 11.4

 

Indemnification Exclusive Remedy

 

55

Section 11.5

 

Indemnification Procedure

 

55

Section 11.6

 

Survival Period

 

57

Section 11.7

 

Liability Limits

 

57

Section 11.8

 

Investigations

 

58

Section 11.9

 

Calculation of Losses

 

58

ARTICLE XII

 

MISCELLANEOUS PROVISIONS

 

58

Section 12.1

 

Shareholder Representative

 

58

Section 12.2

 

Notices

 

59

Section 12.3

 

Schedules and Exhibits

 

60

Section 12.4

 

Assignment; Successors in Interest

 

60

 

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Section 12.5

 

Captions

 

60

Section 12.6

 

Controlling Law

 

60

Section 12.7

 

Severability

 

61

Section 12.8

 

Counterparts

 

61

Section 12.9

 

No Third Party Beneficiaries

 

61

Section 12.10

 

Waiver; Amendment

 

61

Section 12.11

 

Integration

 

61

Section 12.12

 

Interpretation

 

61

Section 12.13

 

Cooperation Following the Closing

 

61

Section 12.14

 

Transaction Costs

 

62

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of April 24,
2007, is made and entered into by and among SCIELE PHARMA, INC., a Delaware
corporation (the “Parent”), SP ACQUISITION CORP., a Georgia corporation (the
“Merger Sub”), ALLIANT PHARMACEUTICALS, INC., a Georgia corporation (the
“Company”), the shareholders of the Company set forth on the signature pages
hereto (collectively the “Shareholders” and individually, a “Shareholder”),  and
John N. Kapoor, Ph.D., as representative of the Company and the Shareholders
(the “Shareholder Representative”).

RECITALS

WHEREAS, the Company is engaged in the business of marketing, selling and
developing pharmaceutical products (the “Business”);

WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub and
the Company have determined that it is advisable and in the best interests of
their respective corporations and their shareholders that Merger Sub be merged
with and into the Company in accordance with the Georgia Business Corporation
Code (the “GBCC”), and the terms of this Agreement, pursuant to which the
Company will be the surviving corporation and will remain a wholly owned
subsidiary of Parent (the “Merger”);

WHEREAS, prior to or concurrently with the execution hereof, pursuant to the
written consent of the Shareholders made in accordance with Section 14-2-1103 of
the GBCC, the requisite holders of the Company’s issued and outstanding shares
of voting and nonvoting common stock (the “Company Common Stock”) have approved
the Merger; and

WHEREAS, the parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger.

NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein contained, and upon and subject to the terms and
the conditions hereinafter set forth, the parties do hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1             Certain Definitions.  The following terms, as used
herein, have the  meanings set forth below:

“Affiliate” of any specified Person means any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person.

“Alternative Arrangements” means, with respect to any Losses, (i) any proceeds
received or receivable from insurance policies covering the damage, loss,
liability or expense that is the subject of the claim for indemnity, less any
increase in premiums resulting from any such insurance claim or (ii) any
proceeds actually received from third parties, through

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indemnification, counterclaim, reimbursement arrangement, contract or otherwise
in compensation for the subject matter of an indemnification claim by such
indemnitee.

“Applicable Benefit Laws” means all Laws applicable to any Company Benefit Plan
or ERISA Affiliate Plan.

“Business Day” means any day except Saturday, Sunday or any day on which banks
are generally not open for business in the City of New York, New York.

“CERCLA” means the United States Comprehensive Environmental Response,
Compensation and Liability Act.

“Closing Date Indebtedness” means any indebtedness of the Company with respect
to borrowed money or other long term indebtedness, including any interest
accrued thereon and prepayment, change of control or similar penalties and
expenses, as of the Closing Date.

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

“Company Benefit Plan” means each Employee Benefit Plan sponsored or maintained
or required to be sponsored or maintained at any time by the Company or to which
the Company makes or has made, or has or has had an obligation to make,
contributions at any time, or with respect to which the Company has any material
liability or material obligation.

“Company Common Stock” means the shares of common stock of the Company, no par
value per share.

“Company Contracts” means those Contracts to which the Company is a party.

“Company Intellectual Property” means any Intellectual Property that is owned by
or licensed to the Company.

“Company Licensed Software” means all Software licensed to the Company, other
than off the shelf software.

“Company Proprietary Software” means all Software owned by the Company.

“Company Registered Intellectual Property” means all of the Registered
Intellectual Property owned by, filed in the name of, or licensed to the
Company.

“Company Software” means the Company Licensed Software and the Company
Proprietary Software.

“Company Stock Option” means any option to acquire capital stock of the Company,
including any such option granted under any Company Benefit Plan.

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“Confidential Information” means any data or information concerning the Company
(including trade secrets), without regard to form, regarding (for example and
including) (a) business process models; (b) proprietary software; (c) research,
development, products, services, marketing, selling, business plans, budgets,
unpublished financial statements, licenses, prices, costs, Contracts, suppliers,
customers, and customer lists; (d) the identity, skills and compensation of
employees, contractors, and consultants; (e) specialized training; and
(f) discoveries, developments, trade secrets, processes, formulas, data, lists,
and all other works of authorship, mask works, ideas, concepts, know-how,
designs, and techniques, whether or not any of the foregoing is or are
patentable, copyrightable, or registrable under any intellectual property Laws
in the United States or elsewhere.  Notwithstanding the foregoing, no data or
information constitutes “Confidential Information” if such data or information
is publicly known through means that do not involve a breach by any Party of any
covenant or obligation set forth in this Agreement.

“Contract” means any contract, sub-contract, agreement, lease, license,
commitment, sale and purchase order, note, loan agreement or binding commitment
or instrument, whether oral or written, to which the Company is a party.

“Control” means, when used with respect to any specified Person, the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by Contract or otherwise.

“Customer” means a customer of the Company that paid the Company more than
$50,000 in the aggregate during the 24-month period ended December 31, 2006, or
a customer that is expected to pay the Company more than $50,000 in the
aggregate during the twelve (12)-month period ended December 31, 2007.

“Disclosure Schedules” means the Disclosure Schedules delivered by the Company
to Parent concurrently with the execution and delivery of this Agreement.

“Employee Benefit Plan” means, with respect to any Person, each plan, fund,
program, agreement, arrangement or scheme, including each plan, fund, program,
agreement, arrangement or scheme maintained or required to be maintained under
applicable Laws, that is at any time sponsored or maintained or required to be
sponsored or maintained by such Person or to which such Person makes or has
made, or has or has had an obligation to make, contributions providing benefits
to the current and former employees, directors, managers, officers, consultants,
independent contractors, contingent workers or leased employees of such Person
or the dependents of any of them (whether written or oral), including (a) each
deferred compensation, bonus, incentive compensation, pension, retirement,
employee stock ownership, stock purchase, stock option, profit sharing or
deferred profit sharing, stock appreciation, phantom stock plan and other equity
compensation plan, “welfare” plan (within the meaning of Section 3(1) of ERISA,
determined without regard to whether such plan is subject to ERISA), (b) each
“pension” plan (within the meaning of Section 3(2) of ERISA, determined without
regard to whether such plan is either subject to ERISA or is tax-qualified under
the Code), (c) each severance plan or agreement, and each other plan providing
health, vacation, supplemental unemployment benefit, hospitalization insurance,
medical, dental, disability, life insurance, death

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or survivor benefits, fringe benefits or legal benefits and (d) each other
employee benefit plan, fund, program, agreement or arrangement, but excluding
any plan (y) the terms of which are contained primarily in statutes, regulations
or rulings of a Governmental Entity, or (z) the funding of which is effected
primarily through a trust or other funding vehicle (including a book reserve
account), maintained directly or indirectly by a Governmental Entity.

“Employees” means all individuals employed by the Company as of the date hereof.

“Employment Agreement” means any employment contract, consulting agreement,
termination or severance agreement, salary continuation agreement, change of
control agreement or any other Contract, including offers for any of the above,
respecting the terms and conditions of employment or payment of compensation in
respect to any current or former officer or employee.

“Environmental Laws” means all Laws and common law relating to pollution or
protection of health, safety or the environment, including the Federal Water
Pollution Control Act (33 U.S.C. §1251 et seq.), Resource Conservation and
Recovery Act (42 U.S.C. §6901 et seq.), Safe Drinking Water Act (42 U.S.C.
§3000(f) et seq.), Toxic Substances Control Act (15 U.S.C. §2601 et seq.), Clean
Air Act (42 U.S.C. §7401 et seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. §9601 et seq.) and other similar
federal, state and local environmental statutes.

“Equity Plan” means the Alliant Pharmaceuticals 2006 Equity Incentive Plan,
dated July 1, 2006, as amended.

“ERISA” means the United States Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.

“ERISA Affiliate” means any Person that together with the Company would be
deemed a “single employer” within the meaning of Section 414 of the Code.

“ERISA Affiliate Plan” means each Employee Benefit Plan sponsored or maintained
or required to be sponsored or maintained at any time by any ERISA Affiliate, or
to which such ERISA Affiliate makes or has made, or has or has had an obligation
to make, contributions at any time, or with respect to which such ERISA
Affiliate has any liability or obligation.

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

“Financial Statements” means (a) the audited balance sheet of the Company as of
December 31, 2005, and the audited statements of income and cash flows of the
Company for the year then ended, (b) the unaudited balance sheet of the Company
as of December 31, 2006, and the unaudited statements of income and cash flow of
the Company for the year then ended, and (c) the unaudited balance sheet of the
Company as of March 31, 2007, and the unaudited statements of income and cash
flow of the Company for the quarter then ended.

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“FLSA” means the United States Fair Labor Standards Act.

“FMLA” means the United States Family and Medical Leave Act.

“GAAP” means United States generally accepted accounting principles.

“GMPs” shall mean Good Manufacturing Practices, Good Laboratory Practices and
Good Clinical Practices as defined in Parts 11, 50, 54, 56, 210, 211, 312, 314,
and 601 and of Title 21 of the Code of Federal Regulations, as amended from time
to time, or any successor thereto.

“Governmental Entity” means any (i) nation, state, commonwealth, county, city,
town, village, district, or other jurisdiction of any nature, (ii) federal,
state, local, municipal, foreign, or other government, (iii) federal, state,
local or foreign governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court or tribunal,
e.g. the FDA and Office of Medical Policy, Division of Drug Marketing,
Advertising, and Communications), (iv) multi-national or supra-national
organization or body with jurisdiction over the Parties, (v) body exercising, or
entitled or purporting to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power, including any
court or arbitrator, (vi) self-regulatory organization to which a Party has
submitted or (vii) official of any of the foregoing.

“Hazardous Materials” means any pollutant, chemical, substance and any toxic,
infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical,
or chemical compound, or hazardous substance, material or waste, whether solid,
liquid or gas, that is subject to regulation, control or remediation under any
Environmental Laws, including any quantity of friable asbestos, urea
formaldehyde, polychlorinated biphenyls, radon gas, crude oil or any fraction
thereof, all forms of natural gas, petroleum products or by-products or
derivatives.

“HSR Act” means the United States Hart-Scott-Rodino Antitrust Improvements Act
of 1976.

“Indemnified Party” means a Parent Indemnified Party or a Shareholder
Indemnified Party.

“Initial Working Capital Adjustment” means the variance in the calculation of
Net Working Capital between the Target Working Capital and the Net Working
Capital on the Initial Working Capital Schedule.

“Intellectual Property” means any or all of the following and all rights,
arising out of or associated therewith: (a) all United States, international and
foreign patents and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof;
(b) all inventions (whether patentable or not), invention disclosures,
improvements, proprietary information, know-how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing
throughout the world; (c) all copyrights, copyright registrations and
applications therefor, and all other rights corresponding thereto throughout the
world; (d) NDAs, (e) all internet uniform resource locators,

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domain names, trade names, logos, slogans, designs, common law trademarks and
service marks, trademark and service mark registrations and applications
therefor throughout the world; and (f) all databases and data collections and
all rights therein throughout the world.

“Key Shareholders” means Mark Pugh, Michael Stresser, Arthur Deas, John N.
Kapoor Trust dated 9/20/89, and Kapoor Children’s 1992 Trust.

“Knowledge” means, with respect to the Company, (i) all facts known by Mark
Pugh, Michael Stresser, William Bucher, and Arthur Deas, following reasonable
inquiry and diligence with respect to the matters at hand, and (ii) the actual
and specific knowledge of John N. Kapoor.

“Labor Laws” means all Laws governing or concerning labor relations, unions and
collective bargaining, conditions of employment, employee classification,
employment discrimination and harassment, wages, hours or occupational safety
and health, including (as amended and as in effect from time to time) ERISA, the
United States Immigration Reform and Control Act of 1986, the United States
National Labor Relations Act, the United States Civil Rights Acts of 1866 and
1964, the United States Equal Pay Act, United States Age Discrimination in
Employment Act, United States Americans with Disabilities Act, FMLA, WARN, OSHA,
the United States Davis Bacon Act, the United States Walsh-Healy Act, the United
States Service Contract Act, United States Executive Order 11246, FLSA and the
United States Rehabilitation Act of 1973.

“Laws” means all laws, statutes, common law, rules, codes, regulations
(including, without limitation, GMPs), restrictions, ordinances, orders,
decrees, approvals, directives, judgments, rulings, injunctions, writs and
awards of, or issued or entered by, all Governmental Entities.

“Leased Real Property” means the parcels of real property of which the Company
is the lessee or sublessee (together with all fixtures and improvements
thereon).

“Licenses” means all notifications, licenses, permits (including environmental,
construction and operation permits), franchises, certificates, approvals,
exemptions, classifications, registrations and other similar documents and
authorizations issued by any Governmental Entity, and applications therefor.

“Liens” means all mortgages, liens, pledges, security interests, charges,
claims, restrictions and encumbrances of any nature whatsoever.

“Loss” or “Losses” shall mean any and all claims, obligations, losses,
liabilities,  fines, costs, damages, penalties and expenses (including amounts
paid in settlement, costs of investigation and reasonable attorneys’ fees and
expenses), but not including speculative, punitive, indirect, incidental, or
consequential damages or damages relating to business interruption or lost
profits (even if advised of the possibility thereof) (collectively,
“Extraordinary Damages”) except to the extent such Extraordinary  Damages are
paid or payable

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to third parties.  All Losses shall be net of any other recoveries realized by
an indemnitee and its Affiliates pursuant to Alternative Arrangements.

“Material Adverse Effect” means any change, event, effect or occurrence after
the date hereof (when taken together with all other changes, events, effects or
occurrences after the date hereof) that has had or is reasonably likely to have
a materially adverse effect on the financial condition, results of operations,
assets or liabilities (including contingent liabilities) of the Company.  A
Material Adverse Effect shall also include any change, event or occurrence that
shall have occurred that (when taken together with all other states of facts,
changes, events, effects or occurrences that have occurred) has prevented the
performance by the Company or the Shareholders of their obligations hereunder or
the consummation of the transactions contemplated hereby.  Notwithstanding the
foregoing, in determining whether there has been a Material Adverse Effect, any
adverse change, event, effect or occurrence principally attributable to any of
the following shall be disregarded:  (i) general economic, business, industry or
financial market conditions (whether in the United States or internationally);
(ii) the taking of any action required or permitted by this Agreement or the
Seller Ancillary Documents; (iii) the announcement or pendency of the
transactions contemplated hereby, (iv) the breach of this Agreement or any
Parent Ancillary Documents by Parent, (v) any changes in accounting rules,
including GAAP; or (vi) any adverse change in or effect on the business of the
Company that is cured by or on behalf of the Company before the earlier of the
Closing Date and termination of this Agreement as set forth in Article IX.

“NDAs” means all new drug applications, abbreviated new drug applications and
other registrations and approvals of any Governmental Entity associated with the
sale of pharmaceutical products.

“Net Working Capital” means the current assets of the Company less the current
liabilities of the Company, as reflected on the Working Capital Schedule
prepared in accordance with GAAP, and to the extent consistent therewith, on a
basis consistent with the methodologies, practices, estimation techniques,
assumptions and principles of the Company, provided, however, that “current
liabilities” shall exclude (A) all amounts, fees and expenses payable in
accordance with Section 3.2(a) and including any related accruals or reserves
therefor, and (B) all income Tax obligations and liabilities, including deferred
income Tax items, and (C) Closing Date Indebtedness.  An example of the Net
Working Capital calculated from the Company’s December 31, 2006 balance sheet is
attached hereto as Schedule 1.1.

“Noncompete Business” means pharmaceutical products for the following
therapeutic classes and/or treatment indications, as applicable: reduction of
inflammation treated by prednisolone-based products; short-acting treatment of
attention deficit/hyperactivity disorder (ADHD); pediculosis; and congestion and
cough resulting from allergy and the common cold.

“Noncompete Period” means the period beginning on the Closing Date and
continuing for a period of three (3) years from the Closing Date.

“Option Releases” has the meaning set forth in Section 7.8(a).

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“OSHA” means the United States Occupational Safety and Health Administration.

“Party” or “Parties” means, individually, the Parent, the Company, each
Shareholder and the Shareholder Representative and, collectively, the Parent,
the Company, the Shareholders and the Shareholder Representative.

“Permitted Liens” means (a) Liens for Taxes not yet due and payable or being
contested in good faith, (b) Liens of carriers, warehousemen, mechanics,
materialmen and repairmen incurred in the ordinary course of business consistent
with past practice and not yet delinquent, and (c) Liens on assets which are
leased and Intellectual Property which is licensed.

“Person” means any individual, corporation, partnership, joint venture, limited
liability company, trust, unincorporated organization or Governmental Entity.

“Product” means the Company’s proprietary pharmaceutical product Rondec-DM.

“Parent Ancillary Documents” means any certificate, agreement, document or other
instrument, other than this Agreement, to be executed and delivered by the
Parent in connection with the transactions contemplated hereby, including,
without limitation, the Escrow Agreement.

“Parent Indemnified Parties” means the Parent and its Affiliates (including,
after the Closing, the Company), their respective officers, directors,
employees, agents and representatives and the heirs, executors, successors and
assigns of any of the foregoing.

“Pro Rata Share” means the percentage of Company Common Stock held by a
Shareholder in the Company as of the Closing Date.

“Receivables” means the Company’s accounts receivable, notes receivable and
other receivables as of the close of business on the Closing Date.

“Reference Balance Sheet” means the audited balance sheet of the Company at
December 31, 2006.

“Registered Intellectual Property” means all United States and international:
(a) patents and patent applications (including provisional applications);
(b) registered trademarks and service marks, applications to register trademarks
and service marks, intent-to-use applications, or other registrations or
applications related to trademarks and service marks; (c) registered copyrights
and applications for copyright registration; (d) domain name registrations;
(e) NDAs, and (f) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued, filed
with or recorded with any Governmental Entity.

“Release” means, with respect to any Hazardous Material, any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or

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disposing into any surface or ground water, drinking water supply, soil, surface
or subsurface strata or medium or the ambient air.

“Seller Ancillary Documents” means any certificate, agreement, document or other
instrument, other than this Agreement, to be executed and delivered by the
Company, the Shareholders or any Affiliate of the Shareholders in connection
with the transactions contemplated hereby, including, without limitation the
Escrow Agreement.

“Shareholder Indemnified Parties” means the Shareholders and their respective
heirs, executors, successors and assigns.

“Software” means any computer software program, together with any error
corrections, updates, modifications or enhancements thereto, in both
machine-readable form and human-readable form, including all comments and any
procedural code.

“Supplier” means any supplier of goods or services to which the Company paid
more than $50,000 in the aggregate during the 24-month period ended December 31,
2006, or expects to pay more than $50,000 in the aggregate during the twelve
(12)-month period ended December 31, 2007.

“Target Working Capital” means an amount equal to negative $6,500,000.

“Tax” or “Taxes” means all taxes, assessments, duties, fees, levies and other
charges of a Governmental Entity, including income, franchise, capital stock,
real property, personal property, tangible, withholding, employment, payroll,
social security, social contribution, unemployment compensation, disability,
transfer, sales, use, excise, gross receipts, value-added and all other taxes of
any kind for which the Company or the Parent may have any liability imposed by
any Governmental Entity, whether disputed or not, and any related charges,
interest or penalties imposed by any Governmental Entity.

“Tax Return” means any report, return, declaration or other information
statement relating to Taxes required to be supplied to a Governmental Entity,
including any schedule or attachment thereto, and including any amendment
thereof.

“Termination Date” means the date prior to the Closing when this Agreement is
terminated in accordance with Article X.

“Territory” means the United States.

“Treasury Regulations” means the temporary and final income tax regulations,
promulgated under the Code.

“WARN” means the United States Worker Adjustment and Retraining Notification
Act, as amended and as in effect from time to time.

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“Working Capital Schedule” means a statement of the current assets of the
Company and the current liabilities of the Company as of the close of business
on the Closing Date.

Section 1.2             Other Definitions.  Terms not defined in Section 1.1
shall have the meaning ascribed in the body of this Agreement.  All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.

ARTICLE II
THE MERGER

Section 2.1             The Merger.  Upon the terms and subject to the
conditions hereof, and in accordance with the GBCC, at the Effective Time, (a)
Merger Sub shall be merged with and into the Company, (b) the separate corporate
existence of Merger Sub shall cease, and (c) the Company shall continue as the
surviving corporation (the “Surviving Corporation”) in the Merger under the laws
of the State of Georgia.

Section 2.2             Time and Place of Closing.  Subject to the terms and
conditions of this Agreement, the Closing of the transactions contemplated by
this Agreement (the “Closing”) shall take place at 10:00 a.m. local time on (a)
the third business day following the date on which all of the conditions to the
obligations of the parties set forth in Article VIII have been satisfied or
waived as provided therein, or (b) at such other time, date or place as the
Company and Parent may agree in writing.  The date on which the Closing occurs
is referred to herein as the “Closing Date.”

