Exhibit 10.26


 


Certain portions of this Exhibit have been omitted
pursuant to a request for confidentiality. 
Such omitted portions, which are marked with brackets [   ] and an asterisk*, have been separately
filed with the Commission.


 


 


ASSET
PURCHASE AGREEMENT


 


by
and between


 


ELAN PHARMACEUTICALS, INC.


 


and


 


 


ACORDA
THERAPEUTICS, INC.


 


dated
as of July 21, 2004


 


 

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with brackets
[   ] and an asterisk*, have been
separately filed with the Commission.


 


 


ASSET
PURCHASE AGREEMENT


 


This Asset Purchase Agreement (this “Agreement”) is made and entered into as of
July 21, 2004, by and between Acorda Therapeutics, Inc., a Delaware
corporation (the “Acquiror”), and
Elan Pharmaceuticals, Inc., a
Delaware-corporation (“EPI”).


 


RECITALS


 


This Agreement sets forth the terms and conditions
upon which the Acquiror is agreeing to purchase the Purchased Assets (as
defined below) and assume the Assumed Liabilities (as defined below) from EPI,
and EPI is agreeing to sell the Purchased Assets and transfer the Assumed
Liabilities to the Acquiror.


 


AGREEMENT


 


In consideration of the premises and the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged,
the parties agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


Section 1.01.          Defined
Terms. As used in this Agreement, the following defined terms shall have
the meanings specified below:


 


“Accountants”
means an accounting firm of national reputation (excluding each of the Acquiror’s
and EPI’s respective regular outside accounting firms) as may be mutually
acceptable to the Acquiror and EPI; provided, however, that in the event that the Acquiror and EPI are
unable to agree on such an accounting firm within ten (10) days, then the
accounting firm shall be selected by lot.


 


“Accounts Receivable”
means all trade accounts and notes receivable and other miscellaneous
receivables, including those that are not evidenced by instruments or invoices,
existing as of the Closing Date.


 


“Acquiror” has
the meaning set forth in the preamble hereto.


 


“Acquiror 2004 Gross Sales”
has the meaning set forth in Section 4.03(a)(i).


 


“Acquiror Adverse Effect”
means an effect or condition that individually or when taken together with all
other effects or conditions has had or would reasonably be expected to have
more than an immaterial adverse effect (i) on the business, assets, Liabilities,
results of operations or financial condition of the Acquiror, taken as a whole,
other than any effect or condition relating (x) to the economy in general,
or (y) in general to the pharmaceutical industry in which the Acquiror
operates and not specifically relating to the Acquiror; provided,
that such event, circumstance, effect or condition does not have a materially
disproportionate effect on the business, assets, Liabilities, results of
operations or financial condition of Acquiror, taken as a


 

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


whole; or (ii) on the ability of the Acquiror to
perform its obligations under this Agreement and the Related Agreements or on
the ability of the Acquiror to consummate the transactions contemplated hereby
and thereby; provided, however,
that the entry into the marketplace of a generic equivalent to any of the
Products shall not be an Acquiror Adverse Effect.


 


“Acquiror Disclosure
Schedule” has the meaning set forth in the preamble to Article VII.


 


“Acquiror Governmental
Consents” has the meaning set forth in Section 7.03(a).


 


“Acquiror Indemnitees”
has the meaning set forth-in Section 11.02(a).


 


“Acquiror Insurance
Policies” has the meaning set forth in Section 7.08.


 


“Acquiror Third Party
Consents” has the meaning set forth in Section 7.03(b).


 


“Action or Proceeding”
means any action, suit, proceeding, arbitration, Order, inquiry, hearing,
assessment with respect to fines or penalties or litigation (whether civil,
criminal, administrative or investigative) commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental or Regulatory
Authority.


 


“Activity Date”
has the meaning set forth in Section 8.05(d).


 


“Administrative Fee”
means any administrative service fee paid to managed care organizations,
pharmacy benefit managers, health maintenance organizations or other customers
(including for the avoidance of doubt governmental organizations).


 


“Affliate”
means, with respect to any Person, any other Person which Controls, is
Controlled by or is under common Control with such Person.


 


“Agreement” has
the meaning set forth in the preamble hereto.


 


“Assignment and Assumption
Agreement” shall mean the Assignment and Assumption Agreement by and
among EPI, the Acquiror and Novartis Pharma AG, dated as of the Closing Date,
in substantially the form attached hereto as Exhibit G.


 


“Assumed Contracts”
has the meaning set forth in Section 2.01(a).


 


“Assumed Liabilities”
has the meaning set forth in Section 3.01(a).


 


“Audit Termination Date”
has the meaning set forth in Section 4.02(c).


 


“Bill of Sale”
means the Bill of Sale and Assignment and Assumption Agreement to be dated the
Closing Date conveying the Purchased Assets from EPI to the Acquiror and
providing for the assignment to and assumption of the Assumed Liabilities by
the Acquiror, substantially in the form attached hereto as Exhibit A.


 


“Books and Records”
means all books, records, files and documents (including financial, sales,
pricing, promotional, regulatory, pharmacovigilance, research and development


 


2

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


and expense records, customer lists, customer
(including government) Product utilization and rebate or chargeback records
(including invoices from customers), “best price” (as defined under the Social
Security Act, 42 U.S.C. § 1396r-8(c)(1)(C)) and “average
manufacturer price” (as defined under the Social Security Act,
42 U.S.C. § 1396r-8(k)(1)) data, credit and collection records
and miscellaneous records with respect to customers and supply sources
correspondence and, to the extent not originals, true and complete copies of
all files relating to the filing, prosecution, issuance, maintenance,
enforcement or defense of any Patents, Patent applications, Trademarks,
Copyrights or other intellectual property rights, including written third party
correspondence, records and documents related to research and pre-clinical and
clinical testing and studies for the Product conducted by or on behalf of EPI
or its Affiliates) in all forms, including electronic, in which they are stored
or maintained, and all data and information included therein, in each case that
are licensed, owned or controlled by or otherwise in the possession of EPI or
any of its Affiliates.


 


“Business” means
the research, development, exploitation, licensing, distribution, marketing,
sale, promotion, importation and use of the Products in the Territory.


 


“Business Day”
means a day other than Saturday, Sunday or any day on which commercial banks
located in New York are authorized or obligated by Law to close.


 


“Charter Documents”
means, with respect to a Person, the certificate of incorporation, bylaws or
other similar governing instruments and organizational documents of such
Person.


 


“Closing” has
the meaning set forth in Section 5.01.


 


“Closing Consideration”
has the meaning set forth in Section 4.01(a).


 


“Closing Date”
has the meaning set forth in Section 5.01.


 


“Closing Date Inventory
Value” means the value of all Inventory as of the Closing Date, such
value determined pursuant to the methods described on Schedule 1.01(a) of
the Elan Disclosure Schedule.


 


“Closing Date Inventory
Value Adjustment” means the Closing Date Inventory Value minus the Estimated Closing Date Inventory
Value.


 


“Closing Date Inventory
Value Statement” has the meaning set forth in Section 4.08(a).


 


“Code” means the
Internal Revenue Code of 1986, as amended.


 


“Confidential Information”
has the meaning set forth in Section 8.04(b).


 


“Confidentiality Agreement”
has the meaning set forth in Section 8.04(f).


 


3

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Contracts”
means any and all binding commitments, contracts, purchase orders, leases,
licenses, easements, commitments, arrangements, undertakings or other
agreements, whether written or oral.


 


“Control” means:


 


(a)           ownership
(directly or indirectly) of at least fifty percent (50%) of the shares of stock
entitled to vote for the election of directors in the case of a company or
corporation;


 


(b)           the
ability (directly or indirectly) otherwise to direct and control the actions of
a Person.


 


“Copyrights”
means (a) all copyrights in the Territory (including copyrights in any
content, package inserts, marketing or promotional material, labeling
information or other text provided to consumers), whether registered or
unregistered; (b) any registrations, and applications therefor; (c) all
rights and priorities to copyrights in the Territory afforded under any
international treaty or convention; (d) all copyright extensions and
renewals in the Territory; (e) any rights similar to the foregoing in the
Territory, including moral rights; (f) all proceeds of the foregoing,
including licenses, royalties, income and payments; and (g) the right to
sue for past, present and future infringements of any of the foregoing and all
proceeds of such suits, provided that any such proceeds of suit shall be
proportionately divided among EPI and the Acquiror based on the duration of
infringing activity prior to and following the Closing if EPI agrees prior to
the commencement of such suit to bear its pro rata share of the costs of
prosecuting the claim relating to such activity calculated on the same basis.


 


“Corporate Names”
has the meaning set forth in Section 8.09(b).


 


“Damages” has
the meaning set forth in Section 11.02(a).


 


“Default” means (a) a
breach, default or violation, (b) the occurrence of an event that with or
without the passage of time or the giving of notice, or both, would constitute
a breach, default or violation or cause an Encumbrance to arise; or (c) with
respect to any Contract, the occurrence of an event that with or without the
passage of time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a right to receive Damages or a
payment of penalties.


 


“Domain Name Assignment
Agreement” means the Domain Name Assignment Agreement to be dated as
of the Closing Date by and between the Acquiror and EPI, substantially in the
form attached hereto as Exhibit B.


 


“Domain Names”
means the domain names set forth on Schedule 1.01(b) of the Elan Disclosure Schedule, and all associated
portals and websites solely associated with the Products.


 


“Due Date” has
the meaning set forth in Section 4.02(b).


 


4

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Elan
Companies Proceeding” means any Action or Proceeding commenced by or
against any of EPI or any of its Affiliates or officers or directors prior to
the date of this Agreement.


 


“Elan
Disclosure Schedule” has the meaning set forth in the preamble to Article VI.


 


“Elan
Governmental Consents” has the meaning set forth in Section 6.03(a).


 


“Elan
Third Party Consents” has the meaning set forth in Section 6.03(b).


 


“Eligible Claim”
has the meaning set forth in Section 11.03(a).


 


“Encumbrance”
means any mortgage, pledge, assessment, security interest, deed of trust,
lease, lien, levy, license, restriction on transferability, defect in title,
charge or other encumbrance of any kind, or any conditional sale or title
retention agreement or other agreement to give any of the foregoing in the
future.


 


“EPI” has the
meaning set forth in the preamble.


 


“EPI Contract”
means any Contract to which EPI or any of its Affiliates is a party or by which
EPI or any of its Affiliates is bound or benefited, or under which EPI or any
of its Affiliates has any rights.


 


“EPI Indemnitees”
has the meaning set forth in Section 11.02(b).


 


“EPI Royalty Term”
has the meaning set forth in Section 4.02(a)(i).


 


“Estimated Closing Date
Inventory Value” means the value of all Inventory as of the Closing
Date, valued in accordance with the definition of “Closing Date Inventory
Value” in EPI’s reasonable and good faith estimation.


 


“Excluded Assets”
has the meaning set forth in Section 2.02.


 


“Excluded Books and Records”
means all Books and Records related to (i) human resources and any other
employee-related files and records, (ii) financial and accounting records,
(iii) any items set forth on Schedule 1.01(c) of the Elan Disclosure Schedule, (iv) any tax
files, documents, instruments, papers, books or records, and (v) the
filing, prosecution, issuance, maintenance, enforcement or defense of any
Patents, Patent applications, Trademarks, Copyrights or other intellectual
property rights comprising Excluded intellectual Property.


 


“Excluded Intellectual
Property” means any intellectual property rights, including any
patent, copyright, trademark, trade secret or other proprietary rights, that
are owned or controlled by EPI or any of its Affiliates, relating to technology
that is (a) contained in the Products and other pharmaceutical products
owned or controlled by EPI or any of its Affiliates, including “SODAS”
technology used in Zanaflex Capsules, or (b) used in the manufacture of
Zanaflex Capsules, but in no event shall the Excluded Intellectual Property
include any of the Purchased Intellectual Property or Product Trademarks.


 


5

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Excluded Liabilities”
has the meaning set forth in Section 3.01(b).


 


“Expiration Date”
has the meaning set forth in Section 11.01(a).


 


“Final Milestone Payment
Date” has the meaning set forth in Section 4.03(b).


 


“FDA” means the
United States Food and Drug Administration or any successor thereto.


 


“FDA Act” means
the U.S. Federal Food, Drug and Cosmetic Act of 1938, as it may be superseded
or amended from time to time, and the related rules, regulations, guidelines,
guidances and requirements of the FDA as may be in effect from time to time.


 


“Final Milestone Payment
Date” has the meaning set forth in Section 4.03(b).


 


“FSS” has the
meaning set forth in Section 8.05(d).


 


“Governmental or Regulatory
Authority” means the United States, Canada, any Member State of the
European Union, any other country, any supranational organization, any state,
province, county, city or other political subdivision of any of the foregoing
or any court, tribunal, arbitrator, authority, agency, commission, ministry,
official or other instrumentality of any of the foregoing.


 


“Governmental Permits”
means all permits, licenses, registrations, certificates of occupancy,
approvals and other authorizations of any Governmental or Regulatory Authority,
including INDs, NDAs and other approvals of or registrations with any
Governmental or Regulatory Authority for the investigation, sale, distribution
and/or marketing of products.


 


“Gross Sales”
means the gross amount invoiced on sales by the Acquiror, its Affiliates and
marketing, promotion and distribution partners to independent, third party
customers in bona fide, arms-length transactions.


 


“Improvement”
means any present and future invention, improvement, discovery, modification or
other development relating to a Product, including any new uses or formulations
for a Product, and all intellectual property rights in any of the foregoing,
that are owned by EPI or any Affiliate at any time after the Closing; provided, that the parties acknowledge and agree that,
subject to the obligations set forth in the Supply Agreement, neither EPI nor
any of its Affiliates shall have any obligation after the Closing to conduct
any research or development relating to the Products.


 


“IND” means (a) an
Investigational New Drug Application, as defined in the FDA Act, as amended,
and the regulations promulgated thereunder (C.F.R. Parts 312-312.38),
which is required to be filed (except under circumstances as described in such
regulations promulgated thereunder) with the FDA before beginning clinical
testing of a product in human subjects, or any successor application or
procedure, and (b) all supplements and amendments that may be filed with
respect to he foregoing.


 


“Indemnification Claim
Notice” has the meaning set forth in Section 11.02(c).


 


6

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Indemnified Party”
has the meaning set forth in Section 11.02(c).


 


“Indemnitees”
has the meaning set forth in Section 11.02(c).


 


“Interim Services Agreement”
shall mean the Interim Services Agreement by and between EPI and the Acquiror,
dated as of the Closing Date, in substantially the form attached hereto as Exhibit C.


 


“Inventory”
means all inventory of finished Products (including samples) having a shelf
life of greater than 12 months from the Closing Date, together with the
inventory of finished Products having a shelf life of less than 12 months from
the Closing Date described on Schedule 1.01(a) of the Elan Disclosure Schedule.


 


“Know-How” means
any proprietary or nonproprietary information directly related to the
manufacture, preparation, development (including research, both pre-clinical
and clinical), promotion, exploitation, marketing, use, sale or other
commercialization of a product, including related to regulatory matters.


 


“Knowledge” of a
particular fact or other matter means:  (i) with
respect to any individual:  (A) the
actual knowledge of such individual concerning such fact or other matter; and (B) the
knowledge that a prudent individual would be expected to discover or otherwise
become aware of in the course of conducting a reasonable investigation
concerning the existence of such fact or other matter, and (ii) with
respect to EPI or the Acquiror, the Knowledge concerning such fact or other
matter of (1) the officers of such Person, (2) the directors of such
Person, and (3) the senior managers of such Person with responsibility
for, or supervision of, the relevant matters; provided
that under no circumstances shall Knowledge of EPI include any knowledge not
actually known to such persons but imputed to such persons or EPI due to its
relationship with Novartis or its representatives; and provided, further, that
none of such persons shall have any obligation as a result of entering into (or
any provision of) this Agreement, the Supply Agreement or any Related Agreement
to make any inquiries of Novartis or its representatives regarding any matter.


 


“Labeling” has
the meaning set forth in Section 201(m) of the FDA Act, 21 U.S.C. § 321(m)
and any related rule, regulation, guideline or guidance of the FDA, and shall
include the applicable Products’ label, packaging and package inserts
accompanying such Products, and any other written, printed, or graphic materials
accompanying such Products, including patient instructions or patient
indication guides and the NDC numbers relating to the Products.


 


“Law” means any
federal, state, local or foreign law, statute or ordinance, or any rule,
regulation or regulatory requirement promulgated by any Governmental or
Regulatory Authority.


 


“Liability”
means any direct or indirect liability, obligation, claim, guarantee or
commitment of any kind or nature (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated or due or to become due), including any liability for Taxes.


 


7

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Material Adverse Effect”
means an event, circumstance, effect or condition that individually of when
taken together with all other events, circumstances, effects or conditions has
bad or would reasonably be expected to have more than an immaterial adverse
effect (i) on the business, assets, Liabilities, results of operations or
financial condition of the Business, other than any event, circumstance, effect
or condition relating primarily (x) to the economy in general, provided, that such event, circumstance,
effect or condition does not have a materially disproportionate effect on the
business, assets, Liabilities, results of operations or financial condition of
the Business, or (y) in general to the pharmaceutical industry in which
the Business operates and not specifically relating to the Products or the
Business, provided, that such event, circumstance, effect or condition does not
have a materially disproportionate effect on the business, assets, Liabilities,
results of operations or financial condition of the Business; (ii) on any
of the Products or the Purchased Assets; or (iii) on the ability of EPI to
perform its obligations under this Agreement, the Supply Agreement or any
Related Agreement or on the ability of EPI to consummate the transactions
contemplated hereby and thereby; provided, however, that the entry into the marketplace of a generic
equivalent to any of the Products shall not be a Material Adverse Effect.


