***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Agreement and Plan of Merger
dated as of September 16, 2008
among
Coria Laboratories, Ltd.,
the Shareholders of Coria Laboratories, Ltd.,
Valeant pharmaceuticals international
and
CL Acquisition Corp.

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
TABLE OF CONTENTS

              Page  
ARTICLE 1 DEFINITIONS
    2  
ARTICLE 2 THE MERGER; CLOSING
    13  
2.1 The Merger
    13  
2.2 Certain Events Immediately Prior to the Closing
    15  
2.3 Closing
    15  
2.4 Adjustments to Base Merger Consideration
    17  
2.5 Post-Closing Reconciliation of Net Working Capital
    17  
2.6 Post-Closing Reconciliation of Product Returns
    19  
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
    20  
3.1 Organization, Good Standing and Authority
    20  
3.2 Enforceability of Transaction Documents
    21  
3.3 No Conflicts
    22  
3.4 Capitalization
    22  
3.5 Financial Statements
    22  
3.6 Real Property
    23  
3.7 Tangible Personal Property
    24  
3.8 Brokers or Finders
    24  
3.9 Environmental, Health and Safety Matters
    24  
3.10 No Undisclosed Liabilities
    25  
3.11 Employee Benefit Plans
    25  
3.12 Company Products; Compliance with Legal Requirements; Permits
    27  
3.13 Legal Proceedings
    30  
3.14 Insurance
    30  
3.15 Absence of Certain Changes and Events
    31  
3.16 Material Contracts
    32  
3.17 Labor and Employment Matters
    33  
3.18 Intellectual Property
    34  
3.19 Suppliers and Customers
    37  
3.20 Related Party Transactions
    38  
3.21 No Product Liabilities; Product Warranties
    38  

-i-

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
TABLE OF CONTENTS
(Continued)

              Page  
3.22 Inventory
    38  
3.23 Accounts Receivable
    39  
3.24 Taxes
    39  
3.25 Books and Records
    41  
3.26 Product Registration Files
    41  
3.27 Brokers or Finders
    41  
3.28 Vote Required
    42  
3.29 Full Disclosure
    42  
3.30 Certain Business Practices
    42  
3.31 Board Recommendation
    42  
3.32 Sufficiency of Assets
    42  
3.33 Hart-Scott-Rodino
    42  
3.34 Seller Representations
    42  
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
    43  
4.1 Organization and Good Standing
    43  
4.2 Authority; Validity; Consents
    44  
4.3 No Conflict
    44  
4.4 Legal Proceedings
    44  
4.5 Brokers or Finders
    45  
4.6 Financing
    45  
4.7 No Knowledge of Misrepresentations or Omissions
    45  
4.8 Solvency
    45  
ARTICLE 5 PRE-CLOSING COVENANTS OF THE SELLERS
    45  
5.1 Access and Investigation
    45  
5.2 Operation of the Business
    46  
5.3 Negative Covenants
    46  
5.4 Required Approvals
    46  
5.5 Commercially Reasonable Efforts
    46  
5.6 Notice of Developments
    47  
5.7 Exclusivity
    47  

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
TABLE OF CONTENTS
(Continued)

              Page  
5.8 Closing Obligation
    47  
ARTICLE 6 PRE-CLOSING COVENANTS OF BUYER
    47  
6.1 Required Approvals
    47  
6.2 Non-Disclosure Obligations
    48  
6.3 Commercially Reasonable Efforts
    48  
6.4 Closing Obligation
    48  
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATION OF BUYER
    49  
7.1 Accuracy of Representations
    49  
7.2 Sellers’ Performance
    49  
7.3 No Order
    49  
7.4 Governmental Authorizations
    49  
7.5 Required Consents
    49  
7.6 Agreements
    49  
7.7 No Material Adverse Effect
    50  
7.8 Contributed Contracts
    50  
7.9 Release of Encumbrances
    50  
7.10 280G Approvals
    50  
7.11 Termination of Certain Existing Agreements
    50  
7.12 Assignment of [...***...]
    51  
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY AND THE SELLERS
    51  
8.1 Accuracy of Representations
    51  
8.2 Buyer’s Performance
    51  
8.3 No Order
    51  
8.4 Governmental Authorizations
    51  
8.5 Agreements
    52  
ARTICLE 9 POST-CLOSING COVENANTS
    52  
9.1 Access to Books, Records, Etc
    52  
9.2 Further Assurances
    52  
9.3 Litigation Support; Attorney-Client Privilege
    52  

***Confidential Treatment Requested***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
TABLE OF CONTENTS
(Continued)

              Page  
9.4 Employee Benefit Arrangements
    53  
9.5 Cooperation on Tax Matters; Transfer Taxes
    53  
9.6 Restrictive Covenants
    55  
9.7 Confidential Information
    56  
9.8 Negotiation of Property Purchase
    57  
9.9 Certain Company Liabilities
    57  
ARTICLE 10 TERMINATION
    57  
10.1 Termination Events
    57  
10.2 Effect of Termination
    58  
ARTICLE 11 INDEMNIFICATION; REMEDIES
    58  
11.1 Survival
    58  
11.2 Indemnification by the Sellers
    59  
11.3 Indemnification by Buyer
    61  
11.4 Notice of Potential Claims for Indemnification
    62  
11.5 Claims Not Involving Third Parties
    62  
11.6 Third Party Claims
    63  
11.7 Subrogation
    63  
11.8 Insurance and Other Recoveries
    63  
11.9 Acknowledgement of Buyer
    64  
11.10 Stockholder Representative
    64  
11.11 [...***...]
    65  
ARTICLE 12 GENERAL PROVISIONS
    65  
12.1 Public Announcements
    65  
12.2 Notices
    65  
12.3 Waiver
    67  
12.4 Entire Agreement; Amendment
    67  
12.5 Assignments
    67  
12.6 Severability
    67  
12.7 Section Headings; Construction
    67  

***Confidential Treatment Requested***

-iv-

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
TABLE OF CONTENTS
(Continued)

              Page  
12.8 Governing Law; Consent to Jurisdiction and Venue; Jury Trial Waiver
    68  
12.9 Counterparts
    68  
12.10 Time of Essence
    68  
12.11 No Third Party Beneficiaries
    68  
12.12 Expenses
    68  

-v-

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Schedules and Exhibits

     
Schedule I:
  Allocation of Product Returns for Specified Lot Numbers
Exhibit A:
  Ownership of Company Common
Exhibit B:
  Working Capital Methodology
Exhibit C:
  Form of Transition Services Agreement
Exhibit D:
  Form of Amended and Restated Manufacturing Agreement
Exhibit E:
  Form of Assignment of Claims
Exhibit F:
  Form of Product Development Agreement

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Agreement and Plan of Merger
     This Agreement and Plan of Merger (“Agreement”) is made as of September 16,
2008 (the “Effective Date”), among (a) Coria Laboratories, Ltd., a Delaware
corporation (the “Company”); (b) the stockholders of the Company (collectively,
the “Sellers”): DFB Pharmaceuticals, Inc., a Texas corporation (“DFB”), H. Paul
Dorman, John W. Feik, Anne Burnett Windfohr, John L. Marion and John W. Mason;
(c) Valeant Pharmaceuticals International, a Delaware corporation (“Buyer”); and
(d) CL Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Buyer (“Newco”). The Company, the Sellers, Buyer and Newco are sometimes
referred to herein individually as a “Party” and collectively as the “Parties.”
Recitals
     The Sellers, collectively, hold of record and own beneficially all of the
issued and outstanding capital stock of the Company, which consists solely of
the Common Stock, par value $0.01 per share, of the Company (“Company Common”).
The number of shares of Company Common, and the percentage of the outstanding
Company Common, held and owned by each Seller is set forth adjacent to such
Seller’s name on Exhibit A.
     Buyer holds of record and owns beneficially all of the issued and
outstanding capital stock of Newco, which consists solely of the Common Stock,
par value $0.001 per share, of Newco (“Newco Common”).
     The Board of Directors of Newco, Buyer, and the Company have each approved
the merger of Newco with and into the Company (the “Merger”), with the Company
continuing as the surviving corporation in the merger (the “Surviving
Corporation”), on the terms and subject to the conditions set forth in this
Agreement.
     Pursuant to the Merger, the Company Common held by the Sellers will be
converted into the right to receive the Merger Consideration (as defined
herein), and all of the outstanding shares of Newco Common will continue as the
outstanding capital stock of the Surviving Corporation.
     The Parties desire to make certain representations, warranties, covenants
and agreements in connection with the Merger.
Agreement
     Now, Therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.

1

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
ARTICLE 1
DEFINITIONS
     For purposes of this Agreement, the following terms have the meanings
specified or referenced below.
     “1933 Act” means the Securities Act of 1933, as amended.
     “280G Approval” has the meaning set forth in Section 7.10.
     “Acquired Person” has the meaning set forth in Section 3.33.
     “Adjusted Current Assets” means the aggregate amount of the current assets
of the Company shown on the Closing Date Balance Sheet as such current assets
are calculated in accordance with the Working Capital Methodology, but excluding
Cash.
     “Adjusted Current Liabilities” means the aggregate amount of the current
liabilities of the Company shown on the Closing Date Balance Sheet as such
current liabilities are calculated in accordance with the Working Capital
Methodology, but excluding (i) any Indebtedness of the Company and (ii) any of
the Company’s Transaction Expenses.
     “Adjusted Net Working Capital” means an amount equal to the Adjusted
Current Assets less the Adjusted Current Liabilities.
     “Affiliate” means with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified.
     “Aggregate Accounting Fees” has the meaning set forth in Section 2.5(c).
     “Agreement” has the meaning set forth in the introductory paragraph.
     “Amended and Restated Facility Lease” has the meaning set forth in Section
2.3(d)(viii).
     “Amended and Restated Manufacturing Agreement” has the meaning set forth in
Section 2.3(d)(vi).
     “Asserted Liability” has the meaning set forth in Section 11.4.
     “Assignment of Claims” has the meaning set forth in Section 2.3(d)(vii).
     “Audited Financial Statements” has the meaning set forth in Section 3.5(a).
     “Base Merger Consideration” means $95,000,000 in cash.
     “Benefit Plans” has the meaning set forth in Section 3.11.

2

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     “Business” means the business of developing, labeling, marketing, selling
and otherwise distributing the Company Products from the Facilities, and all
ancillary activities and business operations in connection therewith.
     “Buyer” has the meaning set forth in the introductory paragraph.
     “Buyer Cap” has the meaning set forth in Section 11.3(c).
     “Buyer Indemnitees” has the meaning set forth in Section 11.2(a).
     “Buyer Severance Expenses” means any severance disclosed on Schedule 3.17
for employees terminated by the Buyer or the Surviving Corporation without cause
on or within one (1) year following the Closing Date.
     “Buyer’s Transaction Expenses” means all costs and expenses incurred by or
on behalf of Buyer and its affiliates in connection with the preparation,
execution and performance of this Agreement and the other Transaction Documents
and the transactions contemplated hereby and thereby, including, without
limitation, all fees and out-of-pocket expenses of such entities’
Representatives, the fees and expenses due in connection with any debt or equity
financing arranged by or for the benefit of Buyer or Newco and any fees or
expenses paid or incurred by Buyer in connection with the notifications and
approvals required under the HSR Act, including the HSR Act filing fee.
     “Cash” means the cash and cash equivalents of the Company on the Closing
Date as shown on the Closing Date Balance Sheet and calculated in accordance
with GAAP. For avoidance of doubt, Cash shall (i) be reduced by checks and
drafts written by the Company but not yet cleared and (ii) be increased by
checks and drafts deposited for the account of the Company but not yet cleared.
     “CERCLA” means the United States Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. §§ 9601 et. seq., as amended.
     “Closing” has the meaning set forth in Section 2.3(a).
     “Closing Date” has the meaning set forth in Section 2.3(a).
     “Closing Date Balance Sheet” has the meaning set forth in
Section 2.5(a)(i).
     “Closing Merger Consideration” means the Base Merger Consideration less the
Escrow Amounts.
     “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended from time to time.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Company” has the meaning set forth in the introductory paragraph.

3

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     “Company Common” has the meaning set forth in the Recitals.
     “Company Intellectual Property means all Intellectual Property Rights owned
by, under obligation or assignment to, licensed or used by the Company in the
Business as previously conducted or as currently conducted.
     “Company Organizational Documents” has the meaning set forth in
Section 3.1.
     “Company Product” means each of the pharmaceutical products listed on
Schedule 3.12(a) together with each other pharmaceutical product subject to the
Federal Food, Drug, and Cosmetic Act, the U.S. Food and Drug Administration
regulations promulgated thereunder, or similar legal provisions in any domestic
or foreign jurisdiction that is developed, manufactured, tested, packaged,
labeled, marketed, sold, and/or distributed by the Company.
     “Company’s Transaction Expenses” means all costs and expenses incurred by
the Company or the Sellers, or on their behalf, in connection with the
preparation, execution and performance of this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby
(including fees, expenses and indemnification obligations owed by the Sellers to
William Blair & Company, L.L.C.), but specifically excluding Buyer’s Transaction
Expenses.
     “Contract” means any agreement, contract, obligation, promise, or
undertaking (whether written or oral) that is legally binding.
     “Deductible” has the meaning set forth in Section 11.2(d).
     “DFB” has the meaning set forth in the introductory paragraph.
     “DGCL” has the meaning set forth in Section 2.1(a).
     “Disclosure Schedules” means the disclosure schedules of the Sellers
delivered to Buyer on the Effective Date.
     “Dispute Resolution Period” has the meaning set forth in Section 11.5.
     “DPT” means DPT Laboratories, Ltd., a Texas limited partnership.
     “Effective Date” means the date as of which this Agreement was executed as
set forth in the first sentence of this Agreement.
     “Effective Time” has the meaning set forth in Section 2.1(a).
     “Encumbrance” means any charge, lien, mortgage, deed of trust, pledge,
security interest, option, right of first refusal, easement, servitude,
restrictive covenant, encroachment, encumbrance, or other similar restriction.
     “End Date” has the meaning set forth in Section 10.1(b).

4

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     “Environmental Law” means and includes any Legal Requirement in effect on
the Closing Date relating to pollution or protection of the environment
including, without limitation: (i) CERCLA; (ii) the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq.,
(“RCRA”); (iii) the Emergency Planning and Community Right to Know Act (42
U.S.C. §§11001 et seq.); (iv) the Clean Air Act (42 U.S.C. §§ 7401 et seq.); (v)
the Clean Water Act (33 U.S.C. §§1251 et seq.); (vi) the Toxic Substances
Control Act (15 U.S.C. §§2601 et seq.); (vii) the Hazardous Materials
Transportation Act (49 U.S.C. §§ 5101 et seq.); (viii) the Safe Drinking Water
Act (41 U.S.C. §§300f et seq.); and (ix) any state, county, municipal or local
statues, laws or ordinances similar or analogous to the federal statutes listed
in parts (i) through (viii) of this subparagraph; in each case as in effect on
the Closing Date.
     “Environmental Permits” has the meaning set forth in Section 3.9(b).
     “Equity Interests” means any capital stock, partnership or limited
liability company interest or other equity or voting interest; or any security
or evidence of indebtedness convertible into or exchangeable for any capital
stock, partnership or limited liability company interest or other equity or
voting interest; or any right, warrant or option to acquire any of the
foregoing; or any commitment, agreement, or other arrangement, whether written
or oral, to acquire, issue, sell, transfer, or otherwise dispose of any of the
foregoing.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rules issued thereunder.
     “ERISA Affiliate” means any person that, together with the Company, is or
was at any time treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA and any general partnership of which the Company is or has
been a general partner.
     “Escrow Agent” means U.S. Bank National Association.
     “Escrow Amounts” means the Indemnity Escrow Amount plus the Return Escrow
Amount.
     “Facility” means the portion of the building located at 3801 Hulen St.,
Fort Worth, Texas, that is leased by the Company from Healthpoint pursuant to
the Facility Lease and at which the Company has its principal office.
     “Facility Lease” means the Lease Agreement, dated June 1, 2007, by and
between Healthpoint, as landlord, and the Company, as tenant, pursuant to which
the Company has leased the Facility from Healthpoint.
     “Facilities” has the meaning set forth in Section 3.9(a).
     “FDA” has the meaning set forth in Section 3.12(a)(i).
     “FFDCA” has the meaning set forth in Section 3.12(a)(i).
     “Financial Statements” has the meaning set forth in Section 3.5(a).

5

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     “GAAP” means United States generally accepted accounting principles as in
effect on the Effective Date.
     “Governmental Authority” means any:

  (1)   nation, state, county, city, town, village, district, or other
jurisdiction of any nature;     (2)   federal, state, local, municipal, foreign,
or other government;     (3)   governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);     (4)   multinational organization or
body; or     (5)   body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.

     “Governmental Authorization” means any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement.
     "[...***...]” has the meaning set forth in [...***...].
     “Hazardous Activities” means the generation, handling, importing,
management, manufacturing, processing, production, refinement, storage,
transfer, transportation, treatment or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof.
     “Hazardous Materials” means any waste or other substance that is listed,
defined, designated, classified as, or determined to be, hazardous, radioactive,
or toxic or a pollutant or a contaminant or otherwise regulated under or
pursuant to any Environmental Law, including, without limitation, RCRA hazardous
wastes, CERCLA hazardous substances, oil and petroleum and all derivatives and
constituents thereof, polychlorinated biphenyls (PCBs), and asbestos or
asbestos-containing materials.
     “Healthpoint” means Healthpoint Ltd., a Texas limited partnership.
     “HSR Act” means Section 7A of the Clayton Act, as added by Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder.
     “Indebtedness” means with respect to the Company, whether recourse as to
all or a portion of the Company’s assets, (i) the principal of and premium, if
any, in respect of any indebtedness of the Company for money borrowed, (ii) the
principal, premium, if any, and interest with respect to obligations of the
Company evidenced by bonds, debentures, notes or other similar instruments,
***Confidential Treatment Requested***

6

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) all obligations of the Company in respect of letters
of credit or other similar instruments (including reimbursement obligations with
respect thereto) but only to the extent of drawings thereunder, (iv) every
obligation of the Company issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable or accrued liabilities
arising in the ordinary course of business which are not overdue or in default),
(v) every capital lease obligation (determined in accordance with GAAP) of the
Company, except for capital lease obligations arising in the ordinary course of
business, (vi) every obligation to pay rent or other payment amounts of the
Company with respect to any sale-leaseback transaction to which the Company is a
party, payable through the stated maturity of such sale-leaseback transaction,
(vii) factoring arrangements of the Company, whether or not such arrangements
appear on the balance sheet of the Company, and (viii) every obligation of the
type referred to in clauses (i) through (vii) of another Person the payment of
which (A) the Company has guaranteed or is responsible or liable for, directly
or indirectly, as obligor, guarantor or otherwise, or (B) is secured by an
Encumbrance on any asset of the Company, whether or not such obligation is
assumed by the Company.
     “Indemnification Notice” has the meaning set forth in Section 11.4.
     “Indemnifying Party” has the meaning set forth in Section 11.4.
     “Indemnitee” has the meaning set forth in Section 11.4.
     “Indemnity Escrow Agreement” has the meaning set forth in
Section 2.3(d)(iii).
     “Indemnity Escrow Amount” means $[...***...].
     “Independent Accounting Firm” has the meaning set forth in Section 2.5(c).
     “Individual Seller” means, individually or collectively, H. Paul Dorman,
John W. Feik, Anne Burnett Windfohr, John L. Marion and John W. Mason.
     “Intellectual Property Rights” means all intellectual property or
proprietary rights of any description of any Person, including all rights of any
Person in and to (i) inventions, invention disclosures, patents, patent
applications and patent disclosures, together with all reissues, continuations,
continuations in part, revisions, extensions, reexams, provisionals, divisions,
renewals, revivals, and foreign counterparts thereof and all registrations and
renewals in connection therewith, and any documents and filings claiming
priority to or serving as the basis for priority thereof, (ii) trademarks,
service marks, trade dress, logos, trade names and corporate names, together
with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications, registrations
and renewals in connection therewith, (iii) works of authorship, copyrights and
all applications, registrations and renewals in connection therewith,
(iv) industrial designs and mask works and all applications, registrations and
renewals in connection therewith, (v) trade secrets, confidential business
information (including ideas, concepts, research and development, know-how,
show-how, formulas, algorithms, models, methodologies, molds, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, business and marketing plans and proposals, assembly, test,
installation, service and
***Confidential Treatment Requested***

7

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
inspection instructions and procedures, technical, operating and service and
maintenance manuals, databases and data, hardware reference manuals and
engineering, programming, service and maintenance notes and logs), (vi) computer
software (including all source code, object code, data and related
documentation) and technology, (vii) Internet addresses, URL, domain names,
websites and web pages, (viii) all moral and economic rights of authors and
investors, however denominated, (ix) goodwill related to all of the foregoing,
and (x) any similar or equivalent rights to any of the foregoing anywhere in the
world.
     “Inventory” means all finished goods inventory of the Company Products.
     “IP Licenses” means all licenses, sublicenses and other agreements or
permissions related to Company Intellectual Property under which the Company is
a licensor or licensee or escrow beneficiary.
     “IRS” means the United States Internal Revenue Service or any successor
agency and, to the extent relevant, the United States Department of the
Treasury.
     “Key Customers” has the meaning set forth in Section 3.19(a).
     “Legal Requirement” means any federal, state, provincial, local, municipal,
foreign, international, multinational, or other administrative Order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
     “Liability” means all liabilities and obligations (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due).
     “Losses” of a Person means any liabilities, losses, damages, deficiencies,
assessments, penalties, judgments and costs or expenses (including out-of-pocket
expenses for investigation and defense and reasonable attorneys’ fees) actually
incurred or sustained by the indemnified party, but specifically excluding any
punitive damages.
     “Material Adverse Effect” means any change, event, effect or condition
that, individually or together with any other change, event, effect or
condition, is, or is reasonably likely to be, materially adverse to a Person or
its assets, results of operations or financial condition, or on the ability of
the Parties to consummate timely the transactions contemplated hereby; provided,
however, that none of the following shall constitute a Material Adverse Effect:
(i) any adverse change, event, effect or condition (A) arising from or relating
to national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack anywhere in the world or (B) as a result of or related to this
Agreement or the transactions contemplated hereby or the announcement hereof,
(ii) any existing event, occurrence, or circumstance that was disclosed in the
Disclosure Schedules as of the Effective Date and (iii) with respect to a
Material Adverse Effect on the Company, any adverse change in or effect on the
business, assets, financial condition or results of operations of the Company
that is cured to the reasonable satisfaction of Buyer before the earlier of
(A) the Closing Date and (B) the date on which this Agreement is terminated
pursuant to Article 10 hereof.

