Exhibit 10.87

EXECUTION VERSION

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of July 6,
2009, by and among Jazz Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).

RECITALS

A. The Company and each Purchaser are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the
Securities Act.

B. The Company has authorized, upon the terms and conditions stated in this
Agreement, the sale and issuance of up to seven million dollars ($7,000,000) of
units of the Company (each of which shall be referred to herein as a “Unit” and
collectively as the “Units”), with each Unit consisting of (i) one share of the
common stock of the Company, par value $0.0001 per share (the “Common Stock”),
and (ii) one warrant (as amended, modified, restated or supplemented from time
to time, each, a “Warrant,” and collectively, the “Warrants”) to purchase 0.50
of a share of Common Stock.

C. At the Closing (as hereinafter defined), each Purchaser, severally and not
jointly, wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, the number of Units as hereafter
determined, with each Unit consisting of (i) one share of Common Stock (each a
“Unit Share,” collectively, the “Unit Shares”), and (ii) a Warrant to purchase
0.50 of a share of Common Stock (such amount being referred to herein as the
“Warrant Ratio”) in substantially the form attached hereto as Exhibit A. The
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants collectively are referred to herein as the “Warrant Shares”.

D. At the Closing, the parties hereto shall execute and deliver an Investor
Rights Agreement, in substantially the form attached hereto as Exhibit B (as
amended, modified, restated or supplemented from time to time, the “Investor
Rights Agreement”), pursuant to which, among other things, the Company will
agree to provide certain registration rights with respect to the Unit Shares and
the Warrant Shares under the Securities Act and the rules and regulations
promulgated thereunder and applicable state securities laws, and will agree to
provide certain other rights to the Purchasers.

E. At the Closing, the parties hereto shall execute and deliver a NOL
Preservation Lock-Up Agreement, in substantially the form attached hereto as
Exhibit C (as amended, modified, restated or supplemented from time to time, the
“NOL Lock-Up Agreement”), pursuant to which, among other things, the Purchasers
and the other stockholders of the Company named therein will agree to certain
restrictions on the acquisition or disposition of Company securities.

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AGREEMENT

NOW, THEREFORE, IN CONSIDERATION of the mutual agreements, representations,
warranties and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and the Purchasers hereby agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
for all purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1:

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 144. With respect to a Purchaser that is an entity, any
investment fund or managed account that is managed on a discretionary basis by
the same investment manager as such Purchaser will be deemed to be an Affiliate
of such Purchaser.

“Agreement” shall have the meaning set forth in the Preamble to this Agreement.

“Board” means the Board of Directors of the Company.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

“Capital Stock” means all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock.

“Closing” means the closing of the purchase by the Purchasers and sale by the
Company of Units to such Purchasers pursuant to this Agreement on the Closing
Date as provided in Section 2.1(a) hereof.

“Closing Date” means the Trading Day on which the last to be satisfied or waived
of the applicable conditions set forth in Sections 2.2(a) and (b), 5.1 and 5.2
shall have been satisfied or waived, except for those conditions and deliveries
that are to be made at the Closing.

“Commission” has the meaning set forth in the Recitals to this Agreement.

“Common Stock” has the meaning set forth in the Recitals to this Agreement, and
also includes any securities into which the Common Stock may hereafter be
reclassified or changed.

“Company” shall have the meaning set forth in the Preamble to this Agreement.

“Company Counsel” means Cooley Godward Kronish LLP.

“Company Deliverables” means, collectively, the documents deliverable by the
Company pursuant to Section 2.2(a).

“Company Intellectual Property” has the meaning set forth in Section 3.1(n).

“Company Products” means all product candidates in Phase III clinical
development and all products being commercialized by the Company, its
Subsidiaries or sublicensees.

“Company’s Knowledge” means with respect to any statement made to the knowledge
of the Company, that the statement is based upon the actual knowledge of the
executive officers of the Company having responsibility for the matter or
matters that are the subject of the statement; provided, however, that such
executive officers have conducted reasonable investigation and due inquiry of
such matter or matters.

 

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“Control” (including the terms “controlling,” “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

“Disclosure Materials” has the meaning set forth in Section 3.1(g).

“Environmental Laws” has the meaning set forth in Section 3.1(o).

“Evaluation Date” has the meaning set forth in Section 3.1(u).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

“Execution Date” means the date first set forth above.

“FDA” has the meaning set forth in Section 3.1(w).

“Financing” has the meaning set forth in Section 7.15.

“GAAP” means U.S. generally accepted accounting principles.

“Governmental Authority” means any nation or government, any Federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.

“Hazardous Materials” means (a) any element, compound or chemical that is
defined, listed or otherwise classified as a contaminant, pollutant, toxic
pollutant, toxic or hazardous substance, extremely hazardous substance or
chemical, hazardous waste, special waste, or solid waste under Environmental
Laws or that is likely to cause immediately, or at some future time, harm to or
have an adverse effect on, the environment or risk to human health or safety,
including any pollutant, contaminant, waste, hazardous waste, toxic substance or
dangerous good which is defined or identified in any Environmental Law and which
is present in the environment in such quantity or state that it contravenes any
Environmental Law; (b) petroleum and its refined products; (c) polychlorinated
biphenyls; (d) any substance exhibiting a hazardous waste characteristic,
including corrosivity, ignitability, toxicity or reactivity as well as any
radioactive or explosive materials; and (e) any raw materials, building
components (including asbestos-containing materials) and manufactured products
containing hazardous substances listed or classified as such under Environmental
Laws.

“Investor Rights Agreement” has the meaning set forth in the Recitals to this
Agreement.

“IRC” means the Internal Revenue Code of 1986, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

“Irrevocable Transfer Agent Instructions” has the meaning set forth in
Section 4.1(d).

“Law” means each provision of any currently existing federal, provincial, state,
local or foreign law, statute, ordinance, order, code, rule or regulation,
promulgated or issued by any Governmental Authority, as well as any judgments,
decrees, injunctions or agreements issued or entered into by any Governmental
Authority.

 

3.

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“Legal Restraint” has the meaning set forth in Section 5.1(c).

“Lien” means any mortgage, deed of trust, lien, charge, claim, encumbrance,
security interest, right of first refusal, preemptive right or other
restrictions of any kind.

“Longitude” means Longitude Venture Partners, L.P.

“Management Rights Letter” has the meaning set forth in Section 2.2(a)(viii).

“Material Adverse Effect” on or with respect to the Company and/or its
Subsidiaries means any state of facts, change, development, event, effect,
condition, occurrence, action or omission that, individually or in the
aggregate, has resulted in or would reasonably be expected to result in a
material adverse effect on the business, financial condition, assets,
liabilities or results of operations of the Company and its Subsidiaries, taken
as a whole.

“Material Contract” means any contract of the Company that has been filed, or is
required to be filed but has not yet been filed, as an exhibit to the SEC
Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

“NOL Lock-Up Agreement” has the meaning set forth in the Recitals to this
Agreement.

“Permits” has the meaning set forth in Section 3.1(l).

“Permitted Liens” means (i) any Liens in favor of the holders of the Senior
Notes or the collateral agent appointed pursuant to the Senior Note Purchase
Agreement for the benefit of the holders of the Senior Notes, pursuant to Senior
Note Purchase Agreement or any document or agreement related thereto or
contemplated thereby, (ii) any Liens in favor of Silicon Valley Bank pursuant to
the Company’s existing line of credit with Silicon Valley Bank or any document
or agreement related thereto or contemplated thereby, (iii) mechanics’,
carriers’, or workmen’s, repairmen’s or similar Liens arising or incurred in the
ordinary course of business, (iv) Liens of or resulting from any judgment or
award, the time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company or any of its Subsidiaries thereof
shall at any time in good faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured, (v) Liens for taxes, assessments
and other governmental charges that are not due and payable or which may
hereafter be paid without penalty or which are being contested in good faith by
appropriate proceedings and (vi) other imperfections of title or encumbrances,
if any, that do not, individually or in the aggregate, materially impair the use
or value of the property to which they relate.

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, Governmental Authority or any
other form of entity not specifically listed herein.

“Press Release” has the meaning set forth in Section 4.6.

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement, shall be The NASDAQ Global Market.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

4.

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“Purchaser” and “Purchasers” have the respective meanings set forth in the
Preamble to this Agreement.

“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).

“Registration Statement” means a registration statement meeting the requirements
set forth in the Investor Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Investor Rights
Agreement).

“Registrations” means the regulatory approvals, authorizations, licenses,
certificates, applications, agreements, permits, exemptions, drug listings, and
other permissions held by the Company, that relate to the Company Products and
are issued by Governmental Authorities.

