Document:

EX-10.2 Elliston Stock Option Agreement

 

EXHIBIT 10.2

STOCK OPTION AGREEMENT

THE COMMON STOCK OPTION REPRESENTED BY THIS AGREEMENT (THE “OPTIONS”) HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE LAWS OF ANY OTHER JURISDICTION AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN ANY MANNER: (1) WITHOUT
REGISTRATION UNDER THE ACT AND IN COMPLIANCE WITH THE LAWS OF ANY APPLICABLE JURISDICTIONS; OR (2)
AN OPINION OF COUNSEL (IN FORM AND SUBSTANCE ACCEPTABLE TO ADVANCED VIRAL RESEARCH CORP.) THAT
REGISTRATION IS NOT REQUIRED.

ADVANCED VIRAL RESEARCH CORP.

COMMON STOCK OPTION AND AGREEMENT

     THIS AGREEMENT is made as of May 15, 2007, by and between Advanced Viral Research Corp., a
Delaware corporation (the “Company”) and Stephen M. Elliston (the “Optionee”).

RECITALS

     WHEREAS, pursuant to the 2007 Stock Incentive Plan (the “Plan”), the Company desires to grant
to the Optionee and the Optionee desires to accept an option to purchase shares of common stock,
par value $0.00001 per share, of the Company (the Common Stock) upon the terms and conditions set
forth in this Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Grant. The Company hereby grants to the Optionee an option to purchase 40,000,000
shares of Common Stock (the “Option”) at the price and subject to the terms and conditions
hereunder and that certain Employment Contract dated May 15, 2007 between the Company and Optionee
(the “Employment Agreement”). Capitalized terms not otherwise defined herein shall be defined as
set forth in the Employment Agreement.

     2. Vesting Schedule; Exercise Prices. The Option shall be exercisable, at any time
and from time to time, pursuant to the following vesting schedule and exercise prices:

	 	 	 	 	 
	Option Shares	 	Exercise Price per Option Share	 	Vesting Schedule
	1st 8,000,000
	 	$0.0500 (the “Base Price”)	 	1/60th of the Option Shares (666,667) shall become
	2nd 8,000,000
	 	$0.0575 (115% of Base Price)	 	exercisable every 30 days commencing on the Commencement Date
	3rd 8,000,000
	 	$0.0650 (130% of Base Price)	 	(each date shall be referred to as an “Exercise Date”) and are
	4th 8,000,000
	 	$0.0725 (145% of Base Price)	 	exercisable through the date which is five years from an
	5th 8,000,000
	 	$0.0800 (160% of Base Price)	 	Exercise Date (the “Expiration Date”).
	
	 		 	 
	 	 

     3. Termination of Employment. Notwithstanding anything contained herein to the
contrary:

          (a) Upon the termination of Optionee’s employment with the Company (A) by the Company for
Cause; or (B) due to Optionee’s voluntary unilateral decision to terminate his employment without
Cause; or (C) due to the expiration of the then current term of employment, the Option shall
expire for all Option Shares which have as of such date not become exercisable but shall survive
with respect to Option

 

 

Shares that have become exercisable as of such date, (the “Surviving Options”), provided,
however, notwithstanding anything contained herein to the contrary, Optionee shall have 90 days to
exercise the Surviving Options.

          (b) Upon the termination of Optionee’s employment with the Company for reasons other than (A)
by the Company for Cause; or (B) due to Optionee’s voluntary unilateral decision to terminate his
employment without Cause, including without limitation, the death or Disability of Optionee; or (C)
due to the expiration of the then current term of employment, the Option shall immediately become
exercisable for that number of Option Shares equal to the number of Option Shares which would have
been subject to exercise by Optionee during the then current term of the Employment Agreement
(without giving effect to any extensions thereof).

     4. Securities Registration Required. If the shares to be issued upon an exercise of
the Option are not registered under the Securities Act of 1933, then, as a further condition of the
Company’s obligation to issue such shares, the Optionee may be required to give a representation in
writing that the Optionee is acquiring the shares for the Optionee’s own account as an investment
and not with a view to, or for sale in connection with, the distribution of such shares, and the
certificates representing such shares shall bear a legend to such effect as the Company’s counsel
shall deem necessary or desirable. The Option shall in no event be exercisable and shares shall not
be issued hereunder if, in the reasonable opinion of counsel to the Company, such exercise and/or
issuance would result in a violation of federal or state securities laws.

     5. No Employment Agreement. Nothing in this Agreement shall confer upon the Optionee
any right with respect to the continuation of Optionee serving as a director of the Company or a
subsidiary, or interfere in any way with any existing employment or consulting agreement between
the Company and the Optionee.

     6. Representations of Optionee. Optionee hereby warrants to the Company as follows:

          (a) Investment Intent. The Option and the Option Shares contemplated to be acquired
pursuant to the exercise of the Option are being and shall be acquired by Optionee solely for
investment purposes and not for the account of any other person and not for distribution,
assignment or resale to others. No other person has a direct or indirect beneficial interest in
the Option or the Option Shares. Optionee has not subdivided the beneficial ownership of the
Option or the Option Shares with any other person.

          (b) Review and Evaluation. Optionee has, together with his or her financial advisors,
if any, had access to any relevant information and documents desired; has had the opportunity to
ask questions of and receive answers from any person authorized to act on behalf of the Company
concerning any aspect of the Company, including, but not limited to, the merits of accepting the
Option; is in receipt of (i) the Company’s Annual Reports as filed with the Securities and Exchange
Commission; (ii) the Company’s Quarterly Reports as filed with the Securities and Exchange
Commission; and (iii) all other requested documents and information regarding the Company
(collectively, the “Information”). Optionee, together with his or her financial advisors, if any,
represent that they have carefully read, are familiar with and fully understand the Information,
including all documents referred to therein; and have consulted with such other advisors as they
have deemed necessary and appropriate in making the decision to acquire the Option. Optionee fully
represents that, after a careful review of the Information, including all documents referred to
therein, Optionee accepts the Option.

          (c) Financial Experience. Optionee is sufficiently experienced in financial and
business matters to be capable of evaluating the merits and risks of his or her acceptance of the
Option, or if Optionee has utilized the services of a financial advisor, together they are
sufficiently experienced in financial and business matters that they are capable of evaluating the
merits and risks of Optionee’s acceptance of the Option.

2

 

          (d) Residency. Optionee is a resident of the State of North Carolina.

     7. Miscellaneous.

          (a) Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.

          (b) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware. This Agreement constitutes the entire Agreement between the
parties with respect to the subject matter hereof, and controls and supersedes any prior
understandings, agreements or representations by or between the parties, written or oral between
the parties with respect to its subject matter and may not be modified except by written instrument
executed by the parties.

          (c) Plan Incorporated by Reference. Other than the vesting schedule set forth herein,
the provisions of the Plan are incorporated by reference hereby and shall govern if and to the
extent that there are inconsistencies between those provisions and the provisions hereof. The
Optionee acknowledges receipt of a copy of the Plan prior to the execution of this Agreement.

          (d) Notices. All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall be in writing and
shall be deemed to have been duly given, when delivered by hand or three (3) days after deposited
in the United States mail, by registered or certified mail, return receipt requested, postage
prepaid, as follows:

	 	 	 
	If to the Company:

	 	Advanced Viral Research Corp.
	 

	 	200 Corporate Boulevard South
	 

	 	Yonkers, New York 10701
	 

	 	Attn: Martin Bookman, CFO
	 
	 	 
	If to Optionee:

	 	Stephen M. Elliston
	 

	 	5808 Rocky Point Court
	 

	 	Raleigh, NC 27613

or to such other address as any party hereto may from time to time designate in writing delivered
in a like manner.