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     “Material Contracts” has the meaning set forth in Section 3.16(a).
     “Merger” has the meaning set forth in the Recitals.
     “Merger Consideration” means the Base Merger Consideration, as such amount
may be increased or decreased on a dollar-for-dollar basis for the adjustments
required by Section 2.4.
     “Merger Documents” has the meaning set forth in Section 2.1(a).
     “Multiemployer Plan” means any “multiemployer plan” within the meaning of
Section 3(37) or Section 4001(a)(3) of ERISA.
     “Net Worth” means, for any Person, the amount obtained by subtracting
(i) the liabilities of such Person (together with its consolidated Subsidiaries,
if applicable), calculated in accordance with GAAP, from (ii) the assets of such
Person (together with its consolidated Subsidiaries, if applicable), calculated
in accordance with GAAP, after deducting adequate reserves in each case where,
in accordance with GAAP, a reserve is proper.
     “Newco” has the meaning set forth in the introductory paragraph.
     “Newco Common” has the meaning set forth in the Recitals.
     “Non-Disclosure Agreement” means the non-disclosure agreement entered into
between the Company and Buyer dated June 1, 2007.
     “Non-Patent IP” has the meaning set forth in Section 3.18(a).
     “Noncompetition Period” means the period of time which commences at the
Effective Time and runs for a period of five (5) years after the Effective Time.
     “Objection” has the meaning set forth in Section 11.5.
     “Occupational Safety and Health Law” means any Legal Requirement in effect
on the Closing Date designed to provide safe and healthful working conditions
and to reduce occupational safety and health hazards.
     “Order” means any award, writ, injunction, judgment, order or decree
entered, issued, made, or rendered by any Governmental Authority.
     “Party” or “Parties” has the meaning set forth in the introductory
paragraph.
     “Patent IP” has the meaning set forth in Section 3.18(b).
     “Permitted Encumbrances” means (i) Encumbrances for Taxes not yet due or
payable or that are being contested in good faith by appropriate Proceedings for
which adequate reserves in accordance with GAAP are maintained and are reflected
on the Closing Date Balance Sheet; (ii) Encumbrances in favor of vendors,
carriers, warehousemen, repairmen, mechanics, workers, materialmen, construction
or other Encumbrances arising by operation of law or in the ordinary

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
course of business in respect of obligations that are not yet due or that are
being contested in good faith by appropriate Proceedings, for which adequate
reserves in accordance with GAAP are maintained and are reflected on the Closing
Date Balance Sheet; (iii) Encumbrances arising pursuant to Indebtedness that
will be released at or prior to the Closing; (iv) easements, servitudes,
reservations, rights-of-way, restrictions, covenants, conditions and other
similar encumbrances whether of record or apparent on the premises, including
but not limited to road, highway, pipeline, railroad and utility easements and
servitudes, and municipal, zoning and building by-laws that do not, individually
or in the aggregate, materially interfere with the use, occupancy or operation
of the real property as currently used, occupied and operated or as intended to
be used, occupied and operated by the Company in the Business; (v) statutory
Encumbrances incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, employment insurance and other social
security legislation; (vi) deposits to secure the performance of bids, trade
contracts and leases, statutory obligations, surety bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(vii) Encumbrances encumbering customary deposit accounts or brokerage accounts
incurred in the ordinary course of business; (viii) Encumbrances that arise
under Article 4 of the Uniform Commercial Code of any applicable jurisdiction on
items in collection and documents and proceeds related thereto; (ix) leases,
licenses, subleases or sublicenses granted to other Persons in the ordinary
course of business and set forth on the Disclosure Schedules as of the Effective
Date that, individually or in the aggregate, do not interfere materially with
the ordinary conduct of the Business; (x) Encumbrances encumbering deposits made
to secure obligations arising from statutory, regulatory, contractual or
warranty requirements, including rights of setoff; (xi) Encumbrances of bailees
on assets entrusted to the bailees in the ordinary course of business,
consistent with past practices, as set forth on the Disclosure Schedules as of
the Effective Date; (xii) Encumbrances in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; and (xiii) other Encumbrances arising
in the ordinary course of business and not incurred in connection with the
borrowing of money or other Indebtedness and set forth on the Disclosure
Schedules.
     “Person” means any individual, corporation (including any non-profit
corporation), partnership, limited liability company, joint venture, estate,
trust, association, organization, labor union or other entity or Governmental
Authority.
     “Pre-Closing Tax Period” has the meaning set forth in Section 9.5(a).
     “Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative or investigative)
involving the Company commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Authority.
     “Product Development Agreement” has the meaning set forth in
Section 2.3(d)(ix).
     “Product Return Amount” means the aggregate sales price of all products
sold by the Company prior to the Effective Time that are returned by customers
to the Surviving Corporation following the Effective Time. The sales price for
any returned products included within the lot numbers set forth on Schedule I
shall be allocated between the pre-Effective Time and post-Effective Time
periods in the proportion set forth for such lot number on such Schedule I. DFB
and

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
the Surviving Corporation shall mutually agree on Schedule I within sixty
(60) days after the Closing Date.
     “Proposal” means any actions through which a party who is not a party to
the Agreement seeks to initiate, encourage, solicit or seek, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including any proposal or offer to its stockholders or any of them) with
respect to a merger, acquisition, consolidation, recapitalization, liquidation,
dissolution, equity investment or similar transaction involving, or any purchase
of all or any substantial portion of the assets or any securities of the
Company.
     “Publicly Available Software” means each of (i) any software that contains,
or is derived in any manner (in whole or in part) from, any software that is
distributed as free software, open source software (e.g., GNU General Public
License, Apache Software License, MIT License), or pursuant to similar licensing
and distribution models; and (ii) any software that requires as a condition of
use, modification, hosting and/or distribution of such software or of other
software used or developed with, incorporated into, derived from, or distributed
with such software, that such software or other software (A) be disclosed or
distributed in source code form; (B) be licensed for the purpose of making
derivative works; (C) be redistributed, hosted or otherwise made available at no
or minimal charge; or (D) be licensed, sold or otherwise made available on terms
that (x) limit in any manner the ability to charge license fees or otherwise
seek compensation in connection with marketing, licensing or distribution of
such software or other software or (y) grant the right to decompile,
disassemble, reverse engineer or otherwise derive the source code or underlying
structure of such software or other software.
     “Related Party” means any partner, shareholder, director, officer,
employee, trustee, beneficiary or Affiliate (meaning a wife, husband, or other
Person controlled by, controlling or under common control with another Person)
of the Company or any Seller.
     “Related Party Transactions” has the meaning set forth in Section 3.20(a).
     “Release” has the same meaning ascribed thereto under CERCLA
Section 101(22), except that it shall apply to any and all Hazardous Materials,
not just CERCLA hazardous substances, including, without limitation, any
spilling, leaking, emitting, discharging, depositing, escaping, leaching,
dumping or other releasing into the environment, whether intentional or
unintentional.
     “Representative” means with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants and financial advisors.
     “Restricted Business” has the meaning set forth in Section 9.6(a).
     “Return Escrow Agreement” has the meaning set forth in Section 2.3(d)(iv).
     “Return Escrow Amount” means $ [...***...]
     “Seller Indemnitees” has the meaning set forth in Section 11.3(a).
***Confidential Treatment Requested***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     “Seller Severance Expenses” means (i) all transaction, sale or retention
bonus payments, or phantom stock due to senior executives or other employees or
former employees, as applicable, of the Company as a result of the transactions
contemplated by this Agreement which are not otherwise Buyer Severance Expenses
and (ii) all severance payments due and owing to Steve Clark as a result of the
transactions contemplated by this Agreement.
     “Sellers” has the meaning set forth in the introductory paragraph.
     “Sellers Cap” has the meaning set forth in Section 11.2(d).
     “Sellers’ Knowledge” means with respect to any matter in question, the
actual knowledge of the matter of question by (i) Anne Burnett Windfohr, John L.
Marion or John W. Mason or (ii) H. Paul Dorman, John W. Feik, Paul Johnson,
William Clark, Michael Steadman, Steve Clark, Michael A. Patterson or Mark A.
Mitchell, or any of their respective direct reports.
     “Stockholder Representative” has the meaning set forth in Section 11.10.
     “Subsidiaries” means all those corporations, associations, or other
business entities of which the entity in question either (i) owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent (provided, there
shall not be included any such entity the equity securities of which are owned
or controlled in a fiduciary capacity), (ii) in the case of partnerships, serves
as a general partner, (iii) in the case of a limited liability company, serves
as a managing member, or (iv) otherwise has the ability to elect a majority of
the directors, trustees or managing members thereof.
     “Surviving Corporation” has the meaning set forth in the Recitals.
     “Tangible Personal Property” has the meaning set forth in Section 3.7.
     “Target Net Working Capital” means $5,850,000.
     “Tax” or “Taxes” means any federal, state, provincial, local, foreign or
other income, alternative, minimum, add-on minimum, accumulated earnings,
personal holding company, franchise, capital stock, net worth, capital, profits,
intangibles, windfall profits, gross receipts, value added, sales, use, goods
and services, excise, customs duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, severance, environmental
(including taxes under Section 59A of the Code), natural resources, real
property, personal property, ad valorem, intangibles, rent, occupancy, license,
occupational, employment, unemployment insurance, social security, disability,
workers’ compensation, payroll, health care, withholding, estimated or other
similar taxes, duty, levy or assessment or deficiencies thereof (including all
interest and penalties thereon and additions thereto, whether disputed or not).
     “Tax Claim” has the meaning set forth in Section 9.5(c).
     “Tax Indemnified Party” has the meaning set forth in Section 9.5(c).

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     “Tax Indemnifying Party” has the meaning set forth in Section 9.5(c).
     “Tax Notice” has the meaning set forth in Section 9.5(c).
     “Tax Return” means any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax.
     “Taxing Authority” means any Governmental Authority with administrative or
judicial authority and responsibility for enforcing the payment of Taxes.
     “Third Party Claim” means any Proceeding that is instituted against an
Indemnitee by a Person other than a Buyer Indemnitee or a Seller Indemnitee.
     “Transaction Documents” means this Agreement, the Amended and Restated
Manufacturing Agreement, the Assignment of Claims, the Transition Services
Agreement, and any other agreements, instruments, or documents entered into
pursuant to this Agreement.
     “Transition Services Agreement” has the meaning set forth in Section
2.3(d)(v).
     “Ultimate Parent” has the meaning set forth in Section 3.33.
     “Unaudited Financial Statements” has the meaning set forth in
Section 3.5(a).
     “Unlimited Representations” has the meaning set forth in Section 11.1.
     “Working Capital Methodology” means in accordance with GAAP consistently
applied, except as modified by any applicable definitions herein or as otherwise
described on Exhibit B.
ARTICLE 2
THE MERGER; CLOSING
          2.1 The Merger.
     The plan of merger for the Merger is as follows:
     (a) Filing of Merger Documents; Effective Time. On the Closing Date, and
subject to the terms and conditions of this Agreement, the Company and Newco
shall duly execute and file a certificate of merger and/or such other documents
as may be required by the General Corporation Law of the State of Delaware
(“DGCL”) to effect the Merger (the “Merger Documents”) with the Secretary of
State of the State of Delaware. The Merger shall become effective at the time
specified in the Merger Documents (the “Effective Time”).
     (b) Merger; Surviving Corporation. At the Effective Time, in accordance
with this Agreement and in accordance with provisions of the DGCL, Newco shall
be merged with and into the Company. Following the Merger, the separate
corporate existence of Newco shall cease and the Company shall continue as the
Surviving Corporation and shall succeed to and assume

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
all the rights, properties, liabilities and obligations of the Company and Newco
in accordance with the DGCL.
     (c) Effects of the Merger. Upon the Effective Time, the Merger shall have
the effects provided for in the DGCL.
     (d) Conversion of Company Common. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Newco, the Surviving
Corporation, Buyer, any Seller or any other Person, the Company Common
outstanding immediately prior to the Effective Time shall automatically be
canceled and extinguished and be converted into and become a right to receive
the Merger Consideration. Upon such conversion of Company Common upon
consummation of the Merger, each Seller shall be entitled to receive the portion
of the Merger Consideration that is equal to the percentage of the outstanding
Company Common owned by such Seller (as set forth in Exhibit A).
     (e) Conversion of Newco Common. Each share of Newco Common issued and
outstanding immediately prior to the Effective Time shall be converted into one
fully paid and non-assessable share of the common stock, par value $0.001 per
share, of the Surviving Corporation.
     (f) Surviving Corporation Organizational Documents. At the Effective Time,
the Certificate of Incorporation of the Company shall be amended and restated in
its entirety to be identical to the Certificate of Incorporation of Newco as in
effect immediately prior to the Effective Time and in the form consistent with
the provisions of the DGCL. As so amended and restated, the Certificate of
Incorporation of the Company shall be the Certificate of Incorporation of the
Surviving Corporation, until amended thereafter in accordance with applicable
Legal Requirement. At the Effective Time, the By-laws of the Company shall be
amended and restated in its entirety to be identical to the By-Laws of Newco as
in effect immediately prior to the Effective Time.
     (g) Directors and Officers of the Surviving Corporation. The directors of
Newco holding office immediately prior to the Effective Time shall become the
directors of the Surviving Corporation at and as of the Effective Time
(retaining their respective terms of office). The officers of Newco holding
office immediately prior to the Effective Time shall become the officers of the
Surviving Corporation at and as of the Effective Time (retaining their
respective positions and terms of office).
     (h) Termination of Agreements. Any and all voting agreements, restrictions
on transfer, preemptive rights, rights of first refusal, management rights,
rights to repurchase, rights to indemnification, parallel exit rights and
registration rights held by or imposed upon the Sellers or associated with the
Company Common shall terminate with regard to the Company Common at the
Effective Time.
     (i) Waiver of Appraisal Rights. Each of the Sellers hereby waives, and
hereby covenants and agrees not to assert, exercise or perfect, any and all
appraisal or dissenters’ rights that it may have with respect to the Merger or
the Company Common.

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
          2.2 Certain Events Immediately Prior to the Closing.
     Immediately prior to the Closing, in addition to such other actions as may
be provided for in this Agreement:
     (a) Releases. The Sellers shall obtain discharges of all Encumbrances
(other than Permitted Encumbrances), each in form and substance satisfactory to
Buyer, with respect to the Company Common and the Assets, as well as a release
of any Indebtedness of the Company in form and substance reasonably satisfactory
to Buyer.
     (b) Wire Instructions. The Stockholder Representative shall provide Buyer
with wire transfer instructions at least two (2) business days prior to the
Closing.
     (c) Transaction Expenses. The Sellers shall provide Buyer with a schedule
setting forth the aggregate amount of the unpaid Company’s Transaction Expenses
through the Closing at least two (2) business days prior to the Closing.
     (d) Cash Distribution. The Company shall distribute all Cash to the
Sellers.
          2.3 Closing.
     (a) Closing Location and Date. The closing of the Merger (the “Closing”)
and the other transactions provided for in this Agreement shall take place at
the offices of DFB, 3909 Hulen St., Fort Worth, Texas 76107, at 10:00 a.m. on
the date that is three (3) business days following the satisfaction (or waiver
by the Party entitled to the benefit thereof) of each of the conditions set
forth in Article 7 and Article 8 (other than conditions that are to be satisfied
by actions taken at the Closing), or at such other time and place as the Parties
may agree (the date on which the Closing shall occur is referred to herein as
the “Closing Date”).
     (b) Funding and Disbursement at Closing. At the Closing, in addition to
such other actions as may be provided for in this Agreement:
          (i) Buyer shall deliver the Closing Merger Consideration to the
Sellers by paying to each Seller an amount of cash equal to the aggregate
Closing Merger Consideration multiplied by the percentage of the outstanding
Company Common owned by such Seller (as set forth in Exhibit A) by wire transfer
of immediately available funds to the account or accounts designated by the
Stockholder Representative (on behalf of the Sellers) to Buyer;
          (ii) The Sellers or their Affiliates, as appropriate, shall pay the
Company’s Transaction Expenses to the extent remaining unpaid at the Closing;
          (iii) The Sellers or their Affiliates, as appropriate, shall pay the
Seller Severance Expenses, whether or not previously accrued; and
          (iv) Buyer shall deliver the Escrow Amounts to the Escrow Agent.

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     (c) Closing Deliveries Relating to the Merger. At the Closing, in addition
to such other actions as may be provided for in this Agreement:
          (i) The Company and Newco shall duly execute and file the Merger
Documents with the Secretary of State of the State of Delaware, as provided in
Section 2.1(a); and
          (ii) The Sellers shall deliver to Newco any and all certificates
representing shares of the Company Common outstanding immediately prior to the
Effective Time, duly endorsed in blank or accompanied by appropriate stock
transfer powers duly endorsed.
     (d) Other Closing Deliveries. At the Closing, in addition to such other
actions as may be provided for in this Agreement:
          (i) The Stockholder Representative shall execute and deliver to Buyer
the certificates provided for in Section 7.1 and Section 7.2;
          (ii) Buyer shall execute and deliver to the Sellers the certificates
provided for in Section 8.1 and Section 8.2;
          (iii) Buyer, the Stockholder Representative and the Escrow Agent shall
execute and deliver to one another an Escrow Agreement to be negotiated in good
faith by the parties between the Effective Date and the Closing (the “Indemnity
Escrow Agreement”);
          (iv) Buyer, the Stockholder Representative and the Escrow Agent shall
execute and deliver to one another an Escrow Agreement to be negotiated in good
faith by the parties between the Effective Date and the Closing (the “Return
Escrow Agreement”);
          (v) The Buyer and Healthpoint shall execute and deliver to one another
a Transition Services Agreement substantially in the form attached hereto as
Exhibit C (the “Transition Services Agreement”);
          (vi) The Company and DPT shall execute and deliver to one another an
Amended and Restated Manufacturing Agreement substantially in the form attached
hereto as Exhibit D (the “Amended and Restated Manufacturing Agreement”);
          (vii) The Company and DFB shall execute and deliver to one another an
Assignment of Claims substantially in the form attached hereto as Exhibit E (the
“Assignment of Claims”);
          (viii) The Company and Healthpoint shall execute and deliver to one
another an Amended and Restated Facility Lease to be negotiated in good faith by
the parties between the Effective Date and the Closing (the “Amended and
Restated Facility Lease”);
          (ix) Buyer and DFB shall execute and deliver to one another a Product
Development Agreement substantially in the form attached hereto as Exhibit F
(the “Product Development Agreement”);

