EX-10.89






Exhibit 10.89





 






ASSET PURCHASE AGREEMENT




by and between




KING PHARMACEUTICALS, INC.




and




ACTAVIS ELIZABETH, L.L.C.




dated as of December 17, 2008





 


















 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	Article I. Definitions
	 	1	 
	Section 1.01
	Defined Terms	 	1	 
	Section 1.02 
	Construction of Certain Terms and Phrases. 	 	12	 
	Article II. Purchase and Sale of Assets
	 	12	 
	Section 2.01 
	Purchase and Sale of Assets 	 	12	 
	Article III. Assumption of Liabilities
	 	13	 
	Section 3.01 
	Assumption of Assumed Liabilities 	 	13	 
	Section 3.02 
	Excluded Liabilities 	 	13	 
	Article IV. Purchase Price and Payment
	 	13	 
	Section 4.01 
	Purchase Price 	 	13	 
	Section 4.02 
	Inventory Payment 	 	14	 
	Section 4.03 
	Allocation of Purchase Price 	 	14	 
	Section 4.04 
	Payment of Sales, Use and Other Taxes 	 	15	 
	Section 4.05 
	Statements and Audit Rights 	 	15	 
	Article V. Closing
	 	16	 
	Section 5.01 
	Time and Place 	 	16	 
	Section 5.02 
	Deliveries at Closing 	 	16	 
	Article VI. Representations and Warranties of Seller
	 	16	 
	Section 6.01 
	Organization, Etc. 	 	17	 
	Section 6.02 
	Authority of Seller 	 	17	 
	Section 6.03 
	Consents and Approvals 	 	17	 
	Section 6.04 
	Non-Contravention 	 	18	 
	Section 6.05 
	Solvency 	 	18	 
	Section 6.06 
	Title 	 	18	 
	Section 6.07 
	Litigation 	 	18	 
	Section 6.08
	Purchased Assets 	 	19	 
	Section 6.09 
	Regulatory 	 	19	 
	Section 6.10 
	Brokers 	 	20	 
	Section 6.11 
	No Other Representations and Warranties 	 	20	 
	Article VII. Representations and Warranties of Buyer
	 	20	 
	Section 7.01 
	Corporate Organization 	 	20	 
	Section 7.02 
	Authority of Buyer 	 	20	 







i









 






	 	 	 	 	 	 	 	 	 
	Section 7.03
	Consents and Approvals 	 	21	 
	Section 7.04
	Non-Contravention	 	21	 
	Section 7.05 
	Solvency 	 	21	 
	Section 7.06 
	Brokers	 	21	 
	Section 7.07 
	No Other Representations and Warranties 	 	22	 
	Article VIII. Covenants of the Parties
	 	22	 
	Section 8.01 
	Reasonable Best Efforts 	 	22	 
	Section 8.02 
	Cooperation and Transition 	 	22	 
	Section 8.03 
	Public Announcements 	 	22	 
	Section 8.04 
	Bulk Sales 	 	23	 
	Section 8.05 
	Corporate Names 	 	23	 
	Section 8.06 
	Regulatory Matters 	 	23	 
	Section 8.07 
	Product Returns 	 	24	 
	Section 8.08 
	Further Assurances 	 	24	 
	Section 8.09 
	Government Price Reporting Obligations 	 	25	 
	Section 8.10 
	Kadian Patent License 	 	25	 
	Section 8.11 
	DEA Notification 	 	28	 
	Section 8.12 
	Representations True 	 	28	 
	Section 8.13 
	Confidentiality; Non-Public Purchased Assets 	 	28	 
	Section 8.14 
	Filings 	 	29	 
	Section 8.15 
	Recalls. 	 	29	 
	Section 8.16 
	Rebates and Coupons 	 	30	 
	Section 8.17 
	Chargeback and Rebate Period 	 	30	 
	Section 8.18 
	Chargebacks 	 	31	 
	Section 8.19 
	GPO Administration Fees and IFF Payments 	 	31	 
	Section 8.20 
	Manufacturing Agreements 	 	32	 
	Section 8.21 
	Sale of Product 	 	32	 
	Section 8.22 
	Delivery of Inventory 	 	32	 
	Section 8.23 
	Assumed Contracts 	 	32	 
	Section 8.24 
	Regulatory Actions 	 	32	 
	Article IX. Conditions to the Obligations of Seller
	 	33	 
	Section 9.01 
	Alpharma Acquisition 	 	33	 
	Section 9.02 
	No Legal Prohibition 	 	33	 
	Article X.
Conditions to the Obligations of Buyer
	 	33	 
	Section 10.01 
	No Legal Prohibition 	 	33	 
	Section 10.02 
	Alpharma Acquisition 	 	33	 
	Article XI. Additional Post-Closing Covenants
	 	33	 
	Section 11.01 
	Access to Information 	 	33	 
	Article XII.
Indemnification
	 	34	 







3









 






	 	 	 	 	 	 	 	 	 
	Section 12.01 
	Survival of Representations and Warranties 	 	34	 
	Section 12.02 
	Indemnification 	 	34	 
	Section 12.03 
	Limitations 	 	37	 
	Section 12.04 
	Remedies Exclusive 	 	37	 
	Article XIII. Termination and Abandonment
	 	37	 
	Section 13.01 
	Methods of Termination 	 	37	 
	Section 13.02 
	Procedure upon and Effect of Termination 	 	38	 
	Article XIV. Miscellaneous
	 	38	 
	Section 14.01 
	Notices 	 	38	 
	Section 14.02 
	Entire Agreement 	 	39	 
	Section 14.03 
	Waiver 	 	40	 
	Section 14.04 
	Amendment 	 	40	 
	Section 14.05 
	Third Party Beneficiaries 	 	40	 
	Section 14.06 
	Assignment; Binding Effect 	 	40	 
	Section 14.07 
	Headings 	 	40	 
	Section 14.08 
	Severability 	 	40	 
	Section 14.09 
	Governing Law 	 	41	 
	Section 14.10 
	Consent to Jurisdiction and Forum Selection 	 	41	 
	Section 14.11 
	Expenses 	 	41	 
	Section 14.12 
	Counterparts 	 	42	 








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ASSET PURCHASE AGREEMENT




     This Asset Purchase Agreement (this “Agreement”) is made and entered into as of
December 17, 2008 (the “Execution Date”), by and between Actavis Elizabeth, L.L.C., a
Delaware limited liability company (“Buyer”), and King Pharmaceuticals, Inc., a Tennessee
corporation (“King”).



RECITALS




     WHEREAS, King is party to an Agreement and Plan of Merger, dated as of November 23, 2008, by
and among King, Albert Acquisition Corp. and Alpharma Inc. (the “Merger Agreement”)
pursuant to which, subject to the terms and conditions set forth therein, King has agreed to
acquire Alpharma Inc. (“Alpharma”);



     WHEREAS, Alpharma is engaged in the business of selling in the Territory the Product that
contains morphine sulfate as its sole active ingredient that is approved for distribution as of the
Closing Date in the Territory under the Regulatory Approval (the “Business”);



     WHEREAS, effective upon the acquisition by King of Alpharma pursuant to the Merger Agreement,
King desires to sell to Buyer the Product and certain related assets, and Buyer desires to purchase
the Product and such assets from Seller and to assume certain related obligations; and



     WHEREAS, this Agreement and the consummation of the transactions contemplated hereby are not
in consideration of, or intended to induce or encourage, the settlement or other resolution of the
litigation captioned King Pharmaceuticals, Inc., King Pharmaceuticals Research and Development,
Inc., Elan Corporation plc and Elan Pharma International Ltd. v. Actavis, Inc. and Actavis
Elizabeth LLC, Civil Action No. 07-CV-5041 (JMA, SDW) (DNJ).



AGREEMENT




     NOW, THEREFORE, 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 have the meanings described below:



     (a) “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, “control” means the













 







possession, direct or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities or general partnership or
managing member interests, by contract or otherwise. Without limiting the generality of the
foregoing, a Person shall be deemed to control any other Person in which it owns, directly or
indirectly, a majority of the ownership interests.



     (b) “AG Distributor” shall mean a third party pharmaceutical company that is taking on
the role of distributing Authorized Generic Versions to trade customers (e.g. wholesalers, retail
chains, managed care organizations, government agencies, pharmacy benefit managers, etc.), which
third party pharmaceutical company shall exclude ordinary trade customers such as wholesalers.



     (c) “Aggregate Inventory Amount” has the meaning set forth in Section 4.02(b).



     (d) “Aggregate Wholesaler Amount” has the meaning set forth in Section 8.17(a).



     (e) “Aggregate Wholesale/Retail Amount” has the meaning set forth in Section 8.17(b).



     (f) “Agreement” has the meaning set forth in the Preamble to this Agreement.



     (g) “Alpharma” has the meaning set forth in the Recitals to this Agreement.



     (h) “Alpharma Subsidiary” means each subsidiary of Alpharma owning or controlling
assets or having liabilities relating to the Business.



     (i) “API” means active pharmaceutical ingredient.



     (j) “Assets and Properties” of any Person means all assets and properties of any kind,
nature, character and description (whether real, personal or mixed, whether tangible or intangible,
whether absolute, accrued, contingent, fixed or otherwise and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person, including cash, cash
equivalents, accounts and notes receivable, chattel paper, documents, instruments, general
intangibles, real estate, equipment, inventory, goods and intellectual property.



     (k) “Assumed Contract” means (i) each Contract relating to the Product, as in effect
on the Closing Date that is set forth in Section 1.01(k) of the Seller’s Disclosure Schedule, and
(ii) each Contract (or any portion thereof) that is assumed by the Buyer after the Closing Date
pursuant to Section 8.23, excluding any Excluded Rights under any such Contract (or portion
thereof).



     (l) “Assumed Liabilities” means (i) all Liabilities and obligations that Buyer has
expressly assumed or agreed to assume or perform under this Agreement, (ii) all Liabilities and
obligations under or pursuant to the Assumed Contracts arising after the Closing, other than
the Liabilities and obligations listed in items (ii)-(iv) of the Excluded Liabilities, (iii)



2









 







any obligations of Seller under an Assumed Contract to deliver Product following the Closing under
purchase orders of Persons entered into prior to the Closing in the ordinary course of business for
delivery of Product within thirty (30) days of the Closing Date and for which Buyer shall receive
payment, (iv) all Liabilities and obligations to pay Rebates attributable to Product bearing any of
Buyer’s NDC numbers, (v) all Liabilities and obligations to pay GPO Administration Fees and IFF
payments attributable to Product bearing any of Buyer’s NDC numbers, (vi) all Liabilities and
obligations to pay Chargebacks that are submitted to Buyer, Seller, or their respective Affiliates,
with respect to Product bearing any of Buyer’s NDC numbers, (vii) all Liabilities and obligations
relating to recalls or product liability claims or threatened claims or injuries caused by Product
sold by Buyer after the Closing, except to the extent that such Product was included in Inventory
and was defective when delivered by Seller to Buyer hereunder, (viii) Seller’s obligations under
the Federal Supply Schedule to supply the Product at the prices set forth in the Federal Supply
Schedule after the Closing for the period required by applicable Law, (ix) Seller’s obligations
under Section 340B of the Public Health Services Act to sell Product at the prices required by
applicable Law with respect to Product sold after the Closing Date, and (x) all other Liabilities
and obligations that (A) arise out of or are related to the Purchased Assets (including the
Regulatory Approval), the Product or the ownership, operation or conduct of the Business by or on
behalf of Buyer, its Affiliates or (sub)licensees, or their respective successors or assigns, (B)
arise after the Closing, and (C) are not otherwise expressly excluded under this definition.



     (m) “Authorized Generic Version” means any Product that is distributed under no
trademark or under a trademark other than Kadian®.



     (n) “Books and Records” means all files, documents, instruments, papers, books and
records (scientific, developmental, distribution, marketing, financial or other) owned by Seller
and relating to the Product or the Business in the Territory, including any pricing lists, customer
lists, vendor lists, financial data (including sales histories, sales force call activities and
market studies), Regulatory Documentation, clinical data, safety data, research and testing data
and pharmacology and toxicology data, validation documents and data, quality control histories,
litigation, adverse claims or demands, investigation information or files, trademark registration
certificates, trademark renewal certificates, and other documentation relating to the Purchased
Assets, the Product or the Regulatory Approval, but excluding any such items (i) to the extent that
any applicable Law prohibits their transfer, (ii) that were specifically prepared by Seller for the
negotiation of this Agreement, and (iii) to the extent such items are included in the definition of
“Marketing Materials”. The Parties acknowledge and agree that to the extent that any such Books
and Records contain information that relates to any product other than the Product or to any
business or operations of Seller other than the Business, such Books and Records may be copies and
in any event shall be redacted to delete such information.



