##### 



ASSET PURCHASE AGREEMENT
 by and among
 AVANIR PHARMACEUTICALS, and
 ALAMO PHARMACEUTICALS, LLC
 on the one hand
 and
 AZUR PHARMA INTERNATIONAL III LIMITED, and
 AZUR PHARMA INC.
 on the other hand
 Dated as of July 2, 2007




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##### 



TABLE OF CONTENTS
 PageARTICLE I DEFINITIONS
    
    
    11.1
    
    Defined Terms
    
    
    11.2
    
    Other Defined Terms
    
    
    121.3
    
    Seller Knowledge
    
    
    13ARTICLE II PURCHASE AND SALE OF ASSETS
    
    
    132.1
    
    Transfer of Assets
    
    
    132.2
    
    Assumption of Liabilities
    
    
    142.3
    
    Purchase Price
    
    
    142.4
    
    Payment of Sales Percentage Amount
    
    
    152.5
    
    Allocation of Purchase Price
    
    
    162.6
    
    Closing Costs; Transfer Taxes and Fees
    
    
    162.7
    
    Further Assurances
    
    
    172.8
    
    Determination of Net Working Capital
    
    
    172.9
    
    Withholding Tax
    
    
    19ARTICLE III CLOSING
    
    
    193.1
    
    Closing
    
    
    193.2
    
    Deliveries at Closing
    
    
    193.3
    
    Consents to Assignment and Transfer of Certain Rights
and Liabilities
    
    
    21ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES AND PARENT
    
    
    214.1
    
    Organization
    
    
    224.2
    
    Authorization
    
    
    224.3
    
    No Conflict or Violation; Consents and Approvals
    
    224.4
    
    Financial Information
    
    
    234.5
    
    Absence of Certain Changes or Events
    
    
    234.6
    
    Title to Purchased Assets and Sufficiency
    
    
    234.7
    
    Material Contracts
    
    
    234.8
    
    Permits
    
    
    244.9
    
    Litigation
    
    
    244.10
    
    Compliance with Laws
    
    
    244.11
    
    Brokers or Finders
    
    
    264.12
    
    Employment, Labor and Employee Benefit Matters
    
    
    264.13
    
    Intellectual Property
    
    
    27




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##### 



Page4.14
    
    Environmental Matters
    
    
    284.15
    
    Inventory
    
    
    284.16
    
    Insurance
    
    
    294.17
    
    Customers
    
    
    294.18
    
    Taxes
    
    
    294.19
    
    Cutler Agreement
    
    
    30ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER
    
    
    305.1
    
    Organization of Buyer
    
    
    305.2
    
    Authorization
    
    
    305.3
    
    Compliance with Applicable Law
    
    
    305.4
    
    Litigation
    
    
    305.5
    
    No Conflict or Violation; Consents and Approvals
    
    305.6
    
    No Brokers or Finders
    
    
    315.7
    
    Sufficiency of Consideration
    
    
    315.8
    
    [* * *]
    
    
    31ARTICLE VI COVENANTS OF THE SELLING PARTIES AND BUYER
    
    
    326.1
    
    Access by Buyer; Confidentiality Agreement
    
    
    326.2
    
    Conduct of Business
    
    
    336.3
    
    Employee Matters
    
    
    346.4
    
    No Additional Representations and Warranties
    
    
    366.5
    
    Disclaimer of Estimates and Projections
    
    
    376.6
    
    Revision of Marketing Materials; Use of Names
    
    376.7
    
    Customer Notifications
    
    
    376.8
    
    Regulatory Matters, Etc
    
    
    386.9
    
    Post Closing Cooperation
    
    
    396.10
    
    Consents
    
    
    406.11
    
    Financing
    
    
    406.12
    
    Transition Services
    
    
    406.13
    
    Transition Services Contracts
    
    
    436.14
    
    Reporting Obligations
    
    
    446.15
    
    Operation of Business by Buyer
    
    
    446.16
    
    [* * *]
    