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
          (x) [...***...] shall deliver to the Buyer [...***...],[...***...] to
[...***...], with respect to (A) [...***...] ([...***...]), (B) [...***...]
([...***...]) and (C) [...***...] ([...***...]); and
          (xi) The Sellers and the Company shall each execute all documents and
take all other actions that, in either case, are reasonably requested by any of
them to evidence the termination of the agreements that are to terminate as of
the Effective Time pursuant to Section 2.1(h).
       2.4 Adjustments to Base Merger Consideration.
     To determine the aggregate amount of the Merger Consideration, the Base
Merger Consideration shall be adjusted as follows:
     (a) the Base Merger Consideration shall be increased by the amount, if any,
by which the Adjusted Net Working Capital exceeds the Target Net Working
Capital; and
     (b) the Base Merger Consideration shall be decreased by the amount, if any,
by which the Adjusted Net Working Capital is less than the Target Net Working
Capital.
       2.5 Post-Closing Reconciliation of Net Working Capital.
     (a) Post-Closing Determinations. As promptly as practicable, but in any
event within ninety (90) days following the Closing Date, Buyer shall cause to
be prepared and delivered to the Stockholder Representative, together with all
relevant working papers and supporting documentation:
          (i) An unaudited balance sheet of the assets and liabilities of the
Company dated as of the Closing Date prepared in accordance with the Working
Capital Methodology (the “Closing Date Balance Sheet”). The Closing Date Balance
Sheet shall be dated as of 11:59 p.m. on the Closing Date and shall not take
into account or otherwise give effect to the transactions contemplated by this
Agreement to occur after the Closing Date.
          (ii) A statement setting forth the Buyer’s calculation of Adjusted Net
Working Capital and the Merger Consideration. The Parties agree that the purpose
of preparing the Closing Date Balance Sheet is to determine the amount of the
Adjusted Net Working Capital and to reconcile any differences between such
amount and the Target Net Working Capital. Such process is not intended to
permit the introduction of different components, judgments, accounting methods,
policies, principles, practices, procedures, classifications or estimation
methodologies for the purpose of preparing the Closing Date Balance Sheet or
determining the Adjusted Net Working Capital from the judgments, accounting
methods, policies, principles, practices, procedures, classifications or
estimation methodologies described in the Working Capital Methodology or used in
determining the Target Working Capital, except to the extent that any existing
accounting methods, policies, principles, practices, procedures, classifications
or estimation methodologies are not in accordance with GAAP (other than such
differences set forth on Exhibit B).
*** Confidential Treatment Requested***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     (b) Access to Records. The Stockholder Representative shall be given timely
access to all supporting documents and work papers used in the preparation of
the Closing Date Balance Sheet, as reasonably requested in connection with its
review of the Closing Date Balance Sheet and the calculation of the Adjusted Net
Working Capital.
     (c) Resolution of Disputes. The Stockholder Representative may dispute any
amounts reflected on the Closing Date Balance Sheet or the calculation of the
Adjusted Net Working Capital; provided, however, that the Stockholder
Representative shall have notified Buyer in writing of each disputed item,
specifying the amount thereof in dispute and setting forth, in reasonable
detail, the basis for such dispute, as promptly as practicable but in any event
no later than the 30th day following receipt by the Stockholder Representative
of the items described in Section 2.5(a). In the event of such a dispute, Buyer
and the Stockholder Representative shall attempt to reconcile their differences.
If Buyer and the Stockholder Representative are unable to reach a resolution
with such effect within thirty (30) days after receipt by Buyer of the
Stockholder Representative’s written notice of dispute, Buyer and the
Stockholder Representative shall submit the items remaining in dispute for
resolution to the accounting firm of KPMG LLP (the “Independent Accounting
Firm”), which shall, within thirty (30) days after such submission, determine
and report to Buyer and the Stockholder Representative upon such remaining
disputed items, and such report shall be final and binding on the Parties absent
fraud or intentional misconduct. The fees and disbursements of the Independent
Accounting Firm (the “Aggregate Accounting Fees”) shall be allocated between
Buyer, on the one hand, and the Sellers, on the other hand, as follows: a
portion of the Aggregate Accounting Fees equal to the product of the Aggregate
Accounting Fees and a fraction, the numerator of which is the aggregate dollar
amount of the disputed items resolved by the Independent Accounting Firm in
favor of Buyer and the denominator of which is the aggregate dollar amount of
all disputed items submitted to the Independent Accounting Firm for resolution,
shall be allocated to the Sellers, and the remainder shall be allocated to Buyer
(in each case as finally determined by the Independent Accounting Firm). In
acting under this Agreement, the Independent Accounting Firm shall be entitled
to the privileges and immunities of arbitrators.
     (d) Adjustments Final. The Merger Consideration, the Closing Date Balance
Sheet and the Adjusted Net Working Capital shall be deemed final for the
purposes of this Agreement upon the earlier of (i) the failure of the
Stockholder Representative to notify Buyer of a dispute by the 30th day
following receipt by the Stockholder Representative of the items described in
Section 2.5(a), (ii) the resolution of all disputes pursuant to Section 2.5(c)
by the Stockholder Representative and Buyer and (iii) the resolution of all
disputes pursuant to Section 2.5(c) by the Independent Accounting Firm. The
final determinations of such matters shall be non-appealable and incontestable
by the Parties and each of their respective Affiliates and successors and
assigns and not subject to collateral attack for any reason other than manifest
error or fraud.
     (e) Reconciliation Payments.
          (i) If the Adjusted Net Working Capital, as determined pursuant to
this Section 2.5, exceeds the Target Net Working Capital, then Buyer shall pay
to the Sellers, in the aggregate, an amount equal to such excess by wire
transfer in immediately available funds to the account or accounts designated by
the Stockholder Representative no later than five (5) business

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days following the final determination of the Adjusted Net Working Capital in
accordance with Section 2.5(d).
          (ii) If the Target Net Working Capital exceeds the Adjusted Net
Working Capital, as determined pursuant to this Section 2.5, then such excess
shall be paid by the Escrow Agent to the Buyer from the Indemnity Escrow Amount
by wire transfer of immediately available funds to the account designated by
Buyer no later than five (5) business days following the final determination of
the Adjusted Net Working Capital in accordance with Section 2.5(d).
       2.6 Post-Closing Reconciliation of Product Returns.
     (a) Buyer Return Statements. At any time and from time to time following
the Effective Time, the Buyer may deliver to the Stockholder Representative a
statement setting forth the aggregate Product Return Amount as of the date
specified in such statement (each, a “Return Statement”); provided, however,
that the Buyer may not deliver a Return Statement (i) until the aggregate
Product Return Amount exceeds $[...***...], (ii) more frequently than once per
calendar quarter or (iii) with respect to any returns received after the three
(3) year anniversary of the Effective Time. The final Return Statement shall be
delivered within sixty (60) days after the three (3) year anniversary of the
Effective Time.
     (b) Access to Records. The Stockholder Representative shall be given timely
access to all supporting documents and work papers used in the preparation of
the Return Statement, as reasonably requested in connection with its review of
the Return Statement and the calculation of the aggregate Product Return Amount.
     (c) Resolution of Disputes. The Stockholder Representative may dispute any
amounts reflected on a Return Statement or the calculation of the Product Return
Amount set forth thereon; provided, however, that the Stockholder Representative
shall have notified Buyer in writing of each disputed item, specifying the
amount thereof in dispute and setting forth, in reasonable detail, the basis for
such dispute, as promptly as practicable but in any event no later than the 30th
day following receipt by the Stockholder Representative of the Return Statement.
In the event of such a dispute, Buyer and the Stockholder Representative shall
attempt to reconcile their differences. If Buyer and the Stockholder
Representative are unable to reach a resolution with such effect within thirty
(30) days after receipt by Buyer of the Stockholder Representative’s written
notice of dispute, Buyer and the Stockholder Representative shall submit the
items remaining in dispute for resolution to the Independent Accounting Firm,
which shall, within thirty (30) days after such submission, determine and report
to Buyer and the Stockholder Representative upon such remaining disputed items,
and such report shall be final and binding on the Parties absent fraud or
intentional misconduct. The Aggregate Accounting Fees relating to such dispute
shall be allocated between Buyer, on the one hand, and the Sellers, on the other
hand, as follows: a portion of the Aggregate Accounting Fees equal to the
product of the Aggregate Accounting Fees and a fraction, the numerator of which
is the aggregate dollar amount of the disputed items resolved by the Independent
Accounting Firm in favor of Buyer and the denominator of which is the aggregate
dollar amount of all disputed items submitted to the Independent Accounting Firm
for resolution, shall be allocated to the Sellers, and the remainder shall be
allocated to Buyer (in each case as finally determined by the Independent
*** Confidential Treatment Requested***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
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Accounting Firm). In acting under this Agreement, the Independent Accounting
Firm shall be entitled to the privileges and immunities of arbitrators.
     (d) Adjustments Final. A Return Statement and the aggregate Product Return
Amount as of the date of such Return Statement shall be deemed final for the
purposes of this Agreement upon the earlier of (i) the failure of the
Stockholder Representative to notify Buyer of a dispute by the 30th day
following receipt by the Stockholder Representative of such Return Statement,
(ii) the resolution of all disputes pursuant to Section 2.6(c) by the
Stockholder Representative and Buyer and (iii) the resolution of all disputes
pursuant to Section 2.6(c) by the Independent Accounting Firm. The final
determinations of such matters shall be non-appealable and incontestable by the
Parties and each of their respective Affiliates and successors and assigns and
not subject to collateral attack for any reason other than manifest error or
fraud.
     (e) Reconciliation Payments. If the aggregate Product Return Amount as of
the date of a Return Statement, as determined pursuant to this Section 2.6,
exceeds the sum of $[...***...] plus the aggregate amount of all previous
payments to the Buyer pursuant to this Section 2.6(e), then such excess shall be
paid by the Escrow Agent to the Buyer from the Return Escrow Amount by wire
transfer of immediately available funds to the account designated by Buyer no
later than five (5) business days following the final determination of such
Product Return Amount in accordance with Section 2.6(d). Amounts held by the
Escrow Agent pursuant to the Return Escrow Agreement shall be the sole and
exclusive remedy of the Buyer and its Affiliates (including the Surviving
Corporation) in respect of any Product Return Amount. For the purposes of
clarity, the Buyer shall not be entitled to any payment, pursuant to this
Section 2.6 or otherwise, with respect to any portion of the aggregate Product
Return Amount that is less than $[...***...] or with respect to any portion of
the aggregate Product Return Amount that is in excess of $[...***...]. Any
portion of the Return Escrow Amount not required to be disbursed to the Buyer
pursuant to this Section 2.6(e) in respect of Return Statements delivered on or
before the three (3) year anniversary of the Effective Time shall be promptly
disbursed by the Escrow Agent to the Stockholder Representative (on behalf of
the Sellers).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
     The Sellers hereby jointly and severally represent and warrant to Buyer as
follows (except that the representations and warranties set forth in
Section 3.34 are made by each Seller severally as to himself or herself and not
jointly):
       3.1 Organization, Good Standing and Authority.
     (a) The Company is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to own its property and carry on its business as
now being conducted, to enter into and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party, and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the other Transaction Documents
to which the Company is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action on the part of the Company. Complete copies of the Certificate
*** Confidential Treatment Requested***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
of Incorporation and Bylaws of the Company, in each case as amended as of the
Effective Date (collectively, the “Company Organizational Documents”), have been
made available for review by Buyer. The Company is duly qualified or licensed to
do business and is in good standing in each jurisdiction where the character of
its business or the nature of its properties makes such qualification or
licensing necessary, except where the failure to be so qualified or be licensed
would not have a Material Adverse Effect on the Company.
     (b) DPT is a limited partnership, duly organized, validly existing and in
good standing under the laws of the State of Texas. DPT has full power and
authority to enter into and perform its obligations under the Amended and
Restated Manufacturing Agreement and the other Transaction Documents, if any, to
which it is a party, and to consummate the transactions contemplated thereby.
The execution, delivery and performance of the Amended and Restated
Manufacturing Agreement and the other Transaction Documents, if any, to which
DPT is a party, and the consummation of the transactions contemplated thereby,
have been duly authorized by all necessary action on the part of DPT.
     (c) Healthpoint is a limited partnership, duly organized, validly existing
and in good standing under the laws of the State of Texas. Healthpoint has full
power and authority to enter into and perform its obligations under the
Transition Services Agreement and the other Transaction Documents, if any, to
which it is a party, and to consummate the transactions contemplated thereby.
The execution, delivery and performance of the Transition Services Agreement and
the other Transaction Documents, if any, to which Healthpoint is a party, and
the consummation of the transactions contemplated thereby, have been duly
authorized by all necessary action on the part of Healthpoint.
       3.2 Enforceability of Transaction Documents.
     (a) This Agreement has been, and the other Transaction Documents to which
the Company is a party will be at Closing, duly executed and delivered by the
Company. This Agreement is, and the other Transaction Documents to which the
Company is a party will be, at Closing, the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors’ rights generally or general principles of equity.
     (b) The Amended and Restated Manufacturing Agreement and the other
Transaction Documents, if any, to which DPT is a party, will be, at Closing,
duly executed and delivered by DPT. The Amended and Restated Manufacturing
Agreement and the other Transaction Documents, if any, to which DPT is a party
will be at Closing, the legal, valid and binding obligations of DPT, enforceable
against DPT in accordance with their respective terms, except as such
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to creditors’ rights
generally or general principles of equity.
     (c) The Transition Services Agreement and the other Transaction Documents,
if any, to which Healthpoint is a party, will be, at Closing, duly executed and
delivered by Healthpoint. The Transition Services Agreement and the other
Transaction Documents, if any, to which

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Healthpoint is a party will be at Closing, the legal, valid and binding
obligations of Healthpoint, enforceable against Healthpoint in accordance with
their respective terms, except as such enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors’ rights generally or general principles of equity.
     3.3 No Conflicts.
     Except as set forth in Schedule 3.3, the execution and delivery by the
Company of this Agreement and each of the other Transaction Documents to which
the Company is a party, and the consummation by the Company of the transactions
contemplated hereby and thereby, will not (a) conflict with, violate, result in
a breach of, or otherwise contravene any provision contained in the Company
Organizational Documents, (b) violate or conflict with any material Legal
Requirement or any Order applicable to the Company, (c) require the Company to
give any notice to, make any filing with or obtain any consent from any Person
(including any Governmental Authority) or (d) result in a breach of, or
constitute a default under, any Material Contract.
       3.4 Capitalization.
     (a) The authorized capital stock of the Company consists solely of One
Hundred Thousand (100,000) shares of Company Common, of which, as of the
Effective Date, One Hundred Thousand (100,000) shares are issued and
outstanding, all of which are held of record and owned beneficially by the
Sellers as set forth on Exhibit A. The Sellers have good and legal title to all
of the issued and outstanding shares of Company Common, free and clear of all
Encumbrances, other than (i) any Encumbrances arising out of, under or in
connection with this Agreement, (ii) Encumbrances to be released at the Closing
pursuant to Section 2.2(a) or (iii) restrictions on resale and transfer pursuant
to the 1933 Act and similar state Legal Requirements. The issued and outstanding
shares of the Company Common are validly issued and are fully paid and
nonassessable. The Company has no other outstanding Equity Interests.
     (b) The Company has no Subsidiaries. The Company does not own of record or
beneficially, either directly or indirectly, any Equity Interests in any other
Person.
       3.5 Financial Statements.
     (a) The Company has delivered to Buyer the audited financial statements of
the Company as of and for each of the twelve-month periods ended December 31,
2005, December 31, 2006 and December 31, 2007, prepared in accordance with GAAP
consistently applied and based upon the operations of the Company as a division
of Healthpoint without restatement as though the Company were a separate entity
taxed as a corporation for federal income tax purposes (collectively, the
“Audited Financial Statements”). The Audited Financial Statements fairly present
in accordance with GAAP the financial condition, results of operations, owners’
equity and cash flows of the Company as a division of Healthpoint as of the
dates, and for the periods, indicated therein. The Company has also delivered to
Buyer the unaudited financial statements for the six-month period ending
June 30, 2008 (collectively, the “Unaudited Financial Statements” and, together
with the Audited Financial Statements, hereinafter referred to as the “Financial
Statements”). No event has occurred and nothing has come to the attention of the

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Company since December 31, 2007 to indicate that the Financial Statements were
not true and correct in all material respects as of the dates, and for the
periods, indicated therein.
     (b) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary (A) to permit preparation of
financial statements in conformity with generally accepted accounting principles
or any other criteria applicable to such statements, and (B) to maintain
accountability for assets; (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.
       3.6 Real Property.
     (a) The Company owns no real property, and has no contracts, options,
rights, agreements or other arrangements to acquire any real property.
     (b) The Company leases the Facility from Healthpoint under the Facility
Lease. The Company has made available to Buyer a true and complete copy of the
Facility Lease as of the Effective Date.
     (c) With respect to the Facility Lease: (i) such lease is legal, valid,
binding, enforceable and in full force and effect, and is the entire agreement
between the Company and Healthpoint with respect thereto; (ii) Healthpoint holds
good and marketable title to the Facility; (iii) the execution of this Agreement
and the consummation of the transactions contemplated hereby will not result in
a breach of or default under the Facility Lease, and will not otherwise cause
such lease to cease to be legal, valid, binding, enforceable and in full force
and effect; (iv) the Company’s possession and quiet enjoyment of the Facility
under the Facility Lease has not been disturbed and there are no material
disputes with respect to such lease; (v) neither the Company nor, to the
Sellers’ Knowledge, Healthpoint is in breach or default under the Facility
Lease, and no event has occurred or circumstance exists which, with the delivery
of notice, the passage of time or both, would constitute such a breach or
default, or permit the termination, modification or acceleration of rent under
the Facility Lease; (vi) the Company has not assigned the Facility Lease or
subleased, licensed or otherwise granted any Person the right to use or occupy
the Facility or any portion thereof; and (vii) the Facility Lease has not been
amended or modified since the time it was first made available to Buyer.
     (d) Except for the Facility and the Facility Lease, the Company does not
own or otherwise hold any leasehold interests under any leases with respect to
any other real property.
     (e) With respect to the Facility (which, for purposes of clarity, does not
include the entire building located at 3801 Hulen St., Fort Worth, Texas, but
only the portion thereof leased pursuant to the Facility Lease): (i) the
Facility is in adequate and suitable condition for the operation of the Business
as currently conducted, ordinary wear and tear excepted; (ii) there exists no
pending or, to Sellers’ Knowledge, threatened condemnation, foreclosure or
similar proceedings with respect to all or any portion of the Facility;
(iii) neither Sellers nor the

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Company has received any notice of any violation of any Legal Requirement
related to the Facility with which it has not complied; and (iv) at Closing, the
Facility will be in the possession and control of Buyer pursuant to the Amended
and Restated Facility Lease and no other Person shall have any right by or
through the Company or Healthpoint to possession of all or any part of the
Facility.
          3.7 Tangible Personal Property.
     The Company owns, leases or otherwise has the legal right to use all of the
tangible personal property, including but not limited to the equipment,
machinery and other tangible personal property reflected on the Company’s
Financial Statements (the “Tangible Personal Property”), used by the Company in
the conduct of the Business. The Company holds good and marketable title to each
item of such Tangible Personal Property, free and clear of all Encumbrances,
except for the Permitted Encumbrances. Each material item of such Tangible
Personal Property is free from material defects and is in good working order and
repair, normal wear and tear excepted.
          3.8 Brokers or Finders.
     Except as set forth on Schedule 3.8, neither the Company nor the Sellers
has incurred or will have any Liability for brokerage or finders’ fees or
agents’ commissions or other similar payment in connection with this Agreement
or the other Transaction Documents or the transactions contemplated hereby or
thereby.
          3.9 Environmental, Health and Safety Matters.
     (a) The Company is in compliance with each, and is not in violation of any,
applicable Environmental Law and Occupational Safety and Health Law, except for
such non-compliances as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company has not received any written
notice from any Governmental Authority or Person of any violation or failure to
comply with any Environmental Laws or Occupational Safety and Health Laws with
respect to any of the facilities or any other properties or assets in which the
Company has an interest (“Facilities”).
     (b) The Company has obtained all Governmental Authorizations that are
required under Environmental Laws (“Environmental Permits”) in connection with
the operation of the Business and the ownership, use, or lease of the
Facilities, a complete list of which is attached hereto on Schedule 3.9(b). The
Company is in compliance with each such Environmental Permit, and to the
Sellers’ Knowledge the Company’s predecessors were in compliance with each such
Environmental Permit, except for such non-compliances as would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
     (c) The Company has not received any written notice of any pending or, to
the Sellers’ Knowledge, threatened claims, actions, suits, proceedings,
investigations, assessments or complaints by any Governmental Authority arising
under or pursuant to any Environmental Law or Occupational Safety and Health Law
with respect to or affecting any of the Facilities.

