Document:

EX-10.1

 

EXHIBIT 10.1

Execution Version CONFIDENTIAL

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

BY AND BETWEEN

ACURA PHARMACEUTICALS, INC.

AND

KING PHARMACEUTICALS RESEARCH AND DEVELOPMENT, INC.

 

			
	[***	 	Confidential treatment requested pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission. Omitted portions have been separated filed with the
Commission.]

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE 1 DEFINITIONS	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 2 GRANTS	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	 	2.1	 	 	License Grants; Future Products
	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	 	2.2	 	 	Sublicense Rights
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	2.3	 	 	No Implied Licenses
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	2.4	 	 	Retained Rights
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 3 GOVERNANCE	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	3.1	 	 	Joint Steering Committee
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	3.2	 	 	Minutes of Committee Meetings
	 	 	13	 
	 	 	 	 	 
	 	 	 	 
	 	3.3	 	 	Expenses
	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	3.4	 	 	Initial Meeting
	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 4 DEVELOPMENT	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	4.1	 	 	Product A Development
	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	4.2	 	 	Product B Development
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	 	4.3	 	 	Future Product Development and Product Line Extensions
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	 	4.4	 	 	Development Reports
	 	 	16	 
	 	 	 	 	 
	 	 	 	 
	 	4.5	 	 	Development Data
	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	4.6	 	 	Use of Third Parties
	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	4.7	 	 	Diligence
	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 5 REGULATORY AFFAIRS	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	5.1	 	 	Regulatory Submissions and Approvals
	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	5.2	 	 	Pharmacovigilance
	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	 	5.3	 	 	Data Access
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	 	5.4	 	 	Participation in Meetings in the United States
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 6 COMMERCIALIZATION	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	 	6.1	 	 	Overview and Diligence
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	 	6.2	 	 	Commercialization Plan
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	 	6.3	 	 	Updates
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	 	6.4	 	 	Expenses and Responsibilities
	 	 	21	 

 

 

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	 	 	 	 	 	 	Page
	 	6.5	 	 	Diligence
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	 	6.6	 	 	Contract Sales Organizations
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 7 PRODUCT SUPPLY	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	 	7.1	 	 	Supply of Products
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	 	7.2	 	 	Supply of Product A
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 8 PAYMENTS TO ACURA	 	 	22	 
	 	 	 	 	 
	 	 	 	 
	 	8.1	 	 	Upfront Fee
	 	 	22	 
	 	 	 	 	 
	 	 	 	 
	 	8.2	 	 	Milestone Payments
	 	 	22	 
	 	 	 	 	 
	 	 	 	 
	 	8.3	 	 	Development Expenses
	 	 	22	 
	 	 	 	 	 
	 	 	 	 
	 	8.4	 	 	Requirements for King Reimbursement of Acura Development Expenses
	 	 	23	 
	 	 	 	 	 
	 	 	 	 
	 	8.5	 	 	Invoices
	 	 	23	 
	 	 	 	 	 
	 	 	 	 
	 	8.6	 	 	Future Product Option Exercise
	 	 	24	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 9 ROYALTIES	 	 	25	 
	 	 	 	 	 
	 	 	 	 
	 	9.1	 	 	Royalty Payments
	 	 	25	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 10 ACCOUNTING AND AUDITING	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	 	10.1	 	 	Currency
	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	 	10.2	 	 	Payments
	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	 	10.3	 	 	Taxes
	 	 	27	 
	 	 	 	 	 
	 	 	 	 
	 	10.4	 	 	Accounting
	 	 	27	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 11 PATENT RIGHTS AND TRADEMARKS	 	 	28	 
	 	 	 	 	 
	 	 	 	 
	 	11.1	 	 	Ownership of Inventions
	 	 	28	 
	 	 	 	 	 
	 	 	 	 
	 	11.2	 	 	Prosecution and Maintenance of Patent Rights
	 	 	29	 
	 	 	 	 	 
	 	 	 	 
	 	11.3	 	 	Third Party Infringement
	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	 	11.4	 	 	Patent Invalidity Claim
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	11.5	 	 	Claimed Infringement
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	11.6	 	 	Patent Term Extensions
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	11.7	 	 	Patent Marking
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	11.8	 	 	Trademarks
	 	 	33	 

 

 

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	ARTICLE 12 CONFIDENTIAL INFORMATION	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	12.1	 	 	Treatment of Confidential Information
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	12.2	 	 	Exceptions to Definition of Confidential Information
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	12.3	 	 	Exceptions
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	12.4	 	 	Previous Confidentiality Agreement
	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	12.5	 	 	Publications
	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	12.6	 	 	Publicity
	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 13 COVENANTS, REPRESENTATIONS AND WARRANTIES	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	 	13.1	 	 	Covenants Not to Compete
	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	 	13.2	 	 	Mutual Representations and Warranties
	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	13.3	 	 	Additional Representations of Acura
	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	13.4	 	 	Additional Representation of King
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	13.5	 	 	Disclaimer of Warranty
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	13.6	 	 	Conditions Precedent
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	13.7	 	 	Existing Liens; Negative Pledge
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	13.8	 	 	Efforts to Satisfy Conditions
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 14 INDEMNIFICATION AND INSURANCE	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	14.1	 	 	By Acura
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	14.2	 	 	By King
	 	 	42	 
	 	 	 	 	 
	 	 	 	 
	 	14.3	 	 	Procedure for Indemnification
	 	 	42	 
	 	 	 	 	 
	 	 	 	 
	 	14.4	 	 	Assumption of Defense
	 	 	43	 
	 	 	 	 	 
	 	 	 	 
	 	14.5	 	 	No Consequential or Punitive Damages
	 	 	43	 
	 	 	 	 	 
	 	 	 	 
	 	14.6	 	 	Insurance
	 	 	43	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 15 HSR	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	15.1	 	 	HSR
	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 16 TERM AND TERMINATION	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	16.1	 	 	Term
	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	16.2	 	 	Termination Prior to Closing
	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	16.3	 	 	Termination by King
	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	16.4	 	 	Termination by Acura
	 	 	44	 

 

 

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	 	16.5	 	 	Termination for Breach or Bankruptcy
	 	 	45	 
	 	 	 	 	 
	 	 	 	 
	 	16.6	 	 	Patent Challenge
	 	 	45	 
	 	 	 	 	 
	 	 	 	 
	 	16.7	 	 	Consequences of Termination
	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	 	16.8	 	 	Bankruptcy
	 	 	47	 
	 	 	 	 	 
	 	 	 	 
	 	16.9	 	 	Survival of Obligations
	 	 	47	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 17 MISCELLANEOUS	 	 	48	 
	 	 	 	 	 
	 	 	 	 
	 	17.1	 	 	Governing Law
	 	 	48	 
	 	 	 	 	 
	 	 	 	 
	 	17.2	 	 	Compliance with Law
	 	 	48	 
	 	 	 	 	 
	 	 	 	 
	 	17.3	 	 	Force Majeure
	 	 	48	 
	 	 	 	 	 
	 	 	 	 
	 	17.4	 	 	Waiver
	 	 	48	 
	 	 	 	 	 
	 	 	 	 
	 	17.5	 	 	Notices
	 	 	48	 
	 	 	 	 	 
	 	 	 	 
	 	17.6	 	 	Relationship of the Parties
	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	 	17.7	 	 	Entire Agreement
	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	 	17.8	 	 	Headings
	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	 	17.9	 	 	Severability
	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	 	17.10	 	 	Assignment and Transfer
	 	 	50	 
	 	 	 	 	 
	 	 	 	 
	 	17.11	 	 	Successors and Assigns
	 	 	50	 
	 	 	 	 	 
	 	 	 	 
	 	17.12	 	 	Interpretation
	 	 	50	 
	 	 	 	 	 
	 	 	 	 
	 	17.13	 	 	Counterparts
	 	 	51	 
	 	 	 	 	 
	 	 	 	 
	 	17.14	 	 	Further Actions
	 	 	51	 

 

 

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

     This LICENSE, DEVELOPMENT and COMMERCIALIZATION AGREEMENT (this “Agreement”), having a date of
October 30, 2007 (the “Execution Date”), is made by and between Acura Pharmaceuticals, Inc.
(“Acura”), a New York corporation, having its principal place of business at 616 N. North Court,
Suite 120, Palatine, IL 60067, and King Pharmaceuticals Research and Development, Inc. (“King”), a
Delaware corporation and wholly owned subsidiary of King Pharmaceuticals, Inc., having a place of
business at 4000 CentreGreen Way, Cary, NC 27513.