          (e) Amendment. This Agreement may not be amended or modified in any respect, except
by the mutual written agreement of the parties hereto.

          (f) No Third Party Beneficiary. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person, firm, corporation, partnership,
association or other entity, other than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.

          (g) Waivers and Remedies. The waiver by any of the parties hereto of any other
party’s prompt and complete performance, or breach, or violation, of any provision of this
Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation, and
the waiver by any of the parties hereto to exercise any right or remedy which it may possess
hereunder shall not operate nor be construed as a bar to the exercise of such right or remedy by
such party upon the occurrence of any subsequent breach or violation.

3

 

          (h) Severability. The invalidity of any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall not affect the enforceability of
the remaining portions of this Agreement or any part hereof, all of which are inserted
conditionally on their being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed as if such invalid
word or words, phrase or phrases, sentence or sentences, clause or clauses, section or sections, or
subsection or subsections had not been inserted.

          (i) Descriptive Headings. Descriptive headings contained herein are for convenience
only and shall not control or affect the meaning or construction of any provision of this
Agreement.

          (j) Counterparts. This Agreement may be executed in any numbers of counterparts and
by the separate parties hereto in separate counterparts, each of which shall be deemed to be one
and the same instrument.

4

 

     IN WITNESS WHEREOF, the parties have hereunto put their hand as of the date first above
written.

	 	 	 	 	 
	 	VIRAL RESEARCH CORP.

 	 
	 	By:  	/s/ Eli Wilner
 	 
	 	 	Name:  	Eli Wilner 	 
	 	 	Title:  	Chairman of the Board 	 
	 
	 	OPTIONEE:

 	 
	 	/s/ Stephen M. Elliston
 	 
	 	Stephen M. Elliston 	 
	 	 	 
	 

5EX-10.1 SETTLEMENT AGREEMENT

 

Exhibit 10.1

     

SETTLEMENT AND LICENSE AGREEMENT

     This is an agreement (hereinafter referred to as “Agreement”) dated as of this 21st
day of March, 2007 (the “Effective Date”), by and between Adams Respiratory Therapeutics,
Inc., Adams Respiratory Operations, Inc. and Adams Respiratory Products, Inc., each such
corporation organized and existing under the laws of Delaware (together “Adams”), and
Pharmaceutical Holdings Corp., a corporation organized and existing under the laws of Delaware, and
Mutual Pharmaceutical Co., Inc. and United Research Laboratories, Inc., each such corporation
organized and existing under the laws of Pennsylvania (together “Mutual”). Adams and
Mutual are sometimes individually referred to herein as a “Party” and collectively referred
to herein as the “Parties”.

     WHEREAS, Adams and Mutual are parties to the patent litigations captioned, Adams Respiratory
Operations, Inc. v. Pharmaceutical Holdings Corp., Mutual Pharmaceutical Co, Inc. and United
Research Laboratories, Inc., Civil Action No. 2:06-CV-04418-PD, and Adams Respiratory Therapeutics,
Inc. v. Pharmaceutical Holdings Corp., Mutual Pharmaceutical Co, Inc. and United Research
Laboratories, Inc., Civil Action No. 2:06-CV-05485-PD, both of which are pending before the
Honorable Paul S. Diamond in the United States District Court for the Eastern District of
Pennsylvania (“District Court”) and to the related antitrust litigation captioned,
Pharmaceutical Holdings Corp., Mutual Pharmaceutical Co., Inc. and United Research Laboratories,
Inc. v. Adams Respiratory Operations, Inc., Civil Action No. 2:07-CV-00217-PD, also pending before
the Honorable Paul S. Diamond in the District Court (the “Lawsuits”);

     WHEREAS, Adams manufactures, markets and sells the pharmaceutical formulations containing 600
and 1200 mg of guaifenesin alone and in combination with other active ingredients under the brand
names Mucinex® (guaifenesin 600 mg ER tablets), Mucinex® DM (guaifenesin 600
mg/pseudoephedrine 60 mg ER tablets), Mucinex® D (guaifenesin 600 mg/dextromethorphan 30
mg ER tablets) and Humibid® (guaifenesin 1200 mg ER tablets) and plans to manufacture,
market and sell future extended-release products containing guaifenesin (collectively “Adams
Guaifenesin Products”);

     WHEREAS, Mutual filed Abbreviated New Drug Application No. 78-333 (the “Mutual ANDA”)
seeking permission to market a 600 mg version of Mucinex® and a 1200 mg version of
Humibid®;

     WHEREAS,
Mutual is in the process of developing versions of Mucinex® D and
Mucinex® DM;

     WHEREAS, the Mutual ANDA contains Paragraph IV Certifications with respect to versions of the
Mucinex® (guaifenesin 600mg ER tablets) and Humibid® (guaifenesin 1200 mg ER
tablets) Adams Guaifenesin Products where guaifenesin is the sole active ingredient;

 

 

     WHEREAS, Adams asserts that Mutual’s versions of Mucinex® and Humibid®
infringe Adams’ U.S. Patent No. 6,372,252 (the “Adams Patent”);

     WHEREAS, with respect to the Adams Patent, Mutual has asserted affirmative defenses and
counterclaims alleging invalidity, unenforceability and/or non-infringement;

     WHEREAS, Mutual admits that the Mutual ANDA and the versions of Mucinex® and
Humibid® set forth therein infringe claims 24-28, 31-34 and 40 of the Adams Patent and
claims 62-63 from Reexamination 90/007,514 filed April 22, 2005, and that the making, using,
selling, offering for sale or importing of the formulation set forth in the Mutual ANDA in versions
of Mucinex® D and Mucinex® DM (such as the Mutual Combination Guaifenesin
Products defined below) and other guaifenesin products would infringe the Adams Patent;

     WHEREAS, Mutual admits that the Adams Patent is valid and enforceable;

     WHEREAS, Mutual alleged as claims, counterclaims or affirmative defenses in the Lawsuits that
Adams has committed exclusionary, anticompetitive and unlawful acts in violation of the Sherman
Act, the Clayton Act and state common law in connection with the Adams Patent and NDA No. 21-282;

     WHEREAS, Mutual hereby admits that Adams has not committed any exclusionary, anticompetitive
or unlawful act in violation of the Sherman Act, the Clayton Act and/or any state common law in
connection with the Adams Patent or NDA No. 21-282 or the Lawsuits;

     WHEREAS, Mutual asserted that Adams committed tortious interference and common law unfair
competition;

     WHEREAS, Mutual admits that Adams has not committed tortious interference or common law unfair
competition;

     WHEREAS, Mutual agrees to withdraw each of its claims and counterclaims;

     WHEREAS, the Parties wish to fully settle the Lawsuits, upon the terms and subject to the
conditions set forth in this Agreement;

     WHEREAS, this Agreement and the Consent Judgment and Dismissal Without Prejudice (attached
hereto as Appendix B) are the only consideration exchanged by or on behalf of Mutual on the one
side, and Adams on the other side, in reaching the agreement to dismiss the Lawsuits; and Mutual
and Adams have each received no consideration from the other Party for their entry into this
Agreement other than that which is described in this Agreement and the Consent Dismissal Without
Prejudice; and this Agreement constitutes Mutual’s best independent
judgment as to how to most expeditiously and competitively sell guaifenesin products in the
United States;

     WHEREAS, as a result of this Agreement, almost eight (8) years prior to expiration of the
Adams Patent, Mutual will have the opportunity to sell a guaifenesin product resulting in

- 2 -

 

increased competition for Adams Guaifenesin Products, which competition otherwise might not have existed
until the expiration of the Adams Patent;

     WHEREAS, settlement of the Lawsuits will help both Adams and Mutual avoid the substantial
uncertainty and risk involved in prolonged litigation;

