EX-10.3 Asset Purchase Agreement



 





Exhibit 10.3





The confidential portions of this exhibit have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.
REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.




 




 

 






ASSET PURCHASE AGREEMENT




by and between


SYNTHON PHARMACEUTICALS, INC.




and


JDS PHARMACEUTICALS, LLC


relating to




Purchase Of PEXEVA® Product Line




Dated October 17, 2005




 

 







 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	1.	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	Purchase and Sale of Purchased Assets	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.1.	 	 	Purchase and Sale
	 	 	6	 
	 

	 	 	2.2.	 	 	Inventory
	 	 	6	 
	 

	 	 	2.3.	 	 	Retained Assets
	 	 	7	 
	 

	 	 	2.4.	 	 	Delivery of Know-How
	 	 	7	 
	 

	 	 	2.5.	 	 	Contracts and NDA
	 	 	7	 
	 

	 	 	2.6.	 	 	Patent License
	 	 	7	 
	 

	 	 	2.7.	 	 	Right to Use Equipment and Machinery
	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.	 	Purchase Price	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.1.	 	 	Payments of Purchase Price
	 	 	8	 
	 

	 	 	3.2.	 	 	Purchase Price Adjustment for Inventory
	 	 	8	 
	 

	 	 	3.3.	 	 	Purchase Price Adjustment for Distribution Channel Inventory
	 	 	8	 
	 

	 	 	3.4.	 	 	Additional Fee
	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	Representations and Warranties of Synthon	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.1.	 	 	Organization; Standing
	 	 	11	 
	 

	 	 	4.2.	 	 	Authorization; Binding Effect
	 	 	11	 
	 

	 	 	4.3.	 	 	No Conflict; Consents
	 	 	11	 
	 

	 	 	4.4.	 	 	Title to Purchased Assets; Liens and Encumbrances
	 	 	11	 
	 

	 	 	4.5.	 	 	Claims; Litigation
	 	 	11	 
	 

	 	 	4.6.	 	 	Product Intellectual Property
	 	 	11	 
	 

	 	 	4.7.	 	 	Contracts
	 	 	13	 
	 

	 	 	4.8.	 	 	Legal and Regulatory Compliance; Specifications
	 	 	13	 
	 

	 	 	4.9.	 	 	Financial and Other Information
	 	 	14	 
	 

	 	 	4.10.	 	 	Inventory
	 	 	14	 
	 

	 	 	4.11.	 	 	Environmental Representation
	 	 	14	 
	 

	 	 	4.12.	 	 	Employment Matters
	 	 	15	 
	 

	 	 	4.13.	 	 	Full Disclosure
	 	 	15	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.	 	Representations and Warranties of JDS	 	 	15	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	5.1.	 	 	Organization; Standing
	 	 	15	 
	 

	 	 	5.2.	 	 	Authorization; Binding Effect
	 	 	16	 
	 

	 	 	5.3.	 	 	No Conflict; Consents
	 	 	16	 
	 

	 	 	5.4.	 	 	No Violation; Litigation or Regulatory Action
	 	 	16	 
	 

	 	 	5.5.	 	 	Availability of Financing
	 	 	16	 
	 

	 	 	5.6.	 	 	Disclosure
	 	 	16	 
	 

	 	 	5.7.	 	 	Hart-Scott-Rodino Compliance
	 	 	16	 






i









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	Covenants of Synthon and JDS	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	6.1.	 	 	Access
	 	 	16	 
	 

	 	 	6.2.	 	 	Notice by Synthon; Statements by Synthon Representatives
	 	 	17	 
	 

	 	 	6.3.	 	 	Chargebacks, Rebates and Returns
	 	 	17	 
	 

	 	 	6.4.	 	 	Manufacturing Agreements
	 	 	19	 
	 

	 	 	6.5.	 	 	Stability Programs; Complaints
	 	 	19	 
	 

	 	 	6.6.	 	 	Safety Data
	 	 	20	 
	 

	 	 	6.7.	 	 	Transition Services
	 	 	20	 
	 

	 	 	6.8.	 	 	Regulatory Matters
	 	 	20	 
	 

	 	 	6.9.	 	 	Offers of Employment
	 	 	21	 
	 

	 	 	6.10.	 	 	Conduct Pending Closing
	 	 	21	 
	 

	 	 	6.11.	 	 	Financial Statements
	 	 	21	 
	 

	 	 	6.12.	 	 	Insurance
	 	 	22	 
	 

	 	 	6.13.	 	 	Synthon Covenant Regarding the Trademarks
	 	 	22	 
	 

	 	 	6.14.	 	 	Retained Asset Dispositions
	 	 	22	 
	 

	 	 	6.15.	 	 	Prohibition on Assignment
	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	7.	 	Closing	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	7.1.	 	 	Time and Place
	 	 	22	 
	 

	 	 	7.2.	 	 	Conditions Precedent to JDS’s Obligations
	 	 	22	 
	 

	 	 	7.3.	 	 	Conditions Precedent to Synthon’s Obligations
	 	 	23	 
	 

	 	 	7.4.	 	 	Deliveries at Closing
	 	 	24	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	Confidentiality and Cooperation; Non-Competition	 	 	25	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	8.1.	 	 	Confidential Information
	 	 	25	 
	 

	 	 	8.2.	 	 	Confidentiality Obligation
	 	 	25	 
	 

	 	 	8.3.	 	 	Cooperation
	 	 	25	 
	 

	 	 	8.4.	 	 	Non-Competition
	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	9.	 	Further Assurances	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	10.	 	Indemnification; Insurance	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	10.1.	 	 	Indemnification Obligations of the Parties
	 	 	26	 
	 

	 	 	10.2.	 	 	Limitations on Indemnification Liability
	 	 	27	 
	 

	 	 	10.3.	 	 	Procedure for Indemnification
	 	 	27	 
	 

	 	 	10.4.	 	 	Representation
	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	11.	 	Survival of Indemnification Obligations and Covenants	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	12.	 	Dispute Resolution	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	12.1.	 	 	Negotiation
	 	 	28	 
	 

	 	 	12.2.	 	 	Arbitration
	 	 	28	 
	 

	 	 	12.3.	 	 	Interim Relief
	 	 	28	 






ii









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	13.	 	Termination	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	13.1.	 	 	Termination
	 	 	28	 
	 

	 	 	13.2.	 	 	Survival
	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	14.	 	Specific Performance	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	15.	 	Assignment	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	16.	 	Choice of Law	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	17.	 	Notices	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	18.	 	Miscellaneous	 	 	30	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	18.1.	 	 	Entire Agreement
	 	 	30	 
	 

	 	 	18.2.	 	 	Amendment and Modification
	 	 	30	 
	 

	 	 	18.3.	 	 	Severability
	 	 	30	 
	 

	 	 	18.4.	 	 	Non-Disclosure
	 	 	30	 
	 

	 	 	18.5.	 	 	Brokerage Indemnity
	 	 	30	 
	 

	 	 	18.6.	 	 	Execution; Facsimile Signatures
	 	 	30	 





	 	 	 	 	 
	Schedule 1A & 1B

	 	—
	 	Licensed Patents
	Schedule 1C

	 	—
	 	Patents
	Schedule 1D

	 	—
	 	Manufacturing Agreements
	Schedule 1E

	 	—
	 	Inventory Costs
	Schedule 1F

	 	—
	 	Equipment and Machinery
	Schedule 3.3(a)

	 	—
	 	Intentionally Deleted
	Schedule 3.3(c)

	 	—
	 	Intentionally Deleted
	Schedule 4

	 	—
	 	Exceptions
	Schedule 4.6(a)

	 	—
	 	Product Intellectual Property
	Schedule 4.7

	 	—
	 	Contracts
	Schedule 4.10

	 	—
	 	Inventory As of September 30, 2005
	Schedule 4.12

	 	—
	 	Employment Matters
	Schedule 6.3(f)

	 	—
	 	Synthon Returned Goods Policy
	Schedule 7.2(f)

	 	—
	 	Synthon Consents and Approvals
	Schedule 7.3(e)

	 	—
	 	JDS Consents and Approvals
	 
	 	 	 	 
	Exhibit A

	 	—
	 	Form of Transition Services Agreement
	Exhibit B

	 	—
	 	Form of Pledge and Security Agreement
	Exhibit C

	 	—
	 	Form of License
	Exhibit D

	 	—
	 	Form of Supply Agreement
	Exhibit E

	 	—
	 	Form of Guaranty







iii









 








ASSET PURCHASE AGREEMENT




     ASSET PURCHASE AGREEMENT (“Agreement”) dated this 17th day of October, 2005 by and
between SYNTHON PHARMACEUTICALS, INC., a North Carolina corporation having its principal offices at
9000 Development Drive, Research Triangle Park, North Carolina 27709 (“Synthon”) and JDS
PHARMACEUTICALS, LLC, a Delaware limited liability company having its principal offices at 122 East
42nd Street, 41st Floor, New York, New York 10168 (“JDS”).



R E C I T A L S:




     A. Synthon owns the proprietary rights to a pharmaceutical product manufactured, marketed and
sold by or on behalf of Synthon under the trademark “PEXEVA®” (as more fully defined herein).



     B. JDS desires to purchase certain assets relating to the Product (as more fully defined in
Section 1, the “Purchased Assets”) from Synthon for purposes of marketing and selling the
Product in the Territory (as defined herein), and Synthon has agreed to sell the Purchased Assets
to JDS, all in accordance with, and subject to, the terms and conditions hereinafter set forth.



     NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions hereinafter
set forth, and good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



     1. Definitions. As used herein, the following terms shall have the respective
meanings set forth below:



          “Additional Fee” shall have the meaning set forth in Section 3.4 (a).




          “Additional Fee Aggregate Minimum” shall have the meaning set forth in Section 3.4
(d).




          “Additional Fee Credit” shall have the meaning set forth in Section 3.4 (f).




          “Additional Fee Expiration Date” shall mean the last date on which U.S. Patent No. 5,874,447
or any divisional thereof (provided such divisional is listed in the FDA publication entitled “Food
and Drug Administration Center for Drug Evaluation and Research Approved Drug Products with
Therapeutic Equivalent Evaluations” with respect to the Product (the “Orange Book”)) expires
(including any patent term extension).




          “Additional Fee Period” shall mean the period commencing on the Closing Date and ending on
Additional Fee Expiration Date or such earlier date as there has been a judicial finding of
invalidity of U.S. Patent No. 5,874,447 and all divisionals thereof (provided such divisionals are
listed in the Orange Book with respect to the Product) as to which no appeal has or can be taken.




          “Affiliate” shall mean any person or legal entity controlling, controlled by or under common
control with the person with respect to whom such status is at issue and shall include, without
limitation, any corporation 50% or more of the voting power of which (or other comparable ownership
interest for an entity other than a corporation) is owned, directly or indirectly, by a party
hereto or any corporation, person or entity which owns 50% or more of such voting power of a party
hereto. With respect to Synthon, the term “Affiliate” shall include, but not be limited to,
Synthon Holding BV, Synthon BV, Synthon BCT Technologies, LLC and Synthon IP Inc.




1









 








          “API” shall mean the compound generally referred to as paroxetine mesylate.




          “Average Selling Price” shall mean ***.




          “Average Wholesaler Inventory” shall have the meaning specified in Section 3.3(a).




          “Chargebacks” shall mean discounts or rebates provided in the form of chargeback and similar
payments to wholesalers or other distributors in connection with the Product.




          “Closing” shall have the meaning set forth in Section 7.1.




          “Closing Date” shall have the meaning set forth in Section 7.1.




          “Closing Wholesaler Inventory” shall have the meaning specified in Section 3.3(b).




          “Confidential Information” shall have the meaning set forth in Section 8.1.




          “Contracts” shall mean all contracts, agreements, arrangements or understandings, to the
extent directly related to the Purchased Assets or the Product in the Territory or related to the
synthesis or manufacture of the Product or any component thereof anywhere in the world to the
extent exclusively related to the marketing, sale, offer for sale, distribution, or use of the
Product in the Territory as set forth on Schedule 4.7. Contracts shall include, without
limitation, contracts or arrangements relating to the sale, use or marketing of the Product in the
Territory (including agreements with managed care organizations and hospitals to the extent
specifically related to the Product in the Territory) and shall include the Manufacturing
Agreements and shall include contracts, agreements, arrangements or understandings relating to the
synthesis or manufacture of the Product or any component thereof executed or to be performed
outside of the Territory which relate to the marketing, sale, offer for sale, distribution or use
of the Product in the Territory.




          “Credits” shall mean credits, utilization based rebates (other than Medicaid rebates),
reimbursements, and similar payments to buying groups, managed care organizations and benefit
managers, insurers and other institutions in connection with the Product.




          “Damages” shall have the meaning set forth in Section 10.1.