RECITALS

     WHEREAS, Acura has developed Aversion® Technology (as defined herein) and related products
intended to deter pharmaceutical product abuse;

     WHEREAS, King has expertise in the development, manufacture and commercialization of
pharmaceutical products; and

     WHEREAS, King desires to secure rights to further develop, manufacture, use and commercialize
certain products and Acura desires to grant such rights, each pursuant to the terms and conditions
of this Agreement.

     NOW THEREFORE, in consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Acura and King agree as follows:

ARTICLE 1

DEFINITIONS

     As used in this Agreement, the following terms, whether used in the singular or plural, shall
have the following meanings:

     1.1 “Acura Development Expenses” shall have the meaning given in Section 8.3.

     1.2 “Acura Indemnitees” shall have the meaning given in Section 14.2.

     1.3 “Acura Sole Inventions” shall have the meaning given in Section 11.1(a).

     1.4 “Affiliate” of a Party means any person, whether de jure or de facto, which directly or
indirectly controls, is controlled by, or is under common control with such person for so long as
such control exists, where “control” means the decision-making authority as to such person and,
further, where such control shall be presumed to exist where a person owns more than fifty percent
(50%) of the equity (or such lesser percentage which is the maximum allowed to be owned by a
foreign corporation in a particular jurisdiction) having the power to vote on or direct the affairs
of the entity.

 

			
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     1.5 “ANDA” means an abbreviated new drug application and any amendments thereto submitted to
the FDA.

     1.6 “Applicable Royalty Rate” shall have the meaning given in Section 9.1.

     1.7 “Aversion® Composition” means a composition having [***].

     1.8 “Aversion® Invention” shall have the meaning given in Section 11.1.

     1.9 “Aversion® Patent Rights” means the patents and patent applications set forth on
Schedule 1.9 as well as those identified in Section 11.1(d) and any patents and patent
applications claiming the Aversion Composition owned or controlled by Acura or its Affiliates
during the Term, issued patents resulting from such applications, and all divisions, continuations,
substitutions, reissues, extensions, registrations, patent term extensions and renewals of the
foregoing.

     1.10 “Aversion® Technology” means the technology reflected in the Aversion Patent Rights, the
inventions identified in Section 11.1(d) and all know-how, trade secrets, and proprietary
information developed, owned or controlled by Acura or its Affiliates on the Execution Date or any
time during the Term relating to any Aversion Composition or a Product.

     1.11 “Bankruptcy Code” shall have the meaning given in Section 16.8.

     1.12 “Breaching Party” shall have the meaning given in Section 16.5(a).

     1.13 “Bundling” means discounting the price of any Product as part of any quantity purchase
program, disease management programs or similar programs based on purchase of multiple products
offerings such that the applicable rebate, discount, other form of reimbursement for, or the price
of, such Product in such arrangement is inconsistent with the rebate, discount, or other form of
reimbursement for, or price of, such Product when sold separately.

     1.14 “cGCP” means current Good Clinical Practices (a) as promulgated under 21 C.F.R. Parts 11,
50, 54, 56, 312, and 314, as the same may be amended or re-enacted from time to time and (b)
required by law in countries other than the United States where clinical studies are conducted.

     1.15 “cGLP” means current Good Laboratory Practices (a) as promulgated under 21 C.F.R. Part
58, as the same may be amended or re-enacted from time to time and (b) as required by law in
countries other than the United States where non-clinical laboratory studies are conducted.

     1.16 “cGMP” means current Good Manufacturing Practices (a) as promulgated under 21 C.F.R.
Parts 210 and 211, as the same may be amended or re-enacted from time to time and (b) as required
by law in countries other than the United States where pharmaceutical product manufacturing is
conducted.

 

			
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     1.17 “Calendar Quarter” means for each Calendar Year, each of the three calendar month periods
ending March 31, June 30, September 30 and December 31; provided, however, that the first calendar
quarter for the first Calendar Year shall extend from the Effective Date to December 31, 2007 and
the last calendar quarter for the last Calendar Year shall extend from the beginning of the last
complete calendar quarter to the effective date of expiration or termination of this Agreement.

     1.18 “Calendar Year” means, (a) for the first calendar year, the period commencing on the
Effective Date and ending on December 31, 2007, (b) for each successive calendar year, the period
beginning on January 1 and ending twelve (12) consecutive calendar months later on December 31, and
(c) for the calendar year in which this Agreement is terminated or expires, the period beginning on
January 1 of such calendar year and ending on the effective date of the termination or expiration
of this Agreement.

     1.19 “Change of Control” means, with respect to any Party, the consummation of any transaction
of the following events: (a) any Third Party (or group of Third Parties acting in concert) becomes
the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the total voting
power of the stock then outstanding of such Party normally entitled to vote in elections of
directors; (b) such Party consolidates with or merges into another corporation or entity, or any
corporation or entity consolidates with or merges into such Party, in either event pursuant to a
transaction in which more than fifty percent (50%) of the total voting power of the stock
outstanding of the surviving entity normally entitled to vote in elections of directors is not held
by the parties holding at least fifty percent (50%) of the outstanding shares of such Party
immediately preceding such consolidation or merger; (c) such Party conveys, transfers or leases all
or substantially all of its assets, or (d) any other arrangement whereby a Third Party controls or
has the right to control the board of directors or equivalent governing body that has the ability
to cause the direction of the management or policies of such Party.

     1.20 “Claim” shall have the meaning given in Section 14.1.

     1.21 “Commercialization Plan” shall have the meaning given in Section 6.2.

     1.22 “Commercialize” means, with respect to a Product, any and all activities directed to
marketing, advertising, promoting, detailing, distributing, offering for sale and selling a
Product. When used as a verb, “Commercialize” means to engage in Commercialization.

     1.23 “Commercially Reasonable Efforts” means with respect to a Party, the efforts and
resources which would be used (including the promptness in which such efforts and resources would
be applied) by that Party consistent with its normal business practices, which in no event shall be
less than the level of efforts and resources standard in the pharmaceutical industry for a company
similar in size and scope to such Party, with respect to a product or potential product at a
similar stage in its Development or product life cycle taking into account efficacy, safety,
commercial value, the competitiveness of alternative products of Third Parties that are in the
marketplace, and the patent and other proprietary position of such product.

     1.24 “Competitive Infringement” shall have the meaning given in Section 11.3(a).

 

			
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     1.25 “Confidential Information” shall have the meaning given in Section 12.1.

     1.26 “Cover”, “Covering” or “Covered” means, with respect to a product or with respect to
technology, that, in the absence of a license granted under a Valid Claim, the making, use,
offering for sale, sale, or importation of such product or the practice of such technology would
infringe such Valid Claim.

     1.27 “Development” means non-clinical (including pre-clinical) and clinical drug development
activities, including formulation development and optimization, stability testing, laboratory
analysis and testing, toxicology studies, statistical analysis and report writing, conducting
clinical trials for the purpose of obtaining or maintaining Regulatory Approval (including
post-marketing studies) and regulatory affairs related to all of the foregoing. Development shall
include all studies primarily intended to support or maintain a product label or obtain any product
labeling change. When used as a verb, “Develop” and “Developing” mean to engage in Development.

     1.28 “Development Plan” shall have the meaning given in Section 4.3(c).

     1.29 “Disclosing Party” shall have the meaning given in Section 12.1.

     1.30 “DoJ” shall have the meaning given in Section 15.1.

     1.31 “Domain Name” means all domain names and domain name registrations incorporating or
utilizing any Trademark.

     1.32 “Effective Date” means the date on which all conditions precedent set forth in Section
13.6 are satisfied.

     1.33 “Execution Date” shall have the meaning given in the first paragraph hereof.

