Document:

Exhibit 10.1

 

DANVERSBANK

 

SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

 

 

As
Amended and Restated Effective as of September 29, 2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  ARTICLE I
  DEFINITIONS

  	
  1

  
	
  1.1

  	
  BENEFICIARY

  	
  1

  
	
  1.2

  	
  BENEFIT

  	
  1

  
	
  1.3

  	
  BENEFIT COMMENCEMENT DATE

  	
  1

  
	
  1.4

  	
  BOARD

  	
  2

  
	
  1.5

  	
  CAUSE

  	
  2

  
	
  1.6

  	
  CHANGE IN CONTROL

  	
  2

  
	
  1.7

  	
  CODE

  	
  2

  
	
  1.8

  	
  DISABILITY

  	
  2

  
	
  1.9

  	
  EARLY RETIREMENT AGE

  	
  3

  
	
  1.10

  	
  EFFECTIVE DATE

  	
  3

  
	
  1.11

  	
  EMPLOYER

  	
  3

  
	
  1.12

  	
  ERISA

  	
  3

  
	
  1.13

  	
  FINAL AVERAGE COMPENSATION

  	
  3

  
	
  1.14

  	
  401(k) PLAN

  	
  3

  
	
  1.15

  	
  NORMAL RETIREMENT AGE

  	
  3

  
	
  1.16

  	
  PARTICIPANT

  	
  3

  
	
  1.17

  	
  PENSION PLAN

  	
  3

  
	
  1.18

  	
  PIA

  	
  3

  
	
  1.19

  	
  PLAN

  	
  4

  
	
  1.20

  	
  SEPARATION FROM SERVICE

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  BENEFITS

  	
  4

  
	
  2.1

  	
  RETIREMENT BENEFIT

  	
  4

  
	
  2.2

  	
  PRE-RETIREMENT INVOLUNTARY TERMINATION BENEFIT

  	
  4

  
	
  2.3

  	
  DISABILITY BENEFITS

  	
  5

  
	
  2.4

  	
  DEATH BENEFITS

  	
  5

  
	
  2.5

  	
  CHANGE IN CONTROL BENEFITS

  	
  5

  
	
  2.6

  	
  ACTUARIAL ASSUMPTIONS

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  ENTITLEMENT TO BENEFITS

  	
  5

  
	
  3.1

  	
  RETIREMENT

  	
  5

  
	
  3.2

  	
  DEATH

  	
  6

  
	
  3.3

  	
  CERTAIN TERMINATIONS PRIOR TO RETIREMENT

  	
  6

  
	
  3.4

  	
  FORFEITURE

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  DISTRIBUTION OF BENEFITS

  	
  6

  
	
  4.1

  	
  AMOUNT

  	
  6

  
	
  4.2

  	
  METHOD OF PAYMENT

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  BENEFICIARIES; PARTICIPANT DATA

  	
  7

  
	
  5.1

  	
  DESIGNATION OF BENEFICIARIES

  	
  7

  

 

i

 

	
  5.2

  	
  INFORMATION TO BE
  FURNISHED BY PARTICIPANT AND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANT OR
  BENEFICIARIES

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  ADMINISTRATION AND RECORDKEEPING

  	
  8

  
	
  6.1

  	
  ADMINISTRATIVE AND RECORDKEEPING AUTHORITY

  	
  8

  
	
  6.2

  	
  UNIFORMITY OF DISCRETIONARY ACTS

  	
  8

  
	
  6.3

  	
  LITIGATION

  	
  8

  
	
  6.4

  	
  CLAIMS PROCEDURE

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  AMENDMENT

  	
  10

  
	
  7.1

  	
  RIGHT TO AMEND

  	
  10

  
	
  7.2

  	
  AMENDMENT REQUIRED BY LAW

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  TERMINATION

  	
  11

  
	
  8.1

  	
  EMPLOYER’S RIGHT TO TERMINATE PLAN

  	
  11

  
	
  8.2

  	
  AUTOMATIC TERMINATION OF PLAN

  	
  11

  
	
  8.3

  	
  SUCCESSOR TO EMPLOYER

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  MISCELLANEOUS

  	
  11

  
	
  9.1

  	
  LIMITATIONS ON LIABILITY OF EMPLOYER

  	
  11

  
	
  9.2

  	
  CONSTRUCTION

  	
  12

  
	
  9.3

  	
  SPENDTHRIFT PROVISION

  	
  12

  

 

ii

 

DANVERSBANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

Amended and Restated
Effective as of September 29, 2010

 

RECITALS

 

This Danversbank Supplemental Executive Retirement
Plan (the “Plan”) as adopted by Danversbank, formerly known as Danvers Savings
Bank (the “Employer”), effective August 1, 2003, as previously
amended, is hereby further amended and restated as follows:

 

The Plan has been established and will be maintained
for the benefit of certain select management or highly compensated employees of
the Employer. The purpose of the Plan is to offer eligible employees retirement
benefits to supplement their retirement benefits under the Employer’s
tax-qualified retirement plan(s).

 

The Plan is intended to be a “top hat plan” (i.e., an
unfunded deferred compensation plan maintained for members of a select group of
management or highly compensated employees of the Employer), pursuant to
sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”).

 

ARTICLE I

DEFINITIONS

 

The following terms, as used herein, unless a
different meaning clearly is implied by the context, have the following
meanings:

 

1.1           BENEFICIARY
means any individual or individuals so designated in accordance with the
provisions of Article V.

 

1.2           BENEFIT
means the amount accrued by a Participant as determined under Article II.

 

1.3           BENEFIT
COMMENCEMENT DATE means generally the date on which benefits under the Plan
are to be made or commence, which shall be as soon as administratively
practicable following the end of the calendar year in which occurs the
Participant’s Separation from Service with the Employer, as provided herein;
provided, however, that if benefits are payable on account of the Participant’s
Separation from Service within one (1) year following a Change in Control
that also constitutes a “change in control event” within the meaning of
Section 409A of the Code and the regulations promulgated thereunder, the
Benefit Commencement Date shall be within 30 days of the Participant’s
Separation from Service. The preceding notwithstanding, if a Participant’s
Benefit is payable pursuant to Section 2.2 on account of the Participant’s
involuntary termination by the Employer without Cause occurring prior to
attainment of Early Retirement Age or Normal Retirement Age and prior to a
Change in Control, the Participant’s Benefit Commencement Date shall be as soon
as administratively practicable following the end of the calendar year in which
occurs the later of (i) the Participant’s sixtieth (60th) birthday, or
(ii) the Participant’s Separation from Service. In the event the 

 

 

Participant is considered a “specified employee”
within the meaning of Section 409A of the Code, in no event may the
Benefit Commencement Date be earlier than six months after the Participant’s
Separation from Service.

 

1.4           BOARD
means the Board of Directors of the Employer.

 

1.5           CAUSE
means the occurrence, as reasonably determined by the Board, of the willful and
continued failure of a Participant to perform his or her duties, and/or of the
willful action, or failure to act, by a Participant that results in actual or
expected injury to the Employer, financial or otherwise.

 

1.6           CHANGE
IN CONTROL means the earliest date upon which one of the following events
is consummated: the sale of all or substantially all of the assets of the
Danvers Bancorp, Inc. (the “Company”) or the Employer; a merger of the
Company or the Employer into another banking institution or entity where the
Company or the Employer is not the surviving entity; any “person” as such term
is used in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934 (the “Act”) (other than the Company or an entity controlled by the
Company (an “Intermediate Holding Company”)), together with all “affiliates”
and “associates” (as such terms are defined in Rule 12b-2 under the Act)
of such person, shall become the “beneficial owner” (as such term is defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company, an Intermediate Holding Company or of the Employer, as the case may
be, representing twenty percent (20%) or more of the combined voting power of
the Company’s, the Intermediate Holding Company’s or the Employer’s, as the
case may be, then outstanding securities having the right to vote in an
election of the Board of Directors of the Company, the Intermediate Holding
Company or the Employer, as the case may be, in each case other than as a result
of an acquisition of securities directly from the Company, the Intermediate
Holding Company or the Employer; or, whenever individuals who are Continuing
Directors of the Company or of the Employer (as defined hereafter) cease for
any reason to constitute at least a majority of the Board of Directors of the
Company or the Employer, respectively. For this purpose, a “Continuing
Director” shall mean (i) an individual who was a Director of the Company
or the Employer as of January 1, 2000, and (ii) any new Director
whose election after January 1, 2000 to the Board of Trustees or Directors
of the Company or the Employer, as the case may be, was approved by a vote of
at least two-thirds (2/3) of the Trustees/Directors of the Company or the
Employer, as applicable, who were either Trustees or Directors as of
January 1, 2000 or whose election was previously so approved by two-thirds
of the Continuing Directors.

 

1.7           CODE
means the Internal Revenue Code of 1986 and the regulations thereunder, as
amended from time to time.

 

1.8           DISABILITY
means the Participant is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or the Participant is, by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan of the Employer. If the
Participant qualifies to receive Social Security disability benefits, he or she
is deemed to have incurred a Disability.

 

2

 

1.9           EARLY
RETIREMENT AGE means the later of a Participant’s sixtieth (60th) birthday
or the date on which the Participant has completed ten (10) years of
service with the Employer, as reasonably determined by the Board.

 

1.10         EFFECTIVE
DATE means the effective date of this Plan, which shall be August 1,
2003. The effective date of the amendment and restatement of this Plan is as of
April 11, 2008.

 

1.11         EMPLOYER
means Danversbank, its successors and assigns unless otherwise herein provided,
or any other corporation or business organization which, with the consent of
Danversbank, or its successors or assigns, assumes the Employer’s obligations
hereunder.

 

1.12         ERISA
means the Employee Retirement Income Security Act of 1974 and the regulations
thereunder, as amended from time to time.

 

1.13         FINAL
AVERAGE COMPENSATION means the Participant’s average annual base salary and
bonus, unreduced by any voluntary salary reduction contributions made by the
Participant to any Employer-sponsored employee benefit or welfare plan, paid by
the Employer to the Participant during the three (3) calendar years within
the Participant’s last five (5) calendar years of employment with the
Employer which yield the largest total. A Participant’s Final Average
Compensation shall be annualized or pro-rated, as appropriate, in the case of

 

(a)           partial
calendar years of employment, using the Participant’s actual number of years of
base salary and bonus if the Participant had been employed for less than the
three (3) prior calendar years, or

 

(b)           a
multi-year bonus or similarly extraordinary item of compensation which is
attributable to multiple calendar years, in such manner as the Board shall
reasonably determine.

 

1.14         401(k) PLAN
means the SBERA 401(k) Plan as Adopted by Danversbank.

 

1.15         NORMAL
RETIREMENT AGE means a Participant’s sixty-fifth (65th) birthday.

 

1.16         PARTICIPANT
means Kevin T. Bottomley, James McCarthy, John J. O’Neil, L. Mark Panella and
any other individual who is designated by the Board to be a Participant under
the Plan, provided such individual is a member of a select group of the
Employer’s management or highly compensated employees, within the meaning of
sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.

 

1.17         PENSION
PLAN means the SBERA Pension Plan as Adopted by Danversbank.

 

1.18         PIA
means the Primary Insurance Amount under Social Security. When determined at an
age other than Social Security retirement age, PIA reflects future compensation
(from age at determination to Social Security retirement age) equal to
compensation in the last calendar year before the determination date. For the
year of determination, PIA reflects the greater of actual compensation or
compensation in the calendar year before the determination date.

 

3

 

1.19         PLAN
means this Danversbank Supplemental Executive Retirement Plan, as amended from
time to time.

 

1.20         SEPARATION
FROM SERVICE is deemed to occur when the Employer and the Participant reasonably
anticipate that no further services would be performed by the Participant for
the Employer after a certain date or that the level of bona fide service the
Participant would perform for the Employer after such date (whether as an
employee or as an independent contractor) would permanently decrease to no more
than 20 percent of the average level of bona fide services performed by the
Participant for the Employer over the immediately preceding 36-month period (or
period of employment, if less than 36 months).

 

ARTICLE II

BENEFITS

 

2.1           RETIREMENT
BENEFIT. Upon a Participant’s Separation from Service with the Employer
after having attained Early Retirement Age or Normal Retirement Age, the
Participant’s Benefit hereunder, when calculated in the form of annual
installments beginning at the Benefit Commencement Date, shall consist of
fifteen (15) annual payments, each equal to a “designated percentage” of
(a) minus (b) minus (c) minus (d), where:

 

(a)           equals
the Participant’s Final Average Compensation;

 

(b)           equals
the portion of the Participant’s accrued benefit under the Pension Plan which
is attributable to the Employer contributions made thereto, expressed as a
single life annuity payable at Early Retirement Age or Normal Retirement Age,
as applicable;

 

(c)           equals
the portion of the Participant’s account under the 401(k) Plan which is
attributable to Employer contributions (whether matching or discretionary) made
thereto, expressed as a single life annuity payable at Early Retirement Age or
Normal Retirement Age, as applicable; and

 

(d)           equals
one-half (1⁄2) of the amount the Participant would receive annually in PIA
beginning at age sixty-five (65) (or beginning at the actual commencement of
PIA, if earlier).

 

Each Participant’s “designated percentage” is set
forth in Schedule I, attached hereto.

 

The above notwithstanding, if the Participant
terminates employment with the Employer prior to attaining Normal Retirement
Age, the Participant’s Benefit, calculated as provided above, shall be reduced
(unless the Participant’s Separation from Service with the Employer is caused
by the Participant’s death or Disability or happens at any time following a
Change in Control) by three percent (3%) of the Participant’s Benefit
multiplied by the number of full years by which the date of the Participant’s
Separation from Service with the Employer precedes the Participant’s Normal
Retirement Age.

 

2.2           PRE-RETIREMENT
INVOLUNTARY TERMINATION BENEFIT. Subject to Section 2.5, if the
Participant terminates employment with the Employer prior to attaining Early
Retirement Age or Normal Retirement Age, and the termination is due to the
Participant’s

 

4

 

involuntary termination by the Employer without Cause,
the Participant’s Benefit shall be determined under Section 2.1 as though
the Participant had terminated employment voluntarily upon attaining Early
Retirement Age (i.e., the Participant shall receive a Benefit with an
appropriate early retirement reduction), but using the Participant’s Final
Average Compensation, Pension Plan and 401(k) Plan benefits, and PIA as of
his or her actual date of Separation from Service with the Employer.

 

2.3           DISABILITY
BENEFITS. The Participant’s Benefit payable hereunder in the event of the
Participant’s Disability during employment with the Employer but prior to
attaining Normal Retirement Age, shall be determined under Section 2.1 as
though the Participant had terminated employment upon attaining Normal
Retirement Age (i.e., the Benefit shall not decreased by an early retirement
reduction), but using the Participant’s Final Average Compensation, Pension
Plan and 401(k) Plan benefits, and PIA as of his or her date of
Disability.

 

2.4           DEATH
BENEFITS. In the event of a Participant’s Separation from Service with the
Employer on account of the Participant’s death, the Beneficiary’s Benefit
hereunder, when calculated in the form of annual installments beginning at the
Benefit Commencement Date, shall consist of fifteen (15) annual payments, each
equal to a “designated percentage” of the Participant’s Final Average
Compensation. Each Participant’s “designated percentage” is set forth in
Schedule I, attached hereto.

 

2.5           CHANGE
IN CONTROL BENEFITS. In the event of a Participant’s Separation from
Service with the Employer at any time following a Change in Control but prior
to attaining Normal Retirement Age, other than a termination by reason of death
or Disability, the Participant’s Benefit hereunder shall be determined under
Section 2.1 as though the Participant had terminated employment upon
attaining Normal Retirement Age (i.e., the Benefit shall not decreased by an
early retirement reduction), but using the Participant’s Final Average
Compensation, Pension Plan and 401(k) Plan benefits, and PIA as of his or
her date of Separation from Service.

 

2.6           ACTUARIAL
ASSUMPTIONS. All calculations concerning the Participant’s Benefit
hereunder, including calculations of the life annuity value of the
Participant’s benefits under the Pension Plan or the 401(k) Plan, lump sum
equivalence of the Benefit or any other calculations that require the
utilization of actuarial assumptions, shall be calculated using an interest
rate of 4.5 percent and the mortality table prescribed by
Section 417(e) of the Code for qualified retirement plans.

 

ARTICLE III

ENTITLEMENT TO BENEFITS

 

3.1           RETIREMENT.
If the Participant terminates employment with the Employer on or subsequent to
the Participant’s attainment of Early Retirement Age or Normal Retirement Age
for reasons other than death, the Participant’s Benefit, as determined pursuant
to Section 2.1, shall become payable to the Participant according to the
provisions of Article IV.

 

5

 

3.2           DEATH.
If a Participant dies prior to his or her Separation from Service with the
Employer, the Beneficiary’s Benefit, as determined pursuant to
Section 2.4, shall become payable to the Participant’s designated
Beneficiary according to the provisions of Article IV.

 

3.3           CERTAIN
TERMINATIONS PRIOR TO RETIREMENT. If the Participant terminates employment
with the Employer prior to the Participant’s attainment of Normal Retirement
Age as a result of the Participant’s Disability or at any time following a
Change in Control, or if the Participant terminates employment with the
Employer prior to the Participant’s attainment of Early Retirement Age or
Normal Retirement Age as a result of an involuntary termination by the Employer
without Cause that does not follow a Change in Control, the Participant’s
Benefit, as determined pursuant to Section 2.2, Section 2.3 or
Section 2.5, as applicable, shall become payable to the Participant (or to
the Participant’s legal representative, in the case of incapacity) according to
the provisions of Article IV.

 

3.4           FORFEITURE.
The Participant and his or her Beneficiary shall forfeit any Benefit accrued
under the Plan upon the Participant’s Separation from Service with the Employer
prior to the Participant’s Early Retirement Age or Normal Retirement Age,
unless the Participant’s Separation from Service with the Employer was caused
by the Participant’s death, Disability or involuntary termination by the
Employer without Cause, or happens at any time following a Change in Control or
termination of the Plan.

 

ARTICLE IV

DISTRIBUTION OF BENEFITS

 

4.1           AMOUNT.
The amount of Benefits payable to a Participant (or his or her Beneficiary or
Beneficiaries) shall be determined under Article II.

 

4.2           METHOD
OF PAYMENT.

 

(a)           Cash
Distributions. All distributions under the Plan shall be made in cash.

 

(b)           Timing
of Distribution. A Participant or a Participant’s Beneficiary, as
applicable, shall receive or commence to receive his or her Benefit on the
Benefit Commencement Date.

 

(c)           Forms
of Distribution. The Participant’s Benefit shall be paid in fifteen (15)
equal annual installments unless the Participant has elected to receive his or
her Benefit in a lump sum. Such election may only be made at the commencement
of his or her participation in the Plan or during 2008 without restriction if
the Participant does not have a Separation from Service in 2008. Beginning in
2009, a Participant may change his or her election to an allowable alternative
form of distribution by submitting a new election to the Employer, provided
that (i) such new election must be submitted at least one (1) year
prior to his or her Benefit Commencement Date, (ii) such new election
cannot take effect for at least 12 months, and (iii) the new Benefit
Commencement Date must be delayed by at least five (5) years from the
original Benefit Commencement Date.

 

The preceding notwithstanding, in the case of a
Participant whose employment with the Employer terminates for any reason upon
or within one (1) year following a Change in Control

 

6

 

that also constitutes a “change in control event”
within the meaning of Section 409A of the Code and the regulations
promulgated thereunder, the form of his or her Benefit shall be a single lump
sum.

 

If the Participant dies prior to his or her Separation
from Service with the Employer, or after Separation from Service but prior to
the completion of the Participant’s Benefit distribution, the Participant’s
Beneficiary shall receive the Benefit, or the unpaid portion of the Benefit, in
the same form as the Benefit was being, or was to be, distributed prior to the
Participant’s death.

 

ARTICLE V

BENEFICIARIES; PARTICIPANT DATA

 

5.1           DESIGNATION
OF BENEFICIARIES. The Participant from time to time may designate any
person or persons (who may be named contingently or successively) to receive
such Benefits as may be payable under the Plan upon or after the Participant’s
death, and such designation may be changed from time to time by the Participant
by filing a new designation with the Employer. Each designation by the Participant
will revoke all prior designations by the Participant, shall be in the form
prescribed by the Employer and will be effective only when filed in writing
with the Employer during the Participant’s lifetime.

 

In the absence of a valid Beneficiary designation, or
if, at the time any Benefit payment is due to a Beneficiary, there is no living
Beneficiary validly named by the Participant, the Employer shall pay any such
Benefit payment to the Participant’s next of kin.

 

5.2           INFORMATION
TO BE FURNISHED BY PARTICIPANT AND BENEFICIARIES; INABILITY TO LOCATE
PARTICIPANT OR BENEFICIARIES. Any communication, statement or notice
addressed to the Participant or to a Beneficiary at his or her last post office
address as shown on the Employer’s records shall be binding on the Participant
or Beneficiary for all purposes of the Plan. The Employer shall not be obliged
to search for the Participant or any Beneficiary beyond the sending of a
registered letter to such last known address. If the Employer notifies the Participant
or any Beneficiary that he or she is entitled to an amount under the Plan and
the Participant or Beneficiary fails to claim such amount or make his or her
location known to the Employer within three (3) years thereafter, then,
except as otherwise required by law, if the location of one or more of the next
of kin of the Participant is known to the Employer, the Employer may direct
distribution of such amounts to any one or more or all of such next of kin, and
in such proportions as the Employer determines. If the location of none of the
foregoing persons can be determined, the Employer shall have the right to
direct that the amount payable shall be deemed to be a forfeiture and paid to
the Employer, except that the dollar amount of the forfeiture, unadjusted for
imputed interest in the interim, shall be paid by the Employer if a claim for
the Benefit subsequently is made by the Participant or Beneficiary to whom it
was payable. If a Benefit payable to the Participant or Beneficiary is subject
to escheat pursuant to applicable state law, the Employer shall not be liable
to any person for any payment made in accordance with such law.

 

7

 

ARTICLE VI

ADMINISTRATION AND RECORDKEEPING

 

6.1                               ADMINISTRATIVE
AND RECORDKEEPING AUTHORITY.  Except as otherwise specifically provided
herein, the Board shall have the sole responsibility for and the sole control
of the operation, administration and recordkeeping of the Plan, and shall have
the power and authority to take all action and to make all decisions and
interpretations which may be necessary or appropriate in order to administer
and operate the Plan, including, without limiting the generality of the
foregoing, the power, duty and responsibility to:

 

(a)           Resolve
and determine all disputes or questions arising under the Plan, including the
power to determine the rights of the Participant and Beneficiaries, and their
respective Benefits, and to remedy any ambiguities, inconsistencies or
omissions, in the Plan.

 

(b)           Adopt
such rules of procedure and regulations as in its opinion may be necessary
for the proper and efficient administration of the Plan and as are consistent
with the Plan.

 

(c)           Implement
the Plan in accordance with its terms and the rules and regulations
adopted as above.

 

(d)           Make
determinations concerning the crediting and distribution of the Participant’s
Benefits.

 

6.2                               UNIFORMITY OF
DISCRETIONARY ACTS.  Whenever in
the administration or operation of the Plan discretionary actions by the
Employer are required or permitted, such action shall be consistently and
uniformly applied to all persons similarly situated, and no such action shall
be taken which shall discriminate in favor of any particular person or group of
persons.