     (o) “Business” has the meaning set forth in the Recitals to this Agreement.



     (p) “Business Day” means a calendar day other than Saturday, Sunday or any other
calendar day on which banks located in New York are authorized or obligated to close.



     (q) “Buyer” has the meaning set forth in the Preamble to this Agreement.



3









 





     (r) “Calendar Quarter” means each successive period of three consecutive calendar
months commencing on January 1, April 1, July 1 and October 1.



     (s) “Chargeback” means a credit, chargeback, reimbursement, purchase discount or other
payment to any pharmaceutical wholesaler or distributor in connection with the sale of a Product in
the United States by such wholesaler or distributor to a customer at a discount price pursuant to a
Contract between such customer and Seller or Buyer or pursuant to the Federal Supply Schedule or
Section 340B of the Public Health Service Act, 42 U.S.C. Section 201 et. seq..



     (t) “Chargeback Period” has the meaning set forth in Section 8.17(a).



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



     (v) “Closing Date” means the date that the Closing actually occurs as provided in
Section 5.01.



     (w) “Consultant” has the meaning set forth in Section 8.17(a).



     (x) “Contract” means any and all legally binding commitments, contracts, purchase
orders, leases, licenses, security agreements or other agreements, whether written or oral,
including any amendments, supplements or modifications thereto.



     (y) “Corporate Names” has the meaning set forth in Section 8.05(a).



     (z) “Costs of Goods Sold” means, with respect to any period, Buyer’s actual direct
costs to manufacture, or purchase from a third party, the Product sold in the Territory during such
period, excluding the Purchase Price.



     (aa) “Coupons” means any coupons, vouchers, co-pay cards or similar promotional
incentives distributed by Alpharma or any subsidiary of Alpharma prior to the Closing Date pursuant
to which Alpharma or such subsidiary of Alpharma is obligated to reimburse or pay a portion of the
purchase price of the Product directly or indirectly to an eligible patient.



     (bb) “Daily Sales Amount” has the meaning set forth in Section 8.17(a).



     (cc) “Daily Utilization Amount” has the meaning set forth in Section 8.17(b).



     (dd) “Damages” has the meaning set forth in Section 12.02(a).



     (ee) “DEA” means the United States Drug Enforcement Administration, and any successor
agency thereto.



     (ff) “Detail” means a face-to-face contact in which a Buyer sales representative makes
a presentation, including selling message and features and benefits of the Product, to a medical
professional with prescribing authority.



4









 





     (gg) “Direct Cost” means the cost of direct labor and direct materials used to provide
the relevant assistance or service.



     (hh) “Embeda NDA” means New Drug Application 22-321 filed pursuant to the Federal
Food, Drug, and Cosmetic Act and applicable FDA rules and regulations for marketing authorization
of the pharmaceutical product containing morphine sulfate as an active ingredient, known as Embeda,
within the United States (including all additions, amendments, supplements, extensions and
modifications thereto and the official regulatory files relating thereto).



     (ii) “Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, claim, option, right of first refusal, preemptive right, community property
interest or restriction of any nature (including any restriction on any other asset and any
restriction on the possession or exercise of any attribute or ownership of any asset).



     (jj) “Excluded Assets” means all Assets and Properties of Seller, including the
Licensed Intellectual Property, except the Purchased Assets.



     (kk) “Excluded Liabilities” means all Liabilities of Seller except the Assumed
Liabilities, including (i) all Liabilities and obligations under any Contract other than the
Assumed Contracts, (ii) all Liabilities and obligations of Seller to pay Rebates and Coupons
pursuant to Section 8.16, (iii) all Liabilities and obligations of Seller to pay GPO Administration
Fees and IFF payments pursuant to Section 8.19, (iv) all Liabilities and obligations of Seller to
pay Chargebacks pursuant to Section 8.18, (v) all Liabilities of Seller for Taxes with respect to
any taxable period, and all Liabilities for Taxes relating or attributable to the Product, the
Business, the Purchased Assets or the sale, operating or use of any of the foregoing with respect
to any taxable period or portion thereof ending on or prior to the Closing Date, with any property,
ad valorem or similar Taxes allocated to any period that includes but does not end on the Closing
Date on a per diem basis and (vi) any and all Liabilities of Seller accruing or arising prior to
the Closing, including Liabilities with respect to any claim or action asserted after the Closing
to the extent the conduct giving rise to such claim or action occurred prior to the Closing.



     (ll) “Excluded Rights” means, with respect to any Assumed Contract, any rights of any
Seller Indemnified Party to seek and obtain defense and indemnification thereunder from any
indemnifying party pursuant to the terms and conditions of the applicable Assumed Contract based on
any Damages incurred by any Seller Indemnified Party, whether prior to, on or after the Closing
Date, to the extent that such Damages (i) are attributable to occurrences and circumstances arising
prior to the Closing, and (ii) are otherwise subject, prior to the Closing, to an obligation of
defense or indemnity by any indemnifying party.



     (mm) “Execution Date” has the meaning set forth in the Preamble to this Agreement.



     (nn) “FDA” means the United States Food and Drug Administration and any successor
agency thereto.



5









 





     (oo) “GAAP” means generally accepted accounting principles, consistently applied, as
applied in the United States.



     (pp) “Generic Product” means a drug product containing morphine sulfate as its sole
active ingredient that refers to the Licensed Product as the reference-listed drug in an
Abbreviated New Drug Application or pursuant to an application under 21 U.S.C. § 355(b)(2).



     (qq) “Governmental or Regulatory Authority” means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United States or other
country, or any supra-national organization, state, county, city or other political subdivision.



     (rr) “GPO Administration Fee” means any administration, service or similar fee paid to
a group purchasing organization, buying group or similar organization pursuant to a Contract
between Seller or Buyer and such group purchasing organization, buying group or similar
organization relating to the sale of Product to members of or participants in such group purchasing
organization, buying group or similar organization.



     (ss) “Gross Profit” means, with respect to any period, (i) Net Sales for such period,
less (ii) Cost of Goods Sold for such period, less (iii) an amount equal to five percent (5%) of
Net Sales for such period (as an allowance for handling and distribution costs).



     (tt) “IFF” means the industrial funding fee payable to the United States Department of
Veterans Affairs in connection with the sale of the Product to the United States Department of
Veterans Affairs under the Federal Supply Schedule, as in effect from time to time.






     (uu) “Indemnification Claim Notice” has the meaning set forth in Section 12.02(c).





     (vv) “Indemnified
Party” has the meaning set forth in Section 12.02(c).




     (ww) “Indemnifying
Party” has the meaning set forth in Section 12.02(c).




     (xx) “Inventory” means all inventory in whole lots of Product owned as of the Closing
by Seller in finished, packaged form, whether held at a location or facility of Seller (or of any
other Person on behalf of Seller) in the Territory, or in transit within the Territory to or from
Seller (or any such other Person).



     (yy) “Kadian” means pharmaceutical product (i) approved for distribution under the
Regulatory Approval in the Territory in any dosage or form, whether or not distributed under the
Trademark Kadian® or (ii) otherwise marketed or sold by Seller in the Territory under the Trademark
Kadian® as of the Closing Date.



     (zz) “Kadian Patents” means United States patent number 5,202,128, United States
patent number 5,378,474, and United States patent number 5,330,766, and any continuations,
continuations-in-part, divisionals, reexaminations, reissues and extensions thereof.



6









 





     (aaa) “Knowledge of King” means the actual knowledge of those employees who hold the
position of vice president or are more senior at King that were engaged in the diligence of
acquisition of Alpharma by King, including but not limited to, the following people, without any
duty to conduct an investigation: Eric Carter, Ken Touw, Brad Knoll, Chris McClendon, James Elrod
and Mary Flipse.



     (bbb) “Law” means any federal, state or local law, statute or ordinance, or any rule,
regulation, or published guidelines or pronouncements promulgated by any Governmental or Regulatory
Authority.



     (ccc) “Liability” means any debt, liability, losses, damages, cost, expenses and
obligations of every kind (whether fixed or contingent, 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.



     (ddd) “License Term” means the period commencing on the Closing Date and ending on the
earlier of (i) the date of expiration of the last to expire of the Licensed Patents and (ii) the
date on which a court enters a final decision from which no appeal has been or can be taken holding
that all claims of the Licensed Patents that would otherwise be infringed by the making, having
made, using, selling, offering for sale or importation of any Licensed Product or Generic Product
are unenforceable or invalid.



     (eee) “Licensed Intellectual Property” means all Product Patents (including the Kadian
Patents), unpatented inventions, know-how, trade secrets, technical data (including the Seller
Data), trade dress, and package designs owned or controlled by Sellers and their Affiliates that
are not exclusively related to the Product and that would be infringed or violated by the making,
having made, using, selling, offering for sale or importation of the Licensed Product in the
Territory.



     (fff) “Licensed Patents” means United States patent number 5,202,128 and United States
patent number 5,378,474, and any continuations, continuations-in-part, divisionals, reexaminations,
reissues and extensions thereof.



     (ggg) “Licensed Product” means the Product in the dosage strengths and formulations
approved for distribution in the Territory pursuant to the Regulatory Approval as of the Closing
Date and manufactured in accordance with the manufacturing process used as of the Closing Date,
including, after the Closing Date, any Minor Changes.



     (hhh) “Marketing Materials” means all market research, marketing plans and strategies,
media plans, advertising, form letters, sales force training materials, advertising, promotional
and marketing data and materials (including competitor information, product data, market
intelligence reports and marketing and sales statistical programs), advertising and promotional
materials and literature, mailing lists, sales data and detailing reports, reimbursement data,
customer information (including customer sales information, sales forecasting models, medical
educational materials, website content and advertising and display materials and speakers lists),
packaging artwork and television masters, in each case (i) owned by Seller and used exclusively in
connection with the marketing, advertising and promotion of



7









 







the Product in the Territory that Seller, in its sole discretion, determines to transfer to
Buyer and (ii) to the extent that Seller is able to share such materials with Buyer without
violation of any third party agreement; provided that “Marketing Materials” shall exclude the
labeling of the Product, which shall be deemed part of the Regulatory Approval.



     (iii) “Material Adverse Effect” means an effect, condition or change that individually
or in the aggregate is materially adverse to the Purchased Assets taken as a whole or the business,
results of operations, or financial condition of the Business taken as a whole, other than changes
in general economic or market conditions or changes or developments generally affecting the
pharmaceutical industry.



     (jjj) “Merger Agreement” has the meaning set forth in the Recitals to this Agreement.



     (kkk) “Minor Changes” means changes to the Licensed Product that would not cause the
manufacture, use or sale of the Licensed Product to fall within the Licensed Intellectual Property
owned or controlled by Seller or its Affiliates after the Closing Date, other than the Kadian
Patents.



     (lll) “NDC” means the unique identifying number assigned to a drug product, including
the labeler code, product code and package code, in connection with the drug listing requirements
of Section 510(j) of the Federal Food, Drug, and Cosmetic Act and applicable FDA rules and
regulations.



     (mmm) “Net Sales” means, with respect to any period, the gross sales recorded by Buyer
and its Affiliates or sublicensees, on its books and records, in accordance with GAAP, for sales of
the Product to third parties in the Territory during such period, less (if not already deducted or
reflected in the amount recorded and to the extent actually allowed by Buyer) (i) trade and
quantity discounts, Rebates, Chargebacks paid by Buyer, GPO Administrative Fees paid by Buyer, and
IFF paid by Buyer and other ordinary course administrative or promotional fees, (ii) repayments,
credits and allowances to customers on account of ordinary course promotional allowances,
rejection, withdrawal, recall, or return of the Product or on account of retroactive price
reductions affecting the Product, and (iii) customary cash discounts (“fast pay”), which,
in each case ((i), (ii), and (iii)), for the avoidance of doubt, shall be paid in accordance with
GAAP and shall not include write-offs, bad debts or freight, insurance and handling costs, Taxes
and expenses for all activities related to the distribution of the Product incurred by Buyer. Net
Sales with respect to sales of the Product that are not made on an arm’s length basis or that are
made for consideration other than cash shall be calculated based on the average per-unit Net Sales
of the Product during the applicable period without regard to such non-arm’s length or non-cash
sales. If the Product is sold with other products on a portfolio basis, any commercially
reasonable discounts or other adjustments with respect to the Product shall be allocated pro rata
across all products in such portfolio based on the non-discounted, non-adjusted price for each such
product. In the event that one or more Authorized Generic Versions are sold by an AG Distributor,
(A) sales from Buyer or its Affiliates to an AG Distributor shall not be included in Net Sales and
(B) such AG Distributor’s sales to third parties shall be included in Net Sales.



8









 





     (nnn) “Order” means any writ, judgment, decree, injunction, charge, ruling or similar
order of any Governmental or Regulatory Authority (in each such case whether preliminary or final).