    
    446.17
    
    Supplement of Disclosure Schedules
    
    
    45ARTICLE VII CONDITIONS TO THE SELLING PARTIES OBLIGATIONS
    
    
    467.1
    
    Representations, Warranties and Covenants
    
    
    46
 
 * * *
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission




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##### 



Page7.2
    
    No Laws or Governmental Orders
    
    
    467.3
    
    Deliveries
    
    
    46ARTICLE VIII CONDITIONS TO BUYERS OBLIGATIONS
    
    
    468.1
    
    Representations, Warranties and Covenants
    
    
    468.2
    
    No Law or Governmental Orders
    
    
    478.3
    
    Deliveries
    
    
    478.4
    
    Consents
    
    
    478.5
    
    Employees
    
    
    47ARTICLE IX POST-CLOSING COVENANTS
    
    
    479.1
    
    Selling Parties Maintenance of Insurance
    
    
    479.2
    
    Survival
    
    
    479.3
    
    Indemnification
    
    
    489.4
    
    Indemnification Procedures
    
    
    499.5
    
    Limitation on Liability
    
    
    529.6
    
    Calculation and Characterization of Damages
    
    
    529.7
    
    Exclusive Remedy
    
    
    529.8
    
    Mitigation of Damages
    
    
    539.9
    
    Certain Damages
    
    
    539.10
    
    Covenant Not to Compete
    
    
    53ARTICLE X MISCELLANEOUS
    
    
    5410.1
    
    Termination
    
    
    5410.2
    
    Assignment
    
    
    5410.3
    
    Cooperation
    
    
    5510.4
    
    Notices
    
    
    5510.5
    
    Governing Law
    
    
    5610.6
    
    Entire Agreement; Amendments and Waivers
    
    
    5610.7
    
    Counterparts
    
    
    5610.8
    
    No Third Party Beneficiaries; Expenses
    
    
    5610.9
    
    Severability
    
    
    5710.10
    
    Titles; Gender; Certain Interpretive Matters
    
    
    5710.11
    
    Publicity
    
    
    5710.12
    
    Exhibits and Schedules; Construction of Certain Provisions
    
    5810.13
    
    Bulk Transfer Laws
    
    
    5810.14
    
    Cumulative Remedies
    
    
    5810.15
    
    Arbitration
    
    
    5810.16
    
    Time of Essence
    
    
    5810.17
    
    Drafting
    
    
    59




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##### 



EXHIBITS
 Exhibit A-1
    
    
    
    Form of Inc. Assignment and Assumption AgreementExhibit A-2
    
    
    
    Form of Limited Assignment and Assumption AgreementExhibit B-1
    
    
    
    Form of Inc. Assignment of ContractsExhibit B-2
    
    
    
    Form of Limited Assignment of ContractsExhibit C
    
    
    
    Form of Assignment of Owned Intellectual PropertyExhibit D
    
    
    
    Form of Assignment and Assumption of Lease




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##### 



ASSET PURCHASE AGREEMENT
 Parent Seller Selling
Parties Azur Inc. Azur Limited Buyer
 RECITALS
   Section 1.1
 AGREEMENT
  DEFINITIONS
 Defined Terms
 Action
 Affiliate




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##### 



Agreement
 Ancillary Agreements
 [* * *]
 Assumed Liabilities
      Section 2.6
 Schedule 1.1(a)
 Assumed Tax Liabilities Section 2.6
 
 [* * *]
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission.