     WHEREAS, to the extent Mutual seeks approval of formulations subject to this Agreement as
Licensed Products, settlement of the Lawsuits will enable Mutual to file future ANDAs seeking final
FDA approval of such Licensed Products prior to the expiration of the Adams Patent without being
subject to the applicability of an automatic thirty (30)-month stay of FDA approval, which would
arise by reason of potential patent actions filed by Adams;

     WHEREAS, settlement of the Lawsuits will permit both Adams and Mutual to save litigation
costs, as well as to adhere to the judicially recognized mandate that encourages the settlement of
litigation;

     WHEREAS, as a result of this Agreement, Mutual’s ability to enter into competition with the
Adams Guaifenesin Products is not subject to its ability to obtain approval of the Mutual products;

     WHEREAS, settlement of the Lawsuits will permit the management of both Adams and Mutual to
focus their efforts on the conduct of their respective businesses rather than devoting substantial
time and resources to litigation;

     WHEREAS, the public will benefit significantly from this final settlement as it will save
judicial resources and create certainty for Adams and Mutual that will encourage the development,
investment and marketing of Mucinex®, Humibid® and other pharmaceutical
products;

     WHEREAS, money saved by settling the Lawsuits can now be invested by Adams and Mutual into
research and development, thereby benefiting consumers by identifying new uses for current drugs,
as well as furthering the creation of new medications.

     NOW THEREFORE, in consideration of the promises, representations, warranties, covenants and
agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, intending to be legally bound hereby agree as follows:

     1. The following terms, when used with initial capital letters, shall have the meaning set
forth below.

	 	a.	 	“Adams Patent” shall mean U.S. Patent No. 6,372,252.
	 
	 	b.	 	“Affiliate” shall mean with respect to a Party, any
person or entity that controls, is controlled by, or is under common control
with, such Party. As used in this definition, “control” means (i) in
the case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or 

- 3 -

 

	 	 	 	shares having the right to vote for the election
of directors, and (ii) in the case of non-corporate entities, the direct or
indirect power to manage, direct or cause the direction of the management and
policies of the non-corporate entity or the power to elect at least fifty
percent (50%) of the members of the governing body of such non-corporate
entity.
	 
	 	c.	 	“ANDA” shall mean an Abbreviated New Drug Application
filed with the FDA in the Territory as defined in 21 USC § 355(j) and 21 US CFR
Part 314.
	 
	 	d.	 	“Bilayered Products” shall mean for purposes of this Agreement:
any (i) guaifenesin-containing tablet comprising two portions compressed
against one another so that the face of each portion is exposed as either the
top or bottom of the tablet, wherein one portion comprises a sustained-release
formulation of guaifenesin and the other portion comprises an immediate-release
formulation of guaifenesin; (ii) guaifenesin-containing tablet comprising a
core and a coating, wherein the core comprises a sustained-release formulation
of guaifenesin in the center of the tablet and the coating comprises an
immediate-release formulation of guaifenesin completely covering the core; or
(iii) capsule product comprising beads of an immediate-release formulation of
guaifenesin and beads of a sustained-release formulation of guaifenesin. For
the sake of clarity, this definition shall not include (without limitation):
(v) the formulation set forth in the Mutual ANDA; (w) a formulation only
containing a sustained-release formulation as set forth in Col. 3, lines 25-43
of the Adams Patent; (x) any formulation in which essentially all of the
guaifenesin is mixed into a single batch or essentially identical batches of
excipients; (y) any formulation in which essentially all of the guaifenesin is
mixed into one or more batches of excipients comprising a sustained-release
polymer; or (z) any formulation that does not contain two separate, discrete
and internally contiguous regions of guaifenesin.
	 
	 	e.	 	“Business Day” shall mean any day other than a
Saturday, Sunday or day on which banks in New York, New York are authorized or
obligated by applicable law to close. Any reference in this Agreement to “day”
whether or not capitalized shall refer to a calendar day, not a Business Day.
	 
	 	f.	 	“FDA” means the United States Food and Drug
Administration and any successor agency having substantially the same
functions.
	 
	 	g.	 	“First Commercial Sale” shall mean the first commercial
sale in the Territory of an Adams Guaifenesin Product by Mutual, its Affiliate
or single Sublicensee to the Retail Trade. First Commercial Sale shall not
include a sale of an Adams Guaifenesin Product among Mutual, a Mutual Affiliate or
Mutual’s Sublicensee.
	 
	 	h.	 	“Fully Allocated Cost Basis” shall mean, with respect
to a particular Adams Guaifenesin Product in any period, (i) to the extent that
such Adams 

- 4 -

 

	 	 	 	Guaifenesin Product is manufactured by Adams, the direct costs to
Adams of manufacturing the units of finished Adams Guaifenesin Product sold to
Mutual during such period as calculated in accordance with generally accepted
accounting principles in the United States consistently applied by Adams,
including (v) to the extent not already included in clause (w) below, the
direct acquisition cost of all raw materials and components, including the
active pharmaceutical ingredient used therein, (w) the direct costs, including
direct labor and materials, of producing, packaging and labeling such Adams
Guaifenesin Product, (x) the direct costs for transportation, insurance and/or
storage consistent with the delivery terms of such Adams Guaifenesin Product
and any applicable sales taxes, (y) a reasonable allocation of manufacturing
overhead costs reasonably attributable to such Adams Guaifenesin Product (but
excluding corporate administrative overhead, depreciation and/or costs
associated with excess capacity), and (z) any royalty payments made by Adams to
Third Parties as consideration for a license to manufacture such Adams
Guaifenesin Product); and (ii) to the extent that such Adams Guaifenesin
Product is manufactured by a Third Party contract manufacturer, the actual
price paid by Adams to such Third Party for the production, packaging and
labeling of the units of such Adams Guaifenesin Product sold in such period.
	 
	 	i.	 	“Gross Profit” shall mean, with respect to an Adams
Guaifenesin Product in any period, the aggregate Net Sales of such Adams
Guaifenesin Product in such period, less the aggregate Fully Allocated Cost
Basis of such Adams Guaifenesin Product in such period.
	 
	 	j.	 	“IRI Sales” shall mean, with respect to a product in
any period, the sales of such product on a pro-rata daily basis in such period
as reported by Information Resources, Inc. (“IRI”), or such other sales data
source as the Parties may agree in writing.
	 
	 	k.	 	“Launch Date” has the meaning given such term in
Section 5(b)(i).
	 
	 	l.	 	“License” has the meaning given such term in Section 4.
	 
	 	m.	 	“Licensed Patents” shall mean the (i) the Adams Patent
and U.S. Patent Application No. 09/559,542 filed April 28, 2000, and any claims
that issue from the Reexamination, and (ii) any U.S. reissue, reexamination,
continuation, divisional or continuation-in-part thereof.
	 
	 	n.	 	“Licensed Products” shall mean the collective reference
to (i) the Mutual 600 mg Guaifenesin Product, (ii) the Mutual 1200 mg
Guaifenesin Product, and (ii) the Mutual Combination Guaifenesin Products,
defined herein, as well as (iv) any other product containing guaifenesin that
is made with the formulation set forth in the Mutual ANDA; and a “Licensed
Product” shall mean each of them.