“Regulation D” has the meaning set forth in the Recitals to this Agreement.

“Required Approvals” has the meaning set forth in Section 3.1(f).

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“SEC Reports” has the meaning set forth in Section 3.1(g).

“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vi).

“Securities” means, collectively, the Warrants and the Shares.

“Securities Act” has the meaning set forth in the Recitals to this Agreement.

“Senior Notes” means the outstanding 15% Senior Secured Notes due June 24, 2011
issued by JPI Commercial, LLC pursuant to the Senior Note Purchase Agreement and
guaranteed by the Company.

“Senior Note Purchase Agreement” means the Senior Secured Note and Warrant
Purchase Agreement, dated as of March 14, 2008, by and among the Company, JPI
Commercial, LLC and the purchasers named therein.

“Shares” means, collectively, the Unit Shares and the Warrant Shares.

“Short Sales” include, without limitation, (i) all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and (ii) sales and other
transactions through non-U.S. broker dealers or foreign regulated brokers.

“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Units purchased hereunder at the Closing as indicated on such
Purchaser’s signature page to this Agreement next to the heading “Subscription
Amount.”

 

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“Subsidiary” means, with respect to any Person at any date, any corporation,
limited or general partnership, limited liability company, trust, estate,
association, joint venture or other business entity (i) the accounts of which
would be consolidated with those of such Person in such Person’s consolidated
financial statements if such financial statements were prepared in accordance
with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock
having (in the absence of contingencies) ordinary voting power to elect a
majority of the board of directors or other managing body of such Person, (B) in
the case of a partnership or limited liability company, the interest in the
capital or profits of such partnership or limited liability company or (C) in
the case of a trust, estate, association, joint venture or other entity, the
beneficial interest in such trust, estate, association or other entity business
is, at the time of determination, owned or controlled directly or indirectly
through one or more intermediaries, by such Person, and “Subsidiaries” mean,
collectively, each Subsidiary with respect to any Person.

“Trading Affiliates” has the meaning set forth in Section 3.2(h).

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets”
by Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.

“Trading Market” means whichever of The NASDAQ Global Select Market, The NASDAQ
Global Market, The NASDAQ Capital Market or the OTC Bulletin Board on which the
Common Stock is listed or quoted for trading on the date in question.

“Transaction Documents” means this Agreement and the schedules and exhibits
attached hereto, the Warrants, the Investor Rights Agreement, the NOL Lock-Up
Agreement, the Waiver and Amendment Agreement, the Management Rights Letter, the
Irrevocable Transfer Agent Instructions and any other agreement, instrument, and
other document executed and delivered pursuant hereto or thereto.

“Transfer Agent” means Computershare Trust Company, N.A., or any successor
transfer agent for the Common Stock.

“Unit Purchase Price” $3.6925 per Unit, which equals the sum of (i) $3.63 and
(ii) $0.0625, which represents a $0.125 purchase price for each whole Warrant
Share.

“Units” has the meaning set forth in the Recitals to this Agreement. Units will
not be issued or certificated. The Unit Shares and the Warrants are immediately
separable and will be issued separately.

“Unit Share” and “Unit Shares” have the respective meaning set forth in the
Recitals to this Agreement.

“Unrestricted Securities” has the meaning set forth in Section 4.1(c).

“Waiver and Amendment Agreement” has the meaning has the meaning set forth in
Section 2.2(a)(ix).

“Warrant” and “Warrants” have the respective meaning set forth in the Recitals
to this Agreement.

 

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“Warrant Exercise Price” means $4.00 per Warrant Share.

“Warrant Ratio” has the meaning set forth in the Recitals to this Agreement.

“Warrant Shares” has the meaning set forth in the Recitals to this Agreement.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing, Delivery and Payment.

(a) Purchase and Sale. Subject to and upon the terms and conditions set forth in
this Agreement, at the Closing, the Company shall issue and sell to each
Purchaser, and each Purchaser shall, severally and not jointly, purchase from
the Company, such number of Units equal to the quotient resulting from dividing
(i) the Subscription Amount for such Purchaser by (ii) the Unit Purchase Price,
rounded down to the nearest whole Unit.

(b) Closing. The Closing shall take place at the offices of Company Counsel,
3175 Hanover Street, Palo Alto, California 94304, on the Closing Date or at such
other locations or remotely by facsimile transmission or other electronic means
as the parties may mutually agree.

(c) Payment. On the Closing Date, (x) each Purchaser shall pay to the Company
its Subscription Amount in United States dollars and in immediately available
funds, by wire transfer to the Company’s account as set forth in instructions
previously delivered to each Purchaser, (y) the Company shall irrevocably
instruct the Transfer Agent to deliver to each Purchaser one or more stock
certificates within three (3) Business Days after the Closing Date, free and
clear of all restrictive and other legends except as expressly provided in
Section 4.1(b) hereof, evidencing the number of Unit Shares such Purchaser is
acquiring at the Closing, and (z) the Company shall issue to each Purchaser a
Warrant pursuant to which such Purchaser shall have the right to acquire such
number of Warrant Shares determined by multiplying the number of Unit Shares
such Purchaser is acquiring at the Closing by the Warrant Ratio and rounding
down to the nearest whole number, in the case of clauses (y) and (z), duly
executed on behalf of the Company and registered in the name of such Purchaser
as set forth on the Stock Certificate Questionnaire included as Exhibit D. The
Warrants issued and sold at the Closing shall have an exercise price equal to
the Warrant Exercise Price.

2.2 Closing Deliveries.

(a) On or prior to the Closing, the Company shall issue, deliver or cause to be
delivered to each Purchaser the following:

(i) this Agreement and the Investor Rights Agreement, each duly executed by the
Company;

(ii) a copy of irrevocable instructions to the Transfer Agent to deliver to each
Purchaser one or more stock certificates, as provided in Section 2.1(c), with
the original stock certificates delivered within three (3) Business Days of the
Closing;

(iii) a Warrant, as provided in Section 2.1(c);

(iv) the NOL Lock-Up Agreement duly executed by the Company and the other
parties thereto other than the Purchasers;

 

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(v) a legal opinion of Company Counsel, dated as of the Closing Date, and in the
form attached hereto as Exhibit E, executed by such Company Counsel and
addressed to the Purchasers;

(vi) a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board or a duly authorized committee thereof approving the
transactions contemplated by this Agreement and the other Transaction Documents
(including the appointment of Patrick Enright to the Board as a Class I
director, effective upon the Closing) and the issuance of the Securities to be
issued at the Closing and that such resolutions remain in full force and effect,
(b) certifying the current versions of the Company’s certificate of
incorporation (including any certificates of designation) and bylaws, each as
amended, and (c) certifying as to the signatures and authority of Persons
signing the Transaction Documents and related documents on behalf of the
Company, in the form attached hereto as Exhibit G;

(vii) the Compliance Certificate referred to in Section 5.1(f);

(viii) the Management Rights Letter, dated as of the Closing Date, and in the
form attached hereto as Exhibit I (“Management Rights Letter”), duly executed by
the Company;

(ix) the Waiver and Amendment Agreement in the form attached hereto as Exhibit J
(“Waiver and Amendment Agreement”), duly executed by the Company and the other
parties thereto;

(x) an indemnification agreement for Patrick Enright in a form reasonably
acceptable to the Company and Longitude;

(xi) evidence reasonably satisfactory to Longitude of the formation and good
standing of the Company and each of its Subsidiaries under the laws of the
jurisdiction of its incorporation or formation, as applicable; and

(xii) evidence reasonably satisfactory to Longitude of the qualification as a
foreign corporation or other legal entity and good standing of the Company and
each of its Subsidiaries in each state where the Company and each of its
Subsidiaries, as applicable, is qualified to do business as a foreign
corporation or other legal entity.

(b) On or prior to the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following (the “Purchaser Deliverables”):

(i) this Agreement, the Investor Rights Agreement and the NOL Lock-Up Agreement,
each duly executed by such Purchaser;

(ii) a fully completed and duly executed Stock Certificate Questionnaire in the
form attached hereto as Exhibit D; and

(iii) such Purchaser’s Subscription Amount, in United States dollars and in
immediately available funds, by wire transfer to the Company’s account as
previously delivered to each Purchaser in accordance with Section 2.1(c).