          “Dollars” or “$” shall mean U.S. dollars.




          “Encumbrance” shall mean any mortgage, pledge, security interest, deed of trust, lease, lien,
adverse claim (including any claim of adverse ownership), levy, charge, easement, right of way,
covenant, restriction, or other encumbrance, third-party right or retained right of any kind
whatsoever, or any conditional sale or title retention agreement or other agreement to give any of
the foregoing in the future.




          “Environmental Law” shall have the meaning set forth in Section 4.11.




          “ERISA” and “ERISA Plans” shall have the respective meanings assigned to those terms in
Section 4.12.




          “FDA” shall mean the United States Food and Drug Administration or any successor agency having
a similar jurisdiction and the corresponding regulatory agency in Canada.




          “Federal Program” shall have the meaning set forth in Section 6.3(d).




2









 








          “Financial Data” shall have the meaning set forth in Section 4.9.




          “Indemnifying Party” shall have the meaning set forth in Section 10.1(c).




          “Indemnitee” shall have the meaning set forth in Section 10.1(c).




          “Inventory” shall mean all saleable inventory of Product with at least twelve (12) months of
remaining shelf-life as of the Closing in finished form (and whether in bulk tablet or final
packaged form) and inventory of finished samples which comply with the NDA on hand at Synthon as of
the Closing.




          “Inventory Cost” with respect to a unit of Inventory shall mean Synthon’s inventory cost
determined in accordance with US GAAP. Schedule 1E sets forth a schedule of Inventory Cost
for units of Inventory.




          “JDS Know-How” shall have the meaning set forth in the last sentence of the definition of
“Know-How” below.




          “Know-How” shall mean all methods, processes, techniques, compositions, technology,
information, data, results of tests, studies, statistical and other analyses and expertise, whether
patented or unpatented to the extent related to the Product in the Territory or to the extent
related to the synthesis or manufacture of the Product or any component thereof anywhere in the
world to the extent exclusively related to the marketing, selling, offering for sale, distributing
or using the Product in the Territory, now in possession of Synthon or an Affiliate of Synthon,
which are at the time of the Closing used in development, formulation, manufacture of the Product.
Know-How shall include, without limitation, pharmacology, toxicology, drug stability, manufacturing
and formulation methodologies and techniques, clinical and non clinical safety and efficacy
studies, marketing studies and absorption, excretion, metabolism studies, quality control and
quality assurance, and all tangible manifestations thereof, subject to Synthon’s rights to retain a
copy of documents set forth in the definition of “Purchased Assets” below. To the extent any of
such information, technology or know-how has applicability to products other than the Product in
the Territory or other than to the synthesis or manufacture of the Product or any component thereof
anywhere in the world to the extent exclusively related to the marketing, selling, offering for
sale, distribution or use of the Product in the Territory, the assignment of Know-How hereunder
shall be limited to the grant of a fully paid, exclusive (with respect to the Territory), perpetual
license to use such information, technology or know-how only to the extent related to the Product.
“JDS Know-How” shall mean any such Know-How now or hereafter possessed by JDS which would be
defined in this Section if possessed or developed by Synthon.




          “Law” shall mean all applicable laws (including, without limitation, the Federal Food, Drug
and Cosmetic Act, as amended, corresponding Canadian law and other national, state, provincial and
local laws) governing the manufacture, marketing, advertising, distribution and sale of the Product
or any other obligations of the parties thereunder, including regulations promulgated thereunder.




          “Licensed Patents” shall mean




          (a) each claim of each patent of Synthon or any Affiliate listed on Schedule 1A and
Schedule 1B;




          (b) each claim of each patent issuing from or on each patent application listed on
Schedule 1A and Schedule 1B; and




3









 








          (c) each claim of each application for letters patent which has been filed by or assigned to
Synthon, or any of its Affiliates, as the case may be, and each claim of each patent issuing from
or on any such application, claiming the Product or methods for making or using the Product and in
each case (including subsections (a) and (b) above) including extensions, continuations,
continuations-in-part, reissues and divisions thereof, and any other patents or patent applications
relating to any form or derivative of paroxetine, including, but not limited to, salts, esters,
chelates, enantiomers, diastereoisomers, prodrugs and metabolites.




          For purposes of this definition only, the term “Product” shall be deemed to include any form or
derivative of paroxetine, including but not limited to, salts, esters, chelates, enantiomers,
diastereoisomers, prodrugs and metabolites. From and after the date hereof, from time to time as
appropriate, Synthon shall update Schedules 1A and 1B to reflect any additional patents and patent
applications which fall within the scope of subsection (c) above.




          “Manufacturing Agreements” shall mean the contracts and agreements identified on Schedule
1D relating to the formulation, manufacture, packaging, testing, validation, storage or
shipment of the Product or any component thereof.




          “Marketing Authorization” shall mean the approval by a Regulatory Authority permitting the
marketing, sale and distribution (and, if applicable, pricing and reimbursement) of the Product
within the Territory, including, without limitation, the NDA.




          “Marketing Information” shall have the meaning set forth in Section 4.9.




          “Marketing Materials and Data” shall mean all physician lists, customer lists, marketing
studies, market research materials, advertising and promotional materials, other similar
information and data, including without limitation, records of sales and cost data for the
immediate three (3) years preceding the Closing, to the extent pertaining to the marketing or
distribution of the Product in the Territory which items are in the possession or control of
Synthon or any of its Affiliates, promotional booths and displays, and all equipment and other
materials used in connection with the sale or promotion of the Product whether or not located at
Synthon’s offices.




          “NDA” shall mean a New Drug Application including amendments and supplements thereto approved
by the FDA in respect of the marketing of the Product in the United States and all corresponding
applications and approvals in Canada.




          “Net Sales” of the Product for a period following the Closing shall mean the gross proceeds
from sales of the Product in the Territory by JDS and its Affiliates or permitted licensees to
unaffiliated third parties, less (i) allowances for returns and discounts given to customers,
including, without limitation, discounts made by means of rebates, Chargebacks or contract
administration fees with customers that are directly related to sales of Product in the Territory
(and including rebates or other payments required to be paid to governmental entities in connection
with sales of Product in the Territory pursuant to the Omnibus Budget Reconciliation Act of 1990
and similar or other Federal or state legislation or programs) and (ii) any taxes or duties
included in gross invoice amounts. For purposes of the definition of Net Sales, the term “Product”
shall include all products marketed by JDS or a permitted licensee within the Territory which
contain paroxetine mesylate. The Net Sales shall be calculated in accordance with US GAAP.




          “Patents” shall mean:




          (a) each claim of each patent of Synthon or any Affiliate listed on Schedule 1C; and




4









 








          (b) each claim of each patent issuing from or on each patent application listed on
Schedule 1C.




          “Product” shall mean any pharmaceutical product containing paroxetine mesylate in all dosage
forms and formulations, including, without limitation, the pharmaceutical product known as Pexeva®
paroxetine mesylate approved for marketing in the United States pursuant to NDA 21-299, whether
sold under the “Pexeva®” trademark, any other brand name or as a generic product.




          “Product Intellectual Property” shall mean any and all of the following intellectual property
rights now owned or controlled (including, without limitation, by means of in-license) by Synthon
or any Affiliate to the extent used in the development, manufacture, sale, use, marketing and
distribution of the Product in the Territory or to the extent used in the synthesis or manufacture
of the Product or any component anywhere in the world to the extent exclusively related to the
marketing, sale, offer to sell, distribution or use of the Product in the Territory, or in
obtaining Marketing Authorizations: (i) Patents (other than those listed in Schedules 1A and 1B
which are addressed as “Licensed Patents” in Section 2.6); (ii) Know-How; (iii) copyrights in any
copyrightable Marketing Material and Data; and (iv) Trademarks, proprietary rights to universal
resource locators (URLs), websites and web pages to the extent exclusively related to the Product
within the Territory.




          “Purchase Price” shall mean the consideration as further defined in Section 3.1 below
paid by JDS to Synthon for the transfer of Synthon and it Affiliates’ entire right, title, and
interest in the Product in the Territory and with respect to the synthesis and manufacture of the
Product or any component thereof anywhere in the world to the extent exclusively related to the
marketing, sale, offer for sale, distribution or use of the Product in the Territory.




          “Purchased Assets” shall mean the following: (i) the Product Intellectual Property; (ii) the
license to the Licensed Patents referred to in Section 2.6, (iii) all outstanding orders
relating to the Product in the Territory and Contracts; (iv) the Inventory (but only to the extent
JDS has elected to acquire Inventory at Closing pursuant to Section 2.2); (v) the Marketing
Material and Data; (vi) the NDA; (vii) all rights or claims of Synthon or any Affiliate in respect
to any of the foregoing against any third party including, without limitation, any prior owner of
Product Intellectual Property but excluding any right of Synthon to receive payment for Product
shipped prior to Closing; (viii) a nonexclusive right to use all Synthon equipment and machinery
located at facilities where Product is manufactured (as set forth on Schedule 1F, which
Schedule includes the location of such equipment and machinery) as long as JDS is manufacturing
Product at such facility and in accordance with the further provisions set forth in Section
2.7; and (ix) all goodwill relating to any of the above. Synthon may retain a copy of all
documents or materials included in the Purchased Assets for archival purposes, for purposes of
fulfilling its obligations under this Agreement and under applicable Law and to the extent such
documents or materials include or relate to Retained Assets (as hereinafter defined).




          “Quarter” shall mean the calendar quarterly periods ending March 31, June 30, September 30 and
December 31.




          “Regulatory Authority” shall mean any governmental regulatory authority involved in the
granting of approvals for the manufacture, sale, marketing, reimbursement or pricing of the Product
(including, without limitation, the FDA) in the Territory.




          “Retained Assets” shall mean all assets of Synthon of any type, nature, status or description
whatsoever, other than the Purchased Assets. For purposes of clarity and not of limitation,
“Retained Assets” shall include (i) any Synthon intellectual property other than Product
Intellectual
Property and (ii) plant, equipment and fixed assets of Synthon other than as expressly
included in the Purchased Assets.





5









 








          “Security Agreement” shall have the meaning set forth in Section 3.1(b).




          “Specifications” shall have the meaning set forth in Section 4.8.




          “Supply Agreement” shall mean that certain supply agreement to be entered into between Synthon
and JDS on the Closing Date whereby Synthon has agreed to supply JDS with certain quantities of API
and Inventory from time to time pursuant to the terms of such agreement in form and substance as
annexed hereto as Exhibit D.




          “Territory” shall mean the United States and Canada.




          “Threshold Loss Amount” shall have the meaning set forth in Section 10.2(a).




          “Trademarks” shall mean the trademarks set forth on Schedule 4.6(a), including all
goodwill associated therewith.




          “Transition Period” shall mean a period not to exceed ninety (90) days from the Closing during
which time Synthon will assist JDS with certain defined services more fully set forth in the
Transition Services Agreement.




          “Transition Services” shall mean the services provided by Synthon during the Transition Period
under the Transition Services Agreement.




          “Transition Services Agreement” shall mean that certain transition services agreement entered
into between Synthon and JDS on the Closing Date whereby Synthon will provide the Transition
Services to JDS during the Transition Period in form and substance as annexed hereto as Exhibit
A.




          “United States” shall mean the United States of America, and its territories and possessions,
including Puerto Rico irrespective of its political status.




          “US GAAP” shall mean generally accepted accounting principles that are in effect in the United
States.




     2. Purchase and Sale of Purchased Assets.



          2.1. Purchase and Sale. Subject to the terms and conditions of this Agreement, at the
Closing, Synthon shall sell, transfer, convey, assign and deliver, or cause to be sold,
transferred, conveyed, assigned and delivered, to JDS, free and clear of all Encumbrances, and JDS,
or any assignee or Affiliate of JDS, shall purchase, acquire and accept from Synthon (and, to the
extent applicable, Affiliates of Synthon) all of Synthon’s (and, if applicable, its Affiliates’)
right, title and interest in and to the Purchased Assets.