- 5 -

 

	 	o.	 	“Losses” shall mean all pending and potential claims,
demands, all manner of actions, causes of action, suits, debts, liabilities,
losses, damages, attorneys’ fees, costs, expenses, judgments, settlements,
interest, punitive damages and other damages or costs of whatever nature,
whether known or unknown, pending or future, certain or contingent.
	 
	 	p.	 	“Marketing License Effective Date” has the meaning
given such term in Section 5.
	 
	 	q.	 	“Mutual 600 mg Guaifenesin Product” shall mean (i) a
formulation as defined in the Mutual ANDA containing a total of 600 mg of
guaifenesin as its sole active ingredient, (ii) any similar formulation that
does not require a new bioequivalence clinical study for FDA approval, or (iii)
or any formulation for which Mutual provides Adams with a certification letter
pursuant to 21 U.S.C. § 355(j)(2)(B) representing that said formulation is
subject to this Agreement as a Licensed Product, but excluding in each case any
Bilayered Products.
	 
	 	r.	 	“Mutual 1200 mg Guaifenesin Product” shall mean (i) a
formulation as defined in the Mutual ANDA containing a total of 1200 mg of
guaifenesin as its sole active ingredient, (ii) any similar formulation that
does not require a new bioequivalence clinical study for FDA approval, or (iii)
any formulation for which Mutual provides Adams with a certification letter
pursuant to 21 U.S.C. § 355(j)(2)(B) representing that said formulation is
subject to this Agreement as a Licensed Product, but excluding in each case any
Bilayered Products.
	 
	 	s.	 	“Mutual ANDA” shall mean the Abbreviated New Drug
Application No. 78-333.
	 
	 	t.	 	“Mutual Combination Guaifenesin Products” shall mean
the collective reference to: (i) Mutual’s combination formulation containing 60
mg or 120 mg of pseudoephedrine and a Mutual 600 mg Guaifenesin Product, (ii)
Mutual’s combination formulation containing 30 mg of dextromethorphan and a
Mutual 600 mg Guaifenesin Product, or (iii) any formulation for which Mutual
provides Adams with a certification letter pursuant to 21 U.S.C. § 355(j)(2)(B)
representing that said formulation is subject to this Agreement as a Licensed
Product, but excluding in each case Bilayered Products.
	 
	 	u.	 	“Net Sales” shall mean, with respect to an Adams
Guaifenesin Product in any period, the gross sales revenue for such Adams
Guaifenesin Product actually invoiced by Adams or its Affiliates or by Mutual,
its Affiliates or its single Sublicensee, as the case may be, to the Retail
Trade in the Territory, less (i) trade, quantity and early pay cash discounts
or rebates which are actually deducted, (ii) amounts repaid or credited by
reason of returns and rebates, including any statutory or contractual liability
for rebates to be paid to or for 

- 6 -

 

	 	 	 	the benefit of any government entity
including, but not limited to, rebates to be paid pursuant to federal, state
and local government rebate legislation and/or programs, (iii) any adjustments
granted to customers for repayments, allowances or credits for rejected Adams
Guaifenesin Product, retroactive price adjustements (e.g., floorstock
adjustments), reprocurement fees, damaged Adams Guaifenesin Product,
promotional allowances, chargebacks, disputed amounts (that are actually not
paid and written off by Adams or Mutual, as the case may be), or other
customary discounts, deductions and administrative fees, (iv) special handling
fees, transportation and insurance charges to the extent included in the
invoice price, or (v) actual sales, use or excise taxes, tariff or customs
duties, and other governmental charges to the extent included in the invoice.
	 
	 	v.	 	“Notice Date” has the meaning given such term in
Section 5(b).
	 
	 	w.	 	“Paragraph IV Certification” shall mean a certification
as defined in 21 U.S.C. 355(j)(2)(A)(vii)(IV).
	 
	 	x.	 	“Person” or “Persons” shall mean any
individual, firm, corporation, partnership, limited liability company, trust,
joint venture, governmental authority, or other entity or organization.
	 
	 	y.	 	“Proceeding” shall mean any action, audit, litigation,
investigation, suit or other proceeding.
	 
	 	z.	 	“Reexamination” shall mean Reexamination 90/007,514
filed April 22, 2005, claims 62-63 of which are attached hereto as Appendix A.
	 
	 	aa.	 	“Related Party” has the meaning given such term in
Section 2.
	 
	 	bb.	 	“Retail Trade” shall mean a Third Party that will sell
a Licensed Product directly to the public (“Retailer”), and any
distributors of such Licensed Product to the retail trade that do not package
or repackage such Licensed Product and that do not sell such Licensed Product
to any entity other than a Retailer.
	 
	 	cc.	 	“Sublicensee” shall mean a person or entity to whom
Mutual grants a single sublicense pursuant to Section 4.
	 
	 	dd.	 	“Supply Agreement” has the meaning given such term in
Section 6.
	 
	 	ee.	 	“Territory” shall mean the United States of America and
its territories, commonwealths and possessions, including without limitation
the Commonwealth of Puerto Rico and the District of Columbia.

- 7 -

 

	 	ff.	 	“Third Party” shall mean any person or entity other
than Adams and Mutual or their respective Affiliates.
	 
	 	gg.	 	“Third Party Launch Notice” has the meaning given such
term in Section 5(b).
	 
	 	hh.	 	“Third Party Formulation” shall mean an
extended-release pharmaceutical formulation, other than the Licensed Products,
that is bioequivalent to an Adams Guaifenesin Product or bioequivalent to any
other Adams’ product containing guaifenesin.

     2. Upon the terms and subject to the conditions of this Agreement, in consideration of the
mutual execution of this Agreement and the mutual agreement to be legally bound by the terms
hereof, each Party, on behalf of itself and its Affiliates, directors, officers, employees, agents,
representatives, heirs, assigns, predecessors or successors (“Related Parties”), hereby
releases, acquits and forever discharges the other Party and its Related Parties from any and all
Losses arising out of, derived from, predicated upon or relating to the infringement of the Adams
Patent or the Reexamination by the Licensed Products, or the actions underlying the Lawsuits;
provided, however, that nothing in this Agreement shall prevent or impair the right
of either Party to bring a Proceeding in state or federal courts located in the Eastern District of
Pennsylvania for a breach of this Agreement (including, without limitation, any claim for
infringement of any intellectual property based upon activities that are not the subject of the
license grants hereunder) or any representation, warranty or covenant herein or therein. The
Parties agree to the entry of a Consent Dismissal Without Prejudice in the Lawsuits, which provides
that each Party shall bear its own costs of suit and attorneys’ fees. To effectuate this
provision, promptly following the execution of this Agreement, the Parties shall cause the Consent
Dismissal Without Prejudice attached hereto as Appendix B (each Party acknowledging that the
approval of the Court is required in order to make such Consent Dismissal Without Prejudice
effective) to be filed with the District Court, and shall take all other necessary actions to
obtain the settlement and dismissal of the Lawsuits.

     3. Each Party acknowledges and agrees that:

	 	(a)	 	It may have sustained Losses arising out of, derived from,
predicated upon or relating to the infringement of the Adams Patent or the
Reexamination by the Licensed Products, or the actions underlying the Lawsuits,
that are presently unknown and unsuspected, and that such actions might give
rise to such Losses in the future. Nevertheless, each Party acknowledges and
agrees that this Agreement has been negotiated and agreed upon, notwithstanding
the existence of such possible Losses, all of which have been hereby released
under Section 2 hereof.
	 
	 	(b)	 	If any fact relating to this Agreement or the Lawsuits and now
believed to be true is found hereafter to be other than, or different from,
that which is now believed, each Party expressly assumes the risk of such
difference in fact and agrees that this Agreement shall be, and will remain,
effective 

- 8 -

 

	 	 	 	notwithstanding any such difference in fact, subject to each Party’s
right to bring a Proceeding for a breach of any representation or warranty
herein.
	 	 	 	 
	 	(c)	 	This Agreement may be pleaded as a full and complete defense
to, and used as a basis for injunction against, any Proceeding that may be
instituted, prosecuted or attempted in breach hereof.