 

6.3                               LITIGATION.  In any action or judicial proceeding
affecting the Plan, it shall be necessary to join as a party only the
Employer.  Except as may be otherwise
required by law, neither the Participant nor any Beneficiary shall be entitled
to any notice or service of process, and any final judgment entered in such
action shall be binding on all persons interested in, or claiming under, the
Plan.

 

6.4                               CLAIMS
PROCEDURE.  This Section 6.4
is based on final regulations issued by the Department of Labor and published
in the Federal Register on November 21, 2000 and codified at 29
C.F.R. section 2560.503-1.  If any
provision of this Section 6.4 conflicts with the requirements of those
regulations, the requirements of those regulations will prevail.

 

(a)           Initial
Claim.  A Participant or Beneficiary
(hereinafter referred to as a “Claimant”) who believes he or she is entitled to
any Benefit under this Plan may file a claim with the Board.  The Board shall review the claim itself or
appoint an individual or an entity to review the claim.

 

The
Claimant shall be notified within ninety (90) days after the claim is filed
whether the claim is allowed or denied, unless the Claimant receives written
notice from the Board or 

 

8

 

appointee
of the Board prior to the end of the ninety (90) day period stating that
special circumstances require an extension of the time for decision, such
extension not to extend beyond the day which is one hundred eighty (180) days
after the day the claim is filed.

 

If
the Board denies a claim, it must provide to the Claimant, in writing or by
electronic communication:

 

(i)            The specific reasons for the denial;

 

(ii)           A reference to the Plan provision upon which the denial is
based;

 

(iii)          A description of any additional information or material
that the Claimant must provide in order to perfect the claim;

 

(iv)          An explanation of why such additional material or
information is necessary;

 

(v)           Notice that the Claimant has a right to request a review
of the claim denial and information on the steps to be taken if the Claimant
wishes to request a review of the claim denial; and

 

(vi)          A statement of the Claimant’s right to bring a civil action
under ERISA section 502(a) following a denial on review of the initial
denial.

 

(b)                                 Review
Procedures.  A request
for review of a denied claim must be made in writing to the Board within sixty
(60) days after receiving notice of denial. 
The decision upon review will be made within sixty (60) days after the
Board’s receipt of a request for review, unless special circumstances require
an extension of time for processing, in which case a decision will be rendered
not later than one hundred twenty (120) days after receipt of a request for
review.  A notice of such an extension
must be provided to the Claimant within the initial sixty (60) day period and
must explain the special circumstances and provide an expected date of
decision.

 

The
reviewer shall afford the Claimant an opportunity to review and receive,
without charge, all relevant documents, information and records and to submit
issues and comments in writing to the Board. 
The reviewer shall take into account all comments, documents, records and
other information submitted by the Claimant relating to the claim regardless of
whether the information was submitted or considered in the initial benefit
determination.

 

Upon
completion of its review of an adverse initial claim determination, the Board
will give the Claimant, in writing or by electronic notification, a notice
containing:

 

(i)            its decision;

 

(ii)           the specific reasons for the decision;

 

(iii)          the relevant Plan provisions on which its decision is
based;

 

9

 

(iv)          a statement that the Claimant is entitled to receive, upon
request and without charge, reasonable access to, and copies of, all documents,
records and other information in the Plan’s files which is relevant to the
Claimant’s claim for Benefits;

 

(v)           a statement describing the Claimant’s right to bring an
action for judicial review under ERISA section 502(a); and

 

(vi)          if an internal rule, guideline, protocol or other similar
criterion was relied upon in making the adverse determination on review, a
statement that a copy of the rule, guideline, protocol or other similar
criterion will be provided without charge to the Claimant upon request.

 

(c)                                  Calculation of
Time Periods.  For
purposes of the time periods specified in this Section, the period of time
during which a benefit determination is required to be made begins at the time
a claim is filed in accordance with the Plan procedures without regard to
whether all the information necessary to make a decision accompanies the
claim.  If a period of time is extended
due to a Claimant’s failure to submit all information necessary, the period for
making the determination shall be tolled from the date the notification is sent
to the Claimant until the date the Claimant responds.

 

(d)                                 Failure of Plan
to Follow Procedures.  If the Plan
fails to follow the claims procedures required by this Section, a Claimant
shall be deemed to have exhausted the administrative remedies available under
the Plan and shall be entitled to pursue any available remedy under ERISA
section 502(a) on the basis that the Plan has failed to provide a
reasonable claims procedure that would yield a decision on the merits of the
claim.

 

(e)                                  Failure of
Claimant to Follow Procedures.  A Claimant’s compliance with the foregoing
provisions of this Article VI is a mandatory prerequisite to the Claimant’s
right to commence any legal action with respect to any claim for Benefits under
the Plan.

 

ARTICLE VII

AMENDMENT

 

7.1                               RIGHT TO AMEND.  The Board, by written instrument, shall have
the right to amend the Plan at any time and with respect to any provisions
hereof, and all parties hereto or claiming any interest hereunder shall be
bound by such amendment; provided, however, that no such amendment shall
deprive the Participant or any Beneficiary of a right accrued hereunder prior
to the date of the amendment, including the right to receive the payment of his
or her Benefit upon a Benefit entitlement event, or earlier as provided herein.

 

7.2                               AMENDMENT
REQUIRED BY LAW. 
Notwithstanding the provisions of Section 7.1, the Plan may be
amended at any time, retroactively if required, if found necessary, in the
opinion of the Board, in order to ensure that the Plan is characterized as a
non-tax-qualified plan of deferred compensation maintained for members of a
select group of management or highly compensated employees as described under
Code section 451 and ERISA sections 201(2), 301(a)(3) and 401(a)(1), to
conform the Plan to the provisions and requirements of any applicable law
(including ERISA and the Code).

 

10

 

ARTICLE VIII

TERMINATION

 

8.1                               EMPLOYER’S
RIGHT TO TERMINATE PLAN.  The
Board may not terminate the Plan without the written consent of the
Participants.  No such termination shall
deprive the Participant or any Beneficiary of a right accrued hereunder prior
to the date of termination and provided that, upon termination, the Participant
shall become fully and immediately vested in his or her Benefit.  The manner of calculation and timing of distribution
of such Benefit shall depend upon which Section of Article II is
applicable to the Participant (i.e., they shall depend upon the reason for the
Participant’s ultimate Separation from Service with the Employer), except that
a Participant’s voluntary Separation from Service shall be considered an
involuntary termination without Cause for these purposes and the Participant’s
Final Average Compensation, Pension Plan and 401(k) Plan benefits, and PIA
as of the date of Plan termination shall apply. 
Benefits payment to the Participants shall not be accelerated as a
result of a Plan termination except to the extent permitted by Section 409A
of the Code.

 

8.2                               AUTOMATIC
TERMINATION OF PLAN.  Except in
the case of an adoption by a successor to the Employer as provided in Section 8.3,
the Plan shall terminate automatically upon the dissolution of the Employer or
upon the Employer’s merger into or consolidation with any other corporation or
business organization which does not specifically adopt and agree to continue
the Plan; provided, however, that no such termination shall deprive the
Participant or any Beneficiary of a right accrued hereunder prior to the date
of termination and provided that, upon termination, the Participant shall
become fully and immediately vested in his or her Benefit.  The manner of calculation and timing of
distribution of such Benefit shall depend upon which Section of Article II
is applicable to the Participant (i.e., they shall depend upon the reason for
the Participant’s ultimate Separation from Service with the Employer), except
that a Participant’s voluntary Separation from Service shall be considered an
involuntary termination without Cause for these purposes and the Participant’s
Final Average Compensation, Pension Plan and 401(k) Plan benefits, and PIA
as of the date of Plan termination shall apply).

 

8.3                               SUCCESSOR TO
EMPLOYER.  Any
corporation or other business organization which is a successor to the Employer
by reason of a consolidation, merger or purchase of substantially all of the
assets of the Employer shall have the right to become a party to the Plan by
adopting the same by resolution of the entity’s board of directors or other
appropriate governing body.  If, within
thirty (30) days from the effective date of such consolidation, merger or sale
of assets, such new entity does not become a party hereto, as above provided,
the Plan shall be terminated automatically, and the provisions of the foregoing
Sections shall become operative.

 

ARTICLE IX

MISCELLANEOUS

 

9.1                               LIMITATIONS ON
LIABILITY OF EMPLOYER. 
Neither the establishment of the Plan nor any modification thereof, nor
the creation of any account under the Plan, nor the payment of any benefits
under the Plan, shall be construed as giving to the Participant or any other
person any legal or equitable right against the Employer or any officer or
employee thereof, except as provided by law or by any Plan provision.

 

11

 

9.2                               CONSTRUCTION.  If any provision of the Plan is held to be
illegal or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provisions had never been
inserted herein.  For all purposes of the
Plan, where the context permits, the singular shall include the plural, and the
plural shall include the singular. 
Headings of Articles and Sections herein are inserted only for
convenience of reference and are not to be considered in the construction of
the Plan.  The laws of the Commonwealth
of Massachusetts shall govern, control and determine all questions of law
arising with respect to the Plan and the interpretation and validity of its
respective provisions, except where those laws are preempted by the laws of the
United States.  Participation under the
Plan will not give a Participant the right to be retained in the service of the
Employer nor any right or claim to any benefit under the Plan unless such right
or claim has specifically accrued hereunder.

 

The
Plan is intended to be and at all times shall be interpreted and administered
so as to qualify as an unfunded plan of deferred compensation, and no provision
of this Plan shall be interpreted so as to give any individual any right in any
assets of the Employer which right is greater than the rights of any general
unsecured creditor of the Employer.

 

9.3                               SPENDTHRIFT
PROVISION.  No amount
payable to a Participant or any Beneficiary under the Plan will, except as
otherwise specifically provided by law, be subject in any manner to
anticipation, alienation, attachment, garnishment, sale, transfer, assignment
(either at law or in equity), levy, execution, pledge, encumbrance, charge or
any other legal or equitable process, and any attempt to do so will be void;
nor will any Benefit hereunder be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the person entitled
thereto.  Further, (i) the
withholding of taxes from Plan Benefit payments, (ii) the recovery under
the Plan of overpayment of Benefits previously made to the Participant or any
Beneficiary, (iii) if applicable, the transfer of benefit rights from the
Plan to another plan, or (iv) the direct deposit of Plan Benefit payments
to an account in a banking institution (if not actually part of an arrangement
constituting an assignment or alienation) shall not be construed as an
assignment or alienation.

 

In
the event that the Participant’s or any Beneficiary’s Benefits hereunder are
garnished or attached by order of any court, the Employer may bring an action
for a declaratory judgment in a court of competent jurisdiction to determine
the proper recipient of the benefits to be paid under the Plan.  During the pendency of said action, any Benefits
that become payable shall be held as credits to the Participant or Beneficiary
or, if the Employer prefers, paid into the court as they become payable, to be
distributed by the court to the recipient as it deems proper at the close of
said action.

 

12

 

IN WITNESS WHEREOF, the Employer has caused
this Plan to be executed and its seal to be affixed hereto, effective as of September 29,
2010.

 

	
  ATTEST/WITNESS:

  	
   

  	
  DANVERSBANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Michael McCurdy

  	
   

  	
  By:

  	
  /s/ L. Mark Panella

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
  Michael
  McCurdy

  	
   

  	
  Print Name:

  	
  L. Mark Panella

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  10/4/10

  
						

 

13

 

SCHEDULE I

 

	
  Name of Participant

  	
   

  	
  Designated Percentage

  
	
   

  	
   

  	
   

  
	
  Kevin
  T. Bottomley

  	
   

  	
  75%

  

 

 

SCHEDULE I

 

	
  Name of Participant

  	
   

  	
  Designated Percentage

  
	
   

  	
   

  	
   

  
	
  James
  McCarthy

  	
   

  	
  65%

  

 

 

SCHEDULE I

 

	
  Name of Participant

  	
   

  	
  Designated Percentage

  
	
   

  	
   

  	
   

  
	
  John
  J. O’Neil

  	
   

  	
  65%

  

 

 

SCHEDULE I

 

	
  Name of Participant

  	
   

  	
  Designated Percentage

  
	
   

  	
   

  	
   

  
	
  L.
  Mark Panella

  	
   

  	
  60%

  

 

 

PAYMENT ELECTION FORM

 

I.                                        Pursuant to Article IV
of the Danversbank Supplemental Executive Retirement Plan (the “SERP”), the
undersigned elects the following optional form of benefit which will be
actuarially equivalent to the 15 annual payments provided by the SERP:

 

o            Lump Sum

 

II.                                   I understand
that if this election is revised after December 31, 2008, I will be
subject to restrictions set forth in Article IV of the SERP, including a
delayed benefit commencement date of at least five years.

 

Executed this
                        
day of
                                    ,
200      .Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

BY AND AMONG

 

VIVUS, INC.

 

As Seller

 

MEDA AB

 

As Buyer

 

AND

 

With respect to Sections 2.1, 2.7(b), 2.15, 3.1(b),
3.2, 3.3, 3.10, 3.16 and 7.2, only

 

VIVUS REAL ESTATE, LLC

 

 

Dated as of October 1, 2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  THE TRANSACTION

  	
  12

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  The Transaction

  	
  12

  
	
  2.2

  	
  Business Assets

  	
  12

  
	
  2.3

  	
  Excluded Assets

  	
  13

  
	
  2.4

  	
  Assumed Liabilities

  	
  14

  
	
  2.5

  	
  Excluded Liabilities

  	
  15

  
	
  2.6

  	
  The Closing

  	
  16

  
	
  2.7

  	
  Deliveries by Seller Parties

  	
  17

  
	
  2.8

  	
  Deliveries by Buyer to Seller

  	
  18

  
	
  2.9

  	
  Product Identification

  	
  19

  
	
  2.10

  	
  Allocation of Purchase Price

  	
  19

  
	
  2.11

  	
  Further Assurances

  	
  19

  
	
  2.12

  	
  Non-Assignable Assets

  	
  20

  
	
  2.13

  	
  Bulk Sales Law

  	
  21

  
	
  2.14

  	
  Transfer Taxes

  	
  21

  
	
  2.15

  	
  Intercompany Accounts

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS AND WARRANTIES OF SELLER

  	
  21

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization, Qualification and Power

  	
  22

  
	
  3.2

  	
  Authorization of Transaction

  	
  22

  
	
  3.3

  	
  Noncontravention

  	
  22

  
	
  3.4

  	
  Statement of Assets; Financials

  	
  23

  
	
  3.5

  	
  Title to Assets

  	
  23

  
	
  3.6

  	
  Inventory

  	
  24

  
	
  3.7

  	
  Absence of Changes

  	
  24

  
	
  3.8

  	
  Condition of Tangible Assets

  	
  25

  
	
  3.9

  	
  Sufficiency of Assets

  	
  25

  
	
  3.10

  	
  Property

  	
  25

  
	
  3.11

  	
  Intellectual Property

  	
  26

  
	
  3.12

  	
  Contracts

  	
  27

  
	
  3.13

  	
  Litigation

  	
  28

  
	
  3.14

  	
  Taxes

  	
  29

  
	
  3.15

  	
  Employee and Labor Matters

  	
  30

  
	
  3.16

  	
  Environmental Matters

  	
  31

  
	
  3.17

  	
  Compliance with Laws

  	
  34

  
	
  3.18

  	
  Customers and Suppliers

  	
  34

  
	
  3.19

  	
  Permits

  	
  35

  
	
  3.20

  	
  Brokers’ Fees

  	
  35

  
	
  3.21

  	
  No Other Representations or
  Warranties

  	
  35

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  3.22

  	
  Transactions with Affiliates;
  Intercompany Arrangements

  	
  36

  
	
  3.23

  	
  Business Products; Defects;
  Liabilities

  	
  36

  
	
  3.24

  	
  Regulatory Matters

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  REPRESENTATIONS AND WARRANTIES OF BUYER

  	
  38

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization and Corporate Power

  	
  38

  
	
  4.2

  	
  Authorization of Transaction

  	
  39

  
	
  4.3

  	
  Noncontravention

  	
  39

  
	
  4.4

  	
  Brokers’ Fees

  	
  39

  
	
  4.5

  	
  Legal Proceedings

  	
  39

  
	
  4.6

  	
  Investigation by Buyer

  	
  39

  
	
  4.7

  	
  Financing

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  COVENANTS

  	
  40

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Closing Efforts

  	
  40

  
	
  5.2

  	
  Regulatory Matters

  	
  40

  
	
  5.3

  	
  Operation of Business

  	
  40

  
	
  5.4

  	
  Access to Information

  	
  42

  
	
  5.5

  	
  Tax Matters

  	
  42

  
	
  5.6

  	
  Confidentiality

  	
  43

  
	
  5.7

  	
  Employees

  	
  44

  
	
  5.8

  	
  Use of Seller’s Name

  	
  45

  
	
  5.9

  	
  Pre-Closing Sales

  	
  46

  
	
  5.10

  	
  Real Estate Closing Costs

  	
  47

  
	
  5.11

  	
  Notice of Certain Events

  	
  47

  
	
  5.12

  	
  Exclusive License of Certain Assets

  	
  47

  
	
  5.13

  	
  Non-Competition

  	
  47

  
	
  5.14

  	
  No Solicitation

  	
  48

  
	
  5.15

  	
  Government Pricing Reporting

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  CONDITIONS TO CONSUMMATION OF TRANSACTION

  	
  48

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Conditions to Buyer’s and Seller’s
  Obligations

  	
  48

  
	
  6.2

  	
  Conditions to Obligations of Buyer

  	
  49

  
	
  6.3

  	
  Conditions to Obligations of Seller

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  SURVIVAL AND INDEMNIFICATION

  	
  50

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Survival

  	
  50

  
	
  7.2

  	
  Indemnification

  	
  51

  
	
  7.3

  	
  Limitations

  	
  51

  
	
  7.4

  	
  Procedures for Indemnification

  	
  52

  
	
  7.5

  	
  Third Party Claims

  	
  53

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Exclusive Remedy

  	
  54

  
	
  7.7

  	
  Asset
  Acquisition Statement

  	
  54

  
	
  7.8

  	
  Binding
  Arbitration

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII TERMINATION

  	
  55

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Termination of Agreement

  	
  55

  
	
  8.2

  	
  Effect of Termination

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  MISCELLANEOUS

  	
  56

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Press Releases and Announcements

  	
  56

  
	
  9.2

  	
  No Third Party Beneficiaries

  	
  56

  
	
  9.3

  	
  Entire Agreement

  	
  56

  
	
  9.4

  	
  Succession and Assignment

  	
  56

  
	
  9.5

  	
  Counterparts

  	
  56

  
	
  9.6

  	
  Headings

  	
  56

  
	
  9.7

  	
  Notices

  	
  56

  
	
  9.8

  	
  Governing Law

  	
  57

  
	
  9.9

  	
  Exclusive Jurisdiction

  	
  57

  
	
  9.10

  	
  Dispute Resolution

  	
  58

  
	
  9.11

  	
  Amendments and Waivers

  	
  58

  
	
  9.12

  	
  Severability

  	
  58

  
	
  9.13

  	
  Construction

  	
  58

  
	
  9.14

  	
  WAIVER OF JURY TRIAL

  	
  59

  
	
  9.15

  	
  Expenses

  	
  59

  
	
  9.16

  	
  Specific Performance

  	
  59

  

 

iii

 

	
  EXHIBITS

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form
  of Transition Services Agreement

  
	
  Exhibit B

  	
  Form
  of Bill of Sale, Assignment and Assumption Agreement

  
	
  Exhibit C

  	
  Form
  of Warranty Deed

  
	
  Exhibit D

  	
  Form
  of Legal Opinion

  
	
   

  	
   

  
	
  SCHEDULES

  
	
   

  	
   

  
	
  Schedule
  1.10

  	
  Business
  Contracts

  
	
  Schedule
  1.20

  	
  Business
  Products

  
	
  Schedule
  1.46

  	
  Excluded
  Intellectual Property

  
	
  Schedule
  1.61

  	
  Knowledge
  of Seller

  
	
  Schedule
  1.64

  	
  Leases

  
	
  Schedule
  1.69

  	
  Management
  Employee

  
	
  Schedule
  1.70

  	
  Management
  Retention Agreements

  
	
  Schedule
  1.78

  	
  Non-Assignable
  Agreements

  
	
  Schedule
  1.87

  	
  Permitted
  Encumbrances

  
	
  Schedule
  1.93

  	
  Principal
  Equipment

  
	
  Schedule
  1.100

  	
  Receivables

  
	
  Schedule
  2.2(k)

  	
  Exception
  to Business Assets

  
	
  Schedule
  2.2(p)

  	
  Other
  Assets

  
	
  Schedule
  2.3(j)

  	
  Excluded
  Assets

  
	
  Schedule
  2.4(i)

  	
  Assumed
  Liabilities

  
	
  Schedule
  2.7(h)

  	
  Encumbrances

  
	
  Schedule
  5.3

  	
  Operation
  of Business

  
	
  Schedule
  5.3(a)

  	
  Business
  Employees

  
	
  Schedule
  5.7(a)

  	
  Certain
  Business Employees

  
			

 

iv

 

STRICTLY CONFIDENTIAL

 

ASSET PURCHASE AGREEMENT

 

ASSET
PURCHASE AGREEMENT (this “Agreement”)
entered into as of October 1, 2010 by and among MEDA AB, a corporation
organized under the laws of Sweden (the “Buyer”),
VIVUS, Inc., a corporation organized under the laws of the State of Delaware (“Seller”), and, with respect to Sections
2.1, 2.7(b), 2.15, 3.1(b), 3.2, 3.3, 3.10,
3.16 and 7.2 only, Vivus Real Estate, LLC, a New Jersey limited
liability company (“Vivus Real Estate”, and
collectively with Seller, the “Seller Parties”).  Buyer, Seller and Vivus Real Estate are
referred to individually as a “Party” and
collectively herein as the “Parties.”

 

RECITALS

 

A.            Seller is, among other things,
engaged in the business of manufacturing, developing, marketing, distributing
and selling MUSE®, its approved drug for the treatment of Erectile Dysfunction,
or ED, together with applicators and other components developed by Seller for
use specifically in connection therewith (such business and operations as
presently conducted by Seller being referred to herein as the “Business”).

 

B.            The Business is comprised of certain
assets and liabilities currently owned or used by Seller.

 

C.            Seller desires to sell, transfer and
assign to Buyer, and Buyer desires to purchase from Seller, the Business
Assets, and Buyer is willing to assume, the Assumed Liabilities, in each case
as more fully described and upon the terms and subject to the conditions set
forth herein.

 

D.            In connection with the transactions
contemplated by this Agreement, Seller and Buyer shall enter into a Transition
Services Agreement in the form attached hereto as Exhibit A (the “Transition Services Agreement”).

 

NOW,
THEREFORE, in consideration of the representations, warranties and covenants
herein contained, the Parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1           For
purposes of this Agreement, the following terms have the meanings specified or
referred to in this Article I.

 

1.2           “affiliate” of any Person means any
Person that controls, is controlled by, or is under common control with such
Person.  As used herein, the term
“control” (including the terms “controlling”, “controlled by” and “under common
control with”) means the possession, directly or 

 

 

indirectly,
of the power to direct  or cause
the direction of the management and policies of a Person, whether through
ownership of voting securities or other interests, by contract or otherwise.

 

1.3           “Accrued Liabilities” means all
amounts payable to trade creditors not included in Payables and all other
current liabilities (including warranty liabilities) to the extent primarily
relating to or arising from the conduct or operations of the Business in the
Ordinary Course of Business, in each case to the extent such amounts payable
and other current liabilities remain outstanding as of the Closing.