Section 2.3             Effective Time.  Simultaneously with the Closing, the
parties hereto shall file a certificate of merger (or other appropriate
documentation) with the Georgia Secretary of State in such form as required by,
and executed in accordance with, the relevant provisions of the GBCC and
acceptable to the parties hereto (the “Certificate of Merger”).  The Merger
shall become effective at the time of filing of the Certificate of Merger, or at
such later time which the parties hereto shall have agreed upon and designated
in such filing as the effective time of the Merger (the “Effective Time”).

Section 2.4             Effects of Merger.  The Merger shall, from and after the
Effective Time, have the effects set forth in the GBCC.  Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
properties, rights, privileges, powers, immunities and franchises of the Merger
Sub and the Company shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Merger Sub and the Company shall become the debts,
liabilities and duties of the Surviving Corporation.  If at any time after the
Effective Time, any further action is deemed necessary or desirable to carry out
the purposes of this Agreement, the parties hereto agree that the Surviving
Corporation and its proper officers and directors shall be authorized to take,
and shall take, any and all such action.

Section 2.5             Articles of Incorporation and Bylaws.  At the Effective
Time, the Articles of Incorporation and the Bylaws of the Company shall become
the Articles of Incorporation and the Bylaws of the Surviving Corporation.

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Section 2.6             Directors.  The directors of Merger Sub shall be the
directors of the Surviving Corporation until their earlier death, resignation or
removal in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation.

Section 2.7             Officers.  The officers of Merger Sub shall be the
officers of the Surviving Corporation until their earlier death, resignation or
removal in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation.

Section 2.8             Name.  The name of the Surviving Corporation shall be
Alliant Pharmaceuticals, Inc.

ARTICLE III
MERGER CONSIDERATION; ADJUSTMENTS

Section 3.1             Conversion of Company Common Stock.  At the Effective
Time, by virtue of the Merger and without any further action on the part of the
Parent, Merger Sub, the Company or the Shareholders, all issued and outstanding
shares of the Company Common Stock and any other equity security of the Company
(including preferred stock, options, warrants or debt convertible into stock,
options or warrants) shall be cancelled and retired and shall cease to exist,
and shall be converted into the right to receive, cash in an amount equal to
$122,250,000 (the “Merger Payment”), subject to adjustment as provided in
Section 3.2 hereof (as so adjusted, the “Adjusted Merger Payment”).

Section 3.2             Adjusted Merger Payment.  At the Effective Time, the
Parent shall pay or cause to be paid to the Shareholder Representative the
Merger Payment (for distribution to each Shareholder based on such Shareholder’s
Pro Rata Share):

(a)           minus the amount, if any, of the Closing Date Indebtedness, as set
forth in the Closing Date Indebtedness Statement;

(b)           minus an amount equal to $12,500,000 (the “Escrow Amount”)
deposited with LaSalle Bank (the “Escrow Agent”), to be held in escrow as
further provided in Section 3.6 below;

(c)           minus the amounts payable to the holders of Company Stock Options
in accordance with the provisions of Section 3.5 below; and

(d)           plus or minus any Initial Working Capital Adjustment in accordance
with the provisions of Section 3.7 below; provided, however, that any positive
Working Capital Adjustment hereunder shall be capped at an amount equal to
$1,000,000.

Section 3.3             Distribution of Adjusted Merger Payment.  At the
Closing, the Shareholders shall receive the Adjusted Merger Payment for the
Company Common Stock promptly upon surrender to Parent by the Shareholder
Representative of the certificate or certificates evidencing such outstanding
Company Common Stock, duly endorsed in blank or accompanied by duly executed
stock transfer powers.  In any event, notwithstanding whether such certificates
representing all of the Company Common Stock have been so surrendered, (i)

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no dividend payable to holders of record of stock of the Surviving Corporation
shall be paid to the holder of such outstanding certificate of Company Common
Stock and (ii) the holder of such outstanding certificate of Company Common
Stock shall not have any voting or other rights in the Surviving Corporation.

Section 3.4             Statement of Closing Date Indebtedness.  Not less than
two (2) Business Days prior to the Closing Date, the Company shall deliver to
the Parent a statement (the “Closing Date Indebtedness Statement”), signed by
the Chief Financial Officer of the Company, which sets forth, by creditor, the
aggregate amount of the Closing Date Indebtedness.  Copies of the Payoff
Letters, delivered in accordance with Section 8.2(f) hereof, shall be attached
to the Closing Date Indebtedness Statement.

Section 3.5             Treatment of Company Stock Options.

(a)           At the Effective Time, by virtue of the Merger and without any
further action on the part of the Parent, Merger Sub, the Company or the
Shareholders, each Company Stock Option outstanding immediately prior to the
Effective Time shall be canceled and retired and shall cease to exist, in
exchange for a cash payment by the Company payable on such date of an amount
equal to (i) the excess, if any, of (A) $6.50 per share of Company Common Stock
over (B) the exercise price per share of Company Common Stock subject to such
Company Stock Option, multiplied by (ii) the number of shares of Company Common
Stock for which such Company Stock Option shall not theretofore have been
exercised.

(b)           All amounts payable pursuant to this Section 3.5 shall be subject
to any required withholding of Taxes and shall be paid without interest.  The
Company shall use its commercially reasonable efforts to obtain all consents of
the holders of the Company Stock Options as shall be necessary to effectuate the
foregoing.

(c)           The Company’s board of directors shall, prior to the Effective
Time, adopt such resolutions or take such other actions as are required so that
the Equity Plan shall terminate as of the Effective Time, and the provisions in
any other benefit plan providing for the issuance, transfer or grant of any
capital stock of the Company or any interest in respect of any capital stock of
the Company shall be deleted as of the Effective Time, and to ensure that
following the Effective Time no holder of a Company Stock Option or any
participant in any Company Benefit Plan shall have any right thereunder to
acquire any capital stock of the Company, the Surviving Corporation or the
Parent.

(d)           The Parties acknowledge that it shall be a condition precedent to
delivery of the cash payment contemplated by subsection (a) above to any holder
of Company Stock Options, that such holder shall have delivered an Option
Release, and Parent shall be entitled to withhold payment to any such Company
Stock Option holder until such Option Release has been given.

Section 3.6             Escrow Amount.  The Escrow Amount shall be deposited
with the Escrow Agent into an interest-bearing escrow account.  The Escrow Agent
shall hold the aggregate

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Escrow Amount in accordance with the terms and conditions of an escrow
agreement, by and among the Parent, the Shareholder Representative and the
Escrow Agent, in substantially the form attached hereto as Exhibit 3.6 (the
“Escrow Agreement”).  The Escrow Amount shall remain in escrow following the
Closing for disbursement in accordance with the working capital adjustment set
forth below and to cover any indemnification claims of Parent, in each case in
accordance with the terms of the Escrow Agreement, until: (i) twelve (12) months
from the Closing Date, at which time 50% of the remaining and undisputed balance
of the Escrow Amount (inclusive of any investment earnings thereon) shall be
released to the Shareholder Representative, and (ii) the remaining and
undisputed balance of the Escrow Amount (inclusive of any investment earnings
thereon) shall be released to the Shareholder Representative on the date which
is eighteen (18) months from the date of Closing (the “Escrow Termination
Date”).

Section 3.7             Initial Working Capital Adjustment.  At least four (4)
Business Days prior to the Closing Date, the Company shall deliver to the Parent
a certificate, executed by the Company, setting forth a good faith calculation
of its estimate of Net Working Capital (the “Initial Working Capital Schedule”)
and a determination of the Adjusted Merger Payment, which shall be calculated in
accordance with Section 3.2.  The Parent shall have the right to review and
comment upon such Initial Working Capital Schedule, and the Company shall
provide Parent and its representatives reasonable access to all books, records,
and employees of the Company for purposes consistent therewith.

Section 3.8             Payment.  All payments required under this Article III
or any other provision hereof shall be made in cash by wire transfer of
immediately available funds to such bank account as shall be designated in
writing by the Parent or the Shareholder Representative, as applicable.

Section 3.9             Post-Closing Working Capital Adjustment.

(a)           Within ninety (90) days following the Closing Date, the Parent
shall prepare and deliver to the Shareholder Representative a schedule (the
“Parent Working Capital Schedule”) setting forth its good faith calculation of
the Net Working Capital.  The Parent Working Capital Schedule shall be prepared
in accordance with GAAP and the calculation of the Initial Working Capital
Schedule.

(b)           The Shareholder Representative shall have thirty (30) days
following receipt of the Parent Working Capital Schedule delivered pursuant to
Section 3.9(a) during which to notify the Parent of any dispute of any item
contained therein (the “Objection Notice”), which notice shall set forth in
reasonable detail the basis for such dispute.  The Parent and the Shareholder
Representative shall cooperate in good faith to resolve any such dispute as
promptly as practicable, and upon such resolution, the Working Capital Schedule
shall be prepared in accordance with the agreement of the Parent and the
Shareholder Representative.  In the event the Shareholder Representative does
not notify the Parent of any such dispute within such thirty (30)-day period or
notifies the Parent within such period that it does not dispute any item
contained therein, the Parent Working Capital Schedule delivered pursuant to
Section 3.9(a) and the

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Parent’s calculation of the Working Capital Schedule, shall be final and binding
upon the Parties.

(c)           In the event the Parent and the Shareholder Representative are
unable to resolve any dispute regarding the Parent Working Capital Schedule
delivered pursuant to Section 3.9(a) within thirty (30) days following the
Parent’s receipt of notice of such dispute, such dispute shall be submitted to,
and all issues having a bearing on such dispute shall be resolved by BDO
Seidman, LLP, a nationally recognized accounting firm (the “Accounting
Referee”).  Within fifteen (15) Business Days of the selection of the Accounting
Referee, both the Shareholder Representative and Parent shall submit a
calculation of Net Working Capital and any supporting documentation to the
Accounting Referee.  Within twenty (20) Business Days of the timely receipt of
the later of such submissions, the Accounting Referee shall choose the one of
the two submissions that most accurately reflects what the actual Working
Capital Schedule should be and that submission shall establish the adjustment to
the Merger Payment.  If only one of the parties makes a timely submission, then
that submission shall establish the adjustment to the Merger Payment.  The
Accounting Referee’s determination of the Working Capital Schedule (the “Final
Working Capital Schedule”) shall be final and binding on the Parties.  To the
extent any facts and circumstances that constitute a breach of any
representation or warranty contained in Article IV or V also constitute an
adjustment that is reflected in the Final Working Capital Schedule, the Parent
shall not be entitled to an additional remedy under Article XI to the extent of
the adjustment in the Final Working Capital Schedule. The fees, costs and
expenses of the Accounting Referee shall be shared equally by (A) the
Shareholder Representative (on behalf of the Shareholders) on the one hand and
(B) the Parent on the other hand, which such amount in the case of (A) shall be
paid out of the Escrow Amount at the direction of the Shareholder
Representative.

(d)           If the Net Working Capital as finally determined in the Final
Working Capital Schedule pursuant to Section 3.9(c) is greater than that
reflected in the Initial Working Capital Schedule, then Parent shall promptly
(but in any event within five (5) Business Days of the final determination
thereof) pay to the Shareholder Representative such excess; provided, however,
that the total positive adjustment pursuant to this subsection (d) and the
Initial Working Capital Schedule delivered pursuant to Section 3.7 shall not
exceed $1,000,000 in the aggregate.  If the Net Working Capital as finally
determined in the Final Working Capital Schedule pursuant to Section 3.9(c)
above is less than the amount shown in the Initial Working Capital Schedule,
then the Shareholder Representative shall promptly (but in any event within five
(5) Business Days of the final determination thereof) cause to be paid to the
Parent from the Escrow Amount an amount equal to such shortfall in accordance
with Section 3.8.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY

Except as set forth on the Disclosure Schedules, the Company represents and
warrants to the Parent and Merger Sub that, as of the date hereof:

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Section 4.1             Organization.

(a)           The Company is a corporation duly formed and validly existing
under the Laws of the State of Georgia and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.  The Company is duly qualified or registered as a
foreign corporation to transact business under the Laws of each jurisdiction
where the character of its activities or the location of the properties owned or
leased by it requires such qualification or registration.  Schedule 4.1(a)
contains a true, correct and complete list of the jurisdictions in which the
Company is qualified or registered and in good standing to do business as a
foreign corporation.  The Company has heretofore made available to the Parent
true, correct and complete copies of its articles of incorporation and bylaws as
currently in effect and its corporate record books with respect to actions taken
by its shareholders and board of directors

(b)           The Company does not own, directly or indirectly, any capital
stock or other equity, securities or interests in any other corporation or in
any limited liability company, partnership, joint venture or other Person.

(c)           The authorized capital stock of the Company consists of 40,000,000
shares of common stock, no par value per share, of which: (i) 30,000,000 shares
are voting common stock, 15,172,452 of which are issued and outstanding, and
(ii) 10,000,000 shares are nonvoting common stock, 15,500 shares of which are
issued and outstanding.  Schedule 4.1(c) accurately and completely sets forth a
list of the number and class of shares of capital stock of the Company held by
each of the Shareholders, who collectively own all of the issued and outstanding
shares of capital stock of the Company.  All of the issued and outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable.  Each Shareholder has full and
exclusive power, right and authority to vote all of the shares of capital stock
owned by it, and no Shareholder is bound by any agreement affecting or relating
to its right to transfer or vote such shares.  Except as set forth on
Schedule 4.1(c), there are no outstanding options, warrants, conversion rights,
subscriptions or other rights entitling any Person to acquire or receive, or
requiring the Company to issue, any shares of its capital stock or securities
convertible into, or exchangeable for, such shares of capital stock.  There are
no outstanding Contracts of the Company or any Shareholder or any other Person
to purchase, redeem, or otherwise acquire any of the shares of capital stock of
the Company or securities or obligations of any kind convertible into any shares
of capital stock of the Company.  There are no dividends which have accrued or
been declared but are unpaid on the capital stock of the Company.

(d)           Except for the Business, the Company is not engaged in any other
business or commercial activity.

Section 4.2             Authorization.  The Company has full corporate power and
authority to execute and deliver this Agreement and the Seller Ancillary
Documents and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby

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and thereby.  The execution and delivery of this Agreement and the Seller
Ancillary Documents by the Company and the performance by the Company of its
obligations hereunder and thereunder and the consummation of the transactions
provided for herein and therein (including, without limitation, the Merger) have
been duly and validly authorized by all necessary corporate action on the part
of the Company.  This Agreement has been, and the Seller Ancillary Documents
shall be as of the Closing Date, duly executed and delivered by the Company and
do or shall, as the case may be, constitute the valid and binding agreements of
the Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which affect
the enforcement of creditors’ rights generally and by equitable principles.

Section 4.3             Absence of Restrictions and Conflicts.  The execution,
delivery and performance by the Company of this Agreement and the Seller
Ancillary Documents, as applicable, the consummation of the transactions
contemplated hereby and thereby and the fulfillment of and compliance with the
terms and conditions hereof and thereof do not or shall not (as the case may
be), with the passing of time or the giving of notice or both, (a) contravene or
conflict with any term or provision of the articles of incorporation or bylaws
of the Company, (b) except as indicated on Schedule 4.3, violate or conflict
with, constitute a breach of or default under, result in the loss of any benefit
under, permit the acceleration of any obligation under or create in any party
the right to terminate, modify or cancel any Contract to which the Company is a
party, (c) contravene or conflict with any judgment, decree or order of any
Governmental Entity to which the Company is a party or by which the Company or
any of its properties are bound, (d) contravene or conflict with any Law or
arbitration award applicable to the Company, or the Business, or (e) result in
the creation or imposition of any Lien on any property or asset of the Company.

Section 4.4             Required Consents.  Schedule 4.4 sets forth each action,
consent, approval, notification, waiver, authorization, order or filing (each, a
“Required Consent” and collectively, the “Required Consents”) under any Law,
License or Contract to which the Company is or any of the Shareholders are a
party that is necessary with respect to the execution, delivery and performance
of this Agreement or the Seller Ancillary Documents to avoid a breach or
violation of, or giving rise to any right of termination, cancellation or
acceleration of any right or obligation or to a loss of any benefit under any
such Law, License or Contract.  Except as may be required by the HSR Act or as
set forth on Schedule 4.4, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
with respect to the Company or any of the Shareholders in connection with the
execution, delivery or performance of this Agreement or the Seller Ancillary
Documents.

Section 4.5             Real Property.

(a)           The Company does not own any real property.

(b)           Schedule 4.5(b) lists any Leased Real Property.  Except as set
forth on Schedule 4.5(b) the leases with respect to the Leased Real Property are
in full force and effect and, subject to application of any bankruptcy or
creditor’s rights laws, are valid,

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binding and enforceable against the parties thereto in accordance with their
respective terms. Copies of the leases with respect thereto have been provided
to Parent.

(c)           Except for the Permitted Liens, no Leased Real Property is subject
to any Liens arranged by or resulting from the action or inaction of the
Company, in favor of any Person.

(d)           Except as set forth on Schedule 4.5(d), the improvements and
fixtures on the Leased Real Property are in good operating condition for the
purposes for which they are presently being used and in a state of reasonable
maintenance and repair, ordinary wear and tear excepted, and are reasonably
adequate and suitable for the purposes for which they are presently being used. 
There is no condemnation, expropriation or similar proceeding pending or, to the
Knowledge of the Company, threatened against any of the Leased Real Property or
any improvement thereon.  The Leased Real Property constitutes all of the real
property utilized by the Company.

Section 4.6             Personal Property.  All equipment and other items of
tangible personal property and assets of the Company (a) are free of defects and
in good operating condition for the purposes for which they are presently being
used and in a state of reasonable maintenance and repair, ordinary wear and tear
excepted and (b) were acquired and are usable in the regular and ordinary course
of business.  Except for laptop computers provided to employees, inventory, and
as set forth on Schedule 4.5(d), all tangible personal property and assets of
the Company (whether owned, leased or licensed) are located at the Leased Real
Property.  No Person other than the Company owns any equipment or other tangible
personal property or asset that is necessary to the operation of the Business,
except for the leased equipment, property or assets listed on Schedule 4.6(1)
and such equipment, property or assets which is licensed.  Schedule 4.6(2) sets
forth a true, correct and complete list and general description of each item of
tangible personal property of the Company having a book value of more than
$15,000.

Section 4.7             Title to Assets.

(a)           Except as set forth on Schedule 4.7(a), there are no assets,
properties or rights (whether real, personal or mixed and whether tangible or
intangible), that are owned by the Company that are not related to or used in
the Business.

(b)           Except as set forth on Schedule 4.7(b), the Company has good title
to or, in the case of the Leased Real Property or leased personal property,
valid leasehold interests in, its properties and assets, free and clear of all
Liens except Permitted Liens.

Section 4.8             Inventory.  The Company’s inventory consists of finished
goods and work-in-process manufactured, packaged and stored in compliance with
all applicable Laws (including any applicable NDA and requirements of any
Governmental Entity associated with product dating), and is valued on the books
and records of the Company at the lower of cost or market with the cost
determined under the first-in-first-out inventory valuation method consistent
with past practice.  The quantity of inventory held by the Company, in the
aggregate, is adequate to meet the presently outstanding order fulfillment
obligations of Company for a period of not

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less than four months nor more than six months following the Closing.  The
Company does not have more than six weeks worth of inventory in stock at the
wholesaler level (i.e. “in the trade”).  No previously sold inventory is subject
to returns in excess of those historically experienced by the Company.  A true
and accurate schedule of inventory, together with expiration dates for each of
the inventory lots included therein, will be attached hereto as Schedule 4.8 at
the Closing.

Section 4.9             Financial Statements.  Schedule 4.9 contains the
Financial Statements.  The Financial Statements are in conformity with GAAP and
have been prepared from, and are in accordance with, the books and records of
the Company, which books and records have been maintained on a basis consistent
with the past practice of the Company.  Each balance sheet included in the
Financial Statements (including the related notes and schedules) fairly presents
in all material respects the financial position of the Company as of the date of
such balance sheet, and each statement of income and cash flows included in the
Financial Statements (including the related notes and schedules) fairly presents
in all material respects, the results of operations and cash flows, as the case
may be, of the Company for the periods set forth therein; provided, however,
that any Financial Statements that are not as of and for a year ended December
31 are subject to normal year-end adjustments and lack footnotes and other
presentation items.  Since December 31, 2006, there has been no material change
in any accounting policy, practice or procedure of the Company.  The Company
maintains accurate books and records reflecting its assets, liabilities,
revenues and expenses.

Section 4.10           No Undisclosed Liabilities.  There are no liabilities of
the Company of the nature required to be reflected as a liability on a balance
sheet prepared in accordance with GAAP or in the footnotes thereto, except for:

(a)           liabilities and obligations fully reflected or reserved against in
the Reference Balance Sheet; and

(b)           liabilities and obligations incurred in the ordinary course of
business, consistent with past practice, since the date of the Reference Balance
Sheet.

Section 4.11           Absence of Certain Changes.  Except to the extent arising
out of or relating to the transactions contemplated by this Agreement or as set
forth on Schedule 4.11, since the date of the Reference Balance Sheet, there has
not been (a) any Material Adverse Effect, (b) any damage, destruction, loss or
casualty to property or assets with a value in excess of $15,000 not covered by
insurance, (c) any sale, transfer or disposition of any properties or assets,
other than sales of inventory in the ordinary course of business, consistent
with past practice, or (d) any action taken of the type described in Section
7.1, that, had such action occurred following the date hereof without the
Parent’s prior approval, would be in violation of such Section 7.1.