     (ooo) “Party” means either Buyer or Seller. “Parties” means Buyer and Seller,
collectively.



     (ppp) “Patent” means (i) all patents, patent applications and statutory invention
registrations, (ii) any substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions, supplementary protection
certificates and the like, and any provisional applications, of any such patents, patent
application or statutory invention registrations, (iii) all inventions disclosed in the foregoing,
(iv) all rights therein provided by international treaties and conventions, and (v) all rights to
obtain and file for patents and registrations thereto anywhere in the Territory.



     (qqq) “Permitted Encumbrance” means (i) any Encumbrance for Taxes not yet due or
delinquent or for those Taxes being contested in good faith by appropriate proceedings for which
adequate reserves have been established and (ii) any Encumbrance that does not materially detract
from the value of, or interfere with the present use of, the properties or assets it affects.



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



     (sss) “Product” means Kadian.



     (ttt) “Product Copyrights” means any and all copyrights owned by Seller relating
exclusively to the Product, including copyrights in Marketing Materials for the Product.



     (uuu) “Product Domain Names” means (i) the domain names set forth in Section 1.01(uuu)
of the Seller’s Disclosure Schedule and (ii) any other domain name owned by Seller as of the
Closing Date the includes the word “Kadian”.



     (vvv) “Product IND” means Investigational New Drug Application 35,553 filed in
accordance with Section 505(i) of the Federal Food, Drug, and Cosmetic Act, as amended, and
applicable FDA rules and regulations (including all additions, amendments, supplements, extensions
and modifications thereto and the official regulatory files relating thereto).



     (www) “Product Intellectual Property” means the Product Copyrights, Product Know-How,
Product Marks and Product Trade Dress, in each case relating to the Territory, and the Product
Domain Names.



     (xxx) “Product Know-How” means any research and development information, validation
methods and procedures, unpatented inventions, know-how, trade secrets or technical data (including
clinical data and safety data) or information that exclusively relate to the Product or the
Business and are owned by Seller, other than such know-how that is or becomes the subject of a
Patent.



9









 





     (yyy) “Product Mark(s)” means (i) the Trademark “Kadian®” and (ii) such other
Trademark(s) owned by Seller and exclusively used in connection with the Product.



     (zzz) “Product Patent” means all Patents in the Territory owned or controlled by
Seller that claim the Product or the manufacture, use or sale of the Product.



     (aaaa) “Product Trade Dress” means the trade dress, package designs, product inserts,
labels and associated artwork owned by Seller that is used exclusively in connection with the
Product, the packaging thereof or the Business, excluding all Seller Brands used thereon other than
the Product Marks.



     (bbbb) “Public Filings” means all of Alpharma’s periodic reports and registration
statements filed or furnished on EDGAR with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 or Securities Act of 1933.



     (cccc) “Purchase Price” shall have the meaning set forth in Section 4.01(a).



     (dddd) “Purchased Assets” means: (i) the Assumed Contracts; (ii) the Marketing
Materials; (iii) the Books and Records; (iv) the Regulatory Approval; (v) the Inventory, (vi) the
Product Intellectual Property and (vii) the Product IND. The Purchased Assets do not include any
fixed assets, entities, the Seller Data or the Licensed Intellectual Property.



     (eeee) “Reasonable Best Efforts” means such prompt, substantial and persistent efforts
as a prudent Person desirous of achieving a result would use in similar circumstances; provided,
that the Parties shall be required to expend only such resources to achieve such results as are
commercially reasonable in similar circumstances.



     (ffff) “Rebate” means any rebate payable pursuant to (i) state Medicaid or other state
and governmental pharmaceutical assistance programs or (ii) Contracts between Seller or Buyer and
managed care organizations (including pharmacy benefit management companies, health plans and
insurance companies), in each case relating to utilization of the Product in the United States
during any particular period.



     (gggg) “Rebate Period” has the meaning set forth in Section 8.17(b).



     (hhhh) “Regulatory Approval” means the New Drug Application 20-616 filed pursuant to
Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act and applicable FDA rules and
regulations for marketing authorization of the Product within the United States (including all
additions, amendments, supplements, extensions and modifications thereto and the official
regulatory files relating thereto).



     (iiii) “Regulatory Documentation” means (i) registrations or applications for, or
other filings or submissions with respect to, the Regulatory Approval or the Product, including
regulatory compliance reports and other reports, and other written materials filed as part of or
referenced in, the Regulatory Approval, and the risk management plan with respect to the Product,
(ii) any other filings or submissions with respect to the Product with any Governmental or
Regulatory Authority in the Territory other than the FDA and (iii) written communications,



10









 







and written summaries and minutes of other communications, with the FDA or other Governmental
or Regulatory Authorities to the extent relating to any of the foregoing.



     (jjjj) “Seller” means King and, from and after the Closing, shall also include
Alpharma and any subsidiary of Alpharma owning or controlling assets or having liabilities relating
to the Business, jointly and severally, or if the context so requires individually.



     (kkkk) “Seller Brands” means all Trademarks owned by, licensed to, controlled by or
used by Seller, whether or not registered, including the name “King”, but excluding the Product
Marks and excluding any trade dress rights in the shape, configuration, coloring or appearance of
the Product or its packaging as sold by Seller before the Closing Date.



     (llll) “Seller Data” means the clinical data, safety data and other information that
is included or referenced in the Regulatory Approval as of the Closing Date, but excluding the
Product Know-How.



     (mmmm) “Seller’s Disclosure Schedule” has the meaning set forth in Article VI.



     (nnnn) “Seller Indemnified Parties” has the meaning set forth in Section 12.02(b).



     (oooo) “Solvent” means, with respect to any Person on a particular date, that at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s debts.



     (pppp) “Tax” means any and all taxes, customs, duties, fees or other like assessments,
charges or Liabilities imposed by any governmental, regulatory or administrative entity or agency
responsible for the imposition of any amount, including (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, excise, severance, stamp, occupation, premium, property, withholding, employment, payroll,
recapture, environmental or windfall profit tax; (ii) any Liability for the payment of any amounts
of the type described in clause (i) above 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 clause (i) or (ii) above as a result of any
express or implied obligation to indemnify any other Person, and including any liability for taxes
of a predecessor or transferor or otherwise by operation of law.



     (qqqq) “Tax Return” means any return, form, estimate, information statement or report
relating to Taxes, including any attachment, appendix, addendum or amendment.



     (rrrr) “Territory” means the United States.



     (ssss) “Third Party Claim” has the meaning set forth in Section 12.02(d).



     (tttt) “Toll Manufacturing Agreement” has the meaning set forth in Section 8.20(a).



     (uuuu) “Trademark” means trademarks, service marks, certification marks, trade dress,
Internet domain names, trade names, product names, company names and any other source



11









 







identifying symbols, designs, slogans, logos or insignia, whether registered or unregistered,
and all common law rights, applications and registrations therefor, and all goodwill associated
therewith.



     (vvvv) “United States” means the United States of America, its territories and
possessions, including Washington, D.C. and Puerto Rico.



Section 1.02 Construction of Certain Terms and Phrases.




     Unless the context of this 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) the terms “including” and “includes” mean
“including without limitation” and “includes without limitation,” respectively; and (g) a reference
to a Law includes any amendments or modifications to such Law. 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




     (a) Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell,
transfer, convey, assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from
Seller, free and clear of any Encumbrance, other than a Permitted Encumbrance, all of Seller’s
right, title and interest, as of the Closing, in and to the Purchased Assets.



     (b) From and after the Closing, Seller shall retain all of its right, title and interest in
and to the Excluded Assets and Seller may retain an archival copy of all Assumed Contracts, Books
and Records (or with respect to any Books and Records that contain information that relates to any
product other than the Product or to any business or operation of Seller and its applicable
subsidiaries other than the Business, the original Books and Records), Marketing Materials and
other documents or materials conveyed hereunder.



     (c) King shall cause Alpharma and each Alpharma Subsidiary to perform all obligations required
of it as a Seller under this Agreement.



     (d) Prior to the Closing, Seller shall use commercially reasonable efforts to obtain all
consents required for the assignment to Buyer of the Contracts listed on Schedule 1.01(k). If such
consent is not obtained prior to the Closing, (a) Seller shall continue to use commercially
reasonable efforts to obtain such consent and (b) Seller and Buyer shall cooperate in a mutually
agreeable arrangement under which Buyer would obtain the benefits and assume the obligations under
such Contract in accordance with this Agreement, and under which Seller would enforce for the
benefit of the Buyer, with Buyer assuming Seller’s obligations, any and all rights of Seller
against a third party thereto. To the extent, and only to the extent, that the



12









 







benefits arising therefrom and obligations thereunder have been provided by alternative
arrangements as provided above, such Contract (or any portion thereof) shall be deemed an Assumed
Contract, provided that Buyer shall not be responsible for any Liabilities (i) arising out of a
claim of breach of such Contract due to the establishment of the alternative arrangements, or (ii)
arising out of such Contract as a result of Seller’s action without Buyer’s approval in a manner
inconsistent with the alternative arrangements.



Article III.

Assumption of Liabilities




Section 3.01 Assumption of Assumed Liabilities




     Subject to the terms and conditions of this Agreement, as of the Closing Date, Buyer agrees to
assume, satisfy, perform, pay and discharge only the Assumed Liabilities.



Section 3.02 Excluded Liabilities




     Seller shall retain and remain solely responsible for, and shall satisfy, perform, pay and
discharge when due, any and all Excluded Liabilities.



Article IV.

Purchase Price and Payment




Section 4.01 Purchase Price




     As full and complete consideration for the Purchased Assets, Buyer shall:



     (a) pay, or cause to be paid the following amounts (together, the “Purchase Price”) in
immediately available funds by wire transfer into an account designated by Seller not later than
three Business Days prior to the date such payment is due:



                    (i) not later than forty-five (45) days (or, upon the certification by Buyer to Seller prior
to such forty-fifth (45th) day that it has not collected sufficient receivables with respect to the
Product to enable it to pay such amount by such forty-fifth (45th) day, fifty-five (55) days)
following the last day of the first Calendar Quarter of 2009, $30,000,000;



                    (ii) not later than thirty (30) days following the last day of the second Calendar Quarter of
2009, $25,000,000, plus any unpaid amounts previously payable pursuant to Section 4(a)(i);



                    (iii) not later than thirty (30) days following the last day of the third Calendar Quarter of
2009, $25,000,000, plus any unpaid amounts previously payable pursuant to Section 4(a)(ii);



                    (iv) not later than thirty (30) days following the last day of the fourth Calendar Quarter of
2009, $20,000,000, plus any unpaid amounts previously payable pursuant to Section 4(a)(iii);



13









 





                    (v) not later than thirty (30) days following the last day of the first Calendar Quarter of
2010, $20,000,000, plus any unpaid amounts previously payable pursuant to Section 4(a)(iv); and



                    (vi) not later than thirty (30) days following the last day of the second Calendar Quarter of
2010, $7,500,000, plus any unpaid amounts previously payable pursuant to Section 4(a)(v);



provided, however, that no payment pursuant to any of Sections 4.01(a)(i) through 4.01(a)(vi)
following any single Calendar Quarter shall, when combined with all prior payments made by Buyer
pursuant to Section 4.01(a), exceed the aggregate amount of Gross Profits for the period beginning
on January 1, 2009 and ending on the last day of such Calendar Quarter; provided further, however,
that any amount that is not paid by reason of the foregoing proviso shall be deemed to be “payable”
but “unpaid” for the purposes of Section 4(a)(ii) through Section 4(a)(vi), but in no case shall
the application of this proviso cause the cumulative Purchase Price to exceed the lesser of (A)
$127,500,000 and (B) the Gross Profits for the period from January 1, 2009, through June 30, 2010;



     (b) not later than the date on which the payment in Section 4.01(a)(i) is due, pay the
Aggregate Inventory Amount as determined in accordance with Section 4.02; and



     (c) assume the Assumed Liabilities at Closing.



Section 4.02 Inventory Payment




     (a) On the day immediately following the Closing Date, representatives of Buyer and Seller
shall count the number of finished packages of the Product included in Inventory where such
Inventory is located.



     (b) The “Aggregate Inventory Amount” shall mean the aggregate cost paid or payable by
Seller to the manufacturer of the Inventory (other than Inventory with a remaining shelf life of
less than twelve (12) months) for all of the Inventory included in the Purchased Assets.



     (c) Not later than the date on which the payment in Section 4.01(a)(i) is due, Buyer shall pay
to Seller the Aggregate Inventory Amount in immediately available funds by wire transfer into an
account designated by Seller not later than three (3) Business Days after such count.