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##### 



Business
 Business Contracts Schedule 1.1(b) Schedule 1.1(c)
 Business Day
 Business Employees Schedule 1.1(d)
 Buyer Employees Section 6.3(a)
 CERCLA et seq
 CIMA Agreements
 Claim
 Closing Net Working Capital Overage
 Closing Net Working Capital Underage
 Clozapine clozapine ®




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##### 



COBRA et seq
 Code
 Confidentiality Agreement
 Contract
 Disclosure Schedules Article IV
 Domain Names Schedule 1.1(e)
 Employee Records
 Encumbrance
 Environmental Laws et seq et seq et seq et seq et seq et seq et seq
 ERISA
 ERISA Affiliate
 Exchange Act
 Excluded Assets




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##### 



Facility
 FDA
 Federal Food, Drug and Cosmetic Act
 Final Net Working Capital Overage
 Final Net Working Capital Underage
 Fixtures and Equipment Schedule 1.1(f)
 GAAP
 Governmental Authority
 Governmental Order
 Hazardous Substance
 Inc. Assumed Liabilities
 Inc. Business Contracts
 Inc. Purchased Assets




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##### 



IND
 Intellectual Property
 Inventory Schedule 1.1(g)
 Know How
 Laws
 Liabilities
 Licensing Revenues
 Licensed Intellectual Property




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##### 



Licenses Schedule
1.1(h).
 Limited Assumed Liabilities
 Limited Business Contracts
 Limited Purchased Assets
 Material Adverse Effect
 Most Recent Fiscal Month End
 NDA
 Net Sales
 Net Sales Baseline provided
 Net Working Capital




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##### 



Ordinary Course of Business Ordinary Course
 Owned Intellectual Property Schedule 1.1(i)
 Patent Rights Schedule 1.1(j)
 Permits
 Permitted Encumbrances
 Permitted Tax Liens
 Person
 Post-Closing Net Working Capital
 Product




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##### 



Product Applications Schedule 1.1(k)
 Product Records provided, however
 Product Registrations Schedule 1.1(l)
 Product Trademarks Schedule 1.1(m)
 Purchased Assets
 (a)
    
    all assets listed on Schedule 1.1(n) hereto;(b)
    
    all Inventory;




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##### 



(c)
    
    all Business Contracts;(d)
    
    all Fixtures and Equipment;(e)
    
    the Permits set forth on Schedule 1.1(o);(f)
    
    the Transferred Intellectual Property;(g)
    
    all Product Applications and Product Registrations;(h)
    
    the Software;(i)
    
    all accounts receivable relating exclusively to the Business; and(j)
    
    the Product Records, including those Product Records set forth on Schedule
1.1(p), other than to the extent they contain information, data, Know-How or trade
secrets of the Selling Parties not used in the Business. Notwithstanding the foregoing, the
Purchased Assets shall not include any of the Excluded Assets.
 Release
 Representative
 Retained Liabilities only
  Section 2.6




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##### 



Section 6.3
 Section 6.3
    Sales Percentage Amount
 Selling Parties Plans
 Software Schedule
1.1(q)
 Supply Agreements
 Target Net Working Capital




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##### 



Tax or Taxes
 Tax Return
 Taxing Authority
 Transferred Intellectual Property
 Unit Purchase Agreement
 UPA Payments
 Other Defined Terms
 Term
    
