Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

by and between

 

DEPOMED, INC.

 

and

 

XANODYNE PHARMACEUTICALS, INC.

 

Dated as of June 21, 2012

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I PURCHASE AND SALE OF ASSETS

1

1.1

Purchase and Sale of Assets

1

1.2

Excluded Assets

3

1.3

Assumption of Liabilities

4

1.4

Excluded Liabilities

5

1.5

Purchase Price

5

1.6

Closing; Delivery and Payment

7

1.7

Taxes and Fees

9

1.8

Allocation of Purchase Price

9

 

 

 

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER

10

2.1

Organization, Standing and Power

10

2.2

Authority; No Conflict; Required Filings and Consents

10

2.3

Taxes

11

2.4

Intellectual Property

12

2.5

Contracts

15

2.6

Litigation

15

2.7

Inventory

16

2.8

Compliance With Laws

16

2.9

Permits

16

2.10

Product Liability

16

2.11

Regulatory Matters

17

2.12

Title to Acquired Assets; Condition of Acquired Assets

19

2.13

Sufficiency of Acquired Assets

19

2.14

Solvency

19

2.15

Fair and Adequate Consideration

20

2.16

Financial Statements

20

2.17

Insurance

20

2.18

Absence of Certain Changes

20

2.19

Disclosure

21

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER

21

3.1

Organization, Standing and Power

21

3.2

Authority; No Conflict; Required Filings and Consents

21

3.3

Litigation

22

3.4

Financing

22

3.5

Condition of Business

22

 

 

 

ARTICLE IV ADDITIONAL AGREEMENTS

23

4.1

Confidentiality

23

4.2

Post-Closing Cooperation

23

4.3

Public Disclosure

24

4.4

Further Assurances

24

 

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4.5

Product Returns

25

4.6

Accounts Receivable

25

4.7

Use of Seller Brands

25

4.8

Regulatory Matters

26

4.9

Debarment and Exclusion

27

4.10

Notification of Customers

27

4.11

Government and GPO Contracts

28

4.12

Medicaid and Other State and Private Third Party Payer Rebates

28

4.13

Information for Calculating Prices

30

4.14

Seller Contact

30

4.15

Taxes

31

4.16

U.S. Excise Tax on Branded Pharmaceutical Manufacturers

32

4.17

Transaction Fees

32

4.18

Seller Covenant Not to Compete

32

4.19

Net Sales Reports

33

4.20

Privilege Rights

33

4.21

Corporate Existence

33

4.22

No Transfer of Right to Receive Milestone Payments

33

4.23

Medical Information Phone Number

34

4.24

Business Operation

34

 

 

 

ARTICLE V INDEMNIFICATION

34

5.1

Indemnification by the Seller

34

5.2

Indemnification by the Buyer

35

5.3

Claims for Indemnification

35

5.4

Survival

36

5.5

Limitations

37

5.6

Indemnification Payments

38

5.7

Setoff

38

 

 

 

ARTICLE VI MISCELLANEOUS

39

6.1

Notices

39

6.2

Entire Agreement

40

6.3

No Third Party Beneficiaries; No Successor Liability

40

6.4

Assignment

40

6.5

Severability

40

6.6

Counterparts and Signature

41

6.7

Interpretation

41

6.8

Governing Law

41

6.9

Remedies

41

6.10

Submission to Jurisdiction

41

6.11

Disclosure Schedules

42

6.12

Seller’s Knowledge

42

 

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Seller Disclosure Schedule

 

Schedules:

 

Schedule 1.1(a)

Transferred Trademarks

Schedule 1.1(b)

Transferred Domain Names

Schedule 1.1(c)

Acquired Licenses and Seller Licensed Patents

Schedule 1.1(d)

Transferred Permits

Schedule 1.1(f)

Product Inventory

Schedule 1.1(h)

Equipment

Schedule 1.1(i)

Assumed Contracts

Schedule 1.1(j)

Prepaid Expenses

Schedule 1.2(c)

Excluded Assets

Schedule 1.3(e)

Assumed Liabilities

Schedule 1.5

Closing Inventory

Schedule 2.2(b)

Permitted Liens

Schedule 2.3

Tax Liens

Schedule 2.4(c)

USPTO Disclosure

Schedule 2.4(e)

Infringement Notices

Schedule 2.5(a)

Business Material Contracts

Schedule 2.11(d)

Clinical Trials

Schedule 2.16

Financial Statements

Schedule 2.17

Insurance

Schedule 4.2(a)

Transition Teams

Schedule 4.5

List of Product lot numbers sold exclusively by Seller

 

Exhibits:

 

Exhibit A

Escrow Agreement

Exhibit B

Bill of Sale

Exhibit C

Patent License Assignment

Exhibit D

Trademark Assignment

Exhibit E-1

Seller FDA Letter (IND)

Exhibit E-2

Seller FDA Letter (NDA)

Exhibit F-1

Buyer FDA Letter (IND)

Exhibit F-2

Buyer FDA Letter (NDA)

Exhibit G

Assumption Agreement

Exhibit H

Seller Counsel Legal Opinion

Exhibit I

Buyer Counsel Legal Opinion

Exhibit J

Transition Plan

Exhibit K

Customer Notification

 

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TABLE OF DEFINED TERMS

 

 

Terms

 

Reference in Agreement

Accountant

 

4.18.(c)

Acquired Assets

 

1.1

Acquired Licenses

 

1.1(c)

Additional Assumption Documents

 

1.6.(b)(x)

Additional Transfer Documents

 

1.6.(b)(vii)

Affiliate

 

4.8.(b)

Agreed Amount

 

5.3.(b)

Agreement

 

Preamble

Allocation

 

1.8

AMP

 

4.12.(a)

Ancillary Documents

 

1.6.(b)(x)

ANDA

 

2.6

Assumed Contracts

 

1.1.(i)

Assumed Liabilities

 

1.3

Assumption Agreement

 

1.6.(b)(viii)

Bill of Sale

 

1.6.(b)(ii)

Books and Records

 

1.1.(j)

Business

 

Preamble

Business Day

 

1.6.(a)

Business Material Adverse Effect

 

2.1

Business Material Contracts

 

2.5.(a)

Buyer

 

Preamble

Buyer FDA Letter

 

1.6.(b)(vi)

Buyer Material Adverse Effect

 

3.1

Buyer Rights Chain Group

 

1.5(c)

CDAPCA

 

2.11(a)

Chargebacks

 

4.11.(b)

cGMP

 

2.7

Claim Amount

 

5.3.(b)

Claim Notice

 

5.3.(b)

Closing

 

1.6.(a)

Closing Date

 

1.6.(a)

Closing Date Purchase Price

 

1.5

CMS

 

4.12.(a)

Code

 

1.8.

Composition

 

Preamble

Confidential Information

 

4.1

Core Reps

 

5.5.(a)

CSA

 

2.11(a)

Damages

 

5.1, 5.3(a)

DEA

 

2.11(a)

Deductible

 

5.5.(a)

Escrow Agent

 

1.5(a)

 

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Terms

 

Reference in Agreement

Escrow Fund

 

1.5(a)

Escrow Agreement

 

1.5(a)

Excluded Assets

 

1.2

Excluded Liabilities

 

1.4

Excluded Tax Damages

 

5.5(a)

Exclusions

 

1.5(d)

FDA

 

1.6.(b)(v)

FDA Act

 

2.11(a)

Federal Ceiling Price

 

4.11(c)

First Additional Purchase Price Payment Date

 

1.5(a)(iv)

First Milestone Payment

 

1.5(a)(iv)

FSS

 

4.11(a)

GAAP

 

1.5(b)

Governmental Entity

 

2.2(c)

Health Authorities

 

2.11(a)

Health Laws

 

2.11(a)

HIPAA

 

2.11(h)

IND

 

2.11(b)

Indemnified Party

 

5.3(a)

Indemnifying Party

 

5.3(a)

Intellectual Property

 

2.4(a)

Investment Banker

 

2.15

Inventory Purchase Price

 

1.5(a)(ii)

Know-How

 

1.1(e)

Law

 

2.8

Laws

 

2.8

Lead Member

 

4.2(a)

Lead Members

 

4.2(a)

Liens

 

2.2(b)

Marketing Assets

 

1.1(g)

Medicaid Finished Product

 

4.12.(c)

Medical Information Phone Number

 

1.6(m)

NDA

 

2.11(b)

Net Sales

 

1.5(b)

Net Sales Report

 

4.19(a)

New Contact Number

 

4.23

Non-FAMP

 

4.11(a)

Order

 

2.4(e)

Other Assumed Liabilities

 

1.3(d)

Patent License Assignment

 

1.6(b)(iii)

Permits

 

1.1(d)

Permitted Liens

 

2.2(b)

PHS

 

4.11(d)

PO Purchase Price

 

1.5(a)(iii)

Product

 

Preamble

 

v

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Terms

 

Reference in Agreement

Product Inventory

 

1.1(f)

Purchase Price

 

1.5(a)(v)

Rebates

 

4.12(b)

Report Deadline

 

4.19(a)

Returns Agreed Amount

 

5.3(c)

Returns Claim Amount

 

5.3(c)

Returns Claim Notice

 

5.3(c)

Returns Escrow Fund

 

1.5(a)

Second Additional Purchase Price Payment Date

 

1.5(a)(v)

Second Milestone Payment

 

1.5(a)(v)

Seller

 

Preamble

Seller Accounts Receivable

 

1.2(b)

Seller Brands

 

1.2(d)

Seller Disclosure Schedule

 

ARTICLE II

Seller FDA Letter

 

1.6(b)(v)

Seller Licensed Patents

 

1.1(c)

Seller Permits

 

2.9

Seller Product Returns

 

4.5(a)

Seller’s Knowledge

 

6.12

Tax Payee

 

4.15(c)

Tax Payor

 

4.15(c)

Tax Returns

 

2.3(a)

Taxes

 

2.3(a)

Taxing Authority

 

2.3(a)

Territory

 

1.1(c)

Third Party Claim Amount

 

5.3(a)

Third Party Claim Notice

 

5.3(a)

Trademark Assignment

 

1.6 (b)(iv)

Trademark Period

 

4.7(b)

Transaction Fees

 

4.17

Transition Plan

 

4.2(a)

Transition Team

 

4.2(a)

Transition Teams

 

4.2(a)

Transfer Taxes

 

1.7

Transferred Domain Names

 

1.1(b)

Transferred Intellectual Property

 

2.4(a)

Transferred Other IP

 

1.1(e)

Transferred Permits

 

1.1(d)

Transferred Trademarks

 

1.1(a)

VA

 

4.11(a)

 

vi

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ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of June 21,
2012, by and between Depomed, Inc., a California corporation (the “Buyer”), and
Xanodyne Pharmaceuticals, Inc., a Delaware corporation (the “Seller”).

 

PRELIMINARY STATEMENT

 

WHEREAS, the Seller is engaged in the business of formulating, manufacturing,
packaging, distributing, marketing and selling one or more pharmaceutical
products containing diclofenac potassium in liquid capsule form (the
“Composition”) (such products and the Composition, collectively, with all
improvements, modifications, extensions and formulations thereof, including, but
not limited to, XP21B, and including all forms of such products, the “Product”),
including under the trademark of Zipsor® (the “Business”), and has certain
rights with respect to the Product on a worldwide basis.

 

WHEREAS, the Seller desires to sell, convey, transfer, assign and deliver to the
Buyer and the Buyer desires to purchase from the Seller all assets, rights and
properties of Seller described herein relating to the Business upon the terms
and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Buyer and the Seller agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE OF ASSETS

 

1.1                               Purchase and Sale of Assets.  Upon the terms
and subject to the conditions set forth in this Agreement, at the Closing (as
defined in Section 1.6 below), the Seller agrees to sell, convey, transfer,
assign and deliver to the Buyer, and the Buyer agrees to acquire, purchase and
accept from the Seller, all of the Seller’s right, title and interest in and to
the Acquired Assets, wherever located, free and clear of any Liens (as defined
in Section 2.2(b) below).  For purposes of this Agreement, the term “Acquired
Assets” means:

 

(a)                                 all of Seller’s trademarks, service marks,
logos, brands, trade names and other source identifiers, or any contraction,
abbreviation or simulation thereof, created by or for the Seller, owned by the
Seller, licensed by the Seller, or acquired by the Seller, for use with the
Product or the Business, including Zipsor®, ProSorb®, and all applications and
registrations of the foregoing, all of which are set forth on Schedule
1.1(a) (the “Transferred Trademarks”);

 

(b)                                 the Zipsor.com domain name and all other
domain name registrations created by or for the Seller, owned by the Seller,
licensed by the Seller, or acquired by the Seller, for use with the Product or
the Business, including those domain name registrations set forth on Schedule
1.1(b) (the “Transferred Domain Names”);

 

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(c)                                  each third party in-license of the Seller
to any issued patent and pending patent application worldwide (the “Territory”)
that relates to the Product or the Business, or the formulation, manufacture,
distribution, sale or use of the Product, all of which are set forth on Schedule
1.1(c) (collectively, the “Acquired Licenses”), including any continuation,
divisional, continuation in part application, renewal, reexamination, extension
of each such patent and patent application, all of which are set forth on
Schedule 1.1(c) (collectively, the “Seller Licensed Patents”);

 

(d)

 

(i)                                     all governmental, regulatory filings,
correspondence, submissions, marketing authorizations, permits, licenses,
registrations (including product registration data), regulatory clearances,
certificates, approvals, variances, consents and similar items (the “FDA
Permits”) of the Seller with the United States Food and Drug Administration (the
“FDA”) related to the Product or the Business, including those related to
marketing, pricing or reimbursement approval, including those items set forth on
Schedule 1.1(d)(i) (the “Transferred FDA Permits”); and

 

(ii)                                  to the extent transferrable, all of the
Seller’s state governmental, regulatory filings, correspondence, submissions,
marketing authorizations, permits, licenses, registrations (including product
registration data), regulatory clearances, certificates, approvals, variances,
consents and similar items (“State Permits,” together with the FDA Permits, the
“Permits”) exclusively or primarily related to the Product or the Business,
including those related to marketing, pricing or reimbursement approval and
including those items set forth on Schedule 1.1(d)(ii) (the “Transferred State
Permits,” together with the Transferred FDA Permits, the “Permits”); and

 

(e)

 

(i)                                     (A) all of the Seller’s trade styles,
copyrights, records (including, but not limited to, operating records),
instructions, methods, processes, formulas, formulation information, technical
information, validations, package specifications, chemical specifications,
chemical and finished goods analytical test methods, data (including, but not
limited to, stability data and clinical data), studies, product specifications,
drawings and technology, laboratory notebooks, electronic databases and
correspondence related to the Product or the Business (collectively, the
“Know-How”) and (B) all of the Seller’s clinical, non-clinical, safety and
adverse event report data, whether collected or in the process of collection,
and manufacturing know-how related to the Product or the Business (collectively,
the “Transferred Other IP”),

 

(ii)                                  (A) all other Intellectual Property of the
Seller (1) exclusively or primarily related to the Product or the Business or
(2) that is essential to the Product or the Business, including all trade
secrets and (B) to the extent transferable, all manufacturing technology of the
Seller (1) exclusively or primarily related to the Product or the Business or
(2) that is essential to the Product or the Business;

 

(f)                                   all of the inventory of the Product,
including, but not limited to, the existing finished quantities, work in
process, raw materials, constituent substances, materials

 