Section 4.12           Legal Proceedings.  Except as set forth on Schedule 4.12,
there is no suit, action, claim, arbitration, proceeding or investigation
pending or, to the Knowledge of the Company, threatened against the Company
before any Governmental Entity.  No suit, action, claim, proceeding or
investigation pending or, to the Knowledge of the Company, threatened against
the Company before any Governmental Entity (including any of those set forth on

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Schedule 4.12), if finally determined adversely, is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.  Except as
set forth on Schedule 4.12, the Company is not subject to any judgment, decree,
injunction, rule or order of any court or arbitration panel

Section 4.13           Compliance with Law.  Except as set forth on Schedule
4.13, the Company is (and has been at all times during the past five (5) years)
in compliance with all applicable Laws (including applicable Laws relating to
zoning and the safety and health of employees, but excluding applicable
Environmental Laws, as to which the Company’s sole representations and
warranties are set forth in Section 4.20, and Laws relating to Taxes, Company
Benefit Plans and employment matters, as to which Seller’s sole representations
and warranties are set forth in Section 4.15, Section 4.17 and Section 4.18,
respectively).  Except as set forth on Schedule 4.13, the Company (a) has not
been charged with, and the Company has not received any written notice that it
is under investigation with respect to, and, to the Knowledge of the Company, is
not otherwise now under investigation with respect to, a violation of any
applicable Law, (b) is not a party to, or bound by, any order, judgment, decree,
injunction, rule or award of any Governmental Entity and (c) has filed all
reports and has all Licenses required to be filed with any Governmental Entity
on or prior to the date hereof. The Company has provided to Parent complete and
accurate copies of all material written communications to or from any
Governmental Entity and associated with the Company’s products, including,
without limitation, any written communication to or from the FDA or the Office
of Medical Policy, Division of Drug Marketing, Advertising, and Communications. 
The Company has not made any material false statements on, or omissions from,
the applications, approvals, reports and other submissions to any Governmental
Entity.  The Company has not received any communication, written or oral, from
any Governmental Entity indicating that any of its products are misbranded or
adulterated as defined in the U.S. Food, Drug & Cosmetic Act, 21 U.S.C. 321, et
seq., as amended, and the rules and regulations promulgated thereunder, or any
other similar Law.  Except as set forth on Schedule 4.13, no products of the
Company have been recalled, suspended or discontinued as a result of any action
by any Governmental Entity, or to the Knowledge of the Company, any licensee,
distributor or marketer of such products.  The Company is not in receipt of
notice of, and is not subject to, any adverse inspection, finding of deficiency,
finding of non-compliance, compelled or voluntary recall, investigation, penalty
for corrective or remedial action or other compliance or enforcement action, in
each case relating to its products or to the facilities in which such products
are manufactured, collected or handled.  Neither the Company nor, to the
Knowledge of the Company, any officer, employee or agent of the Company has been
convicted of any crime or engaged in any conduct that would reasonably be
expected to result in (i) debarment under 21 U.S.C. Section 335(a) or any
similar Law, or (ii) exclusion under 42 U.S.C. Section 1320(a)(7) or any similar
Law.

Section 4.14           Contracts.  Each correspondingly lettered section of
Schedule 4.14 sets forth a true, correct and complete list of the following
Contracts currently in force, or under which the Company has continuing
liabilities and/or obligations, related to the Business (other than the Company
Benefit Plans set forth on Schedule 4.17 and the insurance policies on Schedule
4.19) (collectively, the “Material Contracts”):

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(a)           bonds, debentures, notes, credit or loan agreements or loan
commitments, mortgages, indentures, guarantees or other Contracts relating to
the borrowing of money or the deferred purchase price of property or binding
upon any properties or assets (real, personal or mixed, tangible or intangible);

(b)           Contracts of an amount in excess of $25,000 that were not entered
into in the ordinary course of business, consistent with past practice;

(c)           leases relating to the Leased Real Property, leases of any
personal property and all other Contracts involving any properties or assets
(whether real, personal or mixed, tangible or intangible), involving an annual
commitment or payment of or performance having a value of more than $25,000 by
the Company;

(d)           Contracts that (i) limit or restrict the Company or any officers,
directors, employees, shareholders or other equity holders, agents or
representatives of the Company (in their capacity as such) from engaging in any
business or other activity in any jurisdiction, (ii) create or purport to create
any exclusive or preferential relationship or arrangement, (iii) otherwise
restrict or limit the Company’s ability to operate or expand the Business, or
(iv) impose, or purport to impose, any obligations or restrictions on Affiliates
of the Company with respect to the Shares;

(e)           Contracts for capital expenditures or the acquisition or
construction of fixed assets requiring the payment by the Company of an amount
in excess of $25,000;

(f)            Contracts that provide for any payment or benefit upon the
execution hereof or the Closing or in connection with the transactions
contemplated hereby, including accelerated vesting or other similar rights;

(g)           Contracts granting any Person a Lien on all or any part of any
properties or assets of the Company;

(h)           Contracts for the cleanup, abatement or other actions in
connection with any Hazardous Materials, the remediation of any existing
environmental condition or relating to the performance of any environmental
audit or study;

(i)            Contracts granting to any Person an option or a right of first
refusal, first-offer or similar preferential right to purchase or acquire any
assets of the Company;

(j)            Contracts with any agent, distributor or representative that is
not terminable without penalty on thirty (30) days or less notice;

(k)           Contracts for the granting or receiving of a license, sublicense
or franchise or under which any Person is obligated to pay or has the right to
receive a royalty, license fee, franchise fee or similar payment;

(l)            Contracts (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end user Licenses in the
ordinary course of

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business) or (ii) pursuant to which a third party has licensed or transferred
any Company Intellectual Property to the Company;

(m)          Contracts providing for the indemnification or holding harmless by
the Company of any officer, director, employee or other Person;

(n)           Joint venture or partnership Contracts or Contracts entitling any
Person to any profits, revenues or cash flows of the Company or requiring
payments or other distributions based on such profits, revenues or cash flows;

(o)           Contracts with Customers or Suppliers;

(p)           Outstanding powers of attorney empowering any Person to act on
behalf of the Company;

(q)           Contracts with any Governmental Entity;

(r)            Employment Agreements;

(s)           Contracts with any independent contractor or consultant which
involve annual payment in excess of $25,000; and

(t)            Contracts (other than those described in subsections (a) through
(s) of this Section 4.14) to which the Company is a party or by which its
properties or assets are bound (i) involving an annual commitment or annual
payment to or from the Company of more than $25,000 individually or (ii) that
are material to the Company, individually or in the aggregate.

True, correct and complete copies of all Material Contracts have been provided
to the Parent.  The Material Contracts are legal, valid, binding and enforceable
in accordance with their respective terms with respect to the Company, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which affect the
enforcement of creditors’ rights generally and by equitable principles and, to
the Knowledge of the Company, each other party thereto.  There is no existing
default or breach of the Company under any Material Contract (or event or
condition that, with notice or lapse of time or both could constitute a default
or breach) and, to the Knowledge of the Company, there is no such default (or
event or condition that, with notice or lapse of time or both, could constitute
a default or breach) with respect to any third party to any Material Contract. 
There is no term, obligation, understanding or agreement that would modify any
term of a Material Contract or any right or obligation of a party thereunder
which is not reflected on the face of such Material Contract.  The Company is
not participating in any discussions or negotiations regarding modification of
or amendment to any Material Contract in a manner that would be adverse to the
Company, or entry in any new Material Contract.

Section 4.15           Tax Returns; Taxes.  Except as set forth on
Schedule 4.15:

 

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(a)           All Tax Returns due to have been filed by the Company through the
date hereof in accordance with all applicable Laws (pursuant to an extension of
time or otherwise) have been duly filed and are true, correct and complete in
all respects.

(b)           All Taxes for which the Company has liability through the date
hereof (whether or not shown on any Tax Return) have been paid in full or are
accrued as liabilities for Taxes on the books and records of the Company.

(c)           There are not now any extensions of time in effect with respect to
the dates on which any Tax Returns were or are due to be filed by the Company.

(d)           All Tax deficiencies asserted as a result of any examination by a
Governmental Entity of a Tax Return of the Company have been paid in full,
accrued on the books of the Company or finally settled, and no issue has been
raised in any such examination that, by application of the same or similar
principles, reasonably could be expected to result in a proposed Tax deficiency
for any other period not so examined.

(e)           No claims have been asserted and no proposals or deficiencies for
any Taxes of the Company are being asserted, proposed or, to the Knowledge of
the Company, threatened, and no audit or investigation of any Tax Return of the
Company is currently underway, pending or, to the Knowledge of the Company,
threatened.

(f)            No written claim has ever been made against the Company by any
Governmental Entity in a jurisdiction where the Company does not file Tax
Returns that the Company is or may be subject to taxation in such jurisdiction.

(g)           The Company has withheld and paid all Taxes required to have been
paid by it in connection with amounts paid or owing to any employee, independent
contractor, creditor or shareholder thereof or other third party.

(h)           There are no outstanding waivers or agreements between any
Governmental Entity and the Company for the extension of time for the assessment
of any Taxes or deficiency thereof, nor are there any requests for rulings,
outstanding subpoenas or requests for information, notices of proposed
reassessment of any property owned or leased by the Company or any other Tax
related matter pending between the Company and any Governmental Entity.

(i)            Other than Permitted Liens, there are no Liens for Taxes with
respect to the Company or the assets or properties of the Company, nor is there
any such Lien that is pending or, to the Knowledge of the Company, threatened.

(j)            The Company is not a party to or bound by any Tax allocation or
sharing agreement.

(k)           The Company has not been a member of an “affiliated group” of
corporations (within the meaning of Code Section 1504 of the Code) filing a
consolidated

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federal income tax return (other than a group the common parent of which was the
Company).

(l)            The Company does not have any liability for the Taxes of any
Person (other than for itself) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign Tax law), as a transferee or
successor, by contract or otherwise.

(m)          None of the Tax Returns described in Subsection (a) of this Section
4.15 contains any position which is or would be subject to penalties under
Section 6662 of the Code (or any similar provision of provincial, state, local
or foreign Tax law) and the Treasury Regulations issued thereunder.

(n)           The Company has not made any payments, is not obligated to make
any payments, and is not a party to any contract, plan or arrangement that
obligates it to make any payments of (1) any amounts that will be “excess
parachute payments” under Section 280G of the Code (or any corresponding
provision of state, local or foreign Tax law), (2) any amount that would trigger
any excise tax under Section 4999 of the Code, and (3) any amount that will not
be fully deductible as a result of Section 162(m) of the Code (or any
corresponding provision of state, local or foreign Tax law);

(o)           The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

(p)           There is currently no limitation on the utilization of the net
operating losses, built-in losses, capital losses, Tax credits or other similar
items of the Company under Sections 382, 383, 384 or 1502 of the Code and
Treasury Regulations promulgated thereunder.

(q)           The Company is currently, and has been since January 1, 2004 a
valid “S corporation” within the meaning of Section 1361(a) of the Code (and
will be up to the Closing Date), and no Governmental Entity has challenged, or
is challenging, the S election of the Company.

(r)            The Company is, and has at all times been, in compliance with the
provisions of Section 6011, 6111 and 6112 of the Code relating to tax shelter
disclosure, registration and list maintenance and with the Treasury Regulations
thereunder.

(s)           The Company has not at any time, engaged in or entered into a
“listed transaction” within the meaning of Treasury Regulation Sections
1.6011-4(b)(2), 301.6111-2(b)(2) or 301.6112-1(b)(2)(A), and no IRS Form 8886
has been filed with respect to the Company nor has the Company entered into any
tax shelter or listed transaction with the sole or dominant purpose of the
avoidance or reduction of a Tax liability with respect to which there is a
significant risk of challenge of such transaction by a Governmental Entity.

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(t)            The Company has not, directly or indirectly, transferred property
to or acquired property from a Person with whom it was not dealing at arm’s
length for consideration other than consideration equal to the fair market value
of the property at the time of the disposition or acquisition thereof.

(u)           The Company will not be required to include any item of income in,
or exclude any item of deduction from, taxable income for any Tax period after
the Closing Date as a result of any (i) change in method of accounting for a Tax
period ending on or prior to the Closing Date; (ii) “closing agreement” as
described in Section 7121 of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law) executed on or prior to the Closing
Date; (iii) any installment sale or open transaction disposition made on or
prior to the Closing Date; or (iv) prepaid amount received on or prior to the
Closing Date.

Section 4.16           Officers, Employees and Independent Contractors. 
Schedule 4.16 contains a true, correct and complete list of (a) all of the
officers of the Company, specifying their position, annual rate of compensation,
date of hire, work location, and length of service, (b) all of the employees
(whether full-time, part-time or otherwise) of the Company as of the date
hereof, specifying their position, annual salary and other compensation, hourly
wages, date of hire, work location, and length of service, and (c) all of the
independent contractors used by the Company within the one-year period preceding
the Closing Date whose fees from the Company during that period exceeded
$25,000, specifying the name of the independent contractor, type of labor, fees
paid to such independent contractor for the prior 12 months, work location and
address.  All Persons classified by the Company as independent contractors have
been properly classified in accordance with all applicable Laws and no such
Person is eligible to participate in any Company Benefit Plan or would be
eligible to participate if the Company’s classification of such Person as an
independent contractor is subsequently determined to be incorrect.  Neither the
Company nor the Shareholders have received a claim from any Governmental Entity
to the effect that the Company has improperly classified any Person as an
independent contractor, nor to the Knowledge of the Company has any such claim
been threatened.  Neither the Company nor the Shareholders have made any verbal
commitments to any officer, employee, former employee, consultant or independent
contractor of the Company with respect to compensation, promotion, retention,
termination, severance or similar matters in connection with the transactions
contemplated hereby or otherwise.  The Company has heretofore delivered to the
Parent true, correct and complete copies of each employee handbook applicable to
employees of the Company.

Section 4.17           Company Benefit Plans.

(a)           Schedule 4.17(a) contains a true, correct and complete list of
each Company Benefit Plan and ERISA Affiliate Plan.  Any special tax status or
tax benefits for plan participants enjoyed or offered by a Company Benefit Plan
or ERISA Affiliate Plan is noted on such schedule.

(b)           With respect to each Company Benefit Plan and ERISA Affiliate Plan
identified on Schedule 4.17(a), the Company has heretofore delivered to the
Parent true,

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correct and complete copies of the plan documents and any amendments thereto
(or, in the event the plan is not written, a written description thereof), any
related trust, insurance contract or other funding vehicle, any summary plan
descriptions, summaries of material modifications or prospectuses reports or
summaries required under all applicable Laws, including ERISA or the Code, the
most recent determination or opinion letter received from the Internal Revenue
Service with respect to each current Company Benefit Plan or ERISA Affiliate
Plan intended to qualify under Code Section 401, nondiscrimination and coverage
tests for the most recent three (3) full plan years, the three most recent
annual reports (Form 5500) and any related financial statements filed with the
Internal Revenue Service (“IRS”) and the three most recent actuarial reports or
valuations (if applicable).

(c)           The Company’s records accurately reflect the employment or service
histories of its employees, independent contractors, contingent workers and
leased employees, including their hours of service, in all respects material to
the Company Benefits Plans.

(d)           With respect to each Company Benefit Plan, (i) there has not
occurred any non-exempt “prohibited transaction” within the meaning of Section
4975(c) of the Code or Section 406 of ERISA that would subject the Company or
the Parent to any material liability; and (ii) no fiduciary (within the meaning
of Section 3(21) of ERISA) of any Company Benefit Plan that is subject to Part 4
of Title I of ERISA has committed a breach of fiduciary duty that would subject
the Company or the Parent to any liability.  The Company has not been assessed
any excise taxes under Chapter 43 of the Code and nothing has occurred with
respect to any Company Benefit Plan that is expected to subject the Company or
the Parent to any such taxes.  The transactions contemplated by this Agreement
will not trigger any Taxes under Section 4978 of the Code.  No Company Benefit
Plan or ERISA Affiliate Plan is or was subject to Title IV of ERISA, Section 302
of ERISA or Section 412 of the Code, and no Company Benefit Plan or ERISA
Affiliate Plan is or within the last five years was a “multiemployer plan” (as
defined in Section 3(37) of ERISA), a “multiple employer plan” (within the
meaning of Section 413(c) of the Code), or a “multiple employer welfare
arrangement” (as defined in Section 3(40)(A) of ERISA), nor has the Company or
any of its ERISA Affiliates within the last five years sponsored, maintained,
contributed to, or had any liability or obligation with respect to, any such
Company Benefit Plan or ERISA Affiliate Plan of the type described in this
sentence.

(e)           Each Company Benefit Plan or ERISA Affiliate Plan has been
established, registered, qualified, invested, operated and administered in all
respects in accordance with its terms and in compliance with all Applicable
Benefit Laws.  The Company has performed and complied in all respects with all
of its obligations under or with respect to the Company Benefit Plans.  The
Company has not incurred, and no fact exists that reasonably could be expected
to result in, any liability to the Company with respect to any Company Benefit
Plan or any ERISA Affiliate Plan, including any liability, tax, penalty or fee
under any Applicable Benefit Law (other than to pay premiums, contributions or
benefits in the ordinary course of business consistent with past practice).

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There are no current or, to the Knowledge of the Company, threatened Liens on
any assets of any Company Benefit Plan or ERISA Affiliate Plan.

(f)            No fact or circumstance exists that could reasonably be expected
to cause a Company Benefit Plan or ERISA Affiliate Plan that is intended to be
tax-exempt to lose its tax-exempt status.  Further, each such plan intended to
be “qualified” within the meaning of Section 401(a) of the Code and the trusts
maintained thereunder that are intended to be exempt from taxation under Section
501(a) of the Code has received a favorable determination or opinion letter with
respect to all Applicable Benefits Laws on which the Internal Revenue Service
will issue a favorable determination letter on its qualification, and nothing
has occurred subsequent to the date of such favorable determination letter that
could reasonably be expected to cause a Company Benefit Plan or ERISA Affiliate
Plan to lose its qualified status.

(g)           There is no pending or, to the Knowledge of the Company,
threatened (i) complaint, claim, charge, suit, proceeding or other action of any
kind with respect to any Company Benefit Plan or ERISA Affiliate Plan (other
than a routine claim for benefits in accordance with such Company Benefit Plan’s
or ERISA Affiliate Plan’s claims procedures and that has not resulted in any
litigation) or (ii) proceeding, examination, audit, inquiry, investigation,
citation, or other action of any kind in or before any Governmental Entity with
respect to any Company Benefit Plan or ERISA Affiliate Plan and there exists no
state of facts that after notice or lapse of time or both reasonably could be
expected to give rise to any such claim, investigation, examination, audit or
other proceeding or to affect the registration of any Company Benefit Plan or
ERISA Affiliate Plan required to be registered. All benefit claims have been
paid in accordance with Applicable Benefit Laws and the terms of the applicable
Company Benefit Plan or ERISA Affiliate Plan.

(h)           All contributions and premium payments (including all employer
contributions and employee salary reduction contributions) that are due with
respect to each Company Benefit Plan have been made within the time periods
prescribed by ERISA and the Code, and all contributions and premium payments for
any period ending on or before the Closing Date that are an obligation of the
Company and not yet due have either been made to such Company Benefit Plan, or
have been accrued on the Financial Statements.  Adequate reserves will be
reflected on the Final Working Capital Schedule for any vacation, sick pay, and
other paid time off (i) accrued but unearned or (ii) earned but unused, in each
case as of the Closing Date by the Company’s employees.

(i)            With respect to each Company Benefit  Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA), all claims
incurred by the Company are (i) insured pursuant to a contract of insurance
whereby the insurance company bears any risk of loss with respect to such
claims, (ii) covered under a contract with a health maintenance organization (an
“HMO”), pursuant to which the HMO bears the liability for claims or (iii)
reflected as a liability or accrued for on the Financial Statements.  Except as
set forth on Schedule 4.17(i), no Company Benefit Plan provides or has ever
provided benefits, including death, medical or health benefits (whether or not

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insured), after an employee’s termination of employment, and the Company has no
liabilities (contingent or otherwise) with respect thereto other than (A)
continuation coverage required pursuant to Section 4980B of the Code and Part 6
of Title I of ERISA, and the regulations thereunder, and any other Applicable
Benefit Laws, (B) death benefits or retirement benefits under any employee
pension benefit plan, (C) deferred compensation benefits, reflected as
liabilities on the Financial Statements, or (D) benefits the full cost of which
is borne by the current or former employee (or the employee’s beneficiary).

(j)            The transactions contemplated by this Agreement will not result
(either alone or in combination with any other event) in:  (i) any payment of,
or increase in, remuneration or benefits, to any employee, officer, director or
consultant of the Company; or (ii) any cancellation of indebtedness owed to the
Company by any employee, officer, director or consultant of the Company; (iii)
the acceleration of the vesting, funding or time of any payment or benefit to
any employee, officer, director or consultant of the Company; or (iv) any
“parachute payment” within the meaning of Section 280G of the Code (whether or
not such payment is considered to be reasonable compensation for services
rendered).

(k)           The Company has not announced or entered into any plan or binding
commitment to (i) create or cause to exist any additional Company Benefit Plan,
or (ii) adopt, amend or terminate any Company Benefit Plan, other than any
amendment required by Applicable Benefit Laws.  Each Company Benefit Plan may be
amended or terminated in accordance with its terms without liability to the
Company or the Parent other than for benefits accrued up to the later of the
effective date or adoption date of such amendment or termination.

(l)            Schedule 4.17(l) identifies each Company Benefit Plan that is a
“nonqualified deferred compensation plan” within the meaning of Section 409A of
the Code (and the regulations thereunder) and associated Treasury Department
guidance, including IRS Notice 2005-1 (each a “NQDC Plan”).  With respect to
each NQDC Plan, it either (A) has been operated in good-faith compliance with
Code Section 409A since January 1, 2005, or (B) does not provide for the payment
of any benefits that have or will be deferred or vested after December 31, 2004
and since October 3, 2004, it has not been “materially modified” within the
meaning of Section 409A of the Code and associated Treasury Department guidance,
including IRS Notice 2005-1, Q&A 18.