 

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants as of the date hereof and as of the Closing Date (except for the
representations and warranties that speak as of a specific date, which shall be
made as of such date), to each of the Purchasers that, except as otherwise set
forth in the Disclosure Schedule delivered herewith:

(a) Organization, Good Standing and Qualification. Each of the Company and each
of its Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation
(as applicable). Each of the Company and each of its Subsidiaries has all
requisite power and authority as a corporation or other legal entity to carry on
its business as now conducted and as described in the SEC Reports and to own its
properties. Each of the Company and each of its Subsidiaries is duly qualified
to do business as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property makes such qualification necessary, except
where the failure to so qualify, individually or in the aggregate, would not
have a Material Adverse Effect. To the Company’s Knowledge, no proceeding has
been instituted in any jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail, such power and authority or qualification. The
Company has no direct or indirect Subsidiaries other than Orphan Medical, LLC
and JPI Commercial, LLC. The membership interests of each Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable and, except
as set forth in the Disclosure Schedule, are owned by the Company directly, free
and clear of any claim, lien, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party, other than the Liens
described in clause (i) of the definition of Permitted Liens.

(b) Authorization. The Company has full right and authority and has taken all
requisite action due on or prior to the Closing on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization,
execution and delivery of the Transaction Documents, (ii) the authorization of
the performance of all obligations of the Company hereunder or thereunder and
(iii) the authorization, issuance, sale and delivery of the Securities as
contemplated hereunder.

(c) Valid Agreements. The Transaction Documents constitute the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights generally.

(d) Capitalization. The authorized Capital Stock of the Company consists of:
(i) 150,000,000 shares of Common Stock, of which 29,075,291 shares are
outstanding on the Execution Date (prior to the issuance of the Unit Shares) and
(ii) 20,000,000 shares of preferred stock, $0.0001 par value, of which no shares
are outstanding on the Execution Date. All of the issued and outstanding shares
of the Company’s Capital Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. Except (i) for
options to purchase Common Stock or other equity awards (including restricted
stock units) issued to employees and members of the Board pursuant to the equity
compensation plans or arrangements disclosed in the SEC Reports, (ii) as
contemplated by the Company’s Directors Deferred Compensation Plan or the
Company’s 2007 Employee Stock Purchase Plan, and (iii) for outstanding warrants
disclosed in the SEC Reports, there are no existing options, warrants, calls,
preemptive (or similar) rights, subscriptions or other rights, agreements,
arrangements or commitments of any character obligating the Company to issue,
transfer or sell, or cause to be issued, transferred or sold, any shares of the
Capital Stock of, or other equity interests in, the Company or any of its
Subsidiaries or any securities convertible into or exchangeable for such shares
of Capital Stock or other equity interests, and there are no outstanding
contractual obligations of the Company to repurchase,

 

9.

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redeem or otherwise acquire any shares of its Capital Stock or other equity
interests. Except as set forth in exhibits to the SEC Reports, no Person has the
right to require the Company to register any securities of the Company under the
Securities Act, whether on a demand basis or in connection with the registration
of securities of the Company for its own account or for the account of any other
Person. The issue and sale of the Securities will not result in the right of any
holder of Company securities to adjust the exercise, conversion or exchange
price under such securities. Other than pursuant to the Company’s 2007 Employee
Stock Purchase Plan, the Company has not issued or sold any of its securities at
less than fair market value, or for an option exercise price that was not at
least equal to fair market value at the time of grant of the option, in either
case as determined by the Board of Directors in good faith, to any employee,
consultant or other provider of services to the Company. To the Company’s
Knowledge, the Company has not modified or amended the terms of any of the
Company’s securities or options or other rights to acquire the Company’s
securities in such a way as to cause the holder of any such security, option or
right to recognize ordinary income that is subject to an additional tax pursuant
to Section 409A of the IRC.

(e) Valid Issuance. The Securities have been duly and validly authorized and,
when issued and paid for pursuant to this Agreement, and with respect to the
Warrant Shares, when issued and paid for pursuant to the Warrants, will be
validly issued, fully paid and nonassessable, and will be free of encumbrances
and restrictions (other than those created by the Purchasers), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws.

(f) Consents. The Company is not required to obtain any approval, consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any Governmental Authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents (including the issuance of the Securities), other than (i) the filing
with the Commission of one or more Registration Statements in accordance with
the requirements of the Investor Rights Agreement, (ii) filings required by
applicable state and federal securities laws, (iii) the filing of a Notice of
Sale of Securities on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filing of any requisite notices and/or application(s)
to the Principal Trading Market for the issuance and sale of the Securities, and
the listing of the Common Stock for trading or quotation, as the case may be,
thereon in the time and manner required thereby, (v) as contemplated by the
Waiver and Amendment Agreement, and (vi) those that have been made or obtained
on or prior to the date hereof (collectively, the “Required Approvals”).

(g) SEC Reports. The Company has complied with its requirement to file all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act. The Company has made available to the Purchasers, through the
Commission’s EDGAR system, true and complete copies of (a) the Company’s most
recent Annual Report on Form 10-K, as amended (the “Annual Report”), (b) the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009,
including all exhibits thereto and documents incorporated by reference therein,
and (c) any other statement, report (including, without limitation, Current
Reports on Form 8-K), registration statement or definitive proxy statement filed
by the Company with the Commission during the period commencing subsequent to
the period covered by such Annual Report (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports” and together with this
Agreement and the Schedules to this Agreement, the “Disclosure Materials”). The
Company is not aware of any event that requires the filing of a Current Report
on Form 8-K that has not been filed. The Company has filed as an exhibit to an
SEC Report all documents required to be filed by Item 601 of Regulation S-K
prior to the date of this Agreement. As of their respective filing dates, except
to the extent corrected by a subsequent restatement or amendment or superseded
by a subsequent filing, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a

 

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material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of the date hereof,
the Company complies with General Instruction I.A.3(b) of Form S-3.

(h) No Material Adverse Change. Between March 31, 2009 and the date of this
Agreement, except as disclosed in the SEC Reports, the Disclosure Schedule or in
the unaudited financial statements for the quarter ended June 30, 2009 made
available to the Purchasers prior to the execution of this Agreement, there has
not been:

(i) any material change in the consolidated assets, liabilities, financial
condition, cash flows or operating results of the Company from that reflected in
the financial statements included in the Company’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2009;

(ii) any declaration or payment of any dividend, or any authorization or payment
of any distribution, on any of the Capital Stock of the Company, or any
redemption or repurchase of any securities of the Company;

(iii) any material damage, destruction or loss to any assets or properties of
the Company or any of its Subsidiaries;

(iv) any waiver, not in the ordinary course of business, by the Company or any
of its Subsidiaries of a material right or of a material debt owed to them;

(v) any change or amendment to the Company’s or any of its Subsidiaries’
certificate of incorporation, bylaws or other organizational or charter
documents, or change to any Material Contract or arrangement by which the
Company or any of its Subsidiaries is bound or to which their respective assets
or properties are subject;

(vi) any transaction entered into by the Company or any of its Subsidiaries
other than in the ordinary course of business;

(vii) the loss of the services of any key employee, or material change in the
composition or duties of the senior management of the Company;

(viii) any commitment or arrangement by the Company or any of its Subsidiaries
to do any of the foregoing; or

(ix) any other event or condition of any character that has had or would have a
Material Adverse Effect.

(i) No Conflict, Breach, Violation or Default. Neither the execution, delivery
and performance of the Transaction Documents by the Company nor the consummation
of any of the transactions contemplated hereby (including without limitation the
issuance and sale of the Securities) will (i) conflict with or result in
violation of any of the terms and provisions of Company’s or any of its
Subsidiaries’ certificate of incorporation, bylaws or other organizational or
charter documents, each as in effect on the date hereof, or (ii) will give rise
to the right to terminate or accelerate the due date of any payment under or
result in a breach of any term or provision of, or constitute a default (or any
event which with notice or lapse of time or both would constitute a default)
under, or require any consent or waiver under or result in the execution or
imposition of any Lien upon the properties or assets of the Company or any of
its Subsidiaries pursuant to the terms of (x) any Material Contract or (y) any
license, permit, statute, rule, regulation, judgment, decree or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company, any of its Subsidiaries or any of their

 

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respective assets or properties, other than with respect to clause (y) as would
not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in violation or default of any provisions of its certificate of
incorporation, bylaws or other organizational or charter documents. Except as
disclosed in the SEC Reports, (a) neither the Company nor any of its
Subsidiaries is in violation or default of any term or provision of any material
mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or
decree to which it is a party or by which it is bound, and (b) to the Company’s
Knowledge, the Company and each of its Subsidiaries is in compliance with all
Laws applicable to the Company, in each case where any such violation, default
or failure to comply, as described in clause (a) or (b) above, could reasonably
be expected to have a Material Adverse Effect. The Company has not received any
written notice of any violation of any such Law which has not been remedied
prior to the date hereof.

