Exhibit 10.1
EXECUTION COPY
SETTLEMENT AGREEMENT
          This Settlement Agreement, dated as of June 9, 2009 (the “Effective
Date”), is by and among Purdue Pharma L.P., a Delaware limited partnership (on
its own behalf and as successor in interest to The Purdue Pharma Company, a
Delaware general partnership), The P.F. Laboratories, Inc., a New Jersey
corporation, and Purdue Pharmaceuticals L.P., a Delaware limited partnership
(the foregoing are individually and collectively referred to as the “Purdue
Companies”), and KV Pharmaceutical Company, a Delaware corporation (together
with its Affiliates, “KV”). The Purdue Companies and KV are sometimes referred
to herein individually as a “Party” and collectively as the “Parties.”
WITNESSETH:
          WHEREAS, the Purdue Companies are the owners of United States patent
number 5,508,042 (the “’042 Patent”), and prior to their expiration were the
owners of United States patent numbers 5,226,331 (the “’331 Patent”), 5,549,912
(the “’912 Patent”) and 5,656,295 (the “’295 Patent”), relating to and
protecting controlled-release oxycodone products, including the product
OxyContin®, a controlled-release oxycodone product marketed and sold under NDA
No. 20-553 (“OxyContin®”);
          WHEREAS, the Purdue Companies and KV are involved in litigation, Civil
Action No. 07 Civ. 3972, Civil Action No. 07 Civ. 3973 and Civil Action No. 07
Civ. 4810 (SHS) (collectively, the “Action”) in the United District Court for
the Southern District of New York (the “District Court”) (Civil Action Nos. 07
Civ. 3972 and 07 Civ. 3973 were originally pending in the United States District
Court for the District of Delaware as Civil Action No. 07-CV-0032-_ _ _ and
07-CV-0077-_ _ _, but were transferred by the Judicial Panel on Multidistrict
Litigation, In re OxyContin Antitrust Litigation, Docket No. 1603, as of May 17,
2007), concerning, inter alia, the validity and enforceability of the ’042
Patent, the ’912 Patent and the ’295 Patent, as well as the infringement by KV
of the ’042 Patent, resulting from KV requesting approval (the “FDA Approval”)
from the United States Food and Drug Administration (the

 

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“FDA”) of generic versions of OxyContin® through its submission of Abbreviated
New Drug Application (“ANDA”) No. 78-506 (collectively with all amendments and
supplements thereto, the “KV ANDA”);
          WHEREAS, the KV ANDA contains “Paragraph IV” certifications under 21
U.S.C. §355(j)(2)(A)(vii)(IV) and 21 C.F.R. § 314.94(a)(12)(i)(A)(4) alleging
that the ’042 Patent, the ’912 Patent and the ’295 Patent are invalid and
unenforceable and therefore cannot be infringed by KV’s manufacture, use or sale
of generic versions of controlled-release oxycodone products, including
OxyContin®, pursuant to the KV ANDA (the “KV Products”), and the Purdue
Companies have disputed such contentions;
          WHEREAS, in the Action, the Purdue Companies have asserted claims
against KV and KV has asserted claims and counterclaims against the Purdue
Companies, including violations of federal and state antitrust and
anticompetition laws, which the Parties now seek to resolve without further
litigation; and
          WHEREAS, the KV ANDA has neither tentative approval nor final approval
from the FDA and is currently subject to the limitations on final approval
pursuant to 21 U.S.C. §355(j)(5)(B)(iii).
          NOW THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the Parties agree as follows:
          1. (a) On the Effective Date, the Purdue Companies and KV are
executing and delivering to each other the following documents:
                    (i) a Patent License Agreement, in the form of
Exhibit 1(a)(i) hereto (the “Patent License Agreement”);
                    (ii) a Distribution and Supply Agreement in the form of
Exhibit 1(a)(ii) hereto (the “Distribution and Supply Agreement”);
                    (iii) a Risk Map License Agreement, in the form of
Exhibit 1(a)(iii) hereto;
                    (iv) a Release by the Purdue Companies, in the form of
Exhibit 1(a)(iv) hereto (the “Purdue Release”); and