     1.34 “Existing Liens” means the liens securing Acura’s obligations under that certain Loan
Agreement dated as of March 29, 2000, as amended to date, between Acura and Galen Partners III,
L.P. (as assignee of Watson Pharmaceuticals, Inc. and as Agent under that certain Noteholders
Agreement dated as of February 6, 2004 by and among Acura, Galen Partners III, L.P. and the other
signatories thereto) including Acura’s obligations under (i) the Secured Promissory Note dated as
of December 20, 2002, as amended to date, payable to Galen Partners III, L.P., as agent, in the
principal amount of $5 million, and (ii) all security agreements, collateral assignments, pledge
agreements and mortgage agreements executed by Acura and Acura Pharmaceutical Technologies, Inc.,
its wholly-owned subsidiary, in connection with such Loan Agreement pursuant to which Acura and
Acura Pharmaceutical Technologies, Inc. have granted in favor of Galen Partners III, L.P., as
agent, a lien on all assets, tangible and intangible, of Acura and Acura Pharmaceutical
Technologies, Inc. (collectively, such Loan Agreement, such Noteholders Agreement, such Secured
Promissory Note and all such security agreements, collateral assignments, pledge agreements and
mortgage agreements, the “Acura Loan Agreements”).

     1.35 “Expiration Date” shall have the meaning given in Section 16.1.

 

			
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     1.36 “FDA” means the United States Food and Drug Administration.

     1.37 “Field” means all present and future indications, as a human therapeutic, for use of the
Products for the treatment of pain.

     1.38 “First Commercial Sale” means the date of the first invoice for a Product to a Third
Party resulting in Net Sales in any country in the Territory.

     1.39 “FTC” shall have the meaning given in Section 15.1.

     1.40 “Future Product” means all orally administered pharmaceutical products [***] for human
use, containing [***] in any strength, plus the Aversion® Composition [***] for Commercialization
in the Field in the Territory (other than Product A and Product B), in each case other than any
Product Line Extension.

     1.41 “Future Product Development Plan” shall have the meaning given in Section 4.3(c).

     1.42 “Future Product Option” shall have the meaning given in Section 2.1(e).

     1.43 “Future Product Option Term” shall have the meaning given in Section 8.6(a).

     1.44 “GAAP” shall mean United States generally accepted accounting principles consistently
applied.

     1.45 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.

     1.46 “IND” means an Investigational New Drug Application and any amendments thereto submitted
to the FDA.

     1.47 “Indemnified Party” shall have the meaning given in Section 14.3(a).

     1.48 “Indemnifying Party” shall have the meaning given in Section 14.3(a).

     1.49 “Invalidity Claim” shall have the meaning given in Section 11.4.

     1.50 “Joint Invention” shall have the meaning given in Section 11.1(b).

     1.51 “Joint Press Release” shall have the meaning given in Section 12.6.

     1.52 “Joint Steering Committee” or “JSC” shall have the meaning given in Section 3.1.

     1.53 “King Indemnitees” shall have the meaning given in Section 14.1.

     1.54 “King Sole Inventions” shall have the meaning given in Section 11.1(a).

 

			
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     1.55 “King’s Covenant” shall have the meaning given in Section 13.1(b).

     1.56 “Litigation Condition” shall have the meaning given in Section 14.3(b).

     1.57 “Losses” means any and all damages (including all incidental, consequential, statutory
and treble damages), awards, deficiencies, settlement amounts, defaults, assessments, fines, dues,
penalties, costs, fees, liabilities, obligations, taxes, liens, losses, lost profits and expenses
(including court costs, interest and reasonable fees of attorneys, accountants and other experts)
required to be paid to Third Parties with respect to a claim as to which a Party is entitled to
indemnification under Article 14, by reason of any judgment, order, decree, stipulation or
injunction, or any settlement entered into in accordance with the provisions of this Agreement,
together with all documented out-of-pocket costs and expenses incurred in complying with any
judgments, orders, decrees, stipulations and injunctions that arise from or relate to a claim of a
Third Party.

     1.58 “NDA” means a new drug application or supplemental new drug application and any
amendments thereto submitted to the FDA.

     1.59 “Net Sales” means the gross amount invoiced by King, its Affiliates or sublicensees, to
Third Parties for sale of Products, less, to the extent deducted by King from such gross invoice
amount the following amounts, all in accordance with GAAP:

          (a) trade or cash discounts for prompt payment to the extent actually allowed;

          (b) promotional allowances to the extent actually allowed;

          (c) price adjustments to the extent actually allowed;

          (d) quantity discounts (excluding any discounts relating to Bundling taken by King or its
Affiliates);

          (e) amounts accrued or actually paid for chargebacks;

          (f) amounts accrued or actually paid for rebates, including any and all non-government and
government rebates, such as Medicaid and Medicare rebates;

          (g) amounts accrued or actually refunded due to rejected, spoiled, damaged, outdated, short
dated, or returned Product;

          (h) sales and other excise taxes and duties or similar governmental charges levied on such
sale, to the extent such items are included in the gross amount invoiced;

          (i) freight, shipment and transportation costs incurred in distributing Products to a Third
Party purchaser to the extent such amounts are included in the gross amount invoiced; and

 

			
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          (j) fees associated with inventory management paid by King, its Affiliates or sublicensees to
wholesalers or distributors provided that (i) such fees are allocated directly to the Products and
in no event exceed the fee for other similar or similarly scheduled controlled substance products
sold by King, its Affiliates or sublicensees to such wholesaler or distributor and (ii) King, its
Affiliates or sublicensees deduct such fees when accounting for net sales as reported by such
entities in their public filings to the Securities and Exchange Commission.

          If any Products are sold to Third Parties in transactions that are not at arm’s length between
the buyer and seller, or for consideration other than cash, then the gross amount to be included in
the calculation of Net Sales for such sales shall be the amount that would have been invoiced had
the transaction been conducted at arm’s length, which amount shall be determined, whenever
possible, by reference to the average selling price of the relevant Product in arm’s-length
transactions in the country of sale at the time of sale.

     1.60 “Non-Breaching Party” shall have the meaning given in Section 16.5(a).

     1.61 “Notice” shall have the meaning given in Section 12.5(b).

     1.62 “Party” means Acura or King, and “Parties” means Acura and King.

     1.63 “Patent Challenge” shall have the meaning given in Section 16.6.

     1.64 “Phase III Clinical Trial” means a human clinical trial that is prospectively designed to
statistically demonstrate that a product is safe and effective for use in humans in the indication
being investigated in a manner sufficient to obtain Regulatory Approval to Commercialize such
product for patients having the disease or condition being studied as described in 21 C.F.R.
§312.21, or an equivalent clinical trial in a country in the Territory other than the United
States.

     1.65 “Product” means any of (i) Product A, (ii) Product B, (iii) any Future Product for which
King has timely exercised its Future Product Option, and (iv) any potential Future Product with
respect to which a Party is undertaking Proof of Concept Development activities (provided that any
such potential Future Product shall cease to be a Product if King does not exercise its Future
Product Option within the Future Product Option Term); and “Products” shall mean all of the
foregoing to the extent the same have not been terminated from this Agreement. Each Product shall
also include any Product Line Extension thereto.

     1.66 “Product A” means [***] pharmaceutical product for human use, intended for oral
administration in [***]: oxycodone HCl [***] with each tablet containing the Aversion® Composition
[***].

     1.67 “Product A Development Plan” shall have the meaning given in Section 4.1(a).

     1.68 “Product B” means [***] pharmaceutical product for human use, intended for oral
administration [***].

 

			
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     1.69 “Product B Development Plan” shall have the meaning given in Section 4.2(d).

     1.70 “Product C” means [***] Future Product [***].

     1.71 “Product D” means [***] Future Product [***].

     1.72 “Product Line Extension” with respect to Product A, Product B or a Future Product for
which King has timely exercised its Future Product Option, shall mean additional dosage strengths
of active analgesic ingredients, [***] change of dosage form (color, size, shape, coating and/or
tablet/capsule identification markings), changes from capsules to tablets or tablets to capsules,
and reformulation and/or other modification of such Product which is necessary (a) to achieve
and/or maintain Regulatory Approval for such Product, or (b) for safety reasons for such Product.

     1.73 “Product Line Extension Development Plan” shall have the meaning given in Section 4.3(d).