 


“Milestone Audit
Termination Date” has the meaning set forth in Section 4.03(b).


 


“Milestone Payments”
has the meaning set forth in Section 4.03(a)(v).


 


“Multi-Product Contract”
has the meaning set forth in Section 8.06.


 


“NDA” means a
New Drug Application for any product, as appropriate, requesting permission to
place a drug on the market in accordance with 21 U.S.C. § 355
and 21 C.F.R. Part 314, and all supplements or amendments filed
pursuant to the requirements of the FDA, including all documents, data and
other information concerning a product which are reasonably necessary for FDA
approval to market a product in the United States, and all correspondence with
the FDA relating to the foregoing.


 


“Net Sales”
shall mean Gross Sales less customs duties or other taxes (excluding income or
corporation tax), returns (including returns in connection with rejections and
recalls), Administrative Fees, rebates, chargebacks, allowances for bad debt
and discounts, in each case related to such sales.


 


“Non-Assignable Contract”
has the meaning set forth in Section 2.04(a).


 


“Notice” means
any notice given in accordance with the terms of Section 13.01 of this
Agreement.


 


“Notice of Objection”
has the meaning set forth in Section 4.08(b).


 


“Novartis License Agreement”
means that certain license agreement dated as of April 17th, 1991, as
amended, by and between Novartis Pharma AG (together with its Affiliates,
“Novartis” ), as successor to Sandoz Pharma
Ltd., and EPI, as successor to Athena Neurosciences, Inc.


 


“Novartis Royalty Term”
has the meaning set forth in Section 4.02(a)(i).


 


8

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Order” means
any writ, judgment, decree, injunction or similar order, including consent
orders, of any Governmental or Regulatory Authority (in each such case whether
temporary, preliminary or final).


 


“Ordinary Course of
Business” means an action that is in compliance with applicable Laws
and is consistent in nature, scope and magnitude with the past practices of EPI
and its Affiliates with respect to the Business as conducted by EPI including
any action necessary or desirable for EPI or its Affiliates to enforce its
rights and perform its obligations under the Novartis License Agreement.


 


“Patent Assignment
Agreement” means the Patent Assignment Agreement to be dated as of
the Closing Date by and between the Acquiror and EPI, substantially in the form
attached hereto as Exhibit D.


 


“Patent Rights”
means solely in the Territory and relating to any Product, the rights conferred
or represented by a Patent.


 


“Patents”
means:  (a) all patents and patent
applications, including provisional patent applications; (b) all patent
applications filed either from such patents, patent applications or provisional
applications or from an application claiming priority from either of these,
including divisionals, continuations, continuations-in-part, substitutions,
provisionals, converted provisionals, and continued prosecution applications; (c) any
and all patents that have issued or in the future issue from the foregoing
patent applications described in clauses (a) and (b), including
utility models, petty patents and design Patents and certificates of invention;
(d) any and all extensions or restorations by existing or future extension
or restoration mechanisms, including revalidation, reissues, re-examinations
and extensions (including any supplementary protection certificates and the
like) of the foregoing patents or patent applications described in
clauses (a), (b) and (c); (e) all proceeds of the foregoing,
including licenses, royalties, income and payments; and (f) the right to
sue for past, present and future infringements of any of the foregoing and all
proceeds of such suits, provided that any such proceeds of suit shall be
proportionately divided among EPI and the Acquiror based on the duration of
infringing activity prior to and following the Closing if EPI agrees prior to
the commencement of such suit to bear its pro rata share of the costs of
prosecuting the claim relating to such activity calculated on the same basis.


 


“Permitted Encumbrance”
means, collectively, (a) liens for Taxes or assessments that are not
delinquent and that do not individually or in the aggregate materially detract
from the value or impair the use or operation of the property or asset affected
thereby as currently used or operated, (b) mechanics’, carriers’, workmen’s,
landlord’s or other like statutory liens arising or incurred in the ordinary
course of business which are not yet delinquent and that do not individually or
in the aggregate materially detract from the value or impair the use or
operation of the property or asset affected thereby as currently used or
operated, and (c) restrictions under zoning, building, fire, health,
environmental and pollution control Laws that do not individually or in the
aggregate materially detract from the value or impair the use or operation of
the property or asset affected thereby as currently used or operated.


 


9

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Person” means
any natural person, corporation, general partnership, limited partnership,
limited liability company, proprietorship, joint venture, other business
organization, trust, entity, union, association or Governmental or Regulatory
Authority.


 


“Pre-Closing Tax Period”
means all taxable periods ending on or before the Closing Date and the portion
ending on the Closing Date of any taxable period that includes (but does not
end on) the Closing Date.


 


“Product Books and
Records” shall mean all of the Books and Records relating
exclusively to the Products or that are necessary for the conduct of the
Business in the Territory, Including the Product Marketing Materials but
excluding the Excluded Books and Records.


 


“Product Copyrights”
means all Copyrights, set forth on Schedule 1.01(d) of the Elan Disclosure Schedule.


 


“Product Know-How”
means all Know-How set forth on Schedule 1.01(e) of the Elan Disclosure Schedule, but in no event shall
this definition of “Product Know How” include any Excluded Intellectual
Property or any information properly in the public domain as of the Closing
Date.


 


“Product Marketing
Materials” means all of the advertising, promotional and training
materials solely relating to the Products in the possession of EPI or its
Affiliates as of the Closing Date.


 


“Product Patent Rights”
means the Patents in the Territory set forth on Schedule 1.01(f) of
the Elan Disclosure Schedule, and all
Patent Rights associated with such Patents. 
Notwithstanding the foregoing, “Product Patient Rights” shall not
include any inchoate inventions not yet reduced to practice, all of which,
subject to the license granted pursuant to Section 2.02, shall remain the
exclusive property of EPI.


 


“Product Registrations”
means (i) the approvals or registrations which have been received by EPI
before the Closing Date, for the investigation, sale, distribution and/or
marketing of the Products in the Territory (including any NDAs or INDs), and (ii) all
dossiers, reports, data and other written materials filed as part of such
approvals or registrations, or maintained by EPI and relating to such approvals
or registrations.


 


“Products” means
Zanaflex Tablets and Zanaflex Capsules, along with any other pharmaceutical
products containing the compound tizanidine as their active pharmaceutical
ingredients to which EPI has ownership rights.


 


“Product Trademark”
means the Trademarks in the Territory set forth on Schedule 1.01(g) of
the Elan Disclosure Schedule.


 


“Purchased Assets”
has the meaning set forth in Section 2.01.


 


“Purchased Governmental
Permits” means all Governmental Permits necessary for the operation
of the Business by EPI that are held in the name of EPI or any of its
Affiliates.


 


10

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Purchased Intellectual
Properly” means the Product Copyrights, the Product Patent Rights,
the Product Know-How and the Domain Names; provided that, notwithstanding
anything to the contrary contained herein, in no event shall Purchased
Intellectual Property include any Excluded Intellectual Property.


 


“Rebates and Chargebacks
Termination Date” means the date that is ninety (90) days after the
Closing Date.


 


“Related Agreements”
means the Bill of Sale, the Assignment and Assumption Agreement, the Interim
Services Agreement, the Patent Assignment Agreement, the Trademark License
Agreement and the Domain Name Assignment Agreement.


 


“Returns Termination Date”
means the date that is one hundred and eighty (180) days after the Closing
Date.


 


“Royalty Payments”
has the meaning set forth in Section 4.02(a).


 


“Royalty Term”
has the meaning set forth in Section 4.02(a).


 


“Subsidiary” of
a Person means any entity Controlled by that Person.


 


“Supply Agreement”
means the Supply Agreement to be dated as of the Closing Date by and between
the Acquiror and EPI or one or more of its Affiliates, substantially in the
form at attached hereto as Exhibit E.


 


“Taxes” means
all of the following in connection with the operation of the Business or the
transactions contemplated hereby:  (i) any
net income, withholding, deduction, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, value added ad valorem, transfer,
franchise, profits, license, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, capital tax, customs duty or
other tax, governmental fee or other like assessment, together with any
interest, penalty or additional amount due, imposed by any governmental,
regulatory or administrative entity or agency responsible for the imposition of
any such tax (domestic or foreign); (ii) any Liability for the payment of
any amounts of the type described in (i) as a result of being a member of
any affiliated, consolidated, combined, unitary or other group for any taxable
period; and (iii) any Liability for the payment of any amounts of the type
described in (i)or (ii) as a result of any express or implied obligation
to indemnify any other Person.


 


“Termination Date”
has the meaning set forth in Section 12.01(b).


 


“Territory”
means the United States of America, its territories and possessions and the
Commonwealth of Puerto Rico.


 


“Third Party Intellectual
Property” means any intellectual property rights, including any
patent, copyright, trademark, trade secret or other proprietary rights, that
are owned or controlled by any Person other than a party to this Agreement.


 


“Third Party Claim”
has the meaning set forth in Section 11.02(d).


 


11

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


“Trademark License
Agreement” means the Trademark License Agreement to be dated as of
the Closing Date by and between the Acquiror and EPI, substantially in the form
attached hereto as Exhibit F.


 


“Trademarks”
means:  (a) all trademarks, trade
names, trade dress, service marks, logos and designs, whether registered or
unregistered; (b) all registrations and applications for any of the
foregoing; (c) all extensions or renewals of any of the foregoing; (d) all
of the goodwill connected with the use of and symbolized by the foregoing; (e) all
proceeds of the foregoing, including licenses, royalties, income and payments;
and (f) the right to sue for past, present and future infringements of any
of the foregoing and all proceeds of such suits, provided that any such
proceeds of suit shall be proportionately divided among EPI and the Acquiror
based on the duration of infringing activity prior to and following the Closing
if EPI agrees, prior to the commencement of such suit to bear its pro rata
share of the costs of prosecuting the claim relating to such activity
calculated on the same basis.


 


“Trademark Purchase”
has the meaning set forth in Section 4.04.


 


“Transfer Taxes”
has the meaning set forth in Section 4.06.


 


“Zanaflex Capsules”
means pharmaceutical products containing tizanidine as their active
pharmaceutical ingredients currently approved by the FDA pursuant to NDA No. 21-447
to be marketed in the Territory under the trademark Zanaflex.


 


“Zanaflex Tablets”
means pharmaceutical products containing tizanidine as their active
pharmaceutical ingredients currently approved by the FDA pursuant to NDA No. 20-397
and marketed in the Territory under the trademark Zanaflex.


 


Section 1.02.          Construction
of Certain Terms and Phrases. Unless the context of Agreement otherwise
requires: (a) words of any gender ‘include each-other gender; (b) words
using the singular or plural number also include the plural or singular number,
respectively; (c) the terms “hereof,” “herein,” “hereby” and derivative or
similar words refer to this entire Agreement; (d) the terms “Article” or
“Section” refer to the specified Article or Section of this
Agreement; (e) the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or”; (f) ”$” means United
States dollars; and (g) the term “including” means “including without
limitation.”  Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified.


 


ARTICLE II


 


PURCHASE AND SALE
OF ASSETS


 


Section 2.01.          Purchase
and Sale of Assets at the Closing. 
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, EPI shall sell, convey, assign, transfer and deliver
to the Acquiror, and the Acquiror shall purchase and acquire from EPI, all of
EPI’s right, title and interest in and to the following assets, free and clear
of all Encumbrances, other than Permitted Encumbrances (collectively, the “Purchased Assets”):


 


12

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(a)           the rights
of EPI and its Affiliates under each of the Contracts set forth on Schedule 2.01(a) of
the Elan Disclosure Schedule (the “Assumed Contracts”), subject to the terms
and conditions set forth in the Assignment and Assumption Agreement;


 


(b)           all
Product Books and Records;


 


(c)           all
Inventory;


 


(d)           all
Purchased Intellectual Property;


 


(e)           all
Product Registrations;


 


(f)            all
Purchased Governmental Permits, to the extent legally transferable; and


 


(g)           any other
assets set forth on Schedule 2.01(8) of the Elan Disclosure Schedule;


 


provided, however,
that notwithstanding anything to the contrary contained herein, EPI shall not
be required to transfer physical possession of any Purchased Assets to the
Acquiror to the extent any of such Purchased Assets are necessary for EPI to
perform its obligations under the Interim Services Agreement (it being
understood that (i) EPI will transfer physical possession of such
Purchased Assets to the Acquiror as soon as is practicable after such
obligations aim fully performed, and (ii) as long as EPI retains physical
possession of any Purchased Assets, EPI shall, upon request of the Acquiror,
provide the Acquiror with immediate access to and copies of such Purchased
Assets (at Acquiror’s expense and provided that such access does not
unreasonably interfere with the business or operations of EPI or its
Affiliates).


 


Section 2.02.          Excluded
Assets; License to Excluded Intellectual Property.  Notwithstanding anything to the contrary
contained in this Agreement, from and after the Closing, EPI shall retain all
of its right, title and interest in and to all of its assets; other than the
Purchased Assets (the “Excluded Assets”),
including:


 


(a)           all cash
and cash Equivalents of EPI or any of its Affiliates;


 


(b)           all
Accounts Receivable of EPI or any of its Affiliates;


 


(c)           the
Corporate Names;


 


(d)           the
Product Trademarks;


 


(e)           all
Excluded Intellectual Property;


 


(f)            any
refund or credit of Taxes attributable to any Pre-Closing Tax Period;


 


(g)           all Books
and Records other than the Product Books and Records; and


 


(h)           all
tangible personal property owned by EPI and used outside of, or not exclusively
in connection with, the Business as of the Closing Date.


 


13

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


EPI hereby grants to the Acquiror an exclusive,
perpetual, royalty-free license, with the right to sublicense, to use (i) the
Excluded Intellectual Property (including any inchoate inventions not yet
reduced to practice), (ii) any other intellectual property owned by EPI or
any of its Affiliates that is necessary to conduct the Business, and (iii) any
Improvements to the intellectual property described in clauses, “(i)” and
“(ii)” of this sentence solely for the purposes of importing Products into the
Territory and using, modifying, exploiting, researching, distributing,
developing, marketing, selling, offering for sale and otherwise commercializing
Products in the Territory.  In addition,
at the Closing, EPI and the Acquiror will enter into the Trademark License
Agreement.


 


Section 2.03.          Retention
of Copies of Certain Assets. 
Notwithstanding anything to the contrary contained in this Agreement,
EPI may retain, at its expense, archival copies of all Assumed Contracts,
Product Books and Records and other documents or materials conveyed hereunder; provided, however, that
EPI shall maintain such items in accordance with the provisions of Section 8.04.


 


ARTICLE III


 


ASSUMPTION OF
LIABILITIES


 


Section 3.01.          Assumption
of Liabilities.  (a) Upon the
terms and subject to the conditions set forth in this Agreement, the Interim
Services Agreement and the Bill of Sale, subject to Section 3.01(b), Section 8.05
and the terms and conditions set forth in the Supply Agreement, and excluding
any Liabilities represented, warranted or disclosed by EPI under Article VI
(other than with respect to obligations under the Assumed Contracts), as of the
Closing, the Acquiror agrees to assume, satisfy, perform, pay and discharge
each of the following Liabilities (the “Assumed Liabilities”):


 


(i)            all
Liabilities of EPI or any of its Affiliates solely arising out of any product
liability, patent infringement, breach of warranty or similar claim for injury
to person or property which resulted from the use or misuse of Products sold
directly by the Acquiror (or its Affiliates, sublicensees and marketing,
promotion or distribution partners) at any time after the Closing (including
all Actions or Proceedings relating to any such Liabilities);


 


(ii)           all
Liabilities of EPI or any of its Affiliates under the Assumed Contracts, subject
to the terms and conditions set forth in the Assignment and Assumption
Agreement, but only to the extent that such Liabilities arise from any event,
circumstance or condition occurring after the Closing;


 


(iii)          all
Liabilities of EPI or any of its Affiliates solely arising out of government
seizures, field corrections, withdrawals or recalls of Products to the extent
that such Products were sold directly by the Acquiror (or its Affiliates,
sublicensees and marketing, promotion or distribution partners) at any time
after the Closing;


 


14

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(iv)          subject
to clause ”(i)” above, all liabilities of EPI or any of its Affiliates
with respect to any litigation or other claims solely arising out of or
relating to the conduct of the Business by the Acquiror or its Affiliates after
the Closing;


 


(v)           all
Liabilities of EPI or any member of any affiliated group of which EPI is a
member for Taxes solely arising out of or relating to the Purchased Assets
(including the Products) (to the extent arising out of any event, circumstance
or condition occurring after the Closing), the ownership, research,
development, sale or lease of any of the Purchased Assets by the Acquiror or
its Affiliates after the Closing or the operation of the Business by the
Acquiror or its Affiliates after the Closing;


 


(vi)          all
Liabilities of EPI or any of its Affiliates solely arising out of user or other
similar fees payable to the FDA or any other Governmental or Regulatory
Authority to the extent that such fees are due and payable on account of the
operation of the Business by the Acquiror or its Affiliates after the Closing
(and to the extent that EPI or any of its Affiliates has paid any such fee
prior to the Closing, the Acquiror shall promptly reimburse EPI or such
Affiliate for such payment or prorated portion thereof); and


 


(vii)         all
other Liabilities of EPI or any of its Affiliates solely arising out of or
relating to the Purchased Assets (including the Products)(to the extent arising
out of any event, circumstance or condition occurring after the Closing), the
ownership, research, development, sale or lease of any of the Purchased Assets
by the Acquiror or its Affiliates after the Closing or the operation of the
Business by the Acquiror or its Affiliates after the Closing to the extent
arising out of any event, circumstance or condition occurring after the
Closing.