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                    (v) a Release by KV, in the form of Exhibit 1(a)(v) hereto
(the “KV Release”, and, together with the Purdue Release, the “Releases”).
               (b) On the Effective Date, the Purdue Companies and KV, through
their respective attorneys of record, are executing the Consent Judgment, in the
form of Exhibit 1(b) hereto (the “Consent Judgment”) and each of the Purdue
Companies and KV are causing their respective attorneys of record in the Action
to execute and deliver one copy of the Consent Judgment to the attorneys for the
Purdue Companies and one copy of the Consent Judgment to the attorneys for KV,
as applicable, to be held by each of them until submitted to the District Court
in accordance with paragraph 3 of this Settlement Agreement. Unless otherwise
expressly set forth herein, as used herein, the term “Settlement Agreement”
shall refer to this Settlement Agreement, and such Settlement Agreement,
together with each of the Exhibits attached hereto, shall be referred to as the
“Settlement Documents.” The term “oxycodone” shall include oxycodone base and
any of its salts and “Oxycodone API” shall mean oxycodone as an active
pharmaceutical ingredient. The definitions of the terms herein apply equally to
the singular and plural of the terms defined. Whenever the context may require,
any pronoun will include the corresponding masculine, feminine and neuter forms.
The words “include”, “includes” and “including” will be deemed to be followed by
the phrase “without limitation”. Unless the context requires otherwise, (A) any
definition of or reference to any agreement, instrument or other document herein
will be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or therein), and (B) the words “herein”, “hereof” and “hereunder”, and words of
similar import, will be construed to refer to this Settlement Agreement in its
entirety and not to any particular provision hereof. For purposes of the
Settlement Documents, “Affiliate” means, as to any Party, any person, firm,
trust, partnership, corporation, company or other entity or combination thereof,
which directly or indirectly controls, is controlled by or is under common
control with such Party, provided that for purposes of each of the Settlement
Documents, The Purdue Frederick Company Inc., a New York corporation (d/b/a The
Purdue Frederick Company) shall not be considered

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an “Affiliate” of any of the Purdue Companies. The terms “control” and
“controlled” mean ownership of fifty percent (50%) or more, including ownership
by trusts with substantially the same beneficial interests, of the voting and
equity rights of such person, firm, trust, partnership, corporation, company or
other entity or combination thereof or the power to direct the management of
such person, firm, trust, partnership, corporation, company or other entity or
combination thereof.
               (c) KV agrees that it will make, have made, use, offer to sell
and sell the KV Products only in accordance with the Patent License Agreement.
               (d) KV agrees that, notwithstanding anything to the contrary set
forth in any of the Settlement Documents, KV will provide the Purdue Companies
with at least five (5) business days advance written notice prior to any initial
launch shipment of any of the KV Products.
          2. (a) Within two business days after the Effective Date, the Parties
shall comply with the requirements of Title XI, Subtitle B of the Access to
Affordable Pharmaceuticals Act (The Medicare Prescription Drug Improvement and
Modernization Act of 2003, Pub. L. 108-173), as the same may be amended from
time to time (the “Act”), by filing all necessary copies of the Settlement
Documents (the “MMA Filing”) with the Federal Trade Commission (the “FTC”) and
the Antitrust Division of the Department of Justice (“DOJ”) (the FTC and the DOJ
each shall be referred to as an “Agency”). The Parties will use commercially
reasonable efforts to coordinate the foregoing filings and any responses
thereto, to make such filings promptly and to respond promptly to any requests
for additional information. Each Party will keep the other Party reasonably
informed of any such communication, provided that neither Party is required to
disclose to the other confidential information concerning such Party that was
communicated by such Party to an Agency. Neither Party will disclose the
confidential information of the other Party to an Agency without such other
Party’s prior written consent (not to be unreasonably withheld, conditioned or
delayed).
               (b) If, subsequent to the Effective Date, an Agency Objection (as
defined below) is raised or an Agency Action (as defined below) is brought, then
the Parties shall in good faith use commercially reasonable efforts to revise
the Settlement Documents in a manner which “reasonably

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addresses” (as that term is defined below) such Agency Objection or Agency
Action in a manner which does not materially change the economic value of the
transactions contemplated by the Settlement Documents for either Party. If such
commercially reasonable efforts are not successful, or if it is not possible to
reasonably address such Agency Objection or Agency Action in a manner which does
not materially change the economic value of the transactions contemplated by the
Settlement Documents, then notwithstanding anything herein to the contrary, the
Settlement Documents shall remain in full force and effect, including any
revisions that the Parties shall have mutually agreed upon in writing.
Notwithstanding the foregoing, if a final non-appealable judgment is entered by
a court of competent jurisdiction invalidating any of the provisions of
paragraphs 5(a), 5(b), 5(c) or 20 of this Settlement Agreement, the Releases or
Sections 1, 2 or 3 of the Patent License Agreement or any of the provisions of
Article II or Article IV of the Distribution and Supply Agreement, then the
Settlement Documents shall become null and void and have no legal effect. For
purposes of this paragraph 2(b), (x) the term “Agency Action” shall mean either
Agency has brought a judicial or administrative proceeding against either of the
Parties related to the terms of the Settlement Documents and (y) the term
“Agency Objection” shall mean (i) the Director of the FTC’s Bureau of
Competition or a Section Chief of the Antitrust Division of DOJ, as applicable,
or a staff person acting expressly on behalf of any of those individuals, has
notified either Party in writing that the staff of the Agency is recommending
that the Agency institute its own judicial or administrative proceeding against
either of the Parties related to the terms of the Settlement Documents, or
(ii) either the Assistant Director or Deputy Assistant Director for Healthcare
Services and Products Division of the FTC’s Bureau of Competition, or another
staff person acting expressly on behalf of any of those individuals (each
referred to herein as “Reviewing Agency Staff”), has notified either of the
Parties in writing indicating that the Reviewing Agency Staff has reviewed the
Settlement Documents and stating a specific objection regarding the possible
competitive effects of any of the terms of the Settlement Documents. A
notification from the Reviewing Agency Staff of a decision to commence an
investigation regarding the Settlement Documents without stating a specific
objection shall not constitute an Agency Objection. For purposes of this
paragraph 2(b), the Parties shall have “reasonably addressed” any Agency