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     (d) There are no underground storage tanks located on the Facilities and
now or previously operated by the Company or, to the Sellers’ Knowledge, its
predecessors.
     (e) To the Sellers’ Knowledge, no building or other improvement located on
the Facilities contains any asbestos or asbestos-containing materials in a
friable or damaged form or condition.
     (f) There has been no Release of any Hazardous Materials, or the engagement
in Hazardous Activities, by the Company or, to the Sellers’ Knowledge, its
predecessors on, in, or at the Facilities in violation of the Environmental
Permits or Environmental Laws, except for such Releases as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
     (g) To the Sellers’ Knowledge, there are no Hazardous Materials in the soil
or groundwater at the Facilities in concentrations above regulatory action
levels which require either remediation under Environmental Laws or the
reporting of the same to environmental regulatory agencies having jurisdiction
over the Facilities.
          3.10 No Undisclosed Liabilities.
     The Company has no Liabilities of any nature, except for (a) those
Liabilities set forth in the Financial Statements; and (b) those Liabilities
incurred in the ordinary course of business subsequent to June 30, 2008.
          3.11 Employee Benefit Plans.
     Schedule 3.11 sets forth a list of all bonus, deferred or incentive
compensation, profit sharing, retirement, vacation, sick leave, disability,
unemployment, accident, hospitalization or severance plans and agreements,
“employee benefit plans” (as defined in Section 3(3) of ERISA), employment and
consulting agreements, change in control agreements, retention and fringe
benefit plans sponsored, maintained or contributed to by the Company or any
ERISA Affiliate and in which the employees (or former employees) of the Company
participate or are entitled to participate as of the Effective Date or within
the six-year period ending on the Effective Date, whether or not in writing,
funded or unfunded (including, without limitation, any “voluntary employees’
beneficiary association” as defined in Section 501(c)(9) of the Code) (the
“Benefit Plans”). The Company is neither a plan sponsor nor a “named fiduciary”
of any Benefit Plan. The Company has made available to Buyer copies of all
documents (including the most recent plan document incorporating all plan
amendments, the most recent summary plan description and, if applicable, the
most recent IRS determination or opinion letter) embodying the Benefit Plans, as
well as annual reports (IRS Form 5500 series or the alternative filing, if
applicable, under ERISA Regulation Section 2520.104-23) and certified financial
statements for the most recently completed three fiscal years for each Benefit
Plan required to file such form, copies of all documentation relating to the
correction of any Benefit Plan defects under the IRS Employee Benefits
Compliance Resolution System, Department of Labor Voluntary Fiduciary Correction
program, Department of Labor Delinquent Filer Program or any other voluntary
correction program. Each of the Benefit Plans and each related trust agreement,
annuity contract or other funding instrument is, and has at all times been, in
compliance in all material respects with its terms and the applicable provisions
of ERISA and the Code, except

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
where the failure to comply would not have a Material Adverse Effect on the
Company. Each Benefit Plan that is subject to Section 401(a) or 408, as
applicable, of the Code and each related trust agreement, annuity contract or
other funding instrument is qualified and tax exempt under the applicable
provisions of the Code. No Benefit Plan is a Multiemployer Plan, nor has the
Company or any ERISA Affiliate incurred any withdrawal liability with respect to
any Multiemployer Plan or any liability in connection with the termination or
reorganization of any Multiemployer Plan. Except as otherwise set forth on
Schedule 3.11, all contributions, premiums or payments under or with respect to
each Benefit Plan are current and will have been paid as of the Closing Date or
accrued on the Closing Date Balance Sheet. For this purpose, “current” and
“accrued” shall include pro rata contributions, premiums and payments to each
Benefit Plan for that portion of a plan year or other applicable period that
precedes the Closing Date. No action is pending or, to the Sellers’ Knowledge,
threatened with respect to any Benefit Plan (other than claims for benefits in
the ordinary course) and, to the Sellers’ Knowledge, no fact or event exists
that could give rise to any such action.
     Except as otherwise set forth on Schedule 3.11, neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby will
result in any payment (whether for separation pay or otherwise) becoming due
from any of the Sellers, the Company or any ERISA Affiliate to any current or
former employee, director, or consultant, or result in the vesting, acceleration
of payment or increase in the amount of any benefit payable to or in respect of
any such current or former employee, director, or consultant of any of the
Sellers, the Company or any ERISA Affiliate. Other than agreements for which the
Company will obtain the necessary stockholder approval pursuant to Section 7.10,
there is no contract, agreement, plan or arrangement covering any current or
former employee, director, or consultant of the Sellers, the Company or any
ERISA Affiliate that individually or collectively could give rise to the payment
of any amount that would not be deductible pursuant to the terms of
Sections 162(a)(1), 162(m), and/or 280G of the Code or would require the payment
of an excise tax imposed by Section 4999 of the Code or of any “gross up” of any
such excise tax. None of the Benefit Plans provides for payment of “parachute
payments” (as defined in Section 280G(b)(2) of the Code), separation, severance,
termination or similar type benefits to any person or obligates the Sellers or
the Company to pay separation, severance, termination or similar type benefits
solely as a result of any transaction contemplated by this Agreement or as a
result of an event occurring under Section 280G(b)(2)(A)(i) of the Code. Except
as required by applicable Legal Requirements, none of the Benefit Plans provides
for or promises retiree medical, disability or life insurance benefits for any
current or former employee, officer or director of the Company or any ERISA
Affiliate or provides continuation coverage to any individual following
termination of employment or service with the Company. Neither the Sellers nor
any ERISA Affiliate have the right to modify or terminate any Benefit Plan that
provides coverage or benefits for either or both retired and active employees
and/or their beneficiaries. Each of the Benefit Plans is subject only to the
laws of the United States or a political subdivision thereof. No Benefit Plan is
an “employee stock ownership plan” (as defined in Section 4975(e)(7) of the
Code) or a plan that is or was subject to Title IV of ERISA, Section 412 of the
Code or Section 302 of ERISA.
     All persons classified by the Company as independent contractors satisfy
and have at all times satisfied the requirements of applicable law to be so
classified; the Company has fully and accurately reported their compensation on
IRS Forms 1099 when required to do so; and the

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Company has no obligations to provide benefits with respect to such persons
under Benefit Plans or otherwise. The Company does not employ and has not
employed any “leased employees” as defined in Section 414(n) of the Code.
     Each Benefit Plan that is subject to Section 409A of the Code has been
maintained and operated in good faith based on the proposed or final regulations
(as permitted by applicable guidance) and related IRS guidance issued and in
effect with respect to Section 409A of the Code and has been, or will be prior
to the Closing Date, amended to comply with Section 409A of the Code, and no
Benefit Plan subject to Section 409A of the Code would, as a result of its form,
trigger the imposition of penalty taxes under Section 409A of the Code.
     There has been no prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) with respect to any Benefit Plan (for
which an exemption does not exist under Section 408 of ERISA or Section 4975(d)
of the Code), which could result in the imposition of any material liability on
the Company. Neither the Company nor any ERISA Affiliate has incurred any
liability for any material penalty or tax arising under Section 4971, 4972,
4980, 4980B or 6652 of the Code or any material liability under Section 502 of
ERISA, and, to the Sellers’ Knowledge, no fact or event exists which could give
rise to any such liability. To the Sellers’ Knowledge, none of Sellers, the
Company nor any ERISA Affiliate has participated in a violation of Part 4 of
Title I, Subtitle B of ERISA by any fiduciary of a Benefit Plan or has any
unpaid civil penalty under Section 502(l) of ERISA.
          3.12 Company Products; Compliance with Legal Requirements; Permits.
     (a) Except as set forth on Schedule 3.12(a):
               (i) the Company possesses all regulatory authorizations required
to be held by it for the conduct of the Business as currently conducted, and has
complied and is in compliance with each Legal Requirement that is applicable to
it or to the conduct or operation of the Business or the ownership or use of any
of their assets, including, but not limited to, compliance with the Federal
Food, Drug and Cosmetic Act (the “FFDCA”) and the United States Food and Drug
Administration (“FDA”) regulations promulgated thereunder, or similar legal
provisions in any domestic or foreign jurisdiction where such Company Product is
currently being sold;
               (ii) each Company Product is being developed, manufactured,
tested, packaged, labeled, marketed, sold, and/or distributed in compliance with
all applicable requirements under the FFDCA or other applicable Legal
Requirements;
               (iii) all required notices, supplemental applications, and
reports (including adverse experience and medical device reports) with respect
to the Company Products have been filed with the FDA and all other applicable
Governmental Authorities;
               (iv) the Company Product registration files have been maintained
in accordance with reasonable industry standards and the Company has in its
possession or control, or has access to, copies of all the material
documentation filed in connection with filings made by the Company for
regulatory approval or registration of the Company Products, including the

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
complete regulatory chronology for each NDA or sNDA for each Company Product for
which an NDA or sNDA has been filed;
               (v) the Company has not received any written notice, or to the
Sellers’ Knowledge any oral notice, of any Proceedings or Orders from any
Governmental Authority or any other Person regarding any actual, alleged,
possible, or potential material violation of, or failure to comply in any
material respect with, any material Legal Requirement;
               (vi) the Company has not received any Paragraph IV Notification
under U.S.C. 355(j)(2)(B) relative to any patents listed in any NDA held by the
Company nor has the Company received any notice regarding any, and to Sellers’
Knowledge there are no, plans by any third party to file an ANDA relative to an
NDA held by the Company;
               (vii) to the Sellers’ Knowledge, there is no safety, quality,
efficacy, labeling or advertising, regulatory, legal or other issue concerning
any Company Product or components thereof, including any basis upon which
adverse regulatory enforcement action or claims may be brought against the
Company by any Governmental Authority; and
               (viii) no Company Product has been recalled, withdrawn,
suspended, or discontinued (whether voluntarily or otherwise).
     (b) Schedule 3.12(b) contains a list, which is complete and accurate in all
material respects, of the material Governmental Authorizations (other than the
Environmental Permits) that are held by the Company that relate to the Company
Products, the Business or any of the assets owned or used by the Company. Each
Governmental Authorization listed in Schedule 3.12(b) is valid and in full force
and effect. Except as set forth in Schedule 3.12(b):
               (i) the Company is in compliance with all of the material terms
and requirements of each Governmental Authorization identified on
Schedule 3.12(b);
               (ii) the Company has not received any written notice or other
written communication, or to the Sellers’ Knowledge any oral notice, by any
Governmental Authority or any other Person regarding (A) actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization;
               (iii) the Company has made available to the Buyer all
(A) approved and pending new drug applications (including section 505(b)(2)
applications), abbreviated new drug applications as of the date hereof,
specifying related reference-listed drugs, Paragraph IV patent certifications,
premarket approval applications, 510(K) premarket notifications, and the status
and results of all associated pre-clinical and clinical testing, investigational
new drug applications, and investigational device exemptions; (B) all
pre-clinical and clinical studies and trials and bioequivalence studies
referenced in the Company’s investigational device exemptions, investigational
new drug applications, pending new drug applications (including section
505(b)(2) applications) and abbreviated new drug applications as of the date
hereof, specifying related reference-listed drugs, and Paragraph IV patent
certifications, premarket approval

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
applications and/or clearances, and 510(K) premarket notifications filed with
the FDA, together with the dates and brief descriptions of such studies,
previously or currently undertaken or sponsored by (1) the Company or any
Affiliate, (2) to the Sellers’ Knowledge, its licensors and their respective
Affiliates and (3) to the Sellers’ Knowledge, any third party investigator and
such third party’s licensors, or any similar authorizations, applications,
certifications, study results and information in any domestic or foreign
jurisdiction, each as amended from time to time;
               (iv) the Company has made available to the Buyer true, complete
and accurate copies of all material data and reports with respect to such
applications, studies and trials, and all other material information regarding
the quality, efficacy and safety of the Company Products;
               (v) the Company has made available to the Buyer all material
correspondence and contact information between the Company, the FDA and other
Governmental Authorities regarding the Company Products;
               (vi) to the Sellers’ Knowledge, there are no safety or regulatory
issues that would preclude the Company from researching or conducting clinical
trials for pharmaceutical drugs or medical devices, including, but not limited
to, issues relating to the system for maintaining relevant documents, internal
audit systems, and any other regulatory-related matter;
               (vii) no Proceedings seeking the recall, withdrawal, suspension,
or seizure of any such Company Product are pending or, to the Sellers’
Knowledge, threatened against the Company or any of its Affiliates, nor have any
such Proceedings been pending at any time;
               (viii) none of the Company, its Affiliates or any officers or
employees of the Company or its Affiliates has been convicted of any crime or
engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or
any similar law or authorized by 21 U.S.C. § 335a(b) or, to the Sellers’
Knowledge, has been charged with or convicted under U.S. law for conduct
relating to the development or approval of pharmaceuticals, or otherwise
relating to the regulation of any Company Product or any other relevant or
analogous law in any comparable jurisdiction; and
               (ix) to the Sellers’ Knowledge, neither the Company nor any of
its Affiliates has used in any capacity the services of any Person that is or
has been excluded or threatened with exclusion under state or federal statutes
or regulations, including under 42 U.S.C. § 1320a-7 or relevant regulations in
42 C.F.R. Part 1001, or assessed or threatened with assessment of civil money
penalties pursuant to 42 C.F.R. Part 1003.
     (c) The Company has not made any untrue statement of material fact or
fraudulent statement to the FDA or any other Governmental Authority.

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
          3.13 Legal Proceedings.
     (a) Except as set forth in Schedule 3.13(a), there is no Proceeding pending
or, to the Sellers’ Knowledge, threatened that:
               (i) relates to or that would be reasonably likely to materially
affect the Company Products, the Business or any of the assets owned or used by
the Company;
               (ii) challenges, or that would be reasonably likely to have the
effect of preventing, delaying, or making illegal, or otherwise interfering
with, any of the transactions contemplated by this Agreement; or
               (iii) relates to any warranty claims regarding the Business.
     (b) Except as set forth in Schedule 3.13(b):
               (i) there is no Order to which the Company, or any of the assets
owned or used by the Company, is subject; and
               (ii) to the Sellers’ Knowledge, no senior executive of the
Company is subject to any Order or Contract that prohibits such senior executive
from engaging in or continuing any conduct, activity, or practice relating to
the Business.
     (c) Except as set forth in Schedule 3.13(c):
               (i) the Company is in full compliance with all of the material
terms and requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject; and
               (ii) the Company has not received any written notice, or to the
Sellers’ Knowledge any oral notice, from any Governmental Authority or any other
Person regarding any actual, alleged or potential violation of, or failure to
comply with, any material term or requirement of any Order to which the Company,
or any of the assets owned or used by the Company, are or have been subject.
          3.14 Insurance.
     (a) Schedule 3.14(a) sets forth a list, as of the Effective Date, of all
insurance policies with respect to which the Company is a named insured or that
provide coverage to the Company or to any director or any officer of the
Company, in his or her capacity as such, and, except as otherwise specified in
Schedule 3.14(a), such coverages are in full force and effect on the Effective
Date, shall be maintained in full force and effect through the Closing, and all
premiums due have been paid.
     (b) Except as set forth on Schedule 3.14(b), there are no pending claims in
excess of $25,000 against such insurance policies as to which insurers have
denied liability as of the Effective Date and there exist no claims in excess of
$25,000 that have not been timely submitted by the Company to the related
insurers.

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
          3.15 Absence of Certain Changes and Events.
     Since December 31, 2007, except as disclosed in the Financial Statements or
on Schedule 3.15 and except for the transactions contemplated hereby:
     (a) there has not been any material adverse change in the business,
financial condition, operations, prospects or results of operations of the
Company taken as a whole;
     (b) the Company has not declared, set aside or paid any dividend or other
distribution (whether in cash, stock or property) with respect to any of its
securities;
     (c) the Company has not split, combined or reclassified any of its
securities or altered the terms of any outstanding securities;
     (d) the Company has not issued any Equity Interest;
     (e) there has not been any amendment to the Company’s Organizational
Documents;
     (f) except in the ordinary course of business, the Company has not
(i) incurred any Indebtedness, (ii) issued any debt securities, or (iii) assumed
or guaranteed or otherwise become responsible for any Indebtedness of any
Person, in the case of (i), (ii) and (iii) above;
     (g) the Company has not made any acquisition (by merger, consolidation, or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof;
     (h) the Company has not canceled or compromised any material Indebtedness
or claim, or waived or released any material right of value or collected or
compromised any material accounts receivable other than in the ordinary course
of business;
     (i) except in the ordinary course of business, the Company has not created
or permitted to be imposed any Encumbrances, other than Permitted Encumbrances,
on any of its assets;
     (j) the Company has not sold, assigned or transferred any of its tangible
assets except in the ordinary course of business and except for any such assets
having an aggregate value of less than $250,000;
     (k) except in the ordinary course of business or as otherwise provided for
in this Agreement, the Company has not entered into or altered any contract that
would be a Material Contract or into any written employment or severance
agreement with any of the employees of the Company or any collective bargaining
agreement, nor made any changes in the rate of compensation, benefits,
commission, bonus or other direct or indirect remuneration payable, whether as
bonus, extra compensation, pension or severance or vacation pay or otherwise, to
any director, officer, employee, salesman, distributor, consultant or agent;
     (l) there has not been any material violation of or conflict with any law
to which the Company Products or the Business, operations, assets or properties
of the Company are subject;

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     (m) there has not been any material damage, destruction or loss with
respect to the property and assets of the Company, whether or not covered by
insurance;
     (n) the Company has not made any tax election nor changed its method of tax
accounting;
     (o) the Company has not made any material change in any method of
accounting, other than any such changes required by GAAP; and
     (p) the Company has not entered into any agreement or made any commitment
to take any of the types of actions described in any of subsections set forth
above.
          3.16 Material Contracts.
     (a) Schedule 3.16(a) contains a list of each of the following written
Contracts and a description of each of the following oral Contracts in effect as
of the Effective Date to which the Company is a party (“Material Contracts”):
               (i) all Contracts that Sellers reasonably anticipate will, in
accordance with their terms, involve aggregate payments by the Company of more
than $[...***...] within the twelve-month period following the Effective Date
and that are not cancelable by the Company without Liability on ninety (90) or
less days notice to the other Party thereto;
               (ii) all Contracts that Sellers reasonably anticipate will, in
accordance with their terms, involve aggregate payments to the Company of more
than $[...***...] within the twelve-month period following the Effective Date;
               (iii) all Contracts for the lease of personal property by the
Company anticipated to involve annual payments in excess of $[...***...] by the
Company and that are not cancelable without Liability on ninety (90) or less
days notice to the lessor;
               (iv) all employment Contracts;
               (v) all Contracts that limit or purport to limit the ability of
the Company to compete in any line of business or with any Person or in any
geographic area or during any period of time;
               (vi) all IP Licenses (excluding any licenses to generally
available, off-the-shelf software programs licensed to the Company on standard
terms, the cost of which does not exceed $[...***...]);
               (vii) all Contracts under which the Company has incurred any
Indebtedness or has directly or indirectly guaranteed indebtedness, liabilities
or obligations of any other Person;
               (viii) all Contracts under which the Company has directly or
indirectly made any advance, loan, extension of credit or capital contribution
to, or other investment in, any Person in excess of $[...***...];
*** Confidential Treatment Requested ***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
               (ix) all Contracts entered into since the Company’s incorporation
relating to the sale or purchase by the Company of any properties, assets or
business operations of any Person for a price in excess of $[...***...], other
than the purchase and sale of inventory in the ordinary course of the Business;
               (x) all Contracts regarding any partnership, joint venture,
strategic alliance or business combination that could reasonably be anticipated
to involve assets or liabilities in excess of $[...***...], other than this
Agreement and the other Transaction Documents; and
               (xi) all Contracts with any Related Party.
     (b) Except as specifically noted on Schedule 3.16(a), all Material
Contracts are in the name of the Company or have been specifically assigned to
the Company in compliance with the terms of such Material Contract. As of the
Effective Date, each Material Contract is valid and binding on the Company and,
to the Sellers’ Knowledge, on the other parties thereto, and is in full force
and effect. The Company is not in breach of, or default under, any Material
Contract and, to the Sellers’ Knowledge, no other party to any Material Contract
is in breach thereof or default thereunder. The Company has made available to
Buyer correct and complete copies of all Material Contracts, together with all
modifications or supplements thereto. Except as set forth on Schedule 3.16(b),
to Sellers’ Knowledge, no Material Contract is likely to not be renewed upon
current expiration of the term stated therein.
          3.17 Labor and Employment Matters.
     (a) Schedule 3.17(a) attached hereto contains:
               (i) a true, complete and correct list as of the Effective Date of
all employees of the Company, their job title, date of commencement of
employment, current compensation paid or payable, actual bonus for the year
ended December 31, 2007, any change in compensation since December 31, 2007, and
service credited for purposes of vesting and eligibility to participate under
any employee benefit plans;
               (ii) a true and complete list of any retired employees (or any
dependents of any retired employee) who are receiving or are scheduled to
receive any benefits from the Company; and
               (iii) a true and correct list as of the Effective Date of all
severance agreements or policies (whether written or oral) and any
non-competition agreements with current employees or any former senior
management employees who departed service with the Company within one year prior
to the Effective Date (copies of which have been made available to Buyer prior
to the date hereof).
     (b) As of the Effective Date, there is no pending, or to the Sellers’
Knowledge, threatened, lawsuit, strike, slowdown, picketing, work stoppage or,
to the Sellers’ Knowledge, any pending petition for certification of a
collective bargaining agent involving the Company.
*** Confidential Treatment Requested ***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     (c) As of the Effective Date, there is no pending, or to the Sellers’
Knowledge, threatened claim by any existing or former employee for violation of
any federal or state employment law.
     (d) Schedule 3.17(d) states the number of employees terminated by the
Company since December 31, 2007 and contains a complete and accurate list of the
following information for each employee of the Company who has been terminated
or laid off, or whose hours of work have been reduced by more than fifty percent
(50%) by the Company since December 31, 2007: (i) the date of such termination,
layoff or reduction in hours; (ii) the reason for such termination, layoff or
reduction in hours; (iii) the location to which the employee was assigned; and
(iv) any claim, or to Sellers’ Knowledge, threatened claim by any former
employee related to such employee’s employment with the Company.
     (e) The Company has not violated the Worker Adjustment and Retraining
Notification Act and related regulations, as amended, or any similar federal,
state, or local law, and will comply with and be responsible for any liability
under such laws prior to the Closing Date.
     (f) To the Sellers’ Knowledge, no officer, agent, employee, consultant or
contractor of the Company is bound by any contract that purports to limit the
ability of such officer, agent, employee, consultant or contractor (i) to engage
in or continue or perform any conduct, activity, duties or practice relating to
the Business, or (ii) to assign to the Company or to any other Person any rights
to any invention, improvement or discovery. To the Sellers’ Knowledge, no former
or current employee of the Company is a party to, or is otherwise bound by, any
contract that in any way restricts the ability of the Company or Buyer to
conduct the Business as heretofore carried on by the Company.
     (g) The Benefit Plans have complied in all material respects with all of
their obligations under COBRA and DFB maintains a group health plan for all
qualified beneficiaries who elect or had elected COBRA continuation coverage
under a Benefit Plan that is a group health plan.
     (h) The Company is in compliance with the employment provisions of the
Immigration Reform Act.
     (i) The Company is calculating and paying all hours worked by each and
every employee, and has paid all former employees, as required by the applicable
wage and hours laws and regulations.
          3.18 Intellectual Property.
     (a) Schedule 3.18(a) contains a complete and accurate list of the following
non-patent Company Intellectual Property (“Non-Patent IP”):
               (i) all common law and registered trademarks, service marks,
registered copyrights, trade names, fictitious names, domain names, logotypes
and designs owned by the