 


For greater clarity, the parties acknowledge and agree
that, notwithstanding anything to the contrary contained in this Section 3.01(a),
if any Liabilities that arise from any event, circumstance or condition
occurring after the Closing relate to or in any way involve any Products that
have been sold, the Acquiror shall only assume those Liabilities arising from
those Products sold directly at any time after the Closing by the Acquiror (or
its Affiliates, sublicensees and marketing, promotion or distribution
partners), and EPI shall retain all Liabilities arising from those Products
sold directly at any time prior to he Closing by EPI (or its Affiliates,
sublicensees and marketing, promotion or distribution partners).


 


(b)           Notwithstanding
anything contained in this Agreement to the contrary including Section 3.01(a))
and subject to the terms and conditions of Section 8.05, the Supply
Agreement and the Interim Services Agreement, EPI shall retain an of the
following Liabilities (“Excluded Liabilities”):


 


(i)            all
accounts payable of EPI and its Affiliates;


 


(ii)           all
Liabilities of EPI and its Affiliates with respect to the manufacture,
processing, packaging, testing, sale or holding of any inventory or of the
Products prior to the Closing;


 


15

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(iii)          all
Liabilities under the Assumed Contracts, but only to the extent such
Liabilities arise from any event, circumstance or condition occurring prior to
the Closing;


 


(iv)          (A) all
Liabilities for Taxes payable with respect to any business, assets, property or
operation of EPI or any member of any affiliated group of which EPI is or has
been a member, and (B) all Liabilities for Taxes relating to or arising
out of the Purchased Assets (including the Products), the ownership, research,
development, sale or lease of any of the Purchased Assets by EPI or the
operation of the Business by EPI attributable to any Pre-Closing Tax Period,
other than any Transfer Tax for which the Acquiror is responsible pursuant to Section 4.04;


 


(v)           all
Liabilities of EPI or any of its Affiliates arising out of any product
liability, patent infringement, breach of warranty or similar claim for injury
to person or property which resulted from the use or misuse of Products sold
directly by EPI (or its Affiliates, sublicensees and marketing, promotion or
distribution partners) at any time prior to the Closing (including all Actions
or Proceedings relating to any such Liabilities);


 


(vi)          all
Liabilities of EPI or any of its Affiliates arising out of government seizures,
field corrections, withdrawals or recalls of Products that are sold directly by
EPI (or its Affiliates, sublicensees and marketing, promotion or distribution
partners) at any time prior to the Closing;


 


(vii)         subject
to clause “(v)” above, all Liabilities of EPI or any of its Affiliates with
respect to any litigation or other claims arising out of or relating to the
conduct of the Business by EPI or its Affiliates prior to the Closing,


 


(viii)        all
Liabilities of EPI or any of its Affiliates arising out of user or other
similar fees payable to the FDA or other Governmental or Regulatory Authority
to the extent that such fees are due and payable on account of the operation of
the Business prior to the Closing (and to the extent the Acquiror or any of its
Affiliates has paid any such fee after the Closing, EPI shall promptly
reimburse the Acquirer or such Affiliate for such payment or prorated portion
thereof); and


 


(ix)           any
other Liability of EPI or any of its Affiliates that is not listed as an
Assumed Liability under Section 3.01(a).


 


ARTICLE IV


 


CONSIDERATION AND
PAYMENT


 


Section 4.01.          Closing
Consideration.  As consideration for
the Purchased Assets, at the Closing, the Acquirer shall:


 


(a)           deliver or
cause to be delivered to EPI the sum of [***] plus
the Estimated Closing Date Inventory Value set forth in the statement referred
to in Section 4.08(a) (together, the “Closing
Consideration”) by electronic funds transfer of immediately
available funds to the account specified by EPI; and


 


16

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(b)           assume the
Assumed Liabilities.


 


The Closing Consideration shall be exclusive of any
value added tax which, if urged, shall be payable by Acquirer.


 


Section 4.02.          Royalty
for Products.  (a) The Acquiror
shall pay to EPI royalties (the royalty payments referred-to in this Section 4.02(a) being
referred to as the “Royalty Payments”)
of:


 


(i)            [***]
of the Net Sales of Zanaflex Capsules in the Territory during the period
beginning on the Closing Date and ending on the date of termination of all
obligations to pay royalties under the Novartis License Agreement with respect
to sales of Zanaflex Capsules (the “Novartis Royalty Term”);


 


(ii)           [***]
of the Net Sales of Zanaflex Tablets in the Territory during the period
beginning on the Closing Date and ending on the later of (A) the tenth
(10th) anniversary of the Closing Date or (B) the date of expiration of
the last Patent to expire included within the Product Patent Rights (the “EPI Royalty Term”); provided, however, that notwithstanding the foregoing, no royalty
shall be due and payable under this Section 4.02(a)(ii) with respect
to Net Sales of Zanaflex Tablets arising from Acquiror 2004 Gross Sales that
exceed [***]; and


 


(iii)          [***]
of the Net Sales of Zanaflex Capsules in the Territory during the period
beginning on the termination of the Novartis Royalty Term and ending on the
termination of the EPI Royalty Term.


 


(b)           Royalty
Payments shall be made on a quarterly basis by the Acquiror in United States
dollars on or prior to the date that is forty-five (45) days after the end of
each calendar quarter (each such date, a “Due Date”)
included within the EPI Royalty Term. 
Payment shall be by means of wire transfer to an account designated in
writing by EPI from time to time.


 


(c)           By each
Due Date, the Acquiror shall provide to EPI a true and accurate report of Net
Sales of the applicable Products in the Territory for the previous calendar
quarter and the calculation of royalties due thereon.  Until the date that is two (2) years
after the expiration of the EPI Royalty Term (the “Audit
Termination Date”), the Acquirer shall keep accurate books and
records in sufficient detail to enable the royalties payable hereunder to be
determined.  EPI may demand, no more than
once during any calendar year and until the Audit Termination Date, an audit of
the relevant books and records of the Acquiror in order to verify the royalties
payable hereunder during the previous three (3) year period.  Upon no less than fifteen (15) days’ prior
written notice to the Acquiror, the Acquiror shall grant reasonable access
during normal business hours to members of an internationally recognized
independent public accounting firm selected by EPI to such relevant books and
records of the Acquiror in order to conduct a review or audit thereof.  The accounting firm shall report its
conclusions and calculations to EPI and the Acquiror; provided, that in no
event shall the accounting firm disclose to EPI any information of the Acquiror
except to the extent necessary to verify Net Sales and the royalties payable
hereunder and, at the request of the Acquiror, such accounting firm will
execute appropriate non-disclosure agreements. 
Unless the results of an such audit indicate that


 


17

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


the Acquiror underpaid royalties due hereunder for any period by
greater than [***].  EPI shall bear the
full cost of the performance of such audit. 
If the results of any such audit indicate that the Acquiror underpaid
royalties due hereunder for any period by greater than [***], (i) the
Acquiror shall bear the full cost of the performance of such audit and (ii) the
Acquiror shall pay to EPI the mount by which the Acquiror underpaid such
royalties.


 


(d)           The
Acquiror shall pay interest to EPI on Royalty Payments not made to EPI by the
applicable Due Date over the period from such Due Date until the date of actual
payment (both before and after judgment) at the prime rate publicly announced
by Morgan Guaranty Trust Company of New York at its principal office from time
to time plus 2% (or, if less, the maximum rate allowed to be charged under
applicable laws), such interest to be payable on demand and compounded monthly.


 


Section 4.03.          Milestone
Payments:  (a) The Acquiror
shall make the following payments by means of wire transfer to an account
designated in writing by EPI from time to time:


 


(i)            if
(and only if) the cumulative Gross Sales from and after the Closing during
calendar year 2004 in the Territory of Zanaflex Tablets and Zanaflex Capsules
(“Acquiror 2004 Gross Sales”) are equal to
or greater than [***] then the Acquiror shall pay to EPI an amount equal to
one-half of such Acquiror 2004 Gross Sales, subject to a maximum amount to be
paid to EPI under this Section 4.03(a)(i) of [***] according to the
following schedule:  (A) one-half of
such amount to be paid to EPI shall be paid on March 31, 2005, and (B) the
remainder shall be paid on March 31,2006;


 


(ii)           if
(and only if) the cumulative Gross Sales from and after the Closing in the
Territory of Zanaflex Tablets and Zanaflex Capsules are equal to or greater
than [***] then the Acquiror shall pay [***] to EPI upon the later of (A) the
date that is 45 days following the end of the calendar quarter in which such
target is met and (B) March 31, 2006;


 


(iii)          if
(and only if) the cumulative Gross Sales from and after the Closing in the
Territory of Zanaflex Table and Zanaflex Capsules are equal to or greater than
[***] then the Acquiror shall pay [***] to EPI within 45 days following the end
of the calendar quarter in which such target is met;


 


(iv)          if
(and only if) the cumulative Gross Sales from and after the Closing in the
Territory of Zanaflex Tablets and Zanaflex Capsules are equal to or greater
than [***], then the Acquiror shall pay [***] to EPI within 45 days following
the end of the calendar quarter in which such target is met; and


 


(v)           if
(and only if) the cumulative Gross Sales from and after the Closing in the
territory of Zanaflex Tablets and Zanaflex Capsules are equal to or greater
than [***] then the Acquiror shall pay [***] to EPI within 45 days following
the end of the calendar quarter in which such target is met (the payments
referred to in clauses “(i),” “(ii),” “(iii),” “(iv)” and “(v)” being referred
to as the “Milestone Payments”).


 


18

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(b)           By the
date that is 45 days after the end of each calendar quarter until the quarter
in which the last to be paid of the Milestone Payments is made (the “Final Milestone Payment Date”), the Acquiror shall provide
to EPI a true and accurate report of Gross Sales of the applicable Products in
the Territory for the previous calendar quarter.  Until the date that is six (6) months
after the Final Milestone Payment Date (the “Milestone
Audit Termination Date”), the Acquiror shall keep accurate books and
records in sufficient detail to enable the Milestone Payments to be
determined.  EPI may demand, no more than
once during any calendar year and until the Milestone Audit Termination Date,
an audit of the relevant books and records of the Acquiror in order to verify
the Milestone Payments payable hereunder. 
Upon no less than fifteen (15) days’ prior written notice to the
Acquiror, the Acquiror shall grant reasonable access during normal business
hours to members of an internationally recognized independent public accounting
firm selected by EPI to such relevant books and records of the Acquiror in
order to conduct a review or audit thereof. 
The accounting firm shall report its conclusions and calculations to EPI
and the Acquiror; provided, that in no event shall the accounting firm disclose
to EPI any information of the Acquiror except to the extent necessary to verify
Gross Sales and the Milestone Payments payable hereunder and, at the request of
the Acquiror, such accounting firm will execute appropriate non-disclosure
agreements.  Unless the results of any
such audit indicate that the Acquiror failed to pay any Milestone Payment
within three (3) months following the date that such Milestone Payment was
due, EPI shall bear the full cost of the performance of such audit.  If the results of any such audit indicate
that the Acquiror has not paid any Milestone Payment, (i) the Acquiror
shall bear the full cost of the performance of such audit and (ii) the
Acquiror shall make the appropriate Milestone Payment to EPI (to the extent not
already paid).


 


(c)           The
Acquiror shall pay interest to EPI on Milestone Payments not made to EPI by the
applicable due date thereof over the period from such due date until the date
of actual payment (both before and after judgment) at the prime rate publicly
announced by Morgan Guaranty Trust Company of New York at its principal office
from time to time plus 2% (or, if less, the maximum rate allowed to be charged
under applicable laws), such interest to be payable on demand and compounded
monthly.


 


Section 4.04.          Trademark
Purchase.  At any time on or after
the date upon which the Acquiror shall have paid to EPI an aggregate of [***]
(pursuant to the provisions of Sections 4.01 through 4.03; the Acquiror may
elect, in its sole discretion by written notice to EPI, to purchase the Product
Trademarks for the purchase price of [***] (the “Trademark
Purchase”).  At such time,
the, parties will cooperate in good faith to execute and deliver such
documents, including any trademark assignment agreement required under
applicable law, as are necessary or desirable to vest in the Acquiror good and
marketable title to the Product Trademarks.


 


Section 4.05.          Allocation
of Purchase Price.  The Closing
Consideration shall be allocated among the Purchased Assets in the manner
mutually agreed to by EPI and the Acquiror within thirty (30) days after the
Closing Date.  Any subsequent adjustments
to the consideration paid by the Acquiror for the Purchased Assets (including
the Closing Date Inventory Value Adjustment, the Milestone Payments and the
Royalty Payments) shall be reflected in such allocation as revised hereunder in
manner consistent with Section 1060 of the Code.  The Acquiror and EPI agree (a) to report
the sale and purchase of the Purchased Assets for Tax


 


19

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


purposes in accordance with such allocation and (b) not to take
any position inconsistent with such allocation on any of their respective Tax
returns.  If within a (10) days
after the thirty (30)-day period set forth above the parties have not reached
agreement, the Accountants shall be engaged to determine the final allocation
in dispute.  EPI and the Acquiror shall
share equally the fees of such Accountants.


 


Section 4.06.          Sales,
Use and Other Taxes.  All transfer,
documentary, sales, use, gross receipts, stamp, duty, registration or other
similar transfer taxes (collectively, “Transfer Taxes”)
incurred in connection with the transfer and sale of the Purchased Assets as
contemplated by the terms of this Agreement and the Related Agreements,
including all recording or filing fees, notarial fees and other similar costs
of Closing that may be imposed, payable, collectible or incurred shall be borne
equally by EPI, on the one hand, and by the Acquiror, on the other hand.


 


Section 4.07.          No
Tax Withholding.  All payments under
or contemplated by this Agreement or the Related Agreements will be made
without any deduction or withholding for or on account of any taxes.


 


Section 4.08.          Closing
Date Inventory Value Adjustments.  (a) EPI
will deliver to the Acquiror a written statement of the Estimated Closing Date
Inventory Value at least two (2) Business Days prior to the Closing
Date.  As promptly as practicable, but in
any event not later than thirty (30) days after the Closing Date, EPI shall
prepare and deliver to the Acquiror a statement calculating the Closing Date
Inventory Value and the amount of any Closing Date Inventory Value Adjustment
(the “Closing Date Inventory Value Statement”).


 


(b)           During the
sixty (60) day period immediately following the Acquiror’s receipt of the
Closing Date Inventory Value Statement, the Acquiror shall be permitted to
review EPI’s books and records to the extent reasonably necessary for the
Acquiror to evaluate the Closing Date Inventory Value Statement.  The Closing Date Inventory Value Statement
shall become final and binding upon the Acquiror and EPI at the end of such
sixty (60) day period, unless the Acquiror objects to the Closing Date
Inventory Value Statement, in which case it shall send written Notice (the “Notice of Objection”) to EPI within such period, setting
forth in specific detail the basis for its objection and its proposal for any
adjustments to the Closing Date Inventory Value Statement.  If a timely Notice of Objection is received
by EPI, then the Closing Date Inventory Value Statement shall become final and
binding on EPI and the Acquiror on the first to occur of (x) the date EPI
and the Acquirer resolve in writing any differences they have with respect to the
matters specified in the Notice of Objection and (y) the date all matters
in dispute are finally resolved in writing by the Accountants, in each case as
provided below.  EPI and the Acquiror
shall seek in good faith to reach agreement as to any such proposed adjustment
or that no such adjustment is necessary within thirty (30) days following
receipt of the Notice of Objection.  If
agreement is reached in writing within such thirty (30) day period as to all
proposed adjustments, or that no adjustments are necessary, EPI and the
Acquiror shall revise the Closing Date Inventory Value Statement
accordingly.  If EPI and the Acquiror are
unable to reach agreement within such thirty (30) day period, then the
Accountants shall be engaged at that time to review the Closing Date Inventory
Value Statement, and shall make a determination as to the resolution of any
adjustments.  The determination of the
Accountants shall be delivered as soon as practicable following engagement of
the Accountants, but in no event more than thirty (30)


 


20

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


days thereafter, and shall be final, conclusive and binding upon EPI
and the Acquiror, and the parties shall revise the Closing Date Inventory Value
Statement accordingly.  EPI, on the one
hand, and the Acquiror, on the other hand, shall each pay one-half of the cost
of the Accountants.  Within ten (10) days
after the date on which the Closing Date Inventory Value Statement becomes
final and binding on EPI and the Acquiror, the Acquiror shall pay the Closing
Date Inventory Value Adjustment to EPI, if positive, or EPI shall pay the
Closing Date Inventory Value Adjustment to the Acquiror, if negative.


 


ARTICLE V


 


CLOSING


 


Section 5.01.          Time
and Place.  The closing of the
transactions contemplated by this Agreement, including the purchase and sale of
the Purchased Assets and the assumption of the Assumed Liabilities (the “Closing”), shall take place simultaneously with the signing
of this Agreement, at the offices of EPI, 7475 Lusk Boulevard, San Diego, CA
92121, unless another place shall be agreed to by the parties.  The date on which the Closing actually takes
place is referred to as the “Closing Date”.


 


Section 5.02.          Deliveries
at Closing.