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Objection or Agency Action when (a) the FTC (including its Reviewing Agency
Staff) has indicated to the Parties (in writing to either of the Parties or
orally to both Parties) that such Agency Objection has been resolved or if the
FTC indicates that it otherwise does not intend to expend substantial Agency
resources in taking further action at such time with respect to the Settlement
Documents, (b) such Agency Objection or Agency Action is withdrawn without any
further challenge to the Settlement Documents, or (c) the Parties mutually agree
in writing.
          3. On the Effective Date, counsel for the Purdue Companies and counsel
for KV shall jointly inform the District Court of the execution of this
Settlement Agreement. Within two (2) business days following the Effective Date,
counsel for the Purdue Companies or counsel for KV will submit the fully
executed Consent Judgment to the District Court for signing and entry, and will
simultaneously provide the District Court with a copy of the Settlement
Documents in camera and to the extent requested by the District Court, file the
Settlement Documents under seal. If for any reason the District Court does not
approve the Consent Judgment and enter it as an order of the District Court as
submitted, the Parties agree to confer promptly in good faith and to use
commercially reasonable efforts to modify the Consent Judgment or take such
other action consistent with the Settlement Documents as is required to overcome
the District Court’s objections or modifications, and to secure entry of the
Consent Judgment as submitted or with agreed-upon modifications, failing which,
notwithstanding anything herein to the contrary, (x) the Settlement Documents
shall remain in full force and (y) the Parties agree to take all such actions as
may be reasonably necessary to dismiss the claims of the Parties against each
other in the Action without prejudice; provided, however, that neither of the
Parties is under any obligation to revise the Settlement Documents in a manner
which materially changes the economic value of the transactions contemplated by
the Settlement Documents for such Party. The date on which the Consent Judgment
is entered, following the modification of such Consent Judgment, if any, in
accordance with this paragraph 3, or if the Consent Judgment is not entered, the
date on which the Action is dismissed, shall be the “Consent Judgment Date.” In
the event that the Settlement Documents become null and void as provided in
paragraph 2 herein, neither the provisions of the Settlement Documents, nor the
Settlement Documents themselves

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(except for the provisions of the Settlement Documents which remain in effect as
specified in paragraph 2 hereof), may be offered into evidence, or be referred
to in any testimonial or other evidence, by either Party or any of their
Affiliates at any trial, action or other proceeding pertaining to the subject
matter hereof, nor shall anything herein be construed as an admission or waiver
as to any factual or legal matter by either Party or any of their respective
Affiliates.
          4. KV acknowledges and agrees that (a) the ’042 Patent is valid,
enforceable and infringed, and the ’331 Patent, the ’912 Patent and the ’295
Patent (the ’331 Patent, the ’912 Patent and the ’295 Patent being collectively
referred to herein as the “Purdue Patents”) were valid and enforceable and would
have been infringed during their respective terms, as to oxycodone products
made, used, sold or offered for sale or imported pursuant to the KV ANDA, and
(b) the ’042 Patent is valid and enforceable, and will be valid and enforceable,
in any future causes of action or litigation involving KV, its successors or
assigns, including any other or future causes of action or litigation respecting
different or future products, and the Purdue Patents were valid and enforceable
during their respective terms.
          5. (a) KV agrees that, other than in accordance with all of the terms
and conditions of the Settlement Documents, KV will not, directly or indirectly,
alone or in cooperation with any other person, make, have made, use, sell, ship
or offer to sell, import or distribute, or authorize, permit or solicit others
to make, have made, use, sell, ship or offer to sell, import or distribute, or
facilitate in any manner, indemnify others regarding, or participate in the
profits of others arising from, the sale of any controlled-release oxycodone
product that is described in or covered by the KV ANDA or that would infringe
any of the claims of the ’042 Patent; provided, however, that subject to the
proviso of paragraph 5(c) and paragraph 20, the provisions of this paragraph
5(a) shall not apply following the date (the “Terminal Date”) which is the
earliest to occur of (A) the expiration of the ’042 Patent, plus any period of
exclusivity under the Federal Food, Drug and Cosmetic Act, 21 U.S.C.
Sections 301, et seq., including any amendment thereof; and (B) the date on
which, following the entry of a judgment in another case or proceeding after the
Effective Date, each and every asserted claim of the ’042 Patent is either
(I) unenforceable or (II) invalid; provided, however, that in the case of either
clause (I) or (II) above, the