2

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(including, but not limited to, packaging materials and other collateral),
stores and supplies, as well as any trade, sample or prototype inventories of
the Product wherever located (the “Product Inventory”), all of which are set
forth on Schedule 1.1(f);

 

(g)                                  all of the Seller’s marketing and sales
assets exclusively or primarily related to the Product or the Business or that
are material to the Product or the Business, in any form or format, wherever
located, including, but not limited to, all promotional materials, collateral,
artwork, call lists, sales data, distribution history, marketing or sales
analyses, training materials and collateral, customer lists and pricing
information (the “Marketing Assets”), including the assets set forth on Schedule
1.1(g), whether purchased by or developed by the Seller; provided, however, that
any information not related to the Product or the Business may be redacted from
such materials;

 

(h)                                 all other assets, properties, equipment,
fixtures, tooling, machinery, materials and supplies owned or controlled by, or
in possession of, the Seller, as set forth on Schedule 1.1(h) hereto;

 

(i)                                     all of the Seller’s rights under the
Business Material Contracts and purchase orders set forth on Schedule 1.1(i) and
all rights thereunder (the “Assumed Contracts”);

 

(j)                                    all of the Seller’s prepaid expenses,
fees or other similar payments related to the Business made in respect of the
Acquired Assets, as set forth on Schedule 1.1(j);

 

(k)                                 all of the Seller’s books, ledgers, files,
reports, data, plans and records exclusively or primarily related to the Product
or the Business or that are material to the Product or the Business, wherever
located (the “Books and Records”), including the Books and Records set forth on
Schedule 1.1(k); provided, however, that any information not related to the
Product or the Business may be redacted from such materials and that the Books
and Records shall not include any Tax books and records;

 

(l)                                     copies of (i) all marketing and sales
assets that relate to the Product or the Business and (ii) all books, ledgers,
files, reports, data, plans and records that relate to the Product or the
Business to the extent that such items do not constitute Marketing Assets or
Books and Records;

 

(m)                             all claims, causes of action or other rights of
the Seller, if any, arising out of any of the Acquired Assets arising before, on
or after the Closing Date (other than the Seller Accounts Receivable);

 

(n)                                 all of the Seller’s goodwill associated with
the Acquired Assets; and

 

(o)                                 all other assets, rights and properties of
the Seller that (i) exclusively or primarily relate to the Product or the
Business or (ii) are essential to the Product or the Business.

 

1.2                               Excluded Assets.  Notwithstanding anything to
the contrary in this Agreement, the Acquired Assets shall not include any of the
Excluded Assets.  For purposes of this Agreement, the term “Excluded Assets”
means the following:

 

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(a)                                 all cash and cash equivalents or similar
investments, bank accounts, commercial paper, certificates of deposit, Treasury
bills and other marketable securities;

 

(b)                                 all accounts receivable related to sales of
the Product prior to the Closing, including any sales, use or similar Taxes (as
defined in Section 2.3 below) levied on or included in such accounts receivable,
any unpaid interest accrued on any such accounts receivable and any security or
collateral related thereto, and any payments received with respect thereto on or
after the Closing Date (as defined in Section 1.6 below), as applicable
(collectively, the “Seller Accounts Receivable”);

 

(c)                                  all assets, properties or rights set forth
on, or arising under any contracts or agreements set forth on, Schedule 1.2(c),
including but not limited to the deposit pursuant to the contract between the
Seller and Relay Health;

 

(d)                                 all trademarks, tradenames, logos or any
contraction, abbreviation or simulation of the Seller not specifically set forth
on Schedule 1.1(a) (the “Seller Brands”);

 

(e)                                  all rights that accrue or will accrue to
the benefit of the Seller under this Agreement or the Ancillary Documents (as
defined in Section 1.6(b)(x) below);

 

(f)                                   all tangible property of the Seller not
specifically set forth on Schedule 1.1(h) or that is not an Acquired Asset; and

 

(g)                                  all other assets, rights and properties of
the Seller that are not included in the Acquired Assets.

 

1.3                               Assumption of Liabilities.  Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, the Buyer
shall assume and agree to perform, pay, satisfy or discharge when due, only the
Assumed Liabilities.  For purposes of this Agreement, the term “Assumed
Liabilities” means only the following liabilities and obligations of the Seller:

 

(a)                                 all liabilities and obligations of the
Seller arising under the Transferred Permits, including the PREA commitment
listed on Schedule 1.3(a) hereto, and the Assumed Contracts after the Closing,
excluding any liabilities and obligations resulting from any breach or violation
of any Assumed Contract prior to the Closing;

 

(b)                                 all liabilities and obligations of the
Seller in respect of the Acquired Assets arising or incurred by the Buyer after
the Closing;

 

(c)                                  all liabilities and obligations related to
returns of the Product received on and after the Closing Date;

 

(d)                                 except as set forth in this Agreement, all
liabilities and obligations that arise on account of the sale of the Product
after the Closing; and

 

(e)                                  all liabilities and obligations set forth
on Schedule 1.3(e) (“Other Assumed Liabilities”).

 

4

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1.4                               Excluded Liabilities.  Notwithstanding
anything to the contrary in this Agreement, the Assumed Liabilities shall not
include any of the Excluded Liabilities, and the Buyer does not hereby and shall
not assume or in any way undertake to perform, pay, satisfy or discharge the
Excluded Liabilities.  For purposes of this Agreement, the term “Excluded
Liabilities” means all liabilities and obligations of the Seller, of every kind,
nature, character and description (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated and whether due or to become due)
other than those specifically listed or described in the definition of Assumed
Liabilities.  Without limitation of the foregoing, the Excluded Liabilities
shall include the following:

 

(a)                                 all liabilities and obligations related to
any Excluded Assets;

 

(b)                                 any liabilities and obligations arising out
of the Seller’s operation of the Business or ownership of the Acquired Assets
prior to the Closing, including, but not limited to, any liabilities and
obligations relating to the returns of the Product received by the Seller prior
to the Closing Date, any product liability, or any breach of warranty or similar
claim for injury or other harm to person or property, regardless of when
asserted, that arises out of the use or misuse of the Product supplied by, for
or on behalf of the Seller prior to the Closing;

 

(c)                                  all liabilities and obligations with
respect to the Acquired Assets or the Business to employees or independent
contractors of the Seller, or persons or entities asserting claims on behalf of
such employees, including any liability for employment, labor, pension or
personnel benefits;

 

(d)                                 all liabilities and obligations of the
Seller under this Agreement and the Ancillary Documents;

 

(e)                                  all liabilities and obligations related to
(i) any and all Taxes in respect of the Business or otherwise related to the
Acquired Assets for any period ending on or before the Closing Date, as
determined pursuant to Section 4.15(a), and (ii) any and all Taxes of the Seller
or any of its Affiliates (as defined in Section 4.8(b));

 

(f)                                   all liabilities and obligations of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement;

 

(g)                                  all liabilities and obligations of the
Seller arising as a result of any legal or equitable action or judicial or
administrative proceeding initiated at any time, to the extent that such action
or proceeding relates to any action or omission that occurred prior to the
Closing by or on behalf of the Seller; and

 

(h)                                 all liabilities and obligations of the
Seller to pay any bonus, royalty, milestone or similar payment pursuant to any
Acquired License.

 

1.5                               Purchase Price.  As consideration for the
Acquired Assets, in addition to assuming the Assumed Liabilities, subject to the
terms and conditions of this Agreement:

 

(a)                                 Buyer shall pay:

 

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(i)                                     to the Seller at the Closing $25,900,000
(the “Closing Date Purchase Price”), of which $3,000,000 (such amount, together
with any interest thereon, the “Escrow Fund”) shall be paid to Wells Fargo Bank,
N.A. as escrow agent (the “Escrow Agent”) in accordance with the terms and
conditions of the Escrow Agreement attached hereto as Exhibit A (the “Escrow
Agreement”);

 

(ii)                                  to the Seller upon receipt by the Buyer or
its designee, the amount of inventory set forth on Schedule 1.5 (the “Inventory
Purchase Price”);

 

(iii)                               to the Seller, $2,000,000 (the “First
Milestone Payment”) within 30 days of the end of the first calendar year in
which the Net Sales of the Product exceed $30,000,000 (the “First Additional
Purchase Price Payment Date”); and

 

(iv)                              to the Seller, $3,000,000 (the “Second
Milestone Payment” and, together with the Closing Date Purchase Price, the
Inventory Purchase Price and the First Milestone Payment, the “Purchase Price”)
within 30 days of the end of the first calendar year in which the Net Sales of
the Product exceed $60,000,000 (the “Second Additional Purchase Price Payment
Date”).

 

(b)                                 For the purposes of this Agreement, “Net
Sales” shall mean the gross amount invoiced for sales or other commercial
dispositions of a Product by a member of the Buyer Rights Chain Group to a
person or entity who is not a member of the Buyer Rights Chain Group minus the
Exclusions (as defined in Section 1.5(d) below).  Net Sales shall be calculated
in accordance with United States generally accepted accounting principles
(“GAAP”) as consistently applied by the applicable Buyer Rights Chain Group
member across all of its products.  Sales or other commercial dispositions of a
Product among members of the Buyer Rights Chain Group for resale shall be
excluded from the computation of Net Sales; provided, however, that any
subsequent sale of a Product by any member of the Buyer Rights Chain Group to
another person or entity that is not a member of the Buyer Rights Chain Group
shall be included within Net Sales.  Notwithstanding the foregoing, a Product
provided by a member of the Buyer Rights Chain Group for no revenue for
administration to patients enrolled in clinical trials or distributed through a
not-for-profit foundation at no or nominal charge to eligible patients in
conjunction with a patient assistance program will not be included in Net
Sales.  For purposes of calculating Net Sales, sales in any currency other than
U.S. dollars shall be converted to U.S. dollars using the applicable exchange
rate published in The Wall Street Journal on the first Business Day of the month
immediately following the applicable fiscal quarter of the Buyer in which the
sale occurred.

 

(c)                                  “Buyer Rights Chain Group” means (a) the
Buyer, the Buyer’s Affiliates (as defined in Section 4.8 below) and their direct
and indirect subsidiaries; (b) with respect to the Product, any person or entity
to which any right in or to such Product, or any of the Intellectual Property
covering such Product, is licensed, sublicensed, assigned or transferred by the
Buyer, the Buyer’s Affiliates or their direct or indirect Subsidiaries; (c) with
respect to the Product, any person or entity to which any right in or to such
Product, or any of the Intellectual Property covering such Product, is licensed,
sublicensed, assigned or transferred by any person described in clauses (a) or
(b) above; (d) with respect to the Product, any successor or assign of any
person or entity described in clauses (a), (b) or (c) above with respect to such
person’s or entity’s

 

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interest in such Product; and (e) any Affiliate of any person or entity
described in clauses (b), (c) or (d) above.

 

(d)                                 “Exclusions” means, with respect to a
Product, the following items to the extent included in the gross invoiced price
of such Product and not separately invoiced, in each case to the extent actually
and reasonably allowed or incurred in connection with the sale of such Product: 
(a) amounts invoiced for freight, postage, shipping and insurance, handling and
other transportation costs, provided, that, if a shipment contains
product(s) other than such Product, then a reasonable allocation shall be made
that does not allocate freight, shipping, insurance and other transportation
expenses disproportionately to such Product as compared to such other
product(s); (b) sales, use, value added and other similar taxes with respect to
sales or other dispositions of such Product (reduced by any refunds of such
taxes deducted in the calculation of Net Sales for prior periods and excluding
income taxes); (c) tariffs, customs duties, surcharges and other governmental
charges levied on the sale, transportation or delivery of such Product;
(d) government rebates and discounts; (e) reasonable credits or allowances for
returns, rejections or recalls (due to spoilage, damage, expiration of useful
life or otherwise), retroactive price reductions, billing corrections or bad
debts; (f) trade discounts, credits or allowances; (f) rebates, discounts,
credits, allowances and charge backs, including those granted to managed care
organization, wholesaler, distributor, buying group, health care insurance
carrier, chain pharmaceutical, mass merchandiser, staff model HMO, pharmacy
benefit manager and hospital buying group/group purchasing organization
administration fees; and (g) patient assistance programs.  There shall be no
double counting in determining the foregoing deductions from gross amounts
invoiced to calculate Net Sales.  The Exclusions shall be determined in
accordance with GAAP, as consistently applied by the applicable Buyer Rights
Chain Group member across all of its products.

 

1.6                               Closing; Delivery and Payment.

 

(a)                                 Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated hereby (the “Closing”)
shall take place at 12:30 p.m., Pacific time, on the date of this Agreement (the
“Closing Date”) at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 399
Park Avenue, New York, New York 10022, unless another date, place or time is
agreed to in writing by the Buyer and the Seller.  For purposes of this
Agreement, a “Business Day” shall be any day other than (i) a Saturday or Sunday
or (ii) a day on which banking institutions located in New York, New York are
permitted or required by Law, executive order or governmental decree to remain
closed.

 

(b)                                 At the Closing:

 

(i)                                     the Buyer shall pay the Closing Date
Purchase Price and the Inventory Purchase Price by wire transfer of immediately
available funds to such account or accounts as the Seller and the Escrow Agent,
as applicable, shall designate in writing to the Buyer;

 

(ii)                                  the Seller shall execute and deliver a
Bill of Sale in substantially the form attached hereto as Exhibit B (the “Bill
of Sale”);

 

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(iii)                               the Seller shall execute and deliver a
Patent and Trademark License Assignment in substantially the form attached
hereto as Exhibit C (the “Patent License Assignment”);

 

(iv)                              the Seller shall execute and deliver a
Trademark Assignment in substantially the form attached hereto as Exhibit D (the
“Trademark Assignment”);

 

(v)                                 the Seller shall execute and deliver to the
Buyer a letter from the Seller to the FDA transferring to the Buyer the rights
to the applicable Transferred Permits issued by the FDA, in substantially the
form attached hereto as Exhibit E (the “Seller FDA Letter”);

 

(vi)                              the Buyer shall execute and deliver to the
Seller a letter from the Buyer to the FDA assuming responsibility for
post-Closing obligations for the applicable Transferred Permits issued by the
FDA, in substantially the form attached hereto as Exhibit F (the “Buyer FDA
Letter”);

 

(vii)                           the Seller and the Buyer shall execute and
deliver such other instruments of transfer, conveyance and assignment as the
Buyer may reasonably request in order to effect the sale, transfer, conveyance
and assignment to the Buyer of all right, title and interest in and to the
Acquired Assets (the “Additional Transfer Documents”);

 

(viii)                        the Buyer shall execute and deliver to the Seller
an Assumption Agreement in substantially the form attached hereto as Exhibit G
(the “Assumption Agreement”);

 

(ix)                              the Seller shall execute and deliver to the
Buyer a certification pursuant to U.S. Treasury regulation § 1.1445-2(b)(2), in
a form reasonably acceptable to the Buyer, that the Seller is not a “foreign
person” for U.S. federal income tax purposes;

 

(x)                                 the Buyer and the Seller shall execute and
deliver such other instruments as the Seller may reasonably request in order to
effect the assumption by the Buyer of the Assumed Liabilities (the “Additional
Assumption Documents” and, together with the Bill of Sale, the Patent License
Assignment, the Trademark Assignment, the Seller FDA Letter, the Buyer FDA
Letter, the Additional Transfer Documents, the Assumption Agreement and the
Additional Assumption Documents, the “Ancillary Documents”);

 

(xi)                              the Seller shall deliver or make available to
the Buyer, each to the extent existing in physical or electronic form and in the
possession of the Seller, the Marketing Assets, the Books and Records and the
Transferred Other IP;

 

(xii)                           the Seller shall deliver or make available to
the Buyer, or otherwise put the Buyer in possession and control of, all of the
other Acquired Assets of a tangible nature owned by the Seller, it being
understood that physical delivery of the Product Inventory shall be made by the
Seller and costs thereof shall be borne by the Seller;

 

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(xiii)                        the Seller shall deliver to the Buyer a legal
opinion of Wilmer Cutler Pickering Hale and Dorr LLP dated as of the Closing
Date and addressed to the Buyer in the form attached hereto as Exhibit H;

 

(xiv)                       the Buyer shall deliver to the Seller a legal
opinion of Baker Botts L.L.P. dated as of the Closing Date and addressed to the
Seller in the form attached hereto as Exhibit I; and

 

(xv)                          the Seller shall deliver to the Buyer such
documentation as may be reasonably requested by the Buyer evidencing the receipt
or satisfaction, as applicable, of each consent, approval, notification,
disclosure, filing and registration set forth or required to be set forth on
Schedule 2.2(a), Schedule 2.2(b), Schedule 2.2(c) and Schedule 2.5(c).