 


(a)           Closing
Deliveries by EPI.  At the Closing,
EPI shall deliver or cause to be delivered to the Acquirer:


 


(i)            each
of the Related Agreements and the Supply Agreement, duly executed and delivered
by EPI, and copies of an documents required to be delivered by EPI pursuant to
this Agreement, the Related Agreements and the Supply Agreement;


 


(ii)           a
copy of the Assignment and Assumption Agreement, duly executed by Novartis;


 


(iii)          a
copy, of each of the Assumed Contracts; and


 


(iv)          copies
of all Elan Governmental Consents and Elan
Third Party Consents.


 


(b)           Closing
Deliveries by the Acquiror.  At the
Closing, the Acquiror will deliver or cause to be delivered to EPI:


 


(i)            the
Closing Consideration in immediately available funds by wire transfer to an
account that shall have been designated by EPI not less than two Business Days
prior to the Closing Date;


 


(ii)           each
of the Related Agreements to be executed by the Acquirer and the Supply
Agreement, duly executed and delivered by the Acquirer, and copies of all
documents required to be delivered by the Acquirer pursuant to this Agreement,
the Related Agreements and the Supply Agreement;


 


(iii)          evidence
of the insurance coverage described in Section 7.07; and


 


21

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(iv)          such
instruments of assumption and other instruments or documents, in form and
substance reasonably acceptable to EPI and the Acquiror, as may be necessary to
effect the Acquirer’s assumption of the Assumed Liabilities.


 


ARTICLE VI


 


REPRESENTATIONS
AND WARRANTIES OF EPI


 


EPI represents and warrants to the Acquiror that each
statement set forth in each of the sections and subsections of this Article VI
(each such statement being a “representation and warranty” of the Company) is
accurate and complete as of the date hereof (except as to certain
representations and warranties which expressly speak as of a different date certain,
which shall be accurate and complete as of such date), except as set forth in
any disclosure schedule delivered to the Acquiror by EPI on the date of
this Agreement corresponding to the particular section of subsection of
this Article VI in which such representation and warranty appears (it
being understood, however, that a disclosure in a particular disclosure schedule will
also be deemed to qualify a representation and warranty that does not appear in
the corresponding section or subsection of this, Article VI if
such disclosure reasonably relates to such representation and warranty) (All
disclosure schedules delivered to the Acquiror by EPI on the date of this
Agreement being collectively referred to as the “Elan Disclosure Schedule”).


 


Section 6.01.          Organization,
Etc.  EPI is duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
power and authority to own its assets and carry on its business as currently
conducted by it.  EPI is duly authorized
to conduct its business and is in good standing in each jurisdiction where such
qualification is required, except for any jurisdiction where failure to so
qualify would not have a Material Adverse Effect.


 


Section 6.02.          Authority
of EPI.  EPI (and/or any of its
Affiliates, as applicable with respect to Related Agreements and the Supply
Agreement) has all necessary corporate power and authority and has taken all
actions necessary to enter into, deliver and perform its obligations under this
Agreement, the Supply Agreement and the Related Agreements and carry out the
transactions contemplated hereby and thereby. 
The board of directors and stockholders of EPI (and/or any of its
Affiliates, as applicable with respect to Related Agreements and the Supply
Agreement) have taken all action required by Law and its Charter Documents and
otherwise to be taken by it to authorize (a) the execution and delivery
of, and performance by it of its obligations under, this Agreement, the Supply
Agreement and the Related Agreements and (b) the consummation of the
transactions contemplated hereby and thereby. 
This Agreement has been duly and validly executed and delivered by EPI
and, when executed and delivered by the Acquiror, will constitute a legal,
valid and binding obligation of EPI, enforceable against it in accordance with
its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
generally the enforcement of creditors’ rights and (ii) the availability
of equitable remedies (whether in a proceeding in equity or at law).  When executed and delivered by EPI and each
other party thereto, the Supply Agreement and each Related Agreement will
constitute a legal, valid and binding obligation of EPI (and/or any of its
Affiliates, as applicable), enforceable against it in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
generally the


 


22

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


enforcement of creditors’ rights and (ii) the availability of
equitable remedies (whether in a proceeding in equity or at law).


 


Section 6.03.          Consents
and Approvals. (a) Schedule 6.03(a) of the Elan Disclosure Schedule sets forth a
complete and accurate list (the “Elan Governmental Consents”) of all consents, waivers,
approvals, Orders, permits or authorizations of, or registrations,
declarations, payments or filings with, any Governmental or Regulatory
Authority that are required by of with respect to EPI or my of its Affiliates
in connection with the execution and delivery of this Agreement, the Supply
Agreement and the Related Agreements by EPI, the consummation of the
transactions contemplated hereby and thereby or the performance of its
obligations hereunder and thereunder, except for those consents, waivers,
approvals, Orders, permits, authorizations, registrations, declarations,
payments or filings which a failure to obtain or make would not have a Material
Adverse Effect.


 


(b)           Schedule 6.03(b) of
the Elan Disclosure Schedule sets
forth a complete and accurate list (the “Elan
Third Party Consents”) of all consents, waivers, approvals, or
authorizations of, or notices to, any Person (other than a Governmental or
Regulatory Authority) that are required by or with respect to EPI or any of its
Affiliates in connection with the execution and delivery of this Agreement, the
Supply Agreement and the Related Agreements by EPI, the consummation of the
transactions contemplated hereby and thereby or the performance of its
obligations hereunder and thereunder, except for those consents, waivers,
approvals, authorizations or notices which a failure to obtain or make would
not have a Material Adverse Effect.


 


Section 6.04.          Non-Contravention.  The execution and delivery by EPI of this
Agreement, the Supply Agreement and the Related Agreements, does not, and the
performance by it of is obligations under this Agreement, the Supply Agreement
and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby will not:


 


(a)           conflict
with or result in a violation or breach of any of the terms, conditions or
provisions of the Charter Documents of EPI;


 


(b)           assuming
the receipt of the Elan Governmental
Consents, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to EPI, the Business as conducted by
EPI or the Purchased Assets or any Governmental Permit;


 


(c)           give any
Governmental or Regulatory Authority the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Governmental Permit relating to the Products,
except as would not have a Material Adverse Effect; or


 


(d)           conflict
with or result in a Default under any Assumed Contract, assuming receipt of the
Elan Third Party Consents applicable to the Assumed Contracts, except as would
not have a Material Adverse Effect.


 


Section 6.05.          Contracts.  Schedule 6.05 of the Elan Disclosure Schedule sets forth a
complete and correct list of:  (a) each
EPI Contract that relates to the research, development, exploitation,
licensing, use, importation, promotion, marketing, sale or distribution of the
Products and provides for aggregate annual payments, or has a value in excess,
of $25,000;


 


23

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


and (b) each other EPI Contract that, if such Contract were to be
terminated or otherwise no longer in full force and effect, would have or would
reasonably be expected to have a Material Adverse Effect. EPI has delivered to
the Acquiror complete and correct copies of all such EPI Contracts and all
Assumed Contracts; including all amendments, exhibits, appendices and annexes
thereto.  Except as would not have a
Material Adverse Effect, (a) each of the Assumed Contracts is in full
force and effect and constitutes a legal, valid and binding agreement of EPI or
its Affiliate, as applicable, and is enforceable in accordance with its terms
by EPI or its Affiliate, as applicable, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting generally the enforcement of creditors’
rights and (ii) the availability of equitable remedies (whether in a
proceeding in equity or at law), and (b) EPI-and its Affiliates have
performed all of their obligations under each Assumed Contract, and neither EPI
nor any of its Affiliates, nor, to the Knowledge of EPI, any third party to any
Assumed Contract, has violated or breached, or declared or committed any
Default under, any Assumed Contract. 
Neither EPI nor any of its Affiliates have received any written notice
or, to the Knowledge of EPI, any other communication regarding any actual,
alleged, possible or potential violation or breach of, or default under, any
Assumed Contract.  EPI has delivered to
the Acquiror complete and correct copies of all Multi-Product Contracts,
including all amendments, exhibits, appendices and annexes thereto; provided,
that such copies may have been redacted to prevent disclosure of information
not related to any of the Products.


 


Section 6.06.          Title
to Purchased Assets.  EPI has good
and valid title to all of the Purchased Assets and the Product Trademarks and
owns all of the Purchased Assets and the Product Trademarks free and clear of
any Encumbrances (other than Permitted Encumbrances).  At the Closing EPI will convey to the
Acquiror good and valid title to all of the Purchased Assets free and clear of
any Encumbrances (other than Permitted Encumbrances).


 


Section 6.07.          Intellectual
Property Rights.


 


(a)           EPI has
not entered into any Contract (i) granting any Person the right to bring
infringement actions with respect to, or otherwise to enforce rights with
respect to, any of the Purchased Intellectual Property or the Product
Trademarks in the Territory, (ii) expressly agreeing to indemnify any
Person against any charge of infringement of any of the Purchased Intellectual
Property or the Product Trademarks in the Territory, (iii) granting any
Person any license rights or other rights to use or practice any Purchased
Intellectual Property or the Product Trademarks in the Territory, or (iv) binding
EPI or any of its Affiliates under any covenant not to sue any Person for use,
practice or infringement of any Purchased Intellectual Property or the Product
Trademarks in the Territory.


 


(b)           EPI has
not entered into any Contract granting any Person the right to control the
prosecution of any of the Product Patent Rights in the Territory.


 


(c)           To the
Knowledge of EPI, the conduct of the Business in the Territory, as it has been
and is now being conducted, does not presently and will not infringe or
misappropriate or otherwise violate, as applicable, any Patent, Know-How,
Trademark or other intellectual property or proprietary rights in the Territory
of any Person.  Neither EPI nor any of
its Affiliates has received any written notice from any Person, or has
Knowledge of, any claim, allegation or assertion that the conduct of the
Business in the Territory infringes or


 


24

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


misappropriates or otherwise violates, as applicable, the Patent,
Know-How, Trademark or other intellectual property or proprietary rights in the
Territory of any Person.  To the
Knowledge of EPI, the conduct of research, development, exploitation,
licensing, distribution, marketing, sale, promotion, importation and use of the
Zanaflex Capsules in the Territory by the Acquiror, in each case as such
activities are conducted by EPI as of the Closing, will not infringe or
misappropriate or otherwise violate, as applicable, any Patent, Know-How,
Trademark or other intellectual property or proprietary rights in the Territory
of any Person.


 


(d)           Any
registration, maintenance and renewal fees due in connection with the Purchased
Intellectual Property and the Product Trademarks have been paid in a timely
manner and all documents, certificates and other material in connection with
the Purchased Intellectual Property and the Product Trademarks have, for the
purposes of maintaining such Purchased Intellectual Property or the Product
Trademarks, as applicable, been filed in a timely manner with the relevant
Governmental or Regulatory Authorities. 
EPI has filed, prosecuted and maintained the Product Trademarks in the
Territory and has filed and maintained all Purchased Intellectual Property, as
applicable, in the Territory.


 


(e)           EPI has
the unrestricted right to assign, transfer and grant to the Acquiror all rights
in and to the Purchased Intellectual Property as provided herein, and in and to
the Product trademarks as provided in the Trademark License Agreement, in each
case free of any rights or claims of any Person, or any other Encumbrances
(other than Permitted Encumbrances), and without payment by any Party of any
royalties, license fees or other amounts to any third party.


 


(f)            To the
Knowledge of EPI, all of the Product Patents are valid and are subsisting and
enforceable.  None of the Product Patents
has been or is currently involved in any interference, reissue, re-examination
or opposition proceeding, and, to the Knowledge of EPI, there is no potentially
interfering Patent in the Territory.


 


(g)           To the
Knowledge of EPI, (i) there is no unauthorized use, infringement,
misappropriation or violation of any of the Purchased Intellectual Property or
the Product Trademarks in the Territory by any Person, including any current or
former employee or consultant of EPI or its Affiliates, and (ii) there is
no material breach of any license, sublicense or other Contract authorizing any
Person to use such Purchased Intellectual Property, the Product Trademarks or
any goodwill associated therewith.


 


(h)           There are
no Actions or Proceedings (including any inventorship challenges) ending with
respect to any of the Purchased Intellectual Property or the Product
Trademarks, nor aye any such Actions or Proceedings been brought in the past Schedule 6.07(h) sets
forth any and all settlements or agreements reached with respect to any such
Actions or Proceedings with respect to Purchased Intellectual Property and the
Product Trademarks.  None of the Product
Trademarks in the Territory is or has been the subject of any invalidation,
opposition, cancellation, abandonment or similar proceeding, and neither EPI
nor any of its Affiliates has received any written notice from any Person, or
has Knowledge, of any actual or threatened claim or basis for such a
proceeding.


 


25

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


Section 6.08.          Litigation.  Except as would not have a Material Adverse
Effect, there are no Orders, Actions or Proceedings pending or, to the
Knowledge of EPI, threatened, against, in connection with or relating to (i) the
Purchased Assets or the Business as conducted by EPI, (ii) this Agreement,
the Supply Agreement or any Related Agreement or (iii) the transactions
contemplated by his Agreement, the Supply Agreement or any Related
Agreement.  To the Knowledge of EPI; no
event has occurred, and no claim, dispute or other condition or circumstance
exists that could reasonably be expected to directly or indirectly give rise to
or serve as a basis for the commencement of any such Order, Action or
Proceeding.  EPI has delivered to the
Acquiror accurate and complete copies of all pleadings, non-privileged
correspondence and other non-privileged written materials that relate to any
Orders, Actions or Proceedings identified in Schedule 6.08 of the
Man Disclosure Schedule.


 


Section 6.09.          Compliance
with Law.  (a) Except as would
not have a Material Adverse Effect, the Business as conducted by EPI is and has
been since December 31, 2002 in compliance with all applicable Laws.


 


(b)           Except as
would not have a Material Adverse Effect, since December 31, 2002, no
Governmental or Regulatory Authority or any other Person has notified EPI or
any of its Affiliates that the conduct of the Business by EPI or the ownership
or use of the Purchased Assets were or are in violation of any Law or Order or
the subject of any investigation.


 


Section 6.10.          Inventory.  All of the Inventory (a) is good,
issuable and merchantable in the Ordinary Course of Business of EPI, and is
free of any material defect or deficiency, (b) fully conforms to the
specifications for the Products as set forth in the Product Registrations, (c) was
manufactured, packaged, labelled, held, tested and shipped in accordance with
the specifications for the Products as set forth in the Product Registrations,
cGMPs, all other applicable Laws and requirements of all applicable
Governmental or Regulatory Authorities, (d) is not adulterated or
misbranded and is of suitable quality, and (e) may be introduced into
interstate commerce in the United States pursuant to the Federal Food, Drug,
and Cosmetic Act, as amended.


 


Section 6.11.          Customers
and Suppliers. Schedule 6.11 of the Elan Disclosure Schedule specifies for the fiscal year ended December 31,
2003 the names of the customers that were, in the aggregate, the ten (10) largest
wholesale customers in terms of dollar value of the Products sold by the
Business as conducted by EPI.  None of
such customers has given EPI notice terminating, canceling or threatening to
terminate or cancel any Contract or relationship with EPI relating to the Business
as conducted by EPI.  Schedule 6.11
of the Elan Disclosure Schedule also
specifies for the fiscal year ended December 31, 2003 the names of the
suppliers of the active pharmaceutical ingredients in the Products.  None of such suppliers has given EPI notice
terminating, canceling or threatening to terminate or cancel any Contract or
relationship with EPI relating to the Business as conducted by EPI.  EPI has disclosed and provided to Acquiror
EPI’s current returns policy for Products in the Territory.


 


Section 6.12.          Governmental
Permits.  Schedule 6.12
of the Elan Disclosure Schedule identifies
each Governmental Permit that is held by EPI or its Affiliates that relates
directly to the Business, the ownership or use of any of the Purchased Assets
or EPI’s performance of any of the Assumed Contracts, other than Governmental
Permits which a failure


 


26

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


to hold would not have a Material Adverse Effect.  EPI has delivered to the Acquiror accurate
and complete copies of all of the Governmental Permits identified on Schedule 6.12
of the Elan Disclosure Schedule,
including all renewals thereof and all amendments thereto.  To the Knowledge of the EPI, each
Governmental Permit identified or required to be identified on Schedule 6.12
of the Elan Disclosure Schedule is
valid and in full force and effect. 
Except as would not have a Material Adverse Effect, EPI and each of its
Affiliates is and has at all times since December 31, 2002 been in
compliance with all of the terms and requirements of each Governmental Permit
identified or required to be identified on Schedule 6.12 of the Elan Disclosure Schedule.  Neither EPI nor any of its Affiliates has
since December 3l, 2002 received any written notice or, to the Knowledge
of EPI, any other communication from any Governmental or Regulatory Authority
or any other Person regarding (a) any actual, alleged possible or
potential violation of or failure to comply with any term or requirement of any
material Governmental Permit identified or required to be identified on Schedule 6.12
of the Elan Disclosure Schedule, or (b) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Permit identified
or required to be identified on Schedule 6.12 of the Elan Disclosure Schedule, in each case other
than any violation, failure to comply, revocation, withdrawal, suspension,
cancellation, termination or modification, as applicable, that would not have a
Material Adverse Effect.  Except as would
not have a Material Adverse Effect, all applications required to have been
filed for the renewal of the material Governmental Permits required to be
identified on Schedule 6.12 of the Elan Disclosure Schedule have
been duly filed on a timely basis with the appropriate Governmental or
Regulatory Authority, and each other notice or filing required to have been
given or made with respect to such Governmental Permits has been duly given or
made on a timely basis with the appropriate Governmental or Regulatory
Authority.