 

1.4           “Agreement” shall have the meaning
ascribed to such term in the Preamble.

 

1.5           “Ancillary Agreements” means the Transition
Services Agreement, the Bill of Sale, Assignment and Assumption Agreement and
the Warranty Deed.

 

1.6           “Asset Acquisition Statement” shall
have the meaning ascribed to such term in Section 2.10.

 

1.7           “Assumed Liabilities” shall have the
meaning ascribed to such term in Section 2.4.

 

1.8           “Business” shall have the meaning
ascribed to such term in paragraph A of the Recitals.  For clarity, Business shall not include
development, manufacture, marketing, selling and distribution activities
related to product and technology not specific to the Business Products.

 

1.9           “Business Assets” shall have the
meaning ascribed to such term in Section 2.2.

 

1.10         “Business Contracts” means all
contracts, agreements, leases, subleases, supply contracts, purchase orders,
sales orders and other instruments primarily used or held for use in the
operation or conduct of the Business and to which Seller is a party or by which
the Business Assets are otherwise bound, including those contracts listed on Schedule
1.10, the Leases and the Business License Agreements.

 

1.11         “business day” means a day that is
not a Saturday, a Sunday or a statutory or civic holiday in the State of
California or Stockholm, Sweden or any other day on which banking institutions
are not required to be open in the State of California or Stockholm, Sweden.

 

1.12         “Business Disclosure Schedule” shall
have the meaning ascribed to such term in Article III.

 

1.13         “Business Employees” shall have the
meaning ascribed to such term in Section 5.3(a).

 

1.14         “Business Income Statements” shall
have the meaning ascribed to such term in Section 3.4(b).

 

2

 

1.15         “Business Intellectual Property”
shall have the meaning ascribed to such term in Section 3.11(a).

 

1.16         “Business Know-How” means
(a) all confidential or proprietary technical and business information
contained in the Books and Records or otherwise transferred to Buyer pursuant
to the Transition Services Agreement, and (b) all Know-How and other Trade
Secrets used to manufacture, formulate, test, package, store, stabilize,
market, distribute or sell the Business Products as of the Closing Date or
required as of the Closing Date to comply with all applicable regulatory
requirements in connection therewith.

 

1.17         “Business License Agreements” means
all agreements to which Seller is a party and under which Seller obtains the
right to use any Business Intellectual Property from a third party.

 

1.18         “Business-Owned Intellectual Property”
means the Business Intellectual Property owned by Seller and primarily used or
held for use in the operation or conduct of the Business.

 

1.19         “Business Plans” shall have the
meaning ascribed to such term in Section 3.15(d).

 

1.20         “Business Products” means MUSE®, Seller’s FDA-approved
pharmaceutical product consisting of the active ingredient alprostadil
for the treatment of Erectile Dysfunction, and any variations and formulations
of MUSE® made by Seller
that contain alprostadil existing as of the
Closing Date, and any applicators or other components developed by Seller for
use specifically in connection therewith, including those set forth on Schedule 1.20.

 

1.21         “Business Records” means copies of
all books, records, ledgers and files or other similar information of Seller
exclusively used or held for use in the operation or conduct of the Business,
including price lists, customer lists, vendor lists, mailing lists, warranty
information, catalogs, records of operation, standard forms of documents,
manuals of operations or business procedures, research materials and product
testing reports required by any Governmental Entity, but excluding any such
items to the extent any applicable Law prohibits their transfer.

 

1.22         “Buyer” shall have the meaning
ascribed to such term in the Preamble.

 

1.23         “Buyer Certificate” shall have the
meaning ascribed to such term in Section 6.3(c).

 

1.24         “Buyer Closing Deliverables” shall
have the meaning ascribed to such term in Section 2.8.

 

1.25         “Buyer Material Adverse Effect” shall
have the meaning ascribed to such term in Section 4.3.

 

1.26         “Buyer Tax Returns” shall have the
meaning ascribed to such term in Section 5.5(a).

 

1.27         “CERCLA” means the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C.
§§ 9601 et seq.

 

3

 

1.28         “Claim” shall have the meaning
ascribed to such term in Section 7.3(a).

 

1.29         “Closing” shall have the meaning
ascribed to such term in Section 2.6.

 

1.30         “Closing Date” shall have the meaning
ascribed to such term in Section 2.6.

 

1.31         “COBRA” means the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended and as codified in
Section 4980B of the Code and Section 601 et. seq. of ERISA.

 

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

 

1.33         “Competing Product” means
trans-urethral erectile dysfunction drugs.

 

1.34         “Confidentiality Agreement” shall
have the meaning ascribed to such term in Section 5.6.

 

1.35         “Control” means, with respect to any
definition relating to any material, document, item of information, data or
Intellectual Property, the possession (whether by ownership or license, other
than a license granted pursuant to this Agreement) by a Party or its affiliates
of the ability to grant to the other Party access to use, ownership, a license
or a sublicense as provided herein under such material, document, item of
information, data or Intellectual Property without violating the terms of, or
requiring any payment (whether or not then due and payable) under, any
agreement or other arrangement with any third party as of the time such Party
would first be required hereunder to grant the other Party such access to use,
ownership, license or sublicense.

 

1.36         “Disputed Claim” shall have the
meaning ascribed to such term in Section 9.10.

 

1.37         “Encumbrance” means any lien,
encumbrance, mortgage, pledge, option, license, collateral assignment, security
interest, easement or other restriction of any kind affecting the Business
Assets, other than Permitted Encumbrances.

 

1.38         “End Date” shall have the meaning
ascribed to such term in Section 7.1.

 

1.39         “Environmental Claim” shall have the meaning
ascribed to such term in Section 3.16(d).

 

1.40         “Environmental Encumbrance” shall
have the meaning ascribed to such term in Section 3.16(d).

 

1.41         “Environmental Law” shall have the
meaning ascribed to such term in Section 3.16(d).

 

1.42         “Environmental Liabilities” means all
obligations and liabilities, whether known or unknown, absolute or contingent,
current or potential, past, present or future, imposed by, under or pursuant to
Environmental Laws, including all obligations and liabilities related to
Remedial 

 

4

 

Actions,
and all fees, disbursements and expenses of counsel, experts, personnel and
consultants based on, arising out of or otherwise in respect of: (i) the
ownership or operation of the Business, the Business Assets, the Owned Real
Property or the properties subject to the Leases, or any other real properties,
assets, equipment or facilities included within the Business Assets, by Seller
or any of its predecessors or Affiliates; (ii) the environmental
conditions existing on the Closing Date on, under, above or about any Owned
Real Property or properties subject to the Leases or any other real properties,
assets, equipment or facilities included in the Business Assets; and
(iii) expenditures necessary to cause any Owned Real Property or
properties subject to the Leases or any other real properties, assets,
equipment or facilities included in the Business Assets, to be in compliance
with any and all requirements of Environmental Laws as of the Closing Date.

 

1.43         “ERISA” shall have the meaning
ascribed to such term in Section 3.15(d).

 

1.44         “ERISA Affiliate” shall have the
meaning ascribed to such term in Section 3.15(d).

 

1.45         “Excluded Assets” shall have the
meaning ascribed to such term in Section 2.3.

 

1.46         “Excluded Intellectual Property”
means the Intellectual Property listed on Schedule 1.46 and the Seller
Marks.

 

1.47         “Excluded Liabilities” shall have the
meaning ascribed to such term in Section 2.5.

 

1.48         “FDA” means the United States Food
and Drug Administration, or any successor agency.

 

1.49         “Fixtures and Supplies” means all
furniture, furnishings and other tangible personal property (including desks,
tables, chairs, file cabinets and other storage devices and office supplies)
owned by Seller and either (a) located at the Premises or (b) primarily used or
held for use in the operation or conduct of the Business, unless such property
is identified on Schedule 2.3(j).

 

1.50         “Fundamental Representations” shall
have the meaning ascribed to such term in Section 7.3(a).

 

1.51         “GAAP” means generally accepted
accounting principles in the United States.

 

1.52         “Governmental Entity” shall have the
meaning ascribed to such term in Section 3.3.

 

1.53         “Health Authority” means the FDA and
any other Governmental Entity in a country where a Business Product is
manufactured, used, tested or sold that is responsible for granting licenses or
approvals permitting or otherwise regulating the clinical testing, manufacture,
pricing or sale of such Business Product in such country.

 

1.54         “Indemnified Party” shall have the
meaning ascribed to such term in Section 7.2(a).

 

1.55         “Indemnifying Party” shall have the
meaning ascribed to such term in Section 7.5(a).

 

5

 

1.56         “INDs” means all Investigational New
Drug Applications sponsored by Seller covering the clinical investigation of
any Business Product and filed with the FDA, or the equivalent application
filed with the relevant Health Authority in a country other than the United
States.

 

1.57         “Intellectual Property” means all
intellectual property rights in any jurisdiction, whether owned or held for use
under license, whether registered or unregistered, including such rights in and
to: (i) trademarks, trade dress, service marks, certification marks, logos
and trade names, and the goodwill associated with the foregoing (collectively,
“Trademarks”);
(ii) (A) patents, (B) patent applications, including all
provisional and non-provisional applications, substitutions, continuations,
continuations-in-part, divisions and renewals, and all patents granted thereon,
(C) patents-of-addition, reissues, reexaminations and extensions or
restorations by existing or future extension or restoration mechanisms,
including supplementary protection certificates or the equivalent thereof, and
(D) inventor’s certificates (collectively, “Patents”);
(iii) inventions, discoveries, improvements, developments, data,
information, processes, methods, practices, techniques, materials, results or
other know-how, in any tangible or intangible form and whether or not
patentable, including specifications, formulations, formulae, algorithms,
technology, test data, including pharmacological, biological, chemical,
biochemical, toxicological and clinical test data, analytical and quality
control data, stability data, studies and procedures, including Product
Registration Data (collectively, “Know-How”);
(iv) original writings and other original works of authorship
(collectively, “Copyrights”); (v) trade
secrets, business and technical information, non-public information and
confidential information and rights to limit the use or disclosure thereof by
any Person (collectively, “Trade Secrets”);
(vi) software, including data files, source code, object code, application
programming interfaces, databases and other software-related specifications and
documentation; (vii) registered domain names and uniform resource locators
(collectively, “Domain Names”); and
(viii) moral rights; in each case, including any registrations of,
applications to register, and renewals and extensions of, any of the foregoing
clauses (i) through (viii) with or by any Governmental Entity in any
jurisdiction.

 

1.58         “Interested Person” shall have the
meaning ascribed to such term in Section 3.22.

 

1.59         “Inventory” means all inventory,
including raw materials, work in process and finished products and sample
products owned by Seller (whether held by Seller or a third party and including
materials in transit), to the extent used or held for use in the operation or
conduct of the Business, and any rights of Seller to the warranties received
from suppliers and any related claims, credits, rights of recovery and setoff
with respect to such Inventory.

 

1.60         “IRS” means the United States
Internal Revenue Service or any successor agency, and, to the extent relevant,
the United States Department of the Treasury.

 

1.61         “knowledge of Seller” means the
actual knowledge of the individuals listed on Schedule 1.61 hereto.

 

1.62         “Legal Proceeding” shall have the meaning
ascribed to such term in Section 3.13.

 

6

 

1.63         “Law” means any national, federal,
state, provincial or local law, statute, ordinance, rule, regulation, code,
order, judgment, injunction or decree of any Governmental Entity.

 

1.64         [Intentionally Omitted]

 

1.65         [Intentionally Omitted]

 

1.66         “Leased Equipment” means the
computers, servers, machinery and equipment and other tangible personal
property leased by Seller for use in the operation or conduct of the Business.

 

1.67         “Licensed Books and Records” means,
in any medium including audio, visual, print, magnetic or electronic, that
portion of all records, data, files and materials Controlled by Seller or its
affiliates as of the Closing Date that are not included in the Business Assets,
but are (a) required to be maintained by Buyer under applicable Law,
(b) necessary for the manufacturing of the Business Products or the
distribution by Buyer of Business Products or (c) otherwise expressly required
to be transferred pursuant to the Transition Services Agreement.

 

1.68         “Loss” or “Losses” shall have the meaning ascribed to such
term in Section 7.2(a).

 

1.69         “Management Employee” means each
Business Employee listed on Schedule 1.69.

 

1.70         “Management Retention Agreements”
means the agreements listed on Schedule 1.70 hereto entered into between
Seller and the Management Employees.

 

1.71         “Marketing Authorizations” means the
approval of each NDA issued by the FDA or relevant Health Authority.

 

1.72         “Material Adverse Effect on the Business”
means any change, effect or circumstance (such item, an “Effect”)
that (a) is, or reasonably could be expected to be, materially adverse to
the Business Assets, financial condition or results of operations of the
Business; provided, however,
that in no event shall any of the following be taken into account in
determining whether there has been or will be a Material Adverse Effect on the
Business:  (i) any Effect that is
the result of general market or political factors or economic factors affecting
the economy as a whole, (ii) any Effect that is the result of factors
generally affecting the industry or specific markets in which the Business
competes (which Effect in the case of each of (i) and (ii) does not
disproportionately affect Seller in any material respect), or (iii) any
Effect arising out of or resulting from actions contemplated by the Parties in
connection with this Agreement or that is attributable to the announcement or
performance of this Agreement or the transactions contemplated by this
Agreement (including a loss of customers or employees); or (b) materially
impairs or delays, or reasonably could be expected to materially impair or
delay, the ability of Seller to consummate the transactions contemplated by
this Agreement or to perform its obligations under this Agreement.

 

1.73         “Material Business Contract” shall
have the meaning ascribed to such term in Section 3.12(a).

 

7

 

1.74         “Material of Environmental Concern”
shall have the meaning ascribed to such term in Section 3.16(d).

 

1.75         “Milestone Payment” shall have the
meaning ascribed to such term in Section 2.1(b).

 

1.76         “NDAs” means all New Drug
Applications, all amendments and supplements thereto, and all additional documentation
required to be filed with the FDA for approval to commence commercial sale of a
Business Product in the United States, or the equivalent application filed with
the relevant Health Authority in a country other than the United States.

 

1.77         “NJDEP” shall have the meaning
ascribed to such term in Section 2.7(k).

 

1.78         “NJDEP Required Consent” shall have
the meaning ascribed to such term in Section 2.7(k).

 

1.79         “Non-Assignable Agreements” means the
agreements listed on Schedule 1.79 and each Business Contract that is
not permitted to be assigned by its terms, for which written consent of the
counter party to such Business Contract permitting assignment to Buyer has not
been obtained.

 

1.80         “Non-Assignable Assets” shall have
the meaning ascribed to such term in Section 2.12(a).

 

1.81         “Notice of Claim” shall have the
meaning ascribed to such term in Section 7.4(a).

 

1.82         “Objection” shall have the meaning
ascribed to such term in Section 7.4(a).

 

1.83         “Ordinary Course of Business” means
the ordinary course of the Business as conducted by Seller, consistent with
past practice.

 

1.84         “Owned Real Property” shall have the
meaning ascribed to such term in Section 3.10(a).

 

1.85         “Party” and “Parties”
shall have the meanings ascribed to such terms in the Preamble.

 

1.86         “Payables” means all accounts payable to trade creditors to the extent
primarily relating to or arising from the conduct or operations of the Business
that are incurred in the Ordinary Course of Business, in each case to the
extent such Payables remain unpaid as of the Closing.

 

1.87         “Permitted Encumbrances” means any
(i) lien for Taxes attributable to the Business or the Business Assets,
assessments and other governmental charges or of landlords, liens of carriers,
warehouseman, mechanics and material men incurred in the Ordinary Course of
Business, in each case for sums not yet due and payable or due but not
delinquent or being contested in good faith by appropriate proceedings,
(ii) liens incurred or deposits made in the Ordinary Course of Business in
connection with workers’ compensation, unemployment insurance and other types
of social security 

 

8

 

or
to secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money
bonds and similar obligations, (iii) purchase money liens to the extent
the underlying obligation is an Assumed Liability, (iv) non-exclusive
licenses granted by Seller in connection with sales of products of the Business
in the Ordinary Course of Business, (v) any zoning or similar restrictions
imposed by Law against the Owned Real Property, and (vi) any Encumbrance
set forth on Schedule 1.87.

 

1.88         “Permits” shall have the meaning
ascribed to such term in Section 3.19.

 

1.89         “Person” means any individual,
corporation, partnership, firm, association, joint venture, joint stock
company, trust, unincorporated organization or other entity, including any
Governmental Entity.

 

1.90         “Post-Closing Period” means any
taxable period or portion of a period that begins after the Closing Date.

 

1.91         “Pre-Closing Period” means any
taxable period or portion of a period that begins on or before the Closing Date
and ends on the Closing Date.

 

1.92         “Premises” means the facilities
located at 735 Airport Road and 745 Airport Road in Lakewood, New Jersey.

 

1.93         “Principal Equipment” means the motor
vehicles, trailers and capital equipment set forth on Schedule 1.93 and
all other computers, servers, machinery and equipment (including any related
spare parts, dies, molds, tools, and tooling held by Seller or any third party)
and other similar items owned by Seller that are used or held for use for the
operation or conduct of the Business.

 

1.94         “Product Registration Data” means
(i) all regulatory files relating to the registration of the Business
Products in Seller’s possession or control, including any licenses, minutes of
meetings and telephone conferences with any Governmental Entity, validation
data, data from and documentation related to preclinical and clinical studies
and tests of the Business Products, including original data, case report forms,
study files relating to the aforementioned studies and tests, and all audit
reports of clinical studies, plus all applications (and amendments thereto) for
regulatory approvals, annual reports and safety reports associated therewith,
drug master files, trial master files and all written correspondence with
Governmental Entities regarding the marketing status of the Business Products;
and (ii) all records maintained under cGMPs or other record keeping or
reporting requirements of Governmental Entities, including all written
correspondence and communications with Governmental Entities regarding the
manufacture of the Business Products, adverse event files, complaint files and
manufacturing records.

 

1.95         “Promotional Material” means all
current and, to the extent reasonably available, historical sales and
promotional material and literature used or held for use in the operation of
the Business, including samples, premium and promotional items, pamphlets and
brochures, historical 

 

9

 

and
current television, radio, internet and other media advertising, historical and
current print advertising and the artwork relating to such sales and
promotional literature.

 

1.96         “Property” means the Owned Real
Property and the Premises.

 

1.97         “Purchase Price” shall have the
meaning ascribed to such term in Section 2.1(a).

 

1.98         “Qualified Loss” shall have the
meaning ascribed to such term in Section 7.3(a).

 

1.99         “RCRA” means the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901 et seq.

 

1.100       “Receivables” means all trade
accounts receivable and other rights to payment from customers of Seller to the
extent primarily relating to or from the conduct or operations of the Business
occurring on or before July 31, 2010 and that are reflected on Schedule
1.100 and those other accounts receivable arising on or before the Closing
Date, in each case, in respect of goods shipped or products sold or services
rendered on behalf of the Business, and any claim, remedy or other right
related thereto.

 

1.101       “Regulatory Filings” means
(i) the Marketing Authorizations, and (ii) all INDs.

 

1.102       “Release” shall have the meaning
ascribed to such term in Section 3.16(d).

 

1.103       “Remedial Action” means all actions
required to (i) clean up, remove, treat or in any other way remediate any
Material of Environmental Concern; (ii) prevent the Release of any Material
of Environmental Concern so that it does not migrate or endanger or threaten to
endanger public health or welfare or the environment; or (iii) perform
studies, investigations, assessments and monitoring related to any such
Material of Environmental Concern.

 

1.104       “Required Consents” shall have the
meaning ascribed to such term in Section 3.3.

 

1.105       “Rules” shall have the meaning
ascribed to such term in Section 7.8.

 

1.106       “SEC” means the United States
Securities and Exchange Commission.

 

1.107       “Seller” shall have the meaning
ascribed to such term in the Preamble.

 

1.108       “Seller Certificate” shall have the
meaning ascribed to such term in Section 6.2(c).

 

1.109       “Seller Closing Deliverables” shall
have the meaning ascribed to such term in Section 2.7.

 

1.110       “Seller Logos” shall have the meaning
ascribed to such term in Section 5.8.

 

1.111       “Seller Marks” shall have the meaning
ascribed to such term in Section 5.8.

 

10

 

1.112       “Seller Parties” shall have the meaning
ascribed to such term in the Preamble.

 

1.113       “Seller Tax Returns” shall have the
meaning ascribed to such term in Section 5.5(a).

 

1.114       “Seller Trade Names” shall have the
meaning ascribed to such term in Section 5.8.

 

1.115       “Statement of Assets” shall have the
meaning ascribed to such term in Section 3.4(a).

 

1.116       “Statement of Assets Date” shall have
the meaning ascribed to such term in Section 3.4(a).

 

1.117       “Substantially Equivalent Employment”
shall have the meaning ascribed to such term in Section 5.7(b).

 

1.118       “Tax Returns” means all reports,
returns, declarations, statements or other information supplied to a taxing
authority in connection with Taxes.

 

1.119       “Taxes”  means
all taxes, including income, gross receipts, ad valorem, value-added, excise,
real property, personal property, sales, use, transfer, withholding,
employment, unemployment, insurance, social security, business license,
business organization, environmental, workers compensation, profits, license,
lease, service, service use, severance, stamp, occupation, windfall profits,
customs, duties, franchise and other taxes imposed by the United States of
America or any state, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such government, and
any interest, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or
dispute thereof, and including any liability for the Taxes of another Person.

 

1.120       “Termination Date” shall have the
meaning ascribed to such term in Section 8.1(c).

 

1.121       “Third-Party Claim” shall have the
meaning ascribed to such term in Section 8.1(c).

 

1.122       “Transaction Materials” shall have
the meaning ascribed to such term in Section 5.6.

 

1.123       “Transferred Employee” shall have the
meaning ascribed to such term in Section 5.7(a).

 

1.124       “Transition Services Agreement” shall
have the meaning ascribed to such term in paragraph D of the Recitals.

 

1.125       “Vivus Real Estate” shall have the
meaning ascribed to such term in the Preamble.

 

1.126       “Warranty Deed” means that Bargain
and Sale Deed with covenants against Grantor’s acts for the Owned Real Property
substantially in the form of Exhibit C hereto.

 

11

 

ARTICLE II

THE TRANSACTION

 

2.1           The
Transaction.  On the Closing Date and effective as of the Closing,
upon the terms and subject to the conditions of this Agreement, (a) Vivus Real
Estate shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase from Vivus Real Estate, all of Vivus Real Estate’s right, title
and interest in and to the Owned Real Estate, and (b) Seller shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer shall purchase from
Seller, all of Seller’s right, title and interest in and to the other Business
Assets, in exchange for:

 

(a)   a payment at the Closing to an account designated by Seller in the
amount of USD $22,000,000 (the “Purchase Price”);

 

(b)   a payment to an account designated by Seller in the amount of
$1,500,000, promptly following the achievement of Buyer, or Buyer’s affiliates,
assigns or licensees, of gross sales of Business Products and any Competing
Products based in whole or in part on the Business Intellectual Property
totaling $50,000,000 or more in any one (1) calendar year during any of the
three (3) full calendar years immediately following the date of this Agreement
(the “Milestone Payment”); and

 

(c)   the assumption by Buyer of the Assumed Liabilities.