    SectionAccounting Firm
    
    2.8(c)Assignment and Assumption Agreements
    
    3.2(a)(i)Assignment and Assumption of Lease
    
    3.2(a)(iv)Assignments of Contracts
    
    3.2(a)(ii)Assignment of Owned Intellectual Property
    
    3.2(a)(iii)Buyer Indemnified Parties
    
    9.3(a)Buyer Plans
    
    6.3(c)Buyer Welfare Plans
    
    6.3(d)Claim Notice
    
    9.4(a)Closing
    
    3.1Closing Date
    
    3.1




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##### 



Term
    
    SectionClosing Net Working Capital Estimate
    
    2.8(a)Contingent Cash Purchase Price
    
    2.3Contingent Payment Quarterly Report
    
    Unit Purchase AgreementDamages
    
    9.3(a)Deductible Amount
    
    9.5(a)Final Net Working Capital
    
    2.8(c)Inc. Purchase Price Allocation Schedule
    
    2.5(a)Inc. Up-Front Cash Purchase Price
    
    2.3(b)Indemnified Party
    
    9.4(a)Indemnifying Party
    
    9.4(a)Indemnity Notice
    
    9.4(b)Limited Purchase Price Allocation Schedule
    
    2.5(a)Limited Up-Front Cash Purchase Price
    
    2.3(a)Material Contracts
    
    4.7(a)Notice of Disagreement
    
    2.8(c)Purchase Price
    
    2.3(b)Reimbursement
    
    9.6(a)Sales Percentage Amount Dispute Notice
    
    2.4(b)Selling Parties
    
    PreambleSeller Indemnified Parties
    
    9.3(b)Selling Parties Welfare Plans
    
    6.3(d)SOL Representations and Warranties
    
    9.2(b)Statement of Post-Closing Net Working Capital
    
    2.8(b)Surviving Covenants
    
    9.2(c)Territory
    
    9.10Third-Party Claim
    
    9.4(a)Transfer Fees
    
    2.6Up-Front Cash Purchase Price
    
    2.3WARN Act
    
    6.3(e)
 Seller Knowledge provided, however
 PURCHASE AND SALE OF ASSETS
 Transfer of Assets




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##### 



Section 2.3(a)
 Section 2.3(b)
 Assumption of Liabilities
   Purchase Price Limited Purchase Price Limited Up-Front Cash Purchase Price First
Contingent Payment Second Contingent Payment Contingent Cash Purchase Price Section 2.4 [* * *]
 
 [* * *]
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission.




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Section 6.16 Section 6.16 [* * *]
 Inc. Purchase Price Limited Purchase Price Purchase Price Inc. Up-Front
Cash Purchase Price
 Payment of Sales Percentage Amount
 Section 6.14
 Sales Percentage Amount Dispute Notice
 
 [* * *]
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission.




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Allocation of Purchase Price
 Schedule 2.5(a)(i) Section 2.5(b) Limited Purchase Price Allocation Schedule Schedule 2.5(a)(ii) Inc. Purchase Price Allocation Schedule
 Schedule 2.5(a)(i)
 Closing Costs; Transfer Taxes and Fees Transfer Fee Transfer Fees




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##### 



Further Assurances
 Determination of Net Working Capital
 Section 4.4 Closing Net Working
Capital Estimate
 th Statement of Post-Closing




---



##### 



Net Working Capital Section 4.4
 Notice of Disagreement Final Net Working Capital Final Net Working Capital. Accounting Firm Section 2.8 Final Net Working
Capital




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##### 



Section 2.8(d) Section 2.8(e)
 Section 2.8
 Withholding Tax
 CLOSING
 Closing Section 10.1 Closing th rd Articles VII VIII Closing Date
 Deliveries at Closing
  Exhibit A-1 Inc Assignment and Assumption Agreement Exhibit
A-2 Limited Assignment and Assumption Agreement Assignment and Assumption
Agreements




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Section 3.3 Exhibit B-1 Inc Assignment of Contracts Exhibit B-2 Limited Assignment of
Contracts Assignments of
Contracts
 Exhibit C Assignment of Owned Intellectual Property
 Exhibit D Lease Assignment
   Article VIII




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Article VII
  Consents to Assignment and Transfer of Certain Rights and Liabilities Article IX Article IX
 REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES AND PARENT




---



##### 



Organization
 Authorization
 No Conflict or Violation; Consents and Approvals




---



##### 



Financial Information Schedule 4.4 Schedule 4.4
 Absence of Certain Changes or Events Section 6.2(b)
 Title to Purchased Assets and Sufficiency
 Material Contracts
 Schedule 4.7(a) Material Contracts




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##### 



Permits
 Litigation
    Schedule 4.9(d)
 Compliance with Laws




---



##### 



et seq
 [* * *]
   
 [* * *]
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission.