 


Section 6.13.          Financial
Statements.  EPI has made available
to Acquiror the financial statements attached to the Elan Disclosure Schedule as Exhibit 6.13 thereto,
which financial statements have not been audited.  Each line item in such financial statements
above and including the line item called “Gross Margin” is correct and complete
in all material respects for the periods referred in such financial statements,
subject to normal audit adjustments, and is in accordance with genetically accepted
accounting principles.  Each line item in
such financial statements below the line item called “Gross Margin” is correct
and complete in all material respects for the periods referred to in such
financial statements, subject to normal audit adjustments.  Acquiror acknowledges and agrees at all
financial information contained in such financial statements and relating to
the second calendar quarter of 2004 constitutes Confidential Information of
EPI.


 


Section 6.14.          No
Other Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH IN THIS AGREEMENT (INCLUDING THE ELAN
DISCLOSURE SCHEDULE), EPI DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES,
EXPRESS OR IMPLIED, WITH REGARD TO THE PURCHASED ASSETS AND THE BUSINESS,
INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.


 


27

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


ARTICLE VII


 


REPRESENTATIONS
AND WARRANTIES OF THE ACQUIROR


 


The Acquiror represents and warrants to EPI as of the
date hereof (except as to certain presentations and warranties which expressly
speak as of a different date certain, which shall be accurate and complete as
of such date), subject to such exceptions as are disclosed in the disclosure schedule supplied
by the Acquiror to EPI and dated as of the date hereof (the “Acquiror Disclosure Schedule”), as follows:


 


Section 7.01.          Corporate
Organization. The Acquiror is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
power and authority to own its assets and carry on its business as currently
conducted. The Acquiror is duly authorized to conduct its business and is in
good standing in each jurisdiction where such qualification is required, except
for any jurisdiction where failure to so qualify would not have an Acquiror
Adverse Effect.


 


Section 7.02.          Authority
of the Acquiror. The Acquiror has all necessary power and authority and has
taken all actions necessary to enter into, deliver and perform its obligations
under is Agreement, the Supply Agreement and the Related Agreements and carry
out the transactions contemplated hereby and thereby. The board of directors
and stockholders of the Acquiror have taken all action required by Law and its
Charter Documents and otherwise to be taken by it to authorize (a) the
execution and delivery of, and performance by it of its obligations under, this
Agreement, the Supply Agreement and the Related Agreements and (b) the
consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly and validly executed and delivered by the Acquiror and,
when executed and delivered by EPI, will constitute a legal, valid end binding
obligation of the Acquiror, enforceable against it in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
generally the enforcement of creditors’ rights and (ii) the availability
of equitable remedies (whether in a proceeding in equity or at law). When
executed and delivered by the Acquiror and by EPI, the Supply Agreement and
each Related Agreement to which the Acquirer is a party will constitute a
legal, valid and binding obligation of the Acquiror, enforceable against it in
accordance with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
generally the enforcement of creditors’ rights and (ii) the availability
of equitable remedies (whether in a proceeding in equity or at law).


 


Section 7.03.          Consents
and Approvals. (a) Schedule 7.03(a) of the Acquiror
Disclosure Schedule sets forth a complete and accurate list (the “Acquiror Governmental Consents”) of all
consents, waivers, approvals, Orders, permits or authorizations of, or
registrations, declarations, payments or filings with, any Governmental or
Regulatory Authority that are required by or with respect the Acquiror in
connection with the execution and delivery of this Agreement, the Supply
Agreement and the Related Agreements to which it is a party by the Acquiror,
the transactions contemplated hereby and thereby or the performance of its
obligations hereunder and thereunder, except for those consents, waivers, approvals,
Orders, permits,


 


28

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


authorizations, registrations, declarations, payments or filings which
a failure to obtain or make would not have an Acquiror Adverse Effect.


 


(b)           Schedule 7.03(b) of
the Acquiror Disclosure Schedule sets forth a complete and accurate list
(the “Acquiror Third Party Consents”)
of all consents, waivers, approvals, or authorizations of, or notices to, any
Person (other than a Governmental or Regulatory Authority) that are required by
or with respect to the Acquiror in connection with the execution and delivery
of this Agreement, the Supply Agreement and the Related Agreements by the
Acquirer, the consummation of the transactions contemplated hereby and thereby
or the performance of its obligations hereunder and thereunder, except for
those consents, waivers, approvals, authorizations or notices which a failure
to obtain or make would not have an Acquiror Adverse Effect.


 


Section 7.04. Non-Contravention. The
execution and delivery by the Acquiror of This Agreement, the Supply Agreement
and the Related Agreements to which it is a party, does not, and the
performance by it of its obligations under this Agreement, the Supply Agreement
and such related Agreements and the consummation of the transactions
contemplated hereby and thereby will not:


 


(a)           conflict
with or result in a violation or breach of any of the terms, conditions or
provisions of the Charter Documents of the Acquirer;


 


(b)           assuming
the receipt of all Acquiror Governmental Consents, conflict with or result in a
violation or breach of any term or provision of any Law applicable to the
Acquiror; or


 


(c) conflict with or result in a Default under
any Contract to which the Acquiror is a party or by which the Acquirer or any
of its assets are bound, except as would not have an Acquiror Adverse Effect.


 


Section 7.05.  Litigation. There are no Orders,
Actions or Proceedings pending, or the Knowledge of the Acquiror, threatened,
against the Acquiror in connection with or relating to (i) this Agreement,
the Supply Agreement or any Related Agreement, or (ii) the transactions
contemplated by this Agreement, the Supply Agreement or any Related Agreement.


 


Section 7.06.  Financial Capability. As of the date of
this Agreement, the Acquiror and its Subsidiaries have at least $15 million
of cash, cash equivalents and marketable securities with maturity of less than
one year.  Prior to the Closing, the
Acquiror shall not permit such assets to fall below $15 million unless
otherwise agreed to in writing by EPI.


 


Section 7.07.  Insurance. The Acquiror and each of its
Affiliates that will be involved in the conduct of the Business maintain
insurance policies covering their respective assets, business, equipment,
properties, operations, employees, officers and directors, including product
liability insurance (collectively, the “Acquiror
Insurance Policies”), which are of the type and amounts customarily
carried by Persons conducting businesses similar to those of the Acquiror and
its, Affiliates, and each of the Acquiror and its Affiliates, as the case may
be, will maintain such Acquiror Insurance Policies for at least three (3) years
following the Closing. As


 


29

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


of the date of this Agreement, the Acquirer does not
know of any threatened termination of, or material premium increase with
respect to, any Acquiror Insurance Policies.


 


Section 7.08.  No Other Warranties. EXCEPT FOR THE
WARRANTIES EXPRESSLY SET FORTH THIS AGREEMENT (INCLUDING THE ACQUIROR
DISCLOSURE SCHEDULE), THE ACQUIROR DISCLAIMS ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO THE SUBJECT MATTER OF THIS
AGREEMENT.


 


ARTICLE VIII


COVENANTS OF THE
PARTIES


 


Section 8.01.  [SECTION INTENTIONALLY LEFT BLANK]


 


Section 8.02.  Commercially Reasonable Efforts.
Following the date hereof, each of the parties hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all action, or
to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
by this Agreement, the Supply Agreement td the Related Agreements and to cause
the conditions to the obligations of the other party hereto to consummate the
transactions contemplated hereby and thereby to be satisfied at the Closing, including
obtaining all Elan Third Party Consents, Elan Governmental Consents, Acquirer
Governmental Consents and Acquiror Third Party Consents and removing any
injunctions or other Encumbrances, other than Permitted Encumbrances, on the
Purchased Assets and any impairments or delays the obtaining removal of which
are necessary, proper or advisable to the consummation of the transactions
contemplated by this Agreement, the Supply Agreement and the Related
Agreements.


 


Section 8.03.  Access. (a) In order to facilitate
the resolution of any claims made by against or incurred by EPI or any of its
Affiliates or any of their respective officers or directors in any Elan Companies Proceeding, upon reasonable
notice, the Acquiror shall: (i) afford the officers, employees and
authorized agents and representatives of EPI or any of its Affiliates
reasonable access (including the right to make copies at their own expense),
during normal business hours, to the Product Books and Records; (ii) furnish
to the officers, employees and authorized agents and representatives of EPI or
any of its Affiliates such additional financial and other information regarding
the Business as conducted by EPI relating to the period prior to the Closing as
EPI or any of its Affiliates may from time to time reasonably request; (iii) make
available to the officers, employees and authorized agents and representatives
of EPI or any of its Affiliates the employees of the Acquirer whose assistance,
testimony or presence is necessary to assist EPI or any of its Affiliates in
evaluating any such claims and/or in prosecuting or defending against such
claims, including the presence of such persons as witnesses in hearings or
trials for such purposes; and (iv) to the extent that EPI or any of its
Affiliates or and of their respective officers of directors is legally required
to produce original documents included among the Purchased Assets for
inspection in any legal Action or Proceeding, cooperate with EPI or any of its
Affiliates or any of their respective officers or directors in making such
original documents available for inspection by parties to such Action or
Proceeding; provided,  however, that the foregoing shall not
unreasonably interfere with the business or operations of the Acquiror or any


 


30

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


of its Affiliates and that all Books and Records to
which EPI and its representatives are given such access shall be deemed to be
Confidential Information of the Acquiror.


 


(b)           In order
to facilitate the resolution of any claims made by or against or incurred by
Acquiror or any of its Affiliates or any of their respective officers or
directors in any future Action or Proceeding, or the resolution of any written
demands relating to alleged Liabilities of Acquiror, EPI shall ensure that EPI,
its Affiliates and their respective representatives provide the Acquiror and
its representatives with reasonable access during normal business hours to the
representatives of EPI and its Affiliates, personnel and assets and to all
Books and Records relating to the Business and the Purchased Assets (including
the Excluded Books and Records) as the Acquiror may reasonably request;
provided that the personnel and operations of EPI, its Affiliates and their
respective representatives shall not be unreasonably disrupted by the Acquiror
or its Representatives and that all books and Records to which the Acquiror and
its representatives are given such access shall be deemed to be Confidential
Information of EPI.


 


(c)           Each party
agrees to make its respective personnel and those of its Affiliates reasonably
available to the other party or its respective representatives to the extent
such access is reasonably related to any Excluded Assets, in the case of EPI,
or Purchased Assets, in the case of the Acquiror, or is otherwise reasonably
necessary to comply with the terms of this Agreement or to comply with any
applicable Law, it being understood that the party requesting access shall
reimburse the other party promptly for their reasonable and necessary
out-of-pocket expenses incurred in complying with my such request.


 


(d)           The
Acquiror agrees to maintain all of the Product Books and Records, and EPI
agrees to maintain the Excluded Books and Records, for a period of three (3) years
after the Closing Date. After such three (3) year period, before either
party shall dispose of any such Books and Records, it shall provide to the
other party at least ninety (90) calendar days’ prior written notice to such
effect, and such party shall be given an opportunity, at its sole cost and
expense, to remove and retain all or any part of such Product Books and Records
(other than the Excluded Books and Records).


 


Section 8.04.  Public Announcements: Confidentiality. (a) [SECTION INTENTIONALLY
LEFT BLANK]


 


(b)           Each party
shall not, and shall require that its Affiliates and its and their advisors and
distributors do not, use or reveal or disclose to third parties any
Confidential Information of the other party after the Closing without first
obtaining the written consent of the other party, except as lay be reasonably
necessary in performing such party’s obligations or exercising such party’s
rights under this Agreement (it being understood that any Confidential
Information included in the Purchased Assets shall become Confidential
Information of the Acquiror following the Closing).  Not withstanding the foregoing, each party
may disclose any Confidential Information of the other party to its Affiliates
and its and their advisors, accountants, attorneys, consultants and agents on a
need-to-know basis only, and such party shall be responsible for such Persons’
compliance with the provisions of this paragraph with respect thereto. Each
party shall take, and shall require its Affiliates and its and their advisors,
accountants, attorneys, consultants and agents to take, reasonable steps to
prevent any


 


31

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


unauthorized use or disclosure of any Confidential
Information of the other party. The foregoing obligations in this Section 8.04(b) shall
not apply to. information which (i) is or becomes a matter of public
knowledge through no fault of the receiving party or any Person to whom the
receiving party provided such information, (ii) the receiving party can
demonstrate to have had lawfully in its possession without any obligation of
confidentiality prior to disclosure of such information by or on behalf of the
disclosing party, (iii) is independently developed by the receiving party
without the use of any Confidential Information of the disclosing party as
evidenced by written documentation, (iv) is reasonably required to be
disclosed in connection with obtaining or maintaining Product Patent Rights or
regulatory approvals for the Products, or (v) is required by Law or any
Governmental or Regulatory Authority to be disclosed, provided
that for disclosures under subclauses “(iv)” and “(v)” the disclosing party
uses reasonable efforts to give the other party advance written Notice of such
required disclosure in sufficient time to enable the other party to seek
confidential treatment for such information; and provided, further,
that such disclosing party limits the disclosure to that information which is
required to be disclosed. As used herein, “Confidential
Information” means all Product Know-How and any proprietary or trade
secret information or data relating to the Products or such other information
that either party identifies to the other in writing as confidential or the
nature of which or the circumstances of the disclosure of which would
reasonably indicate that such information is confidential.


 


(c)           The
Acquiror acknowledges that it has been informed that information regarding EPI
has been requested by the Securities and Exchange Commission and by private
litigants in connection with the Elan
Companies Proceedings, and waives notice and the opportunity to seek a
protective order with respect to the information that has been requested in
connection with such Elan Companies
Proceedings.


 


(d)           Notwithstanding
the confidentiality covenants contained herein, the disclosure of any
information governed by the confidentiality covenants contained in this Section 8.04
may be made by EPI or any of its Affiliates without liability hereunder to any
of their Affiliates and to any employee, agent, attorney, accountant,
consultant or representative who is assisting EPI in prosecuting or defending
against any Elan Companies Proceeding.


 


(e)           Notwithstanding
the confidentiality covenants contained herein, EPI and any of its Affiliates
shall be permitted to use any Confidential Information that EPI or any of its
Affiliates in good faith believes to be necessary for purposes of prosecuting
or defending an Elan Companies
Proceeding, provided, however, that EPI or any of
its Affiliates will use its best efforts to obtain an order protecting the
confidentiality of such information.


 


(f)            Following
the Closing, the confidentiality agreement dated as of April 14, 2004
between EPI and the Acquiror (the “Confidentiality
Agreement”) will terminate in its entirety with no further
obligation on the part of any party thereto, except for paragraphs 1.2, 1.4, 4,
7, 8, 9 and 12 thereof.  In addition, the
transactions contemplated by this Agreement, the Supply Agreement and the
Related Agreements shall not constitute a breach or violation of the terms of
the Confidentiality Agreement.


 


Section 8.05.  Returns, Rebates and Chargebacks. (a) (i) Prior
to the Returns Termination Date, EPI will, at its sole cost and expense,
process and issue credits (or render


 


32

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


payment in such other form as EPI may determine) for
all returned Products.  EPI will not bill
the Acquiror for the processing of claims for returned Products. Such handling
of returned Products by EPI, and the issuance of any credits or other form of
reimbursement in connection therewith, shall be in accordance with EPI’s
current returned goods policy.  Subject
to Section 8.05(iii), as of the Returns Termination Date, the Acquiror
will, at its sole cost and expense, process and issue credits (or render
payment in such other form as the Acquiror may determine) for all returned
Products. The Acquiror will not bill EPI for the processing of claims for
returned Products.  Such handling of
returned Products by the Acquiror, and the issuance of any credits of other
form of reimbursement in connection therewith, shall be in accordance with the
Acquiror’s current returned goods policy.


 


(ii)           EPI and
the Acquirer will use reasonable efforts in requesting that customers direct an
Product returns prior to the Returns Termination Date to EPI, and after the
Returns Termination Date to the Acquiror. 
All returned Products received by the Acquiror or EPI after the Closing
Date will be destroyed by such party at its respective returns handling
facility.  After such destruction, each
party will forward to the other party any necessary accompanying documentation
to determine he appropriate credit.  If
the Acquiror or EPI destroys Products for which the other was financially
responsible as set forth in Section 8.05(a)(iii) and (iv), that party
shall bill the other party for the cost of the destruction.  Each such invoice shall set forth the number
of units processed, together with such other information as shall be necessary
to support the invoice.  Each party
shall, within thirty (30) days of its receipt of invoice, pay the other party
for the full invoiced amount.


 


(iii)          The
parties hereto agree and acknowledge that EPI shall be financially responsible
only for returned Products bearing NDC numbers of EPI or any of its Affiliates,
evidenced is being sold by EPI (or its Affiliates, sublicensees and marketing,
promotion or distribution partners) prior to the Closing and evidenced as being
received at either party’s returns handling facility on or before the Returns
Termination Date.  For purposes of this Section 8.05(a)(iii),
the dollar value of returned Products paid or credited for by EPI shall be
determined in accordance EPI’s then current returned goods policy.


 


(iv)          The parties
hereto agree and acknowledge that the Acquiror shall be financially responsible
for returned Product bearing the Acquiror’s NDC number, evidenced as being sold
after the Closing or evidenced as being received at either party’s returns
handling facility after the Returns Termination Date.  For purposes of this Section 8.05(a)(iv),
the dollar value of returned Products raid or credited for by the Acquiror
shall be determined in accordance with the Acquiror’s then current returned
goods policy.