Section 4.18           Labor Relations.

(a)           No employee of the Company, since becoming an employee of the
Company, has been, or currently is, represented by a labor organization or group
that was either certified or voluntarily recognized by any labor relations board
(including the United States National Labor Relations Board) or certified or
voluntarily recognized by any other Governmental Entity.  The Company is not and
has never been a signatory to a collective bargaining agreement with any trade
union, labor organization or group.  No representation election petition or
application for certification has been filed by

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employees of the Company or is pending with the United States National Labor
Relations Board or any other Governmental Entity and no union organizing
campaign or other attempt to organize or establish a labor union, employee
organization or labor organization or group involving employees of the Company
has occurred, is in progress or, to the Knowledge of the Company, is threatened.

(b)           The Company is not and has not been engaged in any unfair labor
practice and the Company is not aware of any pending or, to the Knowledge of the
Company, threatened labor board proceeding of any kind.  No grievance or
arbitration demand or proceeding, whether or not filed pursuant to a collective
bargaining agreement has been filed or is pending or, to the Knowledge of the
Company, has been threatened against the Company.  No labor dispute, walk out,
strike, slowdown, hand billing, picketing, work stoppage (sympathetic or
otherwise), or other “concerted action” involving the employees of the Company
has occurred, is in progress or, to the Knowledge of the Company, has been
threatened.  The Company is in material compliance with all Labor Laws. No
citations, claims, complaints, charges, proceedings, examinations, audits,
inquiries, investigations or other actions have been filed or are pending or, to
the Knowledge of the Company, threatened under the Labor Laws with respect to
the Company.  No citation has been issued by OSHA against the Company and no
notice of contest, claim, complaint, charge, investigation, or other
administrative enforcement proceeding involving the Company has been filed or is
pending or, to the Knowledge of the Company, threatened against the Company
under the Laws administered or enforced by OSHA or any other applicable Law
relating to occupational safety and health.  No workers’ compensation or
retaliation claim, complaint, charge or investigation has been filed or is
pending against the Company.  The Company has not taken any action that could
constitute a “mass layoff”, “mass termination” or “plant closing” within the
meaning of WARN or otherwise trigger notice requirements or liability under any
federal, local, state or foreign plant closing notice or collective dismissal
law. No wrongful discharge, retaliation, libel, slander or other claim,
complaint, charge or investigation that arises out of the employment
relationship between the Company and any of its employees has been filed or is
pending or, to the Knowledge of the Company, threatened against the Company
under any applicable Law.

(c)           The Company is not liable for any liability, judgment, decree,
order, arrearage of wages or taxes, fine or penalty for failure to comply with
any Labor Law.  The Company has provided the Parent with a copy of the policy of
the Company for providing leaves of absence under FMLA and its FMLA notices.

Section 4.19           Insurance Policies.  Schedule 4.19 contains a true,
correct and complete list of all insurance policies carried by or for the
benefit of the Company, specifying the insurer, the amount of and nature of
coverage, the risk insured against, the deductible amount (if any) and the date
through which coverage shall continue by virtue of premiums already paid.  All
insurance policies and bonds with respect to the business and assets of the
Company are in full force and effect and shall be maintained by the Company in
full force and effect through the Closing Date and the Company has not reached
or exceeded its policy limits for any insurance policy in effect at any time
during the past five (5) years.

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Section 4.20           Environmental, Health and Safety Matters.

(a)           The Company possesses all Licenses required under, and is in
compliance with, all Environmental Laws.

(b)           Except as set forth on Schedule 4.20(b), the Company has not
received written notice of actual or threatened liability under CERCLA or any
similar foreign, state or local Environmental Law from any Governmental Entity
or any third party.

(c)           The Company has not entered into or agreed to enter into, and the
Company has no present intent to enter into, any consent decree or order, and
the Company is not subject to any judgment, decree or judicial or administrative
order relating to compliance with, or the cleanup of Hazardous Materials under,
any applicable Environmental Law.

(d)           The Company has not been subject to any administrative or judicial
proceeding pursuant to, or paid any fines or penalties pursuant to, applicable
Environmental Laws at any time during the past five (5) years.  The Company is
not subject to any claim, obligation, liability, loss, damage or expense of any
kind or nature whatsoever, contingent or otherwise, incurred or imposed or based
upon any provision of any Environmental Law or arising out of any act or
omission of the Company, or the Company’s employees, agents or representatives
or arising out of the ownership, use, control or operation by the Company of any
plant, facility, site, area or property (including any plant, facility, site,
area or property currently or previously owned or leased by the Company) from
which any Hazardous Material was Released.

(e)           Notwithstanding the generality of any other representations and
warranties in this Agreement, the representations and warranties in this Section
4.20 constitute the sole and exclusive representations and warranties of the
Company with respect to matters directly or indirectly relating to, or arising
out of any environmental, health or safety Laws, including any Environmental
Laws.

Section 4.21           Intellectual Property.

(a)           Schedule 4.21(a) contains a list of all Company Registered
Intellectual Property.  No Company Intellectual Property or product or service
of the Business related to Company Intellectual Property is subject to any
proceeding or outstanding decree, order, judgment, agreement or stipulation (i)
restricting in any manner the use, transfer or licensing thereof by the Company
or (ii) that may affect the validity, use or enforceability of the Company
Intellectual Property or any such product or service.  Each item of Company
Registered Intellectual Property is valid and subsisting.  All necessary
registration, maintenance and renewal fees currently due in connection with
Company Registered Intellectual Property have been made and all necessary
documents, recordations and certifications in connection with such Company
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other

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authorities in the United States or foreign jurisdictions for the purpose of
maintaining such Company Registered Intellectual Property.

(b)           Except as set forth on Schedule 4.21(b), the Company owns and has
good title to, or has licenses (sufficient for the conduct of the Business as
currently conducted) to, each item of Company Intellectual Property, free and
clear of any Lien (excluding licenses and related restrictions).

(c)           The Company has good title to all material copyrighted works
purportedly owned by it and used in the Business, free and clear of all Liens. 
Schedule 4.21(c) lists all works of original authorship used in the Business and
prepared by or on behalf of the Company (including software programs) by title,
version number, author(s) and publication date (if any), regardless of whether
the Company has obtained or is seeking a copyright registration for such works.

(d)           To the extent that any Company Intellectual Property has been
developed or created by a third party specifically for the Company, the Company
has a written agreement with such third party with respect thereto and the
Company thereby either (i) has obtained ownership of and is the exclusive owner
of, or (ii) has obtained a license (sufficient for the conduct of the Business
as currently conducted) to, all of such third party’s Intellectual Property in
such work, material or invention by operation of law or by valid assignment.

(e)           The operation of the Business as it is currently conducted,
including the design, development, marketing and sale of the products or
services of the Business (including with respect to products currently under
development), has not and does not infringe or misappropriate in any manner the
Intellectual Property of any third party or, to the Knowledge of the Company,
constitute unfair competition or trade practices under the Laws of any
jurisdiction.  The Company has not received written notice of, or any claim from
any third party, that either the Company Intellectual Property or the operation
of the Business, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the Laws
of any jurisdiction.

(f)            To the Knowledge of the Company, no Person has or is infringing
or misappropriating any Company Intellectual Property.

(g)           The Company has taken reasonable steps to protect the rights of
the Company in the Confidential Information and any trade secret or confidential
information of third parties used in the Business, and, except under
confidentiality obligations, there has not been any disclosure by the Company of
any Confidential Information or any such trade secret or confidential
information of third parties.

Section 4.22           Software.

(a)           The Company does not have any Company Proprietary Software.  
Schedule 4.22(a) sets forth a true, correct and complete list of: (i) the
Company Licensed

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Software (other than off the shelf software) and (ii) all technical and
restricted materials relating to the acquisition, design, development, use or
maintenance of computer code program documentation and materials used in
connection with the Business.

(b)           The use of the Company Licensed Software does not breach any term
of any license or other contract between the Company and any third party.  The
Company is in compliance in all respects with the terms and conditions of all
Contracts in favor of the Company relating to the Company Licensed Software.

Section 4.23           Related Party Transactions.  Except as set forth on
Schedule 4.23, no (a) Shareholder or officer or director of the Company, (b)
Person with whom any such Shareholder, officer or director has any direct or
indirect relation by blood, marriage or adoption, or (c) entity in which any
such Shareholder, officer, director or Person owns greater than a ten percent
(10%) beneficial interest (other than a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than five percent (5%) of the stock of which is beneficially owned by such
Shareholders, officers, directors and Persons in the aggregate) has any interest
in or is a party to: (i) any Contract with, or relating to, the Company; or (ii)
any loan for or relating to the Company.  Schedule 4.23 also sets forth a true,
correct and complete list of all accounts receivable, notes receivable and other
receivables and accounts payable owed to or due from any such Person described
above by or to the Company.

Section 4.24           Customer and Supplier Relations.  Schedule 4.24 contains
a true, correct and complete list of the names and addresses of the Customers
and Suppliers.  The Company maintains good commercial relations with each of its
Customers and Suppliers and, to the Knowledge of the Company, no event has
occurred that could reasonably be expected to materially and adversely affect
the Company’s relations with any such Customer or Supplier.  No Customer (or
former Customer) or Supplier (or former Supplier) during the prior twelve (12)
months has canceled, terminated or, to the Knowledge of the Company, made any
threat to cancel or otherwise terminate any of such Customer’s or Supplier’s
Contracts with the Company or to decrease such Customer’s usage of the Company’s
services or products or such Supplier’s supply of services or products to the
Company.  The Company has not received any written notice and does not have any
Knowledge to the effect that any current customer or supplier may terminate or
materially alter its business relations with the Company, either as a result of
the transactions contemplated hereby or otherwise.

Section 4.25           Accounts Receivable.  To the Knowledge of the Company,
the debtors to which the accounts receivable of the Company relate are not in or
subject to a bankruptcy or insolvency proceeding and none of such receivables
have been made subject to an assignment for the benefit of creditors.  All
accounts receivable of the Company represent monies due for goods sold and
delivered or services rendered in the ordinary course of business.  There are no
disputes regarding the collectibility of any such accounts receivable not
reserved against in the Initial Working Capital Schedule or Final Working
Capital Schedule.

Section 4.26           Licenses.  Schedule 4.26 is a true and complete list of
all Licenses held by the Company.  The Company owns or possesses all Licenses
that are necessary to enable it to carry on the Business as presently
conducted.  All Licenses are valid, binding and in full force

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and effect.  The execution, delivery and performance hereof and the consummation
of the transactions contemplated hereby shall not adversely affect any License. 
The Company has taken all necessary action to maintain each License except where
the failure to so act shall not have an adverse effect on the Company or the
Business.  No loss or expiration of any License is pending or, to the Knowledge
of the Company, threatened (other than expiration upon the end of any term). 
Schedule 4.26 identifies with an asterisk each License set forth therein which
by its terms cannot be assigned without the prior consent of either party
thereto.  Each independent contractor listed on Schedule 4.16 has the requisite
License required to provide the services such independent contractor provides
the Company, as applicable.

Section 4.27           Ethical Practices with Governmental Entities.  Neither
the Company nor any of its representatives nor any Shareholder, in his, her or
its capacity as an employee, agent or other representative of the Company, has
offered or given, and the Company does not have any Knowledge of any Person that
has offered or given on its behalf, any thing of value to: (a) any official of a
Governmental Entity, any political party or official thereof or any candidate
for political office; (b) any customer or member of any Governmental Entity; or
(c) any other Person, in any such case while knowing or having reason to know
that all or a portion of such money or thing of value may be offered, given or
promised, directly or indirectly, to any official of a Governmental Entity or
any candidate for political office for the purpose of the following:
(i) influencing any action or decision of such Person, in such Person’s official
capacity, including a decision to fail to perform such Person’s official
function; (ii) inducing such Person to use such Person’s influence with any
Governmental Entity to affect or influence any act or decision of such
Governmental Entity to assist the Company in obtaining or retaining business
for, with, or directing business to, any Person; or (iii) where such payment
would constitute a bribe, kickback or illegal or improper payment to assist the
Company in obtaining or retaining business for, with, or directing business to,
any Person.

Section 4.28           Product Warranties.  Except as set forth on
Schedule 4.28, the Company does not make any warranty or guaranty as to goods
manufactured, sold, or delivered by the Company.

Section 4.29           Brokers, Finders and Investment Bankers.  Neither the
Company nor any officer, member, director or employee of the Company, nor any
Affiliate of the Company, nor any Shareholder has employed any broker, finder or
investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders’ fees in connection with the
transactions contemplated hereby.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

Each Shareholder severally, and not jointly, represents and warrants to the
Parent that, as of the date hereof and as of the Closing Date:

Section 5.1             Authorization and Validity of Agreement.  Such
Shareholder has the right, power and capacity to execute and deliver this
Agreement and the Seller Ancillary Documents to which it is a party and to
perform its obligations hereunder and thereunder and to consummate

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the transactions contemplated hereby and thereby.  This Agreement has been, and
the Seller Ancillary Documents to which it is a party shall be as of the Closing
Date, duly executed and delivered by such Shareholder and do or shall, as the
case may be, constitute the valid and binding agreements of such Shareholder,
enforceable against such Shareholder in accordance with their respective terms.

Section 5.2             Absence of Restrictions and Conflicts.  The execution,
delivery and performance by such Shareholder of this Agreement and the Seller
Ancillary Documents to which it is a party, the consummation of the transactions
contemplated hereby and thereby and the fulfillment of and compliance with the
terms and conditions hereof and thereof do not or shall not (as the case may
be), with the passing of time or the giving of notice or both, (a) violate or
conflict with, constitute a breach of or default under, result in the loss of
any benefit under, permit the acceleration of any obligation under or create in
any party the right to terminate, modify or cancel any Contract to which such
Shareholder is a party, (b) contravene or conflict with any judgment, decree or
order of any Governmental Entity to which such Shareholder is a party or by
which such Shareholder is bound, or (c) contravene or conflict with any Law or
arbitration award applicable to such Shareholder.

Section 5.3             Ownership of Equity.  Such Shareholder has good and
valid title to and record and beneficial ownership of the number of shares of
capital stock set forth next to such Shareholder’s name on Schedule 4.1(c), and
such shares are free and clear of all Liens, other than Liens in favor of the
Company identified on Schedule 5.3, which shall have been terminated prior to
Closing.  Other than the shares of capital stock listed on Schedule 4.1(c), such
Shareholder does not own any shares of capital stock or other equity security of
the Company or any option, warrant, right, call, commitment or right of any kind
to have any such capital stock or equity security issued. Except as set forth on
Schedule 4.1(c), such Shareholder has the full and exclusive right to transfer
or vote the Shares owned by such Shareholder, and such Shareholder is not bound
by any agreement affecting or relating to its right to transfer or vote the
shares of capital stock owned by such Shareholder. Such Shareholder is, under
the Code, an eligible shareholder of an “S corporation” (within the meaning of
Section 1361(a) of the Code)

Section 5.4             Legal Proceedings.  There are no suits, actions, claims,
proceedings or investigations pending or, to the knowledge of such Shareholder,
threatened against, relating to or involving such Shareholder that could
adversely affect such Shareholder’s ability to consummate the transactions
contemplated by this Agreement.

Section 5.5             Amounts Owed to Shareholders.  Except as disclosed on
Schedule 5.5, the Company does not owe and is not otherwise obligated to pay
such Shareholder any amount, except for salary, employee benefits and bonuses,
incurred and accrued prior to the Closing in the ordinary course of business of
the Company, consistent with past practice.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT

The Parent and the Merger Sub hereby represent and warrant to the Company as
follows as of the date hereof and the Closing Date:

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Section 6.1             Organization.  The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.  The
Merger Sub is a Georgia corporation, duly organized, validly existing and in
good standing under the laws of the State of Georgia and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.

Section 6.2             Authorization.  Each of the Parent and the Merger Sub
has full corporate power and authority to execute and deliver this Agreement and
the Parent Ancillary Documents to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  The execution and delivery by the Parent and
the Merger Sub of this Agreement and the Parent Ancillary Documents to which the
Parent and the Merger Sub are a party, the performance by the Parent and the
Merger Sub of their obligations hereunder and thereunder, and the consummation
of the transactions provided for herein and therein have been duly and validly
authorized by all necessary corporate action on the part of the Parent and the
Merger Sub.  This Agreement has been and, as of the Closing Date, the Parent
Ancillary Documents shall be, duly executed and delivered by the Parent and the
Merger Sub and do or shall, as the case may be, constitute the valid and binding
agreements of the Parent and the Merger Sub, enforceable against the Parent and
the Merger Sub in accordance with their respective terms.

Section 6.3             Absence of Restrictions and Conflicts.  The execution,
delivery and performance by Parent and Merger Sub of this Agreement and the
Parent Ancillary Documents to which each is a party, the consummation of the
transactions contemplated hereby and thereby and the fulfillment of, and
compliance with, the terms and conditions hereof and thereof do not or shall not
(as the case may be), with the passing of time or the giving of notice or both,
(a) contravene or conflict with any term or provision of the charter documents
of the Parent or the Merger Sub, (b) violate or conflict with, constitute a
breach of or default under, result in the loss of any benefit under, permit the
acceleration of any obligation under or create in any party the right to
terminate, modify or cancel any Contract to which the Parent or the Merger Sub
is a party, (c) contravene or conflict with any judgment, decree or order of any
Governmental Entity to which the Parent is a party or by which the Parent or the
Merger Sub is bound or (d) contravene or conflict with any statute, Law,
judgment, rule or regulation applicable to the Parent or the Merger Sub.  Except
for the filing of the Certificate of Merger as contemplated hereby, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required with respect to the Parent or Merger
Sub in connection with the execution, delivery or performance of this Agreement
or the Parent Ancillary Documents or the consummation of the transactions
contemplated hereby or thereby, except as may be required by the HSR Act.

Section 6.4             Brokers.  Neither the Parent nor the Merger Sub has
incurred any obligation for any finder’s or broker’s or agent’s fees or
commissions or similar compensation in connection with the transactions
contemplated hereby for which Company or any Shareholders will be liable.

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Section 6.5             Availability of Funds.  Parent has immediately available
funds sufficient to enable it to pay the Merger Payment (as adjusted pursuant to
Section 3.2) and all other amounts payable by it in connection with this
Agreement and the transactions contemplated hereby.

ARTICLE VII
CERTAIN COVENANTS AND AGREEMENTS

Section 7.1             Conduct of Business by the Company.  For the period
commencing on the date hereof and ending on the Closing Date, the Company shall,
except as expressly required hereby and except as otherwise consented to in
advance in writing by the Parent, conduct its business in the ordinary course,
consistent with past practice, and shall, except as expressly required or
permitted hereby and except as otherwise consented to in advance in writing by
the Parent:

(a)           use its commercially reasonable efforts to preserve intact the
goodwill and business organization of the Company, keep the officers and
employees of the Company available to the Parent at reasonable times and under
reasonable conditions and preserve the relationships and goodwill of the Company
with customers, distributors, suppliers, employees and other Persons having
business relations with the Company;

(b)           maintain its existence and good standing in its jurisdiction of
organization and in each jurisdiction listed on Schedule 4.1(a);

(c)           comply with all applicable Laws;

(d)           maintain in existing condition and repair (ordinary wear and tear
excepted), consistent with past practices, all offices, equipment, fixtures and
other tangible personal property of the Company located on the Leased Real
Property;

(e)           not authorize for issuance or issue and deliver any additional
shares of its capital stock or securities convertible into or exchangeable for
shares of its capital stock, except upon exercise of its outstanding options, or
issue or grant any right, option or other commitment for the issuance of shares
of its capital stock or of such securities, or split, combine or reclassify any
shares of its capital stock;

(f)            not amend or modify its articles of incorporation or bylaws;

(g)           not declare any dividend, pay or set aside for payment any
dividend or other distribution or make any payment to any Shareholder, officer
or director or any Person with whom any such Shareholder, officer or director
has any direct or indirect relation, other than: (i) the payment of salaries in
the ordinary course of business and consistent with past practice, and (ii) the
payment of tax distributions sufficient to cover such Shareholder’s income tax
liability attributable to such Shareholder’s distributive share of the Company’s
operating income through the Closing Date, in a manner consistent with past
practice.