     1.74 “Projected Annual Net Sales” shall have the meaning given in Section 9.1.

     1.75 “Proof of Concept” means, in relation to a Future Product, documented completion of the
following studies in accordance with cGCP and/or cGLP and/or cGMP, as applicable: (a) a
pharmacokinetic study with [***] demonstrating an area under the curve (“AUC”) of [***] and the
geometric mean ratio of the AUC point estimate for each analgesic active ingredient in such Future
Product is within [***] of the applicable Orange Book reference listed strength of such Future
Product; and (b) stability studies and data, including a 4-point dissolution profile for [***]
products and a 5-point dissolution profile for [***] products consistent with current ICH
guidelines under one or more of the following conditions [***].

     1.76 “Publishing Party” shall have the meaning given in Section 12.5(a).

     1.77 “Receiving Party” shall have the meaning given in Section 12.1.

     1.78 “Regulatory Approval” means any approvals (including pricing and reimbursement
approvals), licenses, registrations or authorizations of any national or international or local
regulatory authority, department, bureau or other governmental entity, necessary for the
manufacture, marketing, distribution and sale of a Product in a regulatory jurisdiction in the
Territory.

     1.79 “Sale of the Field Business” means, with respect to King, any sale, divestment or other
transfer of all or substantially all of King’s then existing assets or business relating to
products in the Field, whether by asset sale, de-merger, spin-out, public offering, reorganization
or otherwise, and whether such sale, divestment or other transfer is to a Third Party.

     1.80 “Sole Inventions” shall have the meaning given in Section 11.1(a).

 

			
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     1.81 “Term” means the term of this Agreement, as more fully described in Section 16.1.

     1.82 “Territory” means United States, Canada and Mexico.

     1.83 “Third Party” means a person or entity other than (i) Acura or any of its Affiliates or
(ii) King or any of its Affiliates.

     1.84 “Third Party Claim” shall have the meaning given in Section 14.3(a).

     1.85 “Third Party Supplier” shall have the meaning given in Section 7.2(b).

     1.86 “Trademarks” means Aversion®, AcuroxTM, and AcuracetTM including all registrations relating
to such trademarks as may be issued by the United States Patent and Trademark Office, and any
stylized typographical treatments thereof, logo design incorporating such trademarks, or other
variants thereof, including all common law trademark and registered trademark rights therein.

     1.87 “Trademark Infringement Claim” shall have the meaning given in Section 11.8(d).

     1.88 “Trademark Infringement Notice” shall have the meaning given in Section 11.8(d).

     1.89 “United States” means the United States of America, its possessions and territories,
including Puerto Rico.

     1.90 “U.S. Prime Rate” means the base interest rate on corporate loans as published in the
Wall Street Journal.

     1.91 “Valid Claim” means a claim in an Aversion Patent Right that Covers a Product and with
respect to which none of the following ((i), (ii) or (iii)) apply: (i) has been held permanently
revoked, unenforceable or invalid in the Territory by a final unappealable decision of a court or
government agency of competent jurisdiction over such claim, (ii) has been admitted to be invalid
or unenforceable through disclaimers, consent decrees or otherwise or (iii) in the case of a patent
application, has been pending for more than seven (7) years after the filing of its first priority
application.

ARTICLE 2

GRANTS

     2.1 License Grants; Future Products.

          (a) Subject to the terms and conditions of this Agreement, Acura hereby grants to King an
exclusive (even as to Acura and its Affiliates) royalty-bearing license under the Aversion
Technology to Develop, manufacture, have manufactured, import, use and Commercialize Products in
the Field in the Territory (including the right to conduct clinical

 

			
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Development of the Products outside the Territory in support of Development and
Commercialization of such Products in the Territory), including the right to grant sublicenses in
accordance with Section 2.2.

          (b) Subject to the terms and conditions of this Agreement, Acura hereby grants to King an
exclusive (even as to Acura and its Affiliates) royalty-bearing license under the Aversion
Technology (including foreign counterparts and equivalents of patent rights to the extent any
exist) to manufacture and have manufactured Products outside the Territory in order to import, use
and Commercialize Products in the Field in the Territory, including the right to grant sublicenses
in accordance with Section 2.2.

          (c) Subject to the terms and conditions of this Agreement, Acura hereby grants to King an
exclusive (even as to Acura and its Affiliates) royalty-bearing license to use the Trademarks to
Commercialize (including to advertise, promote and distribute) the Products in the Field in the
Territory.

          (d) Subject to the terms and conditions of this Agreement, an exclusive (even as to Acura and
its Affiliates), royalty-bearing license to exploit the Domain Names in connection with the
Products.

          (e) Other than as may be required with respect to a potential Future Product with respect to
which King is undertaking Proof of Concept Development activities pursuant to and as permitted by
Section 2.1(f), King shall not practice the license rights granted above in this Section 2.1(a)
through (d) (inclusive) with respect to a Future Product, unless and until King has timely
exercised its Future Product Option rights with respect to such Future Product. Acura hereby
grants to King, with respect to each potential Future Product, an option (a “Future Product
Option”) to practice the license rights granted above in this Section 2.1(a) through (d)
(inclusive) with respect to such potential Future Product in addition to all other then current
Products. King has the right to exercise its rights under each Future Product Option commencing on
the Effective Date and ending at the conclusion of the applicable Future Product Option Term.

               (i) King may exercise its Future Product Option for a designated Future Product by (1) giving
Acura written notice to such effect prior to the expiration of the Future Products Option Term
specifying the Future Product(s) for which King is exercising such Future Product Option, and (ii)
making payment to Acura of either (A) the payment specified in Section 8.6(a)(i) and/or (B) the
payment specified in Section 8.6(a)(ii).

               (ii) If King has exercised its Future Product Option for any Future Product, then, subject to
the terms and conditions of this Agreement, immediately and automatically thereafter such Future
Product shall no longer be subject to the restriction imposed by the first sentence of this Section
2.1(e).

               (iii) If King declines to exercise its Future Product Option pursuant to this Section 2.1(e)
for a given potential Future Product, King shall relinquish its right to license

 

			
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that potential Future Product; and all rights to such relinquished potential Future Product
shall be retained by Acura.

          (f) Either Acura or King may propose by giving notice to the other Party that Proof of Concept
Development be conducted with respect to a potential Future Product. If the Parties mutually agree
in writing within sixty (60) days of such activities first being proposed, then Acura shall
undertake such activities pursuant to Section 4.3. If the Parties do not reach agreement within
such sixty (60) day period, then King shall have the right to undertake Proof of Concept
Development on its own at its own cost and expense. In such case, King shall (i) provide written
notice to Acura of its election to pursue such Proof of Concept Development not later than ten (10)
days following the expiration of the sixty (60) day period provided above and (ii) provide Acura
with the progress and results of the Proof of Concept Development in the form and detail to be
provided by Acura to King when Acura performs Proof of Concept Development relating to a potential
Future Product.

     2.2 Sublicense Rights. The rights and licenses granted to King pursuant to Section 2.1
include the right of King to grant sublicenses: (a) to Third Parties only after obtaining the prior
written approval of Acura for such sublicense, which approval shall not be unreasonably withheld;
and (b) to Affiliates of King. If King grants such a sublicense permitted hereunder, King shall
cause all of the applicable terms and conditions of this Agreement to apply to the Affiliate or
Third Party sublicensee to the same extent as they apply to King for all purposes. King shall
assume full responsibility for the performance of all obligations and observance of all terms so
imposed on such Affiliate or Third Party sublicensee and shall itself account to Acura and make all
payments due to Acura under this Agreement by reason of such sublicense.

     2.3 No Implied Licenses. Except as expressly provided in this Agreement, neither Party grants
to the other Party any right or license in any intellectual property right, whether by implication,
estoppel or otherwise. No implied licenses are granted under this Agreement. Each Party hereby
covenants and agrees not to use or sublicense any of its rights under the licenses set forth in
this Article 2 except as expressly permitted in this Agreement.