          2.2. Inventory. Prior to the Closing Date, the Parties shall cooperate to provide
information to JDS as to Inventory (including lot numbers, dosage strengths and dating) which
Synthon reasonably expects to have available as of the Closing Date. At least two (2) business
days prior to the Closing Date, JDS will provide Synthon with a written notice of Inventory which
JDS intends to purchase at closing (the “Inventory Notice). Promptly following receipt of the
Inventory Notice, and in any event no later than, the business day prior to the Closing, Synthon
shall provide JDS with written notice based



6









 






on the Inventory Notice indicating the number of lots of Inventory with at least 18 months
left before expiration that it will have available at Closing, including specific dosage strengths
and dating information (the “Closing Inventory”). JDS may elect, but shall not be obligated, to
purchase some or all of the Closing Inventory at Inventory Cost. By notice to Synthon delivered at
the Closing, JDS will indicate which lots of inventory are to be included in the Purchased Assets.
Synthon shall deliver at Closing a Certificate stating that the Closing Inventory delivered to JDS
as part of the Purchased Assets conforms to the description of the Closing Inventory (e.g., the
number of lots, dosage strengths and dating) set forth on the JDS Inventory Notice. To the extent
JDS has so elected to purchase Inventory at Closing, the cash portion of the Purchase Price payable
pursuant to Section 3.1 will be increased as provided by Section 3.2. Any
remaining Inventory may be purchased by JDS from time to time pursuant to the Supply Agreement,
provided, however, Inventory with less than twelve (12) months before expiration may be donated to
accredited or recognized charitable organizations by Synthon outside of the Territory (subject to
JDS prior written consent and provided the recipient agrees in writing not to export the Inventory
to the Territory) or destroyed by Synthon. To the extent that Inventory purchased by JDS at
Closing or pursuant to the Supply Agreement is not sold in the ordinary course, JDS may return to
Synthon remaining Inventory with less than twelve (12) months left before expiration for a full
refund, which JDS may obtain by offsetting the amount thereof against payments due to Synthon
pursuant to 3.4 below, or to any other payments due to Synthon pursuant to this Agreement or the
Supply Agreement.




          2.3. Retained Assets. Notwithstanding anything contained in this Agreement to the
contrary, from and after the Closing, Synthon shall retain all of its right, title and interest in
and to the Retained Assets. Notwithstanding the foregoing, except as expressly provided elsewhere
in this Agreement, Synthon shall retain no interest, royalty or intellectual property rights
relating to the Product in the Territory or relating to the synthesis or manufacture of the Product
or any component thereof anywhere in the world to the extent exclusively related to the marketing,
selling, offering for sale, distribution or use of the Product in the Territory.




          2.4. Delivery of Know-How. As described herein, Synthon shall disclose to JDS any
Know-How in its possession on the Closing Date relating to the Product in the Territory or with
respect to the synthesis or manufacture of the Product or any component thereof anywhere in the
world to the extent exclusively related to the marketing, sale, offer for sale, distribution or use
of the Product in the Territory and shall deliver to JDS at the Closing all tangible manifestations
thereof, subject to the rights of Synthon to retain copies provided herein. From and after the
Closing Date, Synthon shall continue to cooperate with JDS, as JDS may from time to time reasonably
request, in order to more fully convey the Know-How to JDS.




          2.5. Contracts and NDA. Subject only to the provisions of the Transition Services
Agreement and as set forth below, JDS will assume the obligations under the Contracts and the NDA
to the extent arising from and after the Closing.




          2.6. Patent License. At the Closing, Synthon shall grant to JDS a fully paid-up,
perpetual license in form and substance as set forth on Exhibit C.




          2.7. Right to Use Equipment and Machinery. In connection with and during the term of
the grant by Synthon to JDS of the non-exclusive right to use the equipment and machinery listed on
Schedule 1E included in the Purchased Assets, Synthon agrees that it shall not remove or
relocate any of such equipment or machinery from its current location or use or authorize the use
of any such equipment or machinery in any manner which would prevent or delay the use thereof by
JDS for the manufacture of Product. To the extent Synthon uses or grants a licensee the use of any
of the equipment or machinery for any purpose, any incremental costs incurred in connection with
the use of such equipment or machinery
for the manufacture of Product, including but not limited to costs associated with cleaning or
validation of the equipment and machinery, shall be for Synthon’s account.




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     3. Purchase Price.



          3.1. Payments of Purchase Price. As full consideration for the Purchased Assets, JDS
shall pay or cause to be paid to Synthon the following separate and distinct payments which
together constitute the Purchase Price (the “Purchase Price”):




          (a) US $10,000,000, subject to adjustment as set forth in Sections 3.2 and 3.3 below,
to be paid by wire transfer of immediately available funds on the Closing Date to an account
designated by Synthon in writing;




          (b) US $2,000,000 on each of December 31, 2007 and December 31, 2008 plus (i) $1,000,000 if
Net Sales during the calendar year ending on the date of such payment equal or exceed US $7,000,000
but are less than US $8,000,000 or (ii) $2,000,000 if Net Sales during the calendar year ending on
the date of such payment equal or exceed US $8,000,000. Any additional payment pursuant to
subclauses (i) or (ii) of this Section shall be paid by wire transfer on the last business day of
the first calendar quarter of the year immediately following the calendar year in respect of which
such payment became due. At the Closing, JDS and Synthon will execute and deliver a security
agreement in substantially the form and substance as annexed hereto as Exhibit B (the
“Security Agreement”) pursuant to which JDS will provide collateral security to Synthon for the
payments contemplated by this subsection (b) in accordance with the terms and conditions therein
set forth. JDS reserves the right to prepay all or any portion of the Purchase Price provided by
this Section 3.1(b) at any time on or after the Closing. The parties agree that any such
prepayment will be discounted at a rate of 9.75% per annum from the original due date of the
payment to the date of payment prepaid based on the number of days in such period, determined in
the inverse order of maturity. Notwithstanding the foregoing, any prepayment which does not
include payment with respect to amounts which may become due pursuant to subclauses (i) or (ii)
above will not discharge the obligation to make any such payments as they otherwise become due and
payable;




          (c) US $1,250,000, payable with respect to each of the first two calendar years, if any, from
2007 through 2017, inclusive, as to which annual Net Sales equal or exceed US $10,000,000. Each
such payment shall be paid by wire transfer on the last business day of the first calendar quarter
of the year immediately following the calendar year in respect of which such payment became due.
In the event one or both of the payments provided by this subsection does not accrue before January
1, 2009, any of such payments which subsequently become due shall be increased by a factor of 5%
per annum commencing on January 1, 2009; and




          (d) US $5,000,000, payable with respect to the first calendar year, if any, from the Closing
through and including 2017, as to which annual Net Sales equal or exceed US $30,000,000. Such
payment shall be made by wire transfer on or before the last business day of the first calendar
quarter of the year immediately following the calendar year in respect of which such payment became
due.




          3.2. Purchase Price Adjustment for Inventory. To the extent JDS has elected to
purchase Inventory as of the Closing Date, the Purchase Price payment pursuant to Section
3.1(a) shall be increased by an amount equal to the product of (i) the number and type of units
of Inventory purchased multiplied by (ii) the Inventory Cost for each such Unit.




          3.3. Purchase Price Adjustment for Distribution Channel Inventory. In addition to the
adjustment provided by Section 3.2 and whether or not JDS has elected to purchase Inventory
at the



8









 






Closing, the Purchase Price payable pursuant to Section 3.1(a) shall be adjusted to
reflect Inventory of Product sold by Synthon prior to the Closing and then held by wholesalers or
other distributors in accordance with the following provisions of this Section:




          (a) Synthon and JDS agree that the average quantities of Product historically maintained by
wholesalers in the Territory or to the extent exclusively maintained for sale, offer for sale,
distribution or use in the Territory (the “Average Wholesaler Inventory”) is *** bottles.




          (b) Prior to the Closing, Synthon shall obtain and disclose to JDS inventory reports from
McKesson, Amerisource Bergen, and Cardinal, which reports provide information as to wholesaler
inventory and in-transit in-bound quantities of Product as of the most recent practicable date
prior to the Closing Date (the “Closing Wholesaler Inventory”). The parties agree that the sum of
the McKesson, Amerisource Bergen, and Cardinal inventory reports shall be deemed to constitute
eighty-five percent (85%) of the Closing Wholesaler Inventory.




          (c) In the event the Closing Wholesaler Inventory exceeds the Average Wholesaler Inventory,
the Purchase Price payable pursuant to Section 3.1 (as adjusted, to the extent required, by
Section 3.2) shall be reduced by an amount equal to the product of (i) the number of
bottles by which the Closing Wholesaler Inventory exceeds the Average Wholesaler Inventory and (ii)
the Average Selling Price.




          3.4. Additional Fee.




          (a) As part of the Purchase Price delivered in consideration for the Purchased Assets, and in
addition to the amounts set forth in Section 3.1 hereof, JDS shall pay Synthon $.075 for
each tablet of the Product or any product containing paroxetine mesylate as an active ingredient
that is sold for commercial distribution by JDS, its agents or Affiliates (the “Additional Fee”)
during the Additional Fee Period. For purposes of clarification, no Additional Fee shall be
attributed to the Product or any product containing paroxetine mesylate as an active ingredient
distributed as samples or held in inventory by JDS, its agents or Affiliates. Additional Fee shall
be payable Quarterly within 45 days of the end of the Quarter to which each payment relates. Each
payment of Additional Fee shall be accompanied by a statement setting forth the number of tablets
sold by JDS, its agent or Affiliate for the Quarter.




          (b) Subject to sections (c), (e) and (f) below, in the event the Additional Fee payments for a
calendar year are less than $350,000, JDS shall pay Synthon the difference between the total
Additional Fee paid with respect to such calendar year and $350,000, which amount shall be paid
together with the Additional Fee payment for the first Quarter of the following calendar year.




          (c) In the event the Additional Fee payments for any calendar year are in excess of $350,000,
the excess shall be applied to reduce the annual minimum Additional Fee obligation for the next
(and subsequent) calendar years until such entire excess has been so applied.




          (d) JDS’s total payments of Additional Fees to Synthon with respect to sales of the Product or
any product containing paroxetine mesylate as an active ingredient during the Additional Fee Period
shall equal at least the Additional Fee Aggregate Minimum (as defined below). The Additional Fee
Aggregate Minimum shall be equal to $10,000,000, provided however, if the Additional Fee Period
ends prior to the Additional Fee Expiration Date, the Additional Fee Aggregate Minimum shall be
adjusted to equal $10,000,000 multiplied by a fraction, the numerator of which is the number of
months in the Additional Fee Period and the denominator of which shall be the number of months from
the Closing Date until June 10, 2017. In the event payments of Additional Fee pursuant to this
Section during the Additional Fee Period are less than the Additional Fee Aggregate Minimum, JDS
shall pay the



9









 






difference between the total Additional Fee paid and the Additional Fee Aggregate Minimum
within 45 days of the Additional Fee Period. JDS reserves the right to prepay the amount of any
Additional Fee Aggregate Minimum remaining due (after taking into account all previous payments of
Additional Fee) at any time on or after Closing. The parties agree that any such prepayment will
be discounted at a rate of 9.75% per annum from June 10, 2017 to the date of payment prepaid based
on the number of days in such period. The prepayment of the Additional Fee Aggregate Minimum shall
constitute payment in full of all obligations pursuant to this Section 3.4 and no further payments
of Additional Fee shall be due thereafter.




          (e) With respect to the partial calendar years at the beginning and the end of the Additional
Fee Period, that is (i) the period from the Closing Date until the end of the first Calendar Year
and (ii) the period from January 1 of the final year of the Additional Fee Period and the last day
of the Additional Fee Period, (assuming the last day is prior to December 31 of the final year of
the Additional Fee Period) the minimum threshold amount described in Section 3.4(b) shall
be adjusted downward on a pro rata basis. For example, if there are only 292 days in a partial
calendar year, the minimum Additional Fees for such period shall be $280,000.




          (f) To the extent that JDS has purchased Inventory, excluding samples, from Synthon as of the
Closing Date pursuant to Section 3.2 above, a credit in the amount of $.075 times each
Tablet included in the purchased Inventory, excluding samples, (the “Additional Fee Credit”) shall
be applied (i) to reduce any Additional Fee payment required pursuant to Section 3.4 (a) as such
Additional Fee becomes due and payable until the entire Additional Fee Credit has been so applied
and (ii) to reduce the $350,000 Additional Fee minimum payable pursuant to Section 3.4(b)
until the entire Additional Fee Credit has been so applied, provided, however, the Additional Fee
Credit shall not be applied to reduce the $10,000,000 total Additional Fee Aggregate Minimum
payable pursuant to Section 3.4(d).




          (g) JDS shall maintain accurate books and records for a period of no less than three years
from the periods covered reflecting commercial sales of Product during the Additional Fee Period,
which books and records shall be available for audit and inspection by Synthon or an independent
auditing firm to which JDS has no reasonable objection from time to time upon reasonable advance
notice solely for purposes of verifying the amount of Additional Fees and other payments due under
this Agreement. In the event any such audit discloses that Additional Fee payments or other
payments were underpaid by 5% or more with respect to any consecutive six (6) month period, JDS
shall reimburse Synthon for the reasonable cost of the audit and shall be liable for interest
equivalent to 1% compounded monthly of the aggregate amount of the discrepancy from the date such
payments were due.