     4. (a) Adams hereby grants to Mutual a non-exclusive, royalty-free, perpetual and irrevocable
license under the Licensed Patents (the “License”) to make, have made, sell or offer for
sale to the Retail Trade, use and import each Licensed Product commencing on or after the
applicable Marketing License Effective Date for such Licensed Product (as defined below in Section
5). For clarity, the License includes, without limitation, the right of Mutual or one of its
Affiliates to (i) make, use, import and have made reasonable launch quantities of each Licensed
Product up to six (6) months prior to the applicable Marketing License Effective Date, and (ii)
sell or offer for sale, but not ship, reasonable launch quantities of each Licensed Product up to
one (1) month prior to the applicable Marketing License Effective Date.

     (b) The License includes the right to grant sublicenses under the License to (i) any Related
Party for any purpose, and (ii) a single Third Party solely for the purpose of selling or offering
for sale to the Retail Trade. If Mutual sublicenses any of its rights under the License with
respect to a Licensed Product to a Third Party, Mutual agrees that it and its Affiliates will not
sell or offer for sale such Licensed Product. For clarity, only one of Mutual and its Affiliates,
on the one hand, or a single Sublicensee, on the other hand, may sell to the Retail Trade pursuant
to this paragraph.

     5. As to each Licensed Product, the “Marketing License Effective Date” shall be
defined as follows:

	 	(a)	 	Mutual 600 mg Guaifenesin Product: Subject to Section 5(b)
below, the Marketing License Effective Date for the Mutual 600 mg Guaifenesin
Product shall be the later of (i) July 1, 2012 or (ii) the date Mutual obtains
FDA approval to market such Licensed Product.
	 
	 	(b)	 	All Licensed Products: Mutual shall provide Adams notice
within five (5) business days if it obtains final FDA approval for any Licensed
Product. If Mutual has obtained FDA approval of a Licensed Product and has
notified Adams of that approval, then Adams shall notify Mutual promptly in
writing if it reasonably believes that a particular Third Party likely will
commence the lawful sale of a Third Party Formulation corresponding to such
Licensed Product in the Territory, and shall include in such notice (a
“Third Party Launch Notice”) Adams’ reasonable, good faith estimate of
the first lawful commercial sale of such Third Party Formulation
(“Notice Date”). Mutual shall notify Adams in writing if Mutual
reasonably believes that a particular Third Party will commence the lawful
sale of a particular Third Party Formulation, and shall include in such
notice Mutual’s reasonable, good faith estimate of such commencement date.

- 9 -

 

	 	 	 	Mutual shall not have the right to set the Notice Date. If Adams, after
sending a Third Party Launch Notice, subsequently learns of new information,
it may amend such Third Party Launch Notice; provided,
however, that Adams may not amend a Third Party Launch Notice to
change the Notice Date in such Third Party Launch Notice at any time after
the date which is ninety (90) days prior to such Notice Date.
	 
	 	(i)	 	If Mutual obtains approval from FDA to market a
Licensed Product and receives a corresponding Third Party Launch Notice,
then the Marketing License Effective Date for such Licensed Product shall
be the date that is sixty (60) days prior to the Notice Date in such Third
Party Launch Notice; provided, however, that if a Third Party launches a
corresponding Third Party Formulation and it and all other Third Parties
selling a corresponding Third Party Formulation are subsequently enjoined
by a court with appropriate jurisdiction in a final, non-appealable
judgment from selling their respective corresponding Third Party
Formulations in the Territory, then Mutual shall cease selling such
Licensed Product until a Third Party commences or re-commences the lawful
sale of a corresponding Third Party Formulation in the Territory.
	 
	 	 	 	If the actual date of first lawful commercial sale of a formulation
corresponding to the Licensed Product in such Third Party Launch Notice
(“Launch Date”) by (x) a Third Party or (y) Adams or its Affiliates
under a private label, a store brand name or a genericized brand name used
for such corresponding Third Party Formulation, then:

(A) if such Launch Date occurs prior to the Notice Date but after the Marketing
License Effective Date, then Adams shall pay Mutual an amount equal to ten
percent (10%) of the aggregate IRI Sales of Adams, its Affiliates and licensees
(other than licensees under this Agreement) of the Adams Guaifenesin Product
corresponding to such Licensed Product for each day in which the period between
the Marketing License Effective Date and the Launch Date is less than fifty (50)
days; provided, however, that if Adams fails to notify Mutual of
a Notice Date or Launch Date that Adams knows or in good faith should know is
likely to occur, then Adams shall pay Mutual an amount equal to the Gross Profit
for such Adams Guaifenesin Product in such period; or

(B) if such Launch Date occurs prior to the Notice Date but before the
Marketing License Effective Date or if such Launch Date occurs and Adams has not
notified Mutual of a Notice Date (in which case such Launch Date
shall be deemed the Marketing License Effective Date), Adams shall pay Mutual an
amount equal to ten percent (10%) of the aggregate IRI Sales of Adams, its
Affiliates and licensees (other than licensees under this Agreement) of the
Adams Guaifenesin Product corresponding to such Licensed Product for each day in
which Mutual’s launch of its corresponding

- 10 -

 

Licensed Product is delayed beyond
the day that is fifty (50) days prior to such Launch Date, said period not to
exceed one hundred twenty (120) days in total; provided,
however, that if Adams fails to notifies Mutual of a Notice Date or
Launch Date that Adams knows or in good faith should know is likely to occur,
then Adams shall pay Mutual an amount equal to Adams’ Gross Profit for such
Adams Guaifenesin Product in such period; or

(C) if such Launch Date occurs after the Notice Date, then Mutual shall pay
Adams an amount equal to ten percent (10%) of the aggregate IRI Sales of Mutual,
its Affiliates and its Sublicensee of such Licensed Product during the period
commencing seventy (70) days after the Marketing License Effective Date through
such Launch Date. Mutual’s IRI Sales shall be calculated starting from the date
of the first report by IRI of sales more than $25,000, for a period of the time
equaling the number of days between 70 days after the Marketing License
Effective Date and the Launch Date. Mutual agrees to provide all required
account information necessary to track Mutual’s IRI data.

Payments from Adams to Mutual under this Section 5(b)(i) shall be due within
sixty (60) days after the end of the applicable payment calculation period
described in clause (A) or (B) above, as applicable, together with a written
report containing information in sufficient detail to permit confirmation of the
accuracy of the payment made. Payments from Mutual to Adams described in
clause (C) above shall be made quarterly as set forth in Section 6(c).

Neither Party shall be entitled to any other money damages resulting from a
Launch Date failing to occur on the Notice Date or failure to provide a Notice
Date, however, this liquidated damages provision shall not affect the
availability of any equitable relief to which either Party might otherwise be
entitled.

(ii) If Mutual does not obtain approval from FDA to market a Licensed Product
prior to the Launch Date of a corresponding Third Party Formulation or Adams
Guaifenesin Product, then the Marketing License Effective Date shall be the date
on which Mutual obtains FDA approval to market such Licensed Product
corresponding to such FDA-approved Third Party Formulation. Mutual, in its sole
discretion, may purchase from Adams and Adams shall supply, pursuant to the
terms of Section 6 of this Agreement, tablets of the Adams Guaifenesin Product
corresponding to such Third Party Formulation, for sale by Mutual, its
Affiliates or a single independent Sublicensee to the Retail Trade under a
private label or a brand name other than Adams’ brand names for the Adams
Guaifenesin Product, in the Territory
commencing no earlier than ninety (90) days after the corresponding Launch Date.
To the extent that Mutual purchases tablets of Adams Guaifenesin Product
pursuant to the Supply Agreement, Adams grants Mutual a non-exclusive, perpetual
and irrevocable right to sell and offer for sale to the Retail Trade such
tablets supplied by Adams under the Licensed Patents in the

- 11 -

 

Territory and agrees, in a timely manner, to take all steps with respect to the New Drug
Applications and/or other marketing authorizations for such Adams Guaifenesin
Product that are necessary in order to manufacture and supply such Adams
Guaifeneisin Product tablets to Mutual hereunder and under the Supply Agreement
and to ensure that Mutual and its Affiliates or its single Sublicensee, as the
case may be, is authorized to sell such Adams Guaifenesin Product. Only Mutual
and its Affiliates, on the one hand, or a single Sublicensee, on the other hand,
may sell to the Retail Trade pursuant to this paragraph.