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mandate affirming the judgment in such other case or proceeding is issued by the
United States Court of Appeals for the Federal Circuit following appeal of such
judgment, or the time for appeal from that judgment has lapsed.
               (b) KV agrees that it will not, directly or indirectly, alone or
in cooperation with any other person, make, have made, use, sell, ship, offer to
sell, import or distribute, or authorize, permit or solicit others to make, have
made, use, sell, ship, offer to sell, import or distribute, or facilitate in any
manner, indemnify others regarding, or participate in the profits of others
arising from, the sale of any controlled-release oxycodone product, including
10, 15, 20, 30, 40, 60 and 80 mg dosage strengths, (i) that is substantially as
described in the KV ANDA in all foreign countries in which there is a Patent
listed in Exhibit 2 hereto (the “Foreign Patents”), or (ii) in a foreign country
where the making, using, selling or offering for sale, import or distribution of
such product would infringe any of the claims of any of the Foreign Patents in
such country; provided, however, that subject to the proviso of paragraph 5(c)
and paragraph 20, the provisions of this paragraph 5(b) shall not apply on a
country-by-country basis following the date which is the later of (x) (A) the
expiration date of the last to expire of the Foreign Patents and
(B) November 25, 2012, and (y) the date on which a court of competent
jurisdiction or applicable patent office enters a final, non-appealable judgment
or ruling, providing that with respect to each and every asserted claim of the
Foreign Patents in suit in such country that such Foreign Patents are
unenforceable or invalid.
               (c) Except as provided in paragraphs 5(a) and 5(b) of this
Settlement Agreement and consistent with the proviso of this paragraph 5(c) and
paragraph 20 of this Settlement Agreement, nothing set forth in the Settlement
Documents shall be deemed to prevent KV from (i) making, having made, using,
importing, selling or offering for sale any product which does not infringe the
Purdue U.S. Patent Family (as defined in paragraph 6(a)) or Foreign Patents, or
(ii) performing any act protected by 35 U.S.C. § 271(e)(1); provided, however,
that nothing set forth in the Settlement Documents is intended to license or
authorize KV to engage in any of the activities described above in this
paragraph 5(c), or otherwise to make, have made, use, import, sell or offer for
sale any product, in any case, unless

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specifically permitted and authorized by Section 1 of the Patent License
Agreement, and the Purdue Companies reserve all of their rights to assert a
claim of patent infringement for any of such activities and seek all remedies
available to them at law or in equity with respect to such claim.
               (d) KV shall take all actions reasonably necessary to obtain FDA
Approval of the KV ANDA as soon as reasonably practicable and shall use its
commercially reasonable efforts in connection with such actions; provided that
such obligation shall terminate upon the effectiveness of the Distribution and
Supply Agreement. KV acknowledges that it is solely responsible and accepts full
risk for obtaining the FDA Approval of the KV ANDA.
          6. (a) KV agrees that it will not initiate, file, participate,
finance, aid, raise a defense or assist in (i) any action or proceeding that
challenges the validity, patentability, priority of invention or other claim to
priority, or enforceability of the ’042 Patent or any of the Purdue Patents and
(ii) any reexamination, protest, observation, comment, opposition, interference
or other action or proceeding in the United States Patent and Trademark Office
or any federal court of the United States challenging the validity,
patentability, priority of invention or other claim to priority, or
enforceability of the ’042 Patent or any of the Purdue Patents, or any other
patent or patent application claiming priority to application numbers U.S.
800,549 (filed November 27, 1991), U.S. 81,302 (filed June 18, 1993) or PCT/US
92/10146 (filed November 25, 1992) (any and all such ’042 Patent, Purdue
Patents, other patents and patent applications are collectively referred to
herein as the “Purdue U.S. Patent Family”). The provisions of this paragraph
6(a) shall not apply: (x) to the extent that KV directly or indirectly engages
in conduct pursuant to the order of a court of competent jurisdiction, which
conduct would otherwise be prohibited by this paragraph 6(a), provided that KV
has not directly or indirectly initiated or participated in a request that such
court issue such order; or (y) to the extent required by law (excluding pursuant
to private contractual arrangements).
               (b) KV agrees that it will not initiate, file, finance,
participate, aid, raise a defense or assist in (i) any action or proceeding that
challenges the validity, patentability, priority of invention or other claim to
priority, or enforceability of any of the Foreign Patents, (ii) any
reexamination,