(j) Tax Matters. Each of the Company and each of its Subsidiaries has timely
filed all tax returns (taking into account applicable extensions) required to
have been filed by it with all appropriate governmental agencies and timely paid
all taxes shown thereon or otherwise owed by it. The charges, accruals and
reserves on the books of the Company and each of its Subsidiaries in respect of
taxes for all fiscal periods are adequate in all material respects, and there
are no material unpaid assessments against the Company or any of its
Subsidiaries. All taxes and other assessments and levies that the Company or any
of its Subsidiaries are required to withhold or to collect for payment have been
duly withheld and collected and paid to the proper governmental entity or third
party when due. There are no tax Liens or claims pending or, to the Company’s
Knowledge, threatened against the Company, any of its Subsidiaries or any of
their respective assets or property, other than Permitted Liens. To the
Company’s Knowledge, there are no tax audits or investigations pending. There
are no outstanding tax sharing agreements or other such arrangements between the
Company and any other Person.

(k) Title to Properties. Each of the Company and each of its Subsidiaries has
good and marketable title to all properties and assets owned by it, in each case
free from Liens and defects, other than Permitted Liens. Each of the Company and
each of its Subsidiaries holds any leased real or personal property under valid
and enforceable leases. Each of the Company and each of its Subsidiaries is in
material compliance with all material terms of each lease to which it is a party
or is otherwise bound. Neither the Company nor any of its Subsidiaries own any
real property.

(l) Certificates, Authorities and Permits. Each of the Company and each of its
Subsidiaries possesses adequate certificates, approvals, authorities or permits
(“Permits”) issued by governmental agencies or bodies necessary to own, lease
and license its assets and properties and conduct the business now operated by
it, all of which are valid and in full force and effect, except where the lack
of such Permits, individually or in the aggregate, would not have a Material
Adverse Effect. Each of the Company and each of its Subsidiaries has performed
in all material respects all of its material obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of time,
would allow, revocation or termination thereof. Neither the Company nor any of
its Subsidiaries has received any written notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its Subsidiaries, would not,
individually or in the aggregate, have a Material Adverse Effect.

(m) Labor Matters.

(i) Neither the Company nor any of its Subsidiaries is a party to or bound by
any collective bargaining agreement. Neither the Company nor any of its
Subsidiaries has violated in any material respect any laws, regulations, orders
or contract terms, affecting the collective bargaining rights of employees,
labor organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment or employees’ health, safety,
welfare, wages and hours.

 

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(ii) (A) There are no labor disputes existing, or to the Company’s Knowledge,
threatened, involving strikes, slow-downs, work stoppages, job actions,
disputes, lockouts or any other disruptions of or by the Company’s or any of its
Subsidiaries’ employees, (B) there are no unfair labor practices or petitions
for election pending or, to the Company’s Knowledge, threatened before the
National Labor Relations Board or any other federal, state or local labor
commission relating to the Company’s or any of its Subsidiaries’ employees,
(C) no demand for recognition or certification heretofore made by any labor
organization or group of employees is pending with respect to the Company or any
of its Subsidiaries and (D) to the Company’s Knowledge, the Company and each
Subsidiary enjoys good labor and employee relations with its employees.

(iii) Each of the Company and each of its Subsidiaries is in compliance in all
material respects with applicable laws respecting employment (including laws
relating to classification of employees and independent contractors) and
employment practices, terms and conditions of employment, wages and hours,
severance and bonuses, and immigration and naturalization. No claims are pending
against the Company or any of its Subsidiaries before the Equal Employment
Opportunity Commission or any other administrative body or in any court
asserting any violation of Title VII of the Civil Rights Act of 1964, the Age
Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal,
state or local law, statute or ordinance barring discrimination in employment.

(iv) Neither the Company nor any of its Subsidiaries is a party to, or bound by,
any employment or other contract or agreement that contains any severance,
termination pay or change of control liability or obligation, including, without
limitation, any “excess parachute payment,” as defined in Section 280G(b) of the
IRC, other than as set forth in the SEC Reports.

(v) The Company has made all required contributions to each “employee benefit
plan,” as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, and has complied in all material respects with
all laws applicable to any such employee benefit plan.

(n) Intellectual Property. The Company and its Subsidiaries own, possess or
control, or can acquire on reasonable terms ownership of or rights to use, all
material patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, the “Company Intellectual Property”) currently
employed by them in connection with the business described in the SEC Reports
substantially as now conducted and, with respect to material activities, as now
contemplated to be conducted as described in the SEC Reports. Neither the
Company nor any of its Subsidiaries, or to the Company’s Knowledge, its
distributors or sublicensees, have received any notice of infringement of or
conflict with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect. To the best of the
Company’s Knowledge, the Company’s and its Subsidiaries’ businesses as now
conducted, and as now contemplated to be conducted as described in the SEC
Reports, do not and will not infringe any patents, trademarks, service marks,
trade names, copyrights or trade secrets of any person, except as would not have
a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
granted or assigned to any other person or entity any right under any of Company
Intellectual Property other than as described in the SEC Reports or in the
Disclosure Schedule. To the Company’s Knowledge, no third party is infringing or
misappropriating any of the Company Intellectual Property in any material
respect. None of the Company Intellectual Property is subject to any Proceedings
of which the Company is aware alleging invalidity or unenforceability thereof or
challenging or questioning the patentability, registrability or ownership
thereof, other than those conducted in the ordinary course of patent prosecution
and those that would not have a Material Adverse Effect.

 

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(o) Environmental Matters. Neither the Company nor any of its Subsidiaries is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of Hazardous Materials or relating to the protection or
restoration of the environment or human exposure to Hazardous Materials
(collectively, “Environmental Laws”). Except as described in the SEC Reports, to
the Company’s Knowledge, neither the Company nor any of its Subsidiaries own or
operate any real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is subject to any claim relating to any
Environmental Laws. There is no pending or, to the Company’s Knowledge,
threatened investigation that might lead to such a claim.

(p) Litigation. There are no pending or, to the Company’s Knowledge, threatened
actions, suits, proceedings, inquiries or investigations against or affecting
the Company, any of its Subsidiaries or any of their respective properties or
any of the Company’s officers and directors in their capacities as such. Except
in connection with or as contemplated by the civil settlement agreement,
non-prosecution agreement, plea agreement and corporate integrity agreement that
were each entered into in connection with the investigation of Orphan Medical,
Inc. and the promotion of Xyrem as described in the SEC Reports, neither the
Company nor any of its Subsidiaries is a party to or subject to the provisions
of any injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.

(q) Financial Statements. The financial statements included in each SEC Report
and the unaudited financial statements for the quarter ended June 30, 2009 made
available to the Purchasers prior to execution of this Agreement present fairly,
in all material respects, the financial position of the Company as of the dates
shown and its results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with GAAP (except as
may be disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act). Except
as set forth in the financial statements of the Company included in the SEC
Reports and the unaudited financial statements for the quarter ended June 30,
2009 made available to the Purchasers prior to execution of this Agreement, the
Company has not incurred any liabilities, contingent or otherwise, except those
incurred in the ordinary course of business, consistent with past practices
since the date of such financial statements, none of which, individually or in
the aggregate, would have a Material Adverse Effect.

(r) Insurance Coverage. Each of the Company and each of its Subsidiaries
maintains in full force and effect insurance coverage that is customary for
comparably situated companies for the business being conducted and properties
owned or leased by the Company and its Subsidiaries.

(s) Questionable Payments. Neither the Company, any of its directors, officers
or employees nor any of its Subsidiaries, or, to the Company’s Knowledge, any of
its agents or other Persons acting on behalf of the Company or any of its
Subsidiaries, has on behalf of the Company or any of its Subsidiaries or in
connection with their respective businesses: (a) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity; (b) made any direct or indirect unlawful payments to any
governmental officials or employees from corporate funds; (c) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
(d) made any false or fictitious entries on the books and records of the Company
or any of its Subsidiaries; or (e) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of any nature.

(t) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports and other than the grant of stock options or other equity awards, none
of the officers or directors of the Company and, to the Company’s Knowledge,
none of the employees of the Company, is presently

 

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a party to any transaction with the Company or any of its Subsidiaries or to a
presently contemplated transaction (other than for services as employees,
officers and directors) that would be required to be disclosed pursuant to
Item 404 of Regulation S-K promulgated under the Securities Act that has not
been disclosed.

(u) Internal Controls. The Company is in material compliance with the provisions
of the Sarbanes-Oxley Act of 2002 currently applicable to the Company. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15 and 15d-15) for the Company and designed
such disclosure controls and procedures to ensure that material information
relating to the Company is made known to the certifying officers by others
within those entities. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of the end of the
period covered by the most recently filed periodic report under the Exchange Act
(such date, the “Evaluation Date”). The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no changes in the Company’s internal control over financial reporting
(as defined in Exchange Act Rules 13a-15 or Rule 15d-15) that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting. The books, records and accounts of the Company
accurately and fairly reflect, in all material respects, the transactions in,
and dispositions of, the assets of, and the results of operations of, the
Company. The Company maintains and will continue to maintain a standard system
of accounting established and administered in accordance with GAAP and the
applicable requirements of the Exchange Act.