     6. (a) Mutual shall notify Adams in writing of its election to purchase tablets of Adams
Guaifenesin Product pursuant to Section 5(b)(ii), and the Parties shall promptly execute a supply
agreement in the form attached hereto as Appendix C (“Supply Agreement”). The tablets
supplied by Adams shall be white and/or in such other reasonable mono-colored configuration
mutually agreeable to the Parties, and shall be manufactured using Adams’ and its Affiliates’
bilayered technology.

     (b) In consideration for such supply, Mutual shall pay Adams a supply price equal to the sum
of the Fully Allocated Cost Basis for such tablets, and a royalty of ten percent (10%) of the Net
Sales of Mutual, its Affiliates or its Sublicensee of such Adams Guaifenesin Product in the
Territory. Only one royalty shall be due with respect to the same unit of Adams Guaifenesin
Product. No royalties shall be due upon the sale or other transfer among Mutual, its Affiliates
and a single Sublicensee, but in such cases the royalty shall be due and calculated upon such Net
Sales to the first independent Third Party in the Retail Trade.

     (c) Within sixty (60) days after the end of each calendar quarter after the First Commercial
Sale of an Adams Guaifenesin Product by Mutual, Mutual shall deliver to Adams a written report
containing the following information for the prior calendar quarter, in sufficient detail to permit
confirmation of the accuracy of the royalty payment made: (i) the gross sales invoiced for such
Adams Guaifenesin Product by Mutual and its Affiliates or its single Sublicensee, (ii) a
calculation of Net Sales of such Adams Guaifenesin Product that is sold by Mutual, its Affiliates
and its single Sublicensee; (iii) the amount of taxes, if any, withheld to comply with applicable
law; and (iv) a calculation of payments due to Adams with respect to the foregoing. Concurrent
with these reports, Mutual shall remit to Adams any payment due for the applicable calendar
quarter. All such reports shall be considered Confidential Information of Mutual and shall be
maintained in confidence by Adams pursuant to Section 20.

     (d) If Mutual concludes that tax withholdings under the applicable law are required with
respect to payments to Adams, Mutual shall withhold the required amount and pay it to the
appropriate governmental authority.

     (e) All dollar ($) amounts specified in this Agreement are United States dollar amounts and
all payments to be made under this Agreement shall be made in United States dollars and shall be
paid by bank wire transfer in immediately available funds to such bank account in the United States
as may be designated in writing by the receiving Party from time to time.

- 12 -

 

     (f) Mutual and its single Sublicensee (as applicable) shall keep correct and complete books of
accounts and other records containing all information and data which may be necessary to ascertain
and verify the royalties and other amounts payable by Mutual to Adams under Sections 5(b)(i) and
6(b) of this Agreement. Adams shall keep correct and complete books of accounts and other records
containing all information and data which may be necessary to ascertain and verify the amounts
payable by Adams to Mutual under Section 5(b)(i) of this Agreement. During the term of this
Agreement and for a period of two (2) years following its termination or expiration, each Party
(the “Payee”) shall have the right from time to time (at its expense) to have an
independent certified public accountant inspect such books and records of the other Party (the
“Payor”), its Affiliates, and its single Sublicensee (if applicable). Such inspection shall
be conducted after reasonable prior notice by the Payee to the Payor during the Payor’s ordinary
business hours and shall not be more frequent than once during each calendar year. Any such
independent certified accountant shall be reasonably acceptable to the Payor, shall execute the
Payor’s standard form of confidentiality agreement, and shall be permitted to share with the Payee
solely its findings with respect to the accuracy of the royalties or other amounts reported as
payable under this Agreement. If such accounting determines that the Payor paid the Payee less
than the amount properly due in respect of any period, then the Payor shall promptly reimburse the
Payee such amount and if the amount underpaid exceeds five percent (5%) of the amount actually due
then the Payor shall also reimburse the Payee for the costs of such audit.

     (g) The Payor shall pay interest to the Payee on the aggregate amount of any payments that are
not paid on or before the date such payments are due under this Agreement at a rate per annum equal
to the lesser of one percent (1%) per month or the highest rate permitted by applicable law,
calculated on the number of days such payments are paid after the date such payments are due and
compounded monthly.

     7. Mutual hereby admits that the products described in the Mutual ANDA would infringe claims
24-28, 31-34 and 40 of the Adams Patent and claims 62-63 (Appendix A) from the Reexamination in the
Territory, and that if Mutual were to make, use, offer for sale, or sell a Licensed Product in the
Territory, such product would infringe said claims of the Adams Patent and the Reexamination,
respectively. Notwithstanding the above, nothing in this Agreement shall be construed or cited as
an admission of infringement (a) by any product other than a Licensed Product or (b) of any foreign
patent or currently pending patent applications.

     8. Mutual hereby admits that the Adams Patent and claims issuing from the Reexamination are
valid and enforceable in the Territory and agrees not to challenge the validity or enforceability
of the Adams Patent in the Territory on any grounds in the future. Notwithstanding the above,
nothing in this Agreement shall (a) be construed or cited as an admission of validity or
enforceability of any foreign patent or currently pending patent
applications or (b) prohibit Mutual from asserting that a non-Licensed Product does not
infringe the Adams Patent or claims issuing from the Reexamination on the grounds that such
non-Licensed Product is identical to prior art not currently known to Mutual and/or its counsel.
Prior art currently known to Mutual and/or its counsel includes, but is not limited to, all prior
art cited: (i) in the Lawsuit, (ii) in the Adams patent, (iii) in the Reexamination, (iv) in U.S.
Patent

- 13 -

 

No. 6,955,821 and (v) in any divisional, continuation, or continuation in part of U.S.
Application No. 09/559,542 that is currently publicly available, or any other prior art that is
currently in the possession of Mutual or its counsel.

     9. In the event Mutual breaches this Agreement by launching a Licensed Product prior to its
Marketing License Effective Date, Mutual hereby consents to the entry of a preliminary injunction
prohibiting such sales.

     10. If Mutual files a new ANDA and provides a certification letter pursuant to 21 U.S.C. §
355(j)(2)(B) representing that the new formulation is a Licensed Product, then all references in
this Agreement to the Mutual ANDA shall automatically include such new ANDA. Nevertheless, nothing
in this Agreement shall prohibit Adams from commencing a patent infringement suit against Mutual
based upon a new ANDA seeking FDA approval of Bilayered Products.

     11. In accordance with 35 U.S.C. § 287, Mutual agrees to affix or provide the proper patent
markings to all Licensed Products offered for sale or sold under this Agreement.

     12. Mutual acknowledges and agrees that, except as otherwise expressly stated in this
Agreement, nothing in this Agreement gives Mutual any rights: (a) with respect to any Licensed
Product outside the Territory; (b) with respect to any product other than a Licensed Product; or
(c) to make, use, import, offer for sale, market or sell any generic version of any Adams
guaifenesin product at any time prior to the applicable Marketing License Effective Date.