 

1.7                               Taxes and Fees.  Any and all sales taxes, use
taxes, transfer taxes, excise taxes, tariffs, stamp taxes, conveyance taxes,
mortgage taxes, intangible taxes, documentary fees, recording taxes, license or
registration fees, value added taxes, recording fees or similar taxes or
charges, including any interest or penalties thereon, imposed by any
Governmental Entity (as defined in Section 2.2(c) below) upon the transfer of
the Acquired Assets hereunder (“Transfer Taxes”) shall be timely paid by the
Seller.  The Seller shall timely file all tax returns, bulk sales notices and
other documentation with respect to such Transfer Taxes required by applicable
Tax Law to be filed by the Seller.  If the Buyer is required by applicable Tax
Law to file a tax return or other documentation with respect to any Transfer
Tax, the Buyer shall timely file such return or documentation.  The Seller shall
reimburse the Buyer for any Transfer Tax paid by the Buyer within 20 Business
Days of such payment.  If required by applicable Tax Law, the Parties will join
in the execution of any Tax Returns and other documentation relating to Transfer
Taxes.

 

1.8                               Allocation of Purchase Price.  No later than
60 days after the Closing Date, the Buyer shall prepare and deliver to the
Seller for its review, comment and consent (such consent not to be unreasonably
withheld, conditioned or delayed) a statement setting forth the allocation of
the sum of the Purchase Price, plus any related Assumed Liabilities, plus any
other amounts as required by applicable Tax Law among the Acquired Assets, which
allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code of 1986, as amended (the “Code”), and any applicable U.S. Treasury
regulations (the “Allocation”).  The Seller shall notify the Buyer in writing
within 30 days after receipt of the Allocation of any reasonable objections the
Seller may have with the Allocation, in which case the Buyer and the Seller
shall use their good faith efforts to reach agreement thereon.  In the event the
Buyer and the Seller fail to so agree within 30 days after the Seller’s notice
has been delivered, then the Buyer and the Seller shall promptly engage, at the
Seller’s expense, an accounting firm of national reputation and mutually
agreeable to each of the Buyer and the Seller to resolve the dispute within 60
days of the engagement.  The Allocation finally determined pursuant to agreement
of the parties or resolution by such accounting firm shall be used by the Seller
and the Buyer for all purposes, including preparation and filing of IRS
Form 8594, and no party hereto shall take or assert any position inconsistent
therewith except to the extent required by applicable Tax Law.

 

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ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

The Seller represents and warrants to the Buyer that the statements contained in
this Article II are true and correct, except as set forth herein or in the
disclosure schedule delivered by the Seller to the Buyer and dated as of the
date of this Agreement (the “Seller Disclosure Schedule”).

 

2.1                               Organization, Standing and Power.  The Seller
is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware, has all requisite corporate power and authority
to own, lease and operate its properties and assets and to carry on its business
as now being conducted and is duly qualified to do business and, where
applicable as a legal concept, is in good standing as a foreign corporation in
each jurisdiction in which the character of the properties it owns, operates or
leases or the nature of its activities makes such qualification necessary,
except for such failures to be so organized, qualified or in good standing,
individually or in the aggregate, that would not reasonably be expected to have
a Business Material Adverse Effect.  For purposes of this Agreement, the term
“Business Material Adverse Effect” means any material adverse change, event,
circumstance or development with respect to, or material adverse effect on, the
Product, the Acquired Assets, the Assumed Liabilities, the Business or the
ability of the Seller to consummate, including any material delay in the
Seller’s ability to consummate, the transactions contemplated by this Agreement.

 

2.2                               Authority; No Conflict; Required Filings and
Consents.

 

(a)                                 The Seller has all requisite corporate power
and authority to enter into this Agreement and each of the Ancillary Documents
to which it will be a party and to consummate the transactions contemplated
hereby and thereby.  The execution, delivery and performance by the Seller of
this Agreement and each of the Ancillary Documents to which it will be a party
and the consummation of the transactions contemplated hereby and thereby by the
Seller have been duly authorized by all necessary corporate action on the part
of the Seller.  The consummation of the transactions contemplated by this
Agreement have been approved by all necessary action on the part of the Seller’s
stockholders.  This Agreement has been, and each such Ancillary Document will
be, duly executed and delivered by the Seller, and this Agreement is, and each
such Ancillary Document when so duly executed and delivered by the Seller and,
if applicable, the Buyer, will be, the legal, valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws relating to or affecting the rights of
creditors generally and by equitable principles, including those limiting the
availability of specific performance, injunctive relief and other equitable
remedies and those providing for equitable defenses.

 

(b)                                 The execution, delivery and performance by
the Seller of this Agreement and each of the Ancillary Documents to which it is
or will be a party, and the consummation by the Seller of the transactions
contemplated hereby and thereby, do not and will not, (i) conflict with, or
result in any violation or breach of, any provision of the Certificate of
Incorporation or By-laws of the Seller, each as amended to date, (ii) conflict
with, or result in any violation or

 

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breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit) under, require a consent, notice
or waiver under, require the payment of a penalty under or result in the
imposition of any mortgage, security interest, pledge, conditional sale or other
title retention agreement, lien, charge or encumbrance (“Liens”), other than
Permitted Liens, on or with respect to any of the Acquired Assets, including,
but not limited to, the Assumed Contracts, the Acquired Licenses or the
Transferred Permits, or (iii) subject to compliance with the requirements
specified Section 2.2(c), conflict with or violate any permit, concession,
franchise, license or Law applicable to the Seller or any of its properties or
assets.  For purposes of this Agreement, the term “Permitted Liens” means
(A) mechanic’s, materialmen’s, landlord’s, laborer’s, carrier’s, warehouseman’s,
supplier’s, vendor’s and similar liens incurred in the ordinary course of
business, (B) liens for Taxes not yet due and payable and (C) any other liens
set forth Schedule 2.2(b) hereto.

 

(c)                                  No consent, approval, license, permit,
order or authorization of, or registration, declaration, notice or filing with,
any U.S. federal, state, municipal or local government, court, tribunal, agency,
commission, regulatory authority or instrumentality or any other U.S. entity or
person exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to a government (a “Governmental
Entity”) is required by or with respect to the Seller in connection with the
execution, delivery and performance by the Seller of this Agreement and each of
the Ancillary Documents to which it will be a party or the consummation by the
Seller of the transactions contemplated hereby and thereby, except for such
consents, approvals, licenses, permits, orders, authorizations, registrations,
declarations, notices and filings which, if not obtained or made, would not
reasonably be expected to materially diminish or impair the use or value of the
Acquired Assets or the value or operation of the Business.

 

2.3                               Taxes.

 

(a)                                 The Seller has timely filed all material Tax
Returns that it has been required to file, and all such Tax Returns were true,
correct and complete in all material respects.  The Seller has paid on a timely
basis all Taxes that have been due from and payable by the Seller.  For purposes
of this Agreement, (i) “Taxes” means (A) all taxes, charges, fees, duties,
levies or other similar assessments or liabilities in the nature of a tax,
including income, excess profits, gross receipts, net proceeds, alternative or
add-on minimum, ad valorem, premium, value-added, excise, real property,
personal property (tangible and intangible), inventory, stamp, capital stock,
sales, use, service, transfer, withholding, employment, social security,
unemployment, disability, payroll, occupational, severance, estimated and
franchise taxes imposed by any Taxing Authority and (B) any interest, fines,
penalties, assessments or additions to tax resulting from, attributable to or
incurred in connection with any tax described in clause (A) or any contest or
dispute thereof, (ii) “Tax Returns” means all reports, returns, declarations,
statements or other information required to be supplied to any Taxing Authority
in connection with Taxes (including any attachments thereto or amendments
thereof), (iii) “Taxing Authority” means any U.S. or non-U.S. federal, state,
municipal or local government, court, tribunal, agency, commission, regulatory
authority or instrumentality or any other entity or person exercising executive,
legislative, judicial, regulatory or administrative authority to impose, levy or
assess any Tax, and (iv) “Tax Law” means any U.S. or non-U.S. federal, state,
provincial,

 

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municipal or local law, statute, ordinance, treaty, common law, rule,
regulation, standard, judgment, order, writ, injunction, decree, arbitration
award, agency requirement, license or permit of any Taxing Authority.  The
Seller has complied in all material respects with all applicable Tax Laws
relating to the filing of Tax Returns and the payment and withholding of Taxes,
and all Taxes that the Seller has been required by Tax Law to withhold or
collect have been duly withheld or collected and, to the full extent required,
have been properly paid to the appropriate Taxing Authorities.

 

(b)                                 The Seller (i) is not a party to any
agreement with any Taxing Authority extending the time within which to file any
Tax Return (which Tax Returns are related to the Acquired Assets or the
Business) and (ii) has not granted, or been requested to grant, any extension of
the statute of limitations for the assessment or collection of Taxes (which
Taxes are related to the Acquired Assets or the Business).

 

(c)                                  There are no Liens with respect to Taxes
upon any of the Acquired Assets, other than with respect to Taxes not yet due
and payable or being contested in good faith and for which adequate reserves
have been set forth on the Seller’s financial statements as set forth on
Schedule 2.2(b).

 

(d)                                 With respect to the Business or the Acquired
Assets, there is no action, suit, proceeding, audit, claim or assessment
pending, or to the Seller’s Knowledge (as defined in Section 6.12 below),
proposed by a Taxing Authority with respect to any Taxes.

 

(e)                                  No written claim has been made by any
Taxing Authority that the Seller is or may be subject to taxation in a
jurisdiction where the Seller does not file a Tax Return related to the Business
or the Acquired Assets.

 

(f)                                   None of the Acquired Assets is subject to
or owned by any tax partnership, as defined in Section 761 of the Internal
Revenue Code of 1986, as amended, and the related U.S. Treasury regulations.

 

2.4                               Intellectual Property.

 

(a)                                 The Transferred Intellectual Property
constitutes all Intellectual Property that (i) is owned or licensed by the
Seller with respect to which the Seller possesses other rights and
(ii) (A) relates primarily or exclusively to the Product or the Business or
(B) is essential for the sale of the Product or the operation of the Business. 
The Seller has good, saleable and sole title in and to all of the Transferred
Intellectual Property, free and clear of all Liens, other than Permitted Liens,
and free and clear of any requirement of any royalty, milestone or similar
payments.  The Seller has not (i) transferred ownership of, (ii) granted any
license or other right to use, or (iii) authorized the retention of any rights
to use, any Transferred Intellectual Property to any third party.  For purposes
of this Agreement, (A) the term “Intellectual Property” means any and all
intellectual property rights and other similar proprietary rights in any and all
jurisdictions, whether registered or unregistered, whether owned or held for use
under license, including all rights and interests pertaining to or deriving from
(1) patents, trademarks, service marks, trade names, domain names, copyrights,
designs and trade secrets, (2) applications for and registrations of such
patents, including reexaminations, extensions and counterparts claiming

 

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priority therefrom, inventions, invention disclosures, discoveries and
improvements, whether or not patentable, trademarks, service marks, trade names,
domain names, copyrights and designs, (3) proprietary or confidential processes,
formulae, methods, schematics, technology, know-how and computer software
programs and applications, including data files, source code, object code and
software-related specifications and documentation, (4) other tangible or
intangible proprietary or confidential information and materials, including
proprietary databases and data compilations, in each case, including any
registrations of, applications to register, and renewals and extensions of, any
of the foregoing with or by any Governmental Entity in any jurisdiction, (5) all
moral rights and all other proprietary rights that are primarily related to,
used or maintained in connection with or for the purpose of the operation,
conduct or maintenance of the Business, and (6) any similar or equivalent rights
to any of the foregoing anywhere in the world, together with the goodwill and
the business appurtenant thereto and the right to sue third parties for
infringement (including, without limitation, damages and injunctive relief) of
any of the foregoing based on activities occurring prior to and including the
Closing Date and any current or future right to receive royalties based on any
of the foregoing, whether choate or inchoate, known or unknown, contingent or
non-contingent; and (B) the term “Transferred Intellectual Property” means the
Acquired Licenses, Seller Licensed Patents, Transferred Trademarks, Transferred
Domain Names and Transferred Other IP.

 

(b)                                 Except as to the Acquired Licenses or the
Seller Licensed Patents, the Seller is not a party to any agreement pursuant to
which the Seller has licensed or obtained any Transferred Intellectual Property
from a third party.  All registrations, issuances and applications for the
Transferred Intellectual Property, including, but not limited to, the Seller
Licensed Patents set forth Schedule 1.1(c), the Transferred Trademarks set forth
Schedule 1.1(a) and the Transferred Domain Names set forth Schedule
1.1(b) (A) have been duly filed or registered (as applicable) with the
applicable Governmental Entity and properly maintained in all material respects,
including without limitation the timely submission of all necessary filings and
payment of fees in accordance with the legal and administrative requirements in
the appropriate jurisdictions, and (B) have not lapsed or expired.  Schedule
1.1(b) of the Seller Disclosure Schedule lists all actions that must be taken by
the Seller within 180 days from the date of this Agreement to maintain or renew
such registrations, issuances and applications, including the payment of any
registration, maintenance, renewal fees, annuity fees and taxes to, or the
filing of any documents or certificates with, the relevant patent, copyright,
trademark or similar authorities in the United States.

 

(c)                                  To the Seller’s Knowledge, there is no
material fact with respect to any patent application owned or licensed by the
Seller and comprised within the Transferred Intellectual Property required to be
disclosed to the United States Patent and Trademark Office that was not
disclosed and that would reasonably be expected to (i) preclude the issuance of
an issued patent from such patent application or (ii) render any issued patent
issuing from such patent application invalid or unenforceable.  The Seller has
complied in all material respects with applicable requirements including the
duty to disclose and applicable duties of candor in the filing and prosecution
of the patents and patent applications, comprised within the Transferred
Intellectual Property.

 

(d)                                 To the Seller’s Knowledge, no third party is
infringing or violating or misappropriating any of the Transferred Intellectual
Property or has made any claim of

 

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ownership or right to any Transferred Intellectual Property.  The Seller has not
sent any notice to or asserted or threatened any action or claim against any
person or entity involving or relating to any Transferred Intellectual
Property.  The Seller has not received any written notice from any third party
notifying the Seller of, or requesting, that in relation to the Product, the
Acquired Assets or the Business, the Seller enter into a license, under any
third party Intellectual Property right.