(v) Independent Accountants. The Company has engaged an independent registered
public accounting firm as required by the Exchange Act and the rules and
regulations of the Commission thereunder.

(w) Regulatory Compliance. The human clinical trials, animal studies and other
preclinical tests conducted by the Company or its Subsidiaries or in which the
Company or its Subsidiaries have participated or that are described in the SEC
Reports or the results of which are referred to in the SEC Reports, and such
studies and tests conducted on behalf of the Company or its Subsidiaries, or
that the Company or its Subsidiaries currently intend to rely on in support of
Registrations by the United States Food and Drug Administration (the “FDA”) or
foreign regulatory agencies for the Company Products, were and, if still
pending, are being conducted in all material respects in accordance with
experimental protocols, procedures and controls generally used by qualified
experts in the preclinical or clinical study of new drugs and in material
compliance with applicable Laws. The descriptions of the results of such
studies, test and trials contained in the SEC Reports are accurate in all
material respects, and, to the Company’s Knowledge, there are no other trials,
studies or tests, the results of which the Company believes reasonably call into
question the clinical trial results described or referred to in the SEC Reports
when viewed in the context in which such results are described and the clinical
stage of development. Neither the Company nor any of its Subsidiaries have
received any notices or correspondence from the FDA or any other domestic or
foreign Governmental Authority requiring the termination, suspension or material
modification, other than modifications customarily implemented during the drug
development process, of any preclinical tests or clinical trials conducted by or
on behalf of the Company or its Subsidiaries or in which the Company or its
Subsidiaries have participated that are

 

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described in the SEC Reports or the results of which are referred to in the SEC
Reports, in each case that would have a Material Adverse Effect. Except as set
forth in the SEC Reports or in the Disclosure Materials, the Company and its
Subsidiaries, and, to the Company’s Knowledge, its distributors, manufacturers
and sublicensees, are not subject to any obligation arising under an
administrative or regulatory action, FDA inspection, FDA warning letter, FDA
notice of violation letter, recall notice, or other notice or commitment made to
or with the FDA or any other Governmental Authority (including without
limitation the Drug Enforcement Agency) regarding or impacting the Company
Products, including without limitation any notice alleging a material violation
of any applicable Law or required Registration. Except as described in the SEC
Reports, neither the Company nor its Subsidiaries and, to the Company’s
Knowledge, neither its distributors, manufacturers nor sublicensees, have
received any written or other notice from FDA, the Drug Enforcement Agency or a
comparable Governmental Authority alleging that the Company Products are the
subject of any pending or threatened investigation in any jurisdiction that has
not been fully remedied. Except as described in the SEC Reports or in the
Disclosure Materials, the Company and its Subsidiaries and, to the Company’s
Knowledge, its distributors, manufacturers and sublicensees, are in compliance
with all applicable Laws administered or issued by FDA or any other Governmental
Authority that are relevant to the Company Products, including, without
limitation, those requirements relating to the testing, handling, distribution,
regulatory approval, pricing approval, annual reporting, registration, good
manufacturing practices, record-keeping, adverse event reporting, promotion,
sales, packaging, labeling and advertising of drugs and controlled substances
(where applicable) in each case in all material respects. The promotion, sale,
manufacture, storage, packaging, labeling, handling, testing and distribution of
the Company Products for which Registrations have been obtained by the Company,
its Subsidiaries, distributors, manufacturers and sublicensees is being, and at
all times following such Registration has been, conducted in compliance in all
material respects with the Registrations, except for any failure that has not,
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect; provided that the foregoing representation as it
relates to the Company’s distributors, manufacturers and sublicensees shall be
to the Company’s Knowledge. All regulatory filings made by the Company or its
Subsidiaries, or, to the Company’s Knowledge, by the Company’s distributors,
manufacturers or sublicensees, to any Governmental Authority, in each case with
respect to any of the Company Products, when submitted to the Governmental
Authority were accurate in all material respects as of the date of submission,
or as subsequently corrected or modified. Neither the Company nor its
Subsidiaries (including their officers or employees) nor, to the Company’s
Knowledge, any principal investigator or sub-investigator engaged in any
clinical investigation conducted with respect to any Company Product (including
their officers or employees) has been convicted of any crime under 21 U.S.C.
Section 335a(a) or any similar state or foreign Law or under 21 U.S.C.
Section 335a(b) or any similar state or foreign Law. To the Company’s Knowledge,
there are no facts which would reasonably be expected to cause (i) the
withdrawal or recall of any Company Product sold by or on behalf of the Company,
its Subsidiaries, distributors or sublicensees, (ii) a termination or suspension
of marketing of any such Company Product, or (iii) any adverse events or safety
concerns not already publicly disclosed that would have a material impact on the
ability to market any such Company Product. As of the date hereof, the current
quota of sodium oxybate obtained by the Company’s manufacturers from the U.S.
Drug Enforcement Agency is sufficient to meet the Company’s commercial and
clinical requirements for sodium oxybate, Xyrem and JZP-6 for 2009.

(x) Material Contracts. The description of the Material Contracts, documents or
other agreements contained in the SEC Reports (as the case may be) reflect in
all material respects the terms of the underlying contract, document or other
agreement. Each such Material Contract, document or other agreement is in full
force and effect and is valid and enforceable by and against the Company in
accordance with its terms. Except as described in the SEC Reports, neither the
Company nor any of its Subsidiaries is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default or event,
individually or in the aggregate, would result in a Material Adverse Effect.

 

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(y) Certain Fees. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or the Purchasers for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Company. The Company shall indemnify, pay, and hold the Purchasers
harmless against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out-of-pocket expenses) arising in connection with any such
right, interest or claim.

(z) No Directed Selling Efforts or General Solicitation. Neither the Company nor
any Person acting on its or its behalf has conducted any “general solicitation”
or “general advertising” (as those terms are used in Regulation D) in connection
with the offer or sale of any of the Securities.

(aa) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement,
neither the Company nor any Person acting on its behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales of
any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Securities as contemplated hereby or
(ii) cause the offering of the Securities pursuant to the Transaction Documents
to be integrated with prior offerings by the Company for purposes of any
applicable law, regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market on
which any of the securities of the Company are listed or designated.

(bb) Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to terminate the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not,
in the 12 months preceding the date hereof, received written notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. As of the date hereof, the Company is in
compliance in all material respects with the listing and maintenance
requirements for continued trading of the Common Stock on the Principal Trading
Market, except as set forth on the Disclosure Schedule.

(cc) Investment Company. The Company is not required to be registered as, and is
not an Affiliate of, and immediately following the Closing, will not be required
to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

(dd) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its
Exchange Act filings and is not so disclosed or that otherwise would have a
Material Adverse Effect.

(ee) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers are acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to such Purchaser’s purchase of the Securities.

 

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(ff) No Additional Agreements. The Company does not have any agreements or
understandings with the Purchasers with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.

(gg) Change of Control Benefits. Except as described in the SEC Reports, neither
the consummation of any change of control (either alone or in connection with
any other event, including any termination of employment or service), will
(i) result in any payment (including any bonus, golden parachute or severance
payment) becoming due to any employee or consultant of the Company, (ii) result
in any forgiveness of indebtedness owing by any employee or consultant of the
Company to the Company or, to the Company’s Knowledge, owing by any employee or
consultant to any third party, (iii) materially increase the benefits payable by
the Company, nor (iv) result in any acceleration of the time of payment or
vesting of any such benefits.

(hh) Voting Agreements. To the Company’s Knowledge, there are no agreements with
respect to the voting of Capital Stock of the Company or with respect to the
designation or election of directors to the Board.

(ii) Stockholder Approval. No vote of the Company’s stockholders is required in
connection with the issuance and sale of the Securities or any of the other
transactions contemplated by the Transaction Documents.

(jj) Use of Proceeds; Solvency. The net proceeds of the sale of the Units
hereunder shall be used by the Company for working capital and general corporate
purposes. After giving effect to the Closing, the Company will not be insolvent.

(kk) Disclosure. None of the Transaction Documents, when viewed together with
the Disclosure Materials, contain any untrue statement of a material fact nor
omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.