 


(b)           (i) EPI
shall be financially responsible for all rebates pursuant to any government
rebate programs with respect to government claims far the Products indicating
NDC numbers EPI or any of its Affiliates and dispensed prior to the Rebates and
Chargebacks Termination Date.  Any such
rebates for Products dispensed subsequent to the Rebates and Chargebacks
Termination Date will be the liability of the Acquiror.  The Acquiror shall reimburse EPI for all
rebates that EPI is obligated to pay with respect to government claims for the
Products dispensed after such date (it being understood and agreed that the
dispense date contained in any report from a state rebate program shall be used
for purposes of determining such date). All payments due EPI under this Section 8.05(b) shall
be made within thirty (30) days


 


33

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


of submission to the Acquiror of invoices that
describe the requested payments in reasonable detail.


 


(ii)           The
Acquiror acknowledges that EPI will require certain information from the
Acquiror in order to calculate the Medicaid rebate for Products bearing NDC
numbers of EPI or any of its Affiliates. 
Accordingly, the Acquiror agrees that, from and after the Closing Date
until the date which is one year after the expiration date of the last lot of
Products produced with any NDC number of EPI or any of its Affiliates, the
Acquiror will provide to EPI, within five (5) days following the delivery
of related information to the Centers for Medicare and Medicaid Services (or
any successor agency), the following information: (a) the “best price” (as
defined under the Social Security Act, 42 U.S.C. § 1396r-8(c)(1)(C))
for each Product identified by NDC number, (b) the “average manufacturer
price” (as defined under the Social Security Act, 42 U.S.C. § 1396r-8(k)(1))
for each Product identified by the NDC number, and (c) any additional data
or other information related to such Medicaid issues reasonably requested by
EPI.  EPI will provide the same
information to Acquiror on the same basis with respect to Products sold by EPI
prior to the Closing to the extent that such information is not included in the
Product Books and Records.


 


(c)           EPI shall
be responsible for all commercial rebates with respect to the Products
dispensed prior to the Rebates and Chargebacks Termination Date.
Notwithstanding the foregoing, the Acquiror and EPI agree that (a) EPI’s
financial liability for the commercial rebates prior to such date shall be
limited to those commercial customers with which EPI has a rebate obligation as
of the Closing and (b) any such payments by EPI shall be made on the terms
and conditions comparable to EPI’s rebate obligations as of the Closing with
respect to each such commercial customer and shall be based on the terms of EPI’s
agreement with such customer as of the Closing. 
Any rebates for Products dispensed subsequent to the Rebates and
Chargebacks Termination Date will be the liability of the Acquiror.  To the extent that EPI processes such claims,
the Acquiror shall reimburse EPI within thirty (30) days of receipt of (i) invoices
that describe the requested payments in reasonable detail together with copies
of the original underlying invoices submitted to EPI


 


(d)           EPI shall
be financially responsible for all chargeback claims and related Administrative
Fees for the Products with a chargeback invoice dated (i.e.,
the date of sale from the wholesaler to the wholesaler customer, subsequently
referred to as the “Activity Date”)
prior to the Chargebacks Termination Date. 
The Acquiror shall process and be financially liable for all chargeback
claims and related Administrative Fees with an Activity Date subsequent to such
date.  Notwithstanding the foregoing, the
parties acknowledge that the VA National Acquisition Center must approve the
removal of the Products from EPFs Federal Supply Schedule (“FSS”) before the responsibility of processing such
chargebacks is transferred from EPI to the Acquirer. Accordingly, in the event
such approval is not obtained prior to the Closing Date, EPI shall continue to
be responsible for processing the FSS chargebacks and related Administrative
Fees on the Acquirer’s behalf, and the Acquiror shall reimburse EPI for same
within thirty (30) days of receipt of invoices that describe the requested
payments in reasonable detail together with copies of the original underlying
invoices submitted to EPI.  The Acquiror
and EPI agree that (a) EPI’s financial liability for such transition
chargebacks and related Administrative Fees shall be limited to those
commercial customers with which EPI has chargeback obligations as of the
Closing, and (b) any such chargebacks and related Administrative Fees
issued by EPI shall be


 


34

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


made on the terms and conditions comparable to EPI’s
chargeback obligations as of the Closing with respect to each such commercial
customer and shall be based on the terms of EPI’s agreement with such customer
as of the Closing.


 


(e)           Notwithstanding
the requirements of Section 8.05(b), the Acquiror and EPI agree that EPI’s
financial liability for governmental rebates shall terminate on the date that
is one hundred eighty (180) days after the Closing Date, except with respect to
governmental rebates relating to utilization data submitted to EPI prior to the
Rebates add Chargebacks Termination Date (for which EPI’s responsibility and
financial liability shall not terminate). Notwithstanding the requirements of Section 8.05(c) or
(d), the Acquiror and EPI agree that EPI’s financial liability for commercial
rebates and chargeback claims and related Administrative Fees shall terminate
on the date that is one hundred twenty (120) days after the Closing Date.


 


(f)            The
Acquiror agrees that it shall not increase the wholesale acquisition cost of
the Products prior to the date that is one hundred eighty (180) days after the
Closing Date.


 


(g)           EPI shall
promptly provide the Acquiror with all information required to permit the
Acquiror to comply with its obligations to sell-the Products under the Public
Health Services Act after the Closing (i.e., the AMP
and Rebates Per Unit (“RPU”) for
the Products for the two full calendar quarters, and any partial calendar
quarter, immediately preceding the Closing Date).  The parties promptly after Closing shall make
all filings with Health Resources Services Administration and the Veteran’s
Administration necessary to transfer the obligation to sell Products under the
Public Health Services Act after the Closing from EPI to the Acquiror.


 


Section 8.06.          Multi-Product
Contracts. Schedule 8.06 of the Elan
Disclosure Schedule sets forth a complete and correct list of each
Contract to which EPI is a party and pursuant to which EPI sells any of the
Products, together with other pharmaceutical products of EPI or its Affiliates,
to a third party (the “Multi Product Contracts”).  Except as specified in Schedule 8.06 of
the Elan Disclosure Schedule, within ten (10) Business
Days following the Closing, EPI shall (a) take all actions necessary to
terminate such Multi-Product Contracts to the extent that they pertain to the
Products in the shortest period of time permitted thereunder, and (b) inform
the other parties to such Multi-Product Contracts of the acquisition of the Purchased
Assets by the Acquiror and notify them that they must submit all utilization
within the timeframe required by such Contract in order to be paid
thereunder.  From and after the sixth day
following the Closing, the Acquiror may contact any Person who is a party to a
Multi-Product Contract for the purposes of (i) negotiating an agreement
relating to the Products with such Person, and (ii) informing such Person
of the acquisition of the Purchased Assets by the Acquiror and notifying them
that any utilization must be submitted within the timeframe required by the
relevant Multi-Product Contract.


 


Section 8.07.          Bulk
Transfer Laws. The Acquiror and EPI hereby waive compliance with the
provisions of any so-called “bulk transfer law” of any jurisdiction in connection
with the sale of the Purchased Assets to the Acquiror.


 


Section 8.08.          Further
Assurances. (a) On and after the Closing Date, EPI shall, from time to
time, at the request of the Acquiror, execute and deliver, or cause to be
executed


 


35

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


and delivered, such other instruments of conveyance
and transfer and take such other actions as the Acquiror may reasonably
request, in order to (i) more effectively consummate the transactions
contemplated hereby, in the Supply Agreement and in the Related Agreements and
to vest in the Acquirer good and marketable title to the Purchased Assets
(including assistance in the collection or reduction to possession of any of
the Purchased Assets), and (ii) transfer to the Acquiror those assets that
are necessary for the conduct of the Business that were not included in the
Purchased Assets.


 


(b)           On and
after the Closing Date, the Acquiror shall, from time to time, at the request
of EPI, take such actions as EPI may reasonably request, in order to more effectively
consummate the transactions contemplated hereby, in the Supply Agreement and in
the Related Agreements, including the Acquiror’s assumption of the Assumed
Liabilities.


 


Section 8.09           Corporate
Names. (a) The Acquirer shall be entitled to continue to use the
Corporate Names and the NDC number of EPI or its Affiliates for the Products on
the existing Labeling and-packaging for the Products until such time as the
Acquiror has prepared and filed with the appropriate Governmental or Regulatory
Authorities, and such authorities approve, if required, new Labeling that does
not contain references to the Corporate Names or such NDC numbers; provided however, that, if the Acquiror
does not prepare within ninety (90) days of the Closing Date final
specifications for such revised Labeling and packaging of the Products,
including new NDC numbers for the Products and all necessary photo-ready art
(or its substantial equivalent) reflecting such modifications, the right of the
Acquiror described in this sentence shall terminate ninety (90) days after the
Closing Date. Notwithstanding the foregoing, the Acquiror shall be entitled to
continue to use the Corporate Names that consist of trademarks of EPI or its
Affiliates debossed or otherwise included on Zanaflex Tablets as of the Closing
on Zanaflex Tablets until the date that is one hundred eighty (180) days after
the Closing Date. Subject to the terms and conditions herein, EPI hereby grants
a non-exclusive, non-transferable license to the Acquiror and its Subsidiaries to
use the Corporate Names on the Labeling and packaging of the Products and on
Zanaflex Tablets themselves, in each case to the extent specified herein.


 


(b)           “Corporate Names” means the trademark and
service mark “ELAN”, the Corporate logos
and trade names of EPI and its Affiliates, including the word “ELAN” together with any variations and
derivatives thereof and any other logos, symbols or trademarks, trade names or
service marks of EPI and its Affiliates (including for the avoidance of doubt
any trademarks of EPI or is Affiliates debossed or otherwise included on
Zanaflex Tablets themselves), but excluding the Product Trademarks.


 


(e)           EPI and/or
its Affiliates, as applicable, retain and shall retain all right, title and
interest in and to the Corporate Names. 
The Acquiror expressly acknowledges that EPI and/or its Affiliates own
the Corporate Names, and agrees that it will not attack, dispute or contest the
validity of or ownership of the Corporate Names, or any registrations issued or
issuing with respect thereto. The Acquirer further agrees that all use of the
Corporate Names by the Acquiror or its Affiliates shall be for the benefit of
EPI and/or its Affiliates and the goodwill accrued in connection with its use
of the Corporate Names shall accrue to EPI and/or its Affiliates.  In the event the Acquirer acquires any rights
relating to the Corporate Names for any reason, the Acquiror agrees to assign,
at no cost, all such rights, together with any related


 


36

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


goodwill, to EPI. 
The Acquiror shall use best efforts not to do any act which endangers,
destroys or similarly affects the value of the goodwill pertaining to the
Corporate Names and further agrees that it will ensure that all Products comply
with the quality standards and specifications of Elan in existence as of the Closing Date and at all times with at
least the same standards as Elan employs
for its other products taking into account the nature of the Products and the
quality of their manufacture and distribution, including but not limited to the
applicable laws, rules or regulations of any Governmental or Regulatory
Authority having jurisdiction over the manufacture and distribution of the
Products.  Except as provided in this Section 8.09,
the Acquiror farther agrees that it will not alter, change, deface or
obliterate the Corporate Names on Labeling for the Product.  The Acquirer will at anytime execute any
documents reasonably required by EPI to confirm all ownership interests of EPI
and/or its Affiliates in the Corporate Names. 
The Acquirer shall not use in connection with the Product, or allow any
of its Affiliates to use in connection with the Product, any other trademark or
trade name which is similar to or substantially similar, to or so nearly
resembles the Corporate Names as to be likely to cause deception or confusion.


 


Section 8.10.   Protective Covenant. (a) During
the period beginning at the Closing and ending on the third (3rd)
anniversary of the Closing Date, the Acquiror shall not, directly or
indirectly, market, distribute or sell in the United Kingdom or Ireland any pharmaceutical product containing
tizanidine or any chiral isomer of tizanidine as its active pharmaceutical
ingredient.


 


(b)           During the
period beginning at the Closing and ending on the later of (i) the date
that the Supply Agreement (or any superceding agreement between the parties
with respect to the supply of Zanaflex Capsules by EPI to the Acquiror) is
validly terminated, or (ii) the date the EPI Royalty Term ends, EPI shall
not, directly or indirectly, market, distribute or sell in the Territory any
pharmaceutical product containing tizanidine or any chiral isomer of tizanidine
as its active pharmaceutical ingredient.


 


Section 8.11.   Commercialization of Zanaflex
Capsules.  Subject to EPI’s and its
Affiliate’s continuing performance of their obligations under this Agreement,
the Supply Agreement and the Related Agreements, the Acquiror hereby covenants
and agrees that it will use commercially reasonable efforts after the Closing
Date to commercialize Zanaflex Capsules.


 


Section 8.12.   Zanaflex Tablet Business.  From and after the Closing during calendar
year 2004, the Acquirer will conduct the Business relating to Zanaflex Tablets
using the same commercially reasonable efforts that would be used by a
pharmaceutical company similarly situated, including but not limited to filling
orders as they are received for Zanaflex Tablets.


 


37

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


ARTICLE IX

[ARTICLE INTENTIONALLY LEFT BLANK]


 


ARTICLE X

[ARTICLE INTENTIONALLY LEFT BLANK]


 


ARTICLE XI

INDEMNIFICATION


 


Section 11.01.        Survival
of Representations, Warranties, Covenants, Etc. (a) The
representations and warranties and covenants and agreements to be performed at
the Closing of EPI or the Acquiror contained in this Agreement shall survive
the Closing and terminate 12 months following the Closing Date (the “Expiration Date”). 
Notwithstanding the preceding sentence, so long as an Indemnified Party
gives an Indemnification Claim Notice for any claim for indemnification on or
before the Expiration Date, such Indemnified Party shall be entitled to pursue
its rights to indemnification for such claim.


 


(b)           The
representations, Warranties, covenants and agreements of EPI and the Acquiror,
and the rights and remedies that may be exercised by the Acquiror Indemnitees
and the EPI indemnitees, shall not be limited or otherwise affected by or as a
result of any information furnished to, or any investigation made by or any
knowledge of, any of the Acquiror Indemnitees or EPI Indemnitees or m y of
their respective Representatives.


 


(c)           For purposes
of this Agreement, each statement or other item of information set forth in the
Elan Disclosure Schedule shall be deemed to be a representation and
warranty made by EPI in this Agreement; and each statement or other item of
information set forth in the Acquiror Disclosure Schedule shall be deemed
to be a representation and warranty made by the Acquiror in this agreement.


 


(d)           Nothing
contained in this Section 11.01 or elsewhere in this Agreement shall limit
any rights or remedy of any indemnified party for claims based on fraudulent or
intentional misrepresentation.


 


Section 11.02.   Indemnification.


 


(a)           By EPI.  Subject to Sections 11.01 and 11.03, from and
after the Closing, EPI shall indemnify, reimburse, compensate, defend and hold
harmless the Acquiror, its Affiliates and their respective officers, directors,
employees, agents, successors and assigns (the “Acquiror Indemnitees”) from and against any and all costs,
losses, damages, including natural resource damages, fines, penalties,
judgments, lawsuits, deficiencies, claims and expenses (including reasonable
fees and disbursements of attorneys and other professionals, including
third-party consultants and, to the extent allowable at Law, medical monitoring
costs and expenses) of every kind and nature (collectively, “Damages”) incurred in connection. with,
arising out of, resulting from or incident to (regardless of whether or not
such Damages relate to any third-party claim): (i) any inaccuracy in or
breach of a representation or warranty of EPI made in this Agreement or any
Related Agreement, (ii) any inaccuracy in or breach of a representation or
warranty of EPI made in this Agreement or any Related Agreement as of the
Closing Date as if made on the Closing Date (or, in the case of each
representation and warranty


 


38

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


which expressly speaks as of an earlier date, as of
the earlier date as of which such representation and warranty speaks), (iii) any
breach of any covenant or agreement of EPI in this Agreement or any Related
Agreement, (iv) any Excluded Liabilities and (v) any Action or
Proceeding relating directly or indirectly to any inaccuracy, breach, alleged
inaccuracy or breach, Liability or matter of the type referred to in clauses
“(i),” “(ii),” “(iii),” or “(iv)” above (including any Action or Proceeding
commenced by any Acquiror Indemnitee for the purpose of enforcing any of its
rights under this Article XI).


 


(b)           By the
Acquiror.  Subject to Sections 11.01
and 11.03, from and after the Closing, the Acquiror shall indemnify, reimburse,
compensate, defend and hold harmless EPI, its Affiliates and their respective
officers, directors, employees, agents, successors and assigns (the ”EPI Indemnitees”) from and against any and all Damages
incurred in connection with, arising out of, resulting from or incident to
(regardless of whether or not such Damages relate to any third-party
claim):  (i) any inaccuracy in or
breach of a representation or warranty of the Acquiror made in this Agreement
or any Related Agreement, (ii) any inaccuracy in or breach of a
representation or warranty of the Acquiror made in this Agreement or any
Related Agreement as of the Closing Date as if made on the Closing Date (or, in
the case of each representation and warranty which expressly speaks as of an
earlier date, as of the earlier date as of which such representation and
warranty speaks), (iii) any breach of any covenant or agreement of the
Acquiror in this Agreement or any Related Agreement, (iv) any Assured
Liabilities and (v) any Action or Proceeding relating directly or
indirectly to any inaccuracy, breach, alleged inaccuracy or breach, liability
or matter of the type referred to in clauses “(i),” “(ii),” “(iii),” or “(iv)”
above (including any Action or Proceeding commenced by any EPI Indemnitee for
the purpose of enforcing any of its rights under this Article XI).