 

(e)                                  The operation of the Business, including
the Seller’s manufacturing, marketing and sale of the Product, does not infringe
or violate or constitute a material misappropriation of any Intellectual
Property of any third party, violate the rights of any third party (including
rights to privacy or publicity), or constitute unfair competition or an unfair
trade practice under any applicable Law.  The Seller has not received any
written claim or notice alleging any such infringement, violation or
misappropriation.  There is no pending or, to the Seller’s Knowledge, threatened
claim, interference, opposition or demand of any third party challenging the
ownership, validity or scope of any Transferred Intellectual Property.  The
Seller has not been served with or provided written notice that any Transferred
Intellectual Property is the subject of any judicial, administrative or arbitral
order, award, decree, injunction, lawsuit, judgment, proceeding or stipulation
(“Order”), and the Seller is not subject to any Order barring or limiting the
Seller’s use, license or ownership of any Transferred Intellectual Property.

 

(f)                                   Neither this Agreement nor the
transactions contemplated by this Agreement will result in the Buyer granting or
issuing, or being obligated to grant or to issue, any rights or licenses with
respect to the Intellectual Property of the Buyer to any third party pursuant to
any contract or agreement to which the Seller is bound, including, but not
limited to, the Acquired Licenses or the Assumed Contracts.

 

(g)                                  The Seller has not sought or procured a
“freedom to operate” opinion or analysis from patent counsel with respect to the
development, manufacture, marketing, distribution, sale or other use of the
Product.

 

(h)                                 The Seller has taken commercially reasonable
measures to maintain in confidence all trade secrets and confidential
information comprising a part of the Transferred Intellectual Property.  The
Seller requires each person or entity employed or retained by it as a consultant
or independent contractor who contributed to the creation or development of any
of the Transferred Intellectual Property to enter into an agreement covering
confidentiality and assignment of inventions, a form of which has been made
available to the Buyer.  No current or former employee, officer, consultant or
independent contractor of the Seller, or to the Seller’s Knowledge, any other
person or entity, has any right, title, claim or interest in, to or under any
Transferred Intellectual Property owned or developed by or on behalf of the
Seller, or acquired by the Seller.

 

(i)                                     All fees, annuities, royalties,
honoraria and other payments that are or were due from the Seller on or before
the Closing for any of the Transferred Intellectual Property or the Assumed
Contracts have been paid.

 

(j)                                    No government funding or facilities of a
university, college, other educational institution or research center, were used
by the Seller or to the Seller’s Knowledge

 

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another party in (i) the development of or acquisition by the Seller of the
Transferred Intellectual Property or the Product or (ii) the conduct of the
Business.

 

2.5                               Contracts.

 

(a)                                 Schedule 2.5(a) of the Seller Disclosure
Schedule sets forth a complete and accurate list of each contract or agreement
to which the Seller is a party as of the date of this Agreement that (i) relates
exclusively or primarily to the Product or the Business or (ii) has been used by
the Seller and is material to the Product or the Business (collectively, the
“Business Material Contracts”).

 

(b)                                 The Seller has made available to the Buyer a
complete and accurate copy of each Business Material Contract.  Each Business
Material Contract is the legal, valid and binding obligation of the Seller and
is in full force and effect with respect to the Seller and, to the Seller’s
Knowledge, with respect to each other party thereto, except to the extent it has
previously expired in accordance with its terms.  The Seller has not waived any
of its material rights under any Business Material Contract.  No Business
Material Contract restricts the conduct or operation of the Business, including
to accommodate the intellectual property rights of a third party.  Except as may
be reflected in the Business Material Contracts, the Seller has not at any time
assigned, transferred or otherwise conveyed any or all of its rights, title,
interests, duties or obligations in, to, under or with respect to the Business
Material Contracts nor are any such rights encumbered.  The Seller is not in
violation of or in default under, and to the Seller’s Knowledge, no other party
to any Business Material Contract is in violation of or in material default
under (nor does there exist any condition which, upon the passage of time or the
giving of notice or both, would reasonably be expected to cause such a violation
of or material default under or permit termination, material modification or
acceleration of any material obligations of the Seller pursuant to) any Business
Material Contract.

 

(c)                                  Except as set forth on Schedule 2.5(c) of
the Seller Disclosure Schedule, each Business Material Contract that constitutes
an Assumed Contract is assignable or transferable to the Buyer without (i) the
written consent of the other party, (ii) the prior written notice to the other
party and (iii) the making of any payment or grant of any other consideration or
rights to the other party.

 

2.6                               Litigation.  There is no action, suit,
proceeding, claim, arbitration or investigation pending with respect to the
Acquired Assets or the Business (i) to which the Seller is a party, (ii) of
which the Seller has received written notice or (iii) with respect to which
Seller has Knowledge and, to the Seller’s Knowledge, no such action, suit,
proceeding, claim, arbitration or investigation has been threatened against the
Seller.  There are no unsatisfied judgments or outstanding orders, injunctions,
decrees, stipulations or awards (whether rendered by a court, an administrative
agency or by an arbitrator) against any of the Acquired Assets or against the
Seller with respect to the Business.  The Seller has not received or been
notified of and has no knowledge of any Paragraph IV Certification Notice in
accordance with 21 U.S.C. § 355(j)(2)(B)(ii) advising either the Seller or the
owner or assignee of the Seller Licensed Patents of the filing by an Abbreviated
New Drug Application with respect to the Product (“ANDA”).  To the Seller’s
Knowledge, no ANDA filing has been threatened with respect to the Product.

 

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2.7                               Inventory.

 

(a)                                 The Product Inventory consists of bulk
tablets, trade inventories and sample inventories.  All inventories of the
Product consist of a quality usable and saleable, as applicable, in the ordinary
course of business.  All trade inventories of the Product comprising part of the
Product Inventory have an expiration date of at least 24 months from the date of
this Agreement.  All sample inventories of the Product comprising part of the
Product Inventory have an expiration date of at least 12 months from the date of
this Agreement.  All of the Product Inventory is free of defects (including
defects in packaging, labeling, storage and encapsulation), and complies in all
material respects with all applicable specifications and all applicable Law,
including, without limitation, all regulatory requirements and environmental
Laws, including cGMP and may be introduced into interstate commerce in the
United States in accordance with applicable Law.  All Product Inventory that has
been returned, is expired or has been deemed unusable or not fit for sale, has
been or will be destroyed in accordance with the policies of the Seller.  For
purposes of this Agreement, “cGMP”  means the then-current good manufacturing
practices required by the FDA, as defined in 21 C.F.R. Parts 210 and 211, for
the manufacture and testing of pharmaceutical materials.

 

2.8                               Compliance With Laws.  The Seller is in
compliance in all material respects with, is not in material violation of, and,
since January 1, 2008, has not received any notice alleging any material
violation with respect to, any applicable Law with respect to the Product, the
Business or the ownership or operation of the Acquired Assets. For purposes of
this Agreement, “Law” or “Laws” means any U.S. federal, state, provincial,
municipal or local law, statute, ordinance, treaty, common law, rule,
regulation, standard, judgment, order, writ, injunction, decree, arbitration
award, agency requirement, license or permit of any Governmental Entity.

 

2.9                               Permits.  The Seller has all Permits necessary
for the Seller to own, lease or operate the Acquired Assets and operate the
Business in the manner currently conducted and in which the Business has been
conducted prior to the date of this Agreement.  Schedule 1.1(d) contains a
complete listing of all such Permits (the “Seller Permits”).  The Seller is in
compliance in all material respects with the terms of the Seller Permits and has
not received any written notices that it is in violation of any of the terms or
conditions of such Seller Permits.  All such Seller Permits are in full force
and effect and no action or claim is pending or, to the Seller’s Knowledge,
threatened to revoke, suspend, adversely modify or terminate any such Seller
Permit or declare any such Seller Permit invalid in any material respect.  The
Seller has not received any written notice with respect to any failure by the
Seller to timely possess any Seller Permit.

 

2.10                        Product Liability.  No product liability claims have
been received in writing by the Seller and, to the Seller’s Knowledge, no such
claims have been threatened against the Seller, in each case relating to the
Product.  There is no judgment, order or decree outstanding against the Seller
(or to Seller’s Knowledge, any other person or entity) relating to product
liability claims with respect to the Product.

 

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2.11                        Regulatory Matters.

 

(a)                                 The Product has been researched, developed,
tested, manufactured, supplied, promoted, co-promoted, distributed, marketed,
commercialized, stored and sold by Seller and, to the Seller’s Knowledge, by
each other person on behalf of the Seller, as applicable, in compliance in all
material respects with (i) the Federal Food, Drug and Cosmetic Act (the “FDA
Act”), the Comprehensive Drug Abuse Prevention and Control Act of 1970 (the
“CDAPCA”), the Controlled Substances Act (the “CSA”), the Patient Protection and
Affordable Care Act (“PPACA”) and applicable regulations issued by the FDA,
including, as applicable, those requirements relating to the FDA’s cGMP, good
laboratory practices and good clinical practices, and in all material respects
all other Health Laws, rules and regulations and (ii) all Transferred Permits. 
For purposes of this Agreement, (A) the term “Health Laws” means any Law the
purpose of which is to ensure the safety, efficacy and quality of medicines by
regulating the research, development, manufacturing and distribution of these
products, including, but not limited to, Laws relating to good laboratory
practices, good clinical practices, investigational use, product marketing
authorization, manufacturing compliance and approval, good manufacturing
practices, labeling, advertising, promotional practices, pricing, safety
surveillance, record keeping and filing of required reports, including, but not
limited to,  the FDA Act, the Public Health Service Act, as amended, their
associated rules and regulations promulgated thereunder and (B) the term “Health
Authorities” means the Governmental Entities which administer Health Laws,
including, but not limited to, the FDA and the United States Drug Enforcement
Agency (the “DEA”).

 

(b)                                 The Seller has made available to the Buyer
as of the date of this Agreement complete and correct copies of (i) each New
Drug Application (“NDA”) and each Investigational New Drug application (“IND”)
submitted to the FDA with respect to the Product, including all supplements and
amendments thereto and (ii) all other correspondence, communications or filings
submitted to the FDA and received from the FDA, including meeting minutes, with
respect to the Product, the Acquired Assets, or the Business, including, but not
limited to, all supplements and amendments thereto.

 

(c)                                  The Seller has made available to the Buyer
as of the date of this Agreement complete and correct copies of all (i) material
scientific and clinical data of the Seller and all material written and
electronic correspondence with all Health Authorities with respect to the
Product, (ii) all audit reports performed by the Seller or on its behalf to
assess the Seller’s compliance with applicable Health Laws, rules and
regulations, and (iii) any material document, correspondence or other
communication prepared by or on behalf of the Seller or received by the Seller
from the DEA or the United States Department of Justice, in each case with
respect to the Product, the Acquired Assets or the Business.

 

(d)                                 The clinical trials (including any
post-marketing studies) conducted by or on behalf of the Seller related to the
Product (which, for the avoidance of doubt, shall not include
investigator-sponsored clinical trials), each of which are set forth on Schedule
2.11(d), were, and if still pending, are, being conducted in all material
respects in accordance with all applicable Laws and all applicable clinical
trial protocols, informed consents and applicable requirements of the FDA,
including, as applicable, the FDA’s good clinical practices and good laboratory
practices regulations.

 

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(e)                                  The Seller is not subject to any
investigation related to the Product, the Acquired Assets or the Business that
is pending and of which the Seller has been notified in writing or, to the
Seller’s Knowledge, which has been threatened, in each case by (i) the FDA or
(ii) the Department of Health and Human Services Office of Inspector General or
Department of Justice pursuant to the Federal Healthcare Program Anti-Kickback
Statute (42 U.S.C. § 1320a-7b(b) (known as the “Anti-Kickback Statute”), the
Federal False Claims Act (31 U.S.C. § 3729) or the FDA Act (21 U.S.C. § 301 et
seq).

 

(f)                                   The Seller has not received any written
notice that the FDA or any other Governmental Entity has commenced, or overtly
threatened to initiate, any action to withdraw its approval or request the
recall of the Product, or commenced, or overtly threatened to initiate, any
action to enjoin production at any facility at which the Product is
manufactured.

 

(g)                                  The Seller has not submitted any claim for
payment to any government healthcare program in connection with any referrals
related to the Product that violated in any material respect any applicable
self-referral Law, including the Federal Ethics in Patient Referrals Act, 42
U.S.C. § 1395nn (known as the “Stark Law”), or any applicable state
self-referral Law.

 

(h)                                 The Seller has not submitted any claim for
payment to any government healthcare program related to the Product in material
violation of any Laws relating to false claim or fraud, including the Federal
False Claim Act, 31 U.S.C. § 3729, or any applicable state false claim or fraud
Law.

 

(i)                                     The Seller has complied in all material
respects with all applicable security and privacy standards regarding protected
health information under (i) the Health Insurance Portability and Accountability
Act of 1996, including the regulations promulgated thereunder (collectively
“HIPAA”), and (ii) other applicable privacy Laws, in each case as related to the
Product, the Acquired Assets or the Business.

 

(j)                                    To the Seller’s Knowledge, the Product is
not adulterated or misbranded within the meaning of the FDCA or any similar
governmental act or Law of any jurisdiction.

 

(k)                                 To the Seller’s Knowledge, there have not
been and are not now any investigations, adverse third party allegations or
actions, or claims against the Seller, including any pending or threatened
action against the Seller, in any court or by or before any Governmental Entity,
with respect to the Product, or the Seller’s obligations set forth herein,
including any which may adversely affect the Seller’s ability to perform its
obligations under this Agreement.

 

(l)                                     Neither the Seller nor to the Seller’s
Knowledge, any officer, employee or agent of the Seller has made an untrue
statement of material fact or fraudulent statement to any Health Authority,
failed to disclose a material fact required to be disclosed to any Health
Authority or any other Governmental Entity, or committed an act, made a
statement, or failed to make a statement, including with respect to any
scientific data or information, that, at the time such disclosure was made or
failure to disclose occurred, would reasonably be expected to provide a basis
for the Health Authority or any other Governmental Entity to invoke the FDA

 

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policy respecting “Fraud, Untrue Statements of Material Facts, Bribery and
Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any
similar policy, in each case as related to the Product, the Acquired Assets or
the Business.  Neither the Seller nor, to the Seller’s Knowledge, any officer,
employee or agent of the Seller has been convicted of any crime or engaged in
any conduct for which debarment or similar punishment is mandated or permitted
by 21 U.S.C. § 335a(a) or any similar Laws or authorized by 21 U.S.C. §
335a(b) or any similar Laws.  Neither the Seller nor, to the Seller’s Knowledge,
any officer, employee or agent of the Seller has been convicted of any crime or
engaged in any conduct for which such person or entity could be excluded from
participating in the Federal health care programs under Section 1128 of the
Social Security Act of 1935, as amended, or any similar Laws.

 

(m)                             Neither the Seller nor, to the Seller’s
Knowledge, any of its manufacturers of the Product have received any Form 483
observations, warning letters or other communications from a Governmental Entity
related to the Product or the Business that would reasonably be expected to
adversely impact the manufacture or the marketing of the Product in the United
States.

 

(n)                                 Neither the NDA nor any written
correspondence with the FDA made available to the Buyer reflects any material
safety concerns with respect to the Product.  All such materials have been made
available to the Buyer.

