Exhibit 10.5

NONCOMPETITION AGREEMENT

THIS NONCOMPETITION AGREEMENT (the “Noncompetition Agreement”) is entered into
as of the Effective Date (as defined below) by and among Fintan Keegan, an
individual (“Employee”), in favor of, and for the benefit of: Azur Pharma
Limited, a limited company formed under the laws of Ireland (registered number
399192) (which as a result of the Transactions shall become Jazz Pharmaceuticals
plc, a public limited company incorporated in Ireland) whose principal place of
business is at 45 Fitzwilliam Square, Dublin 2, Ireland (“New Jazz”), together
with its subsidiaries Jazz Pharmaceuticals, Inc. (“Jazz”) and Azur Pharma Inc.
Certain capitalized terms used in this Noncompetition Agreement are defined in
Section 17.

RECITALS

A.        Azur Pharma Limited (“Azur”), Jazz, Jaguar Merger Sub Inc. (a
wholly-owned subsidiary of Azur), and Seamus Mulligan, as Indemnitors’
Representative, are entering into an Agreement and Plan of Merger and
Reorganization (the “Merger Agreement”), pursuant to which the parties thereto
will effect a reorganization and merger, among other things. As a result of the
transactions contemplated by the Merger Agreement (the “Transactions”), Jaguar
Merger Sub Inc. will merge with and into Jazz, with Jazz as the surviving
entity, and Azur will change its name to Jazz Pharmaceuticals plc. This
Noncompetition Agreement will be effective as of the Closing Date of the Merger
Agreement, as defined therein (the “Effective Date”). If the Closing (as defined
in the Merger Agreement) does not occur, or the Merger Agreement is terminated
in accordance with its terms, this Noncompetition Agreement shall have no
effect, and shall not be binding on New Jazz or Employee.

B.        By virtue of Employee’s service as a key employee and shareholder of
Azur prior to the Closing Date, Employee has gained access to extensive and
valuable goodwill, knowledge, and Confidential Information concerning Azur’s
business. Employee is entering into this Noncompetition Agreement in connection
with and as a condition to the Merger Agreement, in order to induce Azur and
Jazz to consummate the Transactions, to enable Azur and Jazz to secure more
fully the benefits of the Merger Agreement, and to provide Employee with the
benefits to which Employee shall become entitled to receive pursuant to the
Transactions as a shareholder of Azur and as an employee of New Jazz following
the Closing Date.

C.        New Jazz and Employee are executing an Employment Agreement (the
“Employment Agreement”) contemporaneously with the execution and delivery of
this Noncompetition Agreement. Pursuant to the Employment Agreement, Employee
will continue as a key employee of New Jazz following the Transactions and will
accordingly have access to extensive and valuable goodwill, knowledge and
Confidential Information concerning the businesses of New Jazz and of the Group
Companies (including New Jazz’s wholly-owned subsidiary, Jazz) that New Jazz is
endeavoring to protect.

D.        The provisions of this Noncompetition Agreement are: (i) reasonable in
all the circumstances given the value being obtained by the Employee as a result
of the Transactions and given Employee’s access to valuable goodwill, knowledge
and Confidential Information by virtue of his continued service as a key
employee of New Jazz following the Transactions;

 

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(ii) directly linked to the Transactions and Employee’s continued employment
with New Jazz; and (iii) necessary for the effective implementation of the
Transactions so that the value of the business being acquired can be secured and
protected.

E.        Although New Jazz is located in Ireland, New Jazz’s products are
marketed and sold in and throughout the United States, and New Jazz’s marketing
and sales operations are based in the United States.

F.        Employee acknowledges good and valuable consideration for this
Agreement in the nature of increased stock value and potential higher liquidity
as a result of the Transactions.

AGREEMENT

In order to induce Azur and Jazz to consummate the Transactions contemplated by
the Merger Agreement, and in order to protect New Jazz’s legitimate business
interests such as trade secrets, Confidential Information and goodwill following
the Transactions, and for other good and valuable consideration, Employee agrees
as follows:

1.         Restriction on Competition. Employee agrees that during the
Noncompetition Period, without the prior written consent of the Board of
Directors of New Jazz, Employee shall not, and shall not permit any of his
Affiliates to:

(a)        engage directly or indirectly in Competition in the Restricted
Territory; or

(b)        directly or indirectly be or become an officer, director, employee,
owner, co-owner, Affiliate, partner, promoter, agent, representative,
consultant, advisor, manager, licensor, sublicensor, licensee or sublicensee of,
or acquire or hold (of record, beneficially or otherwise) any direct or indirect
interest in, any Person that engages directly or indirectly in Competition in
any Restricted Territory;

provided, however, that Employee may, without violating this Section 1:

(i)        own, as a passive investor, securities of any competitor corporation,
so long as his direct holdings in any one such corporation shall not in the
aggregate constitute more than five percent (5%) of the voting stock of such
corporation and provided that neither Employee nor any Affiliate of Employee is
otherwise associated directly or indirectly with such corporation or with any
Affiliate of such corporation; and/or

(ii)        become employed by any Person which is engaged in the development,
manufacture, promotion, sale, distribution, licensing or sublicensing, of any
Competing Product or Additional Term Competing Product provided that during the
Noncompetition Period he is not directly or indirectly involved in the
development, manufacture, promotion, sale, distribution, licensing or
sublicensing, of any Competing Product or Additional Term Competing Product (as
applicable) and may also own securities of the said employer or its affiliate,
so long as his direct holdings in any one such corporation shall not in the
aggregate constitute more than one percent (1%) of the voting stock of such
corporation; and/or

 

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(iii)        be engaged in the business of Circ Pharma Limited and its wholly
owned subsidiaries (“Circ”) (which for the purposes of this provision shall be
deemed to include Tramadol) as it is constituted as of the Effective Date, to
the extent that such business does not involve for the applicable Noncompetition
Period the development, manufacture, promotion, sale, distribution, licensing or
sub-licensing of (i) any Additional Term Competing Product, or (ii) a Material
New Jazz Product or Product Candidate, provided that the restriction with regard
to a Material New Jazz Product or Product Candidate shall not apply if Circ has
commenced activities with respect to a product or product candidate that is not
at the date of such commencement a Material New Jazz Product or Product
Candidate, and further provided that if Jazz acquires or licenses rights to a
product from a third party which thereby becomes a Material New Jazz Product or
Product Candidate, the relevant date for making the determination as to whether
or not Circ has commenced the applicable activities shall be the date of the
acquisition or license of such Material New Jazz Product or Product Candidate by
Jazz.

2.        No Hiring or Solicitation of Employees.  Employee agrees that, during
the Nonsolicitation Period, without the prior written consent of the Chief
Executive Officer of New Jazz, Employee shall not, and shall not permit any of
his Affiliates to: (a) hire, accept into employment, or otherwise engage or use
the services of, any Specified Employee, or (b) directly or indirectly,
personally or through others, encourage, induce, attempt to induce, solicit or
attempt to solicit (on Employee’s own behalf or on behalf of any other Person)
any Specified Employee to leave his or her employment with New Jazz or any Group
Company.

3.        Representations and Warranties.  Employee represents and warrants
that: (a) Employee has full power and capacity to execute and deliver, and to
perform all of his obligations under, this Noncompetition Agreement; and
(b) neither the execution and delivery of this Noncompetition Agreement nor the
performance of this Noncompetition Agreement will result directly or indirectly
in a violation or breach of any agreement or obligation by which the Employee or
any of Employee’s Affiliates is or may be bound.

4.        Specific Performance.  Employee agrees that, in the event of any
breach or threatened breach by the Employee of any covenant or obligation
contained in this Noncompetition Agreement, New Jazz shall be entitled (in
addition to any other remedy that may be available, including monetary damages)
to seek (a) a decree or order of specific performance to enforce the observance
and performance of such covenant or obligation, and (b) an injunction
restraining such breach or threatened breach.

5.        Non-Exclusivity.  The rights and remedies of New Jazz under this
Noncompetition Agreement are not exclusive of or limited by any other rights or
remedies which it may have, whether at law, in equity, by contract or otherwise,
all of which shall be cumulative (and not alternative). Without limiting the
generality of the foregoing, the rights and remedies of New Jazz, and the
obligations and liabilities of the Employee, under this Noncompetition
Agreement, are in addition to their respective rights, remedies, obligations and
liabilities under the law of unfair competition, under laws relating to
misappropriation of trade secrets, under other laws and common law requirements
and under all applicable rules and regulations. Nothing in this Noncompetition
Agreement shall limit any of the Employee’s obligations, or the rights or
remedies of New Jazz, under the Merger Agreement or the Employment Agreement;
and nothing in the Merger Agreement or the Employment Agreement shall limit any
of the

 

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Employee’s obligations, or any of the rights or remedies of New Jazz under this
Noncompetition Agreement. No breach on the part of New Jazz of any covenant or
obligation contained in the Merger Agreement or the Employment Agreement or any
other agreement shall limit or otherwise affect any right or remedy of New Jazz
under this Noncompetition Agreement.

