Exhibit 10.2

FIRST AMENDMENT

TO

ASSET PURCHASE AGREEMENT

This First Amendment to the Asset Purchase Agreement (as defined below), dated
as of June 7, 2005 (this “First Amendment”), is by and between Xanodyne
Pharmaceuticals, Inc., a Delaware corporation (“Purchaser”), aaiPharma Inc., a
Delaware corporation (“Parent”), and aaiPharma, LLC, a Delaware limited
liability company (together with Parent, “Sellers”).

RECITALS

     A.      This First Amendment amends that certain Asset Purchase Agreement
(the “Asset Purchase Agreement”), by and among Sellers and Purchaser, dated as
of May 6, 2003.

     B.      Sellers and Purchaser desire to modify the Asset Purchase
Agreement, pursuant to Section 13.5 of the Asset Purchase Agreement, upon the
terms and conditions set forth in this First Amendment.

     C.      Capitalized terms contained herein shall have the meaning ascribed
to them in the Asset Purchase Agreement, unless otherwise expressly set forth
herein.

AGREEMENT

NOW THEREFORE, Sellers and Purchaser hereby agree as follows:

ARTICLE I
AMENDMENTS

     Section 1.1      The definition of “Alternative Transaction” in the Asset
Purchase Agreement is hereby amended and restated in its entirety to read as
follows:

“Alternative Transaction” means (a) the sale (whether by stock sale, merger,
consolidation or otherwise) of all or a substantial portion of the capital stock
of Sellers, (b) the sale of all or any of the Purchased Assets pursuant to the
Bidding Procedures, or (c) a transaction or series of transactions outside or
independent of the Bidding Procedures that result in the Sellers realizing not
less than an aggregate of $75,000,000 in cash and/or fair market value of debt
and/or equity securities (such fair market value to be determined by the
Bankruptcy Court or, if Sellers shall not then be the subjects of a Chapter 11
Case, then jointly by Sellers and Purchaser or, failing such joint
determination, by an independent nationally recognized investment banking firm
jointly selected by Sellers and Purchaser or, failing such joint selection, by
such an independent nationally recognized investment banking firm selected by
two other investment banking firms selected one each by Sellers and Purchaser)
from the sale or transfer of Purchased Assets, in each case to a Person other
than Purchaser, excluding the sale of Inventory in the Ordinary Course of

 

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Business; provided, however, that a sale by a chapter 7 trustee will not
constitute an “Alternative Transaction.”

     Section 1.2      The definition of “Restructuring Transaction” in the Asset
Purchase Agreement is hereby amended and restated in its entirety to read as
follows:

"‘Restructuring Transaction’ means (a) a recapitalization transaction involving,
in whole or in part, Sellers and its existing security holders or creditors, or
(b) a transaction or series of transactions, including by way of a plan of
reorganization, in connection with a chapter 11 liquidation or reorganization or
other continuation of Seller’s business relating to some or all of the Purchased
Assets; provided, however, that a sale by a chapter 7 trustee will not
constitute an “Restructuring Transaction.”

     Section 1.3      Section 7.1(a) of the Asset Purchase Agreement is hereby
amended and restated in its entirety to read as follows:

"(a) Sellers acknowledge and agree that Purchaser has expended considerable time
and expense in connection with this Agreement and the negotiation thereof and
the identification and quantification of assets of Sellers. In consideration
therefor, Sellers shall file with and seek the approval of the Bankruptcy Court
of the Approval Motion, including the Break-Up Fee and Expense Reimbursement,
and the entry by the Bankruptcy Court of the Bidding Procedures Order approving
the payment of the Break-Up Fee in an amount equal to Four Million Dollars
($4,000,000) and the Expense Reimbursement in an amount not to exceed One
Million Seven Hundred Fifty Thousand Dollars ($1,750,000) (not including any
amounts previously paid by Sellers) for Purchaser’s reasonable out-of-pocket
documented expenses incurred in connection with the transactions contemplated
hereby and the financing thereof and deeming the Break-Up Fee and the Expense
Reimbursement as administrative priority expense claims under Sections 503(b)
and 507(a)(1) of the Bankruptcy Code.”

     Section 1.4      Section 7.1(d) of the Asset Purchase Agreement is hereby
amended and restated in its entirety to read as follows:

"(d) If on or prior to twelve (12) months following the date of termination of
this Agreement Sellers file with the Bankruptcy Court a Restructuring
Transaction or enter into a Restructuring Transaction, Purchaser shall have an
allowed administrative priority expense claim under Sections 503(b) and
507(a)(1) of the Bankruptcy Code for an Expense Reimbursement in an amount equal
to Three Million Dollars ($3,000,000) (in each case less any amount previously
paid to Purchaser in accordance with Section 7.1(b)), without regard to actual
expenses incurred, and Sellers shall pay such amount to Purchaser on the first
(1st) Business Day after consummation of such Restructuring Transaction.”

     Section 1.5      Exhibit F of the Asset Purchase Agreement is hereby
amended and restated in its entirety to read as set forth in Annex A hereto.

     Section 1.6      Exhibit I of the Asset Purchase Agreement is hereby
amended and restated in its entirety to read as set forth in Annex B hereto.

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ARTICLE II
MISCELLANEOUS

     Section 2.1      This First Amendment contains the entire agreement of the
parties with respect to the subject matter covered in this First Amendment.

     Section 2.2      This First Amendment shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed in such State.

     Section 2.3      Except as amended hereby, all terms, conditions and
provisions of the Asset Purchase Agreement remain in full force and effect, and
the Asset Purchase Agreement shall continue in full force and effect.

     Section 2.4      This First Amendment may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.

[Signature Page Immediately Follows]

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     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.

         
 
  XANODYNE PHARMACEUTICALS, INC.
 
       
 
  By:   /s/ William A. Nuerge
 
       
 
      Name: William A. Nuerge
Title: Chief Executive Officer
 
       
 
       
 
  AAIPHARMA INC.
 
       
 
  By:   /s/ Ludo J. Reynders
 
       
 
      Name: Ludo J. Reynders, Ph. D.
Title: President and Chief Executive Officer
 
       
 
       
 
  AAIPHARMA, LLC.
 
       
 
  By:   /s/ Ludo J. Reynders
 
       
 
      Name: Ludo J. Reynders, Ph. D.
Title: President and Chief Executive Officer

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