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Company, showing with respect to each the registration numbers of any state,
federal, or foreign registration of any such registered Non-Patent IP;
               (ii) all Non-Patent IP licensed to or used by the Company (copies
of which licenses or similar agreements relating thereto have been made
available to Buyer prior to the date hereof); and
               (iii) all Non-Patent IP used by any other Person under license or
similar agreement from the Company, including without limitation all Non-Patent
IP Licenses (other than those listed under Section 3.18(c)) setting forth the
names of the parties, a brief description of the subject matter thereof and the
exclusive or non-exclusive nature thereof (copies of which agreements relating
thereto have been made available to Buyer prior to the date hereof).
     (b) Schedule 3.18(b) contains a complete and accurate list, along with
applicable descriptions required herein, of all Company Intellectual Property
comprising domestic and foreign provisional patent applications and patents
owned or licensed by the Company and pending domestic and foreign patent
applications owned or licensed or used by the Company (“Patent IP”):
               (i) all Patent IP owned by the Company setting forth: (A) any
product, device, article, method of use or process covered thereby and (B) a
brief description of the use of the device, article or process in the Business;
               (ii) all Patent IP licensed to the Company or used by the Company
in the Business or in which the Company holds any other non-ownership right or
interest (copies of which agreements relating thereto have been made available
to Buyer prior to the date hereof); and
               (iii) all agreements whereby the Company has granted an ownership
interest in, or licensed to other Persons, any Patent IP (copies of which
agreements relating thereto have been made available to Buyer prior to the date
hereof).
     (c) Schedule 3.18(c) sets forth a complete and accurate list, along with
applicable descriptions required herein, of (i) all computer software comprising
Company Intellectual Property (excluding any generally available, off-the-shelf
software programs licensed to the Company on standard terms, the cost of which
does not exceed $[...***...]), and (ii) with respect to any such computer
software owned in whole or in part by or used in the operation of the Business
by the Company any third party Intellectual Property sold with, incorporated
into or used in the development of, such computer software, including without
limitation any Publicly Available Software.
     (d) As of the Effective Date: (i) the Company owns the entire right, title
and interest in, or possesses valid IP Licenses or other rights to, the Company
Intellectual Property; (ii) the Company Intellectual Property is valid and
enforceable and is not subject to any outstanding lien, judgment, injunction,
order, decree or agreement threatening the ownership, validity or use of the
Company Intellectual Property except as indicated on Schedule 3.18(d) and
Schedule 3.18(f); (iii) the Company Intellectual Property has not been and is
not being violated, infringed or
*** Confidential Treatment Requested ***

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
misappropriated by any third party except as set forth on Schedule 3.18(e);
(iv) with respect to all applications for and registrations of Company
Intellectual Property, such applications and registrations are valid and in full
force and effect; (v) there is no pending or, to the Sellers’ Knowledge,
threatened Proceeding to which the Company is a party claiming that the Company
has violated, misappropriated or infringed any Intellectual Property Rights of
any third party or committed an act of unfair competition in the operation of
the Business; (vi) neither the use of the Company Intellectual Property by the
Company, nor the making or the sale of the Company Products by the Company, has
violated, misappropriated or infringed, and neither is violating,
misappropriating or infringing, the Intellectual Property Rights of any third
party or has given rise to any claim of unfair competition under any applicable
law except as set forth on Schedule 3.18(d); (vii) with respect to each item of
Company Intellectual Property, the Company has the right to use such Company
Intellectual Property in the continued operation of the Business, and the
Company Intellectual Property constitutes all of the Intellectual Property
necessary to conduct the business of the Company as previously conducted or as
currently conducted; (viii) all IP Licenses are valid and enforceable and the
Company is in compliance with and has not breached, violated or defaulted under,
or received written notice that it has breached, violated or defaulted under,
any of the terms or conditions of any IP License, nor, to the Sellers’
Knowledge, has there been any event or occurrence that would reasonably be
expected to constitute such a breach, violation or default (with or without the
lapse of time, giving of notice or both); (ix) the Company has not ever agreed
to indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to any of the Company
Intellectual Property or any Intellectual Property Rights that were formerly
Company Intellectual Property except with respect to existing license agreements
between the Company and Healthpoint; (x) other than IP Licenses entered into by
the Company in the ordinary course of business, there are no settlements,
forbearances to sue, consent judgments or orders or similar obligations binding
upon the Company, or, to the Sellers’ Knowledge, upon any third party, that
restrict the Company’s rights to use any Company Intellectual Property or that
restrict the Company’s Business in order to accommodate a third party’s
Intellectual Property rights; and (xi) the execution, delivery and performance
of this Agreement and the other Transaction Documents by the Sellers and the
consummation of the transactions contemplated hereby and thereby will not
breach, violate or conflict with, in any material respect, any Intellectual
Property Right of any third party or any instrument or agreement concerning the
Company Intellectual Property or otherwise require the payment of any additional
amounts or consideration other than fees, royalties or payments which the
Company would otherwise have been required to pay had the Transactions not
occurred.
     (e) To the Sellers’ Knowledge, none of the Company’s respective current or
former employees, officers, directors, agents or consultants is in breach of
confidentiality restrictions in favor of any third person, the breach of which
could subject the Company to any Material Adverse Effect. The Company has
obtained from all parties (including employees and current or former consultants
and subcontractors) who have created any portion of, or otherwise who would have
any rights in or to, the Company Intellectual Property owned by the Company
valid and enforceable written assignments of any such work, invention,
improvement or other rights to the Company and have delivered true and complete
copies of such assignments to Buyer. To the Sellers’ Knowledge, no Employee,
former employee, consultant or former consultant of the Company has retained any
Intellectual Property from any written assignment executed by any

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
such Person in connection with work performed for or on behalf of the Company.
All amounts payable by the Company to any such Employees, consultants and former
consultants have been paid in full.
     (f) With respect to all Patent IP, the Company has complied with all the
requirements of all United States and foreign patent offices and all other
applicable Governmental Authorities to maintain the Patent IP in full force and
effect, including payment of all required fees when due to such offices or
agencies. Other than prior art references cited in the applicable patent office
file history of any Patent IP (a complete copy of which the Company has provided
to Buyer), to the Sellers’ Knowledge, there are no prior art references or prior
public uses, sales, offers for sale or disclosures that are likely to invalidate
the Patent IP or any claim thereof except as set forth on Schedule 3.18(f), or
of any conduct the result of which is likely to render the Patent IP or any
claim thereof invalid or unenforceable. The original, first and joint inventors
of the subject matter claimed in the Patent IP are properly named, and the
applicable statutes governing marking of products covered by the inventions in
the Patent IP have been fully complied with by the Company in the Business.
     (g) The Company has taken commercially reasonable measures to protect its
ownership of, and rights in, all Company Intellectual Property. Without limiting
the foregoing, the Company has not made any of its trade secrets or other
confidential or proprietary information that it intended to maintain as
confidential (including source code with respect to Company Intellectual
Property) available to any other Person except pursuant to written agreements
requiring such Person to maintain the confidentiality of such information.
     (h) No funding, facilities or personnel of any educational institution or
Governmental Authority were used, directly or indirectly, to develop or create,
in whole or in part, any Company Intellectual Property owned in whole or in part
by the Company, including any portion of a Company Product. The Company is not
or has not ever been a member or promoter of, or a contributor to, any industry
standards body or similar organization that could compel the Company to grant or
offer to any third party any license or right to such Company Intellectual
Property. There is no governmental prohibition or restriction on the use of any
Company Intellectual Property by the Company in any jurisdiction in which the
Company currently conducts or has conducted business or on the export or import
of any of the Company Intellectual Property from or to any such jurisdiction,
and no Governmental Authorization is required to be obtained for such export or
import.
          3.19 Suppliers and Customers.
     (a) Schedule 3.19 lists (i) the ten (10) largest suppliers of the Company
for the twelve (12) months ended December 31, 2007, and for the six (6) months
ended June 30, 2008, based on and listing the dollar volume (rounded to the
nearest $1,000), and (ii) the ten (10) largest customers of the Company for the
twelve (12) months ended December 31, 2007, and for the six (6) months ended
June 30, 2008, based on and listing the gross sales (rounded to the nearest
$1,000) (collectively, the “Key Customers”).
     (b) As of the Effective Date, none of the customers or suppliers listed on
Schedule 3.19 has delivered written notice, or to the Sellers’ Knowledge any
oral notice, to the

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Company that it intends to (i) cease or materially decrease purchasing from,
selling to or dealing with the Company, (ii) materially and adversely modify its
relationship (including any price increases) with the Company, or (iii) alter
any purchases, sales or dealings with the Company in the event of the
consummation of the transactions contemplated hereunder.
     (c) Schedule 3.19 sets forth all trade deals, trade promotions or programs,
trade refunds or cooperative programs or any consumer promotions and programs
involving the Company and the Key Customers.
     (d) Except with regard to initial launch quantities of new products or new
SKUs, sales of Company Product to wholesale customers is not reasonably expected
to exceed a thirty (30) day supply.
          3.20 Related Party Transactions.
     (a) Except for the transactions and arrangements as set forth on
Schedule 3.20(a) (each a “Related Party Transaction”), no Related Party (i) has
borrowed money from or loaned money to the Company that is currently outstanding
or otherwise has any cause of action or claim against the Company, (ii) has any
ownership interest in any property or asset used by the Company in the conduct
of the Business, or (iii) is a party to any Contract or is engaged in any
ongoing transaction with the Company (including any arrangements related to the
payment of royalties).
     (b) Schedule 3.16(a) sets forth a list of the Material Contracts which will
be required to be either assigned to the Company or subcontracted by the Company
from an Affiliate of the Sellers in order to continue the Company’s business in
accordance with past practice.
          3.21 No Product Liabilities; Product Warranties.
     There is no pending or, to the Sellers’ Knowledge, threatened Proceeding
alleging any material Liability of the Company as a result of any defect or
other deficiency with respect to any product sold or distributed by the Company
prior to the Effective Date. As of the Effective Date, no product manufactured
or sold by the Company has been the subject of any material recall or similar
action instituted by any Governmental Authority or undertaken by the Company on
a voluntary basis.
          3.22 Inventory.
     (a) Schedule 3.22(a) sets forth a complete and correct list of the
Inventory of the Company as of September 15, 2008. Such Inventory is currently
maintained at a DPT warehouse pursuant to that certain Warehousing and
Distribution Agreement, dated June 1, 2007, by and between the Company and DPT.
The Company has good and marketable title to the Inventory, free and clear of
any Encumbrances, except for the Encumbrances set forth on Schedule 3.22(a).
     (b) All Inventory of the Company reflected on the Closing Date Balance
Sheet, net of reserves set forth therein, consists of a quality and quantity
usable and salable in the ordinary

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course of business. The quantities of each item of Inventory are not excessive
and are reasonable in the present circumstances of the Company. All work in
process and finished goods Inventory is free of any material defect or other
deficiency. No Inventory is held on a consignment basis.
     (c) Other than Inventory for which an appropriate reserve is reflected on
the Closing Date Balance Sheet, none of such Inventory is obsolete and, as of
the Effective Time, each item of Inventory will, based upon the current
forecast, be shipped with at least twelve (12) months remaining until its expiry
date (for trade inventory). Other than Inventory for which an appropriate
reserve is reflected on the Closing Date Balance Sheet, none of such Inventory
is obsolete and, as of the Effective Time, each item of Inventory will have at
least three (3) months remaining until its expiry date (for sample inventory).
     (d) The Company Products that are in the process of being manufactured are
being manufactured, processed, packaged, labeled, stored, treated, tested,
distributed, transported, disposed and otherwise handled in material compliance
with all cGMPs and all Legal Requirements.
     (e) Since December 31, 2007, the Company has not (i) materially altered its
distribution practices or terms with respect to the Company Products, or
(ii) caused or effected a material increase in the inventory level of the
Company Products in the wholesale channel, other than in connection with the
launch of a new product.
     (f) The Company’s two (2) main wholesalers have provided to the Company
information which, to the Sellers’ Knowledge, reflects the Inventory level of
the Company Products maintained by such wholesalers as of July 31, 2008, and the
Company has delivered or made available to Buyer copies of such information.
          3.23 Accounts Receivable.
     Except as set forth on Schedule 3.23, the accounts receivable of the
Company as set forth on the Closing Date Balance Sheet or arising since the date
thereof are, to the extent not paid in full by the account debtor prior to the
date hereof, (a) valid and genuine and have arisen solely out of bona fide sales
and deliveries of goods, performance of services and other business transactions
in the ordinary course of business consistent with past practice and (b) not
subject to valid defenses, set-offs or counterclaims. The allowance for
collection losses on the Closing Date Balance Sheet and, with respect to
accounts receivable arising since the date of the Closing Date Balance Sheet,
the allowance for collection losses shown on the accounting records of the
Company have been determined in accordance with GAAP consistent with past
practice.
          3.24 Taxes.
     Except as set forth on Schedule 3.24,
     (a) the Company has timely filed or will have timely filed all Tax Returns
for the periods or portions thereof ending on or prior to the Closing Date that
are required to be filed on or prior to the Closing Date with any Taxing
Authority (taking timely requested extensions into account);

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     (b) such Tax Returns are complete and correct in all material respects;
     (c) all Taxes shown to be due and payable on such Tax Returns have been
paid or will be paid prior to Closing;
     (d) the Company has not received from any Governmental Authority any
written notice of proposed adjustment, deficiency or underpayment of any Taxes,
which notice has not been satisfied by payment or been withdrawn, and there are
no material claims that to the Sellers’ Knowledge have been threatened relating
to such Taxes against the Company, and to the Sellers’ Knowledge there are no
grounds for any such adjustments;
     (e) the Company is not a party to any pending audit, investigation, action
or proceeding with any Taxing Authority, nor to the Sellers’ Knowledge is any
such audit, investigation, action or proceeding by any Taxing Authority
threatened;
     (f) the Company is not a party to or bound by any Tax sharing agreement,
Tax allocation agreement or Tax indemnity agreement that will survive the
Closing;
     (g) the Company has not distributed stock of another Person, or has had its
stock distributed by another Person, in a transaction that was purported or
intended to be governed in whole or in part by Sections of 355 and 361 of the
Code;
     (h) there are no Tax liens upon any of the assets or properties of the
Company, other than with respect to Taxes not yet due and payable;
     (i) there are no outstanding agreements, waivers or arrangements extending
the statutory period of limitation applicable to any claim for, or the period
for the collection or assessment of, Taxes due from or with respect to the
Company for any taxable period;
     (j) no power of attorney granted by or with respect to the Company relating
to Taxes as currently in force and no closing agreement pursuant to Section 7121
of the Code (or any similar provision of any state or local law) has been
entered into by or with respect to the Company;
     (k) the Company is not and has never been a member of an affiliated group
of corporations filing a consolidated federal income Tax return and the Company
does not have any liability for the Taxes of any other Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of any state or local
law), as a transferee or successor, by contract, or otherwise;
     (l) the Company has duly and timely withheld from employee salaries, wages
and other compensation and other amounts subject to withholding under applicable
Tax laws, and paid over to the appropriate Governmental Authority, all amounts
required to be so withheld and paid over for all periods under all applicable
Legal Requirements;
     (m) the Company has collected all sales and use, goods and services, and
similar Taxes required to be collected, and has remitted, or will remit on a
timely basis, such amounts to the appropriate Governmental Authority, or has
been furnished properly completed exemption

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
certificates and has maintained all such records and supporting documents in the
manner required by all applicable sales and use Tax statutes and regulations;
     (n) the Company has not engaged in any transaction that could give rise to
(i) a reporting obligation under Section 6111 of the Code or the regulations
thereunder, (ii) a list maintenance obligation under Section 6112 of the Code or
the regulations thereunder, (iii) a disclosure obligation of a “reportable
transaction” under Section 6011 of the Code and the regulations thereunder, or
(iv) any similar obligation under any predecessor or successor law or regulation
or comparable provision of state or local law;
     (o) each asset with respect to which the Company claims depreciation,
amortization or similar expense for Tax purposes is owned for Tax purposes by
the Company; and
     (p) the Company has no outstanding rulings of, or requests for rulings
with, any Governmental Authority with respect to any Tax matter.
          3.25 Books and Records.
     The books, records and accounts of the Company accurately and fairly
reflect, in reasonable detail, the material transactions and the assets and
Liabilities of the Company. The Company has not engaged in any material
transaction, maintained any bank account or used any of the funds of the Company
other than transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the business. The
minute books (containing the records of the meetings, or written consents in
lieu of such meetings, of the stockholders, the board of directors and any
committees of the board of directors), the stock certificate books, and the
stock record books of the Company are correct and complete, in all material
respects, and have been maintained in accordance with sound business practices.
There are no resolutions or other actions of the stockholders, the board of
directors or any committee of the board of directors other than as disclosed in
the records of the meetings and written consents contained in the minute books.
At the Closing, all of those books and records will be in the possession of the
Company. At the Closing, the Company will deliver, or cause to be delivered, to
Buyer or its designee all of the minute books of the Company.
          3.26 Product Registration Files.
     The product registration files and dossiers of the Company have been
maintained, in all material respects, in accordance with applicable Legal
Requirements. The filings made by the Company for regulatory approval or
registration of the candidates, compounds or products of the Company were, at
the time of such filings, true and correct in all material respects.
          3.27 Brokers or Finders.
     Except for William Blair & Company, there is no investment banker, broker,
finder, financial advisor or other intermediary which has been retained by or is
authorized to act on behalf of the Company or its stockholders who is entitled
to any fee or commission in connection with the transactions contemplated by
this Agreement.

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
          3.28 Vote Required.
     The approval of the stockholders set forth on Exhibit A is the only vote of
any class of securities of the capital stock of the Company required to approve
this Agreement and the transactions contemplated by this Agreement.
          3.29 Full Disclosure.
     No representation or warranty made under any provision of this Agreement,
or the Disclosure Schedules, contains any untrue statement of material fact or
omits to state a material fact necessary to make the statement herein or therein
not misleading.
          3.30 Certain Business Practices.
     Within the past three (3) years, neither the Company nor, to the Sellers’
Knowledge, any director, officer, agent or employee of the Company has used any
Company funds for (a) unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity, (b) unlawful payments to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns, or for making any payments which violate any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c) any
other unlawful payment.
          3.31 Board Recommendation.
     The Board of Directors of the Company has (a) approved of the transactions
contemplated by this Agreement; and (b) recommended that the stockholders of the
Company vote in favor of the approval of this Agreement and Plan of Merger.
          3.32 Sufficiency of Assets.
     Except as set forth on Schedule 3.32, the assets of the Company constitute
all of the tangible assets reasonably necessary to operate the Business in the
manner and to the extent presently operated by the Company.
          3.33 Hart-Scott-Rodino.
     The Company is the Ultimate Parent of the Acquired Person. “Ultimate
Parent” and “Acquired Person” have the meanings set forth in the HSR Act.
          3.34 Seller Representations.
     Each Seller, severally as to himself or herself but not jointly, represents
and warrants to the Buyer that:
     (a) if the Seller is a corporation, (i) the Seller is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, (ii) the Seller has full corporate power and authority to enter
into, and perform its obligations under, this Agreement and the other
Transaction Documents, if any, to which it is a party, and to consummate the
transactions contemplated hereby and thereby, (iii) the execution, delivery and
performance of this

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Agreement and the other Transaction Documents, if any, to which the Seller is a
party, and the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary action on the part of the Seller, and
(iv) this Agreement and each of the other Transaction Documents, if any, to
which the Seller is a party, have been duly executed and delivered by the
Seller, and assuming the due authorization, execution and delivery of this
Agreement and such other Transaction Documents by the other parties hereto or
thereto, this Agreement and such other Transaction Documents constitute the
valid and binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms;
     (b) if the Seller is an individual, (i) the Seller has the requisite legal
capacity to enter into this Agreement, (ii) the Seller has the power and
authority to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby, and (iii) this Agreement has been duly
executed and delivered by the Seller, and assuming the due authorization,
execution and delivery of this Agreement by the other parties hereto, this
Agreement constitutes the valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms;
     (c) the execution and delivery of this Agreement by the Seller does not,
and the consummation of the transactions contemplated hereunder will not,
(i) violate the provisions of any of the charter, bylaws or other corporate
documents of the Seller, if applicable, (ii) violate any Contract to which the
Seller is a party, or (iii) violate any Legal Requirements applicable to the
Seller;
     (d) no notice to any Governmental Authority is required by the Seller in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder; and
     (e) there is no action pending or, to the Sellers’ Knowledge, threatened
against the Seller which challenges or seeks to enjoin, alter or materially
delay the consummation of the transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
     Buyer represents and warrants to the Sellers as follows:
          4.1 Organization and Good Standing.
     (a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Buyer has the full
corporate power and authority to own its property, to carry on its business as
now being conducted, and to carry out the transactions contemplated hereby.
     (b) Newco is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Newco has full corporate power
and authority to own its property and to carry out the transactions contemplated
hereby. Newco has been formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
not engaged in, and will not prior to the Effective Time engage in, any business
or other operations or activities, other than as required or contemplated by
this Agreement.
          4.2 Authority; Validity; Consents.
     Each of Buyer and Newco has the requisite power, capacity and authority
necessary to enter into and perform its obligations under this Agreement and the
other Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the other Transaction Documents by Buyer and
Newco and the consummation of the transactions contemplated herein and therein
have been duly and validly authorized by all necessary corporate actions in
respect thereof. This Agreement and the other Transaction Documents to which
Buyer or Newco is a party constitute legal, valid and binding obligations of
such party, enforceable against such party in accordance with their respective
terms except as such enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors’ rights generally or general principles of public policy. Except
for any required filing of a notification under the HSR Act, neither Buyer nor
Newco is required to give any notice to or obtain any consent from any Person in
connection with its execution and delivery of this Agreement or its consummation
or performance of any of the transactions contemplated hereby.
          4.3 No Conflict.
     Once the consents and other actions described in Section 4.2 have been
obtained and taken, the execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions provided for
herein and therein by Buyer and Newco will not result in the breach of any of
the terms and provisions of, or constitute a default under, or conflict with, or
cause any acceleration of any obligation of Buyer or Newco under (a) any
agreement, indenture, or other instrument to which it is bound, (b) the
organizational documents of Buyer, (c) the Certificate of Incorporation of
Newco, (d) any Order of any Governmental Authority or (e) any material Legal
Requirement.
          4.4 Legal Proceedings.
     There is no pending Proceeding that has been commenced or that has been
threatened, against or otherwise relating to or involving Buyer or any of its
subsidiaries (including Newco), or any of their respective assets or any of
their respective equity holders, officers or directors (in their capacities as
such), at law or in equity, that, individually or in the aggregate,
(a) challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated hereby or
(b) could reasonably be expected to have a Material Adverse Effect on the Buyer.
There is no Order in effect against Buyer or any of its subsidiaries (including
Newco), or any of their respective assets or any of their respective equity
holders, officers or directors (in their capacities as such) that could have the
effect of preventing, delaying, making illegal, materially altering or otherwise
interfering with, any of the transactions contemplated hereby, or that could
reasonably be expected to have a Material Adverse Effect on the Buyer.