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protest, observation, comment, interference, opposition, or other action or
proceeding in any foreign patent office or court challenging the validity,
patentability, priority of invention or other claim to priority, or
enforceability of any of the Foreign Patents, and (iii) any application seeking
compulsory licensing under a claim within the Foreign Patents. The provisions of
this paragraph 6(b) shall not apply on a country-by-country basis (x) following
the date which is the later of: (A) the expiration date of the last to expire of
the Foreign Patents and (B) November 25, 2012; (y) to the extent that KV
directly or indirectly engages in conduct pursuant to the order of a court of
competent jurisdiction, which conduct would otherwise be prohibited by this
paragraph 6(b), provided that KV has not directly or indirectly initiated or
participated in a request that such court issue such order; and (z) to the
extent required by law (excluding pursuant to private contractual arrangements).
               (c) KV will not take any action or waive any right, including
(i) the right to assert a conflict of interest or (ii) rights under a
confidentiality agreement or order, which would have the effect of permitting
any of its attorneys of record in the Action to take any action on behalf of a
third party which, if taken by KV, would be prohibited by paragraphs 6(a) or
6(b) of this Settlement Agreement. The provisions of the immediately preceding
sentence shall not apply (x) to the extent that KV directly or indirectly
engages in conduct pursuant to the order of a court of competent jurisdiction,
which conduct would otherwise be prohibited by this paragraph 6(c), provided
that KV has not directly or indirectly initiated or participated in a request
that such court issue such order; or (y) to the extent required by law
(excluding pursuant to private contractual arrangements). KV will not provide to
any third party any confidential information or attorney work product relating
to the Action or the KV ANDA, except as required by statute, ordinance,
regulation, court order or compulsory legal process, provided that KV will
request confidential treatment with respect to any confidential information or
attorney work product disclosed pursuant hereto.
          7. The Purdue Companies represent and warrant as of the Effective Date
that (a) each of them has all necessary partnership or corporate, as applicable,
power and authority to execute and deliver the Settlement Documents and to
perform its obligations thereunder, (b) the execution, delivery and

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performance of the Settlement Documents have been duly and validly authorized by
each of them and they are delivering to KV an incumbency certificate
simultaneously with the execution of this Settlement Agreement attesting to the
incumbency of each of the officers executing this Settlement Agreement and the
other Settlement Documents on behalf of the Purdue Companies, (c) there is no
other agreement, whether written or oral, among the Parties hereto with respect
to the subject matter of the Settlement Documents other than as set forth herein
and therein, and (d) the Purdue Companies or their Affiliates collectively own
all right, title and interest in and to each and every patent and/or patent
application within the Purdue U.S. Patent Family and have not granted or
otherwise transferred to any third party any right to enforce any patent or
patent application included in the Purdue U.S. Patent Family, or any right to
practice any patent or patent application included in the Purdue U.S. Patent
Family that would conflict with this Settlement Agreement. Upon execution and
delivery of the Settlement Documents by each of the Purdue Companies, the
Settlement Documents shall constitute the legal, valid and binding agreement of
each of them, enforceable against each of them in accordance with their
respective terms and conditions, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforceability of
creditors’ rights generally and other general equitable principles which may
limit the right to obtain certain remedies.
          8. KV represents and warrants as of the Effective Date that (a) KV has
all necessary corporate, limited liability company or partnership, as
applicable, power and authority to execute and deliver the Settlement Documents
and to perform KV’s obligations thereunder, (b) the execution, delivery and
performance of the Settlement Documents have been duly and validly authorized by
KV and KV is delivering to the Purdue Companies an incumbency certificate
simultaneously with the execution of this Settlement Agreement attesting to the
incumbency of each of the officers executing this Settlement Agreement and the
other Settlement Documents on behalf of KV, (c) there is no other agreement,
whether written or oral, among the Parties hereto with respect to the subject
matter of the Settlement Documents other than as set forth herein and therein,
(d) KV owns all right, title and interest in and to the KV ANDA, no other person
or entity has any rights under the KV ANDA, and KV has not otherwise transferred
or