6.        Severability.  Employee hereby acknowledges and agrees that each
clause, term or provision in this Agreement, and every part thereof, are
entirely separate and independent (notwithstanding that they may be contained in
the same clause, sub-clause, paragraph, sub-paragraph, sentence or phrase) and
that they are independent, separate and severable and enforceable accordingly
and that the duration, extent and application of each such clause, term and/or
provision, and every part thereof, is no greater than is reasonable and
necessary for the protection of the legitimate interest of New Jazz. If any such
clause, term and/or provision or part thereof of this Noncompetition Agreement
is found by any court or administrative body of competent jurisdiction to be
invalid or unenforceable, that invalidity or unenforceability will not affect
the other clauses, terms and/or provisions or part thereof of this Agreement
which will remain in full force and effect. If any clause, term and/or provision
or part thereof of this Agreement is found to be invalid or unenforceable but
would be valid or enforceable if some part of the clause, term and/or provision
were deleted and/or the period thereof was reduced and/or the territorial area
reduced/modified, the clause, term and/or provision or part thereof in question
will apply with whatever modification is necessary to make it valid. If the
final judgment of a court or administrative body of competent jurisdiction
declares that any clause, term and/or provision hereof is invalid or
unenforceable, the parties hereto agree that the court or administrative body
making such determination shall have the power to limit the clause, term and/or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term, provision and/or or clause or part thereof with a clause,
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable clause, term and/or
provision and this Noncompetition Agreement shall be enforceable as so modified.
In the event such court or administrative body 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.

7.        Governing Law; Venue.

(a)        This Noncompetition Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of Pennsylvania (without
giving effect to principles of conflicts of laws).

(b)        Any legal action or other legal proceeding relating to this
Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement may be brought or otherwise commenced in any state or
federal court located in the County of Philadelphia County, Pennsylvania.
Employee:

(i)        expressly and irrevocably consents and submits to the jurisdiction of
each state and federal court located in Philadelphia County, Pennsylvania (and
each appellate court located in the State of Pennsylvania), in connection with
any such legal proceeding;

 

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(ii)        agrees that service of any process, summons, notice or document by
courier or registered mail addressed to him at the address set forth on the
signature page of this Noncompetition Agreement or such other address as he may
specify from time to time shall constitute effective service of such process,
summons, notice or document for purposes of any such legal proceeding;

(iii)        agrees that each state and federal court located in Philadelphia
County, Pennsylvania shall be deemed to be a convenient forum; and

(iv)        agrees not to assert (by way of motion, as a defense or otherwise),
in any such legal proceeding commenced in any state or federal court located in
Philadelphia County, Pennsylvania, any claim that Employee is not subject
personally to the jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Noncompetition Agreement or the subject matter of this
Noncompetition Agreement may not be enforced in or by such court.

(c)        Nothing contained in this Section 7 shall be deemed to limit or
otherwise affect the right of New Jazz to commence any legal proceeding or
otherwise proceed against Employee in any other forum or jurisdiction.

(d)        EMPLOYEE IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION
WITH ANY LEGAL PROCEEDING RELATING TO THIS NONCOMPETITION AGREEMENT OR THE
ENFORCEMENT OF ANY PROVISION OF THIS NONCOMPETITION AGREEMENT.

8.        Waiver.  No failure on the part of New Jazz to exercise any power,
right, privilege or remedy under this Noncompetition Agreement, and no delay on
the part of New Jazz in exercising any power, right, privilege or remedy under
this Noncompetition Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy. New Jazz shall not be deemed to
have waived any claim arising out of this Noncompetition Agreement, or any
power, right, privilege or remedy under this Noncompetition Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of New Jazz;
and any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.

9.        Successors and Assigns.  New Jazz may freely assign all of its rights
under this Noncompetition Agreement, at any time, to any successor in interest
of New Jazz without obtaining the consent or approval of the Employee or of any
other Person. This Noncompetition Agreement shall be binding upon the Employee
and shall inure to the benefit of New Jazz and its permitted assignee.

10.        Attorneys’ Fees.  If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against the Employee, the prevailing
party shall be entitled to recover attorneys’ fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).

 

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11.        Headings.  The headings contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.

12.        Construction.   Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition Agreement. As used in this
Noncompetition Agreement, the words “include” and “including,” and variations
thereof, shall not be deemed to be terms of limitation, and shall be deemed to
be followed by the words “without limitation.” Except as otherwise indicated in
this Noncompetition Agreement, all references in this Noncompetition Agreement
to “Sections” are intended to refer to Sections of this Noncompetition
Agreement.