 

2.2           Business
Assets.  For purposes of this Agreement, the term “Business Assets” means all of the
assets, properties and rights set forth or described in paragraphs (a)
through (p) below (except in each case for the Excluded Assets):

 

(a)   the Owned Real Property and the Premises;

 

(b)   the Principal Equipment and rights to the Leased Equipment;

 

(c)   the Fixtures and Supplies;

 

(d)   the Inventory;

 

(e)   the Business-Owned Intellectual Property;

 

(f)    the Business Contracts;

 

(g)   the Business Records;

 

(h)   the Permits;

 

(i)    all rights, claims and causes of action, whether or not known as
of the Closing, against third parties primarily relating to the Business Assets
or the operation of the Business;

 

12

 

(j)    all rights of indemnity, warranty rights, guarantees, rights of
contribution, rights to refunds and other rights of recovery primarily relating
to the Business Assets or the operation of the Business, unless any such rights
accrued prior to the Closing;

 

(k)   except as set forth on Schedule 2.2(k), all of the prepaid
expenses and deposits used or held by the Seller for use in connection with the
Business, any of the Business Assets or any Assumed Liability, including
prepaid ad valorem taxes, leases and rentals;

 

(l)    all claims to insurance proceeds or other rights of Seller
against third parties relating from casualty or loss relating to the Business
Assets suffered between the date of this Agreement and the Closing Date, or, to
the extent not so assignable, all proceeds received from insurers or third
parties in respect of such claims;

 

(m)  the Promotional Material;

 

(n)   all goodwill associated with the Business Assets;

 

(o)   all other assets, properties, interests and rights primarily used
or held for use in the conduct or operation of the Business; and

 

(p)   those assets not primarily relating to the operation of the
Business set forth on Schedule 2.2(p).

 

2.3           Excluded
Assets.  Notwithstanding anything in Section 2.2 to the
contrary, it is hereby expressly acknowledged and agreed that the Business
Assets shall not include, and Seller is not selling, conveying, assigning,
transferring or delivering to Buyer, and Buyer is not purchasing, acquiring or
accepting from Seller, any of the rights, properties or assets set forth or
described in paragraphs (a) through (j) below (the rights, properties and
assets expressly excluded by this Section 2.3 from the Business
Assets being referred to herein as the “Excluded Assets”):

 

(a)   all Receivables;

 

(b)   all cash, cash equivalents, intercompany receivables owed to
Seller,  bank deposits or similar cash items of
Seller whether or not arising from the conduct of the Business (including the
Receivables);

 

(c)   all rights to and under insurance policies of Seller, including
rights of proceeds thereunder relating to claims from casualty or loss relating
to the Business Assets suffered prior to the date of this Agreement;

 

(d)   all (i) confidential personnel records pertaining to any
Business Employee; (ii) all records prepared in connection with the sale
of the Business Assets; (iii) other books and records that Seller is
required by Law to retain; provided, however, that Buyer shall have the right to make copies of
any portions of such retained books and records that relate to the Business or
any of the Business Assets (subject to clause (i)); and (iv) any
information management system of Seller other than those 

 

13

 

primarily used or held for use in the operation or
conduct of the Business and residing on computer hardware included as a
Business Asset;

 

(e)   any claim, right or interest of Seller in or to any refund,
rebate, abatement or other recovery for Taxes and other monies paid by Seller
attributable to the Business, together with any interest due thereon or penalty
rebate arising therefrom, the basis of which arises or accrues in any
Pre-Closing Period;

 

(f)    rights to and under the Non-Assignable Assets, including the
Non-Assignable Agreements, subject to Section 2.12 below;

 

(g)   the Excluded Intellectual Property;

 

(h)   all rights, claims or causes of action of Seller arising under
this Agreement and the Ancillary Agreements;

 

(i)    all other assets, properties, interests and rights of Seller not
primarily used or held for use in the conduct or operation of the Business and
not specifically identified as a Business Asset; and

 

(j)    all rights and interests to and under the assets set forth on Schedule
2.3(j).

 

2.4           Assumed
Liabilities.  On the Closing Date, Buyer shall execute and deliver to
Seller the Bill of Sale, Assignment and Assumption Agreement, pursuant to which
Buyer shall accept, assume and agree to pay, perform or otherwise discharge,
when due the liabilities and obligations of Seller pursuant to and under the
Assumed Liabilities.  For purposes of
this Agreement, the term “Assumed Liabilities”
means all liabilities and obligations set forth or described in
paragraphs (a) through (i) below:

 

(a)   all liabilities and obligations with respect to Transferred
Employees, in each case, only to the extent arising or accruing following the
Closing Date, including without limitation all liabilities and obligations
arising or accruing following the Closing Date under bonus, commission or other
compensation plans of Buyer, and excluding liabilities and obligations arising
under the Management Retention Agreements as set forth in Section 2.5(d);

 

(b)   all liabilities and obligations with respect to the resignation or
termination of any Business Employees before or after the Closing Date arising
under the WARN Act, Millville Dallas Airmotive Plant Job Loss Notification Act,
or any state or local statute of similar effect as a result of (i) Buyer’s
conduct, (ii) Buyer’s communications with any Business Employees regarding this
transaction, employment, or terms of employment, (iii) Seller’s communications
with any Business Employees at Buyer’s direction or as required under this
Agreement, (iv) Buyer’s failure to offer a sufficient number of Business
Employees employment to avoid liability under the WARN Act, Millville Dallas Airmotive
Plant Job Loss Notification Act, or any state or local statute of similar
effect, (v) Buyer’s failure to offer the Business Employees, to whom it is
making offers, employment under terms and conditions that are the same or
substantially equivalent to the terms and conditions 

 

14

 

of such Business Employees’ employment with Seller,
so as to result in liability under the WARN Act, Millville Dallas Airmotive
Plant Job Loss Notification Act, or any state or local statute of similar
effect, or (vi) a Governmental Entity determining or ruling that the
termination of the Business Employees in connection with this transaction
resulted in liability under the WARN Act, Millville Dallas Airmotive Plant Job
Loss Notification Act, or any state or local statute of similar effect,
regardless of the quality or quantity of Buyer’s offers of employment to such
Business Employees;

 

(c)   all liabilities and obligations under the Business Contracts and
the Permits, in each case, only to the extent arising or accruing following the
Closing Date, including without limitation any liabilities and obligations
under the Marketing Authorizations during the period between the Closing Date
and the date that Buyer receives notice from the applicable Health Authority
that the transfer of each such Marketing Authorization is complete;

 

(d)   all liabilities and obligations arising out of the operation or
conduct of the Business in the Ordinary Course of Business, in each case, only
to the extent arising or accruing following the Closing Date and not
constituting Excluded Liabilities;

 

(e)   the Permitted Encumbrances;

 

(f)    all liabilities for rebates, adjustments and returns of Business
Product sold after the Closing or allocated to Buyer under Section 2.9;

 

(g)   all chargebacks in respect of Business Products that are received
after the thirty (30) day period following the Closing;

 

(h)   all liabilities and obligations arising out of any claim for
injury to any Person relating to any Business Product (i) that has become a
commercially saleable finished product after the Closing or (ii) that is not a
Business Product within the meaning of Section 2.5(m) and that is sold
after the Closing; and

 

(i)    all obligations and liabilities set forth on Schedule 2.4(i).

 

2.5           Excluded
Liabilities.  Notwithstanding any other provisions in this Agreement,
Buyer shall not assume or be obligated to pay, perform or otherwise discharge
any liabilities or obligations of Seller (or any of its affiliates), whether
direct or indirect, known or unknown, absolute or contingent, pursuant to or
under the Excluded Liabilities.  For
purposes of this Agreement, the term “Excluded Liabilities”
means all obligations and liabilities of Seller and its affiliates other than
the Assumed Liabilities, including such obligations and liabilities set forth
or described in paragraphs (a) through (n) below:

 

(a)   all liabilities and obligations with respect to (i) Taxes
under the Seller Tax Returns, or (ii) any other Taxes pertaining to the Business
incurred with respect to the Pre-Closing Period.

 

15

 

(b)   all liabilities and obligations under Business Plans;

 

(c)   the accrued paid vacation leave of Transferred Employees;

 

(d)   all liabilities and obligations under the Management Retention
Agreements;

 

(e)   intercompany payables to Seller;

 

(f)    all Payables;

 

(g)   all Accrued Liabilities;

 

(h)   all obligations and liabilities of Seller not arising from or
relating to the conduct or operation of the Business in the Ordinary Course of
Business;

 

(i)    all liabilities for rebates, adjustments and returns of Business
Product sold prior to the Closing or allocated to Seller under Section 2.9;

 

(j)    all chargebacks in respect of Business Products that are received
within the thirty (30) day period following the Closing;

 

(k)   all Environmental Liabilities to the extent existing, arising or
accruing, as applicable, at or prior to the Closing;

 

(l)    all liabilities and obligations to the extent relating to an
Excluded Asset;

 

(m)  all liabilities and obligations arising out of any claim for injury
to any Person relating to any Business Product (i) that is a commercially
saleable finished product prior to the Closing or (ii) sold prior to the
Closing; and

 

(n)   all liabilities and obligations of the Seller (and its affiliates)
under this Agreement and the Ancillary Agreements.

 

2.6           The
Closing.  The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place
at: (a) the offices of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California, on such mutually agreeable
date as soon as practicable (and in any event not later than three business
days) after the satisfaction or waiver of all conditions set forth in Article VI
hereof (other than those conditions that, by their terms, are not capable of
being satisfied or waived until the Closing) (the “Closing
Date”); or (b) at such other place, time and date as agreed
in writing by Buyer and Seller.

 

16

 

2.7           Deliveries
by Seller Parties.  At the Closing, Seller or Vivus Real Estate, as
applicable, will deliver or cause to be delivered to Buyer the following (the “Seller Closing Deliverables”):

 

(a)   a duly executed counterpart of the Transition Services Agreement
in the form attached hereto as Exhibit A;

 

(b)   copies of duly executed agreements providing for the termination
of the leases for the Owned Real Property between Seller, as lessee, and Vivus
Real Estate, as lessor, effective as of the Closing, in form and substance
satisfactory to Buyer;

 

(c)   a duly executed counterpart of the Bill of Sale, Assignment and
Assumption Agreement in the form attached hereto as Exhibit B;

 

(d)   the Seller Certificate;

 

(e)   a certificate of Seller’s non foreign status that complies with
the requirements of Section 1445 of the Code, and the Treasury Regulations
promulgated thereunder, and a standard owner’s affidavit for the benefit of
Buyer and Buyer’s title insurance company concerning tenants in possession and
labor and materials provided to the Property by Seller, updating any survey and
affirming that Seller is not a foreign person pursuant to Section 1445 of
the Code, together with any other affidavit reasonably requested by Buyer’s
title insurance company as to facts within Seller’s knowledge;

 

(f)    the Warranty Deed in the form attached hereto as Exhibit C;
an Affidavit of Title of Vivus Real Estate in form reasonably satisfactory to
Buyer’s title insurer; an Affidavit of Consideration; such other instruments
and documents as are customarily required of a Seller in connection with the
closing of the sale of commercial real estate in the State of New Jersey;

 

(g)   a duly executed opinion of Seller’s counsel, Wilson Sonsini
Goodrich & Rosati, Professional Corporation, in the form attached hereto as
Exhibit D.

 

(h)   evidence of the release, discharge or termination of all
Encumbrances on the Business Assets, including evidence of the termination and
removal of all UCC-1 financing statements, the payoff and release of all
associated debt and payment obligations, including those set forth on Schedule
2.7(h), and the discharge of all other monetary Encumbrances, excepting
only Encumbrances appearing on Schedule 1.87;

 

(i)    copies of the Required Consents;

 

(j)    the Business Records and Promotional Materials in hard copy,
electronic format or any such other format as Seller currently retains such
records;

 

(k)   all documents, instruments and writings required to evidence
compliance with, or exclusion or exemption from the operation of, the
requirements of the New Jersey Industrial Site 

 

17

 

Recovery Act (“ISRA”) applicable as a result of the
transactions contemplated by this Agreement, in the form of: (i) a Preliminary
Assessment and Remedial Outcome Action report, issued by a Licensed Site
Remediation Professional acceptable to Seller, which does not specify or
reference any matter or area of environmental concern, does not require or
recommend any funding for any potential remediation of known or unknown
environmental conditions or concerns, and does not require or recommend any
remediation or any other or further action to be undertaken by Seller with
respect to the Business Assets, submitted to New Jersey Department of
Environmental Protection (“NJDEP”);
(ii) a letter from the NJDEP approving a “de minimis quantity exemption”; or
(iii) if the Preliminary Assessment obtained by Seller specifies or references
any matter or area of environmental concern, requires or recommends any funding
for any potential remediation of known or unknown environmental conditions or
concerns, or requires or recommends any remediation or any other or further
action to be undertaken by Seller with respect to the Business Assets, such reports,
workplans and agreements as may be reasonably acceptable to Seller and
sufficient to allow the transactions contemplated by this Agreement to proceed
under ISRA and to allow any required investigation or remediation to proceed
subsequent to the Closing ((i), (ii) or (iii) being referred to as the “NJDEP Required Consent”); and

 

(l)    all other documents, instruments and writings required to be
delivered by Seller at or prior to the Closing Date pursuant to this Agreement
and the Ancillary Agreements, and, subject to Section 2.12, all
other documents, instruments, declarations, affidavits and writings reasonably
requested by Buyer that are reasonably necessary to assign, convey, transfer
and deliver to Buyer, good and valid title to the Business Assets; provided, however, that
Buyer shall be responsible for the payment of all fees for applicable
recordations and filings of documents, instruments, declarations, affidavits or
other writings necessary to effect any applicable transfers or assignments
under this Section 2.7(l).

 

2.8           Deliveries
by Buyer to Seller.  At the Closing, Buyer will deliver or cause to be
delivered to Seller the following (the “Buyer Closing Deliverables”):

 

(a)   the Purchase Price, by wire transfer in immediately available
funds to an account designated by Seller;

 

(b)   a duly executed counterpart of the Transition Services Agreement
in the form attached hereto as Exhibit A;

 

(c)   a duly executed counterpart of the Bill of Sale, Assignment and
Assumption Agreement in the form attached hereto as Exhibit B;

 

(d)   the Buyer Certificate;

 

(e)   such instruments and documents as are customarily required of a
Buyer in connection with the closing of the purchase of commercial real estate
in the State of New Jersey; and

 

18

 

(f)    all other documents, instruments and writings required to be
delivered by Buyer at or prior to the Closing Date pursuant to this Agreement
and the Ancillary Agreements, and all other documents, instruments,
declarations, affidavits and writings reasonably requested by Seller that are
reasonably necessary for Buyer to assume the Assumed Liabilities.

 

2.9           Product
Identification.  For purposes of determining liability under Sections
2.4(f) and 2.5(i), the Parties agree to determine when Business
Products were sold in accordance with this Section 2.9.  The Parties shall use commercially reasonable
efforts to identify the lot or unit number of a particular Business Product and
make reference to the Business Records to determine when that Business Product
was sold.  If a Business Product’s lot or
unit number indicates that it could have been sold either before or after
Closing, the Parties agree that any claim in respect of such Business Product
received by Buyer or Seller (a) within 180 days of the Closing, will be deemed
to have been sold prior to the Closing, and (b) 180 days or more after the
Closing, will be deemed to have been sold after the Closing.

 

2.10         Allocation
of Purchase Price.  Seller and Buyer recognize their mutual obligations
pursuant to Section 1060 of the Code to timely file IRS Form 8594 (the “Asset Acquisition Statement”) with
their respective federal income tax returns. 
Accordingly, Seller and Buyer shall, no later than ninety (90) days
after the Closing Date, attempt to (i) enter into a Purchase Price
allocation agreement providing for the allocation of the Purchase Price among
the Business Assets consistent with the provisions of Section 1060 of the
Code and the Treasury Regulations thereunder and (ii) cooperate in the
preparation of the Asset Acquisition Statement in accordance with clause
(i) for timely filing with their respective federal income tax
returns.  If Seller and Buyer shall have
agreed on a Purchase Price allocation and an Asset Acquisition Statement, then
Seller and Buyer shall file the Asset Acquisition Statement in the form so
agreed and neither Seller nor Buyer shall take a Tax position which is
inconsistent with such Purchase Price allocation in any refund claim, during
the course of any Tax audit, for any financial or regulatory purpose, in any
litigation or investigation or otherwise. 
Each Party shall notify the other Party if it receives notice that any
Tax authority or other Governmental Entity proposes any allocation different
from that made pursuant to this Section 2.10.

 

2.11         Further
Assurances.  On and after the Closing, upon the reasonable request of
a Party, the other Party shall prepare, execute and deliver such other and
further agreements, instruments, certificates, and other documents, and take,
do and perform such other and further actions, as may be reasonably necessary
or appropriate in order to effectuate the purposes and intent of this Agreement
and to consummate the transactions contemplated hereby.  In this regard, Seller and Buyer shall, and
shall cause their respective affiliates to, execute, acknowledge and deliver
all such further conveyances, notices, assumptions, releases and acquittances
and such other instruments, and shall take such further actions, as may be
reasonably necessary or appropriate to transfer and deliver to Buyer and its
affiliates and their successors and assigns, all of the properties, rights,
titles, interests, estates, remedies, powers and privileges intended to be
conveyed to Buyer under this Agreement, and to assure the assumption by Buyer
from Seller and its affiliates and their successors and assigns of the
liabilities and obligations intended to be assumed by Buyer under this
Agreement, and to otherwise make effective the transactions contemplated hereby  (including returning to Seller any 

 

19

 

asset
not contemplated by this Agreement to be a Business Asset, which asset was
delivered to Buyer at the Closing).

 

2.12         Non-Assignable
Assets.

 

(a)   Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign any
Business Contract, agreement, asset, property or right, including any
certificate, approval, authorization or other right, which by its terms or by
Law is nonassignable without the consent of a third party or a Governmental
Entity or is cancelable by a third party in the event of an assignment (each a
“Non-Assignable Asset” and
collectively, the “Non-Assignable Assets”) unless
and until such consent shall have been obtained.

 

(b)   Seller shall use commercially reasonable efforts to obtain such
consents prior to the Closing; provided, however, Seller shall not be required to pay any fee or make
any payment to any third party in order to obtain any such consent, and Buyer
understands and agrees that the procurement of any such consent (other than the
Required Consents) is not a condition to Buyer’s obligation to effect the
Closing.

 

(c)   Buyer and Seller shall use their respective commercially
reasonable efforts to obtain, or to cause to be obtained prior to the Closing,
any consent, substitution, approval, or amendment required to novate all
obligations under any and all Business Contracts or other obligations or
liabilities that constitute Assumed Liabilities or to obtain in writing the
unconditional release of Seller and its affiliates so that, in any such case,
Buyer and its affiliates shall, effective as of the Closing, be solely
responsible for the liabilities and obligations underlying the Assumed
Liabilities; provided, however, Buyer
shall not be required to pay any fee or make any payment to any third party in
order to obtain any such consent or release, and Seller understands and agrees
that the procurement of any such consent or release is not a condition to
Seller’s obligation to effect the Closing.

 

(d)   To the extent permitted by applicable Law, in the event that
written consents to the assignment thereof cannot be obtained prior to the
Closing, such Non-Assignable Assets shall be held, as of and from the Closing
Date, by Seller in trust for Buyer and the covenants and obligations thereunder
shall be performed by Buyer in Seller’s name and all benefits and obligations
existing thereunder shall be for Buyer’s account.  Seller shall take or cause to be taken at
Buyer’s expense such actions in its name or otherwise as Buyer may reasonably
request so as to provide Buyer with the benefits of the Non-Assignable Assets
and to effect collection of money or other consideration that becomes due and
payable under the Non-Assignable Assets, and Seller shall promptly pay over to
Buyer all money or other consideration received by it in respect of all
Non-Assignable Assets.

 

(e)   As of and from the Closing Date, Seller on behalf of itself and
its affiliates, authorizes Buyer, to the extent permitted by applicable Law and
the terms of the Non-Assignable Assets, at Buyer’s expense, to perform all the
obligations and receive all the benefits of Seller or its affiliates under the
Non-Assignable Assets.

 

20

 

(f)    Notwithstanding anything in this Agreement to the contrary,
unless and until any written consent or approval with respect to any
Non-Assignable Asset is obtained, such Non-Assignable Asset shall not
constitute a Business Asset and any associated liability shall not constitute
an Assumed Liability for any purpose under this Agreement, and the failure of
any such written consent or approval to be obtained or the failure of any such
Non-Assignable Asset to constitute a Business Asset or any circumstances
resulting therefrom shall not constitute a Material Adverse Effect on the
Business or a breach by Seller of any representation, warranty, covenant or
agreement contained in this Agreement; provided, however, that it is a condition to Buyer’s obligation to
effect the Closing that Seller obtain the Required Consents.

 

(g)   Following the Closing, Buyer and Seller shall use their respective
commercially reasonable efforts to obtain, or to cause to be obtained,
(i) any remaining consents necessary to assign to Buyer any Non-Assignable
Assets, and (ii) any remaining consent, substitution, approval, or
amendment required to novate all Assumed Liabilities underlying such
Non-Assignable Assets, or to obtain in writing the unconditional release of
Seller and its affiliates so that, in any such case, Buyer and its affiliates
shall be solely responsible for such Assumed Liabilities; provided,
however, neither Party shall be required
to pay any fee or make any payment to any third party in order to obtain any
such consent or release.  Each Party
shall keep the other Party reasonably informed of its efforts to obtain such
consents and releases.

 

2.13         Bulk
Sales Law.  Each of the Parties hereby waives compliance with all
waivable requirements and provisions of any “bulk-transfer” Laws of any
jurisdiction that may otherwise be applicable with respect to the sale of any
or all of the Business Assets to Buyer.

 

2.14         Transfer
Taxes.  Each of Seller and Buyer shall pay fifty percent (50%) of all
applicable transfer Taxes and all recording and filings fees that may be
imposed, assessed or payable by reason of the transactions contemplated by this
Agreement, including the sales, transfers, leases, rentals, licenses and assignments
contemplated hereby (“Transfer Taxes”).

 

2.15         Intercompany
Accounts.  Immediately prior to the Closing, Seller will cancel all of
its intercompany payables to the Business arising on or prior to the Closing
Date.  Immediately prior to the Closing,
Seller will cancel all intercompany receivables of the Business owed to Seller,
and Buyer shall not have any responsibility for payment of such
liabilities.  In no event shall this
provision affect any of the Parties’ rights, duties and obligations in, to and
under any of the Ancillary Agreements, or the obligations between Seller and
Vivus Real Estate arising prior to the Closing Date.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Each
of Seller and, with respect to Sections 3.1(b), 3.2, 3.3, 3.10
and 3.16, Vivus Real Estate hereby represents and warrants to Buyer as
of the date hereof, except as set forth in the Business Disclosure Schedule
provided by Seller to Buyer on the date hereof (the “Business
Disclosure Schedule”) (as to which Buyer acknowledges and agrees
that any matter disclosed pursuant to a 

 

21

 

section,
subsection, paragraph or subparagraph of the Business Disclosure Schedule shall
be deemed disclosed for all other purposes of the Business Disclosure Schedule
as and to the extent the content or context of such disclosure makes it
reasonably apparent, if read in the context of such other section, subsection,
paragraph or subparagraph of the Business Disclosure Schedule, that such
disclosure is applicable to such other section, subsection, paragraph or
subparagraph of the Business Disclosure Schedule), the following:

 

3.1           Organization,
Qualification and Power.

 

(a)   Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.  Seller has all requisite corporate power and
authority and all governmental licenses, authorizations, consents and approvals
required to carry on the Business and to own and use the Business Assets.  Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the character
of the property owned or leased by it or the nature of its activities makes
such qualification necessary, except where the failure to obtain such
qualification would not reasonably be expected to have a Material Adverse
Effect on the Business.