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(h)           not create any subsidiary, acquire any capital stock or other
equity securities of any corporation or acquire any equity or ownership interest
in any business or entity;

(i)            not dispose of or permit to lapse any ownership and/or right to
the use of any patent, trademark, trade name, service mark, license or copyright
of the Company (including any of the Company Intellectual Property), or dispose
of or disclose to any Person, any Confidential Information;

(j)            protect, defend and maintain the ownership, validity and
registration of the Company Intellectual Property, and not allow any of the
Registered Intellectual Property to be abandoned, forfeited, cancelled, expunged
and/or dedicated to the public;

(k)           not (i) create, incur or assume any indebtedness other than: (A)
any trade debt created in the ordinary course of business and in accordance with
past practice, or (B) draws on the Company’s existing credit facility with Bank
of America in an amount not to exceed $4,000,000, and which are expressly used
to satisfy the Company’s milestone payment obligations under a license
agreement, dated March 15, 2005, between the Company and BioMarin Pharmaceutical
Inc., (ii) grant, create, incur or suffer to exist any Lien on the assets or
properties of the Company that did not exist on the date hereof other than
Permitted Liens, (iii) write-down the value of any asset or investment on the
books or records of the Company, except for depreciation and amortization in the
ordinary course of business and consistent with past practice, (iv) cancel any
debt or waive any claim or right, (v) make any commitment for any capital
expenditure to be made on or following the date hereof in excess of $25,000 in
the case of any single expenditure or $100,000 in the case of all capital
expenditures, (vi) enter into any Contract which cannot be cancelled by the
Company on notice of not longer than thirty (30) days and without liability or
penalty of any kind, (vii) enter into any Contract which imposes, or purports to
impose, any obligations or restrictions on any of its Affiliates, or (viii)
settle or compromise any legal proceedings related to or in connection with the
Business;

(l)            not, except, in each case, in the ordinary course of business to
the extent consistent with past practice of the Company, (i) increase in any
manner the compensation of, or enter into any new bonus or incentive agreement
or arrangement with, any of its employees, officers, directors or consultants,
(ii) except as required by Applicable Benefit Laws, pay or agree to pay any
additional pension, retirement, allowance or other employee benefit under any
Company Benefit Plan to any of its employees or consultants, whether past or
present.  Notwithstanding the foregoing, the Company shall not take any action
described in this Section 7.1(l)with respect to (i) any manager, officer or
director of the Company or (ii) any Person whose annualized compensation is
$100,000 or more or whose annual compensation for the twelve (12)-month period
following the Effective Date is expected to be $100,000 or more;

(m)          except as required by Applicable Benefit Laws, not adopt, amend or
terminate any Company Benefit Plan or increase the benefits provided under any

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Company Benefit Plan, or promise or commit to undertake any of the foregoing in
the future;

(n)           not enter into a collective bargaining agreement;

(o)           not enter into any Employment Agreement;

(p)           perform in all material respects all of its obligations under all
Company Contracts and Licenses, and not default or suffer to exist any event or
condition that with notice or lapse of time or both could constitute a material
default under any Company Contract or License (except those being contested in
good faith);

(q)           not increase any reserves for contingent liabilities (excluding
any adjustment to bad debt reserves in the ordinary course of business
consistent with past practice);

(r)            maintain in full force and effect policies of insurance
comparable in amount and scope of coverage to that maintained as of the date
hereof;

(s)           continue to maintain its books and records in accordance with GAAP
consistently applied and on a basis consistent with past practice and not make
any material change in any of its accounting (or tax accounting) policies,
practices or procedures except to the extent required by GAAP;

(t)            continue its current cash and inventory management practices in
the ordinary course of business consistent with past practice; and

(u)           not authorize, or commit or agree to take, any of the foregoing
actions, without the Parent’s prior written consent.

Section 7.2             Inspection and Access to Information.  During the period
commencing on the date hereof and ending on the Closing Date, the Company shall
(and shall cause its officers, directors, employees, auditors and agents to)
provide the Parent and its accountants, investment bankers, counsel,
environmental consultants and other authorized representatives reasonable
access, during reasonable hours, under reasonable circumstances and upon
reasonable notice, to any and all of its premises, employees (including
executive officers), properties, Contracts, books, records and other information
(including Tax Returns filed and those in preparation) and shall cause its
officers to furnish to the Parent and its authorized representatives, promptly
any reasonably requested financial, technical and operating data and other
information pertaining to the Company and the Business. Notwithstanding the
foregoing, (a) Parent and its authorized agents and representatives shall not
contact or otherwise communicate with the employees, customers or suppliers of
the Company unless in each instance, approved in advance by the Company, which
approval shall not be unreasonably withheld, and (b) nothing herein shall
require the Company to furnish to the Parent or provide the Parent with access
to information which would cause competitive harm to the Company if the
transactions contemplated by this Agreement are not consummated or would be in
violation of applicable Laws or regulations of any Governmental Entity
(including the HSR Act and other anti-competition Laws).

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Section 7.3             Notices of Certain Events.  Each Party will give written
notice to the other Party of any material variance from its representations and
warranties in Articles IV and VI, as the case may be. Unless the Party receiving
such notice has the right to terminate this Agreement pursuant to Article X by
reason of such development and exercises that right prior to Closing, the
written notice pursuant to this Section 7.3 will be deemed, solely for purposes
of Article XI hereof following the Closing, to have amended the Disclosure
Schedule, to have qualified the representations and warranties contained in
Articles IV and VI, and to have cured any misrepresentation or breach of
warranty that otherwise might have existed hereunder by reason of the
development.  The Company and/or the Shareholders shall promptly notify the
Parent of:

(c)           any fact, condition, change or event that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect or otherwise results in any representation or warranty of the Company or
the Shareholders hereunder being inaccurate in any respect as of the date of
such fact, condition, change or event had such representation or warranty been
made as of such date;

(d)           any fact, condition, change or event that causes or constitutes a
breach of any of the representations or warranties of the Company or the
Shareholders hereunder made as of the date hereof;

(e)           any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated hereby;

(f)            any notice or other communication relating to or involving or
otherwise affecting the Company from or to any Governmental Entity, including
the FDA, Office of Medical Policy, Division of Drug Marketing, Advertising, and
Communications;

(g)           any action, suit, claim, investigation or proceeding commenced or,
to the Knowledge of the Company, threatened against, relating to or involving or
otherwise affecting the Company that, if pending on the date hereof, would have
been required to have been disclosed pursuant to Section 4.12 or that relate to
the consummation of the transactions contemplated hereby; and

(h)           (i) the damage or destruction by fire or other casualty of any
material asset or part thereof of the Company or (ii) any material asset or part
thereof of the Company becoming the subject of any proceeding (or, to the
Knowledge of the Company, threatened proceeding) for the taking thereof or of
any right relating thereto by condemnation, eminent domain or other similar
governmental action.

Should any such fact or condition require any change in the Disclosure Schedules
if the Disclosure Schedules were dated the date of the occurrence or discovery
of any such fact or condition, the Shareholders will promptly deliver to Parent
a supplement to the Disclosure Schedules specifying such change.  Except as
contemplated above, the Company and the Shareholders hereby acknowledge that the
Parent does not and shall not waive any right it may have hereunder solely as a
result of such notifications and any notification given pursuant to this

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Section 7.3 (including any supplement to the Disclosure Schedules) shall be
disregarded for purposes of determining the obligations of the Parties under
Article XI hereof.

Section 7.4             Interim Financials.  As promptly as practicable
following each calendar month prior to the Closing Date, the Company shall
deliver to the Parent periodic financial reports in the form that it customarily
prepares for its internal purposes and, if available, unaudited statements of
the financial position of the Company as of the last day of such calendar month
and statements of income and changes in financial position of such entities for
the calendar month then ended.  The Company covenants that such interim
statements (i) shall present fairly in all material respects the financial
condition of the Company as of their respective dates and the related results of
operations for the respective calendar month then ended, and (ii) shall be
prepared on a basis consistent with prior interim periods.

Section 7.5             No Solicitation of Transactions.  Until the earlier of
the Closing or the termination of this Agreement pursuant to Article X, neither
the Company nor any of the Shareholders shall, directly or indirectly, through
any officer, director, manager or agent of any of them or otherwise, initiate,
solicit or encourage (including by way of furnishing non-public information or
assistance), or enter into negotiations of any type, directly or indirectly, or
enter into a confidentiality agreement, letter of intent or other similar
Contract with any Person other than the Parent with respect to a sale of all or
any substantial portion of the assets or properties of the Company, or a merger,
consolidation, business combination, sale of all or any substantial portion of
the capital stock of the Company, or the liquidation or similar extraordinary
transaction with respect to the Company (an “Acquisition Transaction”).  The
Company and the Shareholders shall, and shall cause each of their officers,
directors, managers and agents to, immediately discontinue any ongoing
discussions or negotiations with any Person (other than the Parent) relating to
a possible Acquisition Transaction.

Section 7.6             Reasonable Efforts; Further Assurances; Cooperation. 
Subject to the other provisions hereof, each Party shall use its commercially
reasonable efforts to perform its obligations hereunder and to take, or cause to
be taken, and do, or cause to be done, all things necessary, proper or advisable
under applicable Law to cause the transactions contemplated herein to be
effected as soon as practicable, but in any event on or prior to the Expiration
Date, in accordance with the terms hereof and shall cooperate fully with each
other Party and its officers, directors, employees, agents, counsel, accountants
and other designees in connection with any step required to be taken as a part
of its obligations hereunder, including the following:

(a)           Each Party shall promptly make its filings and submissions and
shall take all actions necessary, proper or advisable under applicable Laws to
obtain any required approval of any Governmental Entity with jurisdiction over
the transactions contemplated hereby (except that the Parent shall have no
obligation to take or consent to the taking of any action required by any such
Governmental Entity that could adversely affect the Business, the assets or the
properties of the Company or the transactions contemplated by this Agreement or
the Parent Ancillary Documents).  The Company shall furnish to the Parent all
information required for any application or other filing to be made by the
Company pursuant to any applicable Law in connection with the transactions
contemplated hereby;

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(b)           Each Party shall promptly notify the other Parties of (and provide
written copies of) any communications from or with any Governmental Entity in
connection with the transactions contemplated hereby;

(c)           In the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other Person is commenced that
questions the validity or legality of the transactions contemplated hereby or
seeks damages in connection therewith, the Parties shall (i) cooperate and use
commercially reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding, (ii) in the event an injunction or other
order is issued in any such action, suit or other proceeding, use commercially
reasonable efforts to have such injunction or other order lifted, and (iii)
cooperate reasonably regarding any other impediment to the consummation of the
transactions contemplated hereby; and

(d)           The Company shall give all notices to third parties and use its
commercially reasonable efforts (which shall include the payment of any
reasonable consent fee) to obtain all third-party consents (i) required to be
given or obtained, including the Required Consents or (ii) required to prevent a
Material Adverse Effect, whether prior to, on or following the Closing Date.

Section 7.7             Public Announcements.  Subject to its legal obligations
(including requirements of stock exchanges and other similar regulatory bodies),
each Party shall consult with the other Parties with respect to the timing and
content of all announcements regarding this Agreement or the transactions
contemplated hereby to the financial community, Governmental Entities,
employees, customers or the general public and shall use commercially reasonable
efforts to agree upon the text of any such announcement prior to its release. 
Notwithstanding the foregoing, prior to public disclosure by Parent pursuant to
the reporting requirements of the NASDAQ Stock Market and the Securities and
Exchange Commission, without the prior written consent of the Parent, neither
the Company nor any Shareholder shall disclose to any Person any of the terms of
this Agreement other than to such Parties’ advisors who the Company or any
Shareholder, as applicable, reasonably determines needs to know such information
for the purpose of advising Company or such Shareholder, it being understood
that such advisor will be informed of the confidential nature of this Agreement
and the terms of this Agreement and will be directed to treat such information
as confidential in accordance with the terms of this Agreement.

Section 7.8             Employee Matters.

(a)           Company Benefit Plans.  Prior to the Closing Date, the Company
shall make, or cause to be made, all contributions and pay all premiums under
each Company Benefit Plan and ERISA Affiliate Plan, other than a pension benefit
plan within the meaning of ERISA § 3(2), with respect to periods ending on or
prior to the Closing Date.  Immediately prior to the Closing Date, the Company
shall, if and as requested by the Parent, and unless prevented by Applicable
Benefit Laws, terminate certain or all of the Company Benefit Plans and shall
bear all the expenses of terminating such plans.  Without limiting the
generality of the foregoing, certain employees of the Company

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identified in Schedule 4.1(c) have been granted Company Employee Stock Options.
 Prior to the Closing, the Company shall take such action as is necessary to
terminate the Company Benefit Plan(s) pursuant to which such options were issued
and to ensure that upon the Closing, no Person (other than Parent) shall have
any rights with respect to the capital stock of the Company.  Prior to the
Closing, the Company shall use commercially reasonable efforts to obtain a
general release substantially in the form attached hereto as Exhibit 7.8 from
each holder of Company Stock Options (such releases being the “Option
Releases”).

(b)           Communications.  Neither the Shareholders nor the Company nor any
officer, director, employee, agent or representative of the Company shall make
any communication to employees of the Company regarding any 401(k), group
health, life insurance, disability, accidental death and dismemberment insurance
or employee stock purchase plan maintained by the Parent or any of its
Affiliates or any compensation or benefits to be provided after the Closing Date
without the prior written consent of the Parent.

(c)           Status.  Subject to the provisions of any employment agreements to
be executed by any Employees on or prior to the Closing Date, the Employees
shall remain at-will employees of the Company immediately following the Closing
Date.

(d)           Credit.  To the extent permitted by the employee benefit plans of
Parent, Parent agrees that for purposes of all such plans under which an
Employee’s benefit depends, in whole or in part, on length of service, credit
will be given to Employees, for eligibility and vesting purposes only, for
service with the Company and its Affiliates prior to the Closing Date that was
previously credited under any analogous Company Benefit Plans; provided,
however, that such crediting of service does not result in duplication of
benefits, and shall not result in crediting for purposes of determining benefit
accruals.

Section 7.9             Transfer Taxes; Expenses.  All sales, use, purchase,
transfer, documentary stamp or similar Taxes or recording fees (collectively,
“Transfer Taxes”) payable as a result of the purchase and sale of the Shares or
any other action contemplated hereby shall be borne one-half by Parent and
one-half by the Shareholders, which such amount in the case of the Shareholders
shall be paid out of the Escrow Amount.  The Parties shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
and other documents regarding Transfer Taxes that become payable in connection
with the transactions contemplated hereby that are required or permitted to be
filed at or prior to the Closing.

Section 7.10           Non-Competition.

(a)           Confidential Information.  Each Shareholder and the Shareholder
Representative shall hold in confidence at all times following the date hereof
all Confidential Information and shall not disclose, publish or make use of
Confidential Information at any time following the date hereof without the prior
written consent of the Parent.

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(b)           Noncompetition.

(i)            Each Shareholder and the Shareholder Representative hereby
acknowledges that (A) the Parent conducts the Noncompete Business and/or has
current plans to expand the Noncompete Business throughout the Territory and (B)
to protect adequately the interest of the Parent, it is essential that any
noncompetition covenant with respect thereto cover all of the Noncompete
Business and the entire Territory.

(ii)           Neither any Shareholder nor the Shareholder Representative shall,
during the Noncompete Period, in any manner, either directly, indirectly,
individually, in partnership, jointly or in conjunction with any Person (other
than the Parent): (A) engage in the business of providing, distributing or
selling within the Territory products indicated for the treatment of conditions
the same as or similar to the products of the Noncompete Business, or (B) have
an equity or profit interest in, advise or render services (of an executive,
marketing, manufacturing, research and development, administrative, financial,
consulting or other nature) or lend money to any Person that provides,
distributes or sells within the Territory products of the Noncompete Business
(other than the ownership of not more than 5% of any publicly traded
corporation).

(c)           Nonsolicitation.  Neither any Shareholder nor the Shareholder
Representative shall, during the Noncompete Period, in any manner, directly,
indirectly, individually, in partnership, jointly or in conjunction with any
Person, (i) (x) recruit or solicit or attempt to recruit or solicit, on any of
their behalves or on behalf of any other Person, any employee of the Company or
an Affiliate thereof, (y) encourage any Person (other than the Parent or one of
its Affiliates) to recruit or solicit any employee of the Company or an
Affiliate thereof, or (z) otherwise encourage any employee of the Company or an
Affiliate thereof to discontinue his or her employment by the Company or one of
its Affiliates; (ii) solicit any customer of the Company or an Affiliate thereof
who is or has been a customer on or within twelve (12) months prior to the
Closing Date for the purpose of providing, distributing or selling
pharmaceutical products indicated for the treatment of conditions the same as or
similar to the products of the Noncompete Business; or (iii) persuade or attempt
to persuade any customer or supplier of the Company or any of its Affiliates to
terminate or modify such customer’s or supplier’s relationship with the Company
or any of its Affiliates.  Notwithstanding the foregoing, clauses (i) and (ii)
of this Section 7.10(c) will not apply to (A) general solicitations (including
through the use of advertising or search firms) that do not target such Persons,
(B) the hiring of any such Person who approaches or initiates a discussion
regarding employment with any Shareholder, the Shareholder Representative or any
of such person’s Affiliates (including any discussions subsequent to such
approach or initiation), or (z) the solicitation of any such Person who is
terminated by the Company or its Subsidiaries.

(d)           Severability.  In the event a judicial or arbitral determination
is made that any provision of this Section 7.10 constitutes an unreasonable or
otherwise unenforceable

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restriction against the Shareholders, the provisions of this Section 7.10 shall
be rendered void only to the extent that such judicial or arbitral determination
finds such provisions to be unreasonable or otherwise unenforceable with respect
to the Shareholders or Shareholder Representative.  In this regard, any judicial
authority construing this Agreement shall be empowered to sever any portion of
the Territory, any prohibited business activity or any time period from the
coverage of this Section 7.10 and to apply the provisions of this Section 7.10
to the remaining portion of the Territory, the remaining business activities and
the remaining time period not so severed by such judicial or arbitral
authority.  Moreover, notwithstanding the fact that any provision of this
Section 7.10 is determined not to be specifically enforceable, the Parent shall
nevertheless be entitled to recover monetary damages as a result of the breach
of such provision by any Shareholder or the Shareholder Representative.  The
time period during which the prohibitions set forth in this Section 7.10 shall
be tolled and suspended for a period equal to the aggregate time during which a
Shareholder or the Shareholder Representative violates such prohibitions in any
respect.

(e)           Injunctive Relief.  Any remedy at law for any breach of the
provisions contained in this Section 7.10 shall be inadequate and the Parent
shall be entitled to injunctive relief in addition to any other remedy the
Parent might have hereunder.

Section 7.11           Tax Matters.

(a)           Tax Periods Ending on or Before the Closing Date.  The Parent
shall prepare or cause to be prepared and timely file or cause to be timely
filed all Tax Returns for the Company for all Tax periods ending on or prior to
the Closing Date which are filed after the Closing Date.  All such Tax Returns
shall (i) be prepared in accordance with applicable Law, and to the extent
consistent therewith, in a manner consistent with the prior practice of the
Company, (ii) be provided to the Shareholder Representative for its review and
comment at least thirty (30) days prior to the due date of such Tax Return, and
(iii) revised prior to their filing to reflect any changes reasonably requested
by the Shareholder Representative.  Except to the extent such Taxes arise out of
or relate to the Section 338(h)(10) Election (as hereinafter defined) or are
Transfer Taxes allocated to the Parent under Section 7.9, the Shareholders shall
reimburse the Parent for Taxes of the Company with respect to such periods
within fifteen (15) days after payment by the Parent or the Company of such
Taxes to the extent such Taxes are not reflected as a liability in the Final
Working Capital Schedule.

(b)           Tax Periods Beginning Before and Ending After the Closing Date. 
The Parent shall prepare or cause to be prepared and timely file or cause to be
timely filed any Tax Returns of the Company for Tax periods which begin before
the Closing Date and end after the Closing Date. All such Tax Returns shall (i)
be prepared in accordance with applicable Law, and to the extent consistent
therewith, in a manner consistent with the prior practice of the Company, (ii)
be provided to the Shareholder Representative for its review and comment at
least thirty (30) days prior to the due date of such Tax Return, and (iii)
revised prior to their filing to reflect any changes reasonably requested by the
Shareholder Representative.  Except to the extent such Taxes arise out of or
relate to the

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Section 338(h)(10) Election or are Transfer Taxes allocated to Parent under
Section 7.9, the Shareholders shall pay to the Parent within fifteen (15) days
after the date on which Taxes are paid with respect to such periods an amount
equal to the portion of such Taxes which relates to the portion of such Tax
period ending on the Closing Date to the extent such Taxes are not reflected as
a liability in the Final Working Capital Schedule.  For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Tax period that includes (but does not end on) the Closing Date,
the portion of such Tax which relates to the portion of such Tax period ending
on the Closing Date shall (i) in the case of any Taxes other than Taxes based
upon or related to income or receipts, be deemed to be the amount of such Tax
for the entire Tax period multiplied by a fraction the numerator of which is the
number of days in the Tax period ending on the Closing Date and the denominator
of which is the number of days in the entire Tax period, any (ii) in the case of
any Tax based upon or related to income or receipts be deemed equal to the
amount which would be payable if the relevant Tax period ended on the Closing
Date.

(c)           Cooperation on Tax Matters.  The Parent, the Company and the
Shareholders shall cooperate as and to the extent reasonably requested by the
other Party, in connection with the filing of Tax Returns pursuant to this
Section and any audit, litigation or other proceeding with respect to Taxes. 
Such cooperation shall include the retention and (upon the other Party’s
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder.

(d)           Section 338(h)(10) Election.

(i)            The Parent, the Company and the Shareholders shall take all steps
necessary to make a timely, effective and irrevocable election pursuant to
Section 338(h)(10) of the Code (and, if permissible, under any applicable state
or local income Tax laws) with respect to the acquisition by Parent of the
Shares to treat such purchase and sale as a deemed sale of assets for federal
income Tax and state income Tax purposes (collectively, the “Section 338(h)(10)
Election”).  The Parent, the Company and the Shareholders and their respective
affiliates shall report the transactions consistent with such Section 338(h)(10)
Election and shall take no position contrary thereto unless and to the extent
required to do so pursuant to a final determination by the IRS or other
applicable taxing authority.

(ii)           The Parent, the Company and the Shareholders shall execute at the
Closing any and all forms necessary to effectuate the Section 338(h)(10)
Election (including, without limitation, Internal Revenue Service Form 8023 and
any similar forms under applicable state or local income Tax laws)
(collectively, the “Section 338 Forms”).  In the event, however, any Section 338
Forms are not executed at the Closing, the Seller and Parent shall prepare and
complete each such Section 338 Form no later than fifteen (15) days prior to the
date each such Section 338 Form is required to be filed.