     2.4 Retained Rights. Any rights of Acura not expressly granted to King under the provisions
of this Agreement shall be retained by Acura including with respect to Acura rights to use the
Trademarks not licensed to King hereunder and, subject to Article 12, to use the Trademarks in all
public disclosures regarding Acura and the Products. Notwithstanding anything else contained
herein to the contrary, Acura at all times reserves a co-exclusive right under the Aversion
Technology as is necessary to allow Acura to Develop, manufacture and package Products for the
benefit of King in connection with Acura fulfilling its obligations under this Agreement.

 

			
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ARTICLE 3

GOVERNANCE

     3.1 Joint Steering Committee.

          (a) Establishment and Composition. Within five (5) business days after the Effective Date,
the Parties shall establish a joint steering committee (the “Joint Steering Committee”), which
shall consist of at least two (2) members from each Party being at least at a vice president level
and not more than four (4) members in total from each Party. Each of Acura and King may replace
any or all of its representatives on the Joint Steering Committee at any time upon written notice
to the other Party. A Party may designate a substitute to temporarily attend and perform the
functions of such Party’s designee at any meeting of the Joint Steering Committee. Acura and King
each may, on advance written notice to the other Party, invite non-member representatives of such
Party to attend meetings of the Joint Steering Committee. The Joint Steering Committee shall be
chaired by a representative of King. The chairperson shall appoint a secretary of the Joint
Steering Committee, who shall be a representative of King.

          (b) Responsibilities. The Joint Steering Committee shall have the following responsibilities
and decision-making authority and perform the following functions relating to Products and Future
Products pursuant to this Agreement:

               (i) Discuss, facilitate and coordinate the exchange of information between the Parties;

               (ii) Discuss and review: (A) Product Development strategies, (B) prioritization of Development
of Products, and (C) the preparation and implementation of the Development Plans including the
status of material activities and budgets under such plans and any material amendment to the
Development Plans;

               (iii) Discuss and review: (A) Commercialization strategies, and (B) the preparation and
implementation of the Commercialization Plans for the Products including the progress of material
activities under such Plan and any material amendments to any Commercialization Plan;

               (iv) Establishment of separate subcommittees of this Joint Steering Committee (populated by
the same or different representatives of the Parties) as the Parties mutually find to be useful
from time to time relating to the different development, regulatory, commercialization and supply
matters arising during the Term;

               (v) Discuss and review regulatory strategies and submissions, Product labeling strategies and
related activities;

               (vi) Discuss and review Product supply strategies;

 

			
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               (vii) Decision-making with respect to practical day-to-day implementation matters, provided no
such decision or decision-making shall in any event allocate to a Party or otherwise create or
affect any material right, obligation or commitment relating to this Agreement;

               (viii) In accordance with the procedures established in Section 3.1(d), resolve disputes,
disagreements and deadlocks between the Parties; and

               (ix) Have such other responsibilities as may be mutually agreed in writing by the Parties from
time to time.

          (c) Meetings. Except in Calendar Year 2007, the Joint Steering Committee shall meet at least
four (4) times during every Calendar Year of which at least two (2) times during every Calendar
Year shall be in person, and more frequently as the Parties deem appropriate, on such dates, and at
such places and times, as the Parties shall agree. Meetings of the Joint Steering Committee that
are held in person shall be at the Bridgewater, NJ office of King, or such other place as such
Parties may agree. The members of the Joint Steering Committee also may convene or be polled or
consulted from time to time by means of telecommunications, video conferences, electronic mail or
correspondence, as deemed necessary or appropriate.

          (d) Decision-Making.

               (i) The Joint Steering Committee may make decisions with respect to such matters set forth in
Section 3.1(b). Except as specified in Section 3.1(d)(ii) and (iii), all decisions of the Joint
Steering Committee shall be made by unanimous vote, with Acura and King each having, collectively,
among its respective members, one vote in all decisions.

               (ii) With respect to any issue, if the Joint Steering Committee cannot reach consensus within
ten (10) business days after the matter has been brought to the Joint Steering Committee’s
attention, then such issue shall be referred to the Chief Executive Officer of each Party for
resolution. If the Chief Executive Officers cannot resolve the issue within ten (10) business days
after the matter has been brought to their attention, such matter shall be resolved in accordance
with Section 3.1(d)(iii).

               (iii) Notwithstanding anything contained herein to the contrary, and subject to King’s
consideration in good faith of the views of Acura, King shall have final decision-making authority
on all budgetary matters, all regulatory matters, Development matters and all Commercialization
matters with respect to: (a) Product A, (b) Product B; and (c) the Future Products for which King
has timely exercised the relevant Future Product Option for such Future Product; provided, however,
that such authority shall be subject to Acura’s consent to material amendments or updates to the
initial Product A Development Plan and related budget; and provided, further, that Acura shall not
be required to provide resources or expertise beyond its reasonable capabilities, notwithstanding
the fact that King is required to reimburse Acura Development Expenses. Acura shall have final
decision-making authority on all matters with

 

			
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respect to any potential Future Products unless and until the date King timely exercises the
applicable Future Product Option for such Future Product.

     3.2 Minutes of Committee Meetings. Definitive minutes of the Joint Steering Committee
meetings shall be finalized no later than ten (10) business days after the meeting to which the
minutes pertain as follows:

          (a) Distribution of Minutes. Within three (3) business days after a Joint Steering Committee
meeting, the secretary of the Joint Steering Committee shall prepare and distribute to all members
of the Joint Steering Committee draft minutes of the meeting. Such minutes shall summarize the
discussions and decisions at each meeting.

          (b) Review of Minutes. The members of the Joint Steering Committee shall have three (3)
business days after receiving such draft minutes to collect comments thereon and provide them to
the secretary of the Joint Steering Committee.

          (c) Finalizing Minutes. Upon the expiration of such second three (3) business day period,
King shall have an additional four (4) business days to review and incorporate, as may be
appropriate, Acura’s comments and then to finalize the minutes. Any dispute in the wording of the
minutes shall be reflected therein.

     3.3 Expenses. Each Party shall be responsible for all travel and related costs and expenses
for its members and other representatives to attend meetings of, and otherwise participate on, the
Joint Steering Committee.

     3.4 Initial Meeting. Within ten (10) business days after the Effective Date, the Parties
shall convene an initial meeting of the Joint Steering Committee representatives. The objectives
of the initial meeting shall include without limitation introducing the various committee members,
informing such committee members of their responsibilities in connection with this Agreement, and
providing such committee members with pertinent information concerning this Agreement to enable the
Joint Steering Committee to become fully operational as soon as reasonably practicable.

ARTICLE 4

DEVELOPMENT

     4.1 Product A Development.

          (a) The initial Product A Development plan including budget (“Product A Development Plan”) is
attached to this Agreement as Schedule 4.1(a). Any material amendments or updates to the
Product A Development Plan shall require the written agreement of the Parties.

          (b) Acura shall be responsible for and shall use Commercially Reasonable Efforts in conducting
all Development for Product A, in accordance with the Product A Development Plan, through
Regulatory Approval by the FDA of the NDA for Product A.

 

			
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          (c) At all times during Acura’s conduct of Development activities for Product A through
Regulatory Approval by the FDA of the NDA for Product A, Acura shall: (i) keep King fully informed
and provide copies of all material communications to and from the FDA and other regulatory
authorities in the Territory regarding Product A and/or the Aversion Technology as it relates to
Product A, (ii) provide to King advance copies of all filings and material correspondence to be
provided by Acura to the FDA and other regulatory authorities in the Territory regarding Product A
and/or the Aversion Technology as it relates to Product A such that King shall have a reasonable
amount of time to review and comment on such filings and correspondence, (iii) consider in good
faith (and if reasonably requested by King in writing, Acura must adopt) all comments, changes and
suggestions made by King in writing as comments to such filings and correspondence, (iv) include
representatives of King in all in-person meetings with the FDA and, to the extent practical, all
material telephonic meetings with the FDA and other regulatory authorities in the Territory
regarding Product A and/or the Aversion Technology as it relates to Product A and to the extent
allowed by such regulatory authority, and (v) consider in good faith (and if reasonably requested
by King in writing, Acura must adopt) all positions taken by King with respect to the NDA
submission for Product A including regarding labeling for Product A and Phase IV and other
post-marketing requirements and obligations for Product A.