 

(o)                                 Seller has paid for the annual PDUFA Fees
for the Products due for all time periods prior to the Closing.  For the
avoidance of doubt, the PDUFA Fees due on October 1, 2012 shall be the
responsibility of the Buyer.

 

2.12                        Title to Acquired Assets; Condition of Acquired
Assets.  The Seller has (and subject to the Buyer’s own actions after the
Closing, the Buyer will have) good, marketable and indefeasible title to, or a
valid leasehold interest in, all the Acquired Assets, in each case free of all
Liens, other than Permitted Liens. At the Closing, the Seller will convey,
transfer, assign and deliver to the Buyer good title to the Acquired Assets,
free of all Liens, other than Permitted Liens.

 

2.13                        Sufficiency of Acquired Assets.  The Seller does not
utilize any assets that are material to the Product or the Business other than
the Acquired Assets.  Tangible assets that are used partly in the Business but
primarily in the operation of the Seller’s overall business are not material to
the Product or the Business.  The Acquired Assets are sufficient to enable the
Buyer to carry on the Business in substantially the same manner as the Business
is carried on by the Seller prior to the date hereof; provided, however, the
Seller is making no representation or warranty hereby as to the adequacy of the
working capital or cash available to fund the Business as it will operate
following the Closing or any representation or warranty as to the adequacy of
employees available to operate the Business.

 

2.14                        Solvency.  On the Closing Date and immediately prior
to and after the consummation of the transactions contemplated by this
Agreement: (a) the Seller shall not intend, whether by virtue of the sale of the
Acquired Assets (and the transactions contemplated hereby and under the
Ancillary Documents) or otherwise, to hinder, defraud, or delay any of its
present or future creditors, (b) the fair value, on a going concern basis, of
the property of the

 

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Seller is greater than the amount of the Seller’s liabilities (including
disputed, contingent and unliquidated liabilities as properly discounted by the
probability of occurrence), (c) the present fair saleable value, on a going
concern basis, of the property of the Seller is not less than the amount that
will be required to pay the probable liability of the Seller on its debts as
they become absolute and matured in the ordinary course of business, (d) the
Seller is able to pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities as properly discounted by the
probability of occurrence) as they mature in the normal course of business,
(e) the Seller shall not be engaged in business or a transaction, and shall not
about to be engaged in business or a transaction, for which any property
remaining with the Seller shall be an unreasonably small capital, and (f) the
Seller shall not intend to incur, and shall not believe that it is about to
incur, debts that would be beyond the Seller’s ability to pay as such debts
matured.

 

2.15                        Fair and Adequate Consideration.  The amount of
consideration to be received by the Seller upon the sale of the Acquired Assets
and the Business to the Buyer constitutes reasonably equivalent value and fair
consideration for the Acquired Assets and the Business.  The Seller directed the
party listed on Schedule 2.15 (the “Investment Banker”) to solicit and the
Investment Banker did solicit indications of interest from, and held discussions
with, multiple third parties regarding the possible acquisition of the Business
and the Investment Banker concluded that the consideration provided to the
Seller in this Agreement is reasonably equivalent to the value of the Acquired
Assets.  After having considered information provided by the Investment Banker,
the Board of Directors of the Seller has determined that the transactions
contemplated by this Agreement are fair, just and reasonable to the Seller and
the Seller’s stockholders.

 

2.16                        Financial Statements..  Schedule 2.16 of the Seller
Disclosure Schedule includes (a) unaudited Product income statements prepared in
the format the Seller has historically prepared for each of the three year
periods ended December 31, 2011 and (b) interim unaudited Product income
statements for the period ending on April 30, 2012.  The foregoing financial
statements are derived from and in accordance with the books and records of the
Seller, fairly represent the Product’s gross margin for the periods related
thereto, and have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby.

 

2.17                        Insurance.  The Seller maintains the policies of
product liability insurance set forth in Schedule 2.17 of the Seller Disclosure
Schedule in connection with the Business.  Each such policy is in full force and
effect and there is no claim pending under any of such policies relating to the
Product, the Acquired Assets or the Business as to which coverage has been
questioned, denied or disputed by the underwriters of such policies.

 

2.18                        Absence of Certain Changes.  Since January 1, 2012,
the Seller (i) has sold the Product to wholesalers or distributors only in the
ordinary course of business and in amounts that are generally consistent with
past sales by the Seller to its wholesale and distributor customers during
comparable periods and (ii) has not engaged in any practice with the intent of
increasing the levels of inventory of the Product in the distributor or
wholesaler channels outside of the ordinary course of business and in
anticipation of entering into this Agreement or any similar transactions with
respect to the Product.

 

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2.19         Disclosure.  None of this Agreement, any Schedule, Exhibit or
certificate delivered pursuant to this Agreement or any document or statement in
writing which has been supplied to the Buyer or its representatives by or on
behalf of the Seller in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact, or omits any
statement of a material fact necessary to make the statements contained herein
or therein not misleading.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer represents and warrants to the Seller that the statements contained in
this Article III are true and correct as of the date hereof.

 

3.1           Organization, Standing and Power.  The Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted, and is duly qualified to do business and,
where applicable as a legal concept, is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties it
owns, operates or leases or the nature of its activities makes such
qualification necessary, except for such failures to be so organized, qualified
or in good standing, individually or in the aggregate, that would not reasonably
be expected to have a Buyer Material Adverse Effect.  For purposes of this
Agreement, the term “Buyer Material Adverse Effect” means any material adverse
change, event, circumstance or development with respect to, or any material
adverse effect on, the ability of the Buyer to consummate, including any
material delay in the Buyer’s ability to consummate, the transactions
contemplated by this Agreement.

 

3.2           Authority; No Conflict; Required Filings and Consents.

 

(a)           The Buyer has all requisite corporate power and authority to enter
into this Agreement and each of the Ancillary Documents to which it will be a
party and to consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by the Buyer of this Agreement and each of
the Ancillary Documents to which it will be a party and the consummation of the
transactions contemplated hereby and thereby by the Buyer have been duly
authorized by all necessary corporate action on the part of the Buyer.  This
Agreement has been, and each such Ancillary Document will be, duly executed and
delivered by the Buyer and this Agreement is, and each such Ancillary Document
when so duly executed and delivered by the Buyer and, if applicable, the Seller,
will be, the valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
relating to or affecting the rights of creditors generally and by equitable
principles, including those limiting the availability of specific performance,
injunctive relief and other equitable remedies and those providing for equitable
defenses.

 

(b)           The execution, delivery and performance by the Buyer of this
Agreement and each of the Ancillary Documents to which it will be a party, and
the consummation by the

 

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Buyer of the transactions contemplated hereby and thereby, shall not,
(i) conflict with, or result in any violation or breach of, any provision of the
organizational documents of the Buyer, (ii) conflict with, or result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, require a
consent or waiver under, constitute a change in control under, require the
payment of a penalty under or result in the imposition of any Lien, other than
Permitted Liens, on or with respect to the Buyer’s assets under, any of the
terms, conditions or provisions of any lease, license, contract or other
agreement, instrument or obligation to which the Buyer is a party or by which
the Buyer or any of its properties or assets may be bound, or (iii) subject to
compliance with the requirements specified in Section 3.2(c), conflict with or
violate any permit, concession, franchise, license or Law applicable to the
Buyer or any of its properties or assets, except in the case of clauses (ii) and
(iii) of this Section 3.2(b) for any such conflicts, violations, breaches,
defaults, terminations, cancellations, accelerations, losses, penalties or
Liens, and for any consents or waivers not obtained, that, individually or in
the aggregate, would not reasonably be expected to have a Buyer Material Adverse
Effect.

 

(c)           No consent, approval, license, permit, order or authorization of,
or registration, declaration, notice or filing with, any Governmental Entity or
any stock market or stock exchange on which shares of Buyer common stock are
listed for trading is required by or with respect to the Buyer in connection
with the execution, delivery and performance by the Buyer of this Agreement and
each of the Ancillary Documents to which it will be a party or the consummation
by the Buyer of the transactions contemplated by hereby and thereby, except for
such consents, approvals, licenses, permits, orders, authorizations,
registrations, declarations, notices and filings which, if not obtained or made,
would not reasonably be expected to have a Buyer Material Adverse Effect.

 

(d)           No vote of the holders of any class or series of the Buyer’s
capital stock or other securities is necessary for the consummation by the Buyer
of the transactions contemplated by this Agreement or the Ancillary Documents.

 

3.3           Litigation.  There is no material litigation, action, suit,
proceeding, claim, arbitration or investigation pending or, to the knowledge of
the Buyer, threatened, against the Buyer, and the Buyer is not subject to any
outstanding order, writ, judgment, injunction or decree of any Governmental
Entity that, in either case, would, individually or in the aggregate,
(a) prevent or materially delay the consummation by the Buyer of the
transactions contemplated by this Agreement or (b) otherwise prevent or
materially delay performance by the Buyer of any of its material obligations
under this Agreement.

 

3.4           Financing.  The Buyer has sufficient funds to perform all of its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement.

 

3.5           Condition of Business.  Notwithstanding anything contained in this
Agreement to the contrary, the Buyer acknowledges and agrees the Seller is not
making any representations or warranties whatsoever, express or implied, beyond
those expressly given by the Seller in this Agreement (as modified by the Seller
Disclosure Schedule).

 

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ARTICLE IV

 

ADDITIONAL AGREEMENTS

 

4.1           Confidentiality.  From and after the Closing Date, the Seller, and
each of Seller’s directors, officers, employees, contractors, agents and
representatives, will treat and hold as confidential, and not use or disclose
any of the Confidential Information to any third party (other than the
stockholders of the Seller who shall agree to be subject to the provisions of
this Section 4.1), except to pursue its rights under this Agreement or the
Ancillary Documents.  In the event that the Seller is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process or as
otherwise required by Law) to disclose any Confidential Information, the Seller
will notify the Buyer promptly of the request or requirement so that the Buyer
may seek, at its expense, an appropriate protective order or waive compliance
with the provisions of this Section 4.1.  If, in the absence of a protective
order or the receipt of a waiver hereunder the Seller is compelled to disclose
any Confidential Information to any Governmental Entity or else stand liable for
contempt, the Seller may disclose the Confidential Information to the
Governmental Entity; provided, however, that the Seller shall use commercially
reasonable efforts to obtain, at the request, and at the expense, of the Buyer,
an order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate.  For the purposes of this Agreement, “Confidential Information”
shall mean any nonpublic, proprietary or confidential information relating to
the Product, the Acquired Assets or the Business, including, but not limited to,
any information furnished by the Buyer to the Seller after the Closing in
accordance with this Agreement, except to the extent that such information shall
have become public knowledge other than through improper disclosure by the
Seller.

 

4.2           Post-Closing Cooperation.

 

(a)           Each of the Seller and the Buyer shall appoint the persons set
forth on Schedule 4.2(a) as representatives to participate on each party’s
transition team (each, a “Transition Team” and together, the “Transition Teams”)
for the purpose of working with the other party’s Transition Team to facilitate
the implementation and execution of the transition plan attached hereto as
Exhibit J (the “Transition Plan”) and to anticipate and resolve issues relating
to the sale of the Product, the Acquired Assets and the Business by the Seller
to the Buyer and the assumption of the Assumed Liabilities by the Buyer from the
Seller.  Schedule 4.2(a) shall also set forth each of the Buyer’s and the
Seller’s designee as each respective Transition Team’s Lead Member (each a “Lead
Member” and together, the “Lead Members”).  Seller shall not terminate the
employment of its Transition Team members without cause until their tasks under
the Transition Plan are completed.  The Seller shall take all actions reasonably
necessary to timely carry out the Transition Plan.

 

(b)           Subject to compliance with contractual obligations and applicable
Law, following the Closing, each party shall afford to the other party and the
other party’s authorized accountants, counsel and other designated
representatives during normal business hours in a manner so as to not
unreasonably interfere with the conduct of business (a) reasonable access and
duplicating rights to all Confidential Information and other information
relating to the

 

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Product, the Business or the Acquired Assets within the possession or control of
such party and (b) reasonable access to the personnel of such party.  Requests
may be made under this Section 4.2 for financial reporting and accounting
matters, preparing financial statements, preparing and filing any Tax Returns,
determining the proration of Taxes under Section 4.15(a), prosecuting any claims
for refund, defending any Tax claims or assessment, preparing securities Law or
securities exchange filings, prosecuting, defending or settling any litigation
or insurance claim, prosecuting patent applications and pursuing other patent
matters, performing obligations under this Agreement and the Ancillary Documents
and all other proper business purposes.  Except as expressly set forth in the
Transition Plan, neither party shall be entitled to receive any compensation for
making information or personnel available under this Section 4.2(b).

 

(c)           Promptly after the Closing Date, upon the Buyer’s written request,
the Seller will cooperate with the Buyer in connection with the preparation of
unaudited financial statements as of and for the period ending on the Closing
Date covering the operations of the Business as of and for the period ending on
the Closing Date to enable the Buyer to comply with applicable Legal
Requirements with respect to reports and filings with the U.S. Securities and
Exchange Commission (the “SEC”).  In preparing these financial statements the
Seller will use efforts similar to those used in connection with its own audited
financial statements.  Such financial statements shall comply with applicable
Legal Requirements including in connection with the Buyer’s acquisition of a
“significant business” pursuant to Regulation S-X of the SEC.  If requested by
the Buyer, the Seller shall engage Ernst & Young LLP, its independent auditors,
at the Buyer’s sole cost and expense, to audit the financial statements of the
Business for the periods required by Regulation S-X of the SEC and to render an
opinion on such financial statements.  The Seller will provide, if required by
the Buyers’ independent auditors, customary executed representation letters
required to enable independent auditors to render an opinion on audited
financial statements.  The Seller shall request, and take all reasonable steps
necessary to encourage, its auditors to cooperate with the Buyer and provide all
necessary consents required by the SEC and customary “comfort letters” in
connection with securities offerings of the Buyer and with its preparation of
any financial statements or other reports pursuant to Legal Requirements.  The
foregoing financial statements shall be (i) derived from and in accordance with
the books and records of the Seller, (ii) fairly represent the financial
condition, assets and liabilities of the Business as of periods related thereto,
and (iii) prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby.  For the avoidance of doubt, all
reasonable and documented out-of-pocket costs incurred by the Seller in
accordance with this Section 4.2(c) shall be the sole responsibility of the
Buyer.

 

4.3           Public Disclosure.  Any press release announcing the execution of
this Agreement shall be issued in such form as shall be mutually agreed upon by
the Seller and the Buyer.  Except as may be required by Law or stock market
regulations, the Buyer and the Seller shall consult with the other party before
issuing any other press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement prior to the
Closing.  The Seller shall not make any public statement with respect to the
transactions contemplated by this Agreement without the prior written consent of
the Buyer.

 

4.4           Further Assurances.  From time to time, as and when requested by
either party, each of the parties will, at its expense (except as otherwise
expressly provided in this Agreement), execute such additional documents and
take such further actions as may be

 

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reasonably requested to carry out the provisions hereof and consummate and
evidence the transactions contemplated hereby, including executing and
delivering or causing to be executed and delivered to the other party such
additional documents as the other party or its counsel may reasonably request as
necessary for such purpose.  Without limiting the foregoing, if at any time on
or after the Closing Date, the Seller retains or obtains possession or control
of any assets that existed as of the Closing Date and would have constituted an
Acquired Asset on such date, the Seller shall promptly but in no event later
than three Business Days after coming into such possession or control, deliver
or return (or cause to be delivered or returned) such Acquired Assets to Buyer
for no additional consideration.