 


(c)           Procedure
for Claims.  If any indemnified party
has or claims to have incurred or suffered Damages for which it is or may be
entitled to indemnification, compensation or reimbursement under this Article XI,
and the indemnified party wishes to make a claim for the recovery of such
Damages from an indemnifying party, such indemnified party shall deliver a
Notice (an “Indemnification Claim Notice”) to the
indemnifying party.  Each Indemnification
Claim Notice shall (i) state that such indemnified party believes that
that there is or has been a breach of a representation, warranty or covenant
contained in the Agreement or that such indemnified party is otherwise entitled
to indemnification, compensation or reimbursement under this Article XI, (ii) contain
a brief description of the circumstances supporting such indemnified, party’s
belief that there is or has been such a possible breach or that such
indemnified party is so entitled to indemnification, compensation or
reimbursement, and (iii) if practicable contain a good faith, non-binding,
preliminary estimate of the aggregate dollar amount of actual and potential
damages that have, arisen and may arise as a result of such breach or other
matter as set forth in such Indemnification Claim Notice. For the avoidance of
doubt, the parties agree that if an indemnified party is entitled to make an
indemnification claim under more than one clause of either Section 11.02(a) or
11.02(b), as applicable, the indemnified party may make such claim under any or
all of the applicable provisions.


 


(d)           Third
Party Claims.  The obligations of an
indemnifying party under this Section 11.02 with respect to Damages
arising from claims or legal proceedings of any third party that are subject to
indemnification as provided for in Section 11.02(a) or Section 11.02(b)


 


39

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(a “Third Party Claim”)
shall be governed by and be contingent upon the following additional terms and
conditions:


 


(i)            If (A) the
indemnified party receives written notice of the commencement of any Third
Party Claim against any indemnified party, and (B) a claim for
indemnification is to be made against the indemnifying party under this
Agreement with respect to such Third Party Claim, then the indemnified party
shall promptly notify the indemnifying party of the commencement of such Third
Party Claim; provided, however,
that any failure to notify the indemnifying party of the commencement of such
Third Party Claim shall not limit or otherwise affect any rights of the
indemnified party or any liability that the indemnifying party may have to any
indemnified party (except to the-extent that the defense of such Third Party
Claim has been materially prejudiced by the indemnified party’s failure to
notify the indemnifying party of the commencement of such Third Party
Claim).  If, within thirty (30) days
after receiving notification of the commencement of any Third Party Claim, the
indemnifying party delivers to the indemnified party a written notice setting
forth the election of the indemnifying party to assume the defense of such
Third Party Claim, then, subject to subsections “(ii)” and “(iii)” below:


 


(A)            the
indemnifying party shall be entitled to assume the defense of such Third Party
Claim, at the sole expense of the indemnifying party, with counsel reasonably
satisfactory to the indemnified party; and


 


(B)            as long
as the indemnifying party conducts such defense, the indemnifying party shall
not be required to reimburse the indemnified party for any fees paid to any
other counsel representing such indemnified party in such Third Party Claim for
legal services rendered while the indemnifying party is conducting such defense
(it being understood that the indemnifying party shall be required to reimburse
the indemnified party for any fees paid to counsel representing the indemnified
party in such Third Party Claim for legal services rendered prior to the time
the indemnified party receives notice of the election of the indemnifying party
to assume such defense).


 


(ii)           If the
indemnifying party assumes the defense of a Third Party Claim in accordance
with subsection ”(i)” above, then:


 


(A)            it will
be deemed conclusively established for purposes of this Agreement that such
Third Party Claim is within the scope of and are subject to the indemnification
provisions set forth in Section 11.02, and the indemnifying party shall
not be permitted to contest the applicability of Section 11.02 to such
Third Party Claim or to contest the indemnifying party’s obligation to provide
indemnification to the indemnified party with respect thereto;


 


(B)             the
indemnified party shall promptly deliver to the indemnifying party all original
notices and documents (including court papers) received by any indemnified
party in connection with the Third Party Claim.


 


40

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(C)             the
indemnifying party shall keep the indemnified party informed of all material
developments relating to such Third Party Claim;


 


(D)            the
indemnified party shall be entitled to participate (at its own expense) in the
defense of such Third Party Claim; and


 


(E)             the
indemnifying party shall not be permitted to effect any settlement, adjustment
or compromise of such Third Party Claim or any of the claims made in connection
therewith without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld or delayed) unless (I) such
settlement, adjustment or compromise involves no finding or admission of any
breach by any indemnified party of any obligation to any other Person or any
violation by any indemnified party of any Law, (II) such settlement, adjustment
or compromise has no effect on any other claim that may be made against any
indemnified party, (III) the sole relief provided in connection with such
settlement, adjustment or compromise is monetary damages that are paid in full
by the indemnifying party, and (IV) the indemnified party receives a full
release with respect to such claim.


 


If the indemnifying party does not elect (within the
30-day lime period specified in subsection ”(i)” above) to assume the
defense of a Third Party Claim in accordance with subsection ”(i)” above,
then (I) the indemnified party shall have the exclusive right, at its election,
to control the defense of such Third Party Claim with counsel selected by the
indemnified party and reasonably satisfactory to the indemnifying party, (II)
provided that the indemnifying party is adjudged to be obligated to indemnify
he indemnified party hereunder, the indemnifying party shall not be entitled to
challenge the manner in which the Third Party Claim was litigated by the
indemnified party and its counsel or the judgment or other outcome of the Third
Party Claim, and (iii) the indemnifying party will not be bound by any
settlement, adjustment or compromise effected by the indemnified party with
respect to such Third Party Claim or of any of the claims made in connection
therewith that is of effected without the prior written consent of the
indemnifying party (which consent shall not be unreasonably withheld or
delayed).


 


(iii)          Notwithstanding
anything to the contrary contained in this Section 11.02(d), and
notwithstanding any election made by the indemnifying party to assume the
defense of any Third Party Claim in accordance with subsection ”(i)” above,
if any indemnifying party or any affiliate of any indemnifying party is also a
party to such Third Party Claim, and counsel to the indemnified party
determines in good faith that joint representation would give rise to a
conflict of interest in such Third Party Claim, then the indemnified party may
retain its own legal counsel at the expense of the indemnifying party, and the
indemnifying party and its counsel shall cooperate with the Indemnified Party
and its counsel as may be reasonably requested.


 


(iv)          Regardless
of whether the indemnifying party or the indemnified party defends or
prosecutes any Third Party Claim, each non-defending party shall, and shall
cause each Affiliate of any such non-defending party to, cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, provide such witnesses and


 


41

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


attend such conferences, discovery proceedings,
hearings, trials and appeals as maybe reasonably requested in connection
therewith. Such cooperation shall include access during normal business hours
afforded to the defending party to, and reasonable retention by each
non-defending party of, records and information that are reasonably relevant to
such Third Party Claim, and making each non-defending party and other employees
and agents thereof available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder, and
the indemnifying party shall reimburse each such Person for all its reasonable
out-of-pocket expenses in connection therewith.


 


Section 11.03.   Limitations.


 


(a)           With the
exception of claims based upon fraudulent misrepresentation, in no event shall
an indemnifying party be liable for any Damages pursuant to a claim based upon
a representation, warranty or covenant pursuant to (i) Sections 11.02(a)(i),11.02(a)(ii) or
11.02(a)(iii) (other than claims for breach of the covenant set forth in Section 8.10(b))
or (ii) Sections 11.02(b)(i),11.02(b)(ii) or 11.02(b)(iii) (other
than claims for breach of the covenant set forth in Section 8.10(a)), as
applicable (each of the claims set forth in clauses “(i)” and “(ii)” above is
referred to as an “Eligible Claim”),
unless and until the aggregate amount of all such Damages for all Eligible
Claims payable by such indemnifying party exceeds [***] in which case the
indemnifying party shall be liable for all such Damages, and not only those
Damages in excess of such amount.  With
the exception of claims based upon fraudulent misrepresentation or claims for
breach of the covenants set forth in Sections 8.10(a) or 8.10(b), the
maximum aggregate amount payable by an indemnifying party pursuant to all
Eligible Claims payable by such indemnifying party shall in no event exceed [***].
Further, with the exception of claims based upon fraudulent misrepresentation,
each party hereto agrees that the indemnification rights provided by Section 11.02
are the sole and exclusive remedy for monetary damages for claims by such party
or any Acquiror Indemnitee or EPI Indemnitee for breach by the other party of
any representation, warranty or covenant contained in this Agreement.


 


(c)           Any
indemnifying party shall also be liable to the indemnified party for interest
on the amount of any Damages that such indemnified party is entitled to recover
from the indemnifying party (for the period commencing as of the date on which
the indemnified party delivered the applicable Notice of Indemnification Claim
to the indemnifying party and ending on the date on which the liability of such
indemnifying party to such indemnified party is fully satisfied by such
indemnifying party) at a floating rate equal to the prime rate publicly
announced by Morgan Guaranty Trust Company of New York at its principal office
from time to time plus 2% (or, if less, the maximum rate allowed to be charged
under applicable laws), such interest to be compounded monthly.


 


(d)           In the
event of a dispute regarding the amount of Damages recoverable in connection
with an indemnification claim, the indemnifying party and the indemnified party
may bring evidence regarding the quantification of such Damages, including
evidence relating to insurance proceeds recovered by the indemnified party in
connection with the events underlying such indemnification claim and any
related increases in insurance premiums payable by the indemnified party, and
the amount of any tax benefit gained or any tax increase or disadvantage
suffered in connection with such indemnification claim.


 


42

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


(e)           THE
INDEMNIFICATION OBLIGATIONS OF THE PARTIES HERETO SHALL NOT EXTEND TO SPECIAL,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION OR LOST
PROFITS, OR PUNITIVE DAMAGES, UNLESS SUCH DAMAGES ARE AWARDED IN CONNECTION
WITH, OR INCLUDED IN A SETTLEMENT, ADJUSTMENT OR COMPROMISE OF, A THIRD PARTY
CLAIM.


 


ARTICLE XII 

[ARTICLE INTENTIONALLY LEFT BLANK]


 


ARTICLE XIII

MISCELLANEOUS


 


Section 13.01.        Notices.  All Notices, requests and other
communications hereunder must be in writing and will be deemed to have been
duly given (a) if delivered personally, upon receipt, (b) if
delivered by facsimile transmission, upon receipt by the sender of the answer
back confirmation, (c) if mailed, postage prepaid by certified or
registered mail, return receipt requested, upon receipt, or (d) if
delivered by nationally recognized overnight courier that maintains records of
delivery, upon receipt (in each case regardless of whether such Notice, request
or other communication is received by any other Person to whom a copy of such
Notice, request or other communication is to be delivered pursuant to this Section 13.01),
in each case to the patties at the following addresses or facsimile numbers:


 


If to the Acquiror to:


 


Acorda Therapeutics


15 Skyline Drive


Hawthorne, NY 10532


Facsimile: 
(914) 347-4560


Attention: 
General Counsel


 


If to EPI to:


 


Elan Pharmaceuticals, Inc.


800 Gateway Boulevard


South San Francisco, CA 94080


Facsimile: 
(650) 553-7165


Attention:  Vice
President, Legal Affairs.


 


Either party from time to time may change its address,
facsimile number or other information for the purpose of Notices to that party
by giving Notice specifying such change to the other party hereto in accordance
with the terms of this Section 13.01.


 


Section 13.02.        Entire
Agreement.  This Agreement (and all
Exhibits and Schedules attached hereto and all other documents delivered in
connection herewith) supersedes all prior discussions and agreements among the
parties with respect to the subject matter hereof


 


43

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


and contains the sole and entire agreement among the
parties hereto with respect to the subject matter hereof (except as otherwise
set forth in Section 8.04(f)).


 


Section 13.03.        Waiver.  Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition.  No waiver by any party hereto of any term or
condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not in the alternative.


 


Section 13.04.        Amendment.  This Agreement may be amended, supplemented
or codified only by a written instrument duly executed by each party hereto.


 


Section 13.05.        Third
Party Beneficiaries.  The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns and it is not the
intention of the parties to confer third party beneficiary rights upon any
other Person, except as achieved through the indemnification clause set forth
in Section 11.02.


 


Section 13.06         Assignment:
Binding Effect. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto without the prior
written consent of the other party hereto and any attempt to do so will be
void, except that an Indemnified Party under article XI may assign any of
its rights, benefits or obligations hereunder, by operation of law or
otherwise, (a) to any of its Affiliates, provided
such Indemnified Party continues to be responsible for all of its obligations
hereunder, (b) to a Person that (i) purchases all or substantially
all of the assets being conveyed hereunder or (ii), merges with the Acquiror or
the Indemnified Party or (c) to the lenders of the Acquiror and its
successors or assigns; provided, however,
such assignment does not create adverse consequences for the indemnifying
party. This Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and permitted
assigns.


 


Section 13.07.        Headings.  The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.


 


Section 13.08.        Elan Patenting.  Subject to Section 2.02, nothing in this
Agreement shall be deemed to prevent or prohibit EPI or its Affiliates from
filing, maintaining, licensing, prosecuting or enforcing any rights arising out
of intellectual property purchased or licensed after the Closing or relating to
inventions reduced to practice after the Closing.


 


Section 13.09.        Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Agreement will remain in
full force and effect and will not be


 


44

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


affected by the illegal, invalid or unenforceable
provision or by its severance herefrom, and (iv) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and unenforceable provision as similar to the
terms of such illegal, invalid or unenforceable provision as may be possible
and reasonably acceptable to the parties herein.


 


Section 13.10.        Governing
Law: Jurisdiction. THIS AGREEMENT AND THE RELATED AGREEMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING
EFFECT TO CONFLICTS OF LAWS PRINCIPLES. 
EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION
WITH ANY DISPUTE RELATED TO THIS AGREEMENT OR ANY RELATED AGREEMENT OR ANY
MATTERS CONTEMPLATED HEREBY OR THEREBY. SERVICE OF ANY PROCESS, SUMMONS, NOTICE
OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO ANY PARTY HERETO AT THE ADDRESS SET
FORTH FOR SUCH PARTY HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH
PARTY FOR ANY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT.  EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. A FINAL
JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE
ENFORCED IN ANY OTHER COURTS TO WHOSE JURISDICTION SUCH PARTY IS OR MAY BE
SUBJECT, BY SUIT UPON JUDGMENT


 


Section 13.11         Expenses.  Except as otherwise provided in this Agreement,
the Supply Agreement or the Related Agreements, each party hereto shall pay its
own expenses and costs incidental to the preparation of this Agreement, the
Supply Agreement and the Related Agreements and to the consummation of the
transactions contemplated hereby and thereby.


 


Section 13.12         Counterparts.  This Agreement may be executed in any number
of counterparts and by facsimile, each of which will be deemed an original, but
all of which together will constitute one and the same instrument. A facsimile
copy shall be a sufficient proof of signature, without it being necessary to
produce the original copy.


 


[SIGNATURES ON FOLLOWING PAGE]


 


45

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


IN WITNESS WHEREOF, this Agreement has been executed
by the parties hereto all as of the date first above written.


 


	
   

  	
  ELAN
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ 
  Jack Laflin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jack Laflin

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President,

  
	
   

  	
   

  	
  Global Core Services

  
	
   

  	
   

  	
   

  
	
   

  	
  ACORDA THERAPEUTICS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 


S-1

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


IN WITNESS WHEREOF, this Agreement has been executed
by the parties hereto all as of the date first above written.


 


	
   

  	
  ELAN PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ACORDA THERAPEUTICS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Ron Cohen

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Ron Cohen

  
	
   

  	
   

  	
  Title:

  	
  President and CEO

  
					



 


S-1

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


ELAN DISCLOSURE SCHEDULE


 


The following matters are disclosures made in
connection with the representations and warranties of Elan Pharmaceuticals, Inc., a Delaware corporation (“EPI”),
set forth in the Asset Purchase Agreement (the “Agreement”) by and between EPI
and Acorda Therapeutics, Inc., a Delaware corporation (“Acquiror”) and
delivered in connection with the execution and delivery of the Agreement by
EPI. Section numbers used herein correspond to the section numbers in
the Agreement; provided, however, that any information disclosed herein under a
particular section number shall be deemed to be disclosed and incorporated
into another section number contained herein if such information reasonably
relates to the representation and warranty m the Agreement that corresponds to
such other section number. Except as otherwise stated or the where the
context indicates-otherwise, all capitalized terms used herein shall have the
meanings given them in the Agreement.


 


Nothing herein constitutes an admission against EPI’s
interests. The inclusion of any item herein should not be interpreted as.
indicating that EPI has determined that such item or other matter is
necessarily material to Acquiror.  Acquiror
acknowledges that certain information contained in this Elan Disclosure Schedule may constitute confidential
information relating to EPI and/or its Affiliates, and therefore may be subject
to the confidentiality provisions contained in the Agreement.  Where the terms of disclosure items may have
been summarized, disclosed or otherwise described in this Elan Disclosure Schedule, such summary,
disclosure or description does not purport to be a complete statement of the
material terms of such item. For the avoidance of doubt, and notwithstanding
anything in the Agreement or herein to the contrary, the contents of each
document made available to Acquiror in the dataroom by EPI for due diligence
purposes shall be deemed to be disclosed and incorporated into each section number
contained herein if such contents reasonably relate to the representation and
warranty in the Agreement that corresponds to such section number.