          3.5. Adjustments upon Transfer. Unless otherwise waived by means of a written waiver
by Synthon, JDS shall not assign, transfer or exclusively license (whether by means of a sale of
substantially all of JDS’s business or assets, or by merger, stock sale or similar corporate
reorganization) its rights to the Product to any third party other than an Affiliate unless,
effective with closing of any such transaction, all Purchase Price provided by Section 3.1(b)
(except to the extent of additional payments pursuant to subclause (i) or (ii) thereof not yet due,
which will be treated in accordance with the further provisions of this Section) and the Additional
Fee Aggregate Minimum provided by Section 3.4(d) and not yet payable as of such date, shall have
been paid to Synthon, provided that each such payment shall be discounted at a rate of 9.75% per
annum from the original due date of the payment to the date of payment prepaid based on the number
of days in such period, determined in the inverse order of maturity. The prepayment of the
Additional Fee Aggregate Minimum shall constitute payment in full of all obligations pursuant to
Section 3.4 and no further payments of Additional Fee shall be due thereafter. In addition, JDS
shall be required to cause the purchaser or transferee of JDS’s rights to the Product to assume in
writing for the benefit of Synthon the obligation to make all other payments pursuant to Section
3.1 as and when such payments would otherwise become due and payable hereunder. In the event the
purchaser or transferee of JDS’s rights to the Product defaults in any payment obligation pursuant
to Section 3.1,



10









 






JDS shall remain liable for the full amount of such obligation until such time as the amount
is paid in full and shall promptly, and in no event later than ninety (90) days, remit such payment
to Synthon upon receipt of a notice of payment default on the part of such purchaser or transferee.
JDS agrees to provide notice to Synthon of the pendency of any transaction referred to in this
Section 3.5 as promptly as practicable in advance of the closing of any such transaction.




     4. Representations and Warranties of Synthon. Except as otherwise disclosed on
Schedule 4 (Exceptions) (which Schedule indicates the section to which each exception
relates), Synthon hereby represents and warrants to JDS as follows:



          4.1. Organization; Standing. Synthon is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.




          4.2. Authorization; Binding Effect. The execution and delivery by Synthon of this
Agreement, the performance by Synthon of its obligations hereunder and the consummation by Synthon
of the transactions contemplated hereby have been duly authorized by all necessary action on the
part of Synthon. This Agreement has been duly executed and delivered by a duly authorized
representative of Synthon and constitutes the valid and legally binding obligation of Synthon
enforceable against Synthon in accordance with its terms.




          4.3. No Conflict; Consents. The execution, delivery and performance of this Agreement
by Synthon do not (a) violate or result in the breach of, constitute a default under, or accelerate
the performance required by, any term of any covenant, agreement or understanding to which Synthon
or any Affiliate is a party, or any judgment, order, decree, law, rule or regulation to which
Synthon or any Affiliate is subject or (b) require the consent or agreement of any third party
(including governmental bodies).




          4.4. Title to Purchased Assets; Liens and Encumbrances. Synthon or an Affiliate has,
and on the Closing Date will have, good title to the Purchased Assets, free and clear of all
Encumbrances whatsoever. Synthon’s disclosure and delivery of the Product Intellectual Property,
including Know-How, prior to, on or after the Closing Date to JDS in the manner contemplated hereby
will not violate the rights of any third party.




          4.5. Claims; Litigation. There is no action, arbitration, or other legal or
administrative proceeding, pending, or, to the knowledge of Synthon, threatened, against Synthon or
any Affiliate pertaining to the Product or the Purchased Assets (including, without limitation,
claims in the nature of product liability or patent or other intellectual property infringement),
no claims by any individual named on Schedule 4.12 against Synthon, and, to the best of
Synthon’s knowledge, no governmental investigation pertaining to any of the foregoing is pending or
threatened, in each such case in any country. Synthon has in good faith made available to JDS all
of its files and the files of each Affiliate relating to the Purchased Assets and has delivered
true and complete copies thereof to JDS, all communications with regulatory authorities in the
Territory with respect to the Product (except for purely ministerial, non-substantive
communications).




          4.6. Product Intellectual Property.




          (a) Schedule 4.6(a) constitutes a true and correct list of all Product Intellectual
Property (inclusive of such properties as are owned, or in-licensed by Synthon or any Affiliate or
presently used by Synthon or its Affiliates). Synthon or an Affiliate owns all right, title and
interest in



11









 






and to all of the Synthon or Affiliate owned properties, and the full right and interest in
and to the in-licensed properties, and is legally entitled to transfer to JDS, all of the Product
Intellectual Property. Such transfer to JDS is free and clear of all Encumbrances (for all
properties) and free of license or royalty obligations to any third party whatsoever (other than
those designated as in-licensed, in which case any royalty or other obligation of Synthon or any
Affiliate to any third party is separately identified and disclosed on Schedule 4.6(a)) and
free of all license or royalty obligations to any party other than the identified licensor and
obligations for in-licensed properties identified on Schedule 4.6(a). No third party
(including, for this purpose, directors, officers, employees or other consultants to or agents for
Synthon or any Affiliate) has any legal or beneficial interest in the Product Intellectual Property
or any right to restrict, limit or terminate any of Synthon’s or its Affiliates’ rights to the
Product Intellectual Property.




          (b) All necessary registration, maintenance and renewal fees due in connection with such
Product Intellectual Property have been paid through the Closing Date and all necessary documents
and certificates in connection with such Product Intellectual Property have been filed with the
relevant patent, copyright or other governmental or Regulatory Authorities for the purposes of
maintaining such Product Intellectual Property.




          (c) Synthon does not know of any reasonable basis for anyone to assert that the manufacture,
importation, sale, marketing, promotion or use of the Product infringes or misappropriates the
intellectual property rights of any third party in the Territory, or anywhere in the world with
respect to Purchased Assets to the extent utilized by Synthon for purpose of making, using,
selling, offering to sell, or distributing the Product in the Territory or synthesizing or making
the Product anywhere in the world to the extent exclusively related to the marketing, sale, offer
for sale, distribution or use of the Product in the Territory, and has not received any notice from
any person of any claims of infringement or misappropriation with respect thereto. Other than the
patent interference proceedings with GlaxoSmithKline described further on Schedule 4 that
were resolved in Synthon’s favor, no claim of ownership, infringement or invalidity adverse to the
ownership or use by Synthon or any Affiliate of any of the Product Intellectual Property (including
without limitation, any such claim by any shareholder, officer, director, manager, employee,
consultant or agent of Synthon or any Affiliate) has been asserted nor does Synthon know of any
reasonable basis for any such claim. Synthon does not know of any activity being conducted which
would constitute an infringement of the Product Intellectual Property in the Territory or with
respect to Purchased Assets to the extent utilized by Synthon for purposes of marketing, selling,
offering for sale, distribution or use of the Product in the Territory or utilized by Synthon for
purpose of synthesizing or manufacturing the Product anywhere in the world to the extent
exclusively related to the marketing sale, offer for sale, distribution or use of the Product in
the Territory.




          (d) All Trademarks relating to the Product are the sole property of Synthon. Synthon has no
knowledge of any prior use, infringement, piracy or counterfeiting of such Trademarks, any superior
rights by any third party in such Trademarks, or any adverse claims pertaining to such Trademarks.




          (e) The Product Intellectual Property includes all of Synthon’s and its Affiliates interest
and rights to make, use, sell, offer to sell, distribute and import the Product in the Territory
and to synthesize or manufacture the Product or any component thereof anywhere in the world to the
extent exclusively related to the marketing, sale, offer for sale, distribution or use of the
Product in the Territory and all of its rights to prevent others from making, selling, offering to
sell, distributing, using or importing the Product in the Territory and from synthesizing or
manufacturing the Product or any component thereof anywhere in the world to the extent exclusively
related to the marketing, sale, offer for sale, distribution or use of the Product in the
Territory.




12









 








          (f) For purposes of this Section 4.6, the term “Product Intellectual Property” shall be deemed
to include the Licensed Patents.




          4.7. Contracts. Set forth on Schedule 4.7 is a true, correct and complete
list of the Contracts. Synthon has previously furnished to JDS, or has provided JDS with access
to, true, complete and correct copies of the Contracts (or with respect to any of the Contracts
which are in oral form true, complete and correct written descriptions thereof). Except as
otherwise set forth on Schedule 4.7, the Contracts constitute the only contracts, licenses,
agreements, commitments and arrangements, whether oral or written, used by Synthon or any Affiliate
or of which Synthon or any Affiliate has the benefit, with respect to the marketing, promotion,
sale or distribution of the Product in the Territory or with respect to formulation, manufacture,
validation, testing or storage of the Product anywhere in the world to the extent exclusively
related to the sale, offer for sale, marketing, distribution or use of the Product in the
Territory. The Contracts are in full force and effect, without revocation or change, and neither
Synthon nor, to Synthon’s knowledge, any other party to any of the Contracts is in default of its
respective obligations thereunder, nor does any condition exist which, with notice or lapse of time
or both, would constitute a default by any such party of its respective obligations under any of
the Contracts. Synthon is not aware of any dispute with respect to the performance of any material
term or condition of any of the Contracts.




          4.8. Legal and Regulatory Compliance; Specifications. To the best of Synthon’s
knowledge, the NDA included in the Purchased Assets is the only governmental permit, authorization
or approval required for the manufacture, labeling, packaging, sale, shipment, marketing or
promotion of the Product in the United States excepting any such permits, authorizations or
approvals applicable generally to the transaction of pharmaceutical business by corporations in
jurisdictions where Synthon and its Affiliates currently conduct business, including, without
limitation, state prescription drug wholesaler licenses. The Product, as manufactured, sold and
delivered by Synthon or its Affiliates in the Territory or anywhere in the world to the extent
exclusively related to the making, sale, offer for sale, distribution or use of the Product in the
United States prior to the date hereof (including, without limitation, the Inventory) was (i)
manufactured, packaged, labeled, stored, sold and shipped in compliance with the NDA and with the
quality control procedures, formulae and specifications (collectively “Specifications”) previously
furnished to JDS in writing and in substantial compliance with all applicable FDA, and federal,
state and local laws and regulations, including, without limitation, applicable current Good
Manufacturing Practice regulations promulgated by the FDA and all rules and regulations promulgated
thereunder; and (ii) free from all material defects in manufacture, storage, packaging and the
printing and affixing of labels. The Product and the Inventory at the date hereof is labeled in
compliance with all applicable FDA and state and local regulations. The Specifications
substantially comply with all applicable FDA and corresponding state and local regulations,
including, without limitation, applicable current Good Manufacturing Practice regulations
promulgated by the FDA. The NDA remains in effect and Synthon has submitted all reports to the FDA
with respect to the NDA required to have been submitted prior to the date hereof. No regulatory
action is pending or to Synthon’s knowledge threatened with respect to the NDA. To the best of
Synthon’s knowledge, no regulatory action is pending or threatened with respect to the Product or
any component thereof anywhere in the world where the Product or any such component is being
manufactured, stored or shipped to the extent exclusively related to the marketing, sale, offer for
sale, use or distribution in the Territory. Synthon has paid all fees applicable to its ownership
of the NDA for all periods prior to the Closing.




          During the past two (2) years, Synthon has been in material compliance with all Laws relating
to the marketing and distribution of the Product in the Territory and has filed or submitted all
reports and information required by such Laws on a timely basis.





13









 








          4.9. Financial and Other Information. Synthon has previously furnished to JDS or has
identified to JDS and provided JDS an opportunity to review, (i) a copy of the NDA included in the
Purchased Assets and copies of all correspondence and other communications between Synthon and
the FDA related thereto; (ii) all representative information and data in Synthon’s possession or
control concerning the manufacturing formulae, manufacturing and control procedures, quality
control specifications, validation data and stability data in respect of the manufacture,
packaging, labeling, storing, sale and delivery of the Product in or with respect to the Territory;
(iii) representative financial information (including, without limitation, (A) sales of Product in
the Territory through December 31, 2004 and the six-month period ended June 30, 2005, (B)
representative wholesaler stocking data and return and allowance percentages and other data
possessed by Synthon with respect to returns and allowances pertaining to the Product with respect
to the Territory, (C) representative sales data and costs to Synthon of the manufacture, packaging,
labeling, storage, sale and delivery of the Product with respect to the Territory, and (D)
representative sales, promotional, advertising and marketing expenses relating to the Product with
respect to the Territory (collectively, the “Financial Data”)); and (iv) representative information
in Synthon’s possession or control (“Marketing Information”) relating to the sale, promotion,
advertising and marketing of the Product in the Territory other than the Financial Data. Sales,
cost and expense information included in the Financial Data were prepared on a basis consistent
with generally accepted accounting principles. The Financial Data furnished or to be furnished by
Synthon to JDS do not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the facts disclosed therein not materially misleading in light of the
circumstances in which disclosed. The Marketing Information is representative of such information
utilized by Synthon in connection with its marketing and distribution of the Product in the
Territory. In addition, Synthon has furnished to JDS complete and unaltered copies of all
marketing data pertaining to the Product with respect to the Territory in the possession or control
of Synthon or any Affiliate prepared by third parties on behalf of Synthon or any such Affiliate.