Section 4.03 Allocation of Purchase Price




     Promptly following the Closing, Seller and Buyer shall agree in good faith on an allocation of
the Purchase Price among the Purchased Assets. Buyer and Seller agree (a) to report the sale and
purchase of the Purchased Assets for Tax purposes in accordance with such allocations and (b) not
to take any position inconsistent with such allocations on any of their respective tax returns.
All payments made pursuant to Article XII shall be deemed adjustments to the Purchase Price.



14









 





Section 4.04 Payment of Sales, Use and Other Taxes




     Buyer shall be solely responsible for all sales, use, transfer, value added, gross receipts
and other similar Taxes, if any, arising out of the sale by Seller of the Purchased Assets to Buyer
pursuant to this Agreement.



Section 4.05 Statements and Audit Rights




     (a) Any payment under Section 4.01(a) that is based upon Gross Profits shall be accompanied by
a statement of the amount of Gross Profits during the applicable period represented by such
payment.



     (b) Buyer shall, and shall cause its sublicensees and AG Distributors, to maintain at a
location in the United States, complete and accurate books and records in such detail as is
necessary to accurately calculate the amounts payable to Seller under this Agreement. Such books
and records shall be maintained for a period of at least five (5) years after the end of the
Calendar Quarter in which they were generated, or for such longer period as may be required by
applicable Law. Once per each calendar year and for a period of two (2) years after the end of the
second Calendar Quarter of 2010, Seller shall have the right upon reasonable prior notice to have
an independent accounting firm reasonably acceptable to Buyer audit and examine the relevant books
and records as may be reasonably necessary to determine and/or verify the amount of payments due
hereunder and Buyer’s compliance with its obligations hereunder; provided, however, that Seller
shall not have the right to conduct such an audit until the expiration of the Licensed Patents.
Such audit and examination shall be conducted and shall take place, and Buyer shall, and shall
cause its Affiliates, sublicensees, AG Distributors and third party distributors of Authorized
Generic Versions to, make such books and records available, during normal business hours at the
facility(ies) where such books and records are maintained. Each such audit and examination shall
be limited to pertinent books and records for any Calendar Quarter ending not more than twenty-four
(24) months prior to the date of the audit. Before permitting such independent accounting firm to
have access to such books and records, Buyer may require such independent accounting firm and its
personnel involved in such audit to sign a customary confidentiality agreement in form and
substance reasonably acceptable to Buyer as to any confidential information which is to be provided
to such accounting firm or to which such accounting firm will have access while conducting the
audit under this Section. The independent accounting firm will prepare and provide to Seller and
Buyer a written report stating only whether the reports submitted and amounts paid pursuant to this
Agreement were correct or incorrect, and the amounts of any discrepancies. In the event that such
report indicates that there was an underpayment or overpayment by Buyer of any amount to Seller
hereunder, Buyer or Seller, as the case may be, shall promptly (but in no event later than thirty
(30) days after its receipt of the independent accountant’s report so concluding) make payment to
the other of the amount of such underpayment or overpayment. Seller shall bear all costs and
expenses of any such audit, except that if any audit discloses an underpayment or overpayment by
Buyer with respect to any audit period in excess of five percent (5%) of the aggregate amount
required to be paid with respect to such audit period, all costs and expenses of the audit,
including the expenses of the independent accounting firm, shall be borne and promptly paid by
Buyer.



15









 





Article V.

Closing




Section 5.01 Time and Place




     Unless this Agreement is earlier terminated pursuant to Article XIII, 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
automatically, and the conveyances to be made at Closing are hereby made by the parties and shall
be effective without any further action by any party, immediately following the satisfaction or
waiver of the conditions set forth in Articles IX and X.



Section 5.02 Deliveries at Closing




     (a) Closing Deliveries by Seller. Effective as of the Closing, Seller hereby sells,
assigns and conveys to Buyer the Purchased Assets and assigns to the Seller the Assumed
Liabilities. Effective as of the Closing, Buyer hereby accepts the Purchased Assets and assumes
and agrees to perform the Assumed Liabilities. At the Closing, Seller shall deliver or cause to be
delivered to Buyer: a letter from Seller to the FDA duly executed by Seller transferring the rights
to the Regulatory Approval to Buyer; and such bills of sale, assignment and assumption agreements
and other instruments of assignment, conveyance and transfer as are necessary to effect and confirm
the sale, transfer, conveyance, and assignment of the Purchased Assets and the assumption of the
Assumed Liabilities (provided, however, that the failure to execute or deliver any such agreement
or instrument shall not affect the effectiveness of any sale, assignment and conveyance and
assumption effected hereby, or the obligations of the parties at Closing). As soon as reasonably
practicably following the Closing, and in any event no later than ten (10) days after the Closing,
Seller shall deliver the Marketing Materials and the Books and Records.



     (b) Closing Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be
delivered to Seller: a letter from Buyer to the FDA duly executed by Buyer agreeing to assume
certain obligations with respect to the Regulatory Approval; and such bills of sale, assignment and
assumption agreements and other instruments of assignment, conveyance and transfer as are necessary
to effect and confirm the sale, transfer, conveyance, and assignment of the Purchased Assets and
the assumption of the Assumed Liabilities (provided, however, that the failure to execute or
deliver any such agreement or instrument shall not affect the effectiveness of any sale, assignment
and conveyance and assumption effected hereby or the obligations of the parties at Closing).



Article VI.

Representations and Warranties of Seller




     Seller represents and warrants to Buyer as of the date of this Agreement, subject to such
exceptions as are specifically disclosed in the disclosure schedules supplied by Seller to Buyer
and attached to this Agreement (the “Seller’s Disclosure Schedule”), as follows:



16









 





Section 6.01 Organization, Etc.




     King is a corporation duly organized, validly existing and in good standing under the laws of
Tennessee and has all requisite power and authority to own its assets and carry on its business as
currently conducted by it. Alpharma and each Alpharma Subsidiary is a corporation, limited
liability company or partnership duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has all requisite power and authority to own its
assets and carry on the Business as currently conducted by it. King, Alpharma and each Alpharma
Subsidiary 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 reasonably be expected to have a Material Adverse Effect or materially impair or delay Seller’s
ability to perform its obligations hereunder.



Section 6.02 Authority of Seller




     King has, and at the Closing Alpharma and each Alpharma Subsidiary will have, all necessary
power and authority to enter into this Agreement and to carry out the transactions contemplated
hereby. The execution, delivery and performance by King of its obligations under this Agreement
have been duly and validly authorized and no additional corporate or shareholder authorization or
consent is required in connection with the execution, delivery and performance by King of this
Agreement. This Agreement has been duly and validly executed and delivered by King and, when
executed and delivered by Buyer, will constitute a legal, valid and binding obligation of King
enforceable against it in accordance with its terms except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors rights generally, and (b) as limited by Laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.



Section 6.03 Consents and Approvals




     (a) No consents, waivers, approvals, Orders or authorizations of, or registrations,
declarations or filings with, any Governmental or Regulatory Authority are required by or with
respect to Seller in connection with the execution and delivery of this Agreement by Seller or the
performance of its obligations hereunder, except for such consents, waivers, approvals, Orders or
authorizations the failure to obtain which, and such registrations, declarations or filings the
failure to make which, would not reasonably be expected to have a Material Adverse Effect on the
Business or materially impair or delay Seller’s ability to perform its obligations hereunder.



     (b) No consents, waivers, approvals, or authorizations of, or notices to, any third party
(other than a Governmental or Regulatory Authority) that are required by or with respect to Seller
in connection with the execution and delivery of this Agreement by Seller or the performance of its
obligations hereunder, except for such consents, waivers, approvals, or authorizations the failure
to obtain which, and such notices the failure to give which, would not reasonably be expected to
have a Material Adverse Effect or materially impair or delay Seller’s ability to perform its
obligations hereunder.



17









 





Section 6.04 Non-Contravention




     The execution and delivery by King of this Agreement does not, and the performance by Seller
of its obligations under this Agreement and the consummation of the transactions contemplated
hereby will not:



     (a) conflict with or violate any provisions of the organization documents of Seller;



     (b) conflict with or result in a violation or breach of any term or provision of any Law
applicable to King, Alpharma and each Alpharma Subsidiary, the Business or the Purchased Assets,
other than breaches and violations that, in the aggregate, would not reasonably be expected to have
a Material Adverse Effect or materially impair or delay Seller’s ability to perform its obligations
hereunder; or



     (c) conflict with or result in a breach or default (or an event that, with notice or lapse of
time or both, would constitute a breach or default) under, or termination of, any Assumed Contract
or any other Contract to which Seller is a party or by which Seller or any of its assets is bound,
other than such conflicts, breaches or defaults as would not reasonably be expected to have a
Material Adverse Effect.



Section 6.05 Solvency




     (a) King, Alpharma and each Alpharma Subsidiary is Solvent.



     (b) No transfer of property is being made by Seller and no obligation is being incurred by
Seller pursuant to this Agreement with the intent to hinder, delay or defraud either present or
future creditors of Seller.



Section 6.06 Title




     Seller will have as of Closing, and upon transfer of the Purchased Assets to Buyer at Closing
as contemplated by this Agreement Buyer shall acquire, good and marketable title thereto free and
clear of any Encumbrance, other than Permitted Encumbrances.



Section 6.07 Litigation




     To the Knowledge of King, (a) there are no material claims, actions, suits or proceedings
pending or, any investigation by any Governmental or Regulatory Authority pending against any
Seller or any of their respective properties or rights in connection with the Business or the
Purchased Assets, (b) neither Seller nor any of its respective properties or rights is subject to
any outstanding Order in connection with the Purchased Assets and (c) no third party, including any
of its employees, has any cause for filing, threatening or contemplating any material claim,
action, suit or proceeding or investigation against any of them in connection with the Business or
the Purchased Assets.



18









 





Section 6.08 Purchased Assets




     (a) To the Knowledge of King, there are no pending claims, disputes, litigation or proceedings
challenging any of Seller’s right, title or interest in, or Seller’s use of, the Purchased Assets
and there are no facts which would provide a basis for any other Person to claim that it owns,
possesses or controls any rights in any of the Purchased Assets.



     (b) A true and complete copy of the executed version of each agreement listed in Section
1.01(k) of the Seller’s Disclosure Schedule has been provided to the Buyer prior to execution of
this Agreement.



     (c) To the Knowledge of King, Seller is not in breach of any of the Assumed Contracts listed
in Section 1.01(k) of the Seller’s Disclosure Schedule, and no third party has notified Seller of
any breach thereof.



     (d) Except to the extent resulting from any action or inaction by Buyer or its Affiliates, at
the time of delivery to Buyer or its designee, all Inventory (i) conforms in all respects to the
specifications and requirements of the Regulatory Approval for the Product, (ii) has been stored,
transported and handled in compliance with all current Good Manufacturing Practices applicable to
pharmaceutical products sold in the Territory and (ii) is not adulterated or misbranded.



Section 6.09 Regulatory




     (a) To the Knowledge of King, and except as disclosed in the Public Filings, the operation of
the Business, including the manufacture, import, export, testing, development, processing,
packaging, labeling, storage, marketing, and distribution of the Product in the Territory, is and
has been in material compliance for the last three (3) years with all applicable Laws.



     (b) To the Knowledge of King, during the three (3) year period ending on December 10, 2008,
Seller has not had any Product or manufacturing site for the Product subject to a Governmental or
Regulatory Authority (including FDA) shutdown or import or export prohibition, nor received any FDA
Form 483 or other material Governmental or Regulatory Authority notice of inspectional
observations, “warning letters,” or “untitled letters” with respect to the Product or the Business
or any requests or requirements to make changes to the Products that if not complied with would
reasonably be expected to result in a material liability to the Seller or the Business.



     (c) To the Knowledge of King, Seller has filed, or caused to be filed, with the applicable
Governmental and Regulatory Authorities all material required notices and reports, including
adverse experience reports, with respect to manufacture, development, marketing and other
commercial exploitation of the Product in or for the Territory.



     (d) To the Knowledge of King, neither Seller, nor any Person working for or with Seller in
performing or rendering, any activities or services related to the Business, including the
development, use or commercialization of the Product, has ever been or is currently debarred by the
FDA or any other Governmental or Regulatory Authority, nor has any such



19









 







Person been convicted of any crime or engaged in any conduct that would reasonably be expected
to result in exclusion under 42 U.S.C. Section 1320a-7 or any similar state law or regulation.



Section 6.10 Brokers




     Seller has not retained any broker in connection with the transactions contemplated hereunder.
Buyer has no, and will have no, obligation to pay any brokers, finders, investment bankers,
financial advisors or similar fees in connection with this Agreement or the transactions
contemplated hereby by reason of any action taken by or on behalf of Seller.