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(iii)          Parent shall prepare and provide to the Seller within sixty (60)
days after the Closing, a schedule allocating the Adjusted Merger Payment and
the liabilities of the Company as of the Closing Date among the assets of the
Company.  Such schedule shall be prepared in good faith and in accordance with
applicable provisions of the Code.  Unless the Shareholder Representative
objects to the Parent’s allocation schedule within ten (10) days after receipt
thereof, such schedule shall become final and, absent a final determination by a
governmental authority to the contrary, shall be binding upon the Parent, the
Company and the Shareholders for all federal, state and local income Tax
purposes.  If the Shareholder Representative objects to the Parent’s allocation
within ten (10) days of receipt, then the Parties agree to meet and resolve the
dispute in good faith.  Any such objection by the Shareholder Representative
shall be made in good faith and based on the applicable provisions of the Code.

(iv)          The Parent and the Shareholders agree that neither Party shall
take any action to modify or revoke the Section 338(h)(10) Election following
the filing of the Section 338 Forms, without the written consent of the other,
unless required to do so by any governmental authority.  The Parent and
Shareholders shall not take any position for Tax purposes that is inconsistent
with such information without the prior written consent of the other, which
shall not be unreasonably withheld.

(v)           Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 7.11(d) shall survive through the expiration of the
applicable statute of limitations as the same may be extended.

Section 7.12           Customer Visits.  During the period commencing on the
date hereof and ending on the Closing Date, and subject to reasonable
limitations, the Company and the Shareholders shall permit the Parent to discuss
and meet, and shall cooperate in such discussions and meetings, with any
Customer of the Company that the Parent so requests.  A senior executive of the
Company, reasonably satisfactory to the Parent, shall have the right to
accompany the Parent’s representative to such meeting and shall participate with
the Parent’s representative in any such discussions.  Furthermore, the Company
and the Shareholders shall cooperate with the Parent in the preparation of a
presentation to such Customers with respect to the transactions contemplated
hereby.  All costs relating to the actions described in this Section 7.12 shall
be borne solely by the Parent.  The Company shall promptly notify the Parent if
a commercial relationship and/or agreement it has with a Customer terminates
during the period commencing on the date hereof and ending on the Closing Date.

Section 7.13           Director and Officer Liability and Indemnification.

(a)           For a period of six (6) years after the Closing, Parent shall not,
and shall not permit the Surviving Corporation to amend, repeal or modify any
provision in the Surviving Corporation’s articles of incorporation or bylaws
relating to the exculpation or indemnification of any officers and directors
(unless required by law), unless pursuant to a separate written agreement
delivered by Parent, and reasonably satisfactory to such

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officers and directors, Parent has agreed to provide exculpation or
indemnification to such persons on substantially the same terms and conditions.

(b)           For a period of six (6) years after the Closing, Parent shall, or
shall cause the Surviving Corporation to, maintain director and officer
liability insurance which insurance shall provide coverage for the individuals
who were officers and directors of the Company prior to Closing comparable to
the policy or policies maintained by the Company immediately prior to the
Closing for the benefit of such individuals.

(c)           Notwithstanding anything contained in this Agreement to the
contrary, this Section 7.13 shall survive the consummation of the Closing for
six (6) years.

Section 7.14           Accounts and Notes Receivable.

(a)           The Company shall cause all notes and accounts receivable and
payable of the Company owing by or to any Shareholder or any director, officer,
employee or Affiliate of the Company (each, an “Affiliate Loan”) to be paid in
full at or prior to the Closing Date.

(b)           From and after the Closing, if any Shareholder receives or
collects any Receivables, the Shareholder shall remit any such amounts to the
Parent or the Company within five (5) days of each day on which the Shareholder
receives such sum

Section 7.15           Release.  In consideration of the mutual covenants,
agreements and warranties herein contained, and for other good and valuable
consideration the sufficiency of which is hereby acknowledged, as of and
following the Closing Date, each Party to this Agreement (in such capacity, a
“Releasor”) knowingly, voluntarily and unconditionally releases, forever
discharges, and covenants not to sue any other Party to this Agreement (in such
capacity, a “Releasee”) from or for any and all claims, causes of action,
demands, suits, debts, obligations, liabilities, damages, losses, costs and
expenses (including attorneys’ fees) of every kind or nature whatsoever, known
or unknown, actual or potential, suspected or unsuspected, fixed or contingent,
that such Releasor has or may have, now or in the future, arising out of,
relating to, or resulting from any act or omission, error, negligence, breach of
contract, tort, violation of law, matter or cause whatsoever from the beginning
of time to the Closing Date; provided, however, that the foregoing release shall
not apply to: (i) any claims arising out of this Agreement, Parent Ancillary
Documents or the Seller Ancillary Documents, or (ii) in the case of the officers
of the Company, any claims arising out of their fraud or willful misconduct. 
For purposes of clarity, the Shareholders knowingly, voluntarily and
unconditionally release and discharge the Company and Parent for any claim,
cause of action, demand, suit, obligation or liability associated with the
Company’s cancellation of indebtedness evidenced by certain promissory notes
dated (A) January 1, 2006 from Mark Pugh and Harold Deas, (B) August 1, 2006,
October 26, 2006 and March 16, 2007 from the John N. Kapoor Trust dated 9/20/89,
(C) October 30, 2006 from Michael Babich, and (D) December 12, 2006 from John
Wesley, in an aggregate amount (including principal and interest) equal to
$2,216,828.66, made in exchange for the sale and issuance by the Company of
3,141,452 shares of Company Common Stock.

 

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Section 7.16           Termination of Certain Agreements.  Prior to or at
Closing, the Company shall terminate, or cause to be terminated, and deliver to
Parent written evidence of termination, of the agreements and arrangements set
forth on Schedule 7.16 (the “Terminated Arrangements”), such that the Company
shall not have any liability following the Closing related to such Terminated
Arrangements, and no Person (other than Parent) shall have any rights with
respect to the Company’s capital stock.  Each such termination shall include a
release of the Company from any and all liabilities and obligations arising out
of, or related to, such Terminated Arrangement.

Section 7.17           HSR Act.

(a)           The Parent and the Company will, within ten (10) Business Days of
the date hereof, file with the Federal Trade Commission (the “FTC”) and the
Antitrust Division of the Department of Justice (“DOJ”) the notifications and
other information required to be filed under the HSR Act with respect to the
transactions contemplated by this Agreement and shall otherwise comply with the
HSR Act.  Each of the Parent and the Company shall use their commercially
reasonable efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party; (ii) promptly inform the other Party of any communication received from,
or given to, the FTC or DOJ and of any material communication received or given
in connection with any proceeding by a private party, in each case regarding any
of the transactions contemplated hereby; and (iii) permit the other Party to
review any necessary communication given by it to, and consult with each other
in advance of any meeting or conference with, DOJ or the FTC or, in connection
with any proceeding by a private party, with any other Person, and to the extent
permitted by DOJ or the FTC or such other Person, give the other Party the
opportunity to attend and participate in such meetings and conferences.

(b)           The Parties shall keep all information about the other obtained in
connection with the preparation of such notification confidential pursuant to
the terms of that certain Confidentiality Agreement, dated as of January 25,
2007, by and between the Parent and the Company.  The Parent and the Company
will request early termination of the waiting period under the HSR Act.  All
filing fees in connection with the HSR filing shall be borne equally by the
Company on the one hand and the Parent on the other hand.

(c)           Nothing in this Section shall require the Parent or the Company to
sell, hold separate or otherwise dispose of any asset or to conduct their
business in a specified manner.

Section 7.18           Additional Obligations and Performance Payments.

(a)           From and after the Closing, Parent shall use good faith,
commercially reasonable efforts to continue development and obtain approval for
the Product for commercial sale by prescription in the United States, including,
without limitation, by the filing of a new drug application with the FDA;
provided, that, under no circumstances

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shall the Parent be obligated to spend more than $10,000,000 in the aggregate,
for research, development and any other direct costs (i.e., excluding costs
related to allocation of corporate overhead and other similar costs) associated
with such development and approval process.

(b)           Upon FDA approval of the Product for commercial sale in the United
States, Parent shall make an additional one-time payment to the Shareholder
Representative, on behalf of the Shareholders, of $25,000,000 in the aggregate. 
Parent shall further use commercially reasonable efforts to market and sell the
Product in the United States.

(c)           In addition, if the Company achieves certain performance
objectives set forth on Exhibit 7.18, Parent shall make certain additional
performance payments to the Shareholder Representative, on behalf of the
Shareholders, as set forth on such exhibit.

ARTICLE VIII
CONDITIONS TO CLOSING

Section 8.1             Conditions to Each Party’s Obligations.  The respective
obligations of each Party to effect the transactions contemplated hereby shall
be subject to the fulfillment (or mutual waiver) at or prior to the Closing of
the expiration or termination of the waiting period applicable to the
consummation of the purchase and sale of the Shares under the HSR Act.

Section 8.2             Conditions to Obligations of the Parent.  The
obligations of the Parent to consummate the transactions contemplated hereby
shall be subject to the fulfillment  (or waiver by the Parent) at or prior to
the Closing of each of the following additional conditions:

(a)           Injunction. There shall be no effective injunction, writ or
preliminary restraining order or any order of any nature issued or Law passed by
a Governmental Entity of competent jurisdiction to the effect that the
transactions contemplated hereby may not be consummated as provided herein, no
proceeding or lawsuit shall have been commenced by any Governmental Entity for
the purpose of obtaining any such injunction, writ or preliminary restraining
order and no written notice shall have been received from any Governmental
Entity indicating an intent to restrain, prevent, materially delay or
restructure the transactions contemplated hereby, in each case where the Closing
would (or would be reasonably likely to) result in a material fine or penalty
payable by the Parent or the Company or a material restriction on the operation
of the Business as a result of such matter.

(b)           Consents. All Required Consents shall have been obtained or made
on terms and conditions reasonably satisfactory to the Parent.

(c)           Representations and Warranties.  Each of the representations and
warranties of the Company set forth in Article IV and of the Shareholders
contained in Article V shall (i) have been true and correct in all material
respects as of the date hereof (except: (A) in the case of any representation or
warranty that by its terms is made as of a

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date specified in such representation or warranty, in which case such
representation or warranty shall be true and correct as of such date, and (B)
those representations and warranties which are qualified by materiality, which
shall have been true and correct in all respects) and (ii) be true and correct
in all material respects as of the Closing Date as though made on and as of the
Closing Date (except in the case of any representation or warranty that by its
terms is made as of a date specified in such representation or warranty, in
which case such representation or warranty shall be true and correct as of such
date), except where the failure of one or more such representations or
warranties to be true and correct, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.

(d)           Performance of Obligations of the Company.  The Company shall have
performed in all material respects all covenants and agreements required to be
performed by each of them hereunder at or prior to the Closing.

(e)           No Material Adverse Effect.  Between the date hereof and the
Closing Date, there shall not have occurred any Material Adverse Effect.

(f)            Payoff Letters.  The Company shall have delivered to the Parent
satisfactory payoff letters (the “Payoff Letters”) evidencing the outstanding
amount of the Closing Date Indebtedness.

(g)           Release of Liens.  The Parent shall have received evidence
reasonably satisfactory to it that all Liens affecting any property or asset of
the Company (other than Permitted Liens) have been released, or will be released
upon repayment of the Closing Date Indebtedness pursuant hereto.

(h)           Opinion of Company’s Counsel.  The Parent shall have received an
opinion of Company’s counsel(s) dated the Closing Date, in form and substance
reasonably satisfactory to Parent.

(i)            Termination of Terminated Arrangements.  The Parent shall have
received evidence (reasonably satisfactory to the Parent) that the Terminated
Arrangements have been terminated in accordance therewith.

(j)            Resignations and Releases.  All officers and directors of the
Company shall have delivered to the Parent their resignations as officers and
directors, effective as of the Closing Date, and general releases in form and
substance reasonably satisfactory to Parent (the “Resignations and Releases”).

(k)           Option Releases.  The holders of Company Stock Options
constituting not less than 90% of the total Company Stock Options outstanding
shall have delivered to the Parent the Option Releases.

(l)            Closing Date Indebtedness Statement.  The Company shall have
delivered to the Parent the Closing Date Indebtedness Statement in accordance
with Section 3.2.

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(m)          Escrow Agreement.  The Parent shall have received an executed
counterpart of the Escrow Agreement from the Escrow Agent.

(n)           Certificate of Merger.  The Certificate of Merger shall have been
duly accepted for filing by the Secretary of State of the State of Georgia.

(o)           Audit Opinion.  The Parent shall have received a copy of an audit
opinion of BDO Seidman, LLP, expressing its opinion as to the audit of the
financial statements of the Company for the calendar year 2006.

(p)           Ancillary Documents.  The Company shall have delivered, or caused
to be delivered, to the Parent the documents listed in Section 9.2.

Section 8.3             Conditions to Obligations of the Shareholders.  The
obligations of the Shareholders to consummate the transactions contemplated
hereby shall be subject to the fulfillment (or waiver by the Shareholder
Representative) at or prior to the Closing of each of the following additional
conditions:

(a)           Injunction.  There shall be no effective injunction, writ or
preliminary restraining order or any order of any nature issued by a
Governmental Entity of competent jurisdiction to the effect that the Acquisition
may not be consummated as provided herein, no proceeding or lawsuit shall have
been commenced by any Governmental Entity for the purpose of obtaining any such
injunction, writ or preliminary restraining order and no written notice shall
have been received from any Governmental Entity indicating an intent to
restrain, prevent, materially delay or restructure the transactions contemplated
hereby, in each case where the Closing would (or would be reasonably likely to)
result in a material fine or penalty payable by the Shareholders or a material
restriction on the Company’s operations as a result of such matter.

(b)           Consents.  All consents, approvals, orders or authorizations of,
or registrations, declarations or filings with, any Governmental Entity required
in connection with the execution, delivery or performance hereof shall have been
obtained or made on terms and conditions reasonably satisfactory to the
Shareholder Representative.

(c)           Representations and Warranties.  Each of the representations and
warranties of the Parent set forth in Article VI shall (i) have been true and
correct in all respects as of the date hereof (except in the case of any
representation or warranty that by its terms is made as of a date specified in
such representation or warranty, in which case such representation or warranty
shall be true and correct as of such date) and (ii) be true and correct in all
respects as of the Closing Date as though made on and as of the Closing Date
(except in the case of any representation or warranty that by its terms is made
as of a date specified in such representation or warranty, in which case such
representation or warranty shall be true and correct as of such date).

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(d)           Performance of Obligations by the Parent.  The Parent shall have
performed in all material respects all covenants and agreements required to be
performed by it hereunder on or prior to the Closing Date.

(e)           Escrow Agreement.  The Shareholder Representative shall have
received an executed counterpart of the Escrow Agreement from the Escrow Agent.

(f)            Opinion of Parent’s Counsel.  The Company shall have received an
opinion of Paul, Hastings, Janofsky & Walker LLP dated the Closing Date, in form
and substance reasonably satisfactory to Company.

(g)           Certificate of Merger.  The Certificate of Merger shall have been
duly accepted for filing by the Secretary of State of the State of Georgia.

(h)           Ancillary Documents.  The Parent shall have delivered, or caused
to be delivered, to the Shareholders and the Company the documents listed in
Section 9.3.

ARTICLE IX
CLOSING

Section 9.1             Closing Location.  The Closing shall take place at the
time specified in Section 2.2 of this Agreement, at the offices of Paul,
Hastings, Janofsky & Walker LLP, 600 Peachtree Street, NE, Suite 2400, Atlanta,
Georgia 30308, or at such other place as the Parties may agree.

Section 9.2             Company and Shareholder Closing Deliveries.  At the
Closing, the Company and/or the Shareholders, as applicable, shall deliver to
the Parent the following:

(a)           a certificate executed by the Shareholders as to compliance with
the conditions set forth in Section 8.2(c) and Section 8.2(d) hereof;

(b)           certificates representing the Shares, duly endorsed in blank or
accompanied by duly executed stock powers or other assignment documents;

(c)           the Payoff Letters;

(d)           the Resignations and Releases;

(e)           the Escrow Agreement;

(f)            the organizational record books, minute books and corporate seal
of the Company;

(g)           a certificate by the Secretary or any Assistant Secretary of the
Company, dated as of the Closing Date, as to (i) the good standing of the
Company in its jurisdiction of incorporation and in each other jurisdiction
where it is qualified to do business, and (ii)  the effectiveness of the
resolutions of the board of directors of the Company and the

51

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Shareholders authorizing the Merger, and the execution, delivery and performance
of this Agreement and the transactions contemplated hereby;

(h)           the Certificate of Merger; and

(i)            all other documents required to be entered into by the Company
and the Shareholders pursuant hereto or reasonably requested by the Parent to
convey the Shares to the Parent or to otherwise consummate the transactions
contemplated hereby.

Section 9.3             Parent Closing Deliveries.  On the Closing, the Parent
shall deliver, or caused to be delivered, to the Shareholder Representative the
following:

(a)           the Adjusted Merger Payment to be paid at Closing pursuant to
Section 3.1, paid and delivered in accordance with such Section;

(b)           a certificate of an authorized officer as to compliance with the
conditions set forth in Section 8.3(c) and Section 8.3(d);

(c)           the Escrow Agreement;

(d)           the Certificate of Merger; and

(e)           all other documents required to be entered into or delivered by
the Parent at or prior to the Closing pursuant hereto.

ARTICLE X
TERMINATION

Section 10.1           Termination.  This Agreement may be terminated:

(a)           in writing by mutual consent of the Parent and the Shareholder
Representative;

(b)           by written notice from the Shareholder Representative to the
Parent, in the event the Parent (i) fails to perform in any material respect any
of its agreements contained herein required to be performed by it at or prior to
the Closing or (ii) materially breaches any of its representations and
warranties contained herein, which failure or breach is not cured within ten
(10) days following the Shareholder Representative having notified the Parent of
its intent to terminate this Agreement pursuant to this Section 10.1(b);

(c)           by written notice from the Parent to the Shareholder
Representative, in the event the Company or the Shareholders (i) fail to perform
in any material respect any of their agreements contained herein required to be
performed by it at or prior to the Closing or (ii) materially breach any of
their representations and warranties contained herein, which failure or breach
is not cured within ten (10) days following the Parent having

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notified the Shareholder Representative of its intent to terminate this
Agreement pursuant to this Section 10.1(c);

(d)           by written notice by the Shareholder Representative to the Parent
or the Parent to the Shareholder Representative, as the case may be, in the
event the Closing has not occurred on or prior to June 25, 2007 (the “Expiration
Date”) for any reason other than delay or nonperformance of the Party seeking
such termination, provided however, if the only condition to Closing that has
not been satisfied is the condition in Section 8.1, such date shall be extended
to July 25, 2007.

Section 10.2           Specific Performance and Other Remedies.  Each Party
hereby acknowledges that the rights of each Party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character and that,
in the event that any Party violates or fails or refuses to perform any covenant
or agreement made by it herein, the non-breaching Party may be without an
adequate remedy at law.  In the event that any Party violates or fails or
refuses to perform any covenant or agreement made by such Party herein, the
non-breaching Party or Parties may, subject to the terms hereof and in addition
to any remedy at law for damages or other relief, institute and prosecute an
action in any court of competent jurisdiction to enforce specific performance of
such covenant or agreement or seek any other equitable relief

Section 10.3           Effect of Termination.  In the event of termination of
this Agreement pursuant to this Article X, this Agreement shall forthwith become
void and there shall be no continuing obligation on the part of any Party or its
officers, directors or stockholders, except for obligations under Section 7.7
(Public Announcements), Section 10.2 (Specific Performance and Other Remedies),
Section 12.2 (Notices), Section 12.6 (Controlling Law), Section 12.7
(Severability), Section 12.9 (Enforcement of Certain Rights), Section 12.10
(Waiver; Amendment) and Section 12.14 (Transaction Costs) and this Section 10.3,
all of which shall survive the Termination Date.  Notwithstanding the foregoing,
nothing contained herein shall relieve any Party from liability arising out of
any breach of the representations, warranties, covenants or agreements set forth
herein and arising prior to termination.

ARTICLE XI
INDEMNIFICATION

Section 11.1           Indemnification Obligations of the Key Shareholders and
the Company.  The Key Shareholders and the Company shall, jointly and severally,
indemnify, defend and hold harmless the Parent Indemnified Parties from,
against, and in respect of, any and all Losses arising out of or relating to:

(a)           any breach or inaccuracy of any representation or warranty made by
the Company contained in Article III of this Agreement or by the Company in the
Seller Ancillary Documents, whether such representation and warranty is made as
of the date hereof or as of the Closing Date, after giving effect to any
supplement to the Disclosure Schedules delivered pursuant to Section 7.3;

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(b)           any breach of any covenant, agreement or undertaking made by the
Company or the Shareholders in this Agreement or the Seller Ancillary Documents;
and

(c)           the Closing Date Indebtedness.

Section 11.2           Indemnification Obligations of Shareholders.  The
Shareholders, severally and not jointly, shall indemnify, defend and hold
harmless the Parent Indemnified Parties from, against, and in respect of, any
and all Losses arising out of or relating to:

(a)           any breach or inaccuracy of any representation or warranty made by
such Shareholder contained in Article V of this Agreement or in any Seller
Ancillary Document, whether such representation and warranty is made as of the
date hereof or as of the Closing Date, after giving effect to any supplement to
the Disclosure Schedules delivered pursuant to Section 7.3; and

(b)           any breach of any covenant, agreement or undertaking made by such
Shareholder in this Agreement or in any Seller Ancillary Documents; and

(c)           any liability or obligation of the Company for (i) other than
Taxes which arise out of or relate to the Section 338(h)(10) Election or
Transfer Taxes allocated to Parent pursuant to Section 7.9, any Taxes with
respect to any Tax period ending on or before the Closing Date or any Tax period
beginning before and ending after the Closing Date to the extent allocable
(determined in a manner consistent with Section 7.11(b) to the portion of such
period beginning before and ending on the Closing Date), or (ii) the unpaid
Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any similar
provision of other federal, provincial, state, local or foreign Tax law), as a
transferee or successor, by Contract or otherwise, in each case to the extent
not reflected as a liability in the Final Working Capital Schedule.