          As used in this Section 4.9, the term “representative” as applied to data or
information shall not necessarily mean every item of such data or information but shall mean data
or information which, when taken as a whole, presents a fair and accurate depiction of the subject
matter of the data or information being presented and which does not reasonably require the
provision of other data or information in respect of such subject matter to make the data and
information presented not materially misleading.




          4.10. Inventory. Schedule 4.10 sets forth the amount, kind and dating of
Inventory on hand as of September 30, 2005, including batch numbers by SKU and corresponding
expiration dates. As of the Closing Date, all such Inventory is in good and marketable condition
and is in compliance with all applicable federal, state and local laws and regulations applicable
to its manufacture, labeling and storage. The expiration dates applicable to all such Inventory
(which provide for at least twelve (12) months dating) are sufficient to permit the sale thereof in
the normal course of business as has historically been conducted by Synthon with respect to its
sales of the Product in the Territory.




          4.11. Environmental Representation.




          (a) To the best of its knowledge, Synthon is not in violation, or alleged to be in violation,
of any federal, state or local judgment, decree, order, consent agreement, law (including common
law), license, rule or regulation pertaining to environmental health or safety matters, including
without limitation those arising under the Resource Conservation and Recovery Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986 as amended, the Water Act, as amended, the
Federal Clean Air Act, as amended, the Toxic Substances Control Act, or any state or local analogue
(an “Environmental Law”).




14









 








          (b) Synthon has not received any notice, complaint, order, directive, claim or citation from
any third party, including without limitation any federal, state or local governmental authority,
indicating or alleging that Synthon or any predecessor may have any liability or obligation under
any Environmental Law.




          4.12. Employment Matters.




          (a) Schedule 4.12 sets forth the name of each employee (other than the vice president
of sales and marketing) of Synthon as of September 30, 2005 with responsibilities in the detailing
of the Product to physicians or other customers including employees with responsibilities for
communications with managed care organizations, long-term care providers, Federal and state
governmental agencies and other institutions to which the Product is marketed or sold), together
with the annual compensation and bonus paid to each such employee from February 1, 2004 to
September 30, 2005. Schedule 4.12 also includes a true and complete description of (a)
each incentive compensation plan or other compensation plan, including any retention bonus plan,
currently in effect or in effect since January 1, 2004 in which such employees currently
participate or have participated since January 1, 2004, (b) all employment agreements, whether oral
or written, to which Synthon or any Affiliate and any of such employees are parties and a
description of the terms and conditions applicable to current at-will employment arrangements to
which such employees are subject and (c) each “multiemployer pension plan,” “employee welfare
benefit plan” or “employee pension benefit plan” (as such terms are defined in the Employee
Retirement Income Security Act of 1974, as amended to date and the regulations promulgated
thereunder (“ERISA”) and referred to collectively hereinafter as “ERISA Plans”) covering any of
such employees or which covered any of such employees from January 1, 2004 to the date hereof. To
the extent JDS hires employees of Synthon as contemplated by Section 6.9 and in connection
with such employment offers incentive compensation or retention bonuses which credit employees for
service to Synthon under comparable Synthon incentive compensation or bonus programs, payments of
incentive compensation or retention bonuses shall be apportioned between JDS and Synthon on a pro
rata basis based on the period of employment of the affected employee by each company,
respectively.




          (b) To the best of Synthon’s knowledge: each ERISA Plan complies in all material respects
with all applicable laws and regulations and is operated in accordance with its terms; neither
Synthon nor any Affiliate has withdrawn from any “multiemployer pension plan” included in the ERISA
Plans; each of Synthon and its Affiliates has paid all premiums (and interest and late payment
charges, if applicable) due for any period prior to the Closing to the Pension Benefit Guaranty
Compensation (“PBGC”) with respect to each ERISA Plan; there has been no “reportable event” as
defined in Section 4043(b) of ERISA and regulations of the PBGC; and the PBGC has not instituted
proceedings to terminate any ERISA Plan.




          4.13. Full Disclosure. Synthon has not failed to disclose to JDS any documents,
contracts, information and data in its possession or control which are materially adverse to the
Purchased Assets. To the best of Synthon’s knowledge, none of the information supplied or to be
supplied to JDS by Synthon under or in connection with this Agreement, contains or will contain any
untrue statement of a material fact or omits to state any material fact necessary in order to make
the statements, in light of the circumstances under which they were made, not misleading.




     5. Representations and Warranties of JDS. JDS hereby represents and warrants to
Synthon as follows:



          5.1. Organization; Standing. JDS is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware, USA and has all
requisite power and authority to execute and deliver this Agreement, to own, lease and operate its
properties and to
carry on its business as now being conducted, including the performing of all its obligations
hereunder and to consummate the transactions contemplated hereby.





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          5.2. Authorization; Binding Effect. The execution and delivery by JDS of this
Agreement, the performance by JDS of its obligations hereunder and the consummation by JDS of the
transactions contemplated hereby have been duly authorized by all necessary action on the part of
JDS. This Agreement has been duly executed and delivered by a duly authorized officer of JDS and
constitutes the valid and legally binding obligation of JDS enforceable against JDS in accordance
with its terms.




          5.3. No Conflict; Consents. The execution, delivery and performance of this Agreement
by JDS will not violate or result in the breach of, constitute a default under, or accelerate the
performance required by, any term of any covenant, agreement or understanding to which JDS or any
Affiliate is a party, or any judgment, order, decree, law, rule or regulation to which JDS or any
Affiliate is subject and no consents or agreements of any third party (including governmental
bodies) are necessary for the performance by JDS of its obligations under this Agreement.




          5.4. No Violation, Litigation or Regulatory Action. As of date hereof, there are no
actions pending or, to the knowledge of JDS, threatened against JDS or any Affiliate that are
reasonably expected to materially impair the ability of JDS to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby. As of the date hereof,
there is no action pending or, to the knowledge of JDS, threatened that questions the legality or
propriety of the transactions contemplated by this Agreement.




          5.5. Availability of Financing. JDS has, and on the Closing Date will have available
funds adequate to pay the Purchase Price payable pursuant to Section 3.1(a).




          5.6. Disclosure. No representation or warranty by JDS contained in this Agreement,
and to the best of JDS’s knowledge, no statement contained in any other document, certificate or
other instrument delivered by or on behalf of JDS pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or therein not
misleading.




          5.7. Hart-Scott-Rodino Compliance. JDS has performed an estimate of the fair market
value of the Purchased Assets in accordance with Rule 801.10(c) of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, 16 C.F.R. § 801.10(c), and determined that the value of the assets being
acquired is less than $53.1 million.




     6. Covenants of Synthon and JDS.



          6.1. Access. Synthon will permit JDS and its representatives, for as long as Synthon
is required to maintain the applicable records pursuant to any legal or regulatory requirement in
the Territory, to review from time to time during normal business hours, on reasonable notice, for
reasonable business purposes and in such manner as does not unreasonably interfere with the conduct
of Synthon’s business, all books, records and documents of Synthon or any Affiliate pertaining to
(i) the manufacture, formulae, manufacturing and control procedures, stability data and cost of the
Product in the Territory, (ii) all regulatory status and claims information relating to the Product
in the Territory, and (iii) all clinical data, stability data, bioavailability data and reports
pertaining to the Product in the Territory, to the extent any of the foregoing has not previously
been furnished to JDS. In addition, upon JDS’s request, Synthon agrees to make available to JDS,
from time to time during such period, at the facilities of Synthon, personnel of Synthon or its
Affiliates who then have positions of responsibility with respect to the matters above set forth in
this Section (and, to the extent then employed by Synthon or any Affiliate, additional



16









 






personnel to the extent their familiarity with such matters may reasonably be required). To
the extent any of such assistance is best provided by personnel who are no longer employed by
Synthon, Synthon shall, upon JDS’s request, provide JDS with information Synthon may possess and
may lawfully disclose as to the whereabouts of such personnel for purposes of consultation with JDS
or its designated representatives. If Synthon is in possession of information as to the
whereabouts of such former personnel and is unable to disclose such information to JDS, Synthon
will so notify JDS and will transmit any information including JDS’s contact information to such
personnel at JDS’s sole cost and expense.




          6.2. Notice by Synthon; Statements by Synthon Representatives. Within three (3)
business days after the Closing Date, or as soon as practicable thereafter, Synthon agrees to mail
a written notice in form and substance as agreed to by the parties to all current customers in the
Territory listed in Synthon’s records. All sales representatives and national account managers of
Synthon and its Affiliates shall be instructed that, in connection with any inquiries regarding the
Product with respect to the Territory (other than inquiries related to the use of the Product in
the Territory prior to the date hereof) from and after the date hereof, they will indicate (i) if
such representatives or managers have not elected to become employees of JDS following the Closing,
that the Product with respect to the Territory has been acquired by JDS and that JDS should be
contacted for further information with respect thereto and (ii) if such representatives or managers
have elected to become employees of JDS following the Closing, that the Product with respect to the
Territory has been acquired by JDS and such employees will continue to represent the Product to
such customers on behalf of JDS. The parties will cooperate as may be reasonably required to
assure a smooth transition of sales and marketing efforts with respect to the Product with respect
to the Territory.




          6.3. Chargebacks, Rebates and Returns. The parties have agreed to proceed as set
forth below with respect to Chargebacks, Credits or government contracting and similar obligations:




          (a) Chargebacks and Credits. All Chargebacks or Credits with respect to Product sales
which occurred prior to the Closing pursuant to a Contract or with respect to Product sales for
which Synthon received the purchase price thereof shall be for the account of Synthon and all
Chargebacks or Credits with respect to Product sales which occur after the Closing pursuant to a
Contract or with respect to which Product was sold by or on behalf of JDS shall be for the account
of JDS. For the avoidance of doubt, the parties agree that the party that ultimately receives the
benefit of the underlying Product sale shall be responsible for handling and paying any related
Chargeback or Credit.




               Notwithstanding the preceding, in light of the difficulties of determining which party may
have sold Product which is the subject of a wholesaler Chargeback or Credit as to which lot numbers
are not included in the relevant Chargeback invoice, the parties have agreed to assign
responsibility for such Chargebacks and Credits (“Unidentified Claims”) as follows: All such
Unidentified Claims with respect to wholesaler invoices to the trade dated on or before the Closing
Date plus 24 days shall be for the account of Synthon and all such Unidentified Claims with respect
to wholesaler invoices to the trade dated after such date shall be for the account of JDS. In
addition, the responsibility for the allocation of wholesaler corrections and customer re-bills,
irrespective of when received by Synthon or JDS, shall be allocated in accordance with the
preceding provisions based upon the date for the wholesaler invoice which originally reflected the
sales to which such correction or re-bill is made. The parties will cooperate and share all
relevant wholesaler data so as to be able to allocate the responsibility for Chargebacks and
Credits in accordance with the foregoing and to verify such allocations.




17









 








          (b) Medicaid Information. With respect to any Product sold by JDS after the Closing
Date which bears a National Drug Code number of Synthon or any of its Affiliates, JDS will deliver
to Synthon, within fifteen (15) days after the end of each calendar quarter, the following
information: (i) the “best price” (as defined under the Social Security Act, 42 U.S.C. §1396r-8(c)(1)(C) for each
Product identified by National Drug Code number, (ii) the “average manufacturer price” (as defined
under the Social Security Act, 42 U.S.C. §1396r-8(k)(1)) and the number of sales units and dollars
for the Product, each identified by National Drug Code number and (iii) any penalties, including
without limitation CPI based rebates. JDS agrees to provide to Synthon any additional data or
other information regarding sales or pricing of the Product by JDS which Synthon requests as
necessary for the calculation of the rebates contemplated in this Section. JDS agrees that Synthon
may use all information described in this Section in Synthon’s reporting to the Center for Medicaid
Services. Synthon shall provide to JDS the base date average manufacturer price and any
assumptions with respect to the calculation thereof for the Products.