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
          4.5 Brokers or Finders.
     Except as set forth on Schedule 4.5, neither Buyer nor Newco, nor any of
their respective officers, agents or affiliates, has any Liability for brokerage
or finders’ fees or agents’ commissions or other similar payment in connection
with this Agreement or the transactions contemplated hereby.
          4.6 Financing.
     Buyer has, and shall have as of the Closing, sufficient cash, available
lines of credit and other sources of immediately available funds to make
payments of the Merger Consideration and all other amounts to be paid by it
hereunder on and after the Closing Date.
          4.7 No Knowledge of Misrepresentations or Omissions.
     Buyer has no knowledge that the representations and warranties of the
Sellers in this Agreement and the Disclosure Schedules attached hereto are not
true and correct in all material respects, and Buyer has no knowledge of any
material errors in, or material omissions from, any Disclosure Schedule to this
Agreement.
          4.8 Solvency.
     Immediately after giving effect to the transactions contemplated by this
Agreement, Buyer and the Surviving Corporation shall be able to pay their
respective debts as they become due and shall own property which has a fair
saleable value greater than the amounts required to pay their respective debts
(including a reasonable estimate of the amount of all contingent liabilities).
Immediately after giving effect to the transactions contemplated by this
Agreement, Buyer and the Surviving Corporation shall have adequate capital to
carry on their respective businesses. No transfer of property is being made and
no obligation is being incurred in connection with the transactions contemplated
by this Agreement with the intent to hinder, delay or defraud either present or
future creditors of Buyer, the Surviving Corporation or any of their respective
Subsidiaries.
ARTICLE 5
PRE-CLOSING COVENANTS OF THE SELLERS
          5.1 Access and Investigation.
     Between the Effective Date and the Closing Date, the Company shall:
(a) afford Buyer and its Representatives access to, during normal business
hours, in a manner so as not to interfere with the normal business operations of
the Company and upon reasonable prior written notice, the properties, contracts,
books and records and other documents and data pertaining to the Company and the
operation of the Business, and (b) furnish Buyer and its Representatives with
such additional financial, operating and other data and information as they may
reasonably request. Buyer will treat and hold as strictly confidential any such
data or information it receives in the course of the reviews contemplated by
this Section 5.1, will not use any such data or information except in connection
with this Agreement, and, if this Agreement is terminated for any reason

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Commission. Confidential Treatment Requested Under
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whatsoever, will return to the Company all tangible embodiments (and all copies)
of the same which are in its possession or control.
          5.2 Operation of the Business.
     Except as otherwise contemplated or permitted by this Agreement or with the
prior consent of Buyer (such consent not to be unreasonably withheld or
delayed), between the Effective Date and the Closing Date, the Company shall
operate the Business only in the ordinary course of business consistent with
past practices (including, without limitation, with respect to accounts
receivable collection and accounts payable payment practices) and comply in all
material respects with all material Legal Requirements applicable to the
Company. The Company shall have the exclusive authority to manage and operate
the Business during the period between the Effective Date and the Closing Date.
          5.3 Negative Covenants.
     Except as otherwise contemplated or permitted by this Agreement, between
the Effective Date and the Closing Date, the Sellers and the Company shall not,
without the prior consent of Buyer (which shall not be unreasonably conditioned,
withheld or delayed), take any action that would cause the representations
contained in Section 3.15 to be untrue, as of the Closing Date, with respect to
the period from the Effective Date to the Closing Date.
          5.4 Required Approvals.
     The Sellers and the Company shall make all filings required by any Legal
Requirement to be made by them or it in order to consummate the transactions
contemplated hereby. Between the Effective Date and the Closing Date, the
Sellers and the Company shall reasonably cooperate with Buyer: (a) with respect
to all filings that Buyer is required by any Legal Requirement to make in
connection with the transactions contemplated hereby, (b) in obtaining all
consents identified in Schedule 3.3 to the extent requested by Buyer in writing,
and (c) to the extent required by the HSR Act, in filing within ten (10) days of
the Effective Date with the United States Federal Trade Commission and the
United States Department of Justice the notification and report form required
for the transactions contemplated hereby (which form shall request “early
termination”) and any supplemental or additional information which may
reasonably be requested in connection therewith pursuant to the HSR Act and will
comply in all material respects with the requirements of the HSR Act.
          5.5 Commercially Reasonable Efforts.
     Subject to the terms and conditions of this Agreement, between the
Effective Date and the Closing Date, the Sellers and the Company shall (a) use
commercially reasonable efforts (i) to cause the conditions in Article 7 to be
satisfied and (ii) to take all other actions to consummate the transactions
contemplated hereby, and (b) not take any action that will have the effect of
unreasonably delaying, impairing or impeding the receipt of any authorizations,
consents, orders or approvals to be sought pursuant to this Agreement.

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          5.6 Notice of Developments.
     Prior to the Closing, the Company shall notify Buyer of any change or
development which, to the Sellers’ Knowledge, would cause any of the
representations and warranties in Article 3 above not to be true and correct.
Any notice pursuant to this Section 5.6 shall not be deemed to amend the
Disclosure Schedules for purposes of determining whether (a) the conditions set
forth in Article 7 have been satisfied or (b) there has been a breach of a
representation or warranty subject to indemnification pursuant to Article 11 of
this Agreement; provided, however, any such update with respect to an event,
change or development that first occurred or that first became known to the
Sellers after the Effective Date shall be deemed to amend the Disclosure
Schedules for purposes of determining whether there has been a breach of a
representation or warranty subject to indemnification pursuant to Article 11 of
this Agreement.
          5.7 Exclusivity.
     Between the Effective Date and the Closing, the Sellers and the Company
shall not solicit, initiate, encourage or entertain the submission of any
Proposal or offer from any Person relating to the acquisition of all or
substantially all of the equity or the assets of the Company (including any
acquisition structured as a merger, consolidation, or exchange) or participate
in any discussions or negotiations regarding, furnishing any information with
respect to, assisting or participating in, or facilitating in any other manner
any effort or attempt by any Person to do or seek any of the foregoing.
          5.8 Closing Obligation.
     If Buyer has completed all of its obligations hereunder, and all of the
conditions precedent to the obligations of the Company and the Sellers to
Closing under Article 8 are satisfied (other than obligations and conditions
that are to be satisfied by actions taken at the Closing), and the Company and
the Sellers do not proceed with the Closing, then Buyer shall be entitled to
pursue any right or remedy available to Buyer under the circumstances, in
equity, including, without limitation, the right of specific performance to
enforce the closing of this Agreement.
ARTICLE 6
PRE-CLOSING COVENANTS OF BUYER
          6.1 Required Approvals.
     As promptly as practicable after the Effective Date, Buyer shall, and shall
cause its Affiliates to, make all filings required by any Legal Requirement to
be made by it to consummate the transactions contemplated hereby. Between the
Effective Date and the Closing Date, Buyer shall cooperate with the Sellers
(a) with respect to all filings that the Company or the Sellers are required by
any Legal Requirement to make in connection with the transactions contemplated
hereby, (b) in obtaining all consents identified in Schedule 3.3 to the extent
requested by the Sellers in writing, and (c) to the extent required by the HSR
Act (or any comparable foreign jurisdiction’s acts or requirements) and not
otherwise completed prior to the Effective Date, in filing within ten (10) days
after the Effective Date with the United States Federal Trade Commission and the
United States Department of Justice (or any applicable foreign jurisdiction’s
counterpart) the

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notification and report form (which form shall request “early termination”)
required for the transactions contemplated hereby and any supplemental or
additional information that may reasonably be requested in connection therewith
pursuant to the HSR Act (or any foreign jurisdiction’s requirements) and will
comply in all material respects with the requirements of the HSR Act (or such
foreign jurisdiction’s counterpart requirements). Buyer shall promptly deliver
to the Sellers copies of all filings, correspondence and Orders to and from any
Governmental Authority in connection with the transactions contemplated hereby.
          6.2 Non-Disclosure Obligations.
     The terms of the Non-Disclosure Agreement relating to preservation of the
confidentiality of information regarding the Company are hereby incorporated by
reference and shall continue in full force and effect until the Closing, at
which time such Non-Disclosure Agreement and the obligations of Buyer under this
Section 6.2 shall terminate. The Parties hereto acknowledge that the
confidentiality provisions of the Non-Disclosure Agreement shall cover all
information provided by the Sellers, the Company or their Representatives to
Buyer or any of its Representatives in connection with or pursuant to the terms
of this Agreement. Without limiting the provisions of the Non-Disclosure
Agreement, if, for any reason, the transactions contemplated by this Agreement
are not consummated, Buyer agrees that it will not disclose to any third person
or use for its benefit any confidential information relating to the Company, the
Sellers or the operation of the Business that it may have acquired in the course
of such examination and investigation and that it will promptly return and cause
its Representatives to return to the Company or its designee any property,
books, records or papers relating to the Company, the Sellers or the operation
of the Business and any copies thereof that Buyer or its Representatives may
then have in its or their possession.
          6.3 Commercially Reasonable Efforts.
     Subject to the terms and conditions of this Agreement, between the
Effective Date and the Closing Date, Buyer shall (a) use its commercially
reasonable efforts (i) to cause the conditions in Article 8 to be satisfied and
(ii) to take all other actions necessary to consummate the transactions
contemplated hereby, and (b) not take any action that will have the effect of
unreasonably delaying, impairing or impeding the receipt of any authorizations,
consents, orders or approvals to be sought pursuant to this Agreement.
          6.4 Closing Obligation.
     If the Company and the Sellers have completed all of their respective
obligations hereunder, and all of the conditions precedent to the obligations of
Buyer to Closing under Article 7 are satisfied (other than obligations and
conditions that are to be satisfied by actions taken at the Closing), and Buyer
does not proceed with the Closing, then the Company and the Sellers shall be
entitled to pursue any right or remedy available to them under the
circumstances, in equity, including, without limitation, the right of specific
performance to enforce the closing of this Agreement.

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ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER
     The obligation of Buyer and Newco to consummate the transactions
contemplated by this Agreement is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by
Buyer in whole or in part):
          7.1 Accuracy of Representations.
     The representations and warranties of the Sellers set forth in Article 3
shall be true and correct in all material respects (except that those
representations and warranties which are qualified as to material, materiality,
Material Adverse Effect or similar expressions shall be true and correct in all
respects) as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(provided that representations and warranties which speak as of a specified date
shall speak only as of such date).
          7.2 Sellers’ Performance.
     Each covenant and obligation that the Sellers are required to perform or to
comply with pursuant to this Agreement at or prior to the Closing shall have
been duly performed and complied with in all material respects (except that
those covenants and obligations which are qualified as to material, materiality,
Material Adverse Effect or similar expressions shall have been duly performed or
complied with in all respects), and Buyer shall have received a certificate of
the Sellers to such effect.
          7.3 No Order.
     No Governmental Authority shall have enacted, issued, promulgated or
entered any Order which is in effect and has the effect of making illegal or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement.
          7.4 Governmental Authorizations.
     All requisite Governmental Authorizations or waiting periods following
governmental filings shall have been obtained or expired (including expiration
of the applicable waiting periods under the HSR Act).
          7.5 Required Consents.
     The consents and waivers described on Schedule 7.5 shall have been
obtained.
          7.6 Agreements.
     Each of the documents referred to in Section 2.3 to be executed by the
Company, the Sellers, DPT and/or the Escrow Agent shall have been executed and
delivered by such Person.

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          7.7 No Material Adverse Effect.
     Since the Effective Date, no event, change, effect or condition shall have
occurred and exist that has had a Material Adverse Effect on the Company.
          7.8 Contributed Contracts.
     Affiliates of the Sellers shall specifically evidence the assignment or
subcontract to the Company of the contracts described on Schedule 7.8, and
provide evidence of any required third-party consents thereto.
          7.9 Release of Encumbrances.
     The Company shall deliver to the Buyer written evidence that the Company
has secured releases for all Encumbrances other than Permitted Encumbrances, and
guarantees by the Company of third-party indebtedness, including, without
limitation, existing encumbrances in favor of Bank of America, N.A.
          7.10 280G Approvals.
     The Company shall obtain the necessary stockholder approval of any payments
or benefits under any Benefit Plan or other agreement which the Company or Buyer
(by notice to the Company at least three business days prior to the Closing)
reasonably determines may constitute an “excess parachute payment” under
Section 280G of the Code as a result of the transactions contemplated by this
Agreement; provided that any communications to the stockholders regarding such
approval shall be made available to the Buyer and the Buyer shall have the right
to review and approve (which approval shall not be unreasonably withheld) such
communications before they are distributed to the stockholders. The Company
shall deliver to the Buyer prior to the Closing reasonable evidence either
(a) that the stockholder approval was solicited in conformance with Section 280G
and the regulations promulgated thereunder and the necessary stockholder
approval was obtained with respect to any payments and/or benefits that were
subject to the stockholder vote (the “280G Approval”), or (b) that the 280G
Approval was not obtained and, as a consequence, that such “excess parachute
payments” shall not be made or provided, as authorized under the waivers of
those payments and/or benefits which were executed by all of the affected
individuals.
          7.11 Termination of Certain Existing Agreements.
     Each of the following existing agreements shall have been terminated on
terms reasonably acceptable to Buyer: (i) the Intercompany Services Agreement,
dated June 1, 2007, by and between the Company and Healthpoint, (ii) the
Warehousing and Distribution Agreement, dated June 1, 2007, by and between the
Company and DPT, (iii) the Amended and Restated Shareholders Agreement, dated as
of August 29, 2006, by and among the Company and the shareholders of the
Company, and (iv) the Amended and Restated Transfer Restriction Agreement, dated
as of August 29, 2006, by and among the Company and the shareholders of the
Company.

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          7.12 Assignment of [...***...].
     Healthpoint shall have transferred the [...***...] to the Company, and
Healthpoint and the Company shall have entered into a [...***...] pursuant to
which [...***...] will [...***...] a [...***...] with respect to the
[...***...], all pursuant to documentation in a form mutually agreeable to each
of the Parties.
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE COMPANY AND THE SELLERS
     The obligation of the Company and the Sellers to consummate the
transactions contemplated by this Agreement is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by the Company, in whole or in part):
          8.1 Accuracy of Representations.
     The representations and warranties of Buyer set forth in Article 4 shall be
true and correct in all material respects (except that those representations and
warranties which are qualified as to material, materiality, Material Adverse
Effect or similar expressions shall be true and correct in all respects) as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (provided that
representations and warranties which speak as of a specified date shall speak
only as of such date) and the Sellers shall have received a certificate of Buyer
to such effect signed by a duly authorized officer thereof.
          8.2 Buyer’s Performance.
     The covenants and obligations that Buyer or Newco is required to perform or
to comply with pursuant to this Agreement at or prior to the Closing shall have
been performed and complied with in all material respects (except that those
covenants and obligations which are qualified as to material, materiality,
Material Adverse Effect or similar expressions, or are subject to the same or
similar type exceptions, shall have been performed and complied with in all
material respects), and the Sellers shall have received a certificate from Buyer
to such effect signed by a duly authorized officer thereof.
          8.3 No Order.
     No Governmental Authority shall have enacted, issued, promulgated or
entered any Order which is in effect and which has the effect of making illegal
or otherwise prohibiting the consummation of the transactions contemplated by
this Agreement.
          8.4 Governmental Authorizations.
     All requisite Governmental Authorizations or waiting periods following
governmental filings shall have been obtained or expired (including, if
applicable, expiration of the applicable waiting periods under the HSR Act).
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          8.5 Agreements.
     Each of the documents referred to in Section 2.3 to be executed by Buyer,
Newco and/or the Escrow Agent shall have been executed and delivered by such
Person. Each of the actions referred to in Section 2.3 to be performed by Buyer
or Newco shall have been performed by such Person.
ARTICLE 9
POST-CLOSING COVENANTS
          9.1 Access to Books, Records, Etc.
     Buyer agrees that, after the Closing, it will, and will cause the Surviving
Corporation to, cooperate with and make available to the Sellers during normal
business hours and upon reasonable notice, all books and records, information
and employees (without substantial disruption of employment) retained and
remaining in existence after the Closing Date that are necessary or useful in
connection with any inquiry, audit, investigation, dispute, litigation or other
proceeding or similar matter, including the preparation of the Closing Date
Balance Sheet. Buyer agrees that it shall, and shall cause the Surviving
Corporation to, preserve and keep all books and records of Buyer, Newco and the
Company for a period of at least seven (7) years from the Closing Date.
     The Sellers agree that, after the Closing, they will cause Healthpoint to
make available to the Sellers during normal business hours and upon reasonable
notice, all books and records and information relating to the Business retained
and remaining in existence after the Closing Date that is necessary or useful in
connection with any inquiry, audit, investigation, dispute, litigation or other
proceeding or similar matter. The Sellers agree that they shall cause
Healthpoint to preserve and keep all such books and records for a period of at
least seven (7) years from the Closing Date.
          9.2 Further Assurances.
     In case at any time after the Closing any further action is necessary to
carry out the purposes of this Agreement, each of the Parties shall (and shall
cause their subsidiaries to) take such further action (including the execution
and delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Article 11).
          9.3 Litigation Support; Attorney-Client Privilege.
     In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (a) any transaction contemplated
under this Agreement or (b) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving the
Company, each of the other Parties shall (and shall cause their subsidiaries to)
cooperate with him, her, or it and his, her, or its counsel in the defense or
contest, make available their personnel, and provide such testimony and access
to their books and records as shall be necessary in connection with the defense
or contest, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification
therefor under Article 11).