Section 11.3           Indemnification Obligations of the Parent.  Parent shall
indemnify and hold harmless the Shareholder Indemnified Parties from, against
and in respect of any and all Losses arising out of or relating to:

(a)           any breach or inaccuracy of any representation or warranty made by
Parent in this Agreement or in any Parent Ancillary Document, whether such
representation and warranty is made as of the date hereof or as of the Closing
Date; and

(b)           any breach of any covenant, agreement or undertaking made by
Parent in this Agreement or in any Parent Ancillary Document.

Section 11.4           Indemnification Exclusive Remedy.  The sole recourse and
exclusive remedy of any party hereto for the breach of any representations,
warranties, covenants and agreements contained in this Agreement, the Schedules,
or any agreement, instrument or certificate contemplated hereby, or otherwise
arising from the transactions contemplated hereby or the operations of the
Company prior to the Closing, (but excluding any Seller Ancillary Documents or
Parent Ancillary Documents), shall be to assert a claim for indemnification
under the indemnification provisions of Section 11.1, 11.2 or 11.3, as
applicable.  In furtherance of the

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foregoing, each indemnified party hereby waives, from and after the Closing, to
the fullest extent permitted under applicable law, any and all rights, claims,
and causes of action it may have against any indemnifying party relating to the
subject matter of this Agreement based upon predecessor or successor liability,
contribution, tort or strict liability or any federal, state, local or foreign
statute, law, rule, regulation or ordinance or otherwise; provided, however,
that the limitations and waiver of this Section shall not apply to: (i) any
claim arising from fraud, (ii) any claim arising from the willful misconduct of
any officer of the Company, or (iii) any claim for equitable relief (e.g.
injunctive relief or specific performance).

Section 11.5           Indemnification Procedure.

(a)           Promptly following receipt by an Indemnified Party of notice by a
third party (including any Governmental Entity) of any complaint, dispute or
claim or the commencement of any audit, investigation, action or proceeding with
respect to which such Indemnified Party may be entitled to receive payment from
the other Party for any Losses, such Indemnified Party shall promptly provide
written notice thereof (a “Notice of Claim”) to the Parent or the Shareholder
Representative, as the case may be (the “Indemnifying Party”), including the
amount and specific factual and legal basis for such claim, and give the
Indemnifying Party a copy of such claim, process and all legal pleadings and
other written evidence thereof received by the Indemnified Party; provided,
however, that the failure to so notify the Indemnifying Party shall relieve the
Indemnifying Party from liability hereunder with respect to such claim only if,
and only to the extent that, such failure to so notify the Indemnifying Party
results in the forfeiture by the Indemnifying Party of rights and defenses
otherwise available to the Indemnifying Party with respect to such claim.  The
Indemnifying Party shall have the right, upon written notice delivered to the
Indemnified Party within twenty (20) days thereafter assuming full
responsibility for any Losses resulting from such audit, investigation, action
or proceeding, to assume the defense of such audit, investigation, action or
proceeding, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of the fees and disbursements of such
counsel.  In the event, however, that the Indemnifying Party declines or fails
to assume the defense of the audit, investigation, action or proceeding on the
terms provided above and so notify the Indemnified Party within such 20-day
period, or if the Indemnifying Party is barred from assuming such defense
pursuant to this Section 11.5 then the Indemnified Party shall have the right to
assume such defense, subject to the participation of the Indemnifying Party, as
provided in this Section 11.5, and the Indemnified Party’s fees and expenses
(including reasonable fees and expenses of counsel) in connection with such
defense will be borne by the Indemnifying Party.  In any audit, investigation,
action or proceeding for which indemnification is being sought hereunder the
Indemnified Party or the Indemnifying Party, whichever is not assuming the
defense of such action, shall have the right to participate in such matter and
to retain its own counsel at such Party’s own expense.  The Indemnifying Party
or the Indemnified Party (as the case may be) shall at all times use
commercially reasonable efforts to keep the Indemnifying Party or Indemnified
Party (as the case may be) reasonably apprised of the status of the defense of
any matter the defense of which it is maintaining and to cooperate in good faith
with each other with respect to the defense of any such matter.  If the
Indemnified Party shall be

55

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required by judgment or a settlement agreement to pay any amount or perform any
action in respect of any obligation or liability pursuant to which the
Indemnified Party may make a claim against the Escrow Amount, the Indemnified
Party shall make a claim with the Escrow Agent for such amount or the reasonable
and documented cost of performing such action (which shall include all
reasonable legal fees and documented expenses related thereto) to be withdrawn
from the Escrow Account in accordance with the terms and provisions of the
Escrow Agreement, subject to this Article XI.

(b)           In the event of a claim against the Escrow Amount, all such
reasonable fees and expenses in connection with the defense of such claim shall
be advanced from the Escrow Amount in accordance with the Escrow Agreement, and
Parent and the Shareholder Representative shall execute any joint written notice
to the Escrow Agent and otherwise to cooperate with the other in obtaining such
advance or advances of funds.

(c)           No Indemnified Party may settle or compromise any claim or consent
to the entry of any judgment with respect to which indemnification is being
sought hereunder without the prior written consent of the Indemnifying Party
(which may not be unreasonably withheld or delayed), unless (i) the Indemnifying
Party fails to assume and maintain the defense of such claim pursuant to Section
11.5(a) or (ii) such settlement, compromise or consent includes an unconditional
release of the Indemnifying Party and its officers, directors, employees and
Affiliates from all liability arising out of, or related to, such claim.  An
Indemnifying Party may not, without the prior written consent of the Indemnified
Party, settle or compromise any claim or consent to the entry of any judgment
with respect to which indemnification is being sought hereunder unless such
settlement, compromise or consent (x) includes an unconditional release of the
Indemnified Party and its officers, directors, employees and Affiliates from all
liability arising out of, or related to, such claim, (y) does not contain any
admission or statement suggesting any wrongdoing or liability on behalf of the
Indemnified Party and (z) does not contain any equitable order, judgment or term
that in any manner affects, restrains or interferes with the business of the
Indemnified Party or any of the Indemnified Party’s Affiliates.

Section 11.6           Survival Period.  The representations and warranties of
the Parties contained herein shall not be extinguished by the Closing, but shall
survive the Closing for, and all claims for indemnification in connection
therewith shall be asserted not later than, eighteen (18) months following the
Closing Date; provided, however, that (a) each of the representations and
warranties contained in Section 4.1 (Organization), Section 4.2 (Authorization),
those provisions of Section 4.15 (Tax Returns; Taxes) other than Section
4.15(q), solely to the extent that such provisions of Section 4.15 relate to
income Taxes only, Section 4.15(q), Section 5.1 (Authorization), and Section 5.3
(Ownership of Equity) (collectively, the “Surviving Representations”) shall
survive and continue for, and all indemnification claims with respect thereto
shall be made prior to: (i) in the case of those provisions of Section 4.15 (Tax
Returns; Taxes) other than Section 4.15(q), solely to the extent that such
provisions of Section 4.15 relate to income Taxes only, and Section 4.15(q), the
expiration of the applicable statute of limitations, and (ii) in the case of
Section 4.1, Section 4.2 and Section 5.3, two (2) years following the

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Closing Date.  Notwithstanding the foregoing, if, prior to the close of business
on the last day a claim for indemnification may be asserted hereunder, an
Indemnifying Party shall have been properly notified of a claim for indemnity
hereunder and such claim shall not have been finally resolved or disposed of at
such date, such claim shall continue to survive and shall remain a basis for
indemnity hereunder until such claim is finally resolved or disposed of in
accordance with the terms hereof.

Section 11.7           Liability Limits.  Notwithstanding anything to the
contrary set forth herein, the Parent Indemnified Parties shall not make a claim
against the Shareholders (including the Key Shareholders) or the Company for
indemnification under Sections 11.1(a), 11.1(b) (except in the case of Section
11.1(b), any covenants, agreements or undertakings set forth in Sections 7.1(b),
7.1 (d)-(o), 7.1 (q)-(t), 7.2, 7.5, 7.9, 7.10, 7.14,  7.16 and 7.17) or Section
11.2 for Losses unless and until the aggregate amount of such Losses with
respect to any claim or series of related claims for which the Parent
Indemnified Parties are otherwise entitled to indemnification exceeds $1,500,000
(the “Parent Deductible”) (it being understood and agreed that the Parent
Deductible is intended as a deductible).  If the aggregate amount of Losses for
which the Parent Indemnified Parties are entitled to indemnification under the
provisions cited in the first sentence of this Section 11.7 exceeds the Parent
Deductible, the Parent Indemnified Parties shall be entitled to be paid the
excess of the aggregate amount of all such Losses over the Parent Deductible,
subject to the other limitations on recovery set forth in this Article XI.  The
total aggregate amount of the liability of the Shareholders and the Company for
Losses with respect to any claims made pursuant to the provisions cited in the
first sentence of this Section 11.7 shall be limited to the Escrow Amount and
the sole and exclusive remedy of Parent shall be to proceed against the Escrow;
provided, however, that: (i) the liability of the Shareholders for Losses
arising out of or related to fraud shall not be subject to the Parent Deductible
or limited to the Escrow Amount, (ii) the liability of the Shareholders for
Losses arising out of or related to a breach of any of the Surviving
Representations shall not be subject to the Parent Deductible or limited to the
Escrow Amount, but shall be capped at the amount of the Adjusted Merger Payment;
provided further, however, Losses arising out of or related to a breach of
Section 4.15(q) shall be capped at $10,250,000, and (iii) for purposes of
calculating the Parent Deductible, any breaches of any representation or
warranty shall be calculated without reference to any materiality or adverse
effect qualifier or exception set forth in such representation or warranty.

Section 11.8           Investigations.  The respective representations and
warranties of the Parties contained in this Agreement or any certificate or
other document delivered by any Party at or prior to the Closing and the rights
to indemnification set forth herein shall not be deemed waived or otherwise
affected by any investigation made, or knowledge acquired, by a Party.

Section 11.9           Calculation of Losses.  Losses shall be calculated net of
any Tax benefits actually realized by the Indemnified Party or any Affiliate of
the Indemnified Party as a result of the events giving rise to its right to
indemnification under this Article XI.

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ARTICLE XII
MISCELLANEOUS PROVISIONS

Section 12.1           Shareholder Representative.

(a)           John N. Kapoor, Ph.D., is hereby irrevocably appointed as
representative, agent and attorney-in-fact for the Company and each Shareholder,
(i) to give and receive notices and communications relating to the transactions
and other matters contemplated by this Agreement or the Seller Ancillary
Documents, including those relating to adjustments to the Merger Payment and
indemnification claims; (ii) to make decisions on behalf of the Company and the
Shareholders with respect to the transactions and other matters contemplated by
this Agreement or the Seller Ancillary Documents, including regarding (A)
adjustments to the Merger Payment, (B) indemnification claims, (C) amendments to
this Agreement or the Seller Ancillary Documents and (D) the defense of third
party suits that may be the subject of indemnification claims, and to negotiate,
enter into settlements and compromises of, and demand litigation or arbitration
with respect to such third party suits or claims by the Parent for
indemnification; and (iii) to take other actions on behalf of the Company and
the Shareholders as contemplated by this Agreement or the Seller Ancillary
Documents, including the exercise of all rights granted to the Company and the
Shareholders under this Agreement or the Seller Ancillary Documents.

(b)           The Company and each Shareholder agrees that (i) the provisions of
this Section 12.1 are independent and severable, are irrevocable and coupled
with an interest and shall be enforceable notwithstanding any rights or remedies
the Company or any Shareholder may have in connection with the transactions
contemplated by this Agreement or the Seller Ancillary Documents, (ii) the
remedy at law for any breach of the provisions of this Section 12.1 would be
inadequate, and (iii) the provisions of this Section 12.1 shall be binding upon
the successors and assigns of the Company and each Shareholder.

(c)           A decision, act, consent or instruction of the Shareholder
Representative relating to this Agreement or the Seller Ancillary Documents
shall constitute a decision for the Company and all Shareholders, and shall be
final, binding and conclusive upon the Company and the Shareholders, and the
Parent may rely upon any such decision, act, consent or instruction of the
Shareholder Representative as being the decision, act, consent or instruction of
the Company and every Shareholder.  The Shareholders shall indemnify and hold
harmless the Parent from any action or omission on their behalf at the request
or instruction of Shareholder Representative.

Section 12.2           Notices.  All notices, communications and deliveries
required or made hereunder must be made in writing signed by or on behalf of the
Party making the same, shall specify the Section hereunder pursuant to which it
is given or being made, and shall be delivered personally or by telecopy
transmission or by a national overnight courier service or by registered or
certified mail (return receipt requested) (with postage and other fees prepaid)
as follows:

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To the Parent:

 

Sciele Pharma, Inc.
5 Concourse Pky.
Atlanta, Georgia 30328
Attn: General Counsel
Facsimile No.: 678.992.1043

 

 

 

with a copy to:

 

Paul, Hastings, Janofsky & Walker LLP
600 Peachtree Street, NE, Suite 2400
Atlanta, Georgia 30308-2222
Attn: W. Tinley Anderson, III
Facsimile No.: (404) 685-5215

 

 

 

To the Company or
the Shareholders:

 

Alliant Pharmaceuticals, Inc.
333 North Point Center East, Suite 250
Alpharetta, Georgia 30022
Attn: Mark Pugh
Facsimile No.: (770) 817-4501

 

 

 

with a copy to:

 

McKee and McKee, P.C.
3820 Mansell Road, Suite 250
Alpharetta, GA 30022
Attn: Christopher J. McKee
Facsimile No.:(770) 640-1184

 

 

 

with a copy to:

 

McDermott, Will & Emery
227 W. Monroe Street, Suite 4400
Chicago, IL 60606
Attn: Thomas J. Murphy
Facsimile No.: (312) 984-7700

 

or to such other representative or at such other address of a Party as such
Party may furnish to the other parties in writing.  Any such notice,
communication or delivery shall be deemed given or made (a) on the date of
delivery, if delivered in person, (b) upon transmission by facsimile if receipt
is confirmed by telephone, (c) on the first (1st) Business Day following
delivery to a national overnight courier service or (d) on the fifth (5th)
Business Day following it being mailed by registered or certified mail.

Section 12.3           Schedules and Exhibits.  The Schedules and Exhibits are
hereby incorporated into this Agreement and are hereby made a part hereof as if
set out in full herein.

Section 12.4           Assignment; Successors in Interest.  No assignment or
transfer by any Party of such Party’s rights and obligations hereunder shall be
made except with the prior written consent of the other Parties; provided that
the Parent shall, without the obligation to obtain the prior written consent of
any other Party, be entitled to assign this Agreement or all or any part of

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its rights or obligations hereunder to one or more Affiliates of the Parent. 
This Agreement shall be binding upon and shall inure to the benefit of the
Parties and their respective successors and permitted assigns, and any reference
to a Party shall also be a reference to the successors and permitted assigns
thereof.

Section 12.5           Captions.  The titles, captions and table of contents
contained herein are inserted herein only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.

Section 12.6           Controlling Law.  This Agreement shall be governed by and
construed and enforced in accordance with the internal Laws of the State of
Georgia without reference to its choice of law rules.  Each Party irrevocably
and unconditionally (a) consents to submit to the exclusive jurisdiction of the
state courts sitting in Fulton County, Georgia and of the United States District
Court for the Northern District of Georgia for any action, dispute, suit or
proceeding arising out of or relating to this Agreement (and each party
irrevocably and unconditionally agrees not to commence any such action, dispute,
suit or proceeding except in such courts), (b) waives any objection to the
laying of venue of any such action, dispute, suit or proceeding in any such
courts and (c) waives and agrees not to plead or claim that any such action,
dispute, suit or proceeding brought in any such court has been brought in an
inconvenient forum.

Section 12.7           Severability.  Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  To the extent permitted by Law, each Party hereby waives
any provision of law that renders any such provision prohibited or unenforceable
in any respect.

Section 12.8           Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.

Section 12.9           No Third Party Beneficiaries.  Nothing expressed or
implied herein, other than as set forth in Section 7.13,  is intended, or shall
be construed, to confer upon or give any Person other than the Parties, and
their successors or permitted assigns, any right, remedy, obligation or
liability under or by reason of this Agreement, or result in such Person being
deemed a third-party beneficiary hereof.

Section 12.10         Waiver; Amendment.  Any agreement on the part of a Party
to any extension or waiver of any provision hereof shall be valid only if set
forth in an instrument in writing signed on behalf of such Party.  A waiver by a
Party of the performance of any covenant, agreement, obligation, condition,
representation or warranty shall not be construed as a waiver of any other
covenant, agreement, obligation, condition, representation or warranty.  A
waiver by any Party of the performance of any act shall not constitute a waiver
of the performance of any

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other act or an identical act required to be performed at a later time.  This
Agreement may not be amended, modified or supplemented except by written
agreement of the Parties.

Section 12.11         Integration.  This Agreement and the documents executed
pursuant hereto supersede all negotiations, agreements and understandings among
the Parties with respect to the subject matter hereof (except for that certain
Confidentiality Agreement, dated as of January 25, 2007, by and between the
Parent and the Company) and constitute the entire agreement among the Parties
with respect thereto.

Section 12.12         Interpretation.  Where the context requires, the use of a
pronoun of one gender or the neuter is to be deemed to include a pronoun of the
appropriate gender.  References herein to any Law shall be deemed to refer to
such Law, as amended from time to time, and all rules and regulations
promulgated thereunder.  The words “include,” “includes,” and “including” shall
not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words “without limitation.”  Except as otherwise indicated, all
references in this Agreement to “Sections” and “Exhibits” are intended to refer
to Sections of this Agreement and Exhibits of this Agreement.

Section 12.13         Cooperation Following the Closing.  Following the Closing,
each Party shall deliver to the other Parties such further information and
documents and shall execute and deliver to the other Parties such further
instruments and agreements as any other Party shall reasonably request to
consummate or confirm the transactions provided for herein, to accomplish the
purpose hereof or to assure to any other Party the benefits hereof.

Section 12.14         Transaction Costs.  Except as provided above or as
otherwise expressly provided herein, (a) the Parent shall pay its own fees,
costs and expenses incurred in connection herewith and the transactions
contemplated hereby, including the fees, costs and expenses of its financial
advisors, accountants and counsel, and (b) the Shareholders shall pay the fees,
costs and expenses of the Company and the Shareholders incurred in connection
herewith and the transactions contemplated hereby, including the fees, costs and
expenses of financial advisors, accountants and counsel to the Shareholders.

*  *  *

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

PARENT:

 

 

 

 

 

 

 

 

 

 

 

 

 

SCIELE PHARMA, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Patrick Fourteau

 

 

 

 

 

 

 

 

 

Name: Patrick Fourteau

 

 

 

Title:  President and CEO

 

 

 

 

 

 

 

MERGER SUB:

 

 

 

 

 

 

 

 

 

 

 

 

 

SP ACQUISITION CORP.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Darell Borne

 

 

 

 

 

 

 

 

 

 Name: Darrell Borne

 

 

 

 

 Title:   Secretary

 

 

 

 

 

 

 

 

COMPANY:

 

 

 

 

 

 

 

 

ALLIANT PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

By:

/s/ Mark W. Pugh

 

 

 

 

 

 

 

 

 

 Name: Mark W. Pugh

 

 

 

 

 Title:   President

 

 

 

 

 

 

 

 

SHAREHOLDER REPRESENTATIVE:

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ John N. Kapoor

 

 

 

 

 

 

 

 

JOHN N. KAPOOR, PH.D.

 

 

 

--------------------------------------------------------------------------------

 

SHAREHOLDERS:

 

 

 

 

 

 

 

JOHN N. KAPOOR TRUST DATED

 

 

 

SEPTEMBER 29, 1989

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 /s/ John N. Kapoor

 

 

 

 

 

 

 

 

Name: John N. Kapoor, Ph.D.

 

 

 

Title:   Trustee

 

 

 

 

 

 

 

 

KAPOOR CHILDREN’S 1992 TRUST

 

 

 

 

 

 

 

 

By:

 /s/ Rao Akella

 

 

 

 

 

 

 

 

Name: Rao Akella

 

 

 

Title:   Trustee

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ John N. Kapoor

 

 

 

 

 

 

 

 

JOHN N. KAPOOR, PH.D.*

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Mark W. Pugh

 

 

 

 

 

 

 

 

MARK W. PUGH

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Harold A. Deas, Jr.

 

 

 

 

 

 

 

 

HAROLD A. DEAS, JR.

 

 

 

--------------------------------------------------------------------------------

 

/s/ John N. Kapoor

 

 

 

 

 

 

 

 

MICHAEL R. STRESSER

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ John R. Wesley

 

 

 

 

 

 

 

 

JOHN R. WESLEY

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Steven Meyer

 

 

 

 

 

 

 

 

STEVEN MEYER

 

 

--------------------------------------------------------------------------------

 

/s/ Dennis L. Spangler

 

 

 

 

 

 

 

 

DENNIS L. SPANGLER

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Marc Cantu

 

 

 

 

 

 

 

 

MARC CANTU

 

 

--------------------------------------------------------------------------------

 

*As proxy for each of the following:

Michael Babich

Rao Akella

Barbara Hoff

Vikram Malhotra

Sanjiv Mehra

Shashi Mehra

Rajesh Aneja

Robert Kapoor

Gopal Mehra

Sharon Stanfield

Mary Gauwitz

Rudi Teifke

Nelida Oquendo

 

 

--------------------------------------------------------------------------------

 

Exhibit 3.6

ESCROW AGREEMENT

This Escrow Agreement (this “Escrow Agreement”), dated as of
                   , 2007 (the “Closing Date”), is entered into by and among
Sciele Pharma, Inc., a Georgia corporation (“Parent”), John N. Kapoor, Ph.D., in
his capacity as representative (the “Representative”) on behalf of the
Shareholders and LaSalle Bank National Association, a national banking
association, as escrow agent (the “Escrow Agent”).  Capitalized terms used
herein and not otherwise defined shall have the same meaning ascribed to such
terms in that certain Agreement and Plan of Merger (the “Merger Agreement”),
dated as of April 24, 2007, by and among Parent, SP Acquisition Corp., a Georgia
corporation (“Merger Sub”), Alliant Pharmaceuticals, Inc., a Georgia corporation
(the “Company”), and certain shareholders of the Company (the “Shareholders”).