 

(b)   Vivus Real Estate is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of New
Jersey.  Vivus Real Estate has all
requisite limited liability company power and authority and all governmental
licenses, authorizations, consents and approvals required to carry on its
business and to own and use the Business Assets that it purports to own,
including the Owned Real Property.  Vivus
Real Estate is duly qualified to do business as a foreign limited liability
company and is in good standing in each jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to obtain such qualification
would not reasonably be expected to have a Material Adverse Effect on the
Business.

 

3.2           Authorization
of Transaction.  For purposes of Sections 3.2 and 3.3,
“Seller” shall be deemed to include each of the Seller Parties.  Seller has all requisite power and authority
to execute and deliver this Agreement and the Ancillary Agreements to which it
is a party and to perform its obligations hereunder and thereunder.  The execution and delivery by Seller of this
Agreement and the Ancillary Agreements to which it is a party and the consummation
by Seller of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of
Seller.  This Agreement has been duly and
validly executed and delivered by Seller and, assuming due authorization,
execution and delivery by Buyer, constitutes, and when executed at the Closing,
each Ancillary Agreement to which Seller is a party will constitute, valid and
binding obligations of Seller, enforceable against Seller in accordance with
their terms, subject to bankruptcy, insolvency and similar laws affecting the
rights of creditors generally and subject to rules of Law governing specific
performance, injunctive relief and other equitable remedies.

 

3.3           Noncontravention. 
Neither the execution and delivery by Seller of this Agreement or the Ancillary
Agreements to which it is a party, nor the consummation by Seller of the
transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the certificate of 

 

22

 

incorporation
or bylaws of Seller, (b) require on the part of Seller any material action
by, filing with, or any material permit, authorization, consent or approval of,
any U.S. or foreign, federal, state, provincial, regional, county, municipal or
local court, tribunal, administrative agency or commission or other
governmental or regulatory authority or agency or any instrumentality of any of
the foregoing (a “Governmental Entity”),
(c) conflict with, result in a material breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of any obligations under, create in any party the right to
terminate, modify any provision or cancel, or require any notice, consent or
waiver under, any Material Business Contract listed or required to be listed in
Section 3.12 of the Business Disclosure Schedule, except for such
consents and waivers as have been obtained prior to the Closing and are set
forth in Section 3.3 of the Business Disclosure Schedule (each a “Required Consent” and collectively,
the “Required Consents”), (d) result
in the imposition of any Encumbrance upon any of the Business Assets, or
(e) violate in any material respect any order, writ, injunction, decree,
statute, rule or regulation applicable to any of the Business Assets.  All of the Required Consents (i) will
have been duly and validly obtained prior to the Closing and (ii) as of
the Closing, will be in full force and effect and enforceable in accordance
with their terms.

 

3.4           Statement
of Assets; Financials.

 

(a)   Section 3.4(a) of the Business Disclosure Schedule
sets forth a complete and accurate copy of the unaudited pro forma statement of
the carrying value of the Business Assets (the “Statement
of Assets”)  as of July 31,
2010 (the “Statement of Assets Date”).  The Statement of Assets was prepared from,
and are in accordance with, the books and records of Seller, using the same
methodologies and principles as used to prepare the balance sheet included in
the financial statements filed by Seller with the SEC, except as expressly
stated therein.  The Statement of Assets
fairly presents in all material respects the carrying value of the Business
Assets on Seller’s books and records as of the Statement of Assets Date.

 

(b)   Section 3.4(b) of the Business Disclosure Schedule sets
forth copies of (i) the unaudited statement of operations of the Business for
the three- and six-month periods ended on the June 30, 2010; and (ii) the
unaudited statements of operations of the Business for each of the fiscal years
ended December 31, 2008 and December 31, 2009 (such statements, collectively,
the “Business Income Statements”).  Each of the statements of operations included
in the Business Income Statements were compiled from the books and records of
Seller for the periods then ended.  The
Product Revenue and Cost of Goods Sold and Manufacturing Expense set forth in
the Business Income Statements agree with the corresponding category totals in
the consolidated statements of operations included in the financial statements
filed by Seller with the SEC, except as expressly stated therein.

 

3.5           Title
to Assets.  Except as set forth in Section
3.5 of the Business Disclosure Schedule, Seller has, and as of immediately
prior to the Closing will have, good and valid title to, or a valid and binding
leasehold interest or license in, all of the Business Assets, free and clear of
any Encumbrance.

 

23

 

3.6           Inventory. 
All Inventory consists of items of a quantity and quality historically usable
or saleable in the Ordinary Course of Business, and includes items that are
excess and obsolete that have been reserved to estimated net realizable
value in accordance with GAAP, except for items a third party is
contractually obligated to purchase.  No
Inventory has been consigned to any Person. 
Section 3.6 of the Business Disclosure Schedule sets forth
an accounting of the Inventory as of August 31, 2010, including Inventory for
which reserves for excess and obsolete items have been provided on the books
and records of the Company and, with respect only to commercially saleable
finished goods included in Inventory, setting forth lot numbers and expiration
dates.

 

3.7           Absence
of Changes.

 

(a)   Since the Statement of Assets Date, there has not been any event
or condition that has resulted in a Material Adverse Effect on the Business.

 

(b)   Since the Statement of Assets Date, except as set forth on Section 3.7(b)
of the Business Disclosure Schedule, Seller has conducted the Business in the
Ordinary Course of Business and there has not been any:

 

(i)          payment or grant of any right relating to the Business by
Seller to any Interested Person, or any charge by any Interested Person to
Seller relating to the Business, or other transaction between Seller relating
to the Business and any Interested Person, except in any such case for employee
compensation payments in the Ordinary Course of Business;

 

(ii)         damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the Business or any Business Asset in an amount
greater than $100,000;

 

(iii)        transaction or commitment made, or any contract entered into,
by Seller relating to the Business or any Business Asset (including the
acquisition or disposition of any assets) or any relinquishment by Seller of
any contract or other right, in either case, material to the Business and
applying to or affecting the Business subsequent to Closing, other than
transactions and commitments in the Ordinary Course of Business and those
contemplated by this Agreement affecting the Business or any Business Asset in
an amount greater than $100,000;

 

(iv)       change in any method of Tax or financial accounting or
accounting practice or any making of a Tax election or change of an existing
election by Seller with respect to the Business;

 

(v)        a material change in the sales or marketing activities
relating to the Business or generation of sales that are materially different
than those set forth in the Business Income Statements;

 

(vi)       (A) grant of any severance or termination pay or any bonus to
any employee of the Business, (B) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any employee of the 

 

24

 

Business, (C) change in benefits payable under
existing severance or termination pay policies of Seller or employment
agreements to which any employee of the Business is a party or (D) change in
compensation, bonus or other benefits payable to employees of the Business; or

 

(vii)      agreement, undertaking or commitment to do any of the
foregoing.

 

3.8           Condition
of Tangible Assets.  Each item of tangible personal property included
in the Business Assets is in reasonable operating condition, reasonable wear
and tear excepted, for the purposes for which it is currently being used, but
shall otherwise be transferred to Buyer on a “where is” and, as to condition,
“as is” basis.

 

3.9           Sufficiency
of Assets.  Except for (i) the Excluded Assets described in
clauses (a) through (h) and (j) of Section 2.3, (ii) any assets,
personnel or rights used to provide services under the Transition Services
Agreement, (iii) any general corporate or administrative services provided
to the Business by Seller, and (iv) any assets or rights licensed to Buyer
pursuant to Section 5.12, the Business Assets and the Business
Employees include all assets, personnel and rights that are used or held for
use by Seller in the operation or conduct of the Business, and are sufficient
for the conduct of the Business by Buyer immediately following the Closing in
substantially the same manner as presently conducted by Seller.

 

3.10         Property.  For purposes of this Section 3.10,
“Seller” shall be deemed to include each of the Seller Parties.

 

(a)   Section 3.10 of the Business Disclosure Schedule lists
all real property owned by Seller and used primarily for the conduct and
operations of the Business (the “Owned Real Property”).  Except as set forth in Section 3.5 of
the Business Disclosure Schedule, and Schedule 1.86, Seller holds good
and marketable fee simple title to all Owned Real Property, free and clear of
any Encumbrance.

 

(b)   With respect to the Owned Real Property: (i) except for normal
wear and tear, to the knowledge of Seller, each of the Premises is in good
operating condition and repair, (ii) Seller has not leased or otherwise granted
to any Person the right to use or occupy the Property or any portion thereof;
and (iii) other than the rights of Buyer pursuant to this Agreement, there are
no outstanding options, rights of first offer or rights of first refusal to
purchase the Property or any portion thereof or interest therein.

 

(c)   Except as set forth in Section 3.16(a) of the Business
Disclosure Schedule, to the knowledge of Seller, the current use and operation
of the Owned Real Property now is, and at the time of Closing will be, in
compliance in all material respects with all existing Laws. Seller has not
received from any Governmental Entity notice of any violation or potential
violation of Laws applicable to the Property or any part thereof.  There are no condemnation, environmental,
zoning or other land-use regulation proceedings, either instituted or, to the knowledge
of Seller, planned to be instituted, which would detrimentally affect the
Seller’s existing use or operation of the Property, nor has Seller received
notice of any special assessment proceedings affecting the Owned Real Property.

 

25

 

Seller knows of no facts relating to the Owned Real
Property which would prevent Buyer from using and operating the Owned Real
Property after Closing in the manner consistent with the operations of the
Seller in the Owned Real Property prior to Closing.  Water, sewer, gas, electricity, telephone and
other utilities are available to the Owned Real Property.  To the knowledge of Seller, Seller has not
violated any covenants, conditions, restrictions, rights-of-way or easements
which affect the Owned Real Property.

 

3.11         Intellectual
Property. Seller owns or has the right to use all Intellectual Property
used by Seller in, and reasonably necessary for, the operation of the Business
as currently conducted (the “Business Intellectual
Property”).  For the
avoidance of doubt, “Business Intellectual Property” excludes the Excluded
Intellectual Property.  Seller has taken
commercially reasonable measures to protect the proprietary nature of each item
of Business Intellectual Property and to maintain in confidence all Trade
Secrets and confidential information owned or used by Seller in the
Business.  To the knowledge of Seller, no
other person or entity is infringing, violating or misappropriating any of the
Business Intellectual Property.  Seller
has made available to Buyer copies of all written documentation in Seller’s
possession relating to claims or disputes known to Seller concerning any item
of Business Intellectual Property.  To
the knowledge of Seller, none of the activities or operations of the Business
infringes or violates, or constitutes a misappropriation of, any Intellectual
Property rights of any Person.

 

(b)   Section 3.11(b) of the Business Disclosure Schedule
lists (i) all Patents and all registered Trademarks and Copyrights, and
any applications and renewals for any of the foregoing owned by or on behalf of
Seller and used in connection with the Business irrespective if expired or in
force; and (ii) all material licenses, sublicenses and other agreements to
which Seller is a party and pursuant to which Seller or any other Person is
authorized to use any of the Business Intellectual Property or exercise any
other right with regard thereto.

 

(c)   Each item of the Business Intellectual Property is either:
(i) owned solely by Seller free and clear of any Encumbrances; or
(ii) rightfully used and authorized for use by Seller and its successors
in connection with the performance of the Business pursuant to a valid and
enforceable Business License Agreement. 
Seller has all rights in the Business Intellectual Property necessary to
operate the Business as it is now conducted.

 

(d)   No claims (i) challenging the validity, enforceability or
ownership of any of the Business Intellectual Property or (ii) alleging
that the use, manufacture, or sale of the Business Products, infringes on any
Intellectual Property or other proprietary right of any Person have been
asserted against Seller or, to the knowledge of Seller, are threatened by any
Person, nor to the knowledge of Seller does there exist any valid basis for
such a claim.  There are no legal or
governmental proceedings, including interference, re-examination, reissue,
opposition, nullity, or cancellation proceedings pending that relate to any of
the Business-Owned Intellectual Property, other than the prosecution of pending
patent applications, and Seller is not aware of any information indicating that
such proceedings are threatened or contemplated by any Governmental Entity or
any other Person.

 

26

 

(e)   All granted or issued Patents, all registered Trademarks, and all
Copyright registrations included in the Business-Owned Intellectual Property
are valid, enforceable and subsisting to the knowledge of Seller.

 

(f)    Seller is not in violation of any Business License Agreement to
which Seller is a party or otherwise bound relating to any of the Business
Intellectual Property.  Except as noted
in Section 3.11(f) of the Business Disclosure Schedule, neither
Seller nor any of its affiliates is obligated to provide any financial
consideration to any third party, under any Business License Agreement, with
respect to any exercise of rights by Seller or Buyer, as successor to Seller,
in connection with the performance of the Business.

 

(g)   Except as set forth on Section 3.11(g) of the Business
Disclosure Schedule, since January 1, 2008, Seller has obtained from all
employees and consultants who have created any portion of, the Business-Owned
Intellectual Property valid and enforceable written assignments of any such
Business-Owned Intellectual Property, to Seller and has provided true and
complete copies of such assignments to Buyer.

 

(h)   The consummation of the transactions contemplated hereby shall not
alter, impair or otherwise have a Material Adverse Affect on any rights or
obligations of Seller, or Buyer as successor to Seller, in any of the Business
Intellectual Property.

 

3.12         Contracts.

 

(a)   Section 3.12 of the Business Disclosure Schedule
lists, as of the date of this Agreement, the following contracts and agreements
to which Seller is a party or to which any of the Business Assets are bound,
that relate to the conduct or operations of the Business (each a “Material Business Contract”):

 

(i)          any contract for the lease of (x) personal property owned
by Seller to a third party providing for lease payments in excess of $50,000
per annum, (y) personal property from a third party providing for lease
payments in excess of $50,000 per annum, or (z) real property;

 

(ii)         any contract for the procurement of products, inventory,
supplies or other assets, or for the receipt of services, which requires
payment by Seller of more than $50,000 annually for any single contract;

 

(iii)        any contract for the sale or distribution of products,
inventory, supplies or other assets, or for the furnishing of services, which
requires payment to Seller of more than $50,000 annually for any single
contract;

 

(iv)       any contract establishing a partnership or joint venture or
involving a sharing of profits, losses or costs with another Person;

 

(v)        any contract under which Seller has created, incurred,
assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness
for borrowed money or the 

 

27

 

deferred purchase price of property (or capitalized
lease obligations) involving more than $50,000 per annum or under which any
Person has imposed (or may impose) an Encumbrance on any of the Business
Assets;

 

(vi)       any contract with a Governmental Entity;

 

(vii)      any contract under which Seller is restricted from selling,
licensing or otherwise distributing any of the technology or products of the
Business to, or providing services to, customers or potential customers or any
class of customers, in any geographic area, during any period of time or in any
market segment, or otherwise limits the freedom of Seller to compete in any
line of business or with any Person or in any area;

 

(viii)     other than this Agreement, any contract for
the acquisition of any material assets that would be considered Business Assets
or disposition of material assets of the Business, other than in the Ordinary
Course of Business;

 

(ix)        any contract with or for the benefit of any Interested
Person;

 

(x)         any employment or consulting contract;

 

(xi)        any bonus, pension, profit sharing, retirement or any other
form of deferred compensation plan or practice, or any severance agreement,
arrangement or other contract;

 

(xii)       any contract providing for the payment of any cash or other
compensation or benefits upon the consummation of the transactions contemplated
by this Agreement; and

 

(xiii)      any other contract that is material to the
conduct or operations of the Business.

 

(b)   Seller has made available to Buyer a complete and accurate copy of
each Material Business Contract.  With
respect to each Material Business Contract so listed: (i) the contract is,
as of the date hereof, legal, valid, binding and enforceable against Seller and
in full force and effect, subject to bankruptcy, insolvency and similar laws
affecting the rights of creditors generally and subject to rules of Law
governing specific performance, injunctive relief and other equitable remedies;
(ii) neither Seller nor, to the knowledge of Seller, any other party
thereto, is, as of the date hereof, in material breach or violation of, or
default under, any such Material Business Contract; and (iii) no event or
circumstance, to the knowledge of Seller, has occurred that, with notice, would
constitute an event of default thereunder.

 

3.13         Litigation. 
Except as set forth in Section 3.13 of the Business Disclosure Schedule,
there is no action, suit, proceeding, claim, arbitration or to the knowledge of
Seller, investigation, before any Governmental Entity (a “Legal
Proceeding”) which is pending or, to the knowledge of Seller,
threatened against Seller in connection with the Business or otherwise
affecting the Business Assets in any material respect.

 

28

 

3.14         Taxes.

 

(a)   To the extent that failure to do so would adversely impact Buyer,
the Business Assets, Buyer’s use of the Business Assets, the Business or
Buyer’s operation of the Business, or might result in an Encumbrance upon any
of the Business Assets or in any liability of Buyer for any Pre-Closing Period
Taxes, Seller has:

 

(i)          prepared and timely filed all Tax Returns it was required
to file relating to any and all Taxes attributable to Seller for all
Pre-Closing Periods and such Returns are true and correct in all material
respects and have been completed in accordance with applicable Law; and

 

(ii)         paid all Taxes and withheld with respect to the Transferred
Employees and timely remitted to the appropriate Governmental Entity all
federal, state and foreign income, payroll and other Taxes required to be
withheld or paid.

 

(b)   To the extent that doing so would adversely impact Buyer, the
Business Assets, Buyer’s use of the Business Assets, the Business or Buyer’s
operation of the Business, or might result in an Encumbrance upon any of the
Business Assets or in any liability of Buyer for any Pre-Closing Period Taxes,
Seller has paid all Taxes (whether or not shown on any Tax Returns) for all
Pre-Closing Periods.

 

(c)   Except as set forth in Section 3.14(c) of the Business
Disclosure Schedule, no audit or other examination of any Tax Return of Seller
is presently in progress, nor has Seller been notified of any request for such
an audit or other examination, pursuant to which an assessment would adversely
impact Buyer, the Business Assets, Buyer’s use of the Business Assets, the
Business or Buyer’s operation of the Business, or might result in an
Encumbrance upon any of the Business Assets or in any liability of Buyer for
any Pre-Closing Period Taxes.  To the
knowledge of Seller, no action or proceeding is contemplated or threatened for
the assessment or collection of any Taxes.

 

(d)   No Tax deficiency is outstanding, assessed or proposed against the
Seller that would adversely impact Buyer, the Business Assets, Buyer’s use of
the Business Assets, the Business or Buyer’s operation of the Business, or
might result in an Encumbrance upon any of the Business Assets or in any
liability of Buyer for any Pre-Closing Period Taxes.  There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any
Pre-Closing Period Taxes.

 

(e)   Seller has not been and will not as of the Closing Date be a
“United States real property holding corporation” within the meaning of
Section 897 of the Code.

 

(f)    Seller is not a party to any Tax allocation, sharing or
indemnification agreement with respect to the Business or any Business Assets.

 

29

 

3.15         Employee
and Labor Matters.

 

(a)   Section 3.15(a) of the Business Disclosure Schedule
sets forth, as to each Business Employee (including any Business Employee who
is on a leave of absence), (i) such Business Employee’s internal
identification number and title; (ii) date of hire; (iii) current
annual salary or wage rate; (iv) all bonuses, commissions and incentives paid
at any time during the past twelve (12) months; (v) last compensation changes
and the dates on which such changes were made; (vi) any specific bonus,
commission or incentive plans or agreements for or with them; (vii) each
employee benefit plan in which they participate; (viii) any outstanding loans
or advances made by or to them; (ix) current status as either active or on
leave and, if on leave, the type and date of such leave and the date on which
such employee is expected to return to active service.

 

(b)   The employment of each Business Employee is terminable by Seller
at will and, except as provided in the Management Retention Agreements, no
Business Employee is entitled to severance pay, a notice period prior to
termination or other benefits following termination of such Business Employee’s
employment with Seller, except as required by applicable Law.

 

(c)   As relates to the Business, there is not presently pending or
existing, and to the knowledge of Seller, there is not threatened, (i) any
strike, slowdown, picketing, work stoppage or material labor trouble, or
(ii) any application for certification of a collective bargaining
agent.  Since January 1, 2005,
Seller has not experienced (i)  any strike, slowdown, picketing, or work
stoppage, or (ii) any application for certification of a collective
bargaining agent.

 

(d)   Section 3.15(d) of the Business Disclosure Schedule
contains a complete and accurate list of each material employee benefit plan
(including compensation plans) and each employment agreement (excluding offer
letters for at-will employment), including each “employee
benefit plan” within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) which is maintained by
Seller or any affiliate within the meaning of Section 414(b), (c), (m), or
(o) of the Code and the regulations thereunder (“ERISA
Affiliate”) for the benefit of any current or former Business
Employees (the “Business Plans”).  With respect to each Business Plan, a copy of
the Business Plan and a summary of the Business Plan’s materials terms has been
made available to Buyer.  With respect to
the Transferred Employees, Seller has performed in all material respects all
obligations required to be performed by it under each Business Plan and each
Business Plan has been established and maintained in all material respects in
accordance with its terms and in material compliance with all applicable Laws,
including ERISA or the Code.  At no time
has Seller or any ERISA Affiliate contributed to or been obligated to
contribute to any “multiemployer plan” (as defined in Section 3(37) of
ERISA) or to any plan described in Section 413 of the Code.  Neither the Seller nor any ERISA Affiliate
has ever sponsored, participated in or contributed to any pension plan related
to the Business which is subject to Title IV of ERISA or Section 412 of
the Code.  No Business Plan promises or
provides retiree medical benefits to any Business Employee, or to a multiple
employer welfare benefit arrangement (as defined in Section 3(40)(A) of
ERISA.

 

30

 

(e)   Section 3.15(e) of the Business Disclosure Schedule
contains an accurate and complete list of all sales representatives and
independent contractors currently engaged by the Business, including payment
arrangements and a brief description of jobs or projects currently in
progress.  The engagement of any sales
representative or independent contractor of the Business may be terminated by
Seller without payment or other penalty.

 

(f)    Seller is in compliance, in all material respects, with all Laws
relating to employment practices.  Seller
has delivered to Buyer accurate and complete copies of all current employee
manuals and handbooks, material disclosure materials and material policy
statements.

 

(g)   To the knowledge of Seller, no Business Employee is a party to or
is bound by any confidentiality agreement, noncompetition agreement or other
contract (with any Person) that may have an adverse effect on (i) the
performance by such employee of any of his or her duties or responsibilities as
an employee of Seller or (ii) the Business.

 

(h)   Each Business Plan that is intended to be a qualified plan within
the meaning of Section 401(a) of the Code is so qualified, and Seller has delivered
or caused to be delivered to Buyer the most recently received IRS determination
letter or IRS opinion letter issued with respect to such plan.

 

3.16         Environmental
Matters.  For purposes of this Section
3.16, “Seller” shall be deemed to include each of the Seller Parties.

 

(a)   Except as set forth in Section 3.16(a) of the Business
Disclosure Schedule, with respect to the Business, (i) Seller has complied
in all material respects with all applicable Environmental Laws, and
(ii) there is no pending or, to the knowledge of Seller, threatened civil
or criminal litigation, written notice of violation, formal administrative
proceeding, investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving the Business that would
have a Material Adverse Effect on the Business.

 

(b)   Section 3.16(b) of the Business Disclosure Schedule
lists all of the Permits relating to the Business and required to be held under
or in connection with any Environmental Laws, and Seller has all such Permits,
unless the failure to have such Permits would not have had a Material Adverse
Effect on the Business.