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assigned any of its rights under the KV ANDA, (e) KV has not transferred or
assigned any of its rights or claims with respect to the Action, (f) KV does not
have any other pending ANDA relating to controlled-release oxycodone products
and has no current plans to file any other ANDA relating to any such product,
(g) KV is not subject to or aware of an order of a court of competent
jurisdiction of the type referred to in paragraph 6(a)(x), paragraph 6(b)(y) or
paragraph 6(c)(x) hereof, (h) KV is not a party to or bound by a contractual
arrangement of the type referred to in paragraph 6(a)(y), paragraph 6(b)(z) or
paragraph 6(c)(y) hereof, (i) the only dosage strengths for which KV has
requested FDA Approval under the KV ANDA are 10, 15, 20, 30, 40, 60 and 80 mg.,
(j) no Affiliate of KV has offered to sell, sold, marketed, shipped, distributed
or imported any KV Products, (k) KV has not appointed any third party to make,
have made, use, offer to sell, sell, ship, distribute or import the KV Products
and (l) KV has not offered to sell, sold, marketed, shipped, distributed or
imported the KV Products to third parties for resale by such third parties for
and on behalf of KV. Upon execution and delivery of the Settlement Documents by
KV, the Settlement Documents shall constitute the legal, valid and binding
agreements of KV, enforceable against it in accordance with their respective
terms and conditions, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors’
rights generally and other general equitable principles which may limit the
right to obtain certain remedies. KV shall be liable for (i) any breach of the
provisions of the Settlement Documents by any of its Affiliates and (ii) any
failure by KV to cause its Affiliates to comply with the Settlement Documents.
          9. Except as (a) required by statute, ordinance or regulation,
(b) required pursuant to compulsory legal process, (c) necessary for the
exercise of the rights granted to the Parties under the Settlement Documents,
(d) expressly permitted under this paragraph 9, (e) set forth in the press
releases attached hereto as Exhibit 9(e) to be issued by the respective Parties
at 7:00 AM EDT on the day following the Effective Date, or as otherwise agreed
to by the Parties, or (f) set forth in the Current Report on Form 8-K attached
hereto as Exhibit 9(f), none of the Purdue Companies, KV, or any of their
respective Affiliates will publicly announce or otherwise disclose to any third
party any of the terms of the Settlement Documents, without the prior written
approval of the other Party. Except as set forth

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above in paragraphs 9(e) and (f), the Parties will only release public
announcements of the execution of the Settlement Documents in forms to be
mutually agreed to by the Parties, provided if a Party is disclosing information
relating to the Settlement Documents because it is required to do so to comply
with statutory, regulatory or legal process requirements, including its
reporting requirements under the Securities Exchange Act of 1934, as amended, or
any national securities exchange on which it is listed, which may include the
aggregate financial effects of the different options under the Settlement
Documents on KV’s financial condition, but shall not include specific timing,
pricing or units, such Party intending to make such disclosure shall give the
other Party at least two (2) business days prior notice in writing of the text
of the intended disclosure, unless such statutory, regulatory or legal process
requirements would require earlier disclosure, in which event, the notice shall
be provided as early as practicable. A disclosing Party agrees to request
confidential treatment with respect to the terms of the Settlement Documents and
to use commercially reasonable efforts to have redacted such provisions of the
Settlement Documents as the Parties may agree from any copies filed pursuant to
such statutory, regulatory or legal process requirements. If either Party
determines that it will be required to file the Settlement Documents as provided
above, promptly after the giving of notice by such Party as contemplated above,
the Parties will use commercially reasonable efforts to agree on those
provisions of the Settlement Documents that the Parties will seek to have
redacted as provided above. Notwithstanding anything to the contrary above,
(i) the Purdue Companies may disclose the terms of the Settlement Documents to
(x) present, former or future co-promoters of controlled-release oxycodone
products who have a legitimate business reason to know such terms, subject to
all such co-promoters keeping the terms of the Settlement Documents
confidential, and (y) third parties in connection with patent litigation
involving the Purdue U.S. Patent Family or the Foreign Patents or in connection
with settlement discussions and agreements with alleged infringers of the Purdue
U.S. Patent Family or the Foreign Patents, subject to all such third parties
keeping the terms of the Settlement Documents confidential, and (ii) each Party
may disclose the terms of the Settlement Documents to its respective Affiliates,
insurers,