 

4.5           Product Returns.  The Seller shall be liable only for returns
received prior to the Closing Date.  The Buyer shall be liable for all Product
returns of the Product received on or after the Closing Date.  In addition, the
Seller will also notify its third party logistics provider not to accept returns
of the Product on or after the Closing Date.

 

(a)           In the event the Seller receives and processes returns of Product
on or after the Closing Date for which the Buyer is responsible for issuing
credit, the Buyer shall reimburse the Seller within 30 days of receiving an
itemized invoice from the Seller.

 

4.6           Accounts Receivable.

 

(a)           The Buyer hereby agrees and acknowledges that the Seller Accounts
Receivable will remain the property of the Seller, and will be collected by the
Seller regardless of when and by whom such Seller Accounts Receivables are
collected or paid.  If the Buyer receives any payments of any kind from any
obligor with respect to such Seller Accounts Receivable, then the Buyer will,
within 30 days of receipt of such payment, remit the full amount of such payment
to the Seller.

 

(b)           If the Seller receives any payments of any kind from any obligor
related to sales of the Product after the Closing, including any sales, use or
similar Taxes levied on or included in such payments, any unpaid interest
accrued on any such payments and any security or collateral related thereto, and
any payments received with respect thereto, then the Seller will, within 30 days
of receipt of such payment, remit the full amount of such payment to the Buyer.

 

4.7           Use of Seller Brands.

 

(a)           The Seller hereby grants to the Buyer a fully-paid, royalty-free,
non-exclusive, sublicensable, non-transferable and non-assignable right and
license to use the Seller Brands used in connection with the Product for the
purposes expressly set forth below in Section 4.7(b) for the Trademark Period. 
All other uses by the Buyer of the Seller Brands not contemplated by
Section 4.7(b) hereto will be subject to Seller’s prior written consent, which
consent may be withheld in the Seller’s sole discretion.  All such other uses of
the Seller Brands by Buyer shall inure to the benefit of the Seller.

 

(b)           The Buyer will be permitted, for a period commencing on the
Closing Date and ending no later than the date of the latest expiration date for
any individual unit of finished Products included in the Product Inventory (the
“Trademark Period”) to use the Seller Brands used in connection with the Product
in the Territory, solely to the extent set forth on

 

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packaging materials and labels for Product included in the Product Inventory,
and solely in connection with the distribution and sale of such Product
Inventory in the Territory.

 

(c)           The Buyer will not, directly or indirectly, challenge the Seller’s
sole and exclusive ownership of all right, title and interest in and to the
Seller Brands, or the validity or distinctiveness thereof, including the
goodwill associated therewith, and acknowledges that all goodwill arising from
use of the Seller Brands will inure solely to the benefit of the Seller.

 

(d)           Nothing contained in this Agreement will be construed as an
assignment to the Buyer of any right, title or interest in the Seller Brands; it
being understood that all rights, title and interest relating to the Seller
Brands are expressly reserved by the Seller.

 

(e)           The Buyer will not use the Seller Brands other than as permitted
hereunder and will not incorporate the Seller Brands into the Buyer’s corporate
or business name in any manner whatsoever.  In using the Seller Brands, the
Buyer will in no way represent that it has any right, title or interest in any
of the Seller Brands other than those expressly granted under the terms of this
Agreement.  The Buyer will have no right, and is hereby prohibited from, using
any Seller Brand on any business card, letterhead, company or divisional name or
designation of the Buyer, or any related materials.

 

4.8           Regulatory Matters.

 

(a)           Each of the Seller and the Buyer shall cooperate and use its
commercially reasonable efforts to ensure compliance with all Laws, including
but not limited to FDA regulation 21 C.F.R. 314.72, that may be or become
applicable to the performance of its and the other party’s obligations pursuant
to this Agreement.

 

(b)           Each party shall promptly notify the other party of any
communication it or any of its Affiliates receives from any Governmental Entity
relating to the matters that are the subject of this Agreement and shall, to the
extent permitted by applicable Law, permit the other party to review in advance
any proposed communication by such party to any Governmental Entity relating to
the matters that are the subject of this Agreement.  For the purposes of this
Agreement, “Affiliate” means, with respect to any party, any other person, firm,
trust, partnership, corporation, company or other entity or combination thereof,
which directly or indirectly (i) controls such party, (ii) is controlled by such
party or (iii) is under common control with such party.  The terms “control” and
“controlled” mean ownership of 50% or more, including ownership by trusts with
substantially the same beneficial interests, of the voting and equity rights of
such party, firm, trust, corporation or other entity or combination thereof or
the power to direct the management of such party, firm, trust, corporation or
other entity or combination thereof.

 

(c)           As soon as possible following the Closing Date, but not later than
30 days after the Closing Date, the parties will enter into an agreement to
initiate a process for the transfer to the Buyer or its designee of adverse
event safety data in a mutually agreed format, including post-marketing
spontaneous reports received by the Seller, in order to monitor the safety of
the Product and comply with any applicable regulatory authority requirements.

 

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(d)           As soon as possible following the Closing Date, but not later than
30 days after the Closing Date, the parties will enter into an agreement to
initiate a process for the transfer to the Buyer or its designee of medical
information request responsibilities relating to the Product, the Acquired
Assets or the Business. Until such transfer, the Seller will remain responsible
for all medical information responsibilities associated with the Product, the
Acquired Assets or the Business.

 

4.9           Debarment and Exclusion.  Each party will promptly inform the
other party, but in no event later than five Business Days after such party has
knowledge, if such party or any director, officer, agent or employee of such
party is, or such party uses in any capacity the services of any individual or
entity that is:

 

(a)           debarred, or proposed to be debarred 21 U.S.C. Section 335a(a) or
335a(b);

 

(b)           sanctioned by, suspended, excluded or otherwise ineligible to
participate in any federal or state health care program, including Medicare and
Medicaid or in any federal procurement or non-procurement programs;

 

(c)           charged with or convicted of any felony or misdemeanor under 42
U.S.C. Section 1320a-7(a) or 42 U.S.C. Section 1320a-7(b)(1)-(3), or otherwise
proposed for exclusion; or

 

(d)           engaged in any conduct that would reasonably be expected to result
in debarment or exclusion under 21 U.S.C. Section 335a(a) or 335a(b), or under
42 U.S.C. Section 1320a-7, or sanction by, suspension, debarment, exclusion, or
ineligibility to participate in any federal or state health care program,
including Medicare and Medicaid or in any federal procurement or non-procurement
programs.

 

4.10         Notification of Customers.  Promptly after the Closing Date, the
Buyer and the Seller, in substantially the form of notification attached hereto
as Exhibit K, shall jointly notify all wholesale distributors of the Product:
(a) of the transfer of the Acquired Assets to Buyer and retention of the
Excluded Liabilities by the Seller; (b) that all purchase orders for Products
received by the Seller prior to the Closing Date but not shipped prior to
12:01 a.m. (EST) on the Closing Date will be transferred to the Buyer (provided,
that, to the extent that any purchase order cannot be so transferred, the Seller
and the Buyer shall cooperate with each other to ensure that such purchase order
is filled and that the Buyer receives the same economic benefit and assumes the
same liability associated with filling such purchase order as if such purchase
order had been so transferred); (c) that all purchase orders for the Product
received after the Closing Date should be sent to the Buyer at Telephone: (866)
223-0287, Telecopy: (888) 806-4864, E-mail: aa-ics-depomedorders@icsconnect.com;
and (d) any returns for the Product received on or after the Closing Date by the
Seller’s third party logistics provider will be returned to the customer with
instructions to return Product to Buyer at Depomed, Inc., Attn: Returns Goods
Processing, 420 International Road, Suite 500, Brooks, Kentucky 40109.

 

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4.11         Government and GPO Contracts.

 

(a)           Federal Supply Schedule.  The Seller shall continue to list the
Product under the Seller’s Federal Supply Schedule (“FSS”) until the earlier of
(i) 30 days after the Closing Date or (ii) when Buyer adds the Product to its
FSS contract or interim pricing agreement with the Department of Veterans
Affairs (“VA”), at which time the Seller shall notify its contracting officer at
the VA to remove the Product from Seller’s FSS.  The Seller shall provide the
Buyer with all necessary information as required by Section 603 of Veterans
Health Care Act and applicable “Dear Manufacturer” letters issued thereunder,
including all data necessary for the Buyer to calculate Non-FAMPs and Federal
Ceiling Prices (as defined in Section 4.11(c)) after transfer.  For purposes of
this Agreement, “Non-FAMP” means the Non-Federal Average Manufacturer Price, or
the average price paid to a manufacturer by wholesalers in the United States for
a single form and dosage unit of a covered drug and for a period of time
distributed to non-Federal purchasers, taking into account any cash discounts or
similar price reductions during that period.  Until such time as the Products
are removed from the Seller’s FSS, the Buyer shall honor the FSS pricing for the
Product established by the Seller.

 

(b)           Chargebacks.  The Seller shall be responsible for all credits,
chargebacks, reimbursements, administrative fees and other financial obligations
to wholesalers and other distributors, group purchasing organizations, VA,
insurers and other institutions related to the Product (collectively,
“Chargebacks”) submitted with respect to the Product sold by the Seller through
the Closing Date.  The Buyer is responsible for all Chargebacks for product sold
by the Buyer or put in the channel by the Buyer after the Closing Date.

 

(c)           Calculation of Non-FAMP and Federal Ceiling Prices.  For the
period of time the Product is listed under Seller’s FSS, in accordance with
applicable Law, the Seller shall accurately calculate the Non-FAMP of each
“covered drug” and the Federal Ceiling Price as defined in the Veterans’ Health
Care Act of 1992 (38 U.S.C. Section 8126 et seq.) and the Department of Veterans
Affairs Master Agreement (the “Federal Ceiling Price”), as applicable, and
submit to the VA, in a timely manner, the amounts so calculated.  Following the
transfer of the Product to Buyer’s FSS in accordance with applicable Law, the
Buyer shall accurately calculate the Non-FAMP of each “covered drug” and the
Federal Ceiling Price, as applicable, and submit to the VA in a timely manner,
the amounts so calculated.

 

(d)           Public Health Service (“PHS”) Pricing.  On or prior to the Closing
Date, the Seller shall provide the Buyer the calculated PHS pricing (also known
as 340B pricing) for: (i) the calendar quarter during which the Closing Date
occurs and (ii) the calendar quarter prior to the quarter during which the
Closing Date occurs.  The Seller shall be responsible for all PHS pricing
calculations for periods through June 30, 2012, and the Buyer shall be
responsible for all PHS pricing calculations for periods starting after June 30,
2012.

 

4.12         Medicaid and Other State and Private Third Party Payer Rebates.

 

(a)           Access.  After the Closing Date, the Seller (i) will provide the
Buyer access to the Center for Medicare and Medicaid Services (“CMS”) “Drug Data
Reporting for Medicaid” database for the Product and (ii) for periods through
June 30, 2012 the Seller will be exclusively responsible for reporting and
certifying all necessary monthly and quarterly Average

 

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Manufacturer Price (“AMP”) calculations and Customer Prompt Pay Discounts in
accordance with Federal law.  For periods starting after June 30, 2012, the
Buyer will be exclusively responsible for reporting and certifying all necessary
monthly and quarterly AMP calculations and Customer Prompt Pay Discounts in
accordance with Federal law.

 

(b)           Payment of Rebates.  The Seller shall process and pay any rebates
to state Medicaid and other state and local governmental programs, federal
programs, and private third party payers (collectively, “Rebates”) for periods
through September 30, 2012, including any retroactive adjustments submitted in
subsequent quarters, related to the Product reimbursed by the States for periods
through September 30, 2012.  The Buyer shall be financially responsible for all
Rebates with respect to the Product reimbursed by the States for all periods
beginning on October 1, 2012.   The Seller will forward any applicable Rebate
invoices it receives for which the Buyer is responsible to the Buyer within ten
Business Days after receipt by the Seller of such invoice. The Buyer will make
rebate payments directly to the States.

 

(c)           Medicaid Price Reporting.  The Seller shall continue monthly and
quarterly reporting to CMS on each Medicaid Finished Product (as defined below)
with Seller’s labeler code for periods through June 30, 2012, and shall
simultaneously furnish such information to the Buyer. For periods starting after
June 30, 2012, the Buyer shall report (i) the “average manufacturer price” to
the CMS on a monthly basis within 30 calendar days of the end of each month, and
(ii) the “quarterly average manufacturer price,” “Best Price,” “total exempt
sales at the nominal price” and “aggregate customary prompt pay discounts” to
the CMS on a quarterly basis within 30 calendar days of the end of each quarter,
for the Product (“Medicaid Finished Product”).  During the 12 month period
following the expiration dates contained in the last lot of Medicaid Finished
Product containing the Seller’s labeler code, the Buyer shall assume monthly and
quarterly reporting responsibility on each Medicaid Finished Product through the
expiration date contained in the last lot of Medicaid Finished Product
containing the Seller’s labeler code.  The Buyer shall be solely responsible for
all Medicaid Rebate filings and payments relating to the Products sold under its
own labeler code.

 

(d)           Other Programs.  For periods effective through September 30, 2012,
the Buyer is prohibited from entering into any other state supplemental or
private third party payer rebate arrangements for Medicaid Finished Products. 
For periods effective after September 30, 2012, should the Buyer enter into any
other state supplemental or private third party payer rebate arrangements for
Medicaid Finished Products, the Buyer will pay these invoices as appropriate. 
Any data reporting required by any such program shall be the Buyer’s
responsibility and such data shall be shared between the parties as required to
enable the Buyer to fulfill such responsibility.  If during at anytime prior to
September 30, 2012, the Buyer changes the WAC price or enters into any
agreements that would lower the “Best Price”, as defined by guidance from CMS,
for the Product, Buyer will be financially liable for the incremental rebates
caused by the changes to WAC or Best Price.  For the avoidance of doubt, the
Seller will pay the invoices for the period through September 30, 2012, and
invoice the Buyer for the incremental rebate amount caused by changes in WAC or
Best Price, to be paid within 30 days.

 

(e)           Medicare Part D Gap Discount Program.  The Seller shall be
financially liable for any rebates related to the Medicare Part D Gap Discount
Program with respect to the Product for periods through September 30, 2012.  The
Buyer shall be financially responsible for

 

29

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all rebates related to the Medicare Part D Gap Discount Program with respect to
the Product for all periods beginning on October 1, 2012. Under the Medicare
Part D Gap Discount Program, the Seller is required to make all payments for
rebates filed with the Seller’s National Drug Code number.  For periods that the
Buyer is financially liable as described above, the Buyer will reimburse the
Seller for payments made on its behalf by the Seller within 30 days of any
applicable itemized invoice from the Seller.  The Buyer shall be solely
responsible for all Medicare Part D Gap Discount Program Rebate filings and
payments relating to the Products sold under its own labeler code.

 

(f)            Tricare Rebate Program.  The Seller shall be financially liable
for any rebates related to the Tricare Rebate Program with respect to the
Product for periods through September 30, 2012.  The Buyer shall be financially
responsible for all rebates related to the Tricare Rebate Program with respect
to the Product for all periods beginning on October 1, 2012.  The Seller will
forward any applicable Rebate invoices it receives for which the Buyer is
responsible to the Buyer within five Business Days after receipt by the Seller
of such invoice. The Buyer shall be solely responsible for all Tricare Rebate
filings and payments relating to the Products sold under its own labeler code.