3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date (except for the representations and warranties that
speak as of a specific date, which shall be made as of such date), to the
Company as follows:

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. To the extent that Purchaser is an entity, the execution, delivery
and performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company or
other applicable like action, on the part of such Purchaser. Each of this
Agreement, the Investor Rights Agreement, the NOL Lock-Up Agreement and the
Management Rights Letter has been duly executed by such Purchaser (if a party
thereto), and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

 

18.

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(b) No Conflicts. The execution, delivery and performance by such Purchaser of
this Agreement, the Investor Rights Agreement, the NOL Lock-Up Agreement and the
Management Rights Letter (if a party thereto) and the consummation by such
Purchaser of the transactions contemplated hereby and thereby will not
(i) result in a violation of the organizational documents of such Purchaser (to
the extent an entity), (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Purchaser
is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
such Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.

(c) Investment Intent. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to, or for distributing or reselling
such Securities or any part thereof in violation of the Securities Act or any
applicable state securities laws; provided, however, that by making the
representations herein, such Purchaser does not agree to hold any of the
Securities for any minimum period of time and reserves the right, subject to the
provisions of this Agreement, the Investor Rights Agreement and the NOL Lock-Up
Agreement, at all times to sell or otherwise dispose of any or all of the
Securities pursuant to an effective registration statement under the Securities
Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws. Such Purchaser (to the extent an
entity) is acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser does not presently have any agreement, plan or
understanding, directly or indirectly, with any Person to distribute or effect
any distribution of any of the Securities (or any securities which are
derivatives thereof) to or through any Person; such Purchaser is not a
registered broker-dealer under Section 15 of the Exchange Act or an entity
engaged in a business that would require it to be so registered as a
broker-dealer.

(d) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises any
Warrants, it will be, an “accredited investor” as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act.

(e) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general advertisement.

(f) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

(g) Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and its Subsidiaries
and its respective

 

19.

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financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such
Purchaser’s right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company’s representations and warranties contained
in the Transaction Documents.

(h) Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the time that such Purchaser was first contacted by
the Company or any other Person regarding the transactions contemplated hereby
until the date hereof, neither the Purchaser nor any Affiliate of such Purchaser
which (x) had knowledge of the transactions contemplated hereby, (y) has or
shares discretion relating to such Purchaser’s investments or trading or
information concerning such Purchaser’s investments, including in respect of the
Securities, and (z) is subject to such Purchaser’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading Affiliates”) has
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities). Notwithstanding
the foregoing, in the case of a Purchaser and/or Trading Affiliate that is,
individually or collectively, a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s or
Trading Affiliate’s assets and the portfolio managers have no direct knowledge
of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s or Trading Affiliate’s assets, the representation
set forth above shall apply only with respect to the portion of assets managed
by the portfolio manager that has knowledge about the transactions contemplated
by this Agreement. Other than to other Persons who are parties to this
Agreement, such Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).

(i) Brokers and Finders. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or any Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Purchaser.

(j) Independent Investment Decision. Such Purchaser has independently evaluated
the merits of its decision to purchase Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Securities constitutes legal, tax or investment advice.

(k) Reliance on Exemptions. Such Purchaser understands that the Securities being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Securities.

(l) No Governmental Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

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(m) Regulation M. Such Purchaser is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of Common Stock and other
activities with respect to the Common Stock by the Purchasers.

(n) Residency. Such Purchaser’s principal executive offices (or residence, in
the case of a Purchaser that is an individual) are in the jurisdiction set forth
immediately below Purchaser’s name on the applicable signature page attached
hereto.

(o) Complete Agreement. No Purchaser has made or makes any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in this Article III.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) Compliance with Laws. Notwithstanding any other provision of this Article
IV, each Purchaser covenants that the Securities may be disposed of only
pursuant to (x) an effective registration statement under, and in compliance
with the requirements of, the Securities Act, or pursuant to an available
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state
and federal securities laws and (y) the terms of the NOL Lock-Up Agreement (for
so long as the restrictions set forth therein shall remain in effect). In
connection with any transfer of the Securities other than (i) pursuant to an
effective registration statement, (ii) to the Company, (iii) to an Affiliate of
a Purchaser or (iv) pursuant to Rule 144 (provided that the Purchaser provides
the Company with reasonable assurances (in the form of seller and broker
representation letters) that the securities may be sold pursuant to such rule)
or Rule 144A, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer of any Securities other than Unrestricted
Securities (as defined below), any such transferee (i) shall agree in writing to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Investor Rights Agreement, and (ii) for so long as
the restrictions set forth the NOL Lock-Up Agreement shall remain in effect,
shall agree in writing to be bound by the applicable terms of the NOL Lock-Up
Agreement (unless otherwise agreed in writing by the Company).

(b) Legends. Each of the Warrants and the certificates evidencing the Shares
shall bear any legend as required by the “blue sky” laws of any state and the
restrictive legends in substantially the following form, as applicable, until
such time as they are not required under Section 4.1(c) (and a stock transfer
order may be placed against transfer of the certificates for the Shares):

[NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION
OF THIS SECURITY HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN
REGISTERED] UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED EXCEPT AS PROVIDED BY ARTICLE IV OF THAT CERTAIN
SECURITIES PURCHASE AGREEMENT, DATED AS OF JULY 6, 2009, BY AND AMONG JAZZ
PHARMACEUTICALS, INC. AND THE PURCHASERS IDENTIFIED ON THE SIGNATURE PAGES
THERETO.

 

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[THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION OF THIS
SECURITY] [THESE SECURITIES] ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND CERTAIN OTHER RESTRICTIONS, [INCLUDING EXERCISE OR CONVERSION
RESTRICTIONS,] ALL AS SET FORTH IN A NOL PRESERVATION LOCK-UP AGREEMENT BETWEEN
JAZZ PHARMACEUTICALS, INC. AND THE ORIGINAL HOLDER OF [THIS SECURITY][THESE
SECURITIES], A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICES OF JAZZ
PHARMACEUTICALS, INC.

In addition, if any Purchaser is an Affiliate of the Company, the Warrants and
the certificates evidencing the Shares issued to such Purchaser shall bear a
customary “affiliates” legend.

(c) Removal of Legends. The legends set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate without such legends or any
other legend to the holder of the applicable Securities upon which it is stamped
or issue to such holder by electronic delivery at the applicable balance account
at DTC, if (A) such Securities have been or may be transferred in accordance
with the terms of the NOL Lock-Up Agreement without restriction; and
(B) (i) such Securities are sold or transferred pursuant to an effective
Registration Statement covering the resale of such Securities by the Purchasers,
(ii) such Securities are sold or transferred pursuant to Rule 144 (if the
transferor is not an Affiliate of the Company), or (iii) such Securities are
eligible for sale without any restrictions under Rule 144 (any Securities
meeting such criteria being referred to as “Unrestricted Securities”). Following
such time as a legend is no longer required for certain Securities, the Company
will no later than three (3) Trading Days (or such shorter time as may in the
future be required pursuant to applicable law or regulation for the settlement
of trades in securities on the Principal Trading Market) following the delivery
by a Purchaser to the Company or the Transfer Agent (with notice to the Company)
of a legended certificate representing such Securities (endorsed or with stock
powers attached, signatures guaranteed if so required by the Transfer Agent in
the ordinary course of business, and otherwise in form necessary to effect the
reissuance and/or transfer), deliver or cause to be delivered to the transferee
of such Purchaser or such Purchaser, as applicable, a certificate representing
such Securities that is free from such legend. The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section 4.1. In lieu of
delivering physical certificates, upon the written request of any Purchaser, the
Company shall use its commercially reasonable efforts to transmit certificates
for Securities subject to full legend removal hereunder to such Purchaser by
crediting the account of the transferee’s Purchaser’s prime broker with DTC
through its Deposit Withdrawal Agent Commission (DWAC) system, or any successor
system thereto. The time periods for delivery shall apply to the electronic
transmittals described herein. Any delivery not effected by electronic
transmission shall be effected by delivery of physical certificates. Each
Purchaser agrees that the removal of (x) the restrictive legend referring to the
NOL Lock-Up Agreement from any certificates representing Securities as set forth
in this Section 4.1(c) is predicated upon either (A) a transfer of such
Securities in strict compliance with the terms of the NOL Lock-Up Agreement or
(B) the termination of the restrictions set forth in the NOL Lock-Up Agreement;
and (y) the restrictive legend referring to the Securities Act from any
certificates representing Securities as set forth in this Section 4.1(c) above
is predicated upon the Company’s reliance that such Purchaser would sell,
transfer, assign, pledge, hypothecate or otherwise dispose of such Securities
pursuant to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if such Securities are sold pursuant to a Registration
Statement, they will be sold in compliance with the plan of distribution set
forth therein.