---



##### 



Brokers or Finders
 Employment, Labor and Employee Benefit Matters
   Schedule 6.3(a)(i)




---



##### 



Intellectual Property




---



##### 



Environmental Matters
        Inventory




---



##### 



Section 4.4 Schedule 4.15 Schedule
4.15
 Insurance Schedule 4.16
 Customers Schedule 4.17
 Taxes




---



##### 



Cutler Agreement
 REPRESENTATIONS AND WARRANTIES OF BUYER
  Organization of Buyer
 Authorization
 Compliance with Applicable Law
 Litigation
 No Conflict or Violation; Consents and Approvals




---



##### 



No Brokers or Finders
 Sufficiency of Consideration
 [* * *]
      
 [* * *]
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission.




---



##### 



COVENANTS OF THE SELLING PARTIES AND BUYER
  Access by Buyer; Confidentiality Agreement
 Section 6.1(a) Section 6.1(b) provided,
however
 Section 6.1




---



##### 



Conduct of Business
 Schedule 6.2 provided,
however
 Section 6.2(a) Schedule 6.2
  Section
6.2(b)




---



##### 



Employee Matters
 Schedule 6.3(a)(i) Schedule 6.3(a)(i) provided Schedule 6.3(a)(ii)




---



##### 



Buyer Plans th
 Buyer Welfare
Plans
 Section 6.3 Section 6.3 Article IX
 WARN Act




---



##### 



Section 6.3
 No Additional Representations and Warranties Article IV ARTICLE IV ARTICLE IV




---



##### 



Disclaimer of Estimates and Projections
 Revision of Marketing Materials; Use of Names
 Removal of Names
 Transitional Use of Names
 No Other Use
 Website Information
 Customer Notifications provided, however, provided, however




---



##### 



Regulatory Matters, Etc.
 provided
 Section
2.7
    Article IX, Article IX,




---



##### 



Post Closing Cooperation
 Section 6.9 Section 6.1(b)




---



##### 



Consents Schedule 6.10
 Financing provided however
 Transition Services
 Transition
Period Sections 6.12(b) (f) (k) Schedule 6.12 FazaClo Transition Services Employees FazaClo
Transition Services Section 6.12 Schedule 6.12




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##### 



Schedule 6.12 FazaClo Monthly Fee Termination Notice
 Sections 6.12(e)-(k) Schedule 6.12 Administrative Transition Services Employees Administrative Transition Services Schedule 6.12 Schedule 6.12 Annual Base Salary Admin Monthly Fee
 Sections 6.12(e)-(k) Schedule 6.12 Transition
Consultants Transition Services Employees Schedule 6.12 Consultant Transition
Services Schedule 6.12 Consultant Monthly Fee Monthly Fee Section
6.12(d) Section 6.12(d) Schedule
6.12




---



##### 



provided Section
6.12
 Section 6.12
 provided




---



##### 



Section 6.12 e.g. Section (b)
       Section 6.12 Section 6.12
 Transition Services Contracts Schedule 6.13 Transition Services Contracts




---



##### 



Article IX Section 6.13
 Reporting Obligations
 Operation of Business by Buyer
 [* * *] Section 6.16
 
 [* * *]
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission.




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##### 



[* * *]
    provided, further, however Section 6.16
 Supplement of Disclosure Schedules Article IV Section 8.1 Seller
Notice th Article IV
 
 [* * *]
    
    Confidential Information, indicated by [***], has
been omitted from this filing and filed separately with the Securities and
Exchange Commission.




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##### 



CONDITIONS TO THE SELLING PARTIES OBLIGATIONS
  Representations, Warranties and Covenants Section
7.1
 No Laws or Governmental Orders
 Deliveries Section 3.2(b)
 CONDITIONS TO BUYERS OBLIGATIONS
  Representations, Warranties and Covenants




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##### 



Section 8.1
 No Law or Governmental Orders
 Deliveries Section 3.2(a)
 Consents Schedule 8.4
 Employees Schedule 6.3(a)(i) Section 6.3
 POST-CLOSING COVENANTS
 Selling Parties Maintenance of Insurance
 Survival
 Section 9.2
 Sections 4.1 4.2 4.6 4.11 5.2 5.6 SOL Representations and Warranties Section 9.3