          (d) Following Regulatory Approval of the NDA for Product A, the JSC shall agree upon and
coordinate a process for promptly transferring regulatory responsibilities related to Product A in
the Territory from Acura to King.

          (e) After such transfer has been completed, King shall be responsible for and shall use
Commercially Reasonable Efforts in conducting all Development for Product A, to maintain Regulatory
Approval of Product A in the Territory. King shall be responsible for obtaining and maintaining
any additional Regulatory Approvals for Product Line Extensions for Product A in the Territory.

     4.2 Product B Development.

          (a) Prior to the Product B IND becoming effective pursuant to 21 C.F.R. §312.40(b), Acura
shall be responsible for and shall use Commercially Reasonable Efforts in conducting all
Development for Product B.

          (b) The JSC shall agree upon and coordinate a process for transferring Development and
regulatory responsibilities related to Product B from Acura to King upon the IND becoming
effective.

          (c) After the Product B IND becomes effective pursuant to 21 C.F.R. §312.40(b), King shall be
responsible for and shall use Commercially Reasonable Efforts in conducting all Development for
Product B, in accordance with the Product B Development Plan, to obtain and maintain Regulatory
Approval of Product B in the Territory. King shall be responsible for obtaining and maintaining
any additional Regulatory Approvals for Product Line Extensions for Product B in the Territory.

 

			
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          (d) Within forty-five (45) days after the Effective Date, King will prepare a Development plan
for Product B (the “Product B Development Plan”). The Product B Development Plan shall be prepared
by King with details generally consistent with the Product A Development Plan.

          (e) King shall submit the initial Product B Development Plan to Acura for its review. King
shall consider in good faith any comments Acura may have on the initial Product B Development Plan.
King shall periodically (and at least once per Calendar Year) prepare an updated Product B
Development Plan, as applicable taking into account completion, commencement or cessation of or
changes to Development not contemplated by the then-current Product B Development Plan and shall
submit such proposed Product B Development Plan to Acura for review and comment. King shall
consider in good faith any comments Acura may have on the updated Product B Development Plan.

     4.3 Future Product Development and Product Line Extensions.

          (a) Acura shall use Commercially Reasonable Efforts to successfully complete a Proof of
Concept for Product C and/or Product D. In the event the Proof of Concept is successful for
Product C and/or Product D, then King shall either (i) exercise its Future Products Option with
respect to Product C and/or Product D pursuant to Section 2.1 or (ii) pay Acura Development
Expenses relating to Product C and/or Product D as the case may be.

          (b) Acura shall use Commercially Reasonable Efforts to successfully complete a Proof of
Concept of a Future Product (other than Product C or Product D) with respect to which (i) Acura or
King has proposed Proof of Concept Development activities be conducted pursuant to Section 2.1(f)
and (ii) the Parties mutually agree to such activity. Subject to Section 2.1(f), prior to the
exercise of the applicable Future Product Option, Acura shall be responsible for and shall use
Commercially Reasonable Efforts in undertaking a Proof of Concept for such potential Future
Product. If King exercises its Future Product Option pursuant to Section 2.1, King shall assume
responsibility for and shall use Commercially Reasonable Efforts in all further Development related
to the applicable Future Product in the Territory.

          (c) Within forty-five (45) days of exercising its Future Products Option, King shall prepare
and submit an initial Development plan for the applicable Future Product to Acura for its review
(each, a “Future Product Development Plan” and, together with the Product A Development Plan, the
Product B Development Plan and each Product Line Extension Development Plan, the “Development
Plan”). The initial Future Product Development Plans will be prepared by King with details
generally consistent with the initial Product A Development Plan and King shall consider in good
faith any comments Acura may have on each initial Future Product Development Plan. King shall
periodically (and at least once per Calendar Year) prepare an updated Future Product Development
Plan, as applicable taking into account completion, commencement or cessation of or changes to
Development not contemplated by the then-current Future Product Development Plans and shall submit
such proposed Future Product Development Plan to Acura for review and comment. King shall consider
in good faith any comments Acura may have on the revised Future Product Development Plan.

 

			
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          (d) King may at any time and from time to time, at its own cost and expense, Develop and
Commercialize Product Line Extensions with respect to any Product in accordance with the terms and
conditions of this Agreement, it being understood that such Product Line Extensions shall not be
deemed to be Future Products hereunder. Without limiting the foregoing, in addition, upon (i)
King’s written request in connection with a particular Product Line Extension, and (ii) the written
agreement of the Parties, Acura will undertake the Development efforts in relation to such Product
Line Extension, and shall provide to King such requested work product for such Product Line
Extension; provided that Acura Development Expenses related to the Development of such Product Line
Extension shall be reimbursed by King pursuant to Section 8.3 or in such other manner and amount as
may be agreed by the Parties in writing. Any Development of a Product Line Extension, whether
conducted by King or Acura, shall be conducted under a plan prepared and submitted by King (a
“Product Line Extension Development Plan”).

     4.4 Development Reports. With respect to each Product, King shall provide to Acura a copy of
that portion of King’s detailed internal development update report relating to such Product, which
King’s senior management receives periodically [***] for Acura’s use to assess the status of the
Development of each Product.

     4.5 Development Data. Each Party shall provide to the other Party copies of all substantive
or material information with respect to Development hereunder, including, as applicable, final
laboratory and clinical data and reports compiled with respect to each Product as soon as
reasonably practicable after such data or report becomes available. King shall own all clinical
data and results related to all of the Products provided that Acura will have access thereto as set
forth in Section 5.3 on a royalty-free basis for use in its exercise of its retained rights.

     4.6 Use of Third Parties. Each Party may retain Third Parties to perform Development
activities hereunder, provided each such Third Party is approved by King (such approval not to be
unreasonably withheld, conditioned or delayed); provided that the Third Party contractors being
utilized by Acura as of the Effective Date as set forth in the Product A Development Plan are
hereby approved by King. Acura and King shall remain liable for the performance of their
respective obligations hereunder which it delegates to such Third Parties. Any Third Party
performing Development hereunder shall be subject to confidentiality and non-use obligations at
least as stringent as those set forth in Article 12 and must comply with Article 11.

     4.7 Diligence. From and after (i) the Effective Date with regard to the Products, and (ii)
the date of King’s exercise of its Future Products Option with regard to a potential Future
Product, King shall use Commercially Reasonable Efforts to Develop the Products and the Future
Products for Commercialization in the Territory (excluding Mexico).

 

			
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ARTICLE 5

REGULATORY AFFAIRS

     5.1 Regulatory Submissions and Approvals.

          (a) Product A.

               (i) Subject to Section 3.1 and consistent with Sections 4.1(a) and 4.1(b), for Product A,
Acura shall be responsible for pursuing, compiling and submitting all regulatory documents, and
shall lead the interactions with the FDA through Regulatory Approval of the NDA for Product A, and
King shall be responsible for and shall reimburse Acura for any and all out-of-pocket costs
incurred by Acura in submitting, filing and obtaining the NDA for Product A with the FDA, including
any amounts paid by Acura under the Prescription Drug User Fee Act, in each case as provided for
under Section 8.

               (ii) After Regulatory Approval of the NDA for Product A by the FDA, King shall be responsible
for compiling and submitting all regulatory documentation and for interacting with the FDA for
Product A. Acura agrees to cooperate with King with respect to the regulatory activities King
undertakes pursuant to this Section 5.1(a)(ii). Following Regulatory Approval of the NDA for
Product A by the FDA, King shall own and maintain, at its sole cost, all regulatory filings and
Regulatory Approvals for Product A. King shall provide Acura with complete copies of all
applications, submissions, filings and material regulatory correspondence related to Product A in
the Territory.

               (iii) King, at its sole cost, shall pursue all Regulatory Approvals related to Product A in
Mexico and Canada, including the preparation and filing of applications for clinical trials and
Regulatory Approvals. King shall own and maintain, at its sole cost, all regulatory filings and
Regulatory Approvals for Product A in Mexico and Canada. King shall promptly provide Acura with
complete copies of all such applications, submissions, filings and regulatory correspondence
related to Product A in Mexico and Canada.

          (b) Product B.