 

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(d) Irrevocable Transfer Agent Instructions. The Company shall execute and
deliver irrevocable instructions to its Transfer Agent, which irrevocable
instructions shall be acknowledged in writing by the Transfer Agent, in the form
of Exhibit F attached hereto (the “Irrevocable Transfer Agent Instructions”).
The Company represents and warrants that no instruction other than the
Irrevocable Transfer Agent Instructions or instructions consistent therewith
referred to in this Section 4.1(d) will be given by the Company to its transfer
agent in connection with this Agreement, and that the Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement, the other Transaction Documents and applicable law.
The Company acknowledges that a breach by it of its obligations under this
Section 4.1(d) will cause irreparable harm to a Purchaser. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 4.1(d) will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this
Section 4.1(d), that a Purchaser shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

(e) Acknowledgment. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or
otherwise transfer any of the Securities or any interest therein without
complying with the requirements of the Securities Act. While any Registration
Statement remains effective, each Purchaser hereunder may, subject to the
provisions of the NOL Lock-Up Agreement, sell the Shares in accordance with the
plan of distribution contained in such Registration Statement and, if it does
so, it will comply therewith and with the related prospectus delivery
requirements unless an exemption therefrom is available. Each Purchaser,
severally and not jointly with the other Purchasers, agrees that if it is
notified by the Company in writing at any time that a Registration Statement
registering the resale of any of the Shares is not effective or that the
prospectus included in such Registration Statement no longer complies with the
requirements of Section 10 of the Securities Act, the Purchaser will refrain
from selling such Shares until such time as the Purchaser is notified by the
Company that such Registration Statement is effective or such prospectus is
compliant with Section 10 of the Exchange Act, unless such Purchaser is able to,
and does, sell such Shares pursuant to an available exemption from the
registration requirements of Section 5 of the Securities Act.

4.2 Reservation of Common Stock. As of the Closing Date, the Company shall have
taken all action necessary to authorize, and reserve for the purpose of issuance
from and after the Closing, no less than the maximum number of shares of Common
Stock issuable as Unit Shares at the Closing, and issuable upon exercise in full
for cash of the Warrants issued at the Closing.

4.3 Furnishing of Information. In order to enable the Purchasers to sell the
Securities under Rule 144 of the Securities Act, commencing on the date hereof
and ending at such time as all Purchasers can freely sell Securities without
restriction under the Securities Act, the Company shall use its commercially
reasonable efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. During such period,
if the Company is not required to file reports pursuant to such laws, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell the
Shares under Rule 144.

4.4 Form D and Blue Sky. The Company agrees to timely file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Purchaser who requests a copy in writing promptly after such filing. The
Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or “Blue Sky” laws of the states
of the United States following the Closing Date.

 

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4.5 No Integration. The Company shall not, and shall use its commercially
reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that will be integrated
with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Purchasers, or that will be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market such that it
would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such
subsequent transaction.

4.6 Securities Laws Disclosure; Publicity. By 4:15 p.m., Eastern Time, on the
Trading Day immediately following the execution of this Agreement, the Company
shall issue a press release (the “Press Release”) reasonably acceptable to the
Purchasers disclosing all material terms of the transactions contemplated
hereby. On or before 5:30 p.m., Eastern Time, on the fourth Trading Day
following the execution of this Agreement (or such earlier time as required by
law), the Company will file a Current Report on Form 8-K with the Commission
describing the terms of the Transaction Documents and including as exhibits to
such Current Report on Form 8-K the material Transaction Documents (including,
without limitation, this Agreement, the forms of Warrant, the Investor Rights
Agreement, and the NOL Lock-Up Agreement). Each Purchaser, severally and not
jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in this Section 4.6, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction), except that
such Purchaser may disclose the terms to its financial, accounting, legal and
other advisors.

4.7 Listing of Securities. In the time and manner required by the Principal
Trading Market, the Company shall prepare and file with such Trading Market an
additional shares listing application covering all of the Securities and shall
use its commercially reasonable efforts to take all steps necessary to maintain,
so long as any other shares of Common Stock shall be so listed, such listing or
if no longer listed on the Principal Trading Market, shall use its commercially
reasonable efforts to take all steps necessary to maintain a listing on another
Trading Market.

4.8 Dispositions and Confidentiality After the Date Hereof. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that neither it,
nor any Affiliate acting on its behalf or pursuant to any understanding with it,
will engage in any transactions in the Company’s securities (including, without
limitation, any Short Sales involving the Company’s securities) during the
period from the date hereof until the earlier of such time as the transactions
contemplated by this Agreement are first publicly announced as described in
Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenants set forth
above shall apply only with respect to the portion of assets managed by the
portfolio manager that has knowledge about the transactions contemplated by this
Agreement. Each Purchaser understands and acknowledges, severally and not
jointly with any other Purchaser, that the Commission currently takes the
position that covering a short position established prior to effectiveness of a
resale registration statement with shares included in such registration
statement would be a violation of Section 5 of the Securities Act, as set forth
in Section 239.10 of the Compliance and Disclosure Interpretations of the staff
of the Division of Corporation Finance with respect Section 5 of the Securities
Act, dated November 26, 2008.

 

24.

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ARTICLE V.

CONDITIONS PRECEDENT TO CLOSING

5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase
Securities at the Closing. The obligation of each Purchaser to purchase Units at
the Closing is subject to the fulfillment to Longitude’s satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Longitude:

(a) Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct as of the date when made and
as of the Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date, which shall
have been true and correct as of such date.

(b) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing.

(c) No Legal Restraint. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any Governmental Authority of competent jurisdiction (collectively, a “Legal
Restraint”) that remains in effect and prohibits the consummation of any of the
transactions contemplated by the Transaction Documents.

(d) Consents and Approvals. The Company shall have obtained in a timely fashion
any and all consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Units at the Closing
(including, without limitation, all Required Approvals and any other necessary
regulatory and third party consents and approvals), all of which shall be and
remain so long as necessary in full force and effect.

(e) No Insolvency Proceedings. The Company shall have not (i) filed, or
consented by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (ii) made an assignment for
the benefit of its creditors, (iii) consented to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (v) been adjudicated as
insolvent or to be liquidated, or (vi) taken corporate action for the purpose of
any of the foregoing.

(f) Senior Notes. Simultaneously with the Closing, the Company shall have
(i) sent by wire transfer to the holders of the Senior Notes the quarterly
interest payments due for the quarters ended December 31, 2008, March 31, 2009
and June 30, 2009, respectively, pursuant to the terms of the Senior Note
Purchase Agreement, and (ii) sent via facsimile the quarterly financial
statements for the period ended June 30, 2009 pursuant to Section 7.1(a) of the
Senior Note Purchase Agreement which reflect Annualized Aggregate Net Product
Sales of the Company (as defined in the Senior Note Purchase Agreement) of at
least $100 million for the quarter ended June 30, 2009.

(g) Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a).

(h) Compliance Certificate. The Company shall have delivered to each Purchaser a
certificate, dated as of the Closing Date and signed by its Chief Executive
Officer, certifying to the fulfillment of the conditions specified in Sections
5.1(a), (b), (d) and (e) in substantially the form attached hereto as Exhibit H.

 

25.

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(i) No Acceleration Notice. The Company shall not have received a notice from
the Majority Holders (as defined in the Senior Note Purchase Agreement)
declaring any or all of the outstanding Senior Notes to be immediately due and
payable.

(j) Board Member Designation. Patrick Enright shall have been appointed to the
Board as a Class I director effective upon the Closing.

5.2 Conditions Precedent to the Obligations of the Company to Sell Securities at
the Closing. The Company’s obligation to sell and issue the Units to each
Purchaser at the Closing is subject to the fulfillment to the satisfaction of
the Company on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:

(a) Representations and Warranties. The representations and warranties made by
such Purchaser in Section 3.2 hereof shall be true and correct as of the date
when made and as of the Closing Date, as though made on and as of such date,
except for representations and warranties that speak as of a specific date,
which shall have been true and correct as of such date.

(b) Performance. Such Purchaser shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by such
Purchaser at or prior to the Closing Date.

(c) No Legal Restraint. No Legal Restraint shall have been enacted, entered,
promulgated or endorsed by any Governmental Authority of competent jurisdiction
that remains in effect and prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.

(d) Consents and Approvals. The Company shall have obtained in a timely fashion
any and all consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Units at the Closing
(including, without limitation, all Required Approvals and any other necessary
regulatory and third party consents and approvals), all of which shall be and
remain so long as necessary in full force and effect.

(e) Purchaser Deliverables. Such Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b).

ARTICLE VI.