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##### 



Section 9.3
 Section 6.1(b) Surviving
Covenants Sections 3.3 6.3 6.8 6.13 Article IX Section 9.3(a)(iii) Section 9.3(b)(iv)
 Section 9.2
 Indemnification
 Article IX Buyer Indemnified Parties Section 9.9 Damages




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##### 



Section 3.3 6.8(f)
 Article IX Seller Indemnified Parties
   Sections 3.3 6.3 6.8 6.13
   Indemnification Procedures
 Indemnified Party Third-Party Claim Indemnifying Party Claim Notice




---



##### 



Article IX provided Section 9.4(b) provided, however
 Section 9.4(b) Article IX Section
9.4(c) provided, however




---



##### 



Section 9.4(c)
 Indemnity Notice Claimed
Amount
 Dispute Notice Agreed Amount Contested Amount
 Section 10.15
 Article IX Article IX




---



##### 



Limitation on Liability
 Sections 9.3(a)(i) 9.3(a)(ii) Section 9.3(b)(i) 9.3(b)(ii) Deductible
Amount
 Section 9.3(a)(iii) Section
9.3(b)(iv)
 Sections 9.3(a)(i) 9.3(a)(ii) Section 9.3(b)(i) 9.3(b)(ii)
 Calculation and Characterization of Damages
 Reimbursement
 Article IX
 Exclusive Remedy Sections 3.3 6.3 6.8 6.13 Article
IX




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##### 



Mitigation of Damages
 Certain Damages ARTICLE IX
  Covenant Not to Compete
 Territory
 Section 9.10
 Section 9.10
 Section
9.10




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##### 



Section 9.10
 MISCELLANEOUS
    Section 10.1(a)(ii)
 provided, however Section 10.1(a)(iii)
 Section 6.2(b) Article X
 Assignment




---



##### 



Cooperation Section 3.3 Section 3.3
 Notices




---



##### 



llp
  Governing Law
 Entire Agreement; Amendments and Waivers
 Counterparts
 No Third Party Beneficiaries; Expenses
 provided, however




---



##### 



Article IX provided, however
 Section 2.6
 Severability
 Titles; Gender; Certain Interpretive Matters
 Publicity




---



##### 



Exhibits and Schedules; Construction of Certain Provisions
 Bulk Transfer Laws
 Cumulative Remedies Section 9.7
 Arbitration provided,
however
 Time of Essence




---



##### 



Drafting
 [Signature Page Follows]




---



##### 



Seller:
ALAMO PHARMACEUTICALS, LLC,
a California limited liability corporationBy:
    Avanir Pharmaceuticals, its sole memberBy:Name:
    Keith KatkinTitle:
    President and Chief Executive OfficerParent:
AVANIR PHARMACEUTICALS,
a California corporationBy:Name:
    Keith KatkinTitle:
    President and Chief Executive Officer Signature Page To Asset Purchase Agreement




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##### 



[Signature Page of Buyer]
 Buyer:
AZUR PHARMA INTERNATIONAL III
LIMITEDBy:Name:Title:AZUR PHARMA INC.By:Name:Title: Signature Page To Asset Purchase Agreement




---



##### 



EXHIBIT A-1
 FORM OF INC. ASSIGNMENT AND ASSUMPTION AGREEMENT




---



##### 



EXHIBIT A-2
 FORM OF LIMITED ASSIGNMENT AND ASSUMPTION AGREEMENT




---



##### 



EXHIBIT B-1
 FORM OF INC. ASSIGNMENT OF CONTRACTS




---



##### 



EXHIBIT B-2
 FORM OF LIMITED ASSIGNMENT OF CONTRACTS




---



##### 



EXHIBIT C
 FORM OF ASSIGNMENT OF OWNED INTELLECTUAL PROPERTY




---



##### 



EXHIBIT D
 FORM OF ASSIGNMENT AND ASSUMPTION OF LEASE