13.        Survival of Obligations.  Except as specifically provided herein, the
obligations of the Employee under this Noncompetition Agreement shall survive
the expiration of the Noncompetition Period. The expiration of the
Noncompetition Period shall not operate to relieve the Employee of any
obligation or liability arising from any prior breach by the Employee of any
provision of this Noncompetition Agreement.

14.        Obligations Absolute.  Employee’s obligations under this
Noncompetition Agreement are absolute and shall not be terminated or otherwise
limited by virtue of any breach (on the part of New Jazz or any other Person) of
any provision of the Merger Agreement or any other agreement, or by virtue of
any failure to perform or other breach of any obligation of New Jazz or any
other Person.

15.        Amendment.  This Noncompetition Agreement may not be amended,
modified, altered or supplemented other than by means of a written instrument
duly executed and delivered on behalf of the Employee and New Jazz.

16.        Complete Agreement.  This Noncompetition Agreement, together with the
Employment Agreement, forms the complete, final, and exclusive embodiment of the
entire agreement between Employee and New Jazz concerning the subject matters
hereof and shall supersede and replace any and all prior agreements,
representations, letters, understandings or promises, written or oral on such
subject matters. This Noncompetition Agreement is entered into without reliance
on any promise or representation other than those expressly contained herein,
and the terms hereof cannot be modified or amended except in a written agreement
signed by Employee and an officer of New Jazz and duly authorized by the Board
of Directors of New Jazz.

 

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17.        Defined Terms.  For purposes of this Noncompetition Agreement:

(a)        “Additional Term Competing Products” shall mean: (i) any
pharmaceutical or biotechnology product that contains clozapine as an active
pharmaceutical ingredient in any formulation or presentation and for any
indication; (ii) any pharmaceutical or biotechnology product that contains
sodium oxybate (or any other salt, or any analog or prodrug, of oxybate) as an
active pharmaceutical ingredient, in any formulation or presentation or for any
indication; and (iii) any pharmaceutical or biotechnology product which is
delivered intrathecally for severe chronic pain.

(b)        “Affiliate”  shall mean, with respect to any specified Person, any
other Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.

(c)        “Competing Product” shall mean any: (i) pharmaceutical or
biotechnology product that is approved, designed, marketed and/or sold for the
treatment of any condition(s) for which any Material New Jazz Product or Product
Candidate (A) is or has been approved, designed, marketed, and/or sold, or
(B) is or has been under investigation or consideration for being approved,
designed, marketed, and/or sold, at any time during the Noncompetition Period;
or (ii) any pharmaceutical or biotechnology product or product candidate, or
other similar product or product candidate, that is substantially the same as,
incorporates, is a material component or part of, is based upon, is functionally
similar to any Material New Jazz Product or Product Candidate.

(d)        A Person shall be deemed to be engaged in “Competition” if: such
Person is engaged directly in the development, manufacture, promotion, sale,
distribution, licensing or sublicensing, of (i) any Competing Product or
(ii) any Additional Term Competing Product, as applicable.

(e)        “Confidential Information”  shall mean any information (whether or
not in written form and whether or not expressly designated as confidential)
relating directly or indirectly to New Jazz and/or any Group Company or relating
directly or indirectly to the business, operations, financial affairs,
performance, assets, technology, processes, products, contracts, customers,
licensees, sublicensees, suppliers, personnel, consultants or plans of New Jazz
and/or any Group Company (including any such information consisting of or
otherwise relating to trade secrets, know-how, technology, inventions,
prototypes, designs, drawings, sketches, processes, license or sublicense
arrangements, formulae, proposals, research and development activities, customer
lists or preferences, pricing lists, referral sources, marketing or sales
techniques or plans, operations manuals, service manuals, financial information,
projections, lists of consultants, lists of suppliers or lists of distributors);
provided, however, that “Confidential Information” shall not be deemed to
include information of New Jazz and/or any Group Company that was already
publicly known and in the public domain prior to the time of its initial
disclosure to Employee or later becomes publicly known through no fault of
Employee.

(f)        “Group Company” and “Group Companies” shall mean any firm, company,
corporation or other organization which is directly or indirectly controlled by
New Jazz (including Jazz and Azur Pharma Inc.); which directly or indirectly
controls New Jazz; which is directly or indirectly controlled by a third party
who also directly or indirectly controls

 

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New Jazz; of which New Jazz or any other associated company owns or has a
beneficial interest in 20% or more of the issued share capital or 20% or more of
its capital assets; or which is the successor in title or assign of the firms,
companies, corporations or other organizations referred to above.