 

(g)           eVoucher.  The Seller shall be financially responsible for any
redemptions related to the NDCHealth eVoucher program with respect to the
Product through July 31, 2012.  The Buyer shall be financially responsible for
all redemptions related to the NDCHealth eVoucher program with respect to the
Product beginning on August 1, 2012.  Relay Health will bill Buyer directly for
activity starting August 1, 2012.  On August 1, 2012, the existing deposit with
Relay Health will be refunded to the Seller and the Buyer and Relay Health will
negotiate a new deposit amount.

 

(h)           Fines, Penalties, Interest.  Any delays, errors, or omission in
data provided by the Buyer to the Seller that result in fines, penalties,
interest, or any other charges to the Seller shall be the sole responsibility of
the Buyer and the Buyer shall reimburse the Seller for any such payments.  Any
delays, errors, or omission in data provided by the Seller to the Buyer that
result in fines, penalties, interest, or any other charges to the Buyer shall be
the sole responsibility of the Seller and the Seller shall reimburse the Seller
for any such payments.

 

4.13         Information for Calculating Prices.  Within 10 Business Days
following June 30, 2012, the Buyer shall provide to the Seller in a customary
format requested by Seller, detailed direct sales and non-return credit
information by class of trade, corresponding chargeback detail by class of trade
(date of processing of chargeback, chargeback amount, corresponding wholesale
purchase price, contract price, name of contract, corresponding units, date of
sale from wholesaler to contracted customer, and purchasing contracted
customer’s class of trade), and any other information that Seller may request in
order for the Seller to accurately calculate an appropriate Non-FAMP and/or the
Federal Ceiling Price, and “average manufacturer price”, or “Best Price”, as
defined by guidance from CMS, for Medicaid Finished Product, as applicable.  The
provisions of Section 4.12(e) shall apply to all data provided in accordance
with this Section 4.13.

 

4.14         Seller Contact.  The contact for the Seller for all matters
relating to Sections 4.11 through 4.13 is:

 

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Manager, Government Pricing and Report
Xanodyne Pharmaceuticals, Inc.
One Riverfront Place
Newport, Kentucky 41071

 

4.15         Taxes.

 

(a)           Apportionment of Tax Liability.  Proration of liability as between
the Seller and the Buyer for personal property, ad valorem and real property
Taxes, if applicable, on or with respect to the Acquired Assets or the Business
will be made as of the Closing Date on the basis of the number of days before
and including the Closing Date and the number of days after the Closing Date
that are included in the Tax period.  Proration of liability as between the
Seller and the Buyer for all other Taxes will be made by an interim closing of
the books by assuming that the taxable period ended at the close of business on
the Closing Date, except that exemptions, allowances or deductions that are
calculated on an annual basis shall be prorated on the basis of the number of
days in such portion elapsed through the Closing Date as compared to the number
of days in the portion elapsing after the Closing Date.  All Taxes constituting
Excluded Liabilities shall be for the sole account of the Seller, and all other
Taxes shall be for the sole account of the Buyer.  The Seller and the Buyer
shall furnish each other with such documents and other records as shall be
reasonably requested in order to confirm all proration calculations in
accordance with Section 4.2.

 

(b)           Tax Returns.  The Seller shall timely file all Tax Returns
applicable to the Business or otherwise related to the Acquired Assets required
to be filed on or before the Closing Date and shall timely pay all Taxes due
with respect to such Tax Returns.  The Buyer shall file all Tax Returns
applicable to the Business or otherwise related to the Acquired Assets required
to be filed after the Closing Date, including IRS Form 8947, and shall timely
pay all Taxes due with respect to such Tax Returns.  The parties will cooperate
with each other after the Closing Date in connection with audits and other
proceedings with respect to any Taxes relating to the Business or Acquired
Assets in accordance with Section 4.2.

 

(c)           Payment.  The Buyer or the Seller, as applicable (“Tax Payee”),
shall bill the Seller or the Buyer, respectively (“Tax Payor”), for the amount
of Taxes paid by the Tax Payee that are for the sole account of the Tax Payor
pursuant to Section 4.15(a) or Section 4.16, with the Tax Payor making payment
to the Tax Payee within 20 Business Days of receipt of such bill, but in no case
shall such payment be required to be made more than five Business Days prior to
the due date of the Tax Return to which such Taxes relate.

 

(d)           Refunds.  The Buyer shall promptly forward to or reimburse the
Seller for any refunds of Taxes (including any interest paid by a Taxing
Authority thereon and any credits in lieu thereof which are clearly attributable
to Taxes paid by the Seller), to the extent actually received or utilized by the
Buyer or any of its Affiliates, for Taxes paid by or on behalf of the Seller
with respect to the Excluded Assets.  The Seller shall promptly forward to or
reimburse the Buyer for any refunds of Taxes (including any interest paid by a
Taxing Authority thereon and any credits in lieu thereof which are clearly
attributable to Taxes paid by the Buyer), to the extent actually received or
utilized by the Seller or any of its Affiliates, for Taxes paid by or on behalf
of the Buyer with respect to the Acquired Assets.  Any amount due pursuant to
this

 

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Section 4.15(d) shall be reduced by all reasonable expenses and Taxes incurred
by the payor and its Affiliates to obtain such refund or credit.  No interest
shall accrue on any amount due pursuant to this Section 4.15(d).

 

4.16         U.S. Excise Tax on Branded Pharmaceutical Manufacturers.  The
Seller has filed the IRS Form 8947 due by December 15, 2011 and will pay the
U.S. excise tax with respect to the Business on branded prescription drug sales,
which is due by September 30, 2012. The Buyer will file all appropriate forms
relating to the U.S. excise tax with respect to the Business on branded
prescription drug sales which are due after the Closing Date, and the Buyer will
pay all such taxes due after September 30, 2012.

 

4.17         Transaction Fees.  Each party shall be responsible for its own
broker’s, finder’s, financial advisor’s, attorneys’, accounting, consulting or
other similar fees, costs, expenses or commissions in connection with any of the
transactions contemplated by this Agreement (“Transaction Fees”).  The
Investment Banker has acted as the Seller’s exclusive financial advisor in
connection with the transactions contemplated by this Agreement.

 

4.18         Seller Covenant Not to Compete.

 

(a)           The Seller, on behalf of itself, its subsidiaries, its successors
in interest and assigns, covenants and agrees that from and after the Closing
Date and for a five year period thereafter, the Seller shall not, directly or
indirectly, on its own behalf or on behalf or in conjunction with another, own,
control, manage, operate, engage in the business of or otherwise participate in
the ownership, control, management, operation, or engagement in any business,
whether corporate, proprietorship or partnership form or otherwise, engaged in
the research, development, formulation, manufacturing, packaging, distribution,
marketing or selling of any non-steroidal anti-inflammatory drug product that is
competitive with the Product in the Territory; provided, however, such
restriction shall not apply to the Seller’s continued manufacturing, packaging,
distribution, marketing and sale of Roxicodone® (oxycodone hydrochloride).

 

(b)           The Seller, on behalf of itself, its subsidiaries, its
successors-in-interest and assigns, covenants and agrees that from and after the
Closing Date and for the earlier of seven years or final approval of a generic
version of the Product, Seller shall not, directly or indirectly, on its own
behalf or on behalf or in conjunction with another, own, control, manage,
operate, engage in the business of or otherwise participate in the ownership,
control, management, operation, or engagement in any business, whether
corporate, proprietorship or partnership form or otherwise, engaged in the
research, development, formulation, manufacturing, packaging, distribution,
marketing or selling of any pharmaceutical product containing (i) the
Composition, (ii) any isomers, hydrates, anhydrides, solvates, esters, salt
forms, free acids or bases, complexes, metabolites, prodrugs or polymorphs of
the Composition and/or (iii) any derivatives of the foregoing having
substantially similar activity as the Composition.

 

(c)           The Seller agrees that the restrictions set forth in this
Section 4.18 are reasonable in scope and duration and are necessary to protect
the Buyer after the Closing.  The Seller acknowledges and agrees that the
Seller’s breach of this Section 4.18 will cause

 

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irreparable damage and harm to the Buyer, and upon breach of any provision of
this Section 4.18, the Buyer will be entitled to seek injunctive relief,
specific performance or other equitable relief without bond other security;
provided, however, that the foregoing remedies shall not limit any other
remedies that the Buyer may have.

 

4.19         Net Sales Reports.

 

(a)           Until the earlier to occur of the payment of the Second Milestone
Payment or the approval by the FDA of a generic version of the Product, the
Buyer shall provide the Seller, within 45 days following January 1st of each
calendar year (the “Report Deadline”), with reasonably detailed annual reports
(each, a “Net Sales Report”) regarding Net Sales of the Product for the
preceding 12 month period.

 

(b)           Each such Net Sales Report shall include (A) Net Sales during such
12 month period, (B) Net Sales during each consecutive four calendar quarter
period ending during such 12 month period, (C) the “gross to net” adjustments
with respect to the calculation of Net Sales for such 12 month period.

 

(c)           Upon the written request of the Seller, the Buyer shall, and shall
cause its Affiliates and other members of the Buyer Rights Chain Group to,
permit an independent public accountant (the “Accountant”) selected by the
Seller and reasonably satisfactory to the Buyer, at the Seller’s expense, to
have reasonable access upon reasonable prior notice and during normal business
hours, but no more than once during any calendar year, to inspect the records
specified in Section 4.19(a) for the purpose of determining the accuracy of the
reports described in Section 4.19(a).  If the Accountant concludes that any Net
Sales were underreported for any reporting period by more than five percent, the
Buyer shall promptly reimburse the Seller for the reasonable out-of-pocket costs
of the audit.  The Seller may exercise its rights under this
Section 4.19(c) only within 60 days of receipt of a Net Sales Report if the
amount for the Net Sales of the Product in the Net Sales Report does not agree
to the audited financial statements reported to the SEC by the Buyer.

 

4.20         Privilege Rights.  The Seller and the Buyer agree that after the
Closing, the Buyer shall be exclusively entitled to assert or waive rights with
respect to any privileges to information that either party may assert pursuant
to applicable Law relating to the Product, the Acquired Assets, the Business, or
the Assumed Liabilities, including any action related to the foregoing or any
other action in which the Buyer or its assets are a party.  Privileged
information includes privileges arising under or relating to the attorney-client
relationship, the accountant-client privilege and privileges relating to
internal evaluative processes.

 

4.21         Corporate Existence.  The Seller shall maintain its corporate
existence and its good standing in the State of Delaware and shall not commence
any liquidation or make any voluntary filing for bankruptcy until the 18 month
anniversary of the date of this Agreement.  The Seller shall provide at least 20
Business Days prior written notice to the Buyer of the Seller’s intent to
commence any liquidation or make a voluntary filing for bankruptcy.

 

4.22         No Transfer of Right to Receive Milestone Payments.  The right to
receive the First Milestone Payment and the Second Milestone Payment or any
portion thereof, if payable

 

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pursuant to the terms and conditions of this Agreement, is not a security and
may not be pledged, encumbered, dividended, distributed, sold, assigned or
otherwise transferred (including any transfer by operation of Law), by the
Seller to any third party (other than to a single representative of the
stockholders of the Seller subject to written notice to, and the furnishing of
applicable documentary evidence of, such transfer to the Buyer) (i) prior to the
payment of either the First Milestone Payment or Second Milestone Payment,
respectively, by the Buyer to the Seller or (ii) without the prior written
consent of the Buyer.  The right of the Seller to receive the First Milestone
Payment and the Second Milestone Payment shall not be represented by a
certificate or other instrument and shall not represent a security interest or
an ownership interest in the Buyer.

 

4.23         Medical Information Phone Number.  The Seller will, and will cause
its transferees, successors-in-interest or assigns to, answer and transfer to
the Buyer all calls received on the Medical Information Phone Number regarding
any Product to the Buyer’s number at (650) 462-5900.

 

4.24         Business Operation.  The Buyer and the Seller agree that the Buyer
shall continue to operate its business in the ordinary course and as it deems
appropriate in its sole discretion, notwithstanding any provision of this
Agreement, express or implied, to the contrary.

 

ARTICLE V

 

INDEMNIFICATION

 

5.1           Indemnification by the Seller.  Subject to the terms and
conditions of this Article V, from and after the Closing, the Seller shall
indemnify, defend and hold harmless the Buyer and the Buyer’s directors,
officers and employees from and against any and all losses, damages,
obligations, liabilities, claims, fines, fees, penalties, interest, awards,
judgments and claims of any kind, including reasonable attorneys’ and
consultants’ fees and expenses and other reasonable legal costs and expenses
incurred in prosecution, investigation, remediation, defense or settlement
(collectively, “Damages”) resulting from, based on, arising out of, in
connection with or constituting:

 

(a)           the inaccuracy or any breach of any of the representations or
warranties of the Seller contained in this Agreement or any agreement or
certificate required to be delivered by the Seller pursuant to this Agreement;

 

(b)           any breach or failure to perform by the Seller of any covenant or
agreement contained in this Agreement;

 

(c)           any non-compliance with applicable bulk sales laws;

 

(d)           any claims brought by employees, independent contractors or
consultants of the Seller, including, but not limited to, those who were or are
terminated prior to or as of the Closing Date;

 

(e)           Transaction Fees incurred by the Seller;

 

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(f)            any Excluded Liabilities;

 

(g)           any Excluded Assets; or

 

(h)           one half (1/2) of any Damages incurred by the Buyer in connection
with the matters set forth in Schedules 2.4(a), 2.4(d) and 2.4(e) of the Seller
Disclosure Schedule.

 

5.2           Indemnification by the Buyer.  Subject to the terms and conditions
of this Article V, from and after the Closing, the Buyer shall indemnify, defend
and hold harmless the Seller and Seller’s directors, officers and employees from
and against any and all Damages resulting from, based on, arising out of, in
connection with or constituting:

 

(a)           the inaccuracy or any breach of any of the representations or
warranties of the Buyer contained in this Agreement or any agreement or
certificate required to be delivered by the Buyer pursuant to this Agreement;

 

(b)           any breach or failure to perform by the Buyer of any covenant or
agreement contained in this Agreement;

 

(c)           Transaction Fees incurred by the Buyer;

 

(d)           any Assumed Liabilities; or

 

(e)           any Acquired Assets.