          (c) Medicaid Rebates for Products. Synthon shall be responsible for paying the
percentage of all Medicaid rebates incurred in the quarter in which the Closing Date occurs
determined by dividing the number of days in the quarter up to the Closing Date plus 24 days by the
total number of days in such quarter. JDS shall be responsible for paying directly or upon receipt
of an invoice from Synthon as the case may be) the percentage of Medicaid rebates incurred in the
quarter in which the Closing Date occurs determined by dividing the number of days in the quarter
remaining following the Closing Date (after subtracting 24 days from the previous sentence) by the
total number of days in such quarter. Thereafter, JDS shall be responsible for paying all Medicaid
rebates (directly or upon receipt of an invoice from Synthon as the case may be) in all subsequent
quarters. Each party may invoice the other for the direct cost of processing any such Medicaid
rebates. In the event that Net Sales in the quarter in which the Closing Date occurs change by
more than twenty-five percent (25%) over the previous quarter, the parties shall in good faith
negotiate their respective payment obligations hereunder. Synthon understands that it shall
continue to be responsible for paying when due all Medicaid rebate claims stemming from Synthon
labeling of the Product which may arise after the Closing Date. JDS agrees to reimburse Synthon
for all Medicaid rebate claims paid by Synthon for which JDS is responsible hereunder. The
foregoing provisions notwithstanding, if there is sufficient information to reasonably determine
the party responsible for the sale of the Product to which such Medicaid rebate claim relates, in
which case such selling party shall be responsible for such Medicaid rebate. Any and all payments
due and owing under this Section shall be paid no later than seven (7) days following Synthon’s or
JDS’s receipt of the other party’s invoice therefore, which invoice shall include reasonable
supporting documentation and shall specify: (i) each rebate program to which the rebate is paid,
(ii) the period covered by the payment, (iii) the specific amount of the rebate paid to any such
program; and (iv) a reasonable description of the direct cost to such party of processing such
claim. Synthon may, from time to time upon reasonable notice and request to JDS, audit rebates
charged to it by JDS, and JDS shall reasonably cooperate with any such audit or inquiry by Synthon
with respect to the amount or validity of any rebate, subject to any confidentiality obligations to
which JDS is subjected. Subject only to the foregoing, each party shall at all times have the
exclusive responsibility for the processing and payment of any and all rebates arising from or with
respect to Product bearing its National Drug Code numbers. For clarification, Synthon shall be
responsible for the processing and payment of all Medicaid rebates for Products bearing its NDC
number and shall invoice JDS for any and all such rebates that are JDS’s responsibility under the
terms of this Section 6.3(c).




          (d) Federal Government Pricing Programs. Subject to the provisions of the Transition
Services Agreement, promptly after the Closing Date, Synthon shall notify the Center for Medicaid
Services, the United States Department of Defense, the Office of Drug Pricing and the Veteran’s
Affairs National Acquisition Center (the foregoing being hereinafter collectively referred to as
the “Federal Programs”) of JDS’s distribution rights with respect to the Product, and that as of
the Closing Date that Synthon will no longer support or sell the Product under any contracts in
place with said Federal Programs. JDS shall establish its own contractual relationships with the
Federal Programs as soon as commercially reasonable, and Synthon shall cooperate with JDS to assure
the smooth transition of federal contracting to JDS.




18









 








          (e) Recalls. If any Regulatory Authority with applicable jurisdiction shall order, or
it shall otherwise become necessary to perform, any corrective action or market action with respect
to the Product following the Closing (including, without limitation, any recall, field correction,
market withdrawal, stock recovery, customer notice or restriction), JDS shall have the exclusive
responsibility to appropriately manage such action. If such corrective action or market action is
necessitated by the breach by one of the parties of any of its warranties, representations,
obligations, covenants or agreements contained herein, then such party shall be liable, and shall
reimburse the other party, for all reasonable costs incurred by the non-breaching party in
connection with such action (including, without limitation, reasonable attorney’s fees and
expenses). If each of the parties is partly responsible for such corrective action or market
action, then each party shall be responsible for its proportionate share of such costs. If neither
party is responsible for such corrective action or market action, then JDS shall be responsible for
such costs. JDS shall also be exclusively responsible for handling all customer complaints,
inquiries and the like, and Synthon shall appropriately cooperate with JDS, including the
completion of an investigation and the preparation and submission of a complaint report to JDS or
its designees. The preceding shall not be in lieu or limitation of any obligation of indemnity of
a Party pursuant to Sections 10.1 or 10.2.




          (f) Product Returns. Returns shall be the responsibility of the party who shipped the
lot with respect to which a return has occurred. From and after the Closing, Synthon shall be
responsible for, and shall reimburse JDS for, the invoiced value of the returns of the Product from
batches from which any sale has been made by Synthon prior to the Closing Date other than as set
forth on Schedule 4.10. Schedule 4.10 sets forth all batch numbers by SKU and
expiration date of batches existing on the Closing Date from which no sale has been made by Synthon
other than as specifically set forth on Schedule 4.10. The mechanism for handling returns
is set forth in the Transition Services Agreement. During the Transition Period, JDS shall not
engage in any special pricing, rebate allowance, promotional or marketing program or activities,
special returns policy or special restocking program that would impact the normal course or level
of expected returns with respect to the Product.




          (g) Cooperation. The parties shall cooperate following the Closing (including,
without limitation, through tracking and exchange of lot number information and pro-ration of
amounts due pursuant to Contracts) from time to time and for such period as may reasonably be
required to implement the intended allocation of economic responsibilities set forth in subsections
(a) through (f) above.




          6.4. Contracts. To the extent requested by JDS, each of Synthon and JDS will use
commercially reasonable efforts and shall cooperate (including, without limitation, by providing
access to information, assistance in negotiations) to obtain assignments of the Contracts
(excluding the Manufacturing Agreements) to JDS, together with obtaining such amendments or
modifications thereto as JDS may reasonably request by the end of the Transition Period. In the
event Synthon is unable to assign any such Contract to JDS by the end of the Transition Period, the
parties agree to cooperate so that JDS will continue to receive the benefit of such Contract,
subject to JDS’s accepting the obligations thereunder, in similar fashion as provided by the
Transition Services Agreement until the expiration of any such Contract.




          6.5. Stability Programs; Complaints. As of the date hereof Synthon represents that it
is conducting or causing to be conducted all stability testing required by applicable laws or
regulations in the Territory to be conducted. Synthon shall continue such testing through its
completion at JDS’s sole cost and expense. Synthon shall report the results of such tests to JDS
as soon as practicable, but in no event later than thirty (30) days after each stability testing
station.




19









 








          6.6. Safety Data. Each of the parties hereto shall disclose to the other party all
safety reports and other information (collectively “Safety Data”) which they may from time to time
receive or obtain (whether from sources within or without the Territory) with respect to any adverse drug
experiences with respect to the Product, in accordance with a reporting protocol to be mutually
agreed by the parties as promptly as possible following the Closing Date. JDS shall be responsible
for the reporting of Safety Data to regulatory authorities in the Territory.




          6.7. Transition Services. During the Transition Period, Synthon agrees to provide the
Transition Services as more fully set forth in the Transition Services Agreement.




          6.8. Regulatory Matters.




          (a) Responsibility for the Product. Subject to compliance by the parties with the
applicable provisions of the Transition Services Agreement, from and after the Closing Date, JDS
shall have all regulatory responsibilities under applicable laws and regulations, reporting and
otherwise, in connection with the Product in the Territory.




          (b) Transfer of NDA. Subject only to the respective obligations of the parties set
forth in the Transition Services Agreement:





     (i) On the Closing Date, the parties shall file with the FDA all of the documents and
information required by the FDA to effect the transfer of the NDA in the Territory from
Synthon or any Affiliate to JDS or an Affiliate of JDS designated by JDS. Synthon shall
file and shall cause its Affiliates to file all of the documents and the information
required of a former owner, including but not limited to a letter acknowledging the transfer
of ownership of the NDA, and JDS shall file the information required of a new owner. Each of
JDS and Synthon shall take any and all other actions required by the FDA or other relevant
Regulatory Authorities, if any, to effect the transfer of the NDA from Synthon or its
Affiliate to JDS or its designated Affiliate as soon as reasonably practicable. Synthon may
retain an archival copy of the NDA, including supplements and records that are required to
be kept under 21 C.F.R. §314.81.




     (ii) From and after the Closing Date, JDS shall assume from Synthon or its Affiliate
all responsibility for any and all fee obligations for holders or owners of approved NDAs
relating to the Product in the Territory, including, but not limited to, those defined under
the Prescription Drug User Fee Act of 1992, as the same may be amended from time to time.




     (iii) From and after the Closing Date, JDS shall assume all regulatory responsibility
with respect to the Product including those related to (A) the marketing and promotion of
the Product in the Territory; (B) Adverse Drug Reaction reporting relating to the Product in
the Territory; and (C) the filing of NDAs and / or supplements to NDAs for product line
extensions, extensions of the expiry date and additional product claims or additions to the
labeling of the Product.



          (c) Communications with Regulatory Agencies. Subject to the respective obligations of
the parties set forth in the Transition Services Agreement, from and after the Closing Date, JDS
shall have responsibility for all communication with the FDA with respect to the matters relating
to the Product in or with respect to the Territory. From and after the Closing Date, Synthon shall
make available to JDS, copies of all correspondence to or from the FDA or other applicable
Regulatory Authority relating to the manufacturing and testing of the Product. From and after the
Closing Date, Synthon shall make available to JDS copies of all regulatory correspondence regarding
regulatory warning letters, withdrawal of any Product, and correspondence bearing on the safety and
efficacy of the Product.




20









 








          (d) Additional Information. From and after the Closing Date, Synthon shall provide to
JDS in a timely manner, but in no event less than sixty (60) days prior to the due date of JDS’s
annual report to the FDA with respect to the Product, all information (in written form) which JDS
reasonably requests regarding the manufacture of the Product which may be needed for JDS to comply
with applicable annual reporting requirements of the FDA and applicable Laws.




          6.9. Offers of Employment. Subject to the accuracy of the relevant representations
and warranties of Synthon set forth herein and relevant information provided to JDS by Synthon
hereunder, JDS shall offer or shall arrange to have a third party contract sales organization offer
in writing to employ the individuals named on Schedule 4.12, effective at the expiration of
the Transition Period. Such offers of employment will include (i) base salary and incentive
compensation opportunities substantially equivalent to the base salary and incentive compensation
opportunities currently provided to such employees by Synthon, (ii) the waiver of waiting periods
for health insurance coverage to the extent permitted by JDS’s insurance carrier or in the event
JDS determines that such waiver is impracticable to obtain, an obligation to reimburse premium
payments for continuation coverage with respect to health insurance currently maintained by Synthon
pursuant to COBRA or similar state law, and (iii) credit for such employee’s period of employment
with Synthon towards retirement plans of JDS, if any. All other economic and other terms and
conditions of such employment offered shall be in the sole discretion of JDS. Unless otherwise
determined by JDS in its sole discretion, such offers of employment will be on an “at-will” basis
(as such term is generally interpreted in accordance with the laws of the State of New York). To
the extent any of such employees are based in the offices of Synthon or any Affiliate, any such
offers of employment may be made be conditional upon the relocation of the employee to the New York
metropolitan area.




          6.10. Conduct Pending Closing.




          (a) Each party agrees that from and after the date hereof until the Closing Date, it shall
conduct its business operations so that the representations and warranties made by it hereunder
shall remain true and correct throughout such period. If notwithstanding such efforts, one or more
of such representations or warranties shall be rendered materially untrue or incorrect, the party
making such representation shall endeavor to eliminate such condition at the earliest possible
date, rendering the representation or warranty true and correct before the Closing Date.




          (b) Synthon agrees that from and after the date hereof until the Closing Date, it shall
conduct its business operations with respect to the Product in the ordinary course of business
consistent with past practices. Without limiting the generality of the foregoing, Synthon shall
not institute any price discounts or other promotional programs or price increases not in effect as
of the date hereof without the prior written consent of JDS.




          6.11. Financial Statements. In the event JDS determines that it requires financial
statements relating to the Product with respect to the Territory prepared and audited in accordance
with US GAAP for any period prior to the Closing, Synthon shall cooperate with JDS at JDS’s sole
expense to create and have audited such financial statements.




          6.12. Insurance. From and after the Closing, JDS shall procure and maintain, at its
expense, insurance policies covering the risks associated with the manufacture, marketing, sale
distribution and use of the Product in or with respect to the Territory (including, without
limitation, product liability insurance of no less than *** individually and in the aggregate),
which policies shall be of such character and in such amounts as are customarily maintained by
entities engaged in such activities with respect to products similar to the Product. JDS shall, at
Synthon’s request, provide evidence of such insurance reasonably satisfactory to Synthon.




21









 








          6.13. Synthon Covenant Regarding the Trademarks. From and after the Closing, Synthon
agrees that it will not utilize or seek to utilize the Trademarks or the goodwill associated
therewith anywhere in the world.




          6.14. Retained Asset Dispositions. Synthon will not sell, transfer, assign or
otherwise dispose of any of the Retained Assets without making adequate provision, to the
reasonable satisfaction of JDS, for the assumption and performance by any assignee or transferee of
Synthon’s obligations to JDS hereunder, and under the Transition Services Agreement.