               (i) For Product B, for the period beginning on the Effective Date and ending on the date the
Product B IND becomes effective pursuant to 21 C.F.R. §312.40(b), Acura and/or its designated Third
Parties will be responsible, in consultation with King, for the performance of all regulatory
activities required for the Product B IND to become effective. For purposes of clarity, before the
Product B IND becomes effective, Acura shall be responsible for compiling and submitting all
regulatory documentation and for interacting with the FDA for Product B. Acura shall consult with
King and shall consider in good faith any suggestions King may have with respect to such regulatory
activities. The JSC shall agree upon and coordinate a process for transferring Acura’s regulatory
responsibilities related to Product B from Acura to King upon the effectiveness of the Product B
IND.

               (ii) After the Product B IND becomes effective pursuant to 21 C.F.R. §312.40(b), King shall
exercise Commercially Reasonable Efforts in pursuing Regulatory

 

			
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Approval of Product B. King will consult with Acura with respect to any regulatory activities
to be performed by King in accordance with this Section 5.1(b)(ii), and shall consider in good
faith any suggestions Acura may have with respect to such regulatory activities. For purposes of
clarity, after the Product B IND becomes effective, King shall be responsible for compiling and
submitting all regulatory documentation and for interacting with the FDA for Product B. Acura
agrees to cooperate with King with respect to the regulatory activities King undertakes pursuant to
this Section 5.1(b)(ii). King shall own and maintain, at its sole cost, all regulatory filings and
Regulatory Approvals for Product B in the United States. King shall promptly provide Acura with
complete copies of all applications, submissions, filings and regulatory correspondence related to
Product B in the United States.

               (iii) King, at its sole cost, shall pursue all Regulatory Approvals related to Product B in
Mexico and Canada, including the preparation and filing of applications for clinical trials and
Regulatory Approvals. King shall own and maintain, at its sole cost, all regulatory filings and
Regulatory Approvals for Product B in Mexico and Canada. King shall promptly provide Acura with
complete copies of all such applications, submissions, filings and regulatory correspondence
related to Product B in Mexico and Canada.

          (c) Future Products. King, at its sole cost, shall exercise Commercially Reasonable Efforts
in pursuing all Regulatory Approvals related to any Future Product for which King has timely
exercised its Future Products Option pursuant to Section 2.1 in any country in the Territory,
including the preparation and filing of applications for Regulatory Approvals. King shall provide
Acura with a copy of any proposed application for Regulatory Approval in the United States at least
thirty (30) days prior to submission to the applicable governmental authority so as to provide
Acura an opportunity to review such application, and King shall consider in good faith any comments
Acura may have with respect to any such application. For purposes of clarity, King shall be
responsible for pursuing, compiling and submitting all regulatory filing documentation, and for
interacting with regulatory authorities, for any Future Product in all countries in the Territory.
King shall own and maintain, at its sole cost, all regulatory filings and Regulatory Approvals for
any Future Product for which it has timely exercised its Future Products Option in all countries of
the Territory. King shall promptly provide Acura with complete copies of all such applications,
submissions, filings and regulatory correspondence related to any such Future Product in all
countries in the Territory.

          (d) Product Line Extensions. King, at its sole cost and to the extent it elects in its
reasonable discretion, shall pursue all Regulatory Approvals related to any Product Line Extension
in any country in the Territory, including the preparation and filing of applications for
Regulatory Approvals. King shall provide Acura with a copy of any proposed application for
Regulatory Approval in the United States at least thirty (30) days prior to submission to the
applicable governmental authority so as to provide Acura an opportunity to review such application,
and King shall consider in good faith any comments Acura may have with respect to any such
application. For purposes of clarity, King shall be responsible for pursuing, compiling and
submitting all regulatory filing documentation, and for interacting with regulatory authorities,
for any Product Line Extension in all countries in the Territory. King shall own and maintain, at
its sole cost, all regulatory filings and Regulatory Approvals for any Product Line Extension in
all countries of the Territory. King shall provide Acura with complete copies of all

 

			
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such applications, submissions, filings and regulatory correspondence related to any such
Product Line Extension in all countries in the Territory.

     5.2 Pharmacovigilance.

          (a) The Parties agree to inform each other about serious adverse events occurring or having
occurred in connection with the Development or Commercialization of Products anywhere in the world
within five (5) business days of when the Party who is the sponsor of the relevant study first
learns of such event. The Parties agree to handle data and information about such serious adverse
events according to all applicable laws, rules and regulations. To the extent of any Development
or Commercialization of the same Products inside and outside of the Territory, the Parties shall
enter into a worldwide safety information exchange and reporting agreement to coordinate such
matters between the Parties.

          (b) At its initial meeting, the JSC shall specify the procedure for exchange of information
relating to serious adverse events.

          (c) Prior to Regulatory Approval in the United States for Product A, Acura shall report to the
appropriate authorities in accordance with and as required by all applicable laws, rules and
regulations, all serious adverse events related to Product A. After Regulatory Approval in the
United States for Product A, and after the IND becomes effective for all other Products, King shall
report to appropriate authorities in the Territory in accordance with and as required by all
applicable laws, rules and regulations all serious adverse events related to Products anywhere in
the Territory.

     5.3 Data Access.

          (a) King shall permit Acura access to, and grant Acura the right to reference and use, all
Development and regulatory data and reports associated with any Product in the Territory at no cost
(1) outside the Territory with respect to any product of Acura or its Affiliates and (2) inside the
Territory only with respect to [***] products of Acura or its Affiliates. Such Development and
regulatory data and reports shall include preclinical and clinical data and reports, regulatory
submissions and filings, Regulatory Approvals and any adverse event reports. In furtherance of the
foregoing, King shall, promptly upon the request of Acura, deliver a letter to the FDA (or the
relevant regulatory authority) authorizing Acura to reference and use the applicable regulatory
submissions and filings related to Products in the United States, Canada, or Mexico as the case may
be (1) outside the Territory with respect to any product of Acura or its Affiliates and (2) inside
the Territory only with respect to [***] products of Acura or its Affiliates.

          (b) Acura shall promptly provide to King copies of all Development and regulatory data,
reports and correspondence associated with any Product outside the Territory. Such Development and
regulatory data, reports and correspondence shall include preclinical and clinical data and
reports, regulatory submissions and filings, regulatory approvals and any adverse event reports.

 

			
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     5.4 Participation in Meetings in the United States. After Regulatory Approval in the United
States for Product A, and for all other Products, Acura will have the right to participate as an
observer in all material meetings and other contact with governmental authorities pertaining to an
application for Regulatory Approval in the United States for a Product. King shall provide Acura
with reasonable advance notice of all such meetings and other contact and advance copies of all
related documents and other relevant information relating to such meetings or other contact. King
shall also promptly provide to Acura all material correspondence and written conversation summaries
between it and any governmental authority in the United States relating to a Product.

ARTICLE 6

COMMERCIALIZATION

     6.1 Overview and Diligence. King shall be responsible for Commercializing the Products in the
Territory and all costs and expenses in connection therewith. King shall use Commercially
Reasonable Efforts to Commercialize the Products in the Territory except Mexico and shall use
Commercially Reasonable Efforts to undertake the activities contemplated in each Commercialization
Plan with respect thereto.

     6.2 Commercialization Plan. Within [***] after successfully achieving [***] for each Product,
King shall provide Acura with a preliminary written commercialization plan setting forth the
summary of the then anticipated commercialization activities for such Product for such Calendar
Year for the United States for review and comment by Acura (each, a “Commercialization Plan”).
King shall consider all of Acura’s comments in good faith. A table of contents for a
Commercialization Plan for each Product is set forth on Schedule 6.2. [***] after the
successful achievement of the [***] for each Product, King shall prepare a detailed
Commercialization Plan for such Product based upon such table of contents.

     6.3 Updates. After the First Commercial Sale in the United States for each Product and
thereafter: (A) yearly King shall deliver to Acura a Commercialization Plan for the following
Calendar Year in accordance with King’s brand planning process, and (B) a copy of that portion of
King’s detailed internal report relating to the Commercialization of the Products, which King’s
senior management receives periodically [***].