 

(c)   Seller has delivered to Buyer or made available for inspection by
Buyer correct and complete copies of all environmentally-related audits,
studies, reports, analyses and results of investigations that have been
performed with respect to the Owned Real Property, including all Phase I and
Phase II environmental assessments performed on the Owned Real Property by or
on behalf of Seller, all environmentally-related or safety-related audits or
reports, and correspondence to or from any Governmental Entity or third party
regarding violations of any Environmental Law in connection with the Owned Real
Property, delivered or received by Seller within the last ten (10) years and in
the possession of Seller, all of which are set forth in Section 3.16(c)
of the Business Disclosure Schedule.

 

31

 

(d)         For purposes of this
Agreement:

 

“Environmental Claim” means any and
all administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other communication (written or oral), whether criminal or
civil, pursuant to, relating to, arising under or out of or on the alleged
basis of any applicable Environmental Law by any Person (including any
Governmental Entity, private person and citizens’ group) based upon, alleging,
asserting or claiming any actual or potential (i) violation of or
liability under any Environmental Law, (ii) violation of any Permit, or
(iii) liability for investigatory costs, cleanup costs, removal costs,
remedial costs, response costs, natural resource damages, property damage,
personal injury, fines, or penalties arising out of, based on, resulting from,
or related to the presence, Release, or threatened Release into the
environment, of any Material of Environmental Concern at any location,
including but not limited to the Owned Real Property and premises located
elsewhere from the Owned Real Property to which a Material of Environmental
Concern or materials the constituents of which contain any Material of
Environmental Concern were sent for handling, storage, treatment, or disposal.

 

“Environmental Encumbrance” means an
Encumbrance in favor of any Governmental Entity for (i) any liability
under any Environmental Law, or (ii) damages arising from, or costs
incurred by such Governmental Entity in response to, a Release or threatened
Release of a Material of Environmental Concern into the environment.

 

“Environmental Law” means any Law
relating to the environment or occupational health and safety, including
without limitation any statute, regulation, administrative decision or order
pertaining to (i) the prohibition, regulation, or control of any Material
of Environmental Concern; (ii) the management, treatment, storage,
disposal generation and transportation of any Material of Environmental
Concern; (iii) air, water and noise pollution; (iv) groundwater and
soil contamination; (v) the release or threatened release into the
environment of any Material of Environmental Concern, including without
limitation emissions, discharges, injections, spills, escapes or dumping of
pollutants, contaminants, radiation, or chemicals; (vi) the protection of
wildlife, marine life and wetlands, including without limitation all endangered
and threatened species; and (vii) manufacturing, processing, using, distributing
or handling of any Material of Environmental Concern, all as amended to date.

 

“Material of Environmental Concern”
means (i) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls (PCBs); (ii) any chemicals,
materials, substances or wastes which are defined as or included in the
definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic
substances,” “toxic pollutants” or words of similar import, under any
Environmental Law; and (iii) any other chemical, material, substance or
waste, exposure to which is prohibited, limited or regulated by any
Governmental Entity.

 

32

 

“Release” means any spilling,
leaking, pumping, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, discarding, burying, abandoning, flowing from a source, or
disposing into the environment of any Material of Environmental Concern.

 

(e)          Except as set forth in Section
3.16(c) or Section 3.16(e) of the Business Disclosure Schedule:

 

(i)                                     to the
knowledge of Seller, neither Seller nor any previous owner, occupant or user of
the Owned Real Property or any other Person, has engaged in or permitted any
activity at or upon, or any use or occupancy of the Owned Real Property in any
way involving the handling, manufacture, treatment, storage, use, generation,
Release or disposal (whether legal or illegal, accidental or intentional,
integral or incidental to the operations at the affected site) of any Material
of Environmental Concern on, under, in or about the Owned Real Property, or
transported any Material of Environmental Concern to, from or across the Owned
Real Property, except as: (A) in compliance with Environmental Laws and
(B) such that no Environmental Claim has arisen or will arise in connection
with any such activity, use or occupancy;

 

(ii)                                  no Material of
Environmental Concern currently is produced, incorporated in any construction
on, deposited, stored or otherwise located on, under, in or about the Owned
Real Property except as: (A) used in the ordinary course of the Business;
(B) in compliance with Environmental Laws; and (C) such that no
Environmental Claim has arisen or will arise under existing Environmental Laws
in connection with any such incorporation, deposit, storage, or location
through the date of Closing;

 

(iii)                               except as: (A)
in compliance with Environmental Laws; and (B) such that no Environmental Claim
has arisen or will arise in connection with any such Release under existing
Environmental Laws: (1) there has occurred no Release of any Material of
Environmental Concern by Seller or any affiliate from the Owned Real Property
to, on, under, in or about other properties; (2) there has occurred no Release
of any Material of Environmental Concern by Seller or any affiliate to, on,
under, or in the Owned Real Property; and (3) to the knowledge of Seller, no
Material of Environmental Concern has migrated or threatened to migrate from
other properties to, on, under, in or about the Owned Real Property;

 

(iv)                              Seller has not
received any written notice or other written communication or any oral
communication concerning: (A) any violation or alleged or probable
violation of any Environmental Law or (B) alleged liability for any
Environmental Claim or Environmental Encumbrance in connection with the Owned
Real Property or any Material of Environmental Concern transported to, from, or
across the Owned Real Property.  No writ,
injunction, decree, order or judgment relating to the foregoing is outstanding.  There is no court action or other form of
dispute resolution, citation, directive, summons or investigation pending or,
to the knowledge of Seller, threatened against Seller relating to any violation
or alleged violation of any Environmental Law or the Release, threatened
Release, or presence or suspected presence of any Material of Environmental
Concern on the Owned Real Property;

 

33

 

(v)                                 with regard to
the Business, Seller has not received any written notice of, or entered into,
or assumed by Contract or operation of law or otherwise, any obligation,
liability, order, decree, settlement, judgment or injunction relating to or
arising under (A) any Environmental Laws, (B) any Environmental
Encumbrance or (C) any Environmental Claim;

 

(vi)                              except as: (A)
in compliance with Environmental Laws; and (B) such that no Environmental Claim
has arisen or will arise under existing Environmental Laws in connection with
any such Release: there has been no Release of any Material of Environmental
Concern by Seller or any affiliate at the Owned Real Property, properties at
which any operations of the Business were conducted or which Seller leased or
operated in connection with the Business, or at any third-party location to
which Seller transported or arranged for the disposal or treatment of any
Material of Environmental Concern from the location or operation of the
Business;

 

(vii)                           Seller has not
(A) filed a notice pursuant to Section 103(c) of CERCLA or any state
law equivalent; (B) filed notice pursuant to Section 3010 of RCRA or
any state law equivalent indicating the generation of any “hazardous waste”, as
that term is defined under 40 C.F.R. Part 261 or under any applicable state
law; or (C) filed any notice under any Environmental Law reporting a violation
of any Environmental Law; or (D) received an information request pursuant to
Section 104(e) of CERCLA or any state equivalent; and

 

(viii)                        no
Environmental Encumbrance has now or, to the knowledge of Seller, at any time
attached to the Owned Real Property.

 

(f)            As of the Closing Date,
Seller shall have completed and timely filed any and all necessary applications
with all pertinent Government Entities, including NJDEP, for the effective
transfer of all Permits or authorization for change in ownership and/or control
of the Business, all as may be required by Environmental Laws, and as listed
and described in Section 3.16(f) of the Business Disclosure
Schedule.

 

3.17                           Compliance with Laws.  To the
knowledge of Seller, Seller is in compliance in all material respects with, and
has conducted the operations of the Business in compliance in all material
respects with, applicable Law and judgments of any Governmental Entity
applicable to the Business Assets or the Business or by which any property,
asset or the business or operations of the Business is bound or affected.

 

3.18                           Customers and Suppliers.  Section 3.18
of the Business Disclosure Schedule sets forth a list of (a) the ten (10)
largest customers, based on revenues of the Business, and (b) the ten (10)
largest suppliers, based on expenses of the Business, in each case, during the
fiscal year ended December 31, 2009. 
Seller has not received written or, to the knowledge of Seller, other
notice from any customer referenced in clause (a) of Section 3.18
that such customer shall or intends to stop purchasing, or materially decrease
the purchase of, the products or services of the Business, or otherwise
materially change the terms of its relationship with the Business, including
terms relating to risk of loss or pricing. 
Seller has not received written or, to the knowledge of Seller, other
notice from any supplier referenced in clause (b) of Section 3.18
that such supplier shall or intends to stop 

 

34

 

supplying,
or materially decrease the supply of, products or services to the Business, or
otherwise materially change the terms of its relationship with the Business,
including terms relating to risk of loss or pricing.

 

3.19                           Permits.

 

(a)          Seller owns, holds or possesses
all permits, licenses, approvals, consents, franchises or other authorizations
required by any Governmental Entity or under any Law for the ownership, conduct
or operations of the Business, including all Regulatory Filings (collectively,
the “Permits”) and (b) is not in
violation in any material respect of, or default under, any such Permits.  Section 3.19(a) of the Business
Disclosure Schedule contains a complete and accurate list of all Permits held
by Seller as of the date of this Agreement. 
Seller has made available to Buyer complete and accurate copies of all
Permits listed on Section 3.19(a) of the Business Disclosure
Schedule.

 

(b)         Except as disclosed on Section 3.19(b)
of the Business Disclosure Schedule: (i) all material Permits are valid and
in full force and effect, and no other material Permits are required for the
lawful conduct of the Business as it is currently conducted; (ii) no
consent of or notice to any Governmental Entity is required in respect of any
material Permit by reason of the transactions contemplated by this Agreement;
(iii) no material Permit will be revoked, terminated prior to its normal
expiration date or not renewed solely as a result of the consummation of the
transactions contemplated by this Agreement; (iv) Seller has conducted the
Business in compliance in all material respects with the Permits and is not in
violation of, or default under, any of the material Permits; (v) to the
knowledge of Seller, no event has occurred or circumstance exists that, with or
without notice or the passage of time or both, could (A) constitute or
result in a violation of or failure to comply with any material Permit or
(B) result in the revocation, withdrawal, suspension, cancellation,
termination or material modification of any material Permit; (vi) Seller
has not received written or oral notice from any Governmental Entity or other
Person regarding (A) any actual, alleged or potential violation of or
failure to comply with any applicable Permit or (B) any actual, proposed
or potential revocation, withdrawal, suspension, cancellation, termination or
modification of any material Permit; and (vii) Seller has duly filed on a
timely basis all applications that were required to be filed for the renewal of
the applicable material Permits, and has duly made on a timely basis all other
filings required to have been made in respect of the applicable Permits.

 

3.20                           Brokers’ Fees.  No
broker, investment banker, financial advisor or other Person is entitled to any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller.

 

3.21                           No Other Representations or
Warranties.  Except for the representations and
warranties contained in this Article III, none of Seller or any of
its affiliates or any of their respective officers, directors, employees,
agents or representatives makes any representations or warranties, and Seller
hereby disclaims any other representations or warranties, whether made by
Seller or any of its affiliates, or any of their respective officers,
directors, employees, agents or representatives, with 

 

35

 

respect
to the execution and delivery of this Agreement or any Ancillary Agreements and
the transactions contemplated hereby or thereby.

 

3.22                           Transactions with
Affiliates; Intercompany Arrangements.  There are no loans, leases, royalty
agreements or other continuing transactions relating to the Business between
Seller and any officer, director or holder of greater than five percent (5%) of
any class of equity of Seller or any of its affiliates (“Interested
Person”).  To the
knowledge of Seller, no Interested Person (i) has any material direct or
indirect interest in any entity that does business with Seller or (ii) has
any direct or indirect interest in any property, asset or right that is used by
Seller in the conduct of the Business. 
No Interested Person has any contractual relationship (including that of
creditor or debtor) with Seller relating to the Business other than such
relationships as result solely from being an officer, director or stockholder
of Seller.

 

3.23                           Business Products; Defects;
Liabilities.

 

(a)          All of the Business Products
are set forth in Section 3.23 of the Business Disclosure Schedule.

 

(b)         Each of the Business
Products, including the active pharmaceutical ingredients included therein, was
in material conformity with the specifications therefor, all applicable
contractual commitments and all applicable express and implied warranties at
the time of such manufacture, sale or delivery. 
No Business Product is subject to any guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions of sale or beyond
that implied or imposed by applicable Law.

 

(c)          Seller has not received
notice of any claim since January 1, 2008 (or earlier and which remains
outstanding at the date of this Agreement) for personal injuries (excluding
such adverse events routinely reported to regulatory authorities which are not
expected to result in claims against Seller or any of its affiliates for
compensation) that were caused, or alleged to have been caused, by a Business
Product developed, manufactured, marketed, distributed, sold or otherwise
provided by, or on behalf of, Seller or any of its affiliates.  All inventories of commercially saleable
finished goods are safe for their intended uses.  Seller has not received within the past four
(4) years any notification, written or oral, that remains unresolved, from any
Governmental Entity indicating that any Business Product is misbranded or
adulterated in violation of any Law.

 

3.24                           Regulatory Matters.

 

(a)          Except as otherwise set
forth in Section 3.19 above, all current material Regulatory Filings are
set forth on Section 3.24 of the Business Disclosure Schedule.  Seller is the sole and exclusive owner of all
Regulatory Filings and Product Registration Data.  The Product Registration Data constitutes all
data included in the Regulatory Filings. 
Except as otherwise set forth in Section 3.19 above, each
Regulatory Filing has been validly issued or acknowledged by the appropriate
Governmental Entity and is in full force and effect.

 

36

 

(b)         Seller has completed and
filed all material notices, supplemental applications, annual and other
reports, including adverse event reports, required by any applicable Health
Authority to maintain the Regulatory Filings or otherwise required by Law with
respect to the Business Products.  Seller
has made available to Buyer true and complete copies of all Regulatory Filings
and all annual and other reports submitted to Health Authorities with respect
to the Business Products.  Seller is in
compliance in all material respects with all Regulatory Filings and Law
applicable to the Business Products, including all post-approval monitoring,
reporting and other obligations.

 

(c)          Seller has made available to
Buyer copies of all material (i) reports of inspectors or officials from
any Governmental Entity of any event or condition requiring attention or
correction or that is objectionable or otherwise contrary to applicable Law,
(ii) establishment inspection reports and (iii) warning letters, in
each case received by Seller from any Governmental Entity relating to the
Business Products or arising out of the conduct of the Business.

 

(d)         Seller has not received any
notice of proceedings from a Governmental Entity regarding any
(i) obligation on the part of Seller to undertake, or to bear all or any
portion of the costs of, any product recall of any nature with respect to the
Business Products, (ii) loss of or refusal to renew the Regulatory
Filings, (iii) renewal of the Regulatory Filings on terms less
advantageous to Seller than the terms of those Regulatory Filings currently in
force or (iv) action to enjoin production of any Business Product.  Within the past four (4) years, no Business
Product has been recalled, suspended, discontinued or withdrawn from the
market, and no Business Product is currently involved in any ongoing,
threatened or potential recall, discontinuance, withdrawal from market, or
suspension.  There are no pending or, to
the knowledge of Seller, threatened actions, suits, proceedings, hearings,
investigations, charges, claims, demands, notices or complaints by any Health
Authority with respect to the Business Products.

 

(e)          Since January 1, 2008,
neither Seller nor, to the knowledge of Seller, any third party manufacturer of
the Business Products, has received written notice of, and the Business
Products have not been subject to, any adverse inspection, finding of
deficiency, finding of non-compliance, completed or voluntary recall, field
notification, seizure, investigation, penalty for corrective or remedial action
or other compliance or enforcement action, in each case relating to the
Business Products or the facilities in which such Business Products are
developed, manufactured, packaged, collected, handled or stored, by any
applicable Health Authority.

 

(f)            Seller has not been
disqualified, debarred or voluntarily excluded by the FDA or any other
Governmental Entity for any purpose, or charged with or convicted under any Law
for conduct relating to the development or approval, or otherwise relating to
the regulation, of any drug product under any relevant Law.  To Seller’s knowledge, neither Seller nor any
officer or employee of Seller nor any agent thereof, has made any false or
fraudulent statements on or in, or material or fraudulent omissions from, any
applications, approvals, reports and other submissions or communications to any
applicable Health Authority or other Governmental Entity or in or from any
other records and documentation prepared or maintained to comply with the
requirements of any applicable Health Authority relating to the Business
Products.  Since January 1, 2007,
all filings with 

 

37

 

and submissions to any Health Authority made by
Seller with respect to the Business Products were true, accurate and complete
in all material respects as of the date made, and to the extent required to be
updated, as so updated, remain true, accurate and complete in all material
respects.

 

(g)         To Seller’s knowledge, no
event has occurred or circumstance exists that (with or without notice or lapse
of time) is reasonably likely to give rise to any obligation on the part of
Seller to undertake, or to bear all or any portion of the cost of, any product
recall of any nature related to the Business Products.  To the knowledge of Seller, there have been
no material adverse effects from the use of the Business Products that are not
disclosed in the package inserts, adverse experience reports or periodic safety
update reports for the Business Products.

 

(h)         Seller has made all
necessary material filings and received all necessary material approvals and
consents for the conduct of any ongoing clinical trials for the Business
Products from the necessary Governmental Entities, and, to the knowledge of
Seller, there are no actions threatened or pending by such Governmental
Entities to suspend or terminate such clinical trials.  Seller has not received any written notice,
charge, subpoena or other request for information, which has not been complied
with or withdrawn, by a Governmental Entity asserting any material breach of
the conditions for approval of any such clinical trials.  Seller has conducted all clinical trials for
the Business Products pursuant to valid protocols.  The clinical development and the manufacture
of the Business Products were performed in all material respects in accordance
with all applicable good clinical practices and current good manufacturing
practices for pharmaceutical products.

 

(i)             Since January 1, 2007,
Seller has complied in all material respects with all applicable regulatory
requirements concerning the marketing, promotion, pricing and distribution of
the Business Products and related reporting to applicable Governmental
Entities.  Seller has not committed any
act, failed to take any act, made any statement or failed to make any statement
that would materially violate the laws and regulations enforced by any Health
Authority or any other Governmental Entity regarding (i) the promotion,
sale or distribution of the Business Products (including the promotion of a
product for other than the use for which such product is approved by the FDA or
any other Health Authority), or (ii) payments or other remuneration
including prohibitions against kickbacks and the offering or giving of anything
of value to foreign government officials.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer
represents and warrants to Seller as of the date hereof, as follows:

 

4.1                                 Organization and Corporate
Power.  Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Sweden and has qualified to conduct business in
the State of New Jersey.  Buyer has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it.

 

38

 

4.2                                 Authorization of Transaction.  Buyer
has all requisite power and authority to execute and deliver this Agreement and
the Ancillary Agreements to which it is a party and to perform its obligations
hereunder and thereunder.  The execution
and delivery by Buyer of this Agreement and the Ancillary Agreements to which
it is a party and the consummation by Buyer of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of Buyer. 
This Agreement has been duly and validly executed and delivered by Buyer
and, assuming due authorization, execution and delivery by Seller, constitutes,
and when executed at the Closing, each Ancillary Agreement to which Buyer is a
party will constitute, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their terms, subject to bankruptcy, insolvency
and similar laws affecting the rights of creditors generally and subject to
rules of Law governing specific performance, injunctive relief and other
equitable remedies.

 

4.3                                 Noncontravention.  Neither
the execution and delivery by Buyer of this Agreement or the Ancillary
Agreements to which it is a party, nor the consummation by Buyer of the
transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the charter or bylaws (or corresponding governing
documents) of Buyer, (b) require on the part of Buyer any filing with, or
permit, authorization, consent or approval of, any Governmental Entity,
(c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party any right to terminate, modify or
cancel, or require any notice, consent or waiver under, any contract or
instrument to which Buyer is a party or by which it is bound or to which any of
its assets are subject, or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer or any of its properties or
assets, except in the case of clauses (b), (c) or (d), any filing, permit,
authorization, consent or approval of, or conflict, breach, default,
acceleration, right or violation that would not reasonably be excepted to have
a Buyer Material Adverse Effect.  A “Buyer Material Adverse Effect” means
any material adverse change, event or circumstance with respect to, or any
material adverse effect on, the ability of Buyer to consummate the transactions
contemplated by this Agreement.

 

4.4                                 Brokers’ Fees.  No broker, investment banker, financial
advisor or other Person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Buyer.

 

4.5                                 Legal Proceedings.  There
are no Legal Proceedings of any nature that are pending or, to the knowledge of
Buyer, threatened against or relating to Buyer that would be reasonably
expected to have a Buyer Material Adverse Effect.

 

4.6                                 Investigation by Buyer.  Buyer
has conducted its own independent review and analysis of the business,
operations, assets, liabilities, results of operations, financial conditions,
software, technology and prospects of the Business and acknowledges that Buyer
has been provided access to the personnel, properties, premises and records of
the Business for such purpose.

 

4.7                                 Financing.  Buyer
has (i) and will have at Closing, sufficient funds available to pay the
Purchase Price, the Milestone Payment and any expenses incurred by Buyer in
connection with 

 

39

 

the
transactions contemplated by this Agreement, (ii) and will have at Closing,
the resources and capabilities (financial or otherwise) to perform its
obligations hereunder and under the Ancillary Agreements to which it is a
party, and (iii) not incurred and does not reasonably expect to incur any
obligation, commitment, restriction or liability of any kind, absolute or
contingent, which would impair or adversely affect such resources and
capabilities.

 

ARTICLE V

COVENANTS

 

5.1                                 Closing Efforts.  Each of
the Parties shall use its commercially reasonable efforts to take all actions
and to do all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements.

 

5.2                                 Regulatory Matters.  Each of
the Parties shall use commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Entities
that may be or become necessary for the consummation of the transactions
contemplated by this Agreement and shall cooperate fully with each other in
promptly seeking to obtain all such authorizations, consents, orders and
approvals, including in connection with the preparation and delivery of the
documents required by 21 CFR 312.72 to be filed with the FDA to transfer the
NDAs relating to the Business Products.