          6.15. Prohibition on Assignment. From and after the Closing, JDS will not assign,
transfer or sub-license the Product unless it complies with the provisions of Section 3.5.




     7. Closing.



          7.1. Time and Place. The Closing of the transactions contemplated by this Agreement,
including the purchase and sale of the Purchased Assets (the “Closing”), shall take place at the
offices of Hutchinson + Mason PLLC, Raleigh, North Carolina, counsel to Synthon, on November 1,
2005 or as soon as practicable thereafter (the “Closing Date”). In the event the Closing has not
occurred by December 31, 2005, either party (unless such party is the cause of the delay in
Closing) may elect to terminate this Agreement (without prejudice to any other right or remedy
provided such party hereunder) by furnishing written notice to the other party.




          7.2. Conditions Precedent to JDS’s Obligations. Each and every obligation of JDS to
be performed on the Closing Date shall be subject to the satisfaction prior to or on the Closing
Date of each of the following conditions, any or all of which may be waived by JDS in writing:




          (a) Representations and Warranties True on the Closing Date; No Adverse Change. Each
of the representations and warranties made by Synthon in this Agreement shall be true and correct
in all material respects when made and shall be true and correct in all material respects at and as
of the Closing Date as though such representations and warranties were made or given on and as of
the Closing Date, except for any changes permitted by the terms of this Agreement or consented to
in writing by JDS, and no event or condition exists or has occurred which may have a material
adverse effect, nor has there been any damage, destruction or loss materially affecting the
Purchased Assets or the properties, business or condition of Synthon to the extent related to the
Purchased Assets or the Product, whether or not covered by insurance.




          (b) Compliance with Agreement. Synthon shall have in all material respects performed
and complied with all of its agreements and obligations under this Agreement which are to be
performed or complied with by it prior to or on the Closing Date, including the delivery of the
closing instruments and documents specified in Section 7.4(a).




          (c) Absence of Litigation. No material litigation related to the Product or the
Purchased Assets shall have been commenced or threatened, and no material investigation by any
government entity shall have been commenced, against JDS, Synthon or any of the Affiliates,
officers, directors or managers of any of them, which, in the reasonable judgment of JDS, might
materially impair JDS’s title to the Purchased Assets or the transactions contemplated hereby.




          (d) Transition Services Agreement, Security Agreement & Guaranty. Synthon shall have
executed and delivered the Transition Services Agreement and the Security Agreement, each of which
shall be in full force and effect and legally binding in accordance with its terms. Synthon shall
have caused Synthon Holding BV to have executed and delivered the Guaranty in form and substance as
Exhibit E attached hereto having an effective date of even date herewith and which shall be in
full force and effect and legally binding in accordance with its terms.




22









 








          (e) Manufacturing Agreements. JDS shall have entered into binding contractual
obligations reasonably satisfactory to it providing for the performance of equivalent
manufacturing, packaging, validation and testing of Product and Product components for sale,
distribution and future development in the Territory *** with each of OSG Norwich Pharmaceuticals,
Inc. and Synthon (which agreement with Synthon shall be in the form and substance as set forth on
Exhibit D).




          (f) Consents and Approvals. Except as otherwise specifically provided in this
Agreement, Synthon shall have received all approvals, consents and waivers as set forth on
Schedule 7.2(f) that are required to effect the transactions contemplated hereby and copies
of such documents which are in Synthon’s possession shall have been received, and copies thereof
shall have been delivered to JDS on or prior to the Closing Date.




          (g) Promotion Agreements. ***




          7.3. Conditions Precedent to Synthon’s Obligations. Each and every obligation of
Synthon to be performed on the Closing Date shall be subject to the satisfaction prior to or on the
Closing Date of each of the following conditions, any or all of which may be waived by Synthon in
writing:




          (a) Representations and Warranties True on the Closing Date. Each of the
representations and warranties made by JDS in this Agreement shall be true and correct in all
material respects when made and shall be true and correct in all material respects at and as of the
Closing Date as though such representations and warranties were made or given on and as of the
Closing Date, except for any changes permitted by the terms of this Agreement or consented to in
writing by Synthon.




          (b) Compliance with Agreement. JDS shall have in all material respects performed and
complied with all of its agreements and obligations under this Agreement which are to be performed
or complied with by it prior to or on the Closing Date, including the delivery of the Purchase
Price and the closing documents specified in Section 7.4(b).




          (c) Absence of Litigation. No material litigation shall have been commenced or
threatened, and no material investigation by any government entity shall have been commenced,
against JDS, Synthon or any of the Affiliates, officers, directors or managers of any of them,
which might, in the reasonable judgment of Synthon, materially impair the transactions contemplated
hereby.




          (d) Transition Services Agreement and Security Agreement. JDS shall have executed and
delivered the Transition Services Agreement and the Security Agreement, each of which shall be in
full force and effect and legally binding in accordance with its terms.




          (e) Consents and Approvals. Except as otherwise specifically provided in this
Agreement, all approvals, consents and waivers as set forth on Schedule 7.3(e) that are
required to effect the transactions contemplated hereby shall have been received, and copies
thereof shall have been delivered to Synthon on or prior to the Closing Date.






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          7.4. Deliveries at Closing.




          (a) Synthon Deliveries. At or as part of the Closing, Synthon shall have delivered or
caused to be delivered to JDS:



     (i) physical possession (or the implementation of arrangements reasonably satisfactory
to JDS of transfer and delivery of physical possession) of all tangible personal property
(or copies thereof) included in the Purchased Assets, including all tangible personal
property included in the Product Intellectual Property and appropriate documents of transfer
related thereto in form and substance reasonably acceptable to Synthon and JDS;




     (ii) a Bill of Sale and assignments of the Product Intellectual Property duly executed
on behalf of Synthon or its Affiliates, as the case may be, in customary form;




     (iii) the License duly executed on behalf of Synthon or its Affiliates, as the case may
be;




     (iv) a certificate, dated the Closing Date and signed by a duly authorized officer, to
the effect that all corporate proceedings required to be taken by Synthon in connection with
the transactions contemplated hereby have been taken and that all representations and
warranties are true and correct as of the Closing Date;




     (v) duly executed counterparts of the Transition Services Agreement and Security
Agreement;




     (vi) the Guaranty of Synthon Holding BV in form and substance as Exhibit E attached
hereto;




     (vii) notifications to Regulatory Authorities effecting the transfer of the NDA and any
other Marketing Authorization to JDS, in customary form;




     (viii) employee personnel records for all sales representatives and national account
managers who accept employment with JDS or its designee prior to Closing which Synthon may
lawfully deliver, provided, however, in the event employees are engaged by a designee of
JDS, Synthon shall deliver such personal records to such designee; and




     (ix) such other documents, instruments and certificates as JDS and Synthon may mutually
agree upon.



          (b) Deliveries by JDS. At or as part of Closing, JDS shall deliver or cause to be
delivered to Synthon:





     (i) the portion of the Purchase Price specified in Section 3.1(a), as adjusted
in accordance with Sections 3.2 and 3.3, by certified or bank check or wire
transfer;




     (ii) a certificate, dated the Closing Date and signed by a duly authorized officer, to
the effect that all proceedings required to be taken by JDS in connection with the
transactions contemplated hereby have been taken and that all representations and warranties
are true and correct as of the Closing Date;




     (iii) duly executed counterparts of the License, the Transition Services Agreement and
the Security Agreement;




     (iv) a list of employees with outstanding employment offers from JDS or its designee
which have not yet been accepted; and




     (v) such other documents, instruments and certificates as JDS and Synthon may mutually
agree upon.



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     8. Confidentiality and Cooperation; Non-Competition.



          8.1. Confidential Information. For purposes of this Agreement, the term “Confidential
Information” shall mean any Know-How, including JDS Know-How or any other information and any
non-public Product Intellectual Property, whether or not reduced to writing, which any party shall
from time to time possess in relation to the development, formulation, manufacture, testing,
marketing or distribution of the Product in the Territory or in relation to the manufacture or
synthesis of the Product or any component thereof anywhere in the world to the extent exclusively
related to the marketing, sale, offer for sale, distribution or use of the Product in the Territory
and which is not generally known to the public or within the pharmaceutical industry and which one
party hereto discloses to the other party. For purposes of the preceding definition, Know-How
included in the Purchased Assets shall be deemed “Confidential Information” of JDS from and after
the Closing. Confidential Information does not include information that (a) is or becomes part of
the public domain through no act of the receiving party in breach of this Agreement, (b) was
lawfully in the possession of the receiving party without any restriction on use or disclosure
prior to its disclosure hereunder, (c) is lawfully received from another source subsequent to the
date of this Agreement without any restriction on use or disclosure, (d) is deemed in writing by
the disclosing entity no longer to be Confidential Information, (e) is developed by or for the
receiving party independently of disclosures hereunder, as shown by written records, or (f) is
required to be disclosed by order of any court of competent jurisdiction or other governmental
authority (provided, however, in such latter case, however, that the receiving party shall timely
inform the disclosing party of all such legal or governmental proceedings so that the disclosing
party may attempt by appropriate legal means to limit such disclosure, and the receiving party
shall further use its best efforts to limit the disclosure and maintain confidentiality to the
maximum extent possible).




          8.2. Confidentiality Obligation. The parties shall each keep in strictest confidence
all Confidential Information and shall not use or disclose such Confidential Information except as
necessary in connection with the transactions provided for or contemplated hereby including such
disclosures to permitted licensees, sublicensees, assigns or successors to the business of a party
or its pharmaceutical business, as may be reasonably required to permit the exploitation of the
Product in the Territory, the Purchased Assets, or the Retained Assets. To the extent either party
is permitted to disclose Confidential Information pursuant to the previous sentence, such party
shall only disclose the Confidential Information to employees, consultants or other agents who need
to receive such Confidential Information for the purpose of achieving an objective of this
Agreement and who are bound by obligations of confidentiality with respect thereto, or as may
otherwise be required by law and to the extent related to the exploitation of the Product in the
Territory, the Purchased Assets or the Retained Assets. Each such licensee, sublicense, assignee
or successor shall be obligated to execute an agreement of confidentiality which shall be
applicable both within and without the Territory. The parties shall exercise all necessary
precautions to safeguard the secrecy of Confidential Information and to prevent the unauthorized
disclosure thereof. Except as otherwise provided herein, the obligations of this Section shall
survive the termination or expiration of this Agreement for a period of ten years following the
Closing Date.




          8.3. Cooperation.




          (a) Each party covenants and agrees as to any third-party suit, action, arbitration or
judicial proceeding or any governmental investigation or inquiry, relating to the Purchased Assets
or the Product, being prosecuted or defended by the other party, to cooperate in making records
available to such other party and to provide such access to, and use of, such information and data
as reasonably requested by such other party in connection therewith. Each party will reimburse the
party providing such cooperation for its reasonable out-of-pocket expenses incurred in connection with its
obligations under this Section 8.3(a).





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          (b) From time to time after the Closing, the parties hereto shall deliver to each other such
information and data concerning the transactions contemplated hereby as either party may reasonably
request including that required in order to enable such party to complete and file all national,
state and local forms which may be required to be filed by it and to complete all customary tax and
accounting procedures and otherwise to enable such party to satisfy its internal accounting, tax
and other requirements.




          8.4. Noncompetition. Synthon agrees that from the Closing Date until the later to
occur of *** neither Synthon nor any Affiliate or third party licensed or authorized by Synthon or
any Affiliate will engage in the marketing, sale or distribution of the Product in the Territory or
any pharmaceutical product containing paroxetine mesylate or any pharmaceutically acceptable form
of paroxetine, including, without limitation, salts, esters, chelates, enantiomers,
diastereoisomers, prodrugs, and metabolites; and all pharmaceutically acceptable paroxetine
containing materials and derivatives, including, but not limited to, salts, esters, chelates,
enantiomers, diastereoisomers, prodrugs and metabolites. *** Notwithstanding the foregoing,
Synthon’s receipt of royalties pursuant to the terms of the license to be granted at Closing
pursuant to Section 2.6 shall not be deemed a breach of this Section.




     9. Further Assurances. From time to time after the Closing, without further
consideration, Synthon and its Affiliates, as the case may be, shall perform all such other actions
and shall execute, acknowledge and deliver all such assignments, transfers, consents and other
documents as JDS or its counsel may reasonably request to vest more fully in JDS, and perfect JDS’s
right, title and interest in, the Purchased Assets and to more completely convey the Know-How.
Synthon will, at JDS’s sole expense, cooperate and will ensure the cooperation of its personnel and
the personnel of its Affiliates, including, without limitation, by the provision of testimony by
affidavit or in person as may be requested by JDS in connection with any patent prosecution,
maintenance or infringement action.