Section 6.11 No Other Representations and Warranties




     EXCEPT FOR THE REPRESENTATIONS OR WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER
DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH
REGARD TO THE PRODUCT, THE PURCHASED ASSETS AND THE BUSINESS, INCLUDING THE FUTURE PROFITABILITY OF
THE PURCHASED ASSETS, THE PRODUCT OR THE BUSINESS, AND WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.



Article VII.

Representations and Warranties of Buyer




     Buyer represents and warrants to Seller as of the date of this Agreement, subject to such
exceptions as are specifically disclosed in the disclosure schedule supplied by Buyer to Seller and
dated as of the date of this Agreement, if any, as follows:



Section 7.01 Corporate Organization




     Buyer is a limited liability company 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. Buyer 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 could not reasonably be expected, individually or in the
aggregate, to materially impair or delay Buyer’s ability to perform its obligations hereunder.



Section 7.02 Authority of Buyer




     Buyer has all necessary power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by Buyer of this
Agreement have been duly and validly authorized and no additional corporate or shareholder
authorization or consent is required in connection with the execution, delivery and performance by
Buyer of this Agreement. This Agreement has been duly and validly executed and delivered by Buyer
and, when executed and delivered by Seller, will constitute a legal, valid and binding obligation
of Buyer enforceable against it in accordance with its terms except (a) as



20









 







limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of
general application affecting enforcement of creditors’ rights generally, and (b) as limited by
Laws relating to the availability of specific performance, injunctive relief or other equitable
remedies.



Section 7.03 Consents and Approvals




     No consents, waivers, approvals, Orders or authorizations of, or registrations, declarations
or filings with, any Governmental or Regulatory Authority are required by Buyer in connection with
the execution and delivery of this Agreement by Buyer or the performance of its obligations
hereunder.



Section 7.04 Non-Contravention




     The execution and delivery by Buyer of this Agreement does not, and the performance by it of
its obligations under this Agreement and the consummation of the transactions contemplated hereby
will not:



     (a) conflict with or violate any provision of the organizational documents of Buyer;



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



     (c) conflict with or result in a breach or default (or an event that, with notice or lapse of
time or both, would constitute a breach or default) under, or termination of, any Contract to which
Buyer is a party or by which Buyer or any of its assets is bound, other than such conflicts,
breaches or defaults as would not reasonably be expected to or materially impair or delay Buyer’s
ability to perform its obligations hereunder.



Section 7.05 Solvency




     (a) Buyer is Solvent.



     (b) No transfer of property is being made by Buyer and no obligation is being incurred by
Buyer pursuant to this Agreement with the intent to hinder, delay or defraud either present or
future creditors of Buyer.



Section 7.06 Brokers




     Buyer has not retained any broker in connection with the transactions contemplated hereunder.
Seller has no, and will have no, obligation to pay any brokers, finders, investment bankers,
financial advisors or similar fees in connection with this Agreement or the transactions
contemplated hereby by reason of any action taken by or on behalf of Buyer.



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Section 7.07 No Other Representations and Warranties




     EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, BUYER HEREBY
DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN.



Article VIII.

Covenants of the Parties




Section 8.01 Reasonable Best Efforts




     Each Party shall use its Reasonable Best 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 and to cause the
conditions to the obligations of the other Party to consummate the transactions contemplated hereby
to be satisfied, including (a) obtaining all consents and approvals of all Persons and Governmental
or Regulatory Authorities and removing any injunctions or other impairments or delays that are
necessary, proper or advisable to the consummation of the transactions contemplated by this
Agreement and (b) furnishing upon request to each other such information as is required in
connection with the foregoing.



Section 8.02 Cooperation and Transition




     (a) Each Party shall cooperate fully with the other in preparing and filing all notices,
applications, submissions, reports and other instruments and documents that are necessary, proper
or advisable under applicable Laws to consummate and make effective the transactions contemplated
by this Agreement, including Seller’s cooperation in the efforts of Buyer to obtain any consents
and approvals of any Governmental or Regulatory Authority required for Buyer to be able to own the
Purchased Assets.



     (b) For a period of seventy (70) days following the Closing, Seller shall provide to Buyer, at
Seller’s expense, (i) such services in connection with the transition of the marketing and sale of
the Product from Seller to Buyer as Buyer may reasonably request, including with respect to
regulatory affairs, pharmacovigilance, customer service, and risk management programs and related
processes, provided that such services can be provided by Seller without unreasonable burden (such
as the engagement of additional employees or securing of services from independent contractors) to
Seller and without unreasonable interference with Seller’s ongoing operations, and (ii) reasonable
access to appropriate personnel in order to effect an orderly and rapid transition of material
commercial information related to the conduct by Seller of the Business.



Section 8.03 Public Announcements




     Each of Seller and Buyer agrees that, prior and subsequent to the Closing, it and its
representatives shall keep the terms of this Agreement confidential and shall not disclose such
information to any other Person (except as necessary to carry out the express terms of this
Agreement or to the extent such information becomes public information or generally available



22









 







to the public through no fault of such Party or its Affiliates) without the prior written
consent of the other Party (which shall not be unreasonably withheld), unless such Party has been
advised by counsel that disclosure is required to be made under applicable Law or the requirements
of a national securities exchange or another similar regulatory body (in which event such Party
shall, upon request of the non-disclosing Party, exercise its Reasonable Best Efforts to obtain a
protective order or other reliable assurance that confidential treatment will be accorded to the
information so disclosed).



Section 8.04 Bulk Sales




     Buyer and Seller waive compliance with all bulk sales Laws applicable to the transactions
contemplated by this Agreement.



Section 8.05 Corporate Names




     (a) Buyer shall have the right, but not the obligation, to sell the Inventory using applicable
NDC numbers of Seller or Seller Brands that are incorporated into the Inventory or otherwise
included on the label or labeling for the Inventory at time of delivery to Buyer or its designee
(“Corporate Names”), and Seller hereby grants Buyer a limited, non-exclusive, royalty-free
license under Seller’s right, title and interest in the Corporate Names, effective from and after
the Closing Date until the first anniversary of the Closing Date, to market, promote and sell the
Inventory. Buyer shall use its Reasonable Best Efforts to obtain its own NDC numbers for the
Product promptly following the Closing. For clarity, Buyer shall not use any Corporate Names on
any Product other than Inventory.



     (b) Buyer may use, copy, reproduce, modify, display, perform, execute, distribute, translate
into any language or form, and prepare derivative works (and take all of the above actions with
respect to such derivative works) of any Marketing Materials included in the Purchased Assets (and
Buyer shall be the owner of, and have all title to any copyrights in such derivative works created
by or for Buyer); provided, that Buyer uses its own name (or the name of its licensee or designee)
on such materials and completely removes all Seller Corporate Names and logos from, or completely
covers all Corporate Names on, such materials; and provided further, that Buyer acknowledges and
agrees that Seller shall have no Liability arising out of or in connection with Buyer’s or its
Affiliates’ use of such Marketing Materials.



Section 8.06 Regulatory Matters




     (a) As soon as practicable following the Closing Date, but in any event no later than ten (10)
days after the Closing Date, Seller shall transfer the Regulatory Documentation to Buyer, at
Seller’s expense. In addition to closing deliveries in accordance with Section 5.02, each Party
shall promptly after Closing submit to the FDA and any other Governmental or Regulatory Authorities
any other documentation and applications required to effect or provide notice of such transfer
required under applicable Laws, including 21 C.F.R. § 314.72.



     (b) Subject to Section 8.07(a), and except as otherwise provided in Section 8.02, from and
after the Closing, Buyer, at its cost, shall be solely responsible and liable (provided, however,
that Seller shall remain responsible and liable for all Excluded Liabilities)



23









 







for (i) taking all actions, paying all fees and conducting all communication with the
appropriate Governmental or Regulatory Authority required by Law in respect of the Regulatory
Approvals or the Regulatory Documentation, including preparing and filing all reports (including
adverse drug experience reports) with the appropriate Governmental or Regulatory Authority, (ii)
taking all actions and conducting all communication with third parties in respect of the Product
(whether sold before or after Closing), including responding to (A) complaints in respect thereof,
including complaints related to tampering or contamination, and (B) all medical information
requests, and (iii) investigating all complaints and adverse drug experiences in respect of the
Product (whether sold before or after Closing).



Section 8.07 Product Returns




     (a) Buyer shall accept and process all returns of Product following the Closing and disburse
refunds and credits in respect thereof to third parties (whether such Product was sold before or
after Closing) in accordance with the return policy in place for the Product at the time of sale
and applicable Laws. Seller shall reimburse Buyer for all reasonable, documented costs and
expenses incurred by Buyer in connection with (i) Product sold prior to Closing (as determined by
lot numbers) that is returned any time after Closing due to defect, damage or shipping errors or
(ii) Product sold prior to Closing (as determined by lot numbers) that is returned due to
expiration during the period commencing on the Closing Date and ending twenty-four (24) months
thereafter. For purposes of this Section 8.07, the calculation of Buyer’s reasonable costs and
expenses incurred in connection with Products returned shall be equal to Buyer’s actual costs and
expenses of Products returned (including refunds and credits). From and after the date of this
Agreement, neither Buyer nor Seller shall initiate or encourage any acceleration of or delay in the
return of the Product.



     (b) Promptly after the Closing, and except as may otherwise be provided in Section 8.02,
Seller and Buyer shall provide written notice to all Persons to which Product was sold by Seller
during the twelve (12) months prior to Closing stating that the Business has been purchased by
Buyer and that Seller no longer accepts returns of Product, and directing such Persons to contact
Buyer in connection with returns, purchase orders and all other inquiries regarding the Product.



Section 8.08 Further Assurances




     (a) On and after the Closing, Seller shall from time to time, at the request of Buyer, execute
and deliver, or cause to be executed and delivered, such other documents or instruments of
conveyance and transfer and take such other actions as Buyer may reasonably request, in order to
carry out the provisions of this Agreement or more effectively consummate the transactions
contemplated hereby and to vest in Buyer good and marketable title to the Purchased Assets
(including assistance in the collection or reduction to possession of any of the Purchased Assets).



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



24









 





Section 8.09 Government Price Reporting Obligations




     (a) As soon as practicable following the Closing, Seller will modify its Pharmaceutical
Pricing Agreement with the Department of Veterans Affairs to remove the Product, and post-Closing
Buyer will be responsible for all Veterans Health Care Act obligations related to the Product. The
Parties shall cooperate fully to add the Product to Buyer’s agreement with the Department of
Veterans Affairs. Seller will provide all information needed by the Buyer to price its product for
the remainder of calendar year 2008, as well as all information needed to calculate and report the
quarterly and annual non-FAMP and the annual Federal Ceiling Price for the Product pursuant to the
Veterans Health Care Act of 1992. Seller shall indemnify Buyer pursuant to Article 12 from and
against any and all Damages incurred by any or all of the Buyer Indemnified Parties to the extent
arising or resulting from errors or omissions in such information.



     (b) Buyer agrees to provide to Seller, on a monthly and quarterly basis, all pricing
submissions, fully calculated, that are required under applicable Law to be submitted by Seller to
comply with its price reporting obligations with respect to the Product pursuant to Section 1927 of
the Social Security Act, as amended by the Deficit Reduction Act of 2005 (Pub. L. No. 109-171).
Buyer shall provide such submissions to Seller no later than twenty (20) days following the end of
each month. Further, the parties agree to cooperate to facilitate compliance with such price
reporting obligations with respect to the Product, including any price reporting obligations that
may be enacted subsequent to the Closing Date under applicable Law. Seller agrees to hold
confidential and not to disclose to any third party (except as required by applicable Law) pricing
data and submissions furnished by Buyer pursuant to this Section 8.09(b). Further, Seller agrees
not to use such data or submissions for any purpose other than meeting its price reporting
obligations under applicable Law and shall implement procedures to limit the personnel who may have
access to such data to those employees, contractors and agents of Seller who have a need to know
such information and solely to the extent reasonably necessary to facilitate such reporting, which
employees, contractors or agents shall in no event include any employee, contractor or agent with
responsibility for the pricing, marketing or sale of Avinza. Nothing herein shall be construed to
relieve Buyer of any duty that it may have to report pricing data with respect to the Product
pursuant to applicable Law. Buyer shall certify to Seller that, to the best of Buyer’s knowledge,
the results included in each such submission fall with the applicable guidelines provided by the
Centers for Medicare and Medicaid Services (CMS), to the extent such a certification is required to
accompany their submission to CMS by the Seller, and Buyer shall indemnify Seller pursuant to
Article 12 from and against any and all Damages incurred by any or all of the Seller Indemnified
Parties to the extent arising or resulting from errors or omissions in such information.