 

5.3                                 Operation of Business.  Except
as contemplated by this Agreement or as set forth in the Business Disclosure
Schedule, during the period from the date of this Agreement to the Closing,
Seller shall (x) conduct the operations of the Business in the Ordinary
Course of Business and (y) use reasonable best efforts to maintain and preserve
intact the Business and to maintain satisfactory relationships with suppliers,
customers, distributors, Business Employees and other Persons having material
business relationships with the Business. 
Without limiting the generality of the foregoing, except as set forth on
Schedule 5.3 or as otherwise required or contemplated by this Agreement,
prior to the Closing, Seller shall not, without the written consent of Buyer
(such written consent not to be unreasonably withheld, delayed or conditioned):

 

(a)          adopt or amend any employee
plan, benefit plan or employment or severance agreement for the benefit of
employees of Seller whose duties primarily relate to the Business and are
performed at the Premises (together with the employees of Seller listed on Schedule
5.3(a), the “Business Employees”),
materially increase the compensation or fringe benefits of, or materially
modify the employment terms of any Business Employee, or pay any benefit not
required by the terms in effect on the date hereof of any existing Business
Plan; provided, however,
that Seller may (i) increase the compensation of or benefits available to
any Business Employee in connection with periodic reviews conducted in the
Ordinary Course of Business, (ii) take any action required by Law, and
(iii) increase the compensation or benefits available to any employee
under a Seller employee benefit plan (to the extent such increase does not
result in any material liability to Buyer);

 

(b)         sell, lease, license or
dispose of any assets used in the Business having an aggregate value exceeding
$100,000, other than in the Ordinary Course of Business;

 

40

 

(c)          acquire any assets to be
used in the Business, outside the Ordinary Course of Business having an
aggregate value exceeding $100,000;

 

(d)         license any Business-Owned
Intellectual Property to any third party except in the Ordinary Course of
Business;

 

(e)          incur or assume any
liabilities or obligations that would constitute an Assumed Liability, except
in the Ordinary Course of Business;

 

(f)            mortgage or pledge or
subject any assets material to the Business to an Encumbrance (or otherwise
create any exceptions or Encumbrances to title), other than in the Ordinary
Course of Business;

 

(g)         change in any material
respect the accounting methods, principles or practices of the Business, except
insofar as may be required by a change in GAAP;

 

(h)         terminate (except pursuant
to its terms), or materially modify or amend any Material Business Contract,
except in the Ordinary Course of Business;

 

(i)             enter into any Material
Business Contract, except (i) renewals of contracts on substantially
similar terms and conditions, or (ii) any contract relating exclusively to
Excluded Assets or Excluded Liabilities;

 

(j)             cancel or compromise any
material debt or claim or waive or release any material rights or claims of the
Business, other than debts, claims or rights that are not Business Assets;

 

(k)          to the extent it may
adversely affect Seller’s ownership of the Business Assets, make any election
or change concerning Taxes or Tax Returns, change any annual accounting period,
adopt or change any accounting method with respect to Taxes, file any amended
material Tax Return, enter into any closing agreement with respect to Taxes,
settle any Tax claim or assessment, surrender any right to claim a refund of
Taxes or obtain or enter into any Tax ruling, agreement, contract,
understanding, arrangement;

 

(l)             take any affirmative action
that results in the occurrence of an event described in Section 3.7,
or fail to take any reasonable action within Seller’s control that would avoid
the occurrence of an event described in Section 3.7; or

 

(m)       agree to take any of the
foregoing actions.

 

Without
the prior written consent of Buyer, Seller shall not (i) take or agree or
commit to take any action that would make any representation and warranty made
by Seller under this Agreement on the date of its execution and delivery
inaccurate in any material respect at, or as of any time prior to, the Closing
Date, or (ii) omit or agree or commit to omit to take any action necessary
to prevent any such representation or warranty from being inaccurate in any
material respect at any such time.

 

41

 

5.4                                 Access to Information.

 

(a)          During the period commencing
with the execution and delivery of this Agreement until the earlier to occur of
the termination of this Agreement pursuant to its terms and the Closing,
(x) Seller shall afford Buyer and its officers, authorized employees,
accountants, counsel and other authorized representatives reasonable access
during normal business hours to the properties, books, records and personnel of
the Business, as Buyer may reasonably request (subject to any limitations that
are reasonably required to preserve any applicable attorney-client privilege or
third-party confidentiality obligation), (y) without the prior written consent
of Seller, Buyer shall not contact any Business Employee or any suppliers to or
customer of the Business in connection with or pertaining to any subject matter
of this Agreement.  No investigation by
or on behalf of Buyer pursuant to this Section 5.4(a) or otherwise
shall affect, augment or mitigate any representations or warranties of the Parties
or the rights and obligations of the Parties hereunder.

 

(b)         After the Closing Date,
Seller and Buyer shall provide to each other and to their respective officers,
authorized employees, accountants, counsel and other authorized
representatives, upon reasonable request (subject to any limitations that are
reasonably required to preserve any applicable attorney-client privilege or
third-party confidentiality obligation), reasonable access for inspection and
copying of all the Business Records and Permits and any other information
existing as of the Closing Date and primarily relating to the Business, the
Business Assets or the Transferred Employees (subject to applicable privacy
laws), and shall make their respective personnel reasonably available for interviews,
depositions and testimony in any legal matter concerning transactions
contemplated by this Agreement, and as otherwise may be necessary or desirable
to enable the Party requesting such assistance to: (i) comply with any
reporting, filing or other requirements imposed by any Governmental Entity,
including filing any Tax Returns and responding to Tax audits or Tax authority
disputes with respect to the Business, the Business Assets and the Transferred
Employees; (ii) assert or defend any claims or allegations in any
litigation or arbitration or in any administrative or legal proceeding other
than claims or allegations that one Party to this Agreement has asserted
against the other; or (iii) subject to clause (ii) above, perform its
obligations under this Agreement.  The
Party requesting such information or assistance shall reimburse the other party
for all reasonable and necessary out-of-pocket costs and expenses incurred by
such party in providing such information and in rendering such assistance.  The access to files, books and records
contemplated by this Section 5.4 shall be during normal business
hours and upon reasonable prior notice and shall be subject to such reasonable
limitations as the Party having custody or control thereof may impose to preserve
the confidentiality of information contained therein.

 

(c)          Buyer shall preserve copies
of all Business Records and Permits in accordance with its document retention
policies, as in effect from time to time.

 

5.5                                 Tax Matters.

 

(a)          Seller Tax Returns.  Subject to Section 5.5(b) below,
Seller will prepare and file all Tax Returns of Seller (including Tax Returns
required to be filed after Closing Date) to the extent such Tax Returns include
or relate to the operations of the Business or the use or ownership of the 

 

42

 

Business Assets attributable to Pre-Closing Periods
(the “Seller Tax Returns”).  The Seller Tax Returns shall be true,
complete and correct in all material respects and prepared in accordance with
applicable Law.  Seller will make all
payments for Taxes required with respect to the Seller Tax Returns.

 

(b)         Buyer Tax Returns.  Buyer will be responsible for the preparation
and filing of all Tax Returns it is required to file with respect to Buyer’s
ownership or use of the Business Assets or its operation of the Business
attributable to Post-Closing Periods (the “Buyer Tax Returns”).  The Buyer Tax Returns shall be true, complete
and correct in all material respects and prepared in accordance with applicable
Law.  Buyer will make all payments for
Taxes required with respect to the Buyer Tax Returns.

 

(c)          Property Taxes.  In the case of any real or personal property
Taxes (or other similar taxes) attributable to the Business Assets for which the
corresponding Tax Returns cover both a Pre-Closing Period and a Post-Closing
Period, Buyer shall prepare such Tax Returns and make all payments required
with respect to any such Tax Return; provided, however,
that Seller will reimburse Buyer concurrently therewith to the extent that any
payment made by Buyer relates to a Pre-Closing Period, prorated on a per diem
basis.

 

(d)         Wage Withholding.  Seller and Buyer shall utilize the standard
procedure set forth in Revenue Procedure 2004-53 with respect to wage
withholding for Transferred Employees.

 

(e)          FIRPTA Certificate.  On or prior to the Closing Date, Seller will
furnish to Buyer a certificate of non-foreign status as described in Treasury
Regulations Section 1.1445-2(b)(2).

 

5.6                                 Confidentiality.  The
terms of the Confidentiality Agreement dated September 26, 2006 between
the Parties (the “Confidentiality Agreement”)
are hereby incorporated herein by reference and shall continue in full force
and effect until the Closing, at which time, except as set forth below, such
Confidentiality Agreement and the obligations of the parties under this Section 5.6
shall terminate; provided, however,
that after the Closing (a) the Confidentiality Agreement shall terminate
as to Buyer in respect of that portion of the Proprietary Information (as
defined in the Confidentiality Agreement) relating to the Business and the
Business Assets (the ownership of which will have been transferred to Buyer),
(b) such Proprietary Information shall be deemed Buyer’s Proprietary Information,
and Seller and its affiliates shall be subject to all restrictions against use
and disclosure of such information contained in the Confidentiality Agreement
as if it were the receiving party and (c) without limiting the foregoing,
the Confidentiality Agreement shall continue to apply to the Excluded Assets,
Excluded Liabilities and the Transaction Materials.  The “Transaction Materials”
means the terms and conditions of this Agreement and the Ancillary
Agreements.  If this Agreement is, for
any reason, terminated prior to the Closing, the Confidentiality Agreement
shall continue in full force and effect in all respects in accordance with its
terms.

 

43

 

5.7                                 Employees.

 

(a)          Offer Letters.  Within five (5) business days following the
date of this Agreement, Buyer shall provide Seller with the offers of
employment to each Business Employee set forth on Schedule 5.7(a),
which offer shall be consistent with the provisions set forth in Section 5.7(b)(i)
below, shall expressly state that they are contingent upon the Closing of this
transaction, shall expressly state that they do not become effective until
after the Closing Date, and shall be subject to Buyer’s standard hiring
procedures in effect from time to time. 
Buyer shall give Seller a reasonable opportunity to comment on such
offers and consider Seller’s comments in good faith.  Buyer may then extend such offers of
employment to each Business Employee set forth on Schedule 5.7(a).  Effective as of the Closing Date, Buyer will
hire each Business Employee who accepts the offer of employment extended to
such individual by Buyer (each a “Transferred Employee”);
provided, however,
that, unless otherwise set forth on Section 5.7, such Transferred
Employees shall remain employed “at will,” and Buyer may terminate at any time
after the Closing Date the employment of any Transferred Employee who accepts
such offer of employment.  Seller shall
not take any action that would impede, hinder, interfere or otherwise compete
with Buyer’s effort to hire any Transferred Employee.  Seller shall use its reasonable best efforts
to assist Buyer in Buyer’s hiring of the Transferred Employees.

 

(b)         Compensation and Benefits.

 

(i)                                     As of the
Closing Date, Buyer shall provide compensation and employee benefits to each
Transferred Employee that are comparable to those provided to similarly
situated U.S.-based employees of Buyer and/or its U.S. subsidiaries (“Substantially Equivalent Employment”).

 

(ii)                                  For a period of
[***]* ([***]*) months following the
Closing Date, Buyer (i) shall provide, or cause to be provided,
Substantially Equivalent Employment to each of [***]*,[***]*and [***]*to the extent such Person is
a Transferred Employee, and (ii) shall not terminate any such Person other
than for Cause (as such term is defined in the Business Plans).

 

(iii)                               Notwithstanding
anything to the contrary set forth herein, Seller shall make all payments with
respect to Transferred Employees under the Commission Plan, a copy of which has
been provided to Buyer, for the period beginning on January 1, 2010 and
ending on the Closing Date, which payments shall be made by Seller on the
forty-fifth (45th) day following
the close of the fiscal quarter in which the Closing occurs.

 

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

 

44

 

(c)          Service Credit.  For purposes of determining eligibility to
participate, vesting and entitlement to benefits where length of service is
relevant under any benefit plan or arrangement (other than a defined benefit
plan) of Buyer, Buyer shall provide that the Transferred Employees shall
receive service credit under Buyer’s benefit plans or arrangements equal to the
service credit given by Seller and its subsidiaries prior to the Closing.  Buyer shall waive all limitations as to
preexisting conditions exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Transferred Employees
under any medical, dental and other health and welfare plans that such
employees may be eligible to participate in after the Closing Date.  Buyer shall also provide Transferred
Employees and their eligible dependents with credit for any co-payments and
deductibles paid under Seller’s medical, dental and vision plans for the year
in which the Closing occurs under Buyer’s medical, dental and vision plans for
the purposes of satisfying any applicable co-payments and deductibles in the
year in which the Closing occurs.

 

(d)         401(k) Plan.  Buyer shall ensure that a defined
contribution plan that it maintains shall accept rollover distributions under
Section 402 of the Code, including cash and outstanding loans, from or on
behalf of any Transferred Employee.

 

(e)          Workers’ Compensation.  Responsibility for workers’ compensation
claims relating to Transferred Employees arising out of conditions having a
date of injury (or, in the case of a claim relating to occupational illness or
disease, the last significant exposure) prior to the Closing Date and that are
outstanding as of the Closing, shall remain with the Seller and be deemed to be
an Excluded Liability.  Buyer shall have
responsibility for workers’ compensation claims relating to Transferred
Employees and arising out of conditions having a date of injury (or, in the
case of a claim relating to occupational illness or disease, the last
significant exposure) on or after the Closing Date.

 

(f)            No Third Party Beneficiaries.  No provision of this Section 5.7
shall create any third party beneficiary or other rights in any Business
Employee or any other employee or former employee (including any beneficiary or
dependent thereof) of Seller in respect of continued employment (or resumed
employment) with Buyer, and no provision of this Section 5.7 shall
create any such rights in any such Persons in respect of any benefits that may
be provided, directly or indirectly, under any Business Plan or any plan or
arrangement that may be established by Buyer. 
No provision of this Agreement shall constitute a limitation on rights
to amend, modify or terminate after the Closing Date any such plans or
arrangements of Buyer.  No provision of
this Agreement shall cause any employee to be a third party beneficiary of any
rights herein.

 

5.8                                 Use of Seller’s Name.  Buyer
acknowledges that Seller has the absolute and exclusive proprietary right to
all names, marks, trade names, trademarks and service marks incorporating VIVUS
in any form (the “Seller Trade Names”), and to
all corporate symbols or logos incorporating “VIVUS” in any form (the “Seller Logos”, and together with the
Seller Trade Names, the “Seller Marks”).  Buyer shall not use, and Buyer shall cause
its affiliates not to use, any Seller Marks or any confusingly similar marks  in connection with the sale or distribution of any products
or services, and if a Business Asset bears a Seller Mark, Buyer shall, prior to
the use, sale or distribution of such 

 

45

 

Business
Asset, delete such Seller Mark and clearly and prominently indicate that the
Business Asset is no longer affiliated with Seller or any of its affiliates.

 

(a)          Notwithstanding the
foregoing, for a period of twelve (12) months following the Closing, Seller
hereby grants to Buyer and its affiliates a temporary, paid up, non-exclusive,
nontransferable license to use Seller Marks affixed to products of the Business
manufactured before the Closing or manufactured by or on behalf of Buyer or its
affiliates after the Closing and meeting the same quality standards met by
Seller prior to the Closing.  Buyer
hereby assigns, and agrees to assign, to Seller, any goodwill that accrues to
Buyer through such use of the Seller Marks.

 

(b)         Notwithstanding the
foregoing, within three (3) months after the Closing Date, Buyer shall remove
all Seller Marks from all buildings, signs and vehicles of the Business, and
all electronic databases, web sites, schematics, plans, manuals, drawings and
other materials, printed or otherwise (except as expressly provided in
sub-section (c) below), machinery, tooling, Inventory and the like.

 

(c)          Notwithstanding the
foregoing (but subject to sub-section (d) below), Buyer may use existing
supplies of literature, product instructions, packaging, invoices, letterhead,
Promotional Materials, office forms and business cards included with the
Business Assets which refer to or otherwise include Seller Marks, until such
supplies are expended.

 

(d)         In no event shall Buyer or
any of its affiliates use the Seller Marks for any purpose after the twelve
(12) month anniversary of the Closing Date.

 

(e)          Buyer acknowledges and
agrees that Seller is and shall remain the owner of the Seller Marks and all
goodwill attached thereto.  This
Agreement does not give Buyer the right to use the Seller Marks except as
expressly provided in this Agreement. 
Buyer agrees not to attempt to register the Seller Marks nor to register
anywhere in the world a mark same as or similar to the Seller Marks.  In no event shall Buyer or any affiliate of
Buyer advertise or hold itself out as Seller or an affiliate of Seller.

 

5.9                                 Pre-Closing Sales.  Seller agrees that, during the period
beginning on September 1, 2010 and ending on the Closing Date, the quantity of
units of Business Products sold to domestic wholesalers during such period
shall not exceed the historical domestic average daily unit shipments during
the 90 day periods ending on the same day and month in 2008 and 2009 as the
Closing Date plus [***]*.  Seller further
agrees that if the total units of Business Products sold during such period
exceeds the historical average daily units of Business Products sold,
multiplied by the number of shipping days, multiplied by [***]*, then Seller shall
reimburse Buyer with an amount equal to the excess at a rate of [***]* per Business Product unit.

 

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

 

46

 

5.10                           Real Estate Closing Costs.  Except as
otherwise provided in Section 2.14, Buyer shall pay all other closing
costs associated with the sale, transfer and conveyance of the Owned Real
Property to Buyer hereunder, including all escrow fees, costs of title
insurance and endorsements, surveys undertaken by Buyer, document recording
costs, and any other incidental fees or charges.

 

5.11                           Notice of Certain Events.  Seller shall give prompt notice to Buyer
of:  (a) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which could
reasonably be expected to cause any representation or warranty of Seller set
forth in this Agreement to be untrue or inaccurate at the Closing or any time
prior to the Closing; and (b) any failure of Seller to comply with or
satisfy any covenant or agreement to be complied with by it under this
Agreement at the Closing or at any time prior to the Closing; provided,
however, that any disclosure by Seller pursuant to this Section 5.11
shall not: (i) affect or be deemed to modify in any respect any of the
representations or warranties of Seller set forth in this Agreement (or in any
certificate, instrument or other document delivered by Seller (or any officer
thereof) to Buyer in connection with the Transactions), or the conditions to
the obligations of the Parties to consummate the transactions contemplated by
this Agreement in accordance with the terms and conditions hereof; (ii) be
deemed to amend or supplement the Business Disclosure Schedule, or prevent or
cure any misrepresentations, breach of warranty or breach of covenant by
Seller; or (iii) otherwise limit or affect any remedies available to Buyer
as a result of or arising out of such disclosure, including Buyer’s right to
indemnification under this Agreement.

 

5.12                           Exclusive License of Certain
Assets.  Subject to the terms and
conditions of this Agreement, Seller hereby grants to Buyer, on Seller’s behalf
and on behalf of each of its affiliates, (a) an exclusive, worldwide,
perpetual, irrevocable, fully paid up, royalty-free license, to use all Business
Know-How that is Controlled by Seller on the Closing Date (other than Business
Know-How included in the Business Assets) to develop, manufacture or sell the
Business Products; (b) an exclusive, worldwide, perpetual, irrevocable, fully
paid up, royalty-free license, to use all Business Intellectual Property that
is Controlled by Seller on the Closing Date (other than Intellectual Property
included in the Business Assets) to develop, manufacture or sell the Business
Products; and (c) an exclusive, worldwide, perpetual, irrevocable, fully paid
up, royalty-free license to use all the Licensed Books and Records Controlled
by Seller on the Closing Date to develop, manufacture or sell the Business
Products.  The foregoing licenses include
the right to grant sublicenses.  Seller
agrees to make copies available to Buyer of any material subject to the
foregoing licenses promptly upon request.

 

5.13                           Non-Competition.

 

(a)          From and after the Closing
Date until the third (3rd) anniversary thereof, none of Seller or any of its
affiliates shall, directly or indirectly through any third party,
(a) conduct any preclinical or clinical development with regard to, or
make, have made, sell, offer to sell, import, license, market, promote or
commercialize, any Competing Product in any jurisdiction or (b) engage in,
or have any majority equity ownership in, or participate in the financing,
operation or management of, any Person that engages in, the direct or indirect
development, manufacture, licensing, promotion or commercialization of any
Competing Product.

 

47

 

(b)         This Section 5.13
is reasonable and necessary to protect and preserve Buyer’s legitimate business
interests and the value of the Business and the Business Assets, and to prevent
any unfair advantage conferred on Seller and its successors.  To the extent it may effectively do so under
applicable Law, Seller hereby waives on its own behalf and on behalf of its
successors, any provision of Law which renders any provision of this Section 5.13
invalid, void or unenforceable in any respect.

 

5.14                           No Solicitation.  Seller shall immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any transaction or series of related transactions
involving any purchase or acquisition by any one or more third parties, or any
sale, lease, exchange, transfer, license or disposition by Seller or any of its
subsidiaries of, any of the Business Assets, other than in the Ordinary Course
of Business.  During the period from the
date hereof and continuing until the earlier to occur of the termination of
this Agreement pursuant to Article VIII or the Closing, Seller
shall not and shall use its commercially reasonable efforts to cause each of
its current directors, current executive officers and other employees,
affiliates, representatives and other agents (including its financial, legal
and accounting advisors) not to, directly or indirectly:  (i) solicit, initiate, encourage or
induce any inquiry with respect to any such transaction; (ii) furnish to
any Person any nonpublic information or take any other action to facilitate any
inquiries that could reasonably be expected to lead to any such transaction;
(iii) participate or engage in discussions or negotiations with any Person
with respect to any such transaction; (iv) approve, endorse or recommend
any such transaction; or (v) enter into any letter of intent or similar
document or any contract relating to any such transaction.

 

5.15                           Government Pricing Reporting.  From and after the Closing Date, Buyer will
(a) calculate and/or collect government pricing data relating to the Business
Products as required by the reporting requirements of applicable U.S.
Governmental Entities, including under applicable rules and regulations
relating to the Medicaid Drug Rebate Program (42 U.S.C. § 1396r-8 and
implementing regulations) and the Medicare program (42 U.S.C. § 1395w-3a and
implementing regulations), and (b) timely certify and report such data to the
applicable U.S. Governmental Entities, including the Center for Medicare and
Medicaid Services of the U.S. Department of Health and Human Services.  Should such U.S. Governmental Entities
require the inclusion of pricing data from sales of Business Products by Seller
with respect to a period ending on or prior to Closing, Seller will promptly
provide Buyer with such data, together with all reasonable support and a
certification of accuracy in form and substance reasonably satisfactory to Buyer,
and Buyer will continue to provide such reports for as long as required by
applicable Law.  For the avoidance of
doubt, nothing contained herein shall require Buyer to calculate, collect,
certify or report any information related to any products bearing Seller’s
National Drug Code or labeler code other than the Business Products.

 

ARTICLE VI

CONDITIONS TO CONSUMMATION OF TRANSACTION

 

6.1                                 Conditions to Buyer’s and
Seller’s Obligations.  The respective obligations of Buyer and
Seller to consummate the transactions contemplated by this Agreement are
subject to the 

 

48

 

satisfaction
of the following condition:  No
Governmental Entity shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, judgment, decree, order or award which is
then in effect and has the effect of making the transactions contemplated by
this Agreement illegal or otherwise prohibiting consummation of the
transactions contemplated by this Agreement.

 

6.2                                 Conditions to Obligations of
Buyer.  The obligation of Buyer to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (or waiver by
Buyer) of the following additional conditions:

 

(a)          The representations and
warranties of Seller set forth in Article III shall have been true
and correct on the date hereof and shall be true and correct at and as of the
Closing as if made as of the Closing, except (i) for changes contemplated
or permitted by this Agreement, (ii) those representations and warranties
that address matters only as of a particular date (which shall be true and
correct as of such date, subject to clause (iii)) and (iii) where the
failure of the representations and warranties to be true and correct would not
reasonably be expected to have a Material Adverse Effect on the Business.

 

(b)         Seller shall have performed
or complied with in all material respects its agreements and covenants required
to be performed or complied with under this Agreement as of or prior to the
Closing.

 

(c)          Seller shall have delivered
to Buyer a certificate executed by an authorized officer of Seller (the “Seller Certificate”) to the effect
that each of the conditions specified in clauses (a) and (b) of this Section 6.2
is satisfied in all respects.

 

(d)         No Law shall restrain,
prohibit or otherwise interfere with the effective ownership, operation or
enjoyment by Buyer of all or any material portion of the Business Assets.

 

(e)          Seller shall have delivered
to Buyer a duly executed opinion of Seller’s Delaware counsel, Morris, Nichols,
Arsht & Tunnell LLP stating that stockholder approval of Seller to
consummate the transactions contemplated herein is not required.

 

(f)            Seller shall have obtained
the Required Consents, and shall have delivered the Seller Closing Deliverables
in accordance with Section 2.7.