RECITALS

WHEREAS, Parent, Merger Sub and the Company have entered into the Merger
Agreement providing for the merger of the Company with and into Merger Sub, with
Merger Sub as the surviving entity (the “Surviving Corporation”), the closing
with respect to which (the “Closing”) is taking place concurrently with the
execution hereof;

NOW, THEREFORE, in consideration of the consummation of the transactions
contemplated by the Merger Agreement, and payment to the Escrow Agent of the
sums set forth herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

AGREEMENT

The parties, intending to be legally bound, agree as follows:

1.             ESTABLISHMENT OF ESCROW

(a)           Parent is depositing with Escrow Agent $12,500,000 in cash (such
cash together with any interest and other earnings thereon is referred to herein
as, the “Escrowed Funds”).

(b)           Escrow Agent acknowledges receipt of the Escrowed Funds.

(c)           Escrow Agent agrees to act as escrow agent and to hold, safeguard
and disburse the Escrowed Funds pursuant to the terms and conditions hereof.

2.             INVESTMENT OF FUNDS

Except as Representative and Parent may from time to time jointly instruct
Escrow Agent in writing, the Escrowed Funds shall be invested from time to time,
to the extent possible, in (i) direct obligations of the United States of
America or obligations for which the full

--------------------------------------------------------------------------------

faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, (ii) commercial paper rated of the highest
quality by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation,
(iii) certificates of deposit issued by a commercial bank or banks having at
least $100,000,000 in undivided capital and surplus or (iv) an immediately
available money market account in a commercial bank or banks having at least
$100,000,000 in individual capital and surplus.  None of the Escrowed Funds
shall be invested in any obligation or instrument having a maturity which
exceeds one hundred (100) days from the date of purchase or which cannot be
sold, redeemed or otherwise liquidated at the holder’s option in thirty (30)
days or less without loss of interest or discount, until disbursement of all
Escrowed Funds.  Escrow Agent is authorized to liquidate in accordance with its
customary procedures any portion of the Escrowed Funds consisting of the
investments described in this Section 2 to provide for payments required to be
made under this Escrow Agreement.

3.             DISBURSEMENT OF ESCROWED FUNDS

(a)           In accordance with the provisions set forth below, the Escrowed
Funds will be used: (i) to fund the obligations of the Shareholder
Representative to pay any post-Closing working capital adjustment pursuant to
Section 3.9 of the Merger Agreement, and (ii) to pay any Losses properly payable
to any Parent Indemnified Parties from the Escrowed Funds pursuant to Article XI
of the Merger Agreement .

(b)           From time to time on or before the eighteen (18) month anniversary
of the date hereof (the “Termination Date”), Parent may give written notice to
the Representative and Escrow Agent (a “Claim Notice”) specifying (i) in
reasonable detail, the nature and dollar amount of any claim (a “Claim”) for
Escrowed Funds that Parent has under the Merger Agreement as contemplated by
Section 3(a) above, and (ii) the amount of such Claim.  If the Representative
gives written notice to Parent and the Escrow Agent disputing any Claim (a
“Counter Notice”) within thirty (30) calendar days following receipt by the
Representative of the applicable Claim Notice, such Claim shall be resolved by
Parent and the Representative as provided in Section 3(d) of this Escrow
Agreement.  Until such resolution, the amount of the Claim shall not be paid by
the Escrow Agent to either party.

(c)           If no Counter Notice is received by Escrow Agent within such
thirty (30) calendar day period, Escrow Agent shall pay the dollar amount set
forth in the Claim Notice to Parent from the Escrowed Funds.  Escrow Agent shall
not be required to inquire into or consider whether a Claim complies with the
requirements of the Merger Agreement.

(d)           If a Counter Notice is given with respect to a Claim, Escrow Agent
shall make payment with respect thereto only in accordance with (i) joint
written instructions of Parent and the Representative, or (ii) a final
non-appealable order of a court of competent jurisdiction.    Escrow Agent shall
be entitled to act on such court order.

4.             TERMINATION OF ESCROW

(a)           This Escrow Agreement shall terminate upon the first to occur of
the following:  (i) the date of the distribution of the entire balance of the
Escrowed Funds pursuant to Section 3

--------------------------------------------------------------------------------

hereof or (ii) the Termination Date, except if on the Termination Date there is
any pending Claim, in which event, this Escrow Agreement shall terminate upon
final resolution of all such Claims in accordance with the terms hereof.

(b)           On the date that is twelve (12) months after the Closing Date, the
Escrow Agent shall continue to hold the greater of: (i) 50% of the Escrowed
Funds and (ii) the amount of the Escrowed Funds then subject to any pending
Claim.  The balance (if any) of the Escrowed Funds, shall be returned to the
Representative to be distributed to the Shareholders.  On the Termination Date,
the balance (if any) of the Escrowed Funds, less the amount of any pending
Claims made prior to such date, shall be returned to the Representative to be
distributed to the Shareholders.

5.             DUTIES OF ESCROW AGENT

(a)           This Escrow Agreement expressly sets forth all the duties of
Escrow Agent with respect to any and all matters pertinent hereto.  No implied
duties or obligations shall be read into this Escrow Agreement against Escrow
Agent.

(b)           Escrow Agent shall not be under any duty to give the Escrowed
Funds held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement.

(c)           Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent.  Without limiting the foregoing, Escrow Agent shall in no
event be liable in connection with its investment or reinvestment of any cash
held by it hereunder in good faith, in accordance with the terms hereof,
including, without limitation, any liability for any delays (not resulting from
its gross negligence or willful misconduct) in the investment or reinvestment of
the Escrowed Funds, or any loss of interest incident to any such delays.

(d)           Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof.  Escrow Agent may act in reliance upon any instrument or
signature reasonably believed by it to be genuine and may assume that the person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so.

(e)           Any payments of income from the Escrowed Funds shall be subject to
withholding regulations then in force with respect to United States taxes.  The
parties will provide Escrow Agent with appropriate Internal Revenue Service
Forms W-9 for tax identification number certification, or non-resident alien
certifications.  Sections 5(b) and 5(e) of this Escrow Agreement shall survive,
notwithstanding any termination of this Escrow Agreement or the resignation of
Escrow Agent.

--------------------------------------------------------------------------------

(f)            Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Escrowed Funds to any successor Escrow Agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Escrow
Agreement.  The resignation of Escrow Agent will take effect on the earlier of
(i) the appointment of a successor (including a court of competent jurisdiction)
or (ii) the day which is 30 days after the date of delivery of its written
notice of resignation to the other parties hereto.  If at that time Escrow Agent
has not received a designation of a successor Escrow Agent, Escrow Agent’s sole
responsibility after that time shall be to retain and safeguard the Escrowed
Funds until receipt of a designation of successor Escrow Agent or a joint
written disposition instruction by the other parties hereto or a final
non-appealable order of a court of competent jurisdiction.

(g)           In the event of any disagreement between the parties resulting in
adverse claims or demands being made in connection with the Escrowed Funds or in
the event that Escrow Agent is in doubt as to what action it should take, Escrow
Agent shall be entitled to retain the Escrowed Funds until Escrow Agent shall
have received (i) a final non-appealable order of a court of competent
jurisdiction directing delivery of the Escrowed Funds or (ii) a written
agreement executed by Parent and Representative directing delivery of the
Escrowed Funds, in which event Escrow Agent shall disburse the Escrowed Funds in
accordance with such order or agreement.  Escrow Agent shall act on such court
order without further question.

(h)           Parent and Representative shall, jointly and severally, pay Escrow
Agent compensation (as payment in full) for the services to be rendered by
Escrow Agent hereunder in an amount set forth on Exhibit A attached hereto and
agree to reimburse Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by Escrow Agent in performance of its duties hereunder
(including reasonable fees, expenses and disbursements of its counsel).  Any
such compensation, fee and reimbursement to which Escrow Agent is entitled
shall, as between Parent and Representative, be borne 50% by Parent and 50% by
Representative.

6.             TAX TREATMENT

For purposes of federal and other taxes based on income, (i) Parent and the
Shareholders agree to report the return of the Escrowed Funds to the
Shareholders pursuant to Section 4 hereof as a payment pursuant to an
installment sale, to be taken into account under the installment method
described in section 453 of the Internal Revenue Code of 1986, as amended, and
(ii) Parent will be treated as owner of the Escrowed Funds, and Parent will
report all income, if any, that is earned on, or derived from, the Escrowed
Funds as its income in the taxable year or years in which such income is
properly includible and pay any taxes attributable thereto.  Escrow Agent shall
for each appropriate year, prepare tax reports on Form 1099 and deliver the same
to Parent promptly after the calendar year involved.

7.             NOTICES

All notices, requests, demands and other communications hereunder shall be in
writing and shall be personally delivered, sent by overnight carrier (such as
Express Mail,

--------------------------------------------------------------------------------

Federal Express, etc.) or sent by facsimile transmission or e-mail with
confirming copy sent by overnight courier and a delivery receipt obtained and
addressed to the intended recipient as follows:

(a)           If to Parent:

Sciele Pharma, Inc.

 

 

 

 

5 Concourse Parkway.

 

 

 

 

Atlanta, Georgia 30328

 

 

 

 

Attention: General Counsel

 

 

 

 

Telephone No.: (678) 992-3696

 

 

 

 

Facsimile No.: (678) 992-1043

 

 

 

 

Email: LZacks@Sciele.com

 

 

 

 

With a copy to:

 

 

 

 

 

 

 

 

 

Paul, Hastings, Janofsky & Walker LLP

 

 

 

 

600 Peachtree Street, NE, Suite 2400

 

 

 

 

Atlanta, Georgia 30308-2222

 

 

 

 

Attn: W. Tinley Anderson, III

 

 

 

 

Telephone No.: (404) 815-2215

 

 

 

 

Facsimile No.: (404) 685-5215

 

 

 

 

Email: tinleyanderson@paulhastings.com

 

 

 

 

(b)           If to the Representative:

EJ Financial Enterprises

225 East Deerpath Road, Suite 250

Lake Forest, IL 60045

Attention: John N. Kapoor, Ph.D.

Telephone No.: (847) 295-8665

Facsimile No.: (847) 295-8680

Email: JKapoor@ejfinancial.com

With a copy to:

 

McDermott Will & Emery LLP

227 West Monroe Street

Chicago, Illinois 60606 5096

Attention: Thomas J. Murphy

Telephone No.: (312) 984-2069

Telecopy No.: (312) 984-7700

Email: tmurphy@mwe.com

 

--------------------------------------------------------------------------------

(c)           If to Escrow Agent:

Any party may change its address or add or change parties for receiving notice
by giving the other parties notice in the manner set forth above.

8.             APPLICABLE LAW

This Escrow Agreement shall be governed by and construed in accordance with the
internal substantive laws of the State of Georgia.  Each party hereby consents
and submits to the jurisdiction of the federal district court or state court
located in Atlanta, Georgia.  Each party hereby irrevocably waives all claims of
immunity from jurisdiction of a federal district court or state court located in
Atlanta, Georgia.

9.             ATTORNEY’S FEES

In any action at law or suit in equity to enforce or interpret this Escrow
Agreement or the rights of any of the parties hereunder, the prevailing party in
such action or suit shall be entitled to receive a reasonable sum for its
attorney’s fees and all other reasonable costs and expenses incurred in such
action or suit.

10.           COUNTERPARTS

This Escrow Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original and all of which, when taken together, will be
deemed to constitute one and the same instrument.  In addition, the transaction
described herein may be conducted and related documents may be stored by
electronic means.  Copies, telecopies, facsimiles, electronic files and other
reproductions of original executed documents shall be deemed to be authentic and
valid counterparts of such original documents for all purposes, including the
filing of any claim, action or suit in the appropriate court of law.

11.           SECTION HEADINGS

The headings of sections in this Escrow Agreement are provided for convenience
only and will not affect its construction or interpretation.

12.           EXCLUSIVE AGREEMENT AND MODIFICATION

This Escrow Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the Merger Agreement
and all related documents) a complete and exclusive statement of the terms of
the agreement between the parties with respect to its subject matter.  This
Escrow Agreement may not be amended except by a written agreement executed by
Parent, Representative and Escrow Agent.

[The remainder of this page is intentionally left blank.]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to be
executed on its behalf by a duly authorized officer all as of the date first
written above.

 

 

REPRESENTATIVE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JOHN N. KAPOOR, PH.D.

 

 

 

 

[                                    ]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PARENT:

 

 

 

 

 

 

 

 

 

SCIELE PHARMA, INC.

 

 

 

 

EIN: 58-2004779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESCROW AGENT:

 

 

 

 

 

 

 

 

 

LASALLE BANK NATIONAL ASSOCIATION

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Its:

 

 

 

--------------------------------------------------------------------------------

Exhibit A

Escrow Fees

[Escrow Agent to provide fee schedule]

 

--------------------------------------------------------------------------------

 

Exhibit 7.8

OPTION SETTLEMENT AGREEMENT

The undersigned is a holder of options (the “Options”) to purchase shares of
common stock, no par value, (the “Common Stock”) of Alliant Pharmaceuticals,
Inc., a Georgia corporation (the “Company”), pursuant to the Company’s 2006
Equity Incentive Plan (the “Plan”).  The Company is party to an Agreement and
Plan of Merger dated April 24, 2007 (the “Merger Agreement”) by and among Sciele
Pharma, Inc., a Georgia corporation (“Sciele”), SP Acquisition Corp., a Georgia
corporation (“Merger Sub”), the Company, the stockholders of the Company and
John N. Kapoor, as shareholder representative providing for, among other things,
the merger of a Merger Sub with and into the Company in a transaction pursuant
to which the Company is to become a wholly-owned subsidiary of Sciele.

In consideration of the Company continuing to pursue the Merger and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the undersigned hereby agrees as follows:

1)             Upon receipt of a cash payment equal to $6.50 per share of Common
Stock subject to the Options, the Options themselves shall terminate, the
undersigned shall have no further rights to purchase Common Stock of the Company
and shall thereupon knowingly, voluntarily and unconditionally release and
forever discharge the Company and its affiliates from or for any and all claims,
causes of action, demands, suits, debts, obligations, liabilities, damages,
losses, costs and expenses of every kind or nature whatsoever, known or unknown,
actual or potential, suspected or unsuspected, fixed or contingent, that the
undersigned has or may have, now or in the future, arising out of, relating to
or resulting from the Options.

2)             Notwithstanding the provisions of Section 6 of the Plan, the
Options are only exercisable upon a “Change of Control”, as defined in Section 7
of the Plan.

3)             The word “securities” in Section 11(b) of the Plan is hereby
replaced with the words “securities, cash or other consideration” for purposes
of interpreting the Options and the rights of the undersigned pursuant thereto.

IN WITNESS WHEREOF, the undersigned has caused this agreement to be duly
executed on the date set forth below.

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

Print Name:

 

 

 

 

 

 

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLIANT PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit 7.18

PERFORMANCE PAYMENT

1.             Baseline Payment.  Parent shall make an additional one-time
payment to the Shareholder Representative of $5,000,000 (the “Baseline
Payment”), in the event that Gross Profits (as defined below) of the Surviving
Corporation for calendar year 2007 exceed the Baseline Amount (as defined
below).

2.             Additional Payment.  In addition, for each $1.00 in Gross Profits
above the Baseline Amount that the Surviving Corporation achieves during
calendar year 2007, Parent shall make an additional payment to the Shareholder
Representative of $2.78, up to a maximum of $25,000,000 in additional funds
(together with the Baseline Payment, the “Performance Payment”).

3.             Definitions:

“Baseline Amount” means $36,000,000.

“Gross Profits” means net sales of Pediatric Products to third parties, less
costs of goods sold, and gross fees in the case of Allegra, as determined in
accordance with Parent’s internal accounting principles and GAAP.  For the
avoidance of doubt, sales between Parent and its Affiliates shall be excluded
from the computation of Gross Profits, but Gross Profits shall include the sale
to third parties by any such Affiliates. Any royalties associated with Lindane
sales will be treated as a cost of goods sold for purposes of the calculation of
Gross Profit.

“Earn-out Period” means calendar year 2007.

“Pediatric Products” means the following products: Lindane, Methylin, Orapred
and Rondec.

Capitalized terms used herein and not otherwise defined shall have the same
meaning ascribed to such terms in the Agreement and Plan of Merger, dated as of
April 23, 2007, by and among Sciele Pharma, Inc., SP Acquisition Corp., Alliant
Pharmaceuticals, Inc. (the “Company”), certain shareholders of the Company, and
John N. Kapoor, Ph.D. as the shareholder representative.

4.             Inventory Adjustment.  At December 31, 2007, Parent will obtain
inventory reports for each of the Pediatric Products from the three major
wholesalers (McKesson, Cardinal Health and Amerisource Bergen) which shall be
aggregated (on a per product basis) to determine the total number of weeks worth
of inventory of each Pediatric Product in the trade at the wholesale level
(based upon the average demand of such wholesalers over the previous six (6)
week period).  The targeted inventory of each Pediatric Product shall be nine
(9) weeks of inventory for such Pediatric Product, and any amount of inventory
of a Pediatric Product in excess of such amount shall be “Surplus Inventory” and
any deficit of inventory of such Pediatric Product will be deemed “Deficit
Inventory”.  At the same time, Parent shall determine for the preceding twelve
(12) months the Gross Profit attributable to each Pediatric Product on a per
commercial unit basis (based on actual net sales) (the “Per Unit Gross Profit”).
The Per Unit Gross Profit for each Pediatric Product shall be multiplied by the
Deficit Inventory or Surplus Inventory of such Pediatric Product, as the case
may be.  In the case of Surplus Inventory as to a Pediatric Product, the amount
calculated pursuant to the preceding sentence shall reduce the total Gross
Profits otherwise calculated for purposes of Sections 1 and 2 above.  In the
case of Deficit Inventory as to a Pediatric Product, the amount calculated
pursuant to the preceding sentence shall increase the total Gross Profits

--------------------------------------------------------------------------------

otherwise calculated for purposes of Section 1 and 2 above.  In the discretion
of the Shareholder Representative the inventory amounts also shall be subject to
adjustment based on the monthly November and December “TRX Data” of dispensed
Pediatric Products (computing a weekly average for such two months of data),
provided by IMS Health, Inc. (“IMS”) or, if such data is unavailable from IMS,
from NDC, Inc.

5.             Payments.  Within 90 days after the end of the Earn-out Period,
Parent will deliver to the Shareholder Representative (i) a reasonably detailed
calculation of Gross Profits and any Performance Payment based on such
calculation, (ii) an accompanying certification from the Chief Financial Officer
of Parent that such information is accurate and complete and has been prepared
in accordance with the terms of this Agreement and consistent with the
calculation as set forth on Exhibit 7.18(a), and (iii) a cash payment by wire
transfer to an account designated by the Shareholder Representative of the
amount of the Performance Payment specified in such calculation.  Parent will,
and shall cause its Affiliates to, support the Surviving Corporation in the
continued advertising, marketing, promotion and other sponsorship of the
Pediatric Products.

6.             Adjustments.

(i)            The Shareholder Representative shall have forty-five (45) days
following receipt of the calculation of Gross Profits during which to notify the
Parent of any dispute with respect thereto, which notice shall set forth in
reasonable detail the basis for such dispute.  The Parent and the Shareholder
Representative shall cooperate in good faith to resolve any such dispute as
promptly as practicable, and upon such resolution, Gross Profits shall be
calculated in accordance with the agreement of the Parent and the Shareholder
Representative.  In the event the Shareholder Representative does not notify the
Parent of any such dispute within such forty-five (45)-day period or notifies
the Parent within such period that it does not dispute any item contained
therein, the calculation of Gross Profits and the Performance Payment delivered
pursuant thereto shall be final and binding upon the Parties.

(j)            If the Parties cannot resolve their dispute within 30 days, then
the dispute shall be submitted to an independent accounting firm for final
resolution substantially in accordance with the procedures described in Section
7.4 (c) hereof.  In the event the Parent and the Shareholder Representative are
unable to resolve any dispute regarding the calculation of Gross Profits
delivered pursuant hereto within thirty (30) days following the Parent’s receipt
of notice of such dispute, such dispute shall be submitted to, and all issues
having a bearing on such dispute shall be resolved by BDO Siedman, LLP, a
nationally recognized accounting firm (the “Accounting Referee”).

(k)           Within fifteen (15) Business Days of the selection of the
Accounting Referee, both the Shareholder Representative and Parent shall submit
a calculation of Gross Profits and the Performance Payments and any supporting
documentation to the Accounting Referee.  Within twenty (20) Business Days of
the timely receipt of the later of such submissions, the Accounting Referee
shall choose the one of the two submissions that most accurately reflects what
the actual calculation of Gross Profits and the Performance Payments should be
and that submission shall establish the Performance Payment.  If only one of the
parties makes a timely submission, then that submission shall establish the
Performance Payment.  The Accounting Referee’s determination of the calculation
of Gross Profits shall be final and binding on the Parties.  The fees, costs and
expenses of the Accounting Referee shall be shared equally by the Shareholder
Representative and the Parent.

--------------------------------------------------------------------------------

Disclosure Schedules to Agreement and Plan of Merger Intentionally Omitted.

 

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