Section 8.10 Kadian Patent License




     (a) Effective upon the Closing:



                    (i) Seller hereby grants to Buyer and its Affiliates an exclusive, irrevocable, perpetual,
sublicensable, fully paid up, royalty-free license under the Licensed Intellectual Property solely
to use, make, distribute, offer for sale, promote, advertise, sell,



25









 







import, export, or have used, made, distributed, offered for sale, promoted, advertised, sold,
imported, or exported the Licensed Product in the Territory; and



                    (ii) Seller hereby grants to Buyer and its Affiliates an exclusive, irrevocable, perpetual,
sublicensable, fully paid up, royalty-free license under the Kadian Patents solely to use, make,
distribute, offer for sale, promote, advertise, sell, import, export, or have used, made,
distributed, offered for sale, promoted, advertised, sold, imported, or exported the Product in the
Territory.



     (b) In furtherance of the foregoing:



                    (i) Seller shall not, and shall cause its Affiliates not to, grant to any third party a
license under the Licensed Patents to make, have made, import, use, sell, or offer for sale any
Licensed Product or Generic Product in the Territory during the License Term.



                    (ii) During the License Term, each Party shall promptly notify the other Party in writing of
(A) any declaratory judgment action or other proceeding asserting the non-infringement, invalidity
or unenforceability of any Licensed Patent in the Territory in connection with a Licensed Product
or Generic Product by a third party, or (B) any “Paragraph IV Certification” under the Hatch-Waxman
Act, including any certification under 21 U.S.C. § 355(b)(2)(A)(iv) or § 355(j)(2)(A)(vii)(IV) (or
any amendment or successor statute thereto) of which it becomes aware asserting that any Licensed
Patent is invalid, unenforceable or will not be infringed by the manufacture use or sale of any
Generic Product in the Territory by a third party. Seller shall have the sole right to and, during
the License Term shall be obligated to, bring and prosecute in good faith, on behalf of Seller and
Buyer, for purposes of protecting Buyer’s exclusive rights under the exclusive license, an
infringement action against such third party and/or defend such declaratory judgment action or
other proceeding brought by the third party through counsel of Seller’s choosing, and Buyer, at its
expense, agrees to provide all reasonable cooperation in connection with such an action as Seller
may request. With regard to such foregoing infringement action that Seller is obligated to bring,
Seller shall, in each instance, bring such action within forty-five (45) days of receiving a
notification of a “Paragraph IV Certification” under 21 U.S.C. § 355(j)(2)(A)(vii)(IV). All
recoveries from such an action that Seller is obligated to bring that are attributable to an
infringement related to Licensed Products or Generic Products shall be first allocated to reimburse
the Seller for its costs and expenses in bringing or defending such action, and the remainder shall
belong to Buyer and, to the extent attributable to lost sales of Products, constitute Net Sales.
All other recoveries from any such action that Seller is obligated to bring shall be retained by
Seller. In no case during the License Term may Seller enter into any settlement or consent
judgment or other voluntary disposition of such an action that Seller is obligated to bring without
Buyer’s prior written consent, which shall not be unreasonably withheld or delayed, that: (1)
limits Buyer’s rights under the Licensed Patents, (2) makes any admission of the invalidity,
unenforceability or non-infringement of the Licensed Patents with respect to any Licensed Product
or Generic Product, (3) subjects Buyer to an injunction or other equitable relief, (4) purports to
grant a license under the Licensed Patents to any third party to make, use or sell any Licensed
Product or Generic Product.



     (c) Effective upon the Closing, Seller hereby grants to Buyer and its Affiliates a
non-exclusive, irrevocable, perpetual, fully paid-up, royalty-free right and license to use and



26









 







reference the Seller Data to the extent necessary to maintain the Regulatory Approval, which
right and license shall be transferable to any subsequent owner of the Regulatory Approval.



     (d) Seller hereby covenants to Buyer that from and after the Closing Seller and its Affiliates
shall not join, file, prosecute or maintain any suit, in law or equity, against Buyer or its
Affiliates claiming that the research, development, manufacture, use, import, export, distribution
or sale of the Product by Buyer or its Affiliates infringes the Kadian Patents.



     (e) Seller hereby covenants to Buyer that from and after the Closing Seller and its Affiliates
shall not join, file, prosecute or maintain any suit, in law or equity, against Buyer or its
Affiliates claiming that the research, development, manufacture, use, import, export, distribution
or sale of the Licensed Product by Buyer or its Affiliates infringes the Product Patents.



     (f) As a condition to the assignment, transfer or license of any of the Product Patents to a
third party by Seller or its Affiliates, such third party shall agree to provide to Buyer a
covenant not to sue at least as protective as those set forth in the foregoing clauses (d) and (e).



     (g) With respect to any Product Patents licensed to Seller or its Affiliates as to which
Seller or its Affiliates do not control the right of prosecution of any legal action, from and
after the Closing Seller and its Affiliates shall not actively induce, assist or participate in any
legal action or proceeding relating to the Licensed Product against Buyer unless required by Law or
Contract (which Contract shall not be solicited or entered into for the purpose of circumventing
any rights granted to Buyer hereunder).



     (h) Upon the reasonable request of Buyer and with reasonable notice to Seller, from and after
the Closing, Seller shall provide in a timely manner to Buyer, at no greater than Seller’s Direct
Cost, assistance of knowledgeable employees of Seller and its Affiliates in defending against,
responding to or otherwise participating in any litigation related to the Product Intellectual
Property.



     (i) Effective upon the Closing, Buyer hereby grants to Seller and its Affiliates a
non-exclusive, irrevocable, perpetual, fully paid-up, royalty-free right and license to reference
the Regulatory Approval and other Regulatory Documentation in the Embeda NDA solely to the extent
that the Regulatory Approval and other Regulatory Documentation are referenced in the Embeda NDA as
of the Closing Date (the “Right of Reference”). As a condition to the assignment, transfer or
license of any of the Regulatory Approval or other Regulatory Documentation to a third party by
Buyer or its Affiliates, such third party shall agree to grant to Seller and its Affiliates the
foregoing right and license. Any and all use of the Right of Reference is without any
representation or warranty of any kind from Buyer, and Seller waives any and all warranties of any
kind including any express or implied warranty, whether oral or written, including any implied
warranty of the merchantability or fitness for a particular purpose.



     (j) Except as expressly set forth herein, no right or license is granted hereby with respect
to any Trademark, copyright, Patent or other intellectual property of Seller or its Affiliates.



27









 





     (k) Except as expressly set forth herein, no right or license is granted hereby with respect
to any Trademark, copyright, Patent or other intellectual property of Buyer or its Affiliates.



Section 8.11 DEA Notification




     Buyer and Seller shall, as required by Law, notify the DEA that, as of the Closing Date, Buyer
is or will be marketing and selling the Product in the United States either directly or indirectly
through one or more authorized distributors. As required by Law, each of Buyer and each such
authorized distributor, as applicable, shall obtain a valid registration(s) with the DEA permitting
Buyer or such authorized distributor, as applicable, to receive, hold, store, ship and sell the
Product in the United States.



Section 8.12 Representations True




     King shall not knowingly or intentionally take any action or knowingly or intentionally omit
to take any action to the extent such action or omission would result in any of its representations
or warranties being inaccurate or incorrect in any material respect as if given on and as of the
Closing Date.



Section 8.13 Confidentiality; Non-Public Purchased Assets




     (a) Each Party shall use its Reasonable Best Efforts to maintain and assure the
confidentiality of the confidential information of the other Party hereto. In the event that a
Party receives a request to disclose all or any part of the other Party’s confidential information
under the terms of a valid and effective subpoena or order issued by a court of competent
jurisdiction or by any other Governmental or Regulatory Authority, such Party agrees to: (i)
promptly notify the other Party of the existence, terms and circumstances surrounding such a
request, so that the other Party may seek an appropriate protective order and/or waive compliance
with the provisions of this Agreement; (ii) provide the other Party full and complete cooperation
to seek an appropriate order or remedy; (iii) cooperate with the other Party in obtaining reliable
assurances that confidential treatment will be accorded to the disclosed confidential information
if disclosure of such confidential information is required; and (iv) limit disclosure of the
confidential information to only that part necessary to comply with the request.



     (b) Notwithstanding that Seller disclosed the Purchased Assets to Buyer, all non-public
information within the Purchased Assets shall be considered, from and after the Closing Date, the
confidential information of Buyer. Unless and until this Agreement terminates or expires without
Closing, (i) Seller will keep all non-public information in its possession within the Purchased
Assets or related to Buyer and disclosed to Seller pursuant to this Agreement or in connection with
the negotiation hereof confidential and will not disclose such non-public information within the
Purchased Assets or related to Buyer and disclosed to Seller pursuant to this Agreement or in
connection with the negotiation hereof to third parties who are not under confidentiality
obligations adequate to maintain the confidentiality thereof, except for such disclosures as may be
required to comply with applicable Laws or the rules of a national securities exchange, and (ii)
before permitting any Person to receive non-public information or undertake any activity in
connection with Purchased Assets, Seller shall obtain a signed



28









 







agreement from each Person undertaking to maintain the confidentiality of all non-public
information within the Purchased Assets.



Section 8.14 Filings




     (a) The Parties specifically agree to promptly prepare and file any required filings under the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003, with respect to the
transactions contemplated hereby to the extent required by applicable Law.



     (b) Each of the Parties shall furnish to the other such information and assistance as the
other Party may reasonably request in connection with the preparation of any filings or submissions
contemplated in Section 8.14(a) and provide the other with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such Party or any of its
representatives, on the one hand, and the applicable Governmental or Regulatory Authority, on the
other, with respect to this Agreement and the transactions contemplated hereby.



Section 8.15 Recalls.




     (a) From and after the Closing Date, Buyer, at its cost (subject to clause (c) below), shall
be solely responsible and liable for conducting all voluntary and involuntary recalls or market
withdrawals of units of the Product (whether sold before or after Closing), including (i) recalls
required by any Governmental or Regulatory Authority and (ii) voluntary recalls and market
withdrawals of Product sold prior to Closing or Product included in Inventory that was defective
when delivered to Buyer hereunder that are deemed necessary by Seller in its reasonable discretion.
Seller promptly shall notify Buyer in the event that a recall of Product sold prior to Closing or
Product included in Inventory that was defective when delivered to Buyer hereunder is necessary and
Seller shall, and shall cause its relevant Affiliates to, cooperate with Buyer’s reasonable
requests and use Reasonable Best Efforts to assist Buyer in implementing and effecting such recall
or market withdrawal.



     (b) Notwithstanding the foregoing, Seller (or an Affiliate designated by Seller) shall have
the right at its expense to conduct any recall or market withdrawal of Product sold prior to
Closing or Product included in Inventory if Seller determines that significant health and safety
concerns require that Seller or its Affiliates conduct such recall or market withdrawal; provided
that prior to initiating any such recall or market withdrawal, Seller shall consult in good faith
with Buyer to determine how such recall or market withdrawal shall be implemented. Buyer shall use
Reasonable Best Efforts to cooperate with Seller’s and its Affiliates’ reasonable requests and
assist Seller and its Affiliates in implementing and effecting such recall or market withdrawal.



     (c) Seller promptly shall reimburse Buyer for all reasonable, documented costs incurred by
Buyer in connection with any recall or market withdrawal (i) of Product sold prior to Closing or
Product included in Inventory that was defective when delivered to Buyer hereunder or (ii)
otherwise required by Seller pursuant to Sections 8.15(a) or (b) above.



29









 





Section 8.16 Rebates and Coupons




     (a) As between Buyer and Seller, Seller shall be responsible for and pay all Rebates relating
to utilization of the Product prior to and during the Rebate Period; provided that if the Rebate
Period ends on a day other than the last day of a Calendar Quarter, the amount of Rebates payable
by Seller pursuant to this Section 8.16 with respect to utilization of the Product during the
Calendar Quarter in which the Rebate Period ends shall be equal to (a) the aggregate amount of all
Rebates relating to utilization of the Product during such Calendar Quarter, multiplied by (b) a
fraction, the numerator of which is the number of days from and including the first day of such
Calendar Quarter through and including the last day of the Rebate Period and the denominator of
which is the total number of days in such Calendar Quarter. As between Buyer and Seller, Buyer
shall be responsible for and pay all Rebates relating to utilization of the Product after the
Rebate Period; provided that if the Rebate Period ends on a day other than the last day of a
Calendar Quarter, the amount of Rebates payable by Buyer pursuant to this Section 8.16 with respect
to utilization of the Product during the Calendar Quarter in which the Rebate Period ends shall be
equal to (x) the aggregate amount of all Rebates relating to utilization of the Product during such
Calendar Quarter, multiplied by (y) a fraction, the numerator of which is the number of days from
and including the day immediately following the last day of the Rebate Period through and including
the last day of such Calendar Quarter and the denominator of which is the total number of days in
such Calendar Quarter. Buyer shall not enter into any Contract requiring payment of a Rebate
during the Rebate Period except in the ordinary course of business and consistent with Seller’s
past practices regarding the amount of Rebates. Notwithstanding anything herein to the contrary,
in no event shall Seller be liable for, and Buyer shall be solely responsible for and shall pay all
rebates relating to utilization of any Product bearing Buyer’s NDC number.