 

6.3                                 Conditions to Obligations of
Seller.  The obligation of Seller to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (or waiver by
Seller) of the following additional conditions:

 

(a)          The representations and
warranties of Buyer set forth in Article IV shall have been true
and correct on the date hereof and shall be true and correct at and as of the
Closing as if made as of the Closing, except (i) those representations and
warranties that address matters only as of a particular date (which shall be
true and correct as of such date, subject to clause (ii)), and
(ii) where the failure of the representations and warranties to be true
and correct would not reasonably be expected to have a Buyer Material Adverse
Effect.

 

49

 

(b)         Buyer shall have performed
or complied with in all material respects its agreements and covenants required
to be performed or complied with under this Agreement as of or prior to the
Closing.

 

(c)          Buyer shall have delivered
to Seller a certificate executed by a duly authorized officer of Buyer (the “Buyer Certificate”) to the effect
that each of the conditions specified in clauses (a) and (b) of this Section 6.3
is satisfied in all respects.

 

(d)         Buyer shall have delivered
the Buyer Closing Deliverables in accordance with Section 2.8.

 

(e)          Seller shall have obtained
the NJDEP Required Consent; provided, however, that the condition set forth in this Section
6.3(e) shall be effective only if Seller has used its commercially
reasonable efforts to obtain the NJDEP Required Consent as soon as reasonably
practicable after the date of this Agreement.

 

ARTICLE VII

SURVIVAL AND INDEMNIFICATION

 

7.1                                 Survival.  Each
covenant or agreement in this Agreement shall survive the Closing without
limitation as to time until fully performed in accordance with its terms.  The representations and warranties of Buyer
and Seller contained in this Agreement shall survive the Closing solely for
purposes of this Article VII and such representations and
warranties shall terminate at the close of business on the date that is
eighteen (18) months after the Closing Date, except (a) with respect to any
misrepresentation or breach of warranty under Sections 3.1 (Organization, Qualification and Power), 3.2
(Authorization of Transaction), 3.5
(Title to Assets), 3.14 (Taxes) and 3.16 (Environmental Matters), which shall
survive until the expiration of the statute of limitations applicable to the
matters set forth therein (giving effect to any waiver or extension thereof),
and (b) with respect to any misrepresentation or breach of warranty under Section
3.11(b), (c), (d), (f), (g) and (h) and
the first sentence of 3.11(a) (Intellectual
Property), which shall survive for [***]* ([***]*) months after the Closing
Date (the final date of such survival period, the “End Date”).  The obligations to indemnify and hold
harmless an Indemnified Party pursuant to Section 7.2(a)(i) and for
the breach of any covenants required to be performed by a Party prior to
Closing shall terminate on the End Date; provided that
such obligations to indemnify and hold harmless shall not terminate as to any
Loss with respect to which the Indemnified Party shall have delivered to the
Indemnifying Party a Notice of Claim in accordance with Section 7.4,
or, in the event of a Third-Party Claim, given notice to the Indemnifying Party
of such Third-Party Claim in accordance with Section 7.5, in each
case on or prior to the End Date.  Any
investigation or other examination that may have been made or may be made at
any time by or on behalf of the Party to whom representations and warranties
are made shall not limit, diminish or in any way affect the representations and
warranties 

 

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

 

50

 

in
this Agreement, and the Parties may rely on the representations and warranties
in this Agreement irrespective of any information obtained by them by any
investigation, examination or otherwise.

 

7.2                                 Indemnification.

 

(a)          Seller and Buyer shall
indemnify, defend and hold harmless the other Party and its affiliates, and
their respective officers, directors, stockholders, employees, representatives
and agents (each an “Indemnified Party”),
from and against any and all claims, actions, suits, proceedings, liabilities,
obligations, losses, and damages, amounts paid in settlement, costs and
expenses (including reasonable attorney’s fees, court costs and other
out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) incurred or paid (collectively, “Losses”)
by any Indemnified Party to the extent that the Losses arise by reason of, or
result from (i) any breach of any representation or warranty of the other
Party contained in this Agreement or (ii) the breach by the other Party of
any covenant or agreement of such Party contained in this Agreement (except in
each case as a result of any changes contemplated or permitted by this
Agreement).

 

(b)         Seller further agrees to
indemnify and hold harmless Buyer and any Indemnified Party of Buyer from and
against any Losses arising out of or resulting from the Excluded Liabilities.

 

(c)          Buyer further agrees to
indemnify and hold harmless Seller and any Indemnified Party of Seller from and
against any Losses arising out of or resulting from the Assumed Liabilities.

 

(d)         For purposes of Section
7.2, “Seller” shall be deemed to include each of the Seller Parties, to the
extent Vivus Real Estate makes any representations or has obligations in
respect of any covenants or Excluded Liabilities.

 

7.3                                 Limitations.

 

(a)          The Indemnifying Party’s
liability for all claims for indemnifiable Losses made under Section
7.2(a)(i) (each a “Claim”)
shall be subject to the following limitations: 
(x) the Indemnifying Party shall have no liability for any
individual Claim until the amount of the Loss finally determined to have been
incurred or paid equals or exceeds $50,000 (each, a “Qualified
Loss”), and (y) the Indemnifying Party shall have no liability
for any Claims until the aggregate amount of the Qualified Losses finally
determined to have been incurred or paid shall exceed [***]* ([***]*) of the Purchase Price, in
which case the Indemnifying Party shall be liable for all Qualified Losses, and
(z) the Indemnifying Party’s aggregate liability for all such Losses shall
not exceed [***]* ([***]*) of the Purchase
Price.  None of the limitations set forth
in this Section 7.3(a) shall apply in the case of any Losses or
other indemnification matter based upon, arising out of, or relating 

 

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

*  [***] Indicates that confidential treatment has been sought
for this redacted information.

 

51

 

to (i) intentional misrepresentations, fraud or
criminal matters or (ii) any misrepresentation or breach of warranty under Section
3.1 (Organization, Qualification and Power), 3.2
(Authorization of Transaction), 3.5
(Title to Assets) or 3.14 (Taxes) (collectively, the “Fundamental
Representations”); provided, however,
that the Indemnifying Party’s aggregate liability for all such Losses resulting
from a breach of any of the Fundamental Representations shall not exceed the
Purchase Price, inclusive of any other amounts actually paid out pursuant to
this Article VII; provided, further,
for the sake of clarity, that to the extent Buyer is an Indemnified Party,
Buyer may only obtain recovery for a Loss from a Claim against either Seller or
Vivus Real Estate, but not both, as the Indemnifying Party.

 

(b)         Notwithstanding anything
contained in this Agreement to the contrary, the amount of the Indemnifying
Party’s liability under this Agreement shall be net of any insurance proceeds
or other third party indemnity or contribution amounts actually recovered by an
Indemnified Party.

 

(c)          Notwithstanding anything
contained in this Agreement to the contrary, no Party shall be liable to the
other Party for any indirect, special, punitive, exemplary or consequential
loss or damage (including any loss of revenue or profit) arising out of this
Agreement in excess of the Purchase Price; provided, however,
that the foregoing shall not be construed to preclude recovery by the
Indemnified Party in respect of Losses directly incurred from Third Party
Claims.

 

(d)         For purposes of this Section
7.2, “Seller” shall be deemed to include each of the Seller Parties, to the
extent Vivus Real Estate makes any representations or has obligations in
respect of any covenants or Excluded Liabilities

 

7.4                                 Procedures for
Indemnification.

 

(a)          In the event an Indemnified
Party shall have a Claim for Losses under this Article VII, Buyer
or Seller (on behalf of itself or its affiliates), as the case may be, shall
promptly send written notice of such Claim (the “Notice
of Claim”) to the Indemnifying Party.  Such notice must (i) state the amount of
Losses paid or reasonably believed to have been incurred by the Indemnified
Party, (ii) specify in reasonable detail the individual items of Losses
included in the amount stated and the nature of the misrepresentation, breach
of warranty or covenant to which such Loss is related (including specific
references to the applicable representation or covenant), and (iii) be
executed by a duly authorized officer of Buyer or Seller, as the case may be.

 

(b)         The Indemnifying Party may
make a written objection (“Objection”)
to any Claim for indemnification delivered pursuant to Section 7.4(a).  The Objection shall be delivered to the
Indemnified Party within thirty (30) days after delivery of the Notice of
Claim.

 

(c)          In the event of a dispute
that the Parties are able to resolve, the Parties shall prepare and sign a
memorandum setting forth such agreement, and the Indemnifying Party shall pay
to the Indemnified Party by wire transfer of immediately available funds to an
account designated by 

 

52

 

such Indemnified Party the agreed-upon amount of the
Loss (if any) within fifteen (15) days of the date of such written memorandum.

 

(d)         If, within thirty (30) days
of delivery of the notice of Objection (as such period may be extended by
mutual agreement between the Parties), the Parties are unable to resolve a
dispute over the Claim for indemnification to which the Objection has been
made, the dispute shall be resolved exclusively in accordance with the dispute
resolution provisions described in Section 7.8.

 

7.5                                 Third Party Claims.

 

(a)          The Indemnified Party
seeking indemnification under this Agreement shall promptly (and in any event
within ten (10) business days of becoming aware of a Third-Party Claim) notify
the Party against whom indemnification is sought (the “Indemnifying
Party”) of the assertion of any claim, or the commencement of
any action, suit or proceeding by any third party, in respect of which
indemnity may be sought by the Indemnified Party under this Article VII
(a “Third-Party Claim”) and shall give
the Indemnifying Party such information with respect thereto as the
Indemnifying Party may reasonably request, but failure to give timely notice
shall not relieve the Indemnifying Party of any liability hereunder (unless and
to the extent that the Indemnifying Party has suffered prejudice by such
failure, and except as provided in Section 7.1).

 

(b)         The Indemnifying Party shall
have the right, but not the obligation, exercisable in its sole discretion by
written notice to the Indemnified Party within thirty (30) days of receipt
of notice from the Indemnified Party of the commencement of or assertion of any
Third-Party Claim, to assume the defense and control the settlement of such
Third-Party Claim, subject to Section 7.5(c).  The non-controlling Party shall have the
right to participate in (but not control), at its own expense, the defense and
settlement of any Third-Party Claim.  If
the Indemnifying Party does not elect to undertake and conduct the defense of a
Third-Party Claim, the Indemnified Party shall undertake the defense of such
Third-Party Claim.  Notwithstanding the
provisions of this Section 7.5(b), if the Indemnified Party
reasonably determines that there may be a material conflict between the
positions of the Indemnifying Party and the Indemnified Party in conducting the
defense of such Third-Party Claim or that there may be legal defenses available
to such Indemnified Party different from or in addition to those available to
the Indemnifying Party, then counsel for the Indemnified Party shall be
entitled to conduct the defense to the extent reasonably determined by the
Indemnified Party and such counsel to be necessary to protect the interests of
the Indemnified Party, at the reasonable expense of the Indemnifying Party.

 

(c)          In the event the
Indemnifying Party has assumed the defense of any Third-Party Claim, the
Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such Third-Party Claim without the Indemnified
Party’s prior written consent (which consent shall not be unreasonably
withheld, conditioned or delayed), unless such settlement or judgment relates solely
to monetary damages and provides for a complete release of the Indemnified
Party, in which case, no such consent shall be required.  The Indemnified Party shall 

 

53

 

have the right to settle, or consent to the entry of
any judgment arising from, any Third-Party Claim for which the Indemnifying
Party has not assumed the defense.

 

(d)         Whether or not the
Indemnifying Party elects to defend or prosecute any Third-Party Claim, both
Parties hereto shall cooperate in the defense or prosecution thereof and shall
furnish such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith or as provided in Section 5.4.

 

7.6                                 Exclusive Remedy.  Except
as otherwise expressly provided in the Agreement, the indemnification provided
in this Article VII shall be the sole and exclusive remedy after
the Closing Date for damages available to the Parties for breach of any of the
terms, conditions, representations, warranties or covenants contained herein or
any right, claim or action arising from the transactions contemplated by this
Agreement.

 

7.7                                 Asset Acquisition Statement.  To the
extent allowable by Law, amounts payable in respect of the Parties’
indemnification obligations shall be treated as an adjustment to the Purchase
Price.  Buyer and Seller shall cooperate
in the preparation of a supplemental Asset Acquisition Statement as required by
Section 2.10 and Treasury Reg. § 1.1060-1(e) as a result of
any adjustment to the Purchase Price pursuant to the preceding sentence.

 

7.8                                 Binding Arbitration.  Any Disputed Claim shall be resolved
exclusively and solely by binding arbitration pursuant to the Commercial
Arbitration Rules of the American Arbitration Association (the “Rules”) and in accordance with the
following: (a) there shall be one arbitrator, who shall be mutually agreed
upon by the Parties, but if the Parties are unable to mutually agree upon an
arbitrator, then such arbitrator shall be appointed by the American Arbitration
Association; (b) the arbitration shall take place in New York, New York,
and in no other place; (c) the arbitration shall be conducted in
accordance with the procedural laws of the U.S. Federal Arbitration Act, to the
extent not inconsistent with the Rules or this Section 7.8;
(d) subject to legal privileges, the arbitrator shall have the power to
permit discovery to the full extent allowable under the Federal Rules of Civil
Procedure; (e) at the arbitration hearing, each Party shall be permitted to
make written and oral presentations to the arbitrator, to present testimony and
written evidence and to examine witnesses; (f) the arbitrator shall have
the power to grant temporary or permanent injunctive relief and to order
specific performance; (g) the arbitrator shall have the power to order
either Party to pay, or to allocate between the Parties, the fees and expenses
of the arbitrator and of the American Arbitration Association; and (h) the
arbitrator shall issue a written decision explaining the bases for the final
ruling, which decision, with respect to Section 2.1(b), shall be based
solely on representations, warranties and covenants explicitly set forth herein
and not on any implied warranties or covenants of any kind, and such decision
shall be final and binding on the Parties hereto, and not subject to appeal,
and enforceable in any court of competent jurisdiction.

 

54

 

ARTICLE VIII

TERMINATION

 

8.1                                 Termination of Agreement.  Buyer
or Seller may terminate this Agreement prior to the Closing, as provided below:

 

(a)          Buyer and Seller may
terminate this Agreement by mutual written consent;

 

(b)         Buyer may terminate this
Agreement by giving written notice to Seller in the event Seller is in breach
of any representation, warranty or covenant contained in this Agreement, and
such breach, individually or in combination with any other such breach,
(i) would cause the conditions set forth in clauses (a) or (b) of Section 6.2
not to be satisfied and (ii) is not cured to Buyer’s reasonable
satisfaction upon the earlier of (x) thirty (30) days following delivery
by Buyer to Seller of written notice of such breach, or (y) the
Termination Date;

 

(c)          Seller may terminate this
Agreement by giving written notice to Buyer in the event Buyer is in breach of
any representation, warranty or covenant contained in this Agreement, and such
breach, individually or in combination with any other such breach, (i) would
cause the conditions set forth in clauses (a) or (b) of Section 6.3
not to be satisfied and (ii) is not cured to Seller’s reasonable
satisfaction upon the earlier of (x) thirty (30) days following delivery
by Seller to Buyer of written notice of such breach or (y) the Termination
Date;

 

(d)         Buyer or Seller may
terminate this Agreement if the Closing shall not have occurred by November 15, 2010 (the “Termination
Date”); provided, however, that the right to terminate this Agreement under
this Section 8.1(d) shall not be available to any Party whose
breach of this Agreement has been a principal cause of or resulted in the
failure of the Closing to occur on or before such date; and

 

(e)          Buyer or Seller may
terminate this Agreement if a Governmental Entity shall have issued an
order, decree or ruling or taken any other action (including the failure to
have taken an action), and such order, decree or ruling would either have or be
reasonably expected to have a Material Adverse Effect on the Business or would
have the effect of permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, which order, decree, ruling or
other action is final and nonappealable.

 

8.2                                 Effect of Termination.  Any
termination of this Agreement pursuant to Section 8.1 above shall
be effective immediately upon delivery of a valid written notice of the
terminating Party to the other Party.  If
any Party terminates this Agreement pursuant to Section 8.1, all
obligations of the Parties hereunder shall terminate without any liability of
any Party to any other Party (except for obligations in this Section 8.2
and any liability of any Party for willful breaches of this Agreement).  Notwithstanding the foregoing, the provisions
of Article IX and of the Confidentiality Agreement shall survive
the termination of this Agreement. 
Nothing in this Section 8.2 shall relieve either Party from
liability for breach of this Agreement prior to the date of such termination,
in which case the 

 

55

 

terminating
Party shall retain its rights against such other Party in respect of such other
Party’s breach.

 

ARTICLE IX

MISCELLANEOUS

 

9.1                                 Press Releases and
Announcements.  No Party shall issue any press release or
public announcement relating to the subject matter of this Agreement without
the prior written approval of the other Party; provided,
however, that any Party may make any
public disclosure it reasonably believes is necessary under applicable Law,
regulation or stock market rule (in which case the disclosing Party shall use
reasonable efforts to advise the other Party and provide it with a copy of the
proposed disclosure prior to making such disclosure).

 

9.2                                 No Third Party Beneficiaries.  This
Agreement shall not confer any rights or remedies upon any person other than
the Parties and their respective successors and permitted assigns, except as
provided in Section 7.2.

 

9.3                                 Entire Agreement.  This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements
or representations by or among the Parties, written or oral, with respect to
the subject matter hereof, other than the Confidentiality Agreement which shall
remain in effect as contemplated by Section 5.6.

 

9.4                                 Succession and Assignment.  This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns.  No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other Party, and any attempt to make any such assignment
without such consent shall be null and void; provided,
however, that Buyer may assign this
Agreement or any of its rights, interests or obligations, in whole or in part,
to one or more of its wholly-owned subsidiaries, but Buyer shall remain jointly
and severally liable with any such assignee(s) with respect to all obligations
of Buyer hereunder.

 

9.5                                 Counterparts.  This
Agreement may be executed and delivered (including by facsimile or other
electronic transmission) in multiple counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

 

9.6                                 Headings.  The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.

 

9.7                                 Notices.  All
notices, requests, demands, claims, and other communications hereunder shall be
in writing.  Any notice, request, demand,
claim or other communication hereunder shall be deemed duly delivered
(x) three (3) business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid, (y) one (1) business day
after it is sent for next business day delivery via a reputable nationwide
overnight courier service or (y) on the date sent after 

 

56

 

transmission
by facsimile with written confirmation, in each case to the intended recipient
as set forth below:

 

	
  If
  to Seller:

  	
  Copy
  to:

  
	
   

  	
   

  
	
  VIVUS,
  Inc.

  1172
  Castro Street

  Mountain
  View, CA 94040

  UNITED
  STATES

  Attention:  Timothy E. Morris, CFO

  Telecopy:  (650) 934-5389

  	
  Wilson
  Sonsini Goodrich & Rosati

  Professional
  Corporation

  12235
  El Camino Real, Suite 200

  San
  Diego, California 92130

  UNITED
  STATES

  Attention: Martin J.
  Waters

  Telecopy:  (858) 350-2399

  
	
   

  	
   

  
	
  If
  to Buyer:

  	
  Copy to:

  
	
   

  	
   

  
	
  MEDA AB

  Pipers väg 2A

  SE-170 09

  Solna

  SWEDEN

  Attention: Anders Lönner, CEO

  Telecopy:  +46 8 630 1919

  	
  Wiggin
  and Dana LLP

  400
  Atlantic Street

  Stamford,
  Connecticut 06901

  UNITED
  STATES

  Attention:
  James F. Farrington, Jr.

  Telecopy:
  +1 203-363-7676

   

  

 

Any
Party may give any notice, request, demand, claim or other communication hereunder
using any other means (including personal delivery, expedited courier,
messenger service, telex, ordinary mail or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the party for whom
it is intended.  Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.

 

9.8                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without giving effect to any choice or conflict
of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of laws of any jurisdictions
other than those of the State of New York (other than Sections 5-1401 and
5-1402 of the New York General Obligations Law).

 

9.9                                 Exclusive Jurisdiction.  With
respect to any matter based upon or arising out of this Agreement or the
transactions contemplated by this Agreement that seeks injunctive relief or
specific performance, each of the Parties (a) irrevocably consents to the
jurisdiction and venue of the state and federal courts located in the Southern
District of the State of New York, (b) agrees that process may be served
upon them in any manner authorized by the laws of the State of New York for
such persons, (c) waives the defense of an inconvenient forum and
covenants not to assert or plead any objection which they might otherwise have
to such jurisdiction, venue and such process, 

 

57

 

and
(d) agrees that a final judgment in such legal proceeding shall be final,
binding and enforceable in any court of competent jurisdiction.  Each Party agrees not to commence any legal
proceedings subject to this Section 9.9 except in such courts.

 

9.10                           Dispute Resolution.  Each
Party irrevocably agrees and acknowledges that, subject only to Section 9.9
above, any claim, dispute, controversy or other matter based upon, arising out
of or relating to this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby, including (i) as to the existence,
validity, enforceability or interpretation of any such claim, (ii) the
performance, breach, waiver or termination of any provision in dispute,
(iii) any such claim in tort, or (iv) any such claim raising
questions of law, in each case, whether arising before or after termination of
this Agreement (each a “Disputed Claim”),
shall be resolved, as between the Parties, exclusively and solely in accordance
with the dispute resolution provisions described in Section 7.8.

 

9.11                           Amendments and Waivers.  The
Parties may mutually amend any provision of this Agreement.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties.  No waiver of any right
or remedy hereunder shall be valid unless the same shall be in writing and
signed by the Party giving such waiver. 
No waiver by any Party with respect to any default, misrepresentation or
breach of warranty or covenant hereunder shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.  Any delay of
exercise of any right under this Agreement shall not constitute a waiver of
such right.

 

9.12                           Severability.  Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.  The Parties shall use
their commercially reasonable efforts to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the greatest extent possible, the economic, business and other
purposes of such void or unenforceable provision.

 

9.13                           Construction.

 

(a)          The language used in this
Agreement shall be deemed to be the language chosen by the Parties to express
their mutual intent, and no rule of strict construction shall be applied
against any Party.

 

(b)         Any reference to any
federal, state, local or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise.

 

(c)          When reference is made in
this Agreement to an Article or a Section, such reference shall be to an
Article or Section of this Agreement, unless otherwise indicated.

 

58

 

(d)         Whenever the context may
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns and
pronouns shall include the plural, and vice versa.

 

(e)          Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation”.

 

9.14                           WAIVER OF JURY TRIAL.  EACH OF
THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

 

9.15                           Expenses.  Except
as expressly provided in this Agreement, the Parties shall bear their
respective direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement and the consummation of the
transactions contemplated hereby.

 

9.16                           Specific Performance.  The
Parties agree that irreparable damage would occur in the event any provision of
this Agreement was not performed in accordance with the terms thereof and that,
prior to the termination of this Agreement pursuant to its terms, the Parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.

 

[Signatures on Following Page]

 

59

 

IN
WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement as of
the date first above written.

 

	
   

  	
  VIVUS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Timothy E. Morris

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
  SVP,
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  Anders
  Larnholt

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
  VP
  Corporate Development

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VIVUS
  REAL ESTATE, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Timothy E. Morris

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
  SVP,
  CFO of VIVUS, Inc., the sole 

  
	
   

  	
  member
  of VIVUS Real Estate, LLC

  

 

 

Exhibit A

 

Form of Transition Services Agreement

 

 

Exhibit B

 

Form of Bill of Sale, Assignment and Assumption Agreement

 

 

Exhibit C

 

Form of Warranty Deed

 

 

Exhibit D

 

Form of Legal Opinion

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