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lenders, attorneys and accountants, subject to such Affiliates, insurers,
lenders, attorneys and accountants being bound by confidentiality obligations.
          10. This Settlement Agreement, including the obligations of the
Parties under the Consent Judgment and the other Exhibits hereto, is binding
upon and shall inure to the benefit of each Party hereto, and each of its
successors and permitted assigns. KV may not assign, transfer, license or
otherwise convey in any other form (by way of merger, acquisition, statute,
operation of law or otherwise), in whole or in part, any of its rights or
obligations under this Settlement Agreement or the KV ANDA (an “Assignment”)
without the prior written consent of the Purdue Companies, which consent may be
withheld in the sole discretion of the Purdue Companies; provided, however, that
no such Assignment shall in any manner limit or impair the obligations of KV
hereunder; and provided further, however, that any party that acquires this
Settlement Agreement or the KV ANDA as a result of such Assignment will thereby
become subject to the terms and conditions of this Settlement Agreement. If
notwithstanding the above, there is a Change of Control of KV, this Settlement
Agreement shall be deemed to be assigned and each person or entity directly or
indirectly controlling KV and each Affiliate of such person or entity shall
become subject to the terms and conditions of this Settlement Agreement and
shall agree in writing to be bound hereby and KV shall remain primarily liable
for the performance of all its obligations under this Settlement Agreement and
for causing its assignees to act in a manner consistent herewith. For purposes
of this paragraph 10, “Change of Control” shall mean the transfer or disposition
(including by way of merger, acquisition, consolidation, sale of stock, sale of
assets, operation of law or otherwise), directly or indirectly, of more than 50%
of the total assets, equity interests, or voting power of KV. Any Assignment,
attempted Assignment or assignment of the rights hereunder by KV in
contravention of the provisions of this paragraph 10 shall be void and shall
have no force or effect. In the event that the Purdue Companies (or any of their
respective successors and assigns) sell or assign (other than in connection with
the grant of a security interest), the ’042 Patent to any other person or
entity, such person or entity shall agree to assume the obligations of the
Purdue Companies under the Settlement Documents in writing as a condition to
such acquisition.

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          11. The Settlement Documents set forth the entire agreement and
understanding among the Parties hereto as to the subject matter hereof and
supersede all other documents, oral consents or understandings, if any, made
between the Purdue Companies and KV (excluding any agreements or stipulations
endorsed by court order) before the Effective Date with respect to the subject
matter hereof. None of the terms of the Settlement Documents shall be amended or
modified except in a writing signed by each of the Parties hereto. The Parties
acknowledge that there have been a number of drafts of the Settlement Documents
exchanged between them prior to the Parties’ agreement on the final version of
the Settlement Documents which have been executed by them. The Parties expressly
agree that these drafts have been superseded by the executed Settlement
Documents and shall not be used in any dispute between the Parties as evidence
with respect to interpreting the meaning of any provision of this Settlement
Agreement.
          12. Any term or provision of the Settlement Documents which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be deemed
reformed to the extent required to make such term or provision valid or
enforceable in the manner most closely reflecting the Parties’ intentions as
reflected in the Settlement Documents (provided that any such reformation can be
achieved without material change to the economic value of the transactions
contemplated by the Settlement Documents), and shall not render invalid or
unenforceable the remaining terms and provisions of the Settlement Documents in
such jurisdiction or in any other jurisdiction, except as expressly provided in
paragraphs 2 or 3 of this Settlement Agreement.
          13. This Settlement Agreement, and the rights and obligations created
hereunder, shall be governed by and interpreted according to the substantive
laws of the State of New York without regard to its choice of law or conflicts
of law principles.
          14. Any notice required under this Settlement Agreement shall be in
writing and shall be given (and shall be deemed to be duly given upon receipt)
by delivery in person, by facsimile or by registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice):

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If to any of the Purdue Companies:
Purdue Pharma L.P.
One Stamford Forum
201 Tresser Boulevard
Stamford, CT 06901-3431
Attention: General Counsel
Fax No.: (203) 588-6204
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Stuart D. Baker
Fax No.: (212) 489-7130
If to KV:
KV Pharmaceutical Company
2503 South Hanley Road
St. Louis, Missouri 63144
Attention: Paul Brady
Fax No.: (314) 644-2419
with a copy to:
Locke Lord Bissell & Liddell
3 World Financial Center
New York, New York 10281-2101
Attention: John F. Sweeney
Fax No.: (212) 303-2754
Each of the Purdue Companies hereby agrees that Purdue Pharma L.P. (or any other
Purdue Company authorized by the Purdue Companies pursuant to the next sentence
to provide consents on their behalf under this Settlement Agreement) shall be
authorized to provide (and to determine whether or not to provide) any and all
consents on behalf of each of them under this Settlement Agreement and shall not
take any action inconsistent with such authorization. The Purdue Companies may,
at any time upon written notice to KV as provided above, replace Purdue Pharma
L.P. (or any replacement thereof) with any other Purdue Company who they agree
shall be authorized to provide consents on behalf of each of the Purdue
Companies under this Settlement Agreement.