     (b) As between Buyer and Seller, Seller shall be responsible for and pay all obligations under
and pursuant to Coupons relating to utilization of the Product prior to and during the Rebate
Period. As between Buyer and Seller, Buyer shall be responsible for and pay all obligations under
and pursuant to Coupons relating to utilization of the Product after the Rebate Period; provided
that Buyer’s aggregate liability pursuant to Coupons shall not exceed $60,000.



Section 8.17 Chargeback and Rebate Period




     (a) Promptly after the Closing Date, Buyer and Seller jointly shall select a third party
consultant (the “Consultant”) which shall determine the quantity of Product owned by all
wholesalers in the Territory as of the Closing Date (the “Aggregate Wholesaler Amount”) and
the average amount of Product sold by such wholesalers per day in the thirteen (13) weeks
immediately preceding the Closing Date (the “Daily Sales Amount”). The “Chargeback
Period” means the period commencing on the Closing Date and ending the number of days
thereafter equal to the Aggregate Wholesaler Amount divided by the Daily Sales Amount.



     (b) The Consultant also shall determine the quantity of Product owned by all wholesalers and
retailers in the Territory as of the Closing Date (the “Aggregate Wholesale/Retail Amount”)
and the average amount of Product utilized per day in the thirteen (13) weeks immediately preceding
the Closing Date (the “Daily Utilization Amount”). The



30









 





Rebate Period” means the period commencing on the Closing Date and ending the number
of days thereafter equal to the Aggregate Wholesale/Retail Amount divided by the Daily Utilization
Amount.



     (c) The Parties shall bear equally the fees and expenses of the Consultant.



Section 8.18 Chargebacks




     As between Buyer and Seller, Seller shall be responsible for and pay all Chargebacks that are
submitted by wholesalers and other distributors to either Seller and its Affiliates or Buyer prior
to and during the Chargeback Period. As between Buyer and Seller, Buyer shall be responsible for
and pay all Chargebacks submitted by wholesalers and other distributors to either Seller and its
Affiliates or Buyer after the Chargeback Period. Buyer shall not enter into any Contract requiring
payment of a Chargeback during the Chargeback Period except in the ordinary course of business and
consistent with Seller’s past practices regarding the amount of Chargebacks. Notwithstanding
anything herein to the contrary, in no event shall Seller be liable for, and Buyer shall be solely
responsible for and shall pay, any and all Chargebacks with respect to Product bearing Buyer’s NDC
number.



Section 8.19 GPO Administration Fees and IFF Payments




     As between Buyer and Seller, Seller shall be responsible for and pay all GPO Administration
Fees and IFF payments relating to sales of the Product during the Chargeback Period; provided that
if the Chargeback Period ends on a day other than the last day of a Calendar Quarter, the amount of
GPO Administration Fees and IFF payments payable by Seller pursuant to this Section 8.19 with
respect to sales of the Product during the Calendar Quarter in which the Chargeback Period ends
shall be equal to (a) the aggregate amount of all GPO Administration Fees and IFF payments relating
to sales of the Product during such Calendar Quarter, multiplied by (b) a fraction, the numerator
of which is the number of days from and including the first day of such Calendar Quarter through
and including the last day of the Chargeback Period and the denominator of which is the total
number of days in such Calendar Quarter. As between Buyer and Seller, Buyer shall be responsible
for and pay all GPO Administration Fees and IFF payments relating to sales of the Product after the
Chargeback Period; provided that if the Chargeback Period ends on a day other than the last day of
a Calendar Quarter, the amount of GPO Administration Fees and IFF payments payable by Buyer
pursuant to this Section 8.19 with respect to sales of the Product during the Calendar Quarter in
which the Chargeback Period ends shall be equal to (x) the aggregate amount of all GPO
Administration Fees and IFF payments relating to sales of the Product during such Calendar Quarter,
multiplied by (y) a fraction, the numerator of which is the number of days from and including the
day immediately following the last day of the Chargeback Period through and including the last day
of such Calendar Quarter and the denominator of which is the total number of days in such Calendar
Quarter. Buyer shall not enter into any Contract requiring payment of a GPO Administration Fee
during the Chargeback Period except in the ordinary course of business and consistent with Seller’s
past practices regarding the amount of GPO Administration Fees. Notwithstanding anything herein to
the contrary, in no event shall Seller be liable for, and Buyer shall be solely responsible for and
shall pay any and all GPO Administration Fees and IFF payments relating sales of any Product
bearing Buyer’s NDC number.



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Section 8.20 Manufacturing Agreements




     (a) Effective as of the Closing, the Toll Manufacturing Agreement, dated as of December 19,
2005, by and between Alpharma Branded Products Division Inc. and Buyer (formerly Purepac
Pharmaceutical Co.), as amended (the “Toll Manufacturing Agreement”) shall terminate;
provided that to the extent any surviving provisions therein are inconsistent with the terms of
this Agreement, the terms of this Agreement shall govern. Additionally, following the Closing the
Parties agree to negotiate in good faith to amend any surviving provisions of the Toll
Manufacturing Agreement or other provisions of the Toll Manufacturing Agreement in order to address
issues impacted by this Agreement.



     (b) Effective as of the Closing, the Development and Manufacturing Services Agreement, dated
as of February 1, 2008, by and between Actavis Elizabeth LLC and Alpharma Pharmaceuticals LLC, as
amended shall continue in force; provided that following the Closing the Parties agree to negotiate
in good faith to amend such Development and Manufacturing Services Agreement to address issues
impacted by this Agreement.



Section 8.21 Sale of Product




     Buyer, through the second Calendar Quarter of 2010, shall use commercially reasonable efforts
to sell the Product and maximize Gross Profits of the Product; provided, however that Buyer shall
not have any obligation under this Section 8.21 to perform Details or to sell the Product if in the
reasonable view of Buyer such sales expose Buyer to material third party liability.



Section 8.22 Delivery of Inventory




     On the Closing Date, Seller shall tender Inventory at the place where it is located as
requested by Buyer to either Buyer or a third party designated by Buyer.



Section 8.23 Assumed Contracts




     Promptly following the Execution Date, Seller shall provide to Buyer a copy of any Contract to
which Seller is a party that relates to the Product or the Business. Buyer shall designate from
among such Contracts (a) those Contracts (if relating exclusively to the Products or the Business)
and (b) the portion of those Contracts (if relating to the Products or the Business but not
exclusively thereto), to be added, at Buyer’s request, to Section 1.01(k) of the Seller’s
Disclosure Schedule. Seller shall cooperate in good faith with Buyer to effect the transfer and
assignment to Buyer of such Contract, or portion thereof, subject to any required third party
consent. Any Contract or portion of a Contract that has been designated by Buyer pursuant to this
Section shall be deemed added to Section 1.01(k) of the Seller’s Disclosure Schedule as of the date
of such designation and shall be subject to Section 2.01(d).



Section 8.24 Regulatory Actions




     Seller hereby covenants to Buyer that from and after the Closing Seller and its Affiliates
shall not file any Citizen’s Petition with the FDA against Buyer or its Affiliates based



32









 







on any non-public information contained in the Regulatory Approval or other Regulatory
Documentation.



Article IX.

Conditions to the Obligations of Seller




     The obligation of Seller to effect the transactions contemplated hereby is subject to the
satisfaction (or waiver by Seller), at or before the Closing, of each of the following conditions:



Section 9.01 Alpharma Acquisition




     The acquisition of Alpharma by King shall have been consummated pursuant to the Merger
Agreement.



Section 9.02 No Legal Prohibition




     No provision of applicable Law and no Order shall prohibit the consummation of the Closing.



Article X.

Conditions to the Obligations of Buyer




     The obligation of Buyer to effect the transactions contemplated hereby is subject to the
satisfaction (or waiver by Buyer), at or before the Closing, of the following conditions:



Section 10.01 No Legal Prohibition




     No provision of applicable Law and no Order shall prohibit the consummation of the Closing.



Section 10.02 Alpharma Acquisition




     The acquisition of Alpharma by King shall have been consummated pursuant to the Merger
Agreement.



Article XI.

Additional Post-Closing Covenants




Section 11.01 Access to Information




     (a) Upon the request of Seller, from and after the Closing, to the extent permitted by
applicable Law, Buyer shall permit Seller and its representatives to have access, during regular
business hours and upon reasonable advance notice, to inspect and copy the Books and Records and
other documents in Buyer’s possession to the extent pertaining to the operation of the Business
prior to the Closing Date for Tax purposes and in connection with any action, suit, proceeding,
arbitration, Order, inquiry, hearing, assessment with respect to fines or



33









 







penalties or litigation commenced, brought, conducted or heard by or before, any Governmental
or Regulatory Authority.



     (b) To the extent relevant to the Product, Purchased Assets or the Business prior to the
Closing Date, Seller shall provide Buyer with such assistance as may be reasonably be required in
connection with the preparation of any Tax Return and the conduct of any audit or other examination
by any taxing authority or in connection with judicial or administrative proceedings relating to
any liability for Taxes, and shall retain and provide Buyer with all records or other information
that may be related to the preparation of any Tax Returns, or the conduct of any audit or
examination or other Tax proceeding. Seller shall retain all relevant documents, including prior
year’s Tax Returns, supporting work schedules and other records or information that may be relevant
to such Tax Returns and shall not destroy or otherwise dispose of any such records without the
prior written consent of Buyer.



     (c) In the event that Seller transfers to Buyer copies of any Books and Records in accordance
with the last sentence of Section 1.01(n), Seller shall provide Buyer access to the original
documents under circumstances where copies of such documents are insufficient for regulatory or
evidentiary purposes.



Article XII.

Indemnification




Section 12.01 Survival of Representations and Warranties




     The representations and warranties of Seller or Buyer contained in this Agreement shall
terminate twenty four (24) months following the Closing.



Section 12.02 Indemnification




     (a) By Seller. Subject to Section 12.03, from and after the Closing, Seller shall
indemnify, reimburse, defend and hold harmless Buyer, its Affiliates, and their respective
officers, directors, employees, agents, successors and assigns (the “Buyer Indemnified
Parties”) from and against any and all costs, losses, Liabilities, damages, lawsuits,
deficiencies, claims, fines, demands, penalties, interest and expenses (including reasonable fees
and disbursements of attorneys) (collectively, the “Damages”), incurred in connection with,
arising out of, or resulting from (i) any breach of any covenant or agreement of Seller herein,
(ii) the inaccuracy or breach of any representation or warranty made by Seller in this Agreement,
(iii) the failure of Seller to assume, pay, perform and discharge any Excluded Liabilities, (iv)
the ownership and operation of the Purchased Assets or the conduct of the Business prior to the
Closing, (v) the use by Seller or its Affiliates of the Marketing Materials prior to the Closing,
(vi) Third Party Claims in connection with, arising out of, or resulting from the use of the
Regulatory Approval and other Regulatory Documentation in the Embeda NDA and Books and Records,
including any Damages associated with the promotion, marketing, distribution, sale or use of any
products associated with the use of the Regulatory Approval and other Regulatory Documentation in
the Embeda NDA, and Books and Records pursuant to Section 8.10(i) and (vii) the enforcement by the
Buyer Indemnified Parties of their rights under this Section 12.02(a).



34









 





     (b) By Buyer. Subject to Section 12.03, from and after the Closing, Buyer shall
indemnify, defend and hold harmless Seller, its Affiliates and their respective officers,
directors, employees, agents, successors and assigns (the “Seller Indemnified Parties”)
from and against any and all Damages incurred in connection with, arising out of, or resulting from
(i) any breach of any covenant or agreement of Buyer herein, (ii) the inaccuracy or breach of any
representation or warranty made by Buyer in this Agreement, (iii) the failure of Buyer to assume,
pay, perform and discharge any Assumed Liabilities, (iv) the ownership and operation of the
Purchased Assets or the conduct of the Business after Closing, (v) the use by Buyer or its
Affiliates of the Marketing Materials after Closing, and (vi) the enforcement by the Seller
Indemnified Parties of their rights under this Section 12.02(b).



     (c) Procedures. The Person entitled to indemnification under this Agreement (the
“Indemnified Party”), shall give the indemnifying Party (the “Indemnifying Party”)
prompt written notice (an “Indemnification Claim Notice”) of any Damages or discovery of
fact upon which such Indemnified Party intends to base a request for indemnification under Section
12.02(a) or Section 12.02(b), provided, however, that any failure to give such notice shall not
waive any rights of an Indemnified Party except to the extent that the rights of the Indemnifying
Party are actually prejudiced or to the extent that any applicable period contemplated by Section
12.01 has expired without notice being given. Each Indemnification Claim Notice must contain a
description of the claim and the nature and amount of such Damages (to the extent that the nature
and amount of such Damages are known at such time). The Indemnified Party shall furnish promptly
to the Indemnifying Party copies of all papers and official documents received in respect of any
Damages.