     13. Adams hereby agrees not to interfere with or attempt to influence in any way FDA’s review
of Mutual’s, Mutual’s Affiliates or its single Sublicensee’s ANDAs for Licensed Products or to
comment on such ANDAs to FDA. To the extent Mutual continues to seek FDA approval of the Mutual
ANDA, Mutual hereby confirms its prior statement to FDA that it intends to submit to FDA’s Office
of Generic Drugs all bioequivalence data that Mutual submitted in NDA 21-950 and all correspondence
between FDA and Mutual regarding NDA 21-950. If Mutual decides to withdraw its ANDA, Mutual will
do so within five (5) days of making that decision. If Mutual decides to pursue approval of the
Mutual ANDA or refile the Mutual ANDA, Mutual affirms that it will submit the foregoing biostudies
and correspondence to FDA’s Office of Generic Drugs in sufficient time to allow review of this
information prior to approval of the Mutual ANDA.

     14. Adams hereby covenants not to sue Mutual for patent infringement for making, using,
selling or offering for sale Licensed Products, including without limitation a suit under 35 U.S.C.
§ 271(e)(2) in response to the filing of an ANDA by Mutual, except if making, using, selling or
offering for sale Licensed Products is a violation or breach of the Agreement, Adams may initiate
suit against Mutual.

     15. Each Party hereto represents and warrants to the other Party that, as of the date hereof:

- 14 -

 

	 	(a)	 	this Agreement is a legal, valid and binding obligation of the
warranting Party, enforceable against such Party in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally or by general
principles of equity;
	 
	 	(b)	 	the warranting Party is not subject to any judgment, order,
injunction, decree or award of any court, administrative agency or governmental
body that would or might interfere with its performance of any of its material
obligations hereunder; and
	 
	 	(c)	 	the warranting Party has full power and authority to enter into
and perform its obligations under this Agreement in accordance with its terms.

     16. Adams represents and warrants that, as of the date hereof, it (i) presently owns, licenses
or has the legal rights to the Adams Patent and NDA No. 21-282, (ii) has the legal right to grant
the License and other rights granted to Mutual hereunder, (iii) has the right to settle the
Lawsuits, and (iv) is required to pay a royalty in respect of the manufacture of Adams Guaifenesin
Products of not more than $500,000 dollars annually. Mutual represents and warrants that it has
the right to settle the Lawsuits. Mutual further represents and warrants that, as of the date
hereof, Mutual Pharmaceutical Company, Inc. presently owns and has the legal rights to the Mutual
ANDA.

     17. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS
OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.

     18. Neither Party hereto may assign any of its rights or obligations under this Agreement
without the prior written consent of the other Party, except to an Affiliate, or in
connection with a merger, reorganization, change of control or sale of all or substantially all of
the business of such Party to which this Agreement relates. Any purported assignment in violation
of the foregoing shall be null and void ab initio and of no force or effect. No assignment of this
Agreement will relieve the assigning Party from any of its obligations hereunder. In the event of
a permitted assignment, this Agreement shall be binding upon and inure solely to the benefit of the
Parties and their respective successors and permitted assigns.

     19. For avoidance of doubt, all rights and licenses granted under or pursuant to any section
of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code (the “Bankruptcy Code”), licenses of “intellectual property” as
defined under the Bankruptcy Code. The Parties shall retain and may fully exercise all of their
respective rights and elections under the Bankruptcy Code; provided, however, that
should Adams become a party to a bankruptcy proceeding and such proceeding is not dismissed within
thirty (30) days then, to the extent permitted by law, this Agreement and the licenses granted by
Adams hereunder shall be adopted by any bankruptcy trustee or relevant Third Party charged with the
disposition of same, and shall not be rejected by same, it being the Parties’ intent that, in

- 15 -

 

such event, Mutual and its Affiliates and single Sublicensee shall be entitled to retain the rights
granted to them hereunder by Adams.

     20.

	 	(a)	 	With respect to the Confidential Information pertaining to the
subject matter of this Agreement that was exchanged between the Parties prior
to the Effective Date of the Agreement, the Protective Order entered in the
Lawsuit shall govern; provided, however, that each Party agrees that within
five (5) years after the Effective Date, unless subject to litigation, it shall
return to the other Party all documentation or other tangible evidence or
embodiment of Confidential Information belonging to the other Party that it or
its outside counsel has retained pursuant to the Protective Order and not to
use same, unless otherwise agreed in writing. With respect to Confidential
Information exchanged after the Effective Date of the Agreement, each Party
shall keep confidential and not disclose to others or use for any purpose,
other than as authorized by this Agreement or the Supply Agreement, all such
Confidential Information that was provided to it by the other Party or its
Affiliates or Sublicensee or their respective employees or representatives. For
purposes of this Agreement, “Confidential Information” means proprietary or
confidential know-how, trade secrets, formulae, data, inventions, technology
and other information of such Party. To the extent a Party considers
information “Confidential” under this Agreement, it shall be so identified and
marked, or if provided orally shall be memorialized in writing and identified
as “Confidential” within thirty (30) days after disclosure. This Section shall
not apply to any Confidential Information that: (i) was already known to the
recipient at the time of disclosure, as reasonably documented by written
records; (ii) is or later becomes public knowledge through no fault of the
recipient; (iii) is received from a Third Party having the lawful right to
disclose the information; or (iv) is independently developed by employees of
the recipient without access to the disclosing Party’s Confidential
Information. A Party may disclose Confidential Information of the other Party
to (x) its Affiliates and Sublicensee, and to its and their directors,
employees, consultants and agents, in each case who have a specific need to
know such Confidential Information and who are bound by a like obligation of
confidentiality and restriction on use, and (y) to the extent such disclosure
is required to comply with applicable law or to defend or prosecute litigation;
provided, however, that the receiving Party provides prior
written notice of such disclosure pursuant to clause (y) to the disclosing
Party and takes reasonable an lawful actions to avoid or minimize the degree of
such disclosure, including upon the disclosing
Party’s request, seeking confidential treatment of such Confidential
Information. Upon the expiration or termination of this Agreement for any
reason, each Party agrees, except as otherwise provided in this Agreement,
to return within thirty (30) days to the other Party all documentation or

- 16 -

 

	 	 	 	other tangible evidence or embodiment of Confidential Information belonging
to the other Party and not to use same, unless otherwise agreed in writing.
	 	 	 	 
	 	(b)	 	Prior to the execution of this Agreement by both Parties the
Parties shall agree in writing upon one or more press releases to be issued
separately by the Parties publicizing the execution of this Agreement, and any
Party holding a press conference regarding this Agreement shall provide a copy
of the transcript sufficiently in advance to provide an opportunity for the
other Party to provide comments. Each Party agrees that it will not make
disparaging public comments about the other Party in connection with this
Agreement, the Lawsuits or the Mutual ANDA. Mutual affirms that it does not
currently intend to send out a press release publicizing the execution of this
Agreement. Except as consistent with press releases mutually agreed by the
Parties, and information disclosed in this Agreement as provided to the
pertinent regulatory authorities such as the Securities and Exchange
Commission, no public announcement or other disclosure to Third Parties
concerning the existence of or terms of this Agreement shall be made, either
directly or indirectly, by either Party, without first obtaining the written
approval of the other Party and agreement upon the nature, text and timing of
such announcement or disclosure; provided, however, either
Party shall have the right to make any such public announcement or other
disclosure required by law after such Party has provided to the other Party a
copy of such announcement or disclosure and a reasonable opportunity to comment
thereon. Each Party agrees that it shall cooperate fully with the other with
respect to all disclosures regarding this Agreement to the Securities Exchange
Commission and any other governmental or regulatory agencies, including
requests for confidential treatment of proprietary information of either Party
included in any such disclosure.