TERMINATION

6.1 Termination Prior to the Closing. This Agreement and the purchase and sale
of the Units at the Closing may be terminated at any time following the
Execution Date and prior to the Closing:

(a) by mutual written consent of the Company and Longitude; or

(b) by Longitude or the Company, if the Closing shall not have been consummated
on or prior to July 10, 2009 or such other date, if any, as Longitude and the
Company may agree in writing, provided that the right to terminate this
Agreement pursuant to this Section 6.1(b) shall not be available to any party
hereto whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in the failure of the Closing to be consummated.

 

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6.2 Effect of Termination.

(a) In the event that this Agreement is validly terminated as provided herein,
then neither the Company nor the Purchasers shall have any further obligation or
liability (including arising from such termination) to the other, and no
Purchaser will have any liability to any other Purchaser under the Transaction
Documents as a result therefrom; provided, however, that nothing in this
Section 6.2 shall be deemed to release any party from any liability for any
willful breach by such party of the terms and provisions of this Agreement or
the other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.

(b) The provisions of Article I (Definitions), this Section 6.2, and Article VII
(Miscellaneous) shall survive any termination of this Agreement pursuant to
Section 6.1 hereof.

ARTICLE VII.

MISCELLANEOUS

7.1 Fees and Expenses. The Company shall reimburse Longitude for all reasonable
legal fees and expenses incurred in connection with Longitude’s negotiation,
execution and delivery of this Agreement and the other Transaction Documents,
provided that the Company shall not be required to reimburse such fees and
expenses in excess of one hundred thousand dollars ($100,000.00) in the
aggregate, unless a higher amount is mutually agreed to by the Company and
Longitude in writing. Subject to the foregoing limitation, such fees and
expenses shall be reimbursed by the Company within ten (10) days following
receipt of a written invoice documenting in reasonable detail such fees and
expenses of Longitude. Except as provided above, the Company and the Purchasers
shall each pay the fees and expenses of their respective advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party in connection with the preparation, negotiation, execution, delivery and
performance of this Agreement and the other Transaction Documents. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of the Securities to the Purchasers.

7.2 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules hereto and thereto (including the Disclosure Schedule), contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.

7.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section 7.3 prior to 5:00 p.m., Pacific Time, on a
Trading Day, except in the event that the recipient is located outside the
United States, in which case notice shall be deemed given and effective on the
next Trading Day after the date of transmission, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 5:00 p.m., Pacific Time, on any Trading Day, (c) the
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service with next day delivery specified, or in the event the
recipient is located outside the United States, five (5) Trading Days following
the date of mailing, if sent by internationally recognized overnight courier
service with next day delivery specified, or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications shall be as follows:

 

  (a) If to the Company:

Jazz Pharmaceuticals, Inc.

3180 Porter Drive

Palo Alto, California 94304

Telephone No.: (650) 496-3777

Facsimile No.: (650) 496-3781

Attention: General Counsel

 

27.

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

Cooley Godward Kronish LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, California 94306-2155

Telephone No.: (650) 843-5180

Facsimile No.: (650) 849-7400

Attention: Suzanne Sawochka Hooper, Esq.

 

  (b) If to the Purchasers or Longitude:

Longitude Venture Partners, L.P.

800 El Camino Real, Ste 220

Menlo Park, CA 94025

Telephone No.: (650) 854-5700

Facsimile No.: (650) 854-5705

Attention: Patrick Enright

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

Latham & Watkins LLP

140 Scott Drive

Menlo Park, California 94025

Telephone No.: (650) 328-4600

Facsimile No.: (650) 463-2600

Attention: Ora T. Fisher, Esq.

 Linda J. Lorenat, Esq.

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

7.4 Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchaser or Purchasers holding or
having the right to acquire, at the time of such amendment, at least a
majority-in-interest of the total Unit Shares or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. Each
Purchaser acknowledges that the Purchaser or Purchasers holding or having the
right to acquire, at the time of such amendment, at least a majority-in-interest
of the total Unit Shares have the power to bind all of the Purchasers.

 

28.

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7.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

7.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the prior written consent of the Purchasers
holding or having the right to acquire, at the time of such consent to
assignment, at least a majority-in-interest of the total Unit Shares. Subject to
Section 4.1(b) and the terms of the NOL Lock-Up Agreement, any Purchaser may
assign its rights hereunder in whole or in part to any Person to whom such
Purchaser assigns or transfers any Securities in compliance with the Transaction
Documents and applicable law.

7.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

7.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
California, without regard to the principles of conflicts of law thereof. Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.

7.9 Survival. Notwithstanding any investigation made by or on behalf of the
Company or the Purchasers or any person controlling any of them, the
representations and warranties contained herein shall survive the execution of
this Agreement, the delivery to the Purchasers of the Units being purchased and
the payment therefor for a period of twenty-four (24) months following the
Closing. For the avoidance of doubt, the representations and warranties will
continue to survive until the final resolution of any claim brought within such
twenty-four (24) month period against the Company or any Purchaser, as
applicable, with respect to such representations and warranties. The agreements
and covenants contained herein shall survive for the applicable statute of
limitations.

7.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

7.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

29.

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7.12 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon the execution by the holder thereof of a customary
lost certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and, with respect to Shares, the Transfer Agent for any
losses in connection therewith or, if required by the Transfer Agent, a bond in
such form and amount as is required by the Transfer Agent. If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

7.13 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.

7.14 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be deemed to be amended to appropriately account for such event.

7.15 Waiver of Conflicts. Each party to this Agreement acknowledges that Company
Counsel, outside general counsel to the Company, has in the past performed and
is or may now or in the future represent one or more Purchasers or their
affiliates in matters unrelated to the transactions contemplated by this
Agreement (the “Financing”), including representation of such Purchasers or
their affiliates in matters of a similar nature to the Financing. The applicable
rules of professional conduct require that Company Counsel inform the parties
hereunder of this representation and obtain their consent. Company Counsel has
served as outside general counsel to the Company and has negotiated the terms of
the Financing solely on behalf of the Company. The Company and each Purchaser
hereby (a) acknowledge that they have had an opportunity to ask for and have
obtained information relevant to such representation, including disclosure of
the reasonably foreseeable adverse consequences of such representation;
(b) acknowledge that with respect to the Financing, Company Counsel has
represented solely the Company, and not any Purchaser or any stockholder,
director or employee of the Company or any Purchaser; and (c) gives its informed
consent to Company Counsel’s representation of the Company in the Financing.

[Signature Pages Follow]

 

30.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Securities
Purchase Agreement to be duly executed by its authorized signatory as of the
date first indicated above.

 

COMPANY: JAZZ PHARMACEUTICALS, INC. By:  

/s/    Bruce C. Cozadd

Name:   Bruce C. Cozadd Title:   Chief Executive Officer

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

NAME OF PURCHASER:

Longitude Venture Partners, L.P.

a Delaware Limited Partnership

By:   Longitude Capital Partners, LLC Its:   General Partner By:  

/s/    Patrick Enright

   (signature) Name:  

Patrick Enright

   (printed name) Title:   Managing Member Subscription Amount: $6,862,459.56
Tax ID No.: 26-1166019 Telephone No.: 650-854-5700 Facsimile No.: 650-854-5705
Attention: Carolyn Helms

 

Delivery Instructions: c/o Longitude Capital Street: 800 El Camino, Suite 220
City/State/Zip: Menlo Park, CA 94025 Attention: Carolyn Helms Telephone No.:
650-854-5700

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

IN WITNESS WHEREOF, each of the parties hereto has caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

NAME OF PURCHASER:

Longitude Capital Associates, L.P.

a Delaware Limited Partnership

By:   Longitude Capital Partners, LLC Its:   General Partner By:  

/s/    Patrick Enright

   (signature) Name:  

Patrick Enright

   (printed name) Title:   Managing Member Subscription Amount: $137,538.24 Tax
ID No.: 26-1407371 Telephone No.: 650-854-5700 Facsimile No.: 650-854-5705
Attention: Carolyn Helms

 

Delivery Instructions: c/o Longitude Capital Street: 800 El Camino, Suite 220
City/State/Zip: Menlo Park, CA 94025 Attention: Carolyn Helms Telephone No.:
650-854-5700

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EXHIBIT LIST:

 

Exhibit A:    Form of Warrant Exhibit B:    Form of Investor Rights Agreement
Exhibit C:    NOL Lock-Up Agreement Exhibit D:    Stock Certificate
Questionnaire Exhibit E:    Form of Opinion of Company Counsel Exhibit F:   
Irrevocable Transfer Agent Instructions Exhibit G:    Form of Secretary’s
Certificate Exhibit H:    Form of Officer’s Certificate Exhibit I:    Form of
Management Rights Letter Exhibit J:    Form of Waiver and Amendment Agreement