     (d) Third Party Claims. The obligations of an Indemnifying Party under this Section
12.02 with respect to Damages arising from claims, lawsuits, demands or other proceedings by any
third party (each, a “Third Party Claim”) that are subject to indemnification as provided
for in Section 12.02(a) or Section 12.02(b) shall be governed by and be contingent upon the
following additional terms and conditions:



                    (i) At its option, the Indemnifying Party may assume the defense of any Third Party Claim by
giving written notice to the Indemnified Party within fifteen (15) days after the Indemnifying
Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party
Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying
Party is liable to indemnify any Indemnified Party in respect of the Third Party Claim, nor shall
it constitute a waiver by the Indemnifying Party of any defenses it may assert against any
Indemnified Party’s claim for indemnification. Upon assuming the defense of a Third Party Claim,
the Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any
legal counsel selected by the Indemnifying Party, subject to the consent of the Indemnified Party,
which consent shall not be unreasonably withheld or delayed. In the event the Indemnifying Party
assumes the defense of a Third Party Claim, the Indemnified Party shall immediately 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. Should the Indemnifying Party assume
the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified
Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the
analysis, defense or settlement of the Third Party Claim. In the event that it is ultimately
determined that the



35









 







Indemnifying Party is not obligated to indemnify, defend or hold harmless an Indemnified Party
from and against the Third Party Claim, the Indemnified Party shall reimburse the Indemnifying
Party for any and all costs and expenses (including reasonable attorneys’ fees and costs of suit)
and any Damages incurred by the Indemnifying Party in its defense of the Third Party Claim with
respect to such Indemnified Party.



                    (ii) Without limiting Section 12.02(d)(i), any Indemnified Party shall be entitled to
participate in, but not control, the defense of such Third Party Claim and to employ counsel of its
choice for such purpose; provided, however, that such employment shall be at the Indemnified
Party’s own expense unless (A) the employment thereof has been specifically authorized by the
Indemnifying Party in writing, (B) the Indemnifying Party has failed to assume the defense and
employ counsel in accordance with Section 12.02(d)(i) (in which case the Indemnified Party shall
control the defense), or (C) the interests of the Indemnified Party and the Indemnifying Party with
respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the
same counsel of both parties under applicable Law, ethical rules or equitable principles.



                    (iii) With respect to any Damages relating solely to the payment of money damages in
connection with a Third Party Claim and that will not result in the Indemnified Party’s becoming
subject to injunctive or other relief or otherwise adversely affect the business of the Indemnified
Party in any manner, and as to which the Indemnifying Party shall have acknowledged in writing the
obligation to indemnify the Indemnified Party hereunder, the Indemnifying Party shall have the sole
right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of
such Damages, on such terms as the Indemnifying Party, in its sole discretion, shall deem
appropriate. With respect to all other Damages in connection with Third Party Claims, where the
Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section
12.02(d)(i), the Indemnifying Party shall have authority to consent to the entry of any judgment,
enter into any settlement or otherwise dispose of such Damages; provided that it obtains the prior
written consent of the Indemnified Party (which consent shall not be unreasonably withheld or
delayed). The Indemnifying Party shall not be liable for any settlement or other disposition of
Damages by an Indemnified Party in connection with a Third Party Claim that is reached without the
prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld
or delayed). No Indemnified Party shall admit any liability with respect to, or settle, compromise
or discharge, any Third Party Claim without the prior written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld or delayed).



                    (iv) If the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the
Indemnified Party shall cooperate in the defense or prosecution thereof and promptly shall furnish
such records, information and testimony, provide such witnesses and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection
therewith. Such cooperation shall include access during normal business hours afforded to the
Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and
information that are reasonably relevant to such Third Party Claim, and making relevant employees
and agents available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder, and the



36









 







Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket
expenses in connection therewith.



     (e) Expenses. Except as provided above, the reasonable and verifiable costs and
expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in
connection with any claim shall be reimbursed on a quarterly basis by the Indemnifying Party,
without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to
indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to
be obligated to indemnify the Indemnified Party



Section 12.03 Limitations




     (a) In no event shall the aggregate liability of Seller for Damages pursuant to Section
12.02(a)(i) and 12.02(a)(ii) exceed the Purchase Price.



     (b) EXCEPT FOR AND ONLY TO THE EXTENT OF ANY AMOUNTS PAID UNDER AN INDEMNIFIABLE THIRD PARTY
CLAIM UNDER SECTION 12.02, OR IN THE CASE OF A PARTY’S WILLFUL MISCONDUCT, IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR SPECIAL, EXEMPLARY, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING
BUSINESS INTERRUPTION OR LOST PROFITS, OR PUNITIVE DAMAGES.



Section 12.04 Remedies Exclusive




     From and after the Closing, the remedies set forth in this Article XII shall be exclusive and
in lieu of any other remedies that may be available to the Indemnified Parties under any theory of
liability and pursuant to any statutory or common law with respect to any Damages of any kind or
nature directly or indirectly resulting from or arising out of any breach of this Agreement
(including alleged breaches or inaccuracies of any representation, warranty or covenant or for any
alleged misrepresentation) or the transactions contemplated hereby.



Article XIII.

Termination and Abandonment




Section 13.01 Methods of Termination




     Except as provided in Section 13.02 below, the transactions contemplated herein may be
terminated and abandoned at any time prior to the Closing:



     (a) by mutual written consent executed and delivered by Seller and Buyer; or



     (b) by either Seller or Buyer if (i) the Closing shall not have occurred by December 31, 2008;
provided that the terminating Party is not then in material breach of its representations,
warranties, or obligations hereunder; (ii) there shall be a final nonappealable Order of a federal
or state court in effect preventing consummation of the transactions contemplated hereby; or (iii)
there shall be any statute, rule, regulation or order enacted,



37









 







promulgated or issued or deemed applicable to the transactions contemplated hereby by any
governmental entity that would make consummation of the transactions contemplated hereby illegal.



     A termination pursuant to this Section 13.01 shall be effected by delivery of written notice
of such termination by the terminating party to the other Party. Where action is taken to
terminate this Agreement pursuant to this Section 13.01, it shall be sufficient for such action to
be authorized by the board of the Party taking such action.



Section 13.02 Procedure upon and Effect of Termination




     In the event of termination and abandonment under Section 13.01, written notice thereof shall
forthwith be given to the other Party and the transactions, conveyances, and other actions
contemplated by this Agreement shall be terminated and abandoned immediately, without further
action by the Parties. If the transactions contemplated by this Agreement are terminated as
provided herein, no Party and none of the directors, officers, stockholders, affiliates or
controlling Persons of such Party shall have any further liability or obligation to any other Party
to this Agreement except for a willful failure of a Party to fulfill a condition to the performance
of the obligations of the other Party or a willful breach of a covenant or representation or
warranty. The provisions of Article XIII and Article XIV shall survive any termination of this
Agreement.



Article XIV.

Miscellaneous




Section 14.01 Notices




     All notices, requests and other communications hereunder must be in writing and will be deemed
to have been duly given only if delivered personally against written receipt or by facsimile
transmission with answer back confirmation or mailed (postage prepaid by certified or registered
mail, return receipt requested) or by nationally recognized overnight courier that maintains
records of delivery to the Parties at the following addresses or facsimile numbers:



     If to Buyer to:


Actavis Elizabeth, L.L.C.

60 Columbia Road, Building, B

Morristown, NJ 07960

Attention: Chief Legal Officer

Facsimile:




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     With copies to:


Wilson Sonsini Goodrich & Rosati, P.C.

1301 Avenue of the Americas

40th Floor

New York, NY 10019

Attention: Arthur L. Hoag

Facsimile:




     If to Seller to:


King Pharmaceuticals, Inc.

501 Fifth Street

Bristol, Tennessee 37620

Attention: General Counsel

Facsimile:




     With a copy to:


King Pharmaceuticals, Inc.

400 Crossing Boulevard

8th Floor

Bridgewater, New Jersey 08807

Attention: General Counsel

Facsimile:




     All such notices, requests and other communications will (a) if delivered personally to the
address as provided in this Section, be deemed given upon receipt, (b) if delivered by facsimile to
the facsimile number as provided in this Section, be deemed given upon receipt by the sender of the
answer back confirmation and (c) if delivered by mail in the manner described above or by overnight
courier to the address as provided in this Section, be deemed given 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). 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 in accordance with the terms of this Section.



Section 14.02 Entire Agreement




     This Agreement (and all schedules attached hereto and all other documents delivered in
connection herewith) contains the sole and entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior discussions and agreements between the Parties with
respect to the subject matter hereof. Except as expressly provided herein, nothing in this
Agreement shall modify or amend any provision of the Toll Manufacturing Agreement or the
Development and Manufacturing Services Agreement, dated as of February 1, 2008, by and between
Alpharma Pharmaceuticals LLC and Buyer.



39









 





Section 14.03 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 either Party 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 alternative.



Section 14.04 Amendment




     This Agreement may be amended, supplemented or modified only by a written instrument duly
executed by each Party.



Section 14.05 Third Party Beneficiaries




     The terms and provisions of this Agreement are intended solely for the benefit of each Party
and its respective successors or permitted assigns and it is not the intention of the Parties to
confer third-party beneficiary rights upon any other Person.



Section 14.06 Assignment; Binding Effect




     Neither this Agreement nor any right, interest or obligation hereunder may be assigned by
either Party without the prior written consent of the other Party, which shall not be unreasonably
withheld or delayed, and any attempt to do so will be void. This Agreement is binding upon, inures
to the benefit of and is enforceable by the Parties and their respective successors and permitted
assigns.



Section 14.07 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 14.08 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 either Party under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be fully severable, (b)
this Agreement will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar to such illegal, invalid or unenforceable provision as may be
possible and reasonably acceptable to the Parties.



40









 





Section 14.09 Governing Law




     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK EXCLUDING ANY CONFLICTS OR CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER
CONSTRUCTION OR INTERPRETATION OF THIS AGREEMENT TO THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION.



Section 14.10 Consent to Jurisdiction and Forum Selection




     THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT
(OTHER THAN APPEALS THEREFROM) SHALL BE INITIATED AND TRIED EXCLUSIVELY IN THE LOCAL AND FEDERAL
COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK. THE AFOREMENTIONED CHOICE OF VENUE IS
INTENDED BY THE PARTIES TO BE MANDATORY AND NOT PERMISSIVE IN NATURE, THEREBY PRECLUDING THE
POSSIBILITY OF LITIGATION BETWEEN THE PARTIES WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT IN
ANY JURISDICTION OTHER THAN THAT SPECIFIED IN THIS SECTION. EACH PARTY HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR SIMILAR DOCTRINE OR TO OBJECT TO VENUE
WITH RESPECT TO ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THIS SECTION, AND STIPULATES THAT THE
LOCAL AND FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK SHALL HAVE PERSONAL
JURISDICTION AND VENUE OVER EACH OF THEM FOR PURPOSES OF LITIGATING ANY DISPUTE, CONTROVERSY OR
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH PARTY HEREBY AUTHORIZES AND AGREES TO
ACCEPT SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST IT AS
CONTEMPLATED BY THIS SECTION BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE
PREPAID TO ITS ADDRESS FOR THE GIVING OF NOTICES AS SET FORTH IN THIS AGREEMENT, OR IN THE MANNER
SET FORTH IN SECTION 14.01 OF THIS AGREEMENT FOR THE GIVING OF NOTICE. ANY FINAL JUDGMENT RECEIVED
AGAINST A PARTY IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL
JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER PROVIDED BY LAW.



Section 14.11 Expenses




     Except as otherwise expressly provided in this Agreement, each Party shall pay its own
expenses and costs incidental to the preparation of this Agreement and to the consummation of the
transactions contemplated hereby.



41









 





Section 14.12 Counterparts




     This Agreement may be executed in any number of counterparts and by facsimile or other
electronic transmission, each of which will be deemed an original, but all of which together will
constitute one and the same instrument.



(The remainder of this page is left blank intentionally.)




42









 





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



	 	 	 	 	 
	 	KING PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Brian A. Markison
 	 
	 	 	Name:  	Brian A. Markison	 
	 	 	Title:  	Chairman, President and CEO 	 
	 



	 	 	 	 	 
	 	ACTAVIS ELIZABETH, L.L.C.

 	 
	 	By:  	/s/ Douglas S. Boothe
 	 
	 	 	Name:  	Douglas S. Boothe	 
	 	 	Title:  	President and CEO