(g)        “Material New Jazz Product or Product Candidate” shall mean (i) a
product marketed by New Jazz (or Azur as its predecessor) and/or by any Group
Company having annual net sales of at least $25 million in either of two
calendar years immediately preceding the date on which Employee’s employment
with New Jazz or any Group Company terminates for any reason, or having an
annualized net sales run rate of at least $25 million in the then current
calendar year (in which such employment terminates), or (ii) a product candidate
of New Jazz (or Azur as its predecessor) and/or of any Group Company that, as of
the date on which such employment terminates: (A) is in Phase II or III clinical
development; (B) is the subject of a new drug application or other regulatory
application for marketing approval being actively prepared or submitted to the
Food and Drug Administration (“FDA”); (C) for which an FDA marketing approval is
pending; or (D) that has received marketing approval by the FDA but that has not
yet begun to be marketed or sold.

(h)        “Noncompetition Period” shall mean the period of time commencing on
the Effective Date and ending on the following applicable date:

(i)        With respect to any Competing Product:

(1)        The later of (A) one (1) year following the Effective Date or (B) six
(6) months following the termination of Employee’s employment with New Jazz (or
any Group Company) for any reason, if such termination of Employee’s employment
occurs at any time prior to or on the one (1) year anniversary of the Effective
Date.

(2)        Six (6) months following the termination of Employee’s employment
with New Jazz (or any Group Company) for any reason, if such termination of
Employee’s employment occurs at any time following the one (1) year anniversary
of the Effective Date.

(ii)        With respect to the Additional Term Competing Products, two (2)
years following the termination of Employee’s employment with New Jazz (or any
Group Company) for any reason.

(i)        “Nonsolicitation Period” shall mean the period of time commencing on
the Effective Date and ending on the following applicable date:

(i)        The later of (A) one (1) year following the Effective Date or
(B) nine (9) months following the termination of Employee’s employment with New
Jazz (or any Group Company) for any reason, if such termination occurs at any
time prior to or on the one (1) year anniversary of the Effective Date;

(ii)        Nine (9) months following the termination of Employee’s employment
with New Jazz (or any Group Company) for any reason, if such termination of
Employee’s employment occurs at any time following the one (1) year anniversary
of the Effective Date and on or prior to the two (2) year anniversary of the
Effective Date;

 

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(iii)        Six (6) months following the termination of Employee’s employment
with New Jazz (or any Group Company) for any reason, if such termination of
Employee’s employment occurs at any time following the two (2) year anniversary
of the Effective Date and on or prior to the three (3) year anniversary of the
Effective Date;

(iv)        Three (3) months following the termination of Employee’s employment
with New Jazz (or any Group Company) for any reason, if such termination of
Employee’s employment occurs at any time following the three (3) year
anniversary of the Effective Date; and

(v)        Three (3) months following the termination of Employee’s employment
with New Jazz (or any Group Company) for any reason, if such termination occurs
at any time following a Change in Control (as defined in the Employment
Agreement and other than the Transactions), notwithstanding (i) through (iv) in
above.

(j)        “Person” means any: (i) individual; (ii) corporation, general
partnership, limited partnership, limited liability partnership, trust, company
(including any limited liability company or joint stock company) or other
organization or entity; or (iii) governmental body or authority.

(k)        “Restricted Territory” means (i) the United States, and
(ii) worldwide in relation to any pharmaceutical or biotechnology product that
contains sodium oxybate (or any other salt, or any analog or prodrug, of
oxybate) as an active pharmaceutical ingredient, in any formulation or
presentation or for any indication.

(l)        “Specified Employee” shall mean any individual who is or was an
employee of New Jazz or any Group Company on the date of this Noncompetition
Agreement or during the 180-day period ending on the date of this Noncompetition
Agreement, or during the term of Employee’s employment with New Jazz or any
Group Company. Employees who perform purely administrative functions and have no
access to Confidential Information are excluded from the definition of Specified
Employee.

18.        Reduction of Noncompetition Period. Notwithstanding any contrary
provision of this Agreement, in the event of a Covered Termination of the
Employment Agreement (as defined therein) the Noncompetition Period shall
thereupon terminate, save in respect of Additional Term Competing Products.

 

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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Noncompetition Agreement as of the date first above written.

 

AZUR PHARMA LIMITED

By:

 

/s/ James A. Skehan

 

James A. Skehan

Dated:

 

19th September 2011

EMPLOYEE:

/s/ Fintan Keegan

FINTAN KEEGAN

 

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