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          9.4 Employee Benefit Arrangements.
     Buyer shall have no liability with respect to any of the Benefit Plans and
the Sellers and the Company shall terminate all Benefit Plans sponsored by the
Company immediately prior to the Closing Date or take all necessary action to
cause the Company to cease to be a participating employer in any Benefit Plans
sponsored by the Sellers. However, for a period of at least one year after the
Closing Date, for so long as the Surviving Corporation continues to employ an
individual who was an employee of the Company at Closing, Buyer agrees to cause
the Surviving Corporation to pay to such employee substantially similar
compensation (including base salary and a comparable bonus plan, but excluding
equity or phantom equity awards and 401(k) match contributions) as that paid by
the Company to such employee immediately prior to the Closing, and to provide
such employee with Buyer benefits that are substantially similar in the
aggregate to the benefits provided to such employee under the Benefit Plans
immediately prior to the Closing. In addition, Buyer shall cause the Surviving
Corporation to (a) grant credit to each employee of the Company for all unused
vacation and sick leave existing as of the Closing and (b) recognize service
with the Company prior to the Closing as deemed service with the Surviving
Corporation for purposes of any length of service requirements, waiting periods,
vesting periods (other than with respect to any Buyer equity incentives) and
differential benefits based on length of service, and with credit under any
welfare benefit plan for any deductibles or co-insurance paid for the current
plan year under any plan maintained by the Company, to the extent permitted by
such plan. To the extent any amounts payable to or for the benefit of the
employees of the Company with respect to any Benefit Plan or otherwise is set
forth on the Closing Date Balance Sheet, Buyer agrees to cause the Surviving
Corporation to pay such amounts to or for the benefit of the employees of the
Company. In the event that the Buyer or the Surviving Corporation terminates any
employee after the Closing without cause, the Buyer shall be responsible for the
payment of any applicable Buyer Severance Expenses.
          9.5 Cooperation on Tax Matters; Transfer Taxes.
     (a) The Sellers shall cause to be prepared and submit to the Buyer for
timely filing all Tax Returns of the Company for the taxable periods ending on
or prior to the Closing Date (“Pre-Closing Tax Period”) that are due after the
Closing Date and Sellers shall pay any Taxes due thereon. After the Closing and
in connection with the preparation of any such Tax Returns, Buyer and the
Surviving Corporation shall grant or cause to be granted to the Sellers, or
their representatives, access to all of the information, books and records
relating to the Company within Buyer’s or the Surviving Corporation’s possession
or control and shall furnish the assistance and cooperation of such personnel of
Buyer and the Surviving Corporation as may reasonably be requested in connection
therewith. Sellers shall be entitled to any credits or refunds of income Taxes
of the Company with respect to any taxable periods of the Company ending before
the Closing Date. Buyer shall prepare or cause to be prepared and file or cause
to be filed any Tax Returns of the Surviving Corporation for periods that end
after the Closing Date; it being understood that all Taxes shown as due and
payable on such Tax Returns shall be the responsibility of Buyer. The Parties
further agree and acknowledge that (i) the Company’s Transaction Expenses not
subject to capitalization shall be expenses of the Company reported on its Tax
Returns for the short taxable year ending on the Closing Date, and (ii) neither
the

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Surviving Corporation nor Buyer shall deduct the Company’s Transaction Expenses
not subject to capitalization on any Tax Return for any taxable period beginning
after the Closing Date.
     (b) The Sellers shall be liable for, and shall pay any and all transfer,
sales, use, excise, goods and services, health services, conveyance, recording
or any other similar fees or Taxes (including, without limitation, title
recording or filing fees, transfer Taxes and other amounts payable in respect of
transfer filings), and all documentary or other stamp Taxes, arising out of or
related to the Merger and the other transactions contemplated by this Agreement.
The Parties shall consult with each other in good faith and shall cooperate
fully with each other in planning for the reduction or elimination of any such
Taxes.
     (c) If a claim for Taxes, including, without limitation, notice of a
pending or threatened audit, shall be made by any Taxing Authority in writing (a
“Tax Claim”), which, if successful, might result in an indemnity payment
pursuant to this Agreement, the party seeking indemnification (the “Tax
Indemnified Party”) shall notify the other party (the “Tax Indemnifying Party”)
in writing of the Tax Claim within 15 business days of receipt of such Tax
Claim. If notice of a Tax Claim (a “Tax Notice”) is not given to the Tax
Indemnifying Party within such 15 day period, the Tax Indemnifying Party shall
not be liable to the Tax Indemnified Party to the extent the Tax Indemnified
Party was materially prejudiced by such delay. The Sellers shall have the sole
right to represent the interests of the Surviving Corporation in any Tax audit
or administrative or court proceeding relating to the Pre-Closing Tax Period,
and to employ counsel of their choice; provided, however, if any issue or
potential adjustment in such proceeding would or could result in an increase in
the Surviving Corporation’s Taxes for any period following the Closing Date,
then the Surviving Corporation shall have the right to participate in such
proceeding (as it relates to such issue or adjustment) and Sellers shall not be
entitled to settle or compromise such issue or adjustment without the prior
consent of the Surviving Corporation. If the Sellers decide not exercise such
right, the Sellers shall be entitled to participate in the defense of any claim
for Taxes for the Pre-Closing Tax Period that may be subject to indemnification
by the Sellers pursuant to this Section 9.5. Notwithstanding the foregoing,
neither Buyer nor the Surviving Corporation shall be entitled to settle, either
administratively or after the commencement of litigation, any claim for Taxes
that would result in a claim for indemnification pursuant to Section 9.5 without
the prior written consent of the Stockholder Representative.
     (d) Until the Closing Date, the Company shall not make or change any
material election in respect to Taxes, adopt or change any accounting method in
respect to Taxes, enter into any closing agreement settle any claim or
assessment in respect of Taxes, file any amended Tax return, surrender any
refund claim, or consent to any extension or waiver of the limitation period or
period of assessment or reassessment applicable to any claim or assessment in
respect of Taxes, except with the prior written consent of Buyer, which consent
shall not be unreasonably withheld or delayed.
     (e) The Stockholder Representative shall be entitled, where permitted by
law, to elect to carry back to a Pre-Closing Tax Period or Periods any net
operating loss, net capital loss, charitable contribution or other Tax item
attributable to the Pre-Closing Tax Period. In connection therewith, the Buyer
or the Surviving Corporation shall permit the Stockholder

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Representative to control the prosecution of any such refund claim at the
Sellers’ expense and, where deemed appropriate by the Stockholder
Representative, shall cause the Surviving Corporation and any of its successors
to authorize by appropriate powers of attorney such persons as the Stockholder
Representative shall designate to represent the Surviving Corporation or any of
their successors with respect to such refund claim. Any refunds or credits of
Taxes of the Company received from the applicable Taxing Authority for the
Pre-Closing Tax Period (including, without limitation, refunds or credits
arising by reason of amended Tax Returns filed after the Closing Date) shall be
for the account of the Sellers and shall be paid by Buyer or the Surviving
Corporation to the Stockholder Representative within 10 days after Buyer or the
Surviving Corporation receives such refund or after the relevant Tax Return is
filed in which the credit is applied against the Surviving Corporation’s or
Buyer’s or their Affiliates’ liability for Taxes.
     (f) Except for the offset rights set forth in Section 11.8, this
Section 9.5 shall govern the procedures with respect to Taxes. Notwithstanding
any provision of this Agreement to the contrary, the covenants, agreements and
obligations of the Parties in this Section 9.5 shall survive the Closing.
          9.6 Restrictive Covenants.
     (a) Each Seller covenants that, during the Noncompetition Period, such
Seller shall not, and it shall cause its Affiliates not to, directly or
indirectly, in any capacity, work for, engage in or have any direct or indirect
ownership interest in, or permit such Seller’s or any such Affiliate’s name to
be used in connection with, any business anywhere in the United States which is
engaged, either directly or indirectly, in the business of developing, marketing
or selling any dermatologic products that are competitive with products
manufactured, marketed, and sold by, or services provided by, the Company as of
the Effective Date; provided, however, such Seller and its Affiliates shall be
able to sell skin products in the acute care (i.e., hospital, wound care
clinics, surgery centers, outpatient clinics and home health) and extended care
(i.e., nursing home and retirement home) markets as well as wound care products
in the dermatology market for the treatment, prevention or healing of wounds;
and, provided further, such Seller and its Affiliates shall continue to have the
ability to manufacture and perform research and development and other services
related to such products as well as dermatologic products of any kind or nature,
including dermatologic products substantially similar to and in direct
competition with any of the Company Products or future products to be developed
by the Buyer or its Affiliates, provided that the Sellers do not use or
otherwise disclose any Company Intellectual Property in the process of
performing and/or providing such services, and provided further, that such
manufacturing, research and development activities or other related services are
for the sole benefit of and on behalf of unaffiliated independent third parties
(the “Restricted Business”). It is recognized that the Restricted Business is
expected to be conducted throughout the United States and that more narrow
geographical limitations of any nature on this non-competition covenant (and the
non-solicitation covenant set forth in Section 9.6(b)) are therefore not
appropriate.
     (b) Each Seller covenants that, commencing on the Closing Date and for a
period of 24 months after the Closing Date, such Seller shall not, and it shall
cause its Affiliates not to,

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solicit the employment or engagement of services of any person who is or was
employed as an employee, consultant or contractor of the Company on the
Effective Time or at any time within the twelve (12) months preceding the
Effective Time; provided, however, the Sellers and their Affiliates shall be
permitted to (i) solicit the employment or engagement of services of any such
person who is affirmatively terminated by the Surviving Corporation after the
Closing Date, (ii) solicit the employment or engagement of services of any such
person who resigns from the Surviving Corporation if such person is required by
the Surviving Corporation to relocate to a place of employment that is more than
30 miles away from their place of employment as of the Effective Time,
(iii) engage in any advertisement for, or general solicitation of, employment
that is not specifically targeted at such persons or (iv) hire any such person
who responds to any solicitation permitted by clause (i), clause (ii) or clause
(iii); and provided further, that the Surviving Corporation shall not be
obligated to pay severance to any employee hired by any Seller or their
Affiliates, as permitted by this Section 9.6, during the period in which such
employee is also employed by any Seller or its Affiliates.
     (c) The Sellers acknowledge that the restrictions contained in this
Section 9.6 are reasonable and necessary to protect the legitimate interests of
the Buyer and constitute a material inducement to Buyer to enter into this
Agreement and consummate the transactions contemplated by this Agreement. The
Sellers acknowledge that any violation of this Section 9.6 will result in
irreparable injury to Buyer and agree that Buyer shall be entitled to
preliminary and permanent injunctive relief without the necessity of proving
actual damages.
     (d) In the event that any covenant contained in this Section 9.6 should
ever be adjudicated to exceed the time, geographic, product or service or other
limitations permitted by applicable Legal Requirements in any jurisdiction, then
any court is expressly empowered to reform such covenant, and such covenant
shall be deemed reformed, in such jurisdiction to the maximum time, geographic,
product or service or other limitations permitted by applicable Legal
Requirements. The covenants contained in this Section 9.6 and each provision
thereof are severable and distinct covenants and provisions. The invalidity or
unenforceability of any such covenant or provision as written shall not
invalidate or render unenforceable the remaining covenants or provisions hereof,
and any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such covenant or provision in any other
jurisdiction.
          9.7 Confidential Information.
               The Sellers covenant that they shall, and shall cause their
Affiliates to, hold confidential all Company Intellectual Property and all other
proprietary technical, financial and business information relating to the
Company, which may include, but is not limited to, technical data, trade
secrets, know-how, intellectual property or other materials owned or controlled
by the Company at the time of Closing, including, but not limited to, research,
product plans, products, samples, specifications, service plans, services,
customer lists, customers, markets, software, developments, inventions,
processes, formulas, chemical applications, laboratory instruments, laboratory
methods of analysis, interpretation of lab results, techniques, technology,
manufacturing methods, designs, drawings, engineering, marketing, distribution
and sales methods and systems, sales and profit figures, finances and other
business information, and all analyses, compilations, studies or other materials
prepared by or on behalf of the Company.

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          9.8 Negotiation of Property Purchase.
               For a period of six (6) months following the Effective Time, the
Parties will negotiate in good faith with respect to the purchase by the
Surviving Corporation (or such other Affiliate of the Buyer as the Buyer may
designate) of the real property that is subject to the Amended and Restated
Facility Lease.
          9.9 Certain Company Liabilities.
               DFB acknowledges and agrees that it shall be obligated to pay,
and shall pay within a reasonable time after the Closing Date, all amounts
arising through the Closing Date with respect to Company employee bonuses,
401(k) matching payments and self-insured medical claims.
ARTICLE 10
TERMINATION
          10.1 Termination Events.
     This Agreement may be terminated prior to the Closing:
     (a) by mutual written consent of the Company and Buyer;
     (b) by written notice from the Company to Buyer if the transactions
contemplated hereunder shall not have been consummated by November 15, 2008 (as
such date may be extended as provided below, the “End Date”) (unless the failure
to consummate the transactions contemplated hereunder is attributable to the
breach of any representations or a failure on the part of the Company or the
Sellers or their respective Affiliates to perform any obligation required to be
performed by such Party or its Affiliates at or prior to the Closing);
     (c) by written notice from Buyer to the Company if the transactions
contemplated hereunder shall not have been consummated by the End Date (unless
the failure to consummate the transactions contemplated hereunder is
attributable to the breach of any representations or a failure on the part of
Buyer or its Affiliates to perform any obligation required to be performed by
Buyer or its Affiliates at or prior to the Closing);
     (d) by written notice from Buyer to the Company, unless Buyer is then in
material default or breach of this Agreement, following a material breach of any
covenant or agreement of the Sellers or the Company contained in this Agreement,
or if any representation or warranty of the Sellers contained in this Agreement
shall be or shall have become inaccurate, in either case such that any of the
conditions set forth in Section 7.1 and Section 7.2 would not be satisfied as of
the time of such breach or as of the time such representation or warranty was or
shall have become inaccurate; provided, however, that: (i) if such breach or
inaccuracy is curable by the Sellers or the Company, then Buyer may not
terminate this Agreement under this Section 10.1(d) with respect to the
particular breach or inaccuracy provided the Sellers or the Company cures such
breach or inaccuracy within thirty (30) days after written notice of such breach
from Buyer is received by the Company; and (ii) the right to terminate this
Agreement under this

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Section 10.1(d) shall not be available to Buyer if the breach is the result of
any willful act on the part of Buyer designed to impede the consummation of any
transaction contemplated hereby; or
     (e) by written notice from the Company to Buyer, unless the Company or any
Seller is then in material default or breach of this Agreement, following a
material breach of any covenant or agreement of Buyer or Newco contained in this
Agreement, or if any representation or warranty of Buyer contained in this
Agreement shall be or shall have become inaccurate, in either case such that any
of the conditions set forth in Section 8.1 and Section 8.2 would not be
satisfied as of the time of such breach or as of the time such representation or
warranty was or shall have become inaccurate; provided, however, that: (i) if
such breach or inaccuracy is curable by Buyer or Newco, then the Company may not
terminate this Agreement under this Section 10.1(e) with respect to the
particular breach or inaccuracy provided Buyer or Newco cures such breach or
inaccuracy within thirty (30) days after written notice of such breach from the
Company is received by Buyer and (ii) the right to terminate this Agreement
under this Section 10.1(e) shall not be available to the Company if the breach
is the result of any willful act on the part of the Company or the Sellers
designed to impede the consummation of any transaction contemplated hereby.
Notwithstanding the foregoing, in the event that, as of the End Date, all
conditions to the obligations of the Parties set forth in Article 7 and
Article 8 have been satisfied or waived (other than those that are to be
satisfied by action taken at the Closing) other than the condition that all
Governmental Authorizations or waiting periods following governmental filings
required under the HSR Act have been obtained or expired (as set forth in
Section 7.4 and Section 8.4), then the End Date shall automatically be extended
to January 15, 2009.
          10.2 Effect of Termination.
     In the event of any termination of this Agreement pursuant to Section 10.1,
this Agreement shall immediately become void and there shall be no liability or
obligation on the part of any Party to consummate the transactions contemplated
hereby; provided, however, that (a) no such termination shall relieve any Party
from liability for damages arising out of or with respect to the breach of this
Agreement by such Party prior to such termination and (b) the confidentiality
provisions of Section 6.2, and the expense responsibility provisions of
Section 12.12 shall remain in full force and effect and survive any termination
of this Agreement.
ARTICLE 11
INDEMNIFICATION; REMEDIES
          11.1 Survival.
     The representations and warranties contained in Section 3.[...***...],
Section 3.[...***...] and Section 3.[...***...] shall survive in perpetuity; the
representations and warranties contained in Section 3.[...***...],
Section 3.[...***...] and Section 3.[...***...] shall survive until the
expiration of the statute of limitations applicable thereto (without regard to
any extensions thereof); and the other representations and warranties of the
Parties contained in this Agreement shall survive the Closing until the date
that is eighteen (18) months following the Closing. (The representations and
warranties contained in Section 3.[...***...], Section 3.[...***...],
Section 3.[...***...], Section
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3.[...***...], Section 3.[...***...] and Section 3.[...***...] are collectively
hereinafter referred to as the “Unlimited Representations.”) The covenants and
other agreements made by the Parties in this Agreement shall survive the
execution and delivery of this Agreement and the Closing and continue in full
force and effect thereafter for the time period specified in the respective
covenant or, if no time period is specified, for so long as such covenants
remain executory in nature. Notwithstanding anything to the contrary contained
in this Agreement, no claim with respect to a breach of any representation or
warranty may be asserted nor any action commenced against any Party obligated to
provide indemnification pursuant to this Article 11 unless written notice
describing in reasonable detail the facts and circumstances with respect to the
subject matter of such claim or action is received by such Party on or prior to
the date on which the representation or warranty on which such claim or action
is based ceases to survive as set forth in this Section 11.1; provided, however,
that any written notice of a claim submitted in accordance herewith (including
the requirement that the facts and circumstances of such claim be described in
reasonable detail) shall be deemed to preserve the subject matter of such claim
for indemnification for purposes hereof even if the Losses attributable to such
claim have not, as of the date the claim is submitted, been paid or even
definitively quantified so long as the amount of such claim has been accrued
for, in accordance with GAAP, on the balance sheet of the party suffering such
Losses.
          11.2 Indemnification by the Sellers.
     (a) Subject to the limitations set forth below, including specifically, the
limitations contained in Section 11.2(b), Section 11.2(c) and Section 11.2(d),
the Sellers agree, subject to the other terms and conditions of this Article 11,
to indemnify, defend and hold harmless Buyer and Newco (and with respect to any
period after the Effective Time, the Surviving Corporation), and each of their
respective directors, officers, employees and Affiliates (collectively, the
“Buyer Indemnitees”), from and against any and all Losses incurred or suffered
by any such Buyer Indemnitee that are related to or arise, directly or
indirectly, out of (i) the breach of any representation or warranty of the
Sellers contained in Article 3 of this Agreement or in any certificate delivered
by the Stockholder Representative at the Closing pursuant to Section 7.1 as it
related to such representations and warranties, (ii) any breach by the Sellers
of any covenants or agreements to be performed by the Sellers pursuant to this
Agreement, (iii) any breach by the Company of any covenants or agreement to be
performed by it pursuant to this Agreement on or prior to the Closing Date,
(iv) [...***...] arising from the [...***...] or [...***...] of the [...***...]
or [...***...] of the [...***...] prior to the [...***...], (v) any claim that
arises out of facts which occurred prior to the formation of the Company that
would have constituted a breach of any representation and warranty of the
Sellers contained in Article 3 of this Agreement if the Company had been formed
prior to the occurrence of such facts, which facts are not otherwise rectified
prior to the Closing Date, (vi) any claim made by any Seller or any Affiliate of
any Seller against the Company relating to facts arising prior to the Closing,
(vii) any Third Party Claim for [...***...] of a [...***...] arising from
[...***...] which [...***...] and (viii) any Third Party Claim for [...***...]
of a [...***...] by the [...***...] that arises out of or in connection with the
[...***...] of [...***...] the [...***...].
     (b) Notwithstanding anything to the contrary contained in this Agreement,
the sole and exclusive remedies of the Buyer Indemnitees or any other Person for
any breach by the Company prior to the Closing or the Sellers of any provision
of this Agreement, or otherwise
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arising out of or in connection with the transactions contemplated hereby, shall
consist solely of (i) the rights of the Buyer Indemnitees to indemnification by
the Sellers (including the Individual Sellers), subject to the limitations set
forth in Section 11.2(d), for any Losses indemnifiable under Section 11.2(a)
solely from funds held by the Escrow Agent pursuant to the Indemnity Escrow
Agreement, (ii) the rights of the Buyer Indemnitees to indemnification by DFB,
subject to the limitations set forth in Section 11.2(d), for any Losses
indemnifiable under Section 11.2(a), (iii) the right to pursue any available
remedies at law or in equity against any Seller for any fraud or intentional
misrepresentation committed by such Seller and (iv) the right to pursue specific
performance and other equitable remedies for any matter that is indemnifiable
under Section 11.2(a)(ii) or Section 11.2(a)(iii). In no event shall any Buyer
Indemnitee or any other Person be entitled to punitive damages or the like for
any breach of any term hereunder.
     (c) Notwithstanding anything to the contrary contained in this Agreement,
no Individual Seller shall be liable for any indemnity obligation under this
Section 11.2 or under any other provision of this Agreement or for any other
liability otherwise arising out of or in connection with the transactions
contemplated hereby, except that each Individual Seller shall be severally, and
not jointly and severally, liable for his or her own fraud or intentional
misrepresentation in an amount not to exceed the Merger Consideration received
by such Individual Seller.
     (d) The indemnification obligations of the Sellers pursuant to
Section 11.2(a) shall not be effective until the aggregate dollar amount of all
Losses that would otherwise be indemnifiable pursuant thereto exceeds
$[...***...] (the “Deductible”), and then only to the extent such aggregate
amount of Losses exceeds the Deductible; provided, however, in the case of
(i) fraud or intentional misrepresentation or (ii) an indemnity claim with
respect to any Unlimited Representation, the Deductible shall not apply. The
indemnification obligations of the Sellers pursuant to Section 11.2(a) shall be
limited, in the aggregate, to $[...***...] (the “Sellers Cap”), and no
indemnification pursuant to such provisions shall be payable in excess of the
Sellers Cap; provided, however, that in the case of (A) fraud or intentional
misrepresentation or (B) an indemnity claim with respect to any Unlimited
Representation, the Sellers Cap shall not apply and such aggregate limitation on
indemnification shall be 100% of the Merger Consideration. For so long as the
Indemnity Escrow Agreement is in effect and to the extent that sufficient funds
are held pursuant thereto, the Buyer Indemnitees shall first make a claim
against the funds held pursuant to the Indemnity Escrow Agreement in accordance
with its terms for payment of any indemnification obligation to which any Buyer
Indemnitee is entitled pursuant to Section 11.2(a).
     (e) The Sellers shall have no obligation to indemnify the Buyer Indemnitees
with respect to any liabilities or assets of the Company (or the Surviving
Corporation) to the extent included as a liability in the calculation of the
Adjusted Net Working Capital, as finally determined under the procedures set
forth in Section 2.5.
     (f) If an indemnification obligation exists under Section 11.2(a) due to
the inaccuracy of any representation or warranty or breach of any covenant under
this Agreement, the amount of any Losses related to such inaccuracy will be
calculated without regard to any qualifications as to materiality or Material
Adverse Effect contained in such representation or warranty or
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covenant; provided, however, that no individual claim by a Buyer Indemnitee may
be asserted, and the Sellers shall have no indemnification obligation under
Section 11.2(a)(i) with respect to any such claim for breach of representation
or warranty qualified by materiality or Material Adverse Effect, unless the
aggregate amount of Losses that would be payable with respect to such claim
exceeds an amount equal to $[...***...] (it being understood that similar
individual claims will be aggregated for purposes of this Section 11.2(f)).
          11.3 Indemnification by Buyer.
     (a) Buyer agrees, subject to the other terms and conditions of this
Article 11, to indemnify, defend and hold harmless the Company (prior to the
Closing), each Seller and their respective directors, officers, employees and
Affiliates (collectively, the “Seller Indemnitees”), from and against any and
all Losses incurred or suffered by any such Seller Indemnitee that are related
to or arise, directly or indirectly, out of (i) the breach of any representation
or warranty of Buyer contained in Article 4 of this Agreement or in any
certificate delivered by Buyer at the Closing pursuant to Section 8.1 as it
related to such representations and warranties and (ii) any breach by Buyer or
Newco (or with respect to any period after the Effective Time, the Surviving
Corporation) of any covenants or agreements to be performed by such Person
pursuant to this Agreement.
     (b) Notwithstanding anything to the contrary contained in this Agreement,
the sole and exclusive remedies of the Seller Indemnitees or any other Person
for any breach by Buyer or Newco (or with respect to any period after the
Effective Time, the Surviving Corporation) of any provision of this Agreement,
or otherwise arising out of or in connection with the transactions contemplated
hereby, shall consist solely of (i) the rights of the Seller Indemnitees to
reimbursement by Buyer, subject to the limitations set forth in Section 11.3(c),
for any Losses indemnifiable under Section 11.3(a), (ii) the right to pursue any
available remedies at law or in equity against Buyer for any fraud or
intentional misrepresentation committed by Buyer and (iii) the right to pursue
specific performance and other equitable remedies for any matter that is
indemnifiable under Section 11.3(a)(ii). In no event shall any Seller Indemnitee
or any other Person be entitled to punitive damages or the like for any breach
of any term hereunder.
     (c) The indemnification obligations of Buyer pursuant to Section 11.3(a)
shall not be effective until the aggregate dollar amount of all Losses that
would otherwise be indemnifiable pursuant thereto exceeds the Deductible, and
then only to the extent such aggregate amount of Losses exceeds the Deductible;
provided, however, in the case of fraud or intentional misrepresentation or in
the case of an indemnity claim under Section 4.1 or Section 4.2, the Deductible
shall not apply. The indemnification obligations of Buyer pursuant to
Section 11.3(a) shall be limited, in the aggregate, to $[...***...] (the “Buyer
Cap”), and no indemnification pursuant to such provisions shall be payable in
excess of the Buyer Cap; provided, however, that in the case of fraud or
intentional misrepresentation, the Buyer Cap shall not apply and such aggregate
limitation on indemnification shall be 100% of the Merger Consideration.
     (d) If an indemnification obligation exists under Section 11.3(a) due to
the inaccuracy of any representation or warranty or breach of any covenant under
this Agreement, the amount of any Losses related to such inaccuracy will be
calculated without regard to any qualifications as
***Confidential Treatment Requested***