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          15. A waiver by any Party of any term or condition of this Settlement
Agreement in any one instance shall not be deemed or construed to be a waiver of
such term or condition for any other instance in the future (whether similar or
dissimilar) or of any subsequent breach of this Settlement Agreement. All
rights, remedies, undertakings, obligations and agreements contained in this
Settlement Agreement shall be cumulative and none of them shall be a limitation
of any other remedy, right, undertaking, obligation or agreement of any of the
Parties.
          16. Each of the Parties agrees that in executing the Settlement
Documents and in accepting the consideration provided for herein, each of the
Parties does so with full knowledge of any and all rights that each of the
Parties may have with respect to the controversies herein compromised. Each of
the Parties affirms that it is not relying and has not relied upon any
representation or statement made by any of the other Parties with respect to the
facts involved in said controversies or with regard to each of the Parties’
legal rights or asserted legal rights, except as set forth in paragraphs 7 and 8
hereof, and except as set forth in any representation or warranty in the Patent
License Agreement or the Distribution and Supply Agreement, as the case may be.
Each of the Parties hereby assumes the risk of any mistake of fact or legal
right with regard to said controversies or with regard to any of the facts or
legal rights that are now unknown to such Party, except with respect to any
breach of paragraphs 7 and 8 hereof, and except as set forth in any
representation or warranty in the Patent License Agreement or the Distribution
and Supply Agreement, as the case may be.
          17. Each of the Parties agrees that it has received independent legal
advice from its attorneys with respect to the rights and asserted rights arising
out of the controversies between the Parties relating to the Purdue U.S. Patent
Family, the Foreign Patents and the Action. Each of the Parties further agrees
that it and its counsel have had adequate opportunity to make whatever
investigation or inquiry they may have deemed necessary or desirable in
connection with the subject matter of this Settlement Agreement, prior to the
execution hereof.
          18. If KV breaches, in any material respect, any provision of
paragraphs 1(c), 1(d), 4, 5(a), 5(b) or 6 of this Settlement Agreement, or
Sections 1 or 2(a) of the Patent License Agreement, in

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addition to any other remedy the Purdue Companies may have at law or in equity,
the Purdue Companies, upon a showing of such breach, shall be entitled to a
preliminary injunction to prevent the continuance of such breach, without the
requirement of the posting of a bond.
          19. This Settlement Agreement may be executed in counterparts
(including by facsimile or other electronic transmission), and each fully
executed counterpart shall be deemed an original of this Settlement Agreement.
          20. Except for the rights, agreements and covenants specifically
granted pursuant to this Settlement Agreement, no other right, written or oral
license, covenant not to sue, waiver or release of future infringement or other
written or oral authorization is or has been granted or implied by this
Settlement Agreement. Furthermore, and for the avoidance of doubt, no activity
by KV with respect to the making, having made, using, offering to sell, selling,
shipping, distributing or importing of any (a) KV Product and (b) any other
pharmaceutical product or ingredient, shall constitute an authorized sale under
this Settlement Agreement unless, in the case of (a) above, it is expressly
permitted and authorized under Section 1 of the Patent License Agreement or
Section 2.1 of the Distribution and Supply Agreement, as applicable; and no
determination that any patent rights of the Purdue Companies in the ‘042 Patent
or any other intellectual property have been terminated or exhausted may be
based on any activity by KV whatsoever unless and solely to the extent that such
activity relates to a sale of KV Products expressly permitted and authorized
under Section 1 of the Patent License Agreement or Section 2.1 of the
Distribution and Supply Agreement, as applicable.
[Remainder of this page intentionally left blank]

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Settlement Agreement Signature Page
          IN WITNESS WHEREOF, each of the Parties has caused this Settlement
Agreement to be executed as of the date first written above by its duly
authorized officer or agent.

          PURDUE PHARMA L.P.
(on its own behalf and as successor
in interest to The Purdue Pharma Company)
      By:   Purdue Pharma Inc., its general partner
      By:   /s/ Edward B. Mahony       Name:  Edward B. Mahony       Title: 
EVP, CFO & Treasurer       THE P.F. LABORATORIES, INC.
      By:   /s/ Edward B. Mahony       Name:  Edward B. Mahony       Title: 
EVP, CFO & Treasurer       PURDUE PHARMACEUTICALS L.P.
      By:   Purdue Pharma Inc., its general partner
      By:   /s/ Edward B. Mahony       Name:  Edward B. Mahony       Title: 
EVP, CFO & Treasurer       KV PHARMACEUTICAL COMPANY
      By:   /s/ Paul T. Brady       Name:  Paul T. Brady       Title:  Corporate
Vice President, B.D.