     21. The Parties each covenant that, at their own expense:

	 	(a)	 	they shall use their respective reasonable efforts to resolve
any and all objections that may be asserted with respect to this Agreement
under any applicable law;
	 
	 	(b)	 	they shall use their respective reasonable efforts to obtain
approval of this Agreement under all applicable laws and shall make all
required filings with all governmental authorities, including without
limitation the reporting of this Agreement to the Federal Trade Commission and
the Department of Justice pursuant to Section 1112 of Title XI of the Medicare
Prescription Drug Improvement and Modernization Act of 2003;
	 
	 	(c)	 	they shall use their respective reasonable efforts to comply
with and terminate any investigation or inquiry regarding the Agreement by any

- 17 -

 

	 	 	 	government authority, including in exchanging information, permitting
reasonable access to Adams’ and Mutual’s documents, officials and data in
connection with receiving approvals of this Agreement by all governmental
authorities;
	 
	 	(d)	 	if any administrative, judicial or legislative action or
proceeding is instituted (or threatened to be instituted) challenging the
transaction contemplated by this Agreement as violative of any applicable law,
Adams and Mutual will render reasonable assistance to contest and resist any
such action or proceeding, and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order (whether temporary, preliminary
or permanent) that is in effect and that challenges this Agreement, including,
without limitation, by pursuing all reasonable avenues of administrative and
judicial appeal; and
	 
	 	(e)	 	they shall promptly inform each other of any material
communication made to, or received by such Party from any governmental
authority regarding this Agreement.

     22. The relationship between the Parties created by this Agreement is one of independent
contractors. Neither Adams nor Mutual shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall be binding on the
other, without the prior consent of the other Party. All persons employed by a Party shall be
employees of such Party and not of the other Party and all costs and obligations incurred by reason
of any such employment shall be for the account and expense of such Party.

     23. Should this Agreement be rendered null and void for any reason, Adams agrees not to use
any of the stipulations contained herein or attached hereto in any subsequent litigation.

     24. Any representation, warranty, covenant, term or condition of this Agreement which may
legally be waived, may be waived, or the time of performance thereof extended, at any time by the
Party hereto entitled to the benefit thereof, and any term, condition or covenant (including,
without limitation, the period during which any condition is to be satisfied or any obligation
performed) may be amended by the Parties hereto at any time. Any such waiver, extension or
amendment by a Party shall be evidenced by an instrument in writing executed by an officer of such
Party authorized to execute waivers, extensions or amendments. No waiver by any Party, whether
express or implied, of its rights under any provision of this Agreement or otherwise shall
constitute a waiver of such Party’s rights under such provisions at any other time or a waiver of
such Party’s rights under any other provision of this Agreement. No failure by any Party to take
any action against any breach of this Agreement or default by the other Party shall constitute a
waiver of the non-breaching Party’s right to enforce any provision of this Agreement
or to take action against such breach or default or any subsequent breach or default by such
other Party.

     25. The Parties agree and acknowledge that this Agreement is the product of both Parties and
shall not be construed against either of the Parties other than in accordance with its

- 18 -

 

terms. The Parties acknowledge that each has been advised by counsel during the course of negotiation of this
Agreement and, therefore, that this Agreement shall be interpreted without regard to any
presumption or rule requiring construction against the Party causing this Agreement to be drafted.

     26. The Parties agree that there is no adequate remedy at law for the damage which either
Party might sustain for breach of this Agreement and, accordingly, each Party shall be entitled, as
its option, to specific performance, in addition to any other remedy at law or in equity, to
enforce the terms hereof.

     27. All notices, requests, consents and other communications required or permitted under this
Agreement shall be in writing and shall be (as elected by the Party giving such notice) hand
delivered by messenger or courier service, or mailed by registered or certified mail (postage
prepaid), return receipt requested, or delivered by overnight delivery service, addressed to:

In the case of Adams:

Adams Respiratory Therapeutics, Inc.

4 Mill Ridge Lane

Mill Ridge Farm

Chester, NJ 07930

Attention: CEO

with a copy to

Adams Respiratory Therapeutics, Inc.

4 Mill Ridge Lane

Mill Ridge Farm

Chester, NJ 07930

Attention: General Counsel

and

In the case of Mutual:

Mutual Pharmaceutical Company, Inc.

1100 Orthodox Street

Philadelphia, PA 19124

Attention: President

with a copy to:

Mutual Pharmaceutical Company, Inc.

1100 Orthodox Street

- 19 -

 

Philadelphia, PA 19124

Attention: Legal Department

Each such notice shall be deemed delivered (a) on the date delivered if by personal or overnight
delivery, and (b) on the date upon which the return receipt is signed or delivery is refused or the
notice is designated by the postal authorities as not deliverable, as the case may be, if mailed.
A contemporaneous courtesy copy of any communications with FDA under this Agreement shall be
provided to a single designated outside law firm, which shall not communicate this information to
Adams.

     28. This Agreement and any dispute arising out of or related to this Agreement shall be
governed by and construed in accordance with the internal laws of the State of New York, without
giving effect to conflicts of law principles that would dictate the application of the law of
another jurisdiction. Any Proceeding against any Party with respect to this Agreement or any
judgment entered by any court in respect of this Agreement shall be brought in state or federal
courts located in the Eastern District of Pennsylvania, and the Parties hereto accept the exclusive
jurisdiction of such courts for the purpose of any such suit, action or proceeding. In addition,
the Parties irrevocably waive, to the fullest extent permitted by law, any objection that they may
now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, or any judgment entered by any court in respect hereof brought in the
Eastern District of Pennsylvania and further irrevocably waive any claim that any suit, action or
proceeding brought in the Eastern District of Pennsylvania was brought in an inconvenient forum.

     29. This Agreement may be executed in any number of counterparts, and execution by each of the
Parties of anyone of such counterparts will constitute due execution of this Agreement. Each such
counterpart hereof shall be deemed to be an original instrument, and all such counterparts together
shall constitute but one agreement.

     30. This Agreement, including the Appendices attached hereto, together with the Supply
Agreement, contains every obligation and understanding between the Parties relating to the subject
hereof and merges all prior discussions, negotiations and agreements, if any, between them, and
none of the Parties shall be bound by any conditions, definitions, understandings, warranties or
representations other than as expressly provided or referred to herein.

     31. If any provision of this Agreement is held invalid, illegal or unenforceable for any
reason, the Parties shall negotiate in good faith for a substitute provision to continue the intent
and purpose of such invalid provision taking into account the intent and purpose of the
overall Agreement, and the validity, legality and enforceability of the remaining provisions shall
not be in any way impaired thereby.

     32. No person other than the Parties hereto and their respective Affiliates, successors and
permitted assigns shall be deemed an intended beneficiary hereunder or have any legal or equitable
rights or benefits to enforce any provision of this Agreement.

- 20 -

 

This Agreement is signed as indicated below by duly authorized representatives of Adams and Mutual,
respectively, effective as of the date first written above.

	 	 	 	 	 
	 	 	ADAMS RESPIRATORY
THERAPEUTICS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Robert D. Casale
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	Robert D. Casale
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	COO
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	3/21/2007
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	ADAMS RESPIRATORY OPERATIONS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Robert D. Casale
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	Robert D. Casale
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	COO
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	3/21/2007
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	ADAMS RESPIRATORY
PRODUCTS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Robert D. Casale
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	Robert D. Casale
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	COO
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	3/21/2007
	 

	 	 	 	 

- 21 -

 

	 	 	 	 	 
	 	 	PHARMACEUTICAL HOLDINGS CORP.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Richard H. Roberts, M.D., Ph.D.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	Richard H. Roberts, M.D., Ph.D.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	President & CEO
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	3/21/07
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	MUTUAL PHARMACEUTICAL CO., INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Richard H. Roberts, M.D., Ph.D.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	Richard H. Roberts, M.D., Ph.D.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	President & CEO
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	3/21/07
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	UNITED RESEARCH LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Richard H. Roberts, M.D., Ph.D.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	Richard H. Roberts, M.D., Ph.D.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	President & CEO
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	3/21/07
	 

	 	 	 	 

- 22 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]