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to materiality or Material Adverse Effect contained in such representation or
warranty or covenant; provided, however, that no individual claim by a Seller
Indemnitee may be asserted, and Buyer and Newco (and with respect to any period
after the Effective Time, the Surviving Corporation) shall have no
indemnification obligation under Section 11.3(a)(i) with respect to any such
claim for breach of representation or warranty qualified by materiality or
Material Adverse Effect, unless the aggregate amount of Losses that would be
payable with respect to such claim exceeds an amount equal to $[...***...] (it
being understood that similar individual claims will be aggregated for purposes
of this Section 11.3(d)).
          11.4 Notice of Potential Claims for Indemnification.
     Except as otherwise provided in Section 9.5(c), a party entitled to
indemnification under Section 11.2 or Section 11.3 (the “Indemnitee”) shall give
the party obligated to provide such indemnification (the “Indemnifying Party”)
prompt written notice (an “Indemnification Notice”) of any matter or event that
could give rise to any Losses for which indemnification under this Article 11
may be due, including but not limited to any Third Party Claim, which, with the
lapse of time, the giving of notice or both, would give rise to a claim or the
commencement of any litigation that may result in Losses (an “Asserted
Liability”). Each Indemnification Notice shall specify with particularity the
basis on which indemnification is sought and the Indemnitee’s good faith
estimate of the amount of its Losses and/or Asserted Liability and, in the case
of a Third Party Claim, contain (by attachment or otherwise) all such other
information as such Indemnitee may have concerning such Third Party Claim. After
the delivery of an Indemnification Notice, the Indemnitee shall provide prompt
written notice to the Indemnifying Party of all developments relating to the
related Losses or Asserted Liability and any material changes in the
Indemnitee’s good faith estimate of the amount of its Losses or Asserted
Liability. The Indemnitee shall provide the Indemnifying Party with access, upon
reasonable notice and during normal business hours, to its books and records,
properties and personnel relating to the Losses or Asserted Liability. The
Indemnitee will not be entitled to indemnification for Losses or Asserted
Liabilities of the Indemnitee to the extent that any unreasonable delay in
providing an Indemnification Notice or notice of future developments or other
failure to follow the procedures set forth in this Article 11 prejudices the
Indemnifying Party’s ability to defend a Third Party Claim or otherwise affects
the Indemnifying Party’s ability to reduce the amount of indemnifiable Losses.
          11.5 Claims Not Involving Third Parties.
     Upon receipt of an Indemnification Notice not involving a Third Party
Claim, the Indemnifying Party shall have twenty (20) business days to object to
the claim set forth in the Indemnification Notice by delivery of a written
objection (an “Objection”) to the Indemnitee specifying in reasonable detail the
basis for such objection. Failure to timely deliver an Objection shall
constitute a final and binding acceptance of the claim by the Indemnifying
Party. If the Indemnifying Party timely delivers an Objection, the parties shall
in good faith seek to resolve any dispute within the twenty (20) business day
period following the Objection (the “Dispute Resolution Period”). If the parties
have not resolved their dispute within the Dispute Resolution Period, either
Party may bring an action pursuant to Section 12.8 and the parties shall proceed
in accordance therewith. Upon resolution of a dispute and the determination of
indemnifiable Losses pursuant to a final, non-appealable order in favor of an
Indemnitee, such Indemnitee shall be entitled to be paid
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by the Indemnifying Party an aggregate amount equal to such Losses within five
(5) business days of such order by wire transfer of immediately available funds
to such account as such Indemnitee may specify in writing to the Indemnifying
Party.
          11.6 Third Party Claims.
     The obligations and liabilities of an Indemnifying Party hereunder with
respect to a Third Party Claim for which an Indemnitee is entitled to
indemnification pursuant to this Article 11 shall be subject to the terms and
conditions set forth in this Article 11. An Indemnifying Party shall have the
right to contest any Asserted Liability so long as it shall within thirty
(30) days (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so by sending a notice to the
Indemnitee. An Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Asserted Liability without the
prior written consent of the Indemnitee, which consent shall not unreasonably be
withheld. So long as the Indemnifying Party is contesting any Asserted
Liability, the Indemnitee shall not consent to the entry of any judgment or
enter into any settlement with respect to the Asserted Liability. If the
Indemnifying Party elects not to contest the Asserted Liability, the Indemnitee
(upon further notice to the Indemnifying Party) shall have the right to pay,
compromise or contest such Asserted Liability, provided that Indemnitee obtains
the prior written consent of the Indemnifying Party, which consent shall not
unreasonably be withheld. In any event, the Indemnifying Party and the
Indemnitee may participate, at their own expense, in the contest of an Asserted
Liability. The Indemnifying Party and the Indemnitee shall cooperate fully with
each other as to all Asserted Liabilities, shall make available to each other as
reasonably requested all information, records, and documents relating to all
Asserted Liabilities and shall preserve all such information, records, and
documents until the termination of any Asserted Liability.
          11.7 Subrogation.
     Upon payment of any Losses or the payment of any judgment or settlement
with respect to a Third Party Claim, the Indemnifying Party shall be subrogated
to the extent of such payment to the rights of the Indemnitee against any person
or entity with respect to the subject matter of such Losses or Third Party
Claim. The Indemnitee shall assign or otherwise cooperate with the Indemnifying
Party, at the cost and expense of the Indemnifying Party, to pursue any claims
against, or otherwise recover amounts from, any Person liable or responsible for
any Losses for which indemnification has been received pursuant to this
Agreement.
          11.8 Insurance and Other Recoveries.
     Losses and all indemnification payments payable hereunder shall be reduced
by the amount of insurance proceeds actually received by the Indemnitee or its
Affiliates (net of any applicable deductible) as a result of the Losses for
which the Indemnitee is seeking indemnification.
          11.9 Acknowledgement of Buyer.
     Buyer acknowledges that it has (a) conducted to its satisfaction an
independent investigation and verification of the financial condition, results
of operations, assets, liabilities, properties and projected operations of the
Company and (b) relied on the results of its own independent

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investigation and verification and the representations and warranties of the
Sellers expressly and specifically set forth in this Agreement, including the
Disclosure Schedules (and updated Disclosure Schedules), in making its
determination to proceed with the transactions contemplated by this Agreement.
The representations and warranties of the Sellers expressly and specifically set
forth in this Agreement, including the Disclosure Schedules (and updated
Disclosure Schedules), constitute the sole and exclusive representations and
warranties of the Sellers and the Company to Buyer in connection with the
transactions contemplated hereby, and Buyer understands, acknowledges and agrees
that all other representations and warranties of any kind or nature expressed or
implied (including, but not limited to, any relating to the future or historical
financial condition, results of operations, assets or liabilities of the
Company, or the quality, quantity or condition of the Company’s assets) are
specifically disclaimed by the Sellers (on behalf of themselves and the
Company). The Sellers and the Company do not make or provide, and Buyer hereby
waives, any warranty or representation, express or implied, as to the quality,
merchantability, fitness as for a particular purpose, conformity to samples, or
condition of the Company’s assets or any part thereto, except as expressly set
forth in Section 3.7. In connection with Buyer’s investigation of the Company,
Buyer has received certain projections, pro forma financials or adjustments,
including projected statements of operating revenues and income from operations
of the Company and certain business plan information. Buyer acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, pro forma financials, adjustments and plans, that Buyer
is familiar with such uncertainties and that Buyer is taking full responsibility
for such estimates, projections, forecasts, pro forma financials, adjustments
and plans so furnished to it, including, without limitation, the reasonableness
of the assumptions underlying such estimates, projections, forecasts, pro forma
financials, adjustments and plans Accordingly, Buyer hereby acknowledges that
neither the Company nor the Sellers is making any representation or warranty
with respect to such estimates, projections, forecasts, pro forma financials,
adjustments and plans, including, without limitation, the reasonableness of the
assumptions underlying same.
          11.10 Stockholder Representative.
     Each of the Sellers hereby appoint DFB or its agents, successors or assigns
as their exclusive agent and attorney-in-fact to act on its behalf with respect
to any claims, controversies, or disputes arising out of the terms of this
Agreement (the “Stockholder Representative”). The Sellers further agree that the
Stockholder Representative shall have the power to (a) receive all notices and
communications directed to the Sellers with respect to any claims,
controversies, or disputes arising out of the terms of this Agreement and to
take any action or no action in connection therewith as it may deem appropriate,
and (b) to take any action (or determine to take no action) with respect to the
foregoing appointment and authority as it may deem appropriate as effectively as
the Sellers could act themselves, including the settlement or compromise of any
dispute or controversy under the indemnification provisions hereof, the
Indemnity Escrow Agreement, the Return Escrow Agreement or any other document
entered into in connection herewith. The authority granted hereunder is deemed
to be coupled with an interest. For purposes of clarity, the adoption of this
Agreement by the Sellers constitutes approval of the appointment of DFB to serve
as the Sellers’ representative on such indemnification matters and to have sole
power with respect to the authorization of disbursements of funds from the
Escrow Amounts to Buyer.

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          11.11 [***].
     The [***] hereby [***] to the [***] the [***] of its [***] pursuant to the
terms, and subject to the limitations, set forth in this Article 11. The [***]
hereby [***] of [***] of any [***], any [***], [***] whatsoever in connection
with the [***] set forth in this Section 11.11. This [***] shall continue in
full force and effect until [***] with respect to any [***] that are [***]
herewith prior to the [***] of the [***] have been [***], at which time this
[***] shall automatically expire and terminate. The [***] hereby covenant and
agree with the [***] that the [***] shall at all times prior to the [***] of the
[***], maintain, in the aggregate, a [***] of not less than $[***]. [***] shall
mean [***]; provided, however, that at any time after the [***] of the [***],
the [***] shall have the [***], by giving written notice thereof to the [***],
to [***] one or more [***] as [***] hereunder if such [***] (i) satisfy the
[***] set forth in the [***] as of the date of such [***] and (ii) execute and
deliver to the [***] a written [***] in the form of this Section 11.11. Upon any
such [***] of [***] pursuant to the preceding sentence, the [***] given by the
[***] so [***] shall be [***] and of [***] or [***].
ARTICLE 12
GENERAL PROVISIONS
          12.1 Public Announcements.
     The initial press release relating to the transactions contemplated by this
Agreement shall be a joint press release, the text of which has been agreed to
by the Sellers and Buyer.
          12.2 Notices.
     All notices, consents, waivers and other communications under this
Agreement must be in writing and shall be deemed to have been duly given when:
(a) delivered by hand (with written confirmation of receipt), or (b) when
received by the addressee, if sent by a delivery service (prepaid, receipt
requested) or (c) when received by the addressee, if sent by registered or
certified mail (postage prepaid, return receipt requested), in each case to the
appropriate addresses set forth below (or to such other addresses,
representative and telecopier numbers as a Party may designate by notice to the
other Parties):

  (i)   If to Buyer or Newco:

Valeant Pharmaceuticals International
One Enterprise
Aliso Viejo, CA 92656
Attention:                     
Facsimile:                     
***Confidential Treatment Requested***

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Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

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

                                                            
                                                            
                                                            
Attention:                     
Facsimile:                     

  (ii)   If to the Stockholder Representative:

DFB Pharmaceuticals, Inc.
3909 Hulen St.
Fort Worth, Texas 76107
Attention: H. Paul Dorman
Facsimile: (817) 900-4101

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

Mark A. Mitchell
Vice President and General Counsel
DFB Pharmaceuticals, Inc.
318 McCullough
San Antonio, Texas 78215
Facsimile: (210) 227-6132

  (iii)   If to any other Seller:

To the address for such Seller set forth on Exhibit A

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

Mark A. Mitchell
Vice President and General Counsel
DFB Pharmaceuticals, Inc.
318 McCullough
San Antonio, Texas 78215
Facsimile: (210) 227-6132
          12.3 Waiver.
     Except as explicitly provided in this Agreement (including Section 11.2 and
Section 11.3), the rights and remedies of the Parties under this Agreement are
cumulative and not alternative and are not exclusive of any right or remedies
that any Party may otherwise have at law or in equity. Except as set forth in
Article 11, neither the failure nor any delay by any Party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement shall operate as a waiver of such right, power or privilege, and
no single or partial exercise of any such right, power, or privilege shall
preclude any other or further exercise of such right, power, or

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no waiver that may be given by a
Party shall be applicable except in the specific instance for which it is given;
and (b) no notice to or demand on one Party shall be deemed to be a waiver of
any right of the Party giving such notice or demand to take further action
without notice or demand.
          12.4 Entire Agreement; Amendment.
     This Agreement (including the Disclosure Schedules and the Exhibits hereto)
and the other Transaction Documents supersede all prior agreements between the
Parties with respect to its subject matter and constitute (along with the
Non-Disclosure Agreement) a complete and exclusive statement of the terms of the
agreements between the Parties with respect to their subject matter. This
Agreement may not be amended except by a written agreement executed by all of
the Parties hereto.
          12.5 Assignments.
     This Agreement, and the rights, interests and obligations hereunder, shall
not be assigned by any Party hereto, by operation of law or otherwise, without
the express written consent of each other Party (which consent may be granted or
withheld in the sole discretion of each such other Party).
          12.6 Severability.
     If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Legal Requirement or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party in any
material respect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
          12.7 Section Headings; Construction.
     The headings of Sections in this Agreement are provided for convenience
only and shall not affect its construction or interpretation. All references to
“Article,” “Section” or “Sections” refer to the corresponding Article,
Section or Sections of this Agreement. All words used in this Agreement shall be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word “including” does not limit the preceding
words or terms. The Exhibits attached hereto and the Disclosure Schedules
referred to herein and attached hereto are hereby incorporated herein and made a
part hereof as if fully set forth herein.
          12.8 Governing Law; Consent to Jurisdiction and Venue; Jury Trial
Waiver.
     (a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed in that State.

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     (b) All actions and proceedings arising out of or relating to this
Agreement, including any actions for specific performance or other equitable
relief, shall be heard and determined in a state or federal court sitting in
Fort Worth, Texas, and the Parties to this Agreement hereby irrevocably submit
to the exclusive jurisdiction of such courts in any such action or proceeding
and irrevocably waive the defense of an inconvenient forum to the maintenance of
any such action or proceeding. The Parties hereto hereby consent to service of
process by mail (in accordance with Section 12.2) or any other manner permitted
by law.
     (c) THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE
SELLERS, BUYER OR THEIR RESPECTIVE REPRESENTATIVES IN THE NEGOTIATION OR
PERFORMANCE HEREOF.
          12.9 Counterparts.
     This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original of this Agreement and all of which, when taken
together, shall be deemed to constitute one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by electronic or
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.
          12.10 Time of Essence.
     Time is of the essence in this Agreement.
          12.11 No Third Party Beneficiaries.
     This Agreement is for the sole benefit of the Parties hereto and nothing
herein, express or implied, is intended to or shall confer upon any other Person
any legal or equitable benefit, claim, cause of action, remedy or right of any
kind.
          12.12 Expenses.
     All expenses of the preparation, negotiation and execution of this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, attorneys’, accountants’ and outside advisers’
fees and disbursements, shall be borne by the Party incurring such expenses.
Without limiting the foregoing, (a) Buyer shall pay all of the Buyer’s
Transaction Expenses and (b) the Sellers shall pay all of the Company’s
Transaction Expenses.
(Signatures Appear on Next Page)

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***Text Omitted and Filed Separately with the Securities and Exchange
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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
     In Witness Whereof, the Parties have caused this Agreement and Plan of
Merger to be executed and delivered as of the Effective Date.

                      COMPANY:       BUYER:     Coria Laboratories, Ltd.      
Valeant Pharmaceuticals International      
By:
 
/s/ H. Paul Dorman
      By:  
/s/ J. Michael Pearson
   
Name:
 
H. Paul Dorman
      Name:  
J. Michael Pearson
   
Title:
 
Chairman and CEO 
      Title:  
Chairman and CEO 
   
 
                    SELLERS:       NEWCO:     DFB Pharmaceuticals, Inc.       CL
Acquisition Corp.      
By:
 
/s/ H. Paul Dorman 
      By:  
/s/ Robert Chai-Onn 
   
Name:
 
H. Paul Dorman 
      Name:  
Robert Chai-Onn 
   
Title:
 
Chairman and CEO
      Title:  
Vice President, Assistant General Counsel
   
 
                H. Paul Dorman       [...***...]        
 
                    /s/ H. Paul Dorman        [...***...]                      
   
 
                    John W. Feik       By:  
[...***...] 
   
 
          Name:  
[...***...] 
    /s/ John W. Feik        Title:  
[...***...] 
                     
 
                    Anne Burnett Windfohr                
 
                    /s/ Anne Burnett Windfohr                                   
 
                    John L. Marion                
 
                    /s/ John L. Marion                                         
            John W. Mason                
 
                   
/s/ John W. Mason 
                                     
 
                   

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Schedule I
Allocation of Product Returns for Specified Lot Numbers
See Attached

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Exhibit A
Ownership of Company Common
See Attached

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Exhibit B
Working Capital Methodology
The parties acknowledge and agree that because DFB has agreed pursuant to
Section 9.9 of the Agreement to pay all amounts arising through the Closing Date
with respect to Company employee bonuses, 401(k) matching payments and
self-insured medical claims, all such amounts shall have a value of zero in the
calculation of Adjusted Net Working Capital as part of the working capital
adjustment pursuant to Section 2.5.
The Reserve for Returns account will be fixed at $[...***...] for purposes of
calculating Adjusted Net Working Capital and in the Final Closing Balance Sheet.
***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Exhibit C
Form of Transition Services Agreement
See Attached

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Exhibit D
Form of Amended and Restated Manufacturing Agreement
See Attached

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Exhibit E
Form of Assignment of Claims
See Attached

 

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***Text Omitted and Filed Separately with the Securities and Exchange
Commission. Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2
Exhibit F
Form of Product Development Agreement
See Attached