 

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


Schedule 1.01 (a) -
Closing Date Inventory Value -valuation methodology


 


	
  Lot Number

  	
   

  	
  Strength

  	
   

  	
  Units per lot

  	
   

  	
  Unit price

  	
   

  
	
  37584

  	
   

  	
  4 mg

  	
   

  	
  [***]

  	
   

  	
  [***

  	
  ]

  
	
  37583

  	
   

  	
  4 mg

  	
   

  	
  [***]

  	
   

  	
  [***

  	
  ]

  
	
  23934(a)

  	
   

  	
  4 mg

  	
   

  	
  [***]

  	
   

  	
  N/A

  	
  (b)

  
	
  23934(a)

  	
   

  	
  4 mg

  	
   

  	
  [***]

  	
   

  	
  N/A

  	
  (b)

  
	
  33535(a)

  	
   

  	
  2 mg

  	
   

  	
  [***]

  	
   

  	
  N/A

  	
  (b)

  
	
  37329(a)

  	
   

  	
  2 mg

  	
   

  	
  [***]

  	
   

  	
  N/A

  	
  (b)

  
	
  37329(a)

  	
   

  	
  2 mg

  	
   

  	
  [***]

  	
   

  	
  N/A

  	
  (b)

  



 






(a)  Denotes Inventory
having a shelf life of less than 12 months from the Closing Date.


 


(b)  Each such batch
will be included for an aggregate purchase price (for all such batches) of [***].


 


Schedule 1.01(b) –
Domain Names


 


ZANAFLEX.BIZ


ZANAFLEX.COM


ZANAFLEX.INFO


ZANAFLEX.NET


ZANAFLEX.ORG


ZANAFLEX.US


 


Schedule 1.01(c) – Excluded Books and
Records


 


1.             All information
provided to EPI or its Affiliates by or pursuant to contracts with IMS Health,
Verispan, L.L.C. (formerly, Scott Levin) and NDC Health Information Services.


 


2.             EPI shall not be
providing to Acquiror any Books and Records or Know-How embodying any
calculation methods or policies, processes or procedures relating to government
or commercial rebates and chargeback claims.


 


Schedule 1.01(d) – Product Copyrights


 


1.             No Copyrights have
been registered with the U.S. Copyright Office.


 


2.             All Copyrights in
the Product Books and Records (including for the avoidance of doubt the Product
Marketing Materials) and the Labeling.


 

















 


Certain portions of this Exhibit have been omitted
pursuant to a request for confidentiality. 
Such omitted portions, which are marked with brackets [   ] and an asterisk*, have been separately
filed with the Commission.


 


 


Schedule 1.01(e) – Product Know-How


 


All Know-How contained in, and in the data underlying,
the following clinical study reports:


 


	
  Protocol Number

  	
   

  	
  Title

  
	
  AN021-301

  	
   

  	
  A Placebo-Controlled, Double-blind, Randomized,
  parallel Groups, Single Dose Study to Assess Efficacy and Safety of
  Tizanidine Hydrochloride – Modified Release in Patients with Spasticity due
  to Multiple Sclerosis or Spinal Cord Impairment Treated with 24 or 48 mg

  
	
  AN021-302

  	
   

  	
  A Placebo-Controlled, Double-Blind, Randomized,
  parallel Groups Study to Assess Efficacy and Safety of Tizanidine
  Hydrochloride – Modified Release at Stable Dose in Patients with Spasticity
  due to Multiple Sclerosis or Spinal Cord Impairment

  
	
  AN021-351

  	
   

  	
  Open-Label Study of Tizanidine Hydrochloride –
  Modified Release in Patients with Spasticity Due to Multiple Sclerosis of
  Spinal Cord Impairment

  
	
  AN021-002

  	
   

  	
  A Multicenter, Open-Label, Long Term Study to
  Evaluate the Safety of Tizanidine Tablets in Patients Suffering from
  Spasticity due to Multiple Sclerosis

  
	
  AN021-004

  	
   

  	
  A Multicenter, Open-Label, Long-Term Study to
  Evaluate the Safety of Tizanidine Tablets in Patients Suffering from
  Spasticity Resulting from Spinal Cord Injury

  
	
  AN021-103

  	
   

  	
  A Pharmacokinetic Study to Evalute the
  Bioequivalence of Zanaflex (Tizanidine Hydrochloride) 2 x 2 mg Tablets, with
  Varying Storage Times, Administered to Healthy subjects

  
	
  AN021-401

  	
   

  	
  An Open-Label Study to Assess the Long-Term Safety
  of Zanaflex (tizanidine HCI) in Patients Treated with 28 to 36 mg/day.

  
	
  AN021-456

  	
   

  	
  Open Label Dose Titration Study of the Safety and
  Efficacy of Zanaflex (tizanidine HCI) in Chronic Daily Headache Prophylaxis.

  



 


Notwithstanding the foregoing or anything in the
Agreement or herein to the contrary, neither EPI nor any of its Affiliates
makes any representations or warranties of any nature regarding such study
reports or the underlying data.


 


Schedule 1.01(f) – Product Patent Rights


 


1.             U.S. Patent No. 6,455,557
dated September 24, 2002.


 


2.             U.S. Patent
Application No. 10/645,840, filed August 22, 2003.


 


2

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


Schedule 1.01(g) – Product Trademarks


 


1.             The Trademark
“Zanaflex” is used in the United States (registration number 1906277).


 


2.             The Trademark “Zanaflex” is used in the United States (registration number
2383531).


 


Schedule 2.01 (a) – Assumed Contracts


 


The Novartis License Agreement (including the
amendment to such agreement dated May 3, 1991 and the Addendum to such
agreement dated February 24, 1995, which documents constitute all of the
amendments to the Novartis License Agreement).


 


Schedule 2.01(g) – Other Purchased Assets


 


None.


 


Schedule 6.03(a) – Elan Governmental Consents


 


1.             EPI will be required
to notify the FDA in writing of the transfer of the Product Registrations to
Acquiror. EPI will so notify the FDA within five (5) Business Days after
the date hereof.


 


2.             In order for EPI’s
Affiliate Elan Pharma International Limited to perform its obligations under
the Supply Agreement, each of IND 63-884 and NDA 21-447 will have to be in
effect and are now and will be immediately after the Closing in full force and
effect.


 


Schedule 6.03(b) – Elan Third Party Consents


 


The Novartis License Agreement requires Novartis’
consent to assignment.


 


Schedule 6.05 – Material
Contracts


 


1.             The Novartis License
Agreement.


 


2.             Rebate Agreement by
and between Argus Health Systems, Inc. and EPI dated as of January 2,
2002 (the “Argus Agreement”).


 


3.             Rebate Agreement by
and between Coventry Health Care, Inc. and EPI dated as of January 1,
2001, as amended (the “Coventry Agreement”).


 


4.             Rebate Agreement by
and between Horizon Healthcare of New Jersey, Inc. and EPI dated as of January 1,
2001, as amended (the “Horizon Agreement”).


 


3

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


5.             Rebate Agreement by
and between Intermountain Health Care Health Plans, Inc. and EPI dated as
of January 1, 2001, as amended (the “Intermountain Agreement”).


 


6.             Agreement by and
between Merck-Medco Managed Care, L.L.C. (as successor-in-interest to
Merck-Medco Managed Care, Inc. and Managed Care LLC) and EPI (as
successor-in-interest to Athena Neurosciences, Inc.) dated as of July 1,
1996, as amended (the “Merck-Medco Agreement”).


 


7.             Rebate Agreement by
and between Medimpact Healthcare Systems, Inc. and EPI dated as of April 1,
2002 (the “Medimpact Agreement”).


 


8.             Rebate Agreement by
and between Pharmacare Management Services, Inc. and EPI dated as of July 1,
2000 (the “Pharmacare Agreement”).


 


9.             Rebate Agreement by
and between Security Health Plan (“Security Health”) and EPI dated as of January 1,
2002 (the “Security Health Agreement”).


 


10.           Safety Data Exchange
Agreement between EPI and Novartis Pharma AG dated as of February 13,
2002.


 


11.           Safety Data Exchange
Agreement between EPI and Medeus Pharma Limited dated as of March 16,
2004.


 


12.           Agreement by and among
Glaxo Group Limited (“Glaxo”) and EPI’s Affiliates Elan Corporation, plc (“Elan”)
and Athena Neurosciences, Inc. (“Athena”) dated as of August 6, 1997
(the “Glaxo Agreement”).


 


13.           Agreement between
Pharmacia & Upjohn Company (“Pharmacia”) and Athena dated as of October 30,
1998 (the “Pharmacia Agreement”).


 


Schedule 6.07(a)(i) and (ii) – Certain
Contracts Relating to – Product Intellectual Property


 


1.             The Novartis License
Agreement contains indemnification obligations of EPI that include claims
relating to infringement of Purchased Intellectual Property. In addition, such
agreements contain indemnification obligations of Novartis that include claims
relating to Purchased Intellectual Property and that provide that Novartis
shall have certain rights to control the defense of such claims.


 


2.             The Argus Agreement
contains indemnification obligations of EPI that include claims relating to infringement
of Purchased Intellectual Property.


 


3.             The Coventry
Agreement contains indemnification obligations of EPI that include claims
relating to infringement of Purchased Intellectual Property.


 


4

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


4.             The Horizon Agreement
contains indemnification obligations of EPI that include claims relating to
infringement of Purchased Intellectual Property.


 


5.             The Intermountain
Agreement contains indemnification obligations of EPI that include claims
relating to infringement of Purchased Intellectual Property.


 


6.             The Medimpact
Agreement contains indemnification obligations of EPI that include claims
relating to infringement of Purchased Intellectual Property.


 


7.             The Pharmacare
Agreement contains indemnification obligations of EPI that include claims
relating to infringement of Purchased Intellectual Property.


 


8.             The Security Health
Agreement contains indemnification obligations of EPI that include claims
relating to infringement of Purchased Intellectual Property.


 


Schedule 6A7(a)(iv) – Covenant Not to Sue
Relating to Purchased Intellectual Property


 


In the Glaxo Agreement, Elan and
Athena agreed not to object to Glaxo’s use or registration of the mark “ZANTAC”
in certain circumstances.


 


Schedule 6.07(h) – Certain Proceedings
Relating to Product Intellectual Property


 


1.             Petition for
Cancellation of Registration No. 1,906,277 filed by Glaxo Group Limited,
which was settled pursuant to the Glaxo Agreement.


 


2.             Petition for
Cancellation of Registration No. 1,906,277 and Notice of Opposition No. 108,684,
each filed by Pharmacia and settled pursuant to the Pharmacia Agreement.


 


Schedule 6.08 – Litigation


 


The events described in the MedWatch reports submitted to Acquiror in
the dataroom for due diligence present bases for Actions or Proceedings
relating to the Purchased Assets or the Business.


 


Schedule 6.09 – Compliance with Law


 


1.             Neither EPI nor any
of its Affiliates makes any representations or warranties of any nature
relating to promotional, marketing or training materials relating to the
Products.


 


2.             On February 23,
2004, EPI was notified by Novartis that Novartis failed to provide EPI adverse
event reports from the period from July 1, 1999 through March 9,
2004. On April 7, 2004, EPI submitted to the FDA 139


 


5

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


MedWatch reports as prepared by Novartis, together with EPI’s
adjudication of each adverse event. These materials were submitted within the
statutorily-required time period, but were not prepared by EPI.  EPI did not submit, and has not been
requested by the FDA to submit, a corrective action plan relating to these
adverse events.


 


3.             The annual report for
NDA 20-397 was due on January 26, 2004 and has not yet been submitted.


 


4.             As a result of the
following article: Granfors MT. Backman
JT. Neuvonen M. Ahonen J. Neuvonen PJ. Fluvoxamine drastically increases
concentrations and effects of tizanidine: a potentially hazardous interaction.
[Clinical Trial. Clinical Trial, Phase II. Journal Article. Randomized
Controlled Trial] Clinical Pharmacology &
Therapeutics. 75(4):331-41, 2004 Apr. (the “Clinical Article”),
EPI has undertaken to amend EPI’s Labeling for Zanaflex Tablets to include an
additional precaution. EPI has also undertaken to update such Labeling to
include certain information that was included in the combined Labeling that was
approved for Zanaflex Tablets and Zanaflex Capsules. EPI shall not be obligated
to continue such undertakings after the Closing, but the foregoing shall not
reduce or otherwise affect EPI’s retention of Excluded Liabilities or other
covenants in the Agreement.


 


Schedule 6.11 – Customers and Suppliers


 


Top 10 wholesale customers for the fiscal year
ended December 31, 2003 for Zanaflex Tablets 2mg:


 


                                                [***]


 


 


Top 10 wholesale customers for the fiscal year
ended December 31, 2003 for Zanaflex Tablets 4mg:


 


                                                [***]


 


 


 


 


6

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


 


 


Supplier of active pharmaceutical ingredient:


 


Novartis


 


Schedule 6.12 – Certain Governmental Permits


 


1.             EPI is required to
have wholesaler/distribution licenses in each state where the Products are
sold. Such licenses have not been delivered to Acquiror.


 


2.             NDA 20-397.


 


3.             NDA 21-447.


 


4              IND 37-891.


 


5.             IND 63-884.


 


6.             IND 59-464.


 


7.             On February 23,
2004, EPI was notified by Novartis that Novartis failed to provide EPI adverse
event reports from the period from July 1, 1999 through March 9,
2004.  On April 7, 2004, EPI
submitted to the FDA 139 MedWatch reports as prepared by Novartis, together
with EPI’s ajudication of each adverse event. These materials were submitted
within the statutorily-required time period, but were not prepared by EPI.  EPI did not submit, and has not been
requested by the FDA to submit, a corrective action plan relating to these
adverse events.


 


8.             The annual report for
NDA 20-397 was due on January 26, 2004 and has not yet been submitted.


 


9.             As a result of the
Clinical Article, EPI has undertaken to amend EPI’s Labeling for Zanaflex
Tablets to include an additional precaution. EPI has also undertaken to update
such Labeling to include certain information that was included in the combined Labeling
that was approved for Zanaflex Tablets and Zanaflex Capsules.  EPI shall not be obligated to continue such
undertakings after the Closing, but the foregoing shall not reduce or otherwise
affect EPI’s retention of Excluded Liabilities or other covenants in the
Agreement.


 


7

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have been
separately filed with the Commission.


 


 


Schedule 8.06 – Multi-Product Contracts


 


1.             The Argus Agreement.


 


2.             The Coventry
Agreement.


 


3.             The Horizon
Agreement.


 


4.             The Intermountain
Agreement.


 


5.             The Merck-Medco
Agreement.


 


6.             The Medimpact
Agreement.


 


7.             The Pharmacare
Agreement.


 


8.             The Security Health
Agreement.


 


9.             EPI’s contract with
the Veteran’s Administration is also a Multi-Product Contract, but
notwithstanding anything to the contrary contained in the Agreement or herein,
such contract will not be terminated.


 


8

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


Exhibit 6.13


 


 


[***]


 


9

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


 


ACQUIROR DISCLOSURE SCHEDULE


 


The following matters are disclosures made in
connection with the representations and warranties of Acorda Therapeutics, Inc.,
a Delaware corporation (Acquiror”), set forth in the Asset Purchase Agreement
(the “Agreement”) by and between Elan
Pharmaceuticals, Inc. (“EPI”) and Acquiror and delivered in connection
with the execution and delivery of the Agreement by Acquiror. Section numbers
used herein correspond to the section numbers in the Agreement; provided,
however, that any information disclosed herein under a particular section number
shall be deemed to be disclosed and incorporated into another section number
contained herein if such information reasonably relates to the representation
and warranty in the Agreement that corresponds to such other section number.
Except as otherwise stated or the where the context indicates otherwise, all
capitalized terms used herein shall have the meanings given them in the
Agreement.


 


Nothing herein constitutes an admission against
Acquiror’s interests. The inclusion of any item herein should not be
interpreted as indicating that Acquiror has determined that such item or other
matter is necessarily material to EPI. 
EPI acknowledges that certain information contained in this Acquiror
Disclosure Schedule may constitute confidential information relating to
Acquiror and/or its Affiliates, and therefore may be subject to the
confidentiality provisions contained in the Agreement. Where the terms of
disclosure items may have been summarized, disclosed or otherwise described in
this Acquiror Disclosure Schedule, such summary, disclosure or description does
not purport to be a complete statement of the material terms of such item.


 

















 


Certain portions of this Exhibit have been
omitted pursuant to a request for confidentiality.  Such omitted portions, which are marked with
brackets [   ] and an asterisk*, have
been separately filed with the Commission.


 


Schedule 7.03(a) – Acquiror Governmental
Consents


 


                                The
following may or will be required by or with respect to the Acquiror in
connection with the performance of its obligations under the Agreement, the
Supply Agreement and the Related Agreements to which it is a party. Acquiror
has begun evaluating and/or applying for the items listed below and will obtain
each as necessary to perform its obligations under the Agreement, the Supply
Agreement and the Related Agreements to which it is a party.


 


1.         Licenses to do business in each of New
York, Tennessee, California, Florida, and Louisiana.


2.         Licenses to distribute prescription
medication in the states where required.


3.         License(s) to import pharmaceutical
product from Canada (for Zanaflex tablets) and from Ireland (for Zanaflex capsules).


4.         National Drug Code from the U.S. Food
and Drug Administration.


5.         NDA for Zanaflex tablets and capsules,
to be transferred by EPI.


 


Schedule 7.03(b) – Acquiror Third Party
Consents


 


None.


 


2