     10. Indemnification; Insurance.



          10.1. Indemnification Obligations of the Parties.




          (a) Synthon shall indemnify and hold JDS (including for this purpose its Affiliates, officers,
directors and agents) harmless from and against any direct costs, expenses (including, without
limitation, reasonable attorneys’ fees and expenses), or damages (collectively, “Damages”) incurred
by JDS which arise from (i) the breach by Synthon of any of its representations, covenants,
warranties or obligations set forth herein, (ii) the development, registration, manufacture,
marketing, sale or distribution of the Product before the Closing (including, without limitation,
lawsuits, regulatory or other actions or proceedings, recalls, complaints or other Damages incurred
with respect to the Product sold by Synthon prior to the Closing Date) except to the extent such
Damages are caused by or arise from the negligence or willful misconduct of JDS or its Affiliates,
***.




          (b) JDS shall indemnify and hold Synthon (including for this purpose its Affiliates, officers,
directors and agents) harmless from and against any Damages incurred by Synthon which arise from
(i) the breach by JDS of any of its representations, covenants, warranties or obligations set forth
herein, (ii) the development, registration, marketing, sale or distribution of the Product by JDS
from and after the Closing, (iii) the manufacture of the Product anywhere in the world to the
extent relating to the marketing, sale, offer for sale, distribution or use of the Product in the
Territory following the Closing (including, without limitation, lawsuits, regulatory or other
actions or proceedings, recalls, complaints or other Damages incurred with respect to the Product
sold by JDS from and after the Closing Date or with



26









 






respect to Product manufactured by JDS following the Closing Date) except to the extent that
such Damages were caused by or arise from the negligence or willful misconduct of Synthon or its
Affiliates; and (iv) any claim by Relialab respecting the promotion and marketing services provided
by JDS pursuant to the Transition Services Agreement during the termination period.




          (c) The party obligated to provide indemnity pursuant to this Section is hereinafter referred
to as the “Indemnifying Party” and the party to be indemnified (together with its Affiliates,
officers, directors and agents) is hereinafter referred to as the “Indemnitee.”




          10.2. Limitations on Indemnification Liability.




          (a) The Indemnifying Party’s indemnification obligations under Section 10.1 shall not
arise for any individual claim for damages in an amount less than $5,000 and until the sum of the
aggregate amount of damages for which the Indemnifying Party is so required to indemnify exceeds
$75,000 (the “Threshold Loss Amount”), provided that once the amount of individual claims exceeds
the Threshold Loss Amount the indemnification obligation shall apply to all claims including those
below the Threshold Loss Amount. Individual claims for damages that are similar in subject matter
or that arise out of like or similar circumstances shall, where appropriate (based on all facts and
circumstances including the nature and timing of the relevant claim for Damages) constitute a
single claim for the purpose of this Section 10.2.




          (b) The limitations on indemnification liability provided in this Section shall not apply to
the allocation of responsibility for Chargebacks, Credits and rebates set forth in Section
6.3 above. In no event shall either party be liable for punitive, consequential, special,
incidental or similar damages under or in connection with this Agreement.




          10.3. Procedure for Indemnification. Promptly after the receipt by any party hereto
of notice of (i) any third-party claim or (ii) the commencement of any suit, action, arbitration or
judicial proceeding by a third-party, such party will, if a claim with respect thereto is to be
made against any party obligated to provide indemnification pursuant to Section 10.1
hereof, give such Indemnifying Party written notice of such claim or the commencement of such
action or proceeding. Such Indemnifying Party shall have the right, at its option, to compromise
or defend, at its own expense and by its counsel, any such matter involving the asserted liability
of the party seeking such indemnification subject to the consent of the Indemnitee which shall not
be unreasonably withheld, conditioned or delayed. Such notice, and the opportunity to compromise
or defend, shall be a condition precedent to any liability of the Indemnifying Party under the
indemnification agreement contained in said Section 10.1. In the event that any
Indemnifying Party shall undertake to compromise or defend any such asserted liability, it shall
promptly notify the Indemnitee of its intention to do so, and the Indemnitee agrees to cooperate
fully with the Indemnifying Party and its counsel in the compromise of, or defense against, any
such asserted liability. In any event, the Indemnitee shall have the right, at its own expense, to
participate in the defense of such asserted liability, provided that the Indemnifying Party shall
make all final decisions concerning the defense or compromise or settlement of such litigation and
the Indemnitee shall have the right to be separately represented by counsel at the expense of the
Indemnifying Party if there is a conflict of interest in representation by a single counsel.
Notwithstanding the foregoing, no compromise or settlement of any claim, action, liability, etc.
pursuant to this Section 10.3 may be effected by the Indemnifying Party without
Indemnitee’s consent, which shall not be unreasonably withheld, conditioned or delayed, unless (A)
there is no finding or admission of any violation of legal requirements or any violation of the
right of any person or entity and no effect on any other claims that may be made against the
Indemnitee and (B) the sole relief provided is monetary damages that are paid in full by the
Indemnifying Party.




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          10.4. Representation. Each of the parties hereto shall be entitled to be represented
at any action, arbitration or proceeding brought by the other party against a third party under
this Section 10 by its own counsel, at its own expense, and shall fully cooperate with the
other party in any such proceeding, provided it is adequately reimbursed for its out-of-pocket
costs and expenses, excluding attorneys’ fees.




     11. Survival of Indemnification Obligations and Covenants. Except as otherwise
expressly set forth herein, all indemnifications, obligations, agreements and covenants contained
in this Agreement shall survive the Closing Date and shall remain in full force and effect for a
period of ten years following the Closing Date, provided, however, that the obligations relating to
the representations and warranties (except to the extent related to indemnity obligations for third
party claims, with respect to which such representations and warranties shall remain in full force
and effect for the duration of such indemnity obligations) shall remain in full force and effect
for a period of twelve (12) months following the Closing Date.



     12. Dispute Resolution.



          12.1. Negotiation. Any dispute, controversy or claim arising out of or relating to
this Agreement or the breach, termination, or invalidity hereof shall be submitted for negotiation
and settlement in the first instance to the Chief Operating Officer of Synthon, or such person’s
designee of equivalent or superior position, and the Chief Operating Officer of JDS, or such
person’s designee of equivalent or superior position.




          12.2. Arbitration. If the parties are unable to settle a dispute, controversy or
claim hereunder pursuant to Section 12.1, the matter shall be finally resolved by
arbitration in accordance with the rules of American Arbitration Association, except as modified by
this Section 12.2. The number of arbitrators shall be three (3), one (1) of whom is
selected by JDS, one (1) of whom is selected by Synthon and one (1) of whom is selected by Synthon
and JDS (or by the other two (2) arbitrators if the parties cannot agree). The arbitration
proceeding shall be conducted in the English language. The arbitration proceeding shall be brought
in the District of Columbia, unless the parties agree in writing to conduct the arbitration in
another location. The arbitration decision shall be binding and not be appealable to any court in
any jurisdiction. The prevailing party may enter such decision in any court having competent
jurisdiction. Each party shall pay its own expenses of arbitration and the expenses of the
arbitrators shall be equally shared except that if, in the opinion of the arbitrators, any claim by
a party hereto or any defense or objection thereto by the other party was unreasonable, the
arbitrators may in their discretion assess as part of the award any part of the arbitration
expenses of the other party (including reasonable attorneys’ fees) and expenses of the arbitrators
against the party raising such unreasonable claim, defense or objection.




          12.3. Interim Relief. Any party may, without inconsistency with this Agreement, apply
to any court having jurisdiction hereof and seek injunctive relief so as to maintain the status quo
or to prevent irreparable harm as to any matter as to which there is no adequate remedy at law
until such time as the arbitration award is rendered or the controversy is otherwise resolved.




     13. Termination.



          13.1. Termination. Either party shall have the right to terminate this Agreement,
effective upon written notice to the other party, if the Closing has not occurred on or before
December 31, 2005 and the terminating party is not otherwise in material default hereunder.





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          13.2. Survival.




          (a) Provisions of the Agreement which recite by their terms that they apply to a period of
time beyond the Closing Date shall survive the Closing in accordance with their terms.




          (b) In the event that this Agreement is terminated as a result of the default of either party,
the obligations of confidentiality shall survive and continue to bind the parties, and in all other
respects the rights and obligations of the parties shall be determined in accordance with the
provisions of this Agreement.




     14. Specific Performance. Each party agrees that a breach of Section 8.1 or
Section 8.2 of this Agreement will cause irreparable injury to the other, and that such
other party shall be entitled, in addition to any other rights and remedies it may have hereunder
or at law or in equity, to seek an injunction or similar equitable remedy or conservatory and
interim measures enjoining and restraining any such breach or threatened breach thereof.



     15. Assignment. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective assigns and successors in interest. Without limiting the
generality of the foregoing, subject only to Section 3.5, the parties acknowledge that JDS
shall have the right to assign all of its right, title and interest hereunder to any third party.



     16. Choice of Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to its principles of conflicts of
law.



     17. Notices. Any notice, request or other communication required or permitted by this
Agreement to be given by any party to the other shall be in writing and either mailed by registered
or certified mail, return receipt requested, by express delivery service or by facsimile
transmission, addressed to such party as set forth below or to such other address as such party may
previously have designated by like written notice. Notice shall be deemed to have been given upon
receipt.



	 	 	 
	If to JDS:

	 	JDS Pharmaceuticals, LLC
	 

	 	122 East 42nd Street, 41st Floor
	 

	 	New York, New York 10168
	 

	 	Facsimile No.: (212) 682-1946
	 
	 	 
	With a copy to:

	 	Dornbush Schaeffer Strongin & Weinstein, LLP
	 

	 	747 Third Avenue
	 

	 	New York, NY 10017
	 

	 	Attn: Herschel S. Weinstein, Esq.
	 

	 	Facsimile No.: (212) 753-7673






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	If to Synthon:

	 	Synthon Pharmaceuticals, Ltd.
	 

	 	9000 Development Drive
	 

	 	Research Triangle Park, NC 27709
	 

	 	Attn: President & CEO
	 

	 	Facsimile No.: (919) 493-6104
	 
	 	 
	With a copy to:

	 	Hutchison+Mason
	 

	 	3110 Edwards Mill Road, Suite 100
	 

	 	Raleigh, North Carolina 27612
	 

	 	Attn: Fred D. Hutchison, Esq.
	 

	 	Facsimile No.: (919) 829-9696






     18. Miscellaneous.



          18.1. Entire Agreement. This Agreement, the Transition Services Agreement and the
Pledge and Security Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior written or oral agreements or understandings
concerning the subject matter hereof or in conflict with their terms.




          18.2. Amendment and Modification. No modification or waiver of any of the terms of
this Agreement shall be deemed valid unless it is in writing and signed by both parties. The
failure of either party to insist upon the strict performance of any term of this Agreement or the
waiver by either party of any breach under this Agreement shall not prevent the subsequent strict
enforcement of such term nor be deemed a waiver of any subsequent breach.




          18.3. Severability. Should any part or provision of this Agreement be held
unenforceable or in conflict with the applicable laws or regulations of any applicable
jurisdiction, the invalid or unenforceable part or provision shall, provided that it does not go to
the essence of this Agreement, be replaced with a revision which accomplishes, to the extent
possible, the original commercial purpose of such part or provision in a valid and enforceable
manner, and the balance of this Agreement shall remain in full force and effect and binding upon
the parties hereto.




          18.4. Non-Disclosure. Prior to Closing, neither party shall publicly disclose the
subject matter or terms and conditions hereof without the prior consent of the other, except to the
extent of disclosures which either party may be required to make by any applicable Laws or
regulations. On and after Closing, each party shall grant the other the opportunity to review,
comment upon, and approve any proposed press release describing the transactions contemplated
hereby prior to public release.




          18.5. Brokerage Indemnity. Each party represents to the other that no brokerage or
finders fee is due to any third party with respect to the transactions contemplated hereby and
hereby indemnifies the other against any claim therefore arising with respect to such party.




          18.6. Execution; Facsimile Signatures. This Agreement may be executed in
counterparts, each of which will be considered an original and all of which together will be
considered one and the same instrument. Any counterpart may be signed and transmitted by facsimile
with the same force and effect as if such counterpart was an ink-signed original.




[SIGNATURE PAGE FOLLOWS]




30









 








     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.



	 	 	 	 	 
	 	JDS PHARMACEUTICALS, LLC 

 	 
	 	By:  	/s/ Michael Satow
 	 
	 	 	Name:  	Michael Satow                                	 
	 	 	Title:  	Chief Operating Officer 	 
	 



	 	 	 	 	 
	 	SYNTHON PHARMACEUTICALS, INC. 

 	 
	 	By:  	/s/ Peter van Straelen
 	 
	 	 	Name:  	Peter van Straelen                          	 
	 	 	Title:  	President and Chief Operating Officer 	 
	 




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