 

5.3           Claims for Indemnification.

 

(a)           Third Party Claims.  All claims for indemnification made under
this Agreement resulting from, related to or arising out of a third-party claim
against an Indemnified Party shall be made in accordance with the following
procedures.  A person or entity entitled to indemnification under this Article V
(an “Indemnified Party”) shall give prompt written notification to the
Indemnifying Party (a “Third Party Claim Notice”) of the commencement of any
action, suit or proceeding relating to a third party claim for which
indemnification may be sought or, if earlier, upon the assertion of any such
claim by a third party.  For purposes of this Agreement, “Indemnifying Party”
means (i) in the case of a claim for indemnification by the Buyer, the Seller
and (ii) in the case of a claim for indemnification by the Seller, the Buyer. 
Such Third Party Claim Notice shall include a description in reasonable detail
(to the extent known by the Indemnified Party) of the facts constituting the
basis for such third party claim and the amount of the Damages claimed (the
“Third Party Claim Amount”).  Within 10 Business Days after delivery of such
Third Party Claim Notice, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such action,
suit, proceeding or claim with counsel reasonably satisfactory to the
Indemnified Party.  If the Indemnifying Party does not assume control of such
defense, the Indemnified Party shall control such defense.  The party not
controlling such defense may participate therein at its own expense; provided
that if the Indemnifying Party assumes control of such defense and the
Indemnified Party reasonably concludes, based on advice from counsel, that the
Indemnifying Party and the Indemnified Party have conflicting interests with
respect to such action, suit, proceeding or claim, the reasonable fees and
expenses of counsel to the Indemnified Party solely in connection

 

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therewith shall be considered “Damages” for purposes of this Agreement;
provided, however, that in no event shall the Indemnifying Party be responsible
for the fees and expenses of more than one counsel for the Indemnified Party. 
The party controlling such defense shall keep the other party advised of the
status of such action, suit, proceeding or claim and the defense thereof and
shall consider recommendations made by the other party with respect thereto. 
The Indemnified Party shall not agree to any settlement of such action, suit,
proceeding or claim without the prior written consent of the Indemnifying
Party.  The Indemnifying Party shall not agree to any settlement of such action,
suit, proceeding or claim that does not include a complete release of the
Indemnified Party from all liability with respect thereto or that imposes any
liability or obligation, financial or otherwise, on the Indemnified Party
without the prior written consent of the Indemnified Party.

 

(b)           Procedure for Claims Not Involving Third Parties.  An Indemnified
Party wishing to assert a claim for indemnification under this Article V that
does not involve a third-party claim shall deliver to the Indemnifying Party a
written notice (a “Claim Notice”) which contains (i) a description and the
amount (the “Claim Amount”) of any Damages, (ii) a statement that the
Indemnified Party is entitled to indemnification under this Article V and a
reasonable explanation of the basis therefor and (iii) a demand for payment in
the amount of such Damages.  Within 30 days after delivery of a Claim Notice,
the Indemnifying Party shall deliver to the Indemnified Party a written response
in which the Indemnifying Party shall (A) agree that the Indemnified Party is
entitled to receive all of the Claim Amount (in which case such response shall
be accompanied by a payment to the Indemnified Party of the Claim Amount by the
Indemnifying Party by wire transfer of immediately available funds or, if
payment is to be made from the Escrow Fund, authorization to the Escrow Agent
(in accordance with the Escrow Agreement) to make payment of the Claim Amount to
the Buyer from the Escrow Fund), (B) agree that the Indemnified Party is
entitled to receive part, but not all, of the Claim Amount (the “Agreed Amount”)
(in which case such response shall be accompanied by a payment to the
Indemnified Party of the Agreed Amount by the Seller by wire transfer of
immediately available funds or, if payment is to be made from the Escrow Fund,
authorization to the Escrow Agent (in accordance with the Escrow Agreement) to
make payment of the Agreed Amount to the Buyer from the Escrow Fund) or
(C) contest that the Indemnified Party is entitled to receive any of the Claim
Amount.  If such dispute is not resolved within 30 days following the delivery
by the Indemnifying Party of such response, the Indemnifying Party and the
Indemnified Party shall each have the right to submit such dispute to a court of
competent jurisdiction in accordance with the provisions of Section 6.10.

 

5.4           Survival.

 

(a)           The representations and warranties of the Seller and the Buyer set
forth in this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby and continue until the date 18 months after the
Closing Date, at which time they shall expire, other than the Core Reps, which
shall survive indefinitely.  The covenants and agreements of the Seller and the
Buyer set forth in this Agreement shall survive the Closing and the consummation
of the transactions contemplated hereby.

 

(b)           If an indemnification claim is asserted in writing pursuant to
Section 5.3 prior to the expiration as provided in Section 5.4(a) of the
representation or warranty that is the

 

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basis for such claim, then such representation or warranty shall survive until,
but only for the purpose of, the resolution of such claim.

 

5.5           Limitations.

 

(a)           Notwithstanding anything to the contrary contained in this
Agreement,  the amount of Damages that may be recovered by an Indemnified Party
under Section 5.1(a) or Section 5.2(a) shall not exceed the Escrow Fund,
provided, however, that such limitation shall not apply with respect to:

 

(i)            those representations and warranties contained in Section 2.1
(Organization, Standing and Power), Section 2.2(a) (Authority), Section 2.3
(Taxes), Section 2.12 (Brokers), Section 2.13 (Title to Acquired Assets),
Section 3.1 (Organization, Standing and Power) and Section 3.2(a) (Authority)
(the “Core Reps”);

 

(ii)           Damages arising from the breach of Section 1.7 (Taxes and Fees)
or Section 4.15 (Taxes) (collectively, the “Excluded Tax Damages”);

 

(iii)          Damages arising from a claim related to fraud, intentional
misrepresentation or for equitable relief made with respect to breaches of any
covenant or agreement contained in this Agreement; or

 

(iv)          Damages arising from a claim with respect to the Seller Product
Returns.

 

(b)           An Indemnified Party shall not be permitted to recover any Damages
under Section 5.1(a) or Section 5.2(a), as the case may be, until the aggregate
amount of all such Damages (excluding Excluded Tax Damages) exceeds an amount
equal to $50,000 (the “Deductible”), at which point the Indemnified Party shall
recover any such and future Damages, including the amount of the Deductible. 
The Deductible shall not apply to Excluded Tax Damages, any Damages arising from
a claim related to fraud, intentional misrepresentation or for equitable relief
made with respect to breaches of any covenant or agreement contained in this
Agreement.

 

(c)           In no event shall the Seller’s liability under
Section 5.1(h) exceed $1,000,000, and the Seller’s liability under any Paragraph
IV patent proceeding shall be limited solely to those claims arising directly
from the matters set forth in Schedules 2.4(a), 2.4(d) and 2.4(e) of the Seller
Disclosure Schedule, which claims shall be separately monitored by the Buyer.

 

(d)           The amount of Damages recoverable by an Indemnified Party under
this Article V with respect to an indemnity claim shall be reduced by the amount
of any insurance payment received by such Indemnified Party (or an Affiliate
thereof) with respect to such indemnity claim.  An Indemnified Party shall use
reasonable commercial efforts to pursue, and to cause its Affiliates to pursue,
all insurance claims to which it may be entitled in connection with any Damages
it incurs, and the parties shall cooperate with each other in pursuing insurance
claims with respect to any Damages or any indemnification obligations with
respect to Damages.  If an Indemnified Party (or an Affiliate) receives any
insurance payment in connection with any

 

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claim for Damages for which it has already been indemnified by the Indemnifying
Party, it shall pay to the Indemnifying Party, within 30 days of receiving such
insurance payment, an amount equal to the excess of (i) the amount previously
received by the Indemnified Party under this Article V with respect to such
claim plus the amount of the insurance payments received, over (ii) the amount
of Damages with respect to such claim which the Indemnified Party has become
entitled to receive under this Article V.

 

(e)           In no event shall any Indemnifying Party be responsible or liable
for any Damages or other amounts under this Article V that are consequential, in
the nature of lost profits, diminution in the value of property, special or
punitive or otherwise not actual damages.

 

(f)            Except with respect to claims related to fraud, intentional
misrepresentation or for equitable relief made with respect to breaches of any
representation, warranty, covenant or agreement contained in this Agreement
(i) the rights of the Indemnified Parties under this Article V shall be the sole
and exclusive remedies of the Indemnified Parties with respect to claims under,
or otherwise relating to the transactions that are the subject of, this
Agreement and (ii) and neither the Seller nor the Buyer, or their respective
successors or permitted assigns, be entitled to claim or seek rescission of the
transactions consummated by this Agreement.

 

5.6           Indemnification Payments.  All indemnification payments made
hereunder shall be treated by all parties as adjustments to the Purchase Price
for Tax purposes unless otherwise required by Tax Law.

 

5.7           Setoff.  Subject to the limitations set forth in Section 5.5, the
parties acknowledge and agree that in the event (i) the Escrow Fund is depleted
or is insufficient to cover the amount of Damages for which the Buyer is
entitled to indemnification by the Seller under this Article V and (ii) the
Seller has not satisfied its indemnification obligations under this Article V
for a period of greater than 30 days, the Buyer may, at its sole discretion, set
off any indemnification payment to which it is entitled under this Article V
against payment of either or both of the First Milestone Payment and the Second
Milestone Payment to the Seller.  If the Buyer shall set off any amounts
pursuant to this Section 5.7, and Seller objects to that set off by notice to
the Buyer given within 30 days of such set off and it is finally determined that
the Buyer has improperly set off any amount, the Buyer shall be required to pay
to the Seller interest on such improperly set off portion of the First Milestone
Payment or the Second Milestone Payment, as applicable, from and after the First
Additional Purchase Price Payment Date or the Second Additional Purchase Price
Payment Date, as applicable, at a rate per month equal to the prime rate then in
effect plus 2.00%, to the maximum extent permitted by applicable Law.  Such
interest shall accrue and compound on a daily basis.  In addition to accrued
interest on any improperly set off portion of the First Milestone Payment or the
Second Milestone Payment, as applicable, the Buyer agrees to pay to the Seller
reasonable attorneys’ fees and expenses and other reasonable costs and expenses
incurred in connection with the collection of any unpaid portion of the First
Milestone Payment or the Second Milestone Payment, as applicable.

 

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ARTICLE VI

 

MISCELLANEOUS

 

6.1           Notices.  All notices and other communications hereunder shall be
in writing and shall be deemed duly delivered (i) four Business Days after being
sent by registered or certified mail, return receipt requested, postage prepaid,
(ii) one Business Day after being sent for next Business Day delivery, fees
prepaid, via a reputable nationwide overnight courier service or (iii) on the
date of confirmation of receipt (or, the first Business Day following such
receipt if the date of such receipt is not a Business Day) of transmission by
facsimile, in each case to the intended recipient as set forth below:

 

(a)           if to the Buyer, to

 

Depomed, Inc.
1360 O’Brien Drive
Menlo Park, California 94025
Attn: General Counsel
Telecopy: (650) 462-9993

 

with a copy (which shall not constitute notice) to:

 

Baker Botts L.L.P.
1001 Page Mill Boulevard
Building One, Second Floor
Palo Alto, California 94304
Attn:  Kyle Guse
          K. Amar Murugan
Telecopy:  (650) 739-7699

 

(b)           if to the Seller, to

 

Xanodyne Pharmaceuticals, Inc.
One Riverfront Place
Newport, Kentucky 41071
Attn:  General Counsel
Telecopy:  (859) 342-2090

 

with a copy (which shall not constitute notice) to:

 

Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attn:  David E. Redlick
Telecopy: (617) 526-5000

 

Any party to this Agreement may give any notice or other communication hereunder
using any other means (including personal delivery, messenger service, ordinary
mail or

 

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electronic mail), but no such notice or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended.  Any party to this Agreement may change the address to
which notices and other communications hereunder are to be delivered by giving
the other parties to this Agreement notice in the manner herein set forth.

 

6.2           Entire Agreement.  This Agreement (including the Seller Disclosure
Schedule and the Schedules and Exhibits hereto and the documents and instruments
referred to herein that are to be delivered at the Closing) constitutes the
entire agreement between the parties to this Agreement and supersedes any prior
understandings, agreements or representations by or between the parties hereto,
written or oral, with respect to the subject matter hereof; provided that the
Mutual Confidentiality Agreement, dated November 29, 2011, shall remain in
effect in accordance with its terms until the Closing.

 

6.3           No Third Party Beneficiaries; No Successor Liability.  This
Agreement is not intended, and shall not be deemed, to confer any rights or
remedies upon any person or entity other than the parties hereto and their
respective successors and permitted assigns, to create any agreement of
employment with any person or entity or to otherwise create any third party
beneficiary hereto.  The Buyer shall not be considered a successor to the
Seller, any of its Affiliates or any of their respective predecessors by reason
of any theory of laws or equity.

 

6.4           Assignment.  Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of Law or otherwise by either of the parties
hereto without the prior written consent of the other party, and any such
assignment without such prior written consent shall be null and void, except
that the Buyer may transfer or assign its rights and obligations under this
Agreement, in whole or in part, from time to time to 1 or more of its
Affiliates; provided that such transfer or assignment shall not relieve the
Buyer of its primary liability for its obligations hereunder or enlarge, alter
or change any obligation of any other party hereto or due to the Buyer.  Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties hereto and their respective
successors and permitted assigns.

 

6.5           Severability.  Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.  If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified.  In the event such court
does not exercise the power granted to it in the prior sentence, the parties
hereto agree to replace such invalid or unenforceable term or provision with a
valid and enforceable term or provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid or
unenforceable term.

 

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6.6           Counterparts and Signature.  This Agreement may be executed in two
counterparts, each of which shall be deemed an original but all of which
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties hereto and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  This Agreement may be executed and delivered by
facsimile or .pdf transmission.

 

6.7           Interpretation.  When reference is made in this Agreement to an
Article or a Section, such reference shall be to an Article or Section of this
Agreement, unless otherwise indicated.  The table of contents, table of defined
terms and headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement.  The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party.  Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.  Any reference to
any federal, state or local Law or Tax Law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.  Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation.”

 

6.8           Governing Law.  This Agreement shall be governed by and construed
in accordance with the Laws of the State of New York, without giving effect to
any choice or conflict of Law provision or rule that would cause the application
of Laws of any jurisdiction other than those of the State of New York.

 

6.9           Remedies.  Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.  The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. 
It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at law or in equity.

 

6.10         Submission to Jurisdiction.  Each of the parties to this Agreement
(a) consents to submit itself to the exclusive personal jurisdiction of any
state or federal court sitting in the State of New York, County of New York,
including the federal district court for the Southern District of New York, in
any action or proceeding arising out of or relating to this Agreement or any of
the transactions contemplated by this Agreement, (b) agrees that all claims in
respect of such action or proceeding may be heard and determined in any such
court, (c) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and
(d) agrees not to bring any action or proceeding arising out of or relating to
this Agreement or any of the transactions contemplated by this Agreement in any
other court.  Each of the parties hereto waives any defense of inconvenient
forum to the maintenance of any

 

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action or proceeding so brought and waives any bond, surety or other security
that might be required of any other party with respect thereto.  Any party
hereto may make service on another party by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided for
the giving of notices in Section 6.1.  Nothing in this Section 6.10, however,
shall affect the right of any party to serve legal process in any other manner
permitted by law.

 

6.11         Disclosure Schedules.  The Seller Disclosure Schedule shall be
arranged in sections corresponding to the numbered Sections contained in
Article II, and the disclosure in any section shall qualify (a) the
corresponding section in Article II and (b) the other sections in Article II to
the extent that it is reasonably apparent on the face of such disclosure that it
also qualifies or applies to such other Sections.

 

6.12         Seller’s Knowledge.  For purposes of this Agreement, the term
“Seller’s Knowledge” means matters which are known by each of Natasha Giordano,
Rita O’Connor, Thomas P. Jennings and Stan Micek after having made due inquiry
of each their direct reports and the review of their files.

 

[Remainder of Page Intentionally Left Blank.]

 

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IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.

 

 

 

DEPOMED, INC.

 

 

 

 

 

By:

/s/ James A. Schoeneck

 

Name: James A. Schoeneck

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

XANODYNE PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Natasha Giordano

 

Name: Natasha Giordano

 

 

Title: President and Chief Executive Officer

 

[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

 

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