     6.4 Expenses and Responsibilities. King shall bear all costs and expenses incurred by it with
the Commercialization of Products in the Territory. Consistent with the license rights granted to
King under Article 2, King, its Affiliates and its sublicensees shall (a) have the sole right and
responsibility to distribute, sell, record sales and collect payments for Products in the
Territory, and (b) have sole responsibility for establishing and modifying the terms and conditions
with respect to the sale of Products in the Territory, including the price or prices at which
Products in the Territory will be sold, any discount applicable to payments or receivables, and
similar matters. At least [***] in the United States, King shall provide to Acura [***].

     6.5 Diligence. From and after (i) the Effective Date with regard to the Products, and (ii)
the date of King’s exercise of its Future Products Option with regard to a potential Future
Product, King shall use Commercially Reasonable Efforts to Commercialize the Products and the

 

			
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Future Products in the Territory (excluding Mexico) and shall use Commercially Reasonable
Efforts to undertake the activities contemplated in each Commercialization Plan with respect
thereto

     6.6 Contract Sales Organizations. Notwithstanding anything to the contrary contained herein,
[***] without the prior written consent of Acura, and thereafter without the prior written consent
of Acura, not to be unreasonably withheld, in no event shall King enter into an agreement with a
contract sales organization or similar agreement with a Third Party pharmaceutical company (e.g., a
co-promotion agreement) to share sales representative detailing responsibilities for the Products
in the United States targeting a physician specialty other than [***].

ARTICLE 7

PRODUCT SUPPLY

     7.1 Supply of Products. Except for Product A, King in consultation with Acura, shall be
responsible, at its sole cost and expense, for sourcing raw materials, manufacturing, packaging,
labeling, release testing, and stability testing the clinical and commercial supplies of the
Products in the Territory.

     7.2 Supply of Product A.

          (a) For Product A, Acura in consultation with King shall be responsible for manufacturing,
packaging, labeling, release testing, and stability testing for laboratory and clinical supplies
required for obtaining Regulatory Approval in the United States of the NDA for Product A. King
shall pay for all of Acura’s out of pocket costs for raw materials, manufacturing, packaging,
labeling, release testing, and stability testing and any other costs associated with clinical and
commercial supplies of Product A, in each case as provided for under Section 8.

          (b) Acura and King shall jointly have the responsibility with each other’s full cooperation
and assistance to establish a single Third Party commercial supplier and packager of Product A for
commercial distribution and sale in the United States (the “Third Party Supplier”); provided,
however, that King shall (i) participate with Acura in the negotiations for any supply agreement,
including supply agreements for active pharmaceutical ingredients, with such Third Party Supplier
and (ii) be the signing party under any supply agreement with such Third Party Supplier; provided
that the Parties shall agree to the terms of such supply agreement prior to its execution.

          (c) The Parties shall cooperate and undertake the actions necessary to qualify King as a
secondary commercial supplier of Product A.

 

			
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ARTICLE 8

PAYMENTS TO ACURA

     8.1 Upfront Fee. Upon the Effective Date, King shall make a payment to Acura of thirty
million dollars ($30,000,000), which payment shall be non-refundable and non-creditable.

     8.2 Milestone Payments. Within ten (10) business days of achieving each milestone event set
forth in Schedule 8.2, King shall pay Acura the milestone payments related to such
milestone event in the amounts set forth on Schedule 8.2, which payments shall be
non-refundable and non-creditable, provided that certain such milestones can be creditable under
certain circumstances as provided for under the last two sentences of Schedule 8.2. Each
such milestone payment shall be payable only once for each Product (i.e., one payment for each of
Product A, Product B and each Future Product), upon the first occurrence with respect to which it
becomes due.

     8.3 Development Expenses. Each Party shall bear its own expenses under this Agreement, except
that King shall pay Acura Development Expenses incurred for:

          (a) Product A from September 19, 2007 through the Effective Date;

          (b) Product A in accordance with the Product A Development Plan set forth in Schedule
4.1(a) and any amendments or modifications thereto agreed by the Parties;

          (c) Developing any Product Line Extension requested by King in writing and agreed to in
writing by the Parties;

          (d) Qualifying a Third Party Supplier;

          (e) successfully achieving a Proof of Concept for Product C and/or Product D in the event that
King does not exercise its Future Products Option relating to such Future Product;

          (f) successfully achieving a Proof of Concept for any other [***] Future Product (other than
Product C and/or Product D) requested by King and agreed by Acura in the event that King does not
exercise its Future Products Option relating to such Future Product; and

          (g) Developing any [***] potential Future Product requested by King and agreed by Acura in
accordance with a Development Plan and budget agreed by the Parties.

          For the purposes of this Agreement, “Acura Development Expenses” shall mean (i) all
out-of-pocket expenses incurred by Acura to Develop Products or Future Products as the case may be
including expenses associated with active pharmaceutical ingredients, inactive ingredients, and
other raw materials, contract manufacturing site qualifications, contract research organizations,
medical writing, statistical analysis, clinical trial investigative sites, clinical trial
investigator grants and patient and/or subject costs, contract manufacturers, and clinical trial
insurance, third party consultants for regulatory, chemistry manufacturing and control, and (ii)
Acura’s reasonable and verifiable internal research and development staff costs of Acura

 

			
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employees working on the Development of Products (limited to Acura’s research and development staff
and research and development senior management salaries and associated payroll taxes and benefits
excluding non-cash compensation and bonuses) allocated to the Development of Products based on the
time spent by such staff on such Development activities as compared to other activities, but
excluding any allocation of overhead and senior management compensation (other than research and
development senior management salaries and associated payroll taxes and benefits excluding non-cash
compensation and bonuses).

     8.4 Requirements for King Reimbursement of Acura Development Expenses. King shall pay Acura
only for Acura Development Expenses incurred in direct connection with this Agreement pursuant to a
Development Plan, as it may be amended from time to time, up to a cap of the total budget set forth
in such Development Plan; it being understood that in the event that the Parties agree that Acura
shall conduct any Development activities for Products other than Product A, the applicable
Development Plan shall include a mutually agreeable budget for such activities. The Parties intend
that each such budget shall constitute the Parties’ then best estimate of the funds required to
timely complete such Development. In no event shall Acura charge King any amounts in excess of the
cap on the total budget as set forth in a budget in the applicable Development Plan (“Total Cap”),
nor shall King be liable to pay such amounts; provided further that in no event shall Acura be
required to perform Development activities which would not be eligible for reimbursement. All
changes in the Total Cap shall be considered by the Joint Steering Committee, and upon Joint
Steering Committee approval the Total Cap shall be amended accordingly.

     8.5 Invoices. Within five (5) business days after the end of each month, Acura shall provide
King with a good faith estimate for all Acura Development Expenses incurred by Acura for such
month. In addition, within thirty (30) days after the end of each Calendar Quarter, Acura shall
provide King with an invoice for all Acura Development Expenses incurred by Acura for such Calendar
Quarter which invoice shall set forth the details of the charges for each activity together with
appropriate documentation and a detailed comparison of such charges for such Calendar Quarter as
well as year to date for such Calendar Year against the applicable Development Plan(s) and
budget(s). Costs and expenses of Third Parties invoiced to King shall be fully detailed. Within
thirty (30) days after the date of each such invoice, King shall pay in full such invoice. If any
portion of an invoice is disputed, then King shall pay the undisputed amounts as set forth in the
preceding sentence and the Parties shall use good faith efforts to reconcile the disputed amount as
soon as practicable. Notwithstanding the previous sentence, if King disputes a charge or charges
on an invoice, King will pay the amount ultimately determined to be due, if any, within thirty (30)
days after King and Acura, acting in good faith, resolve the dispute. Where Acura does not receive
payment due to it pursuant to this Section 8.5 within the time specified, interest shall accrue on
the sum due and owing to Acura at the rate set forth in Section 10.2(b).

     8.6 Future Product Option Exercise.

          (a) For [***] after the receipt by King of a reasonably sufficient amount of data to
demonstrate that a potential Future Product has achieved a successful Proof of Concept (“Future
Product Option Term”), King shall have the option of any or all of the following:

 

			
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               (i) paying a [***] fee (such fee to be non-refundable and non-creditable) to Acura, for up to
[***] of an [***] product; provided that in the event that pursuant to and as permitted by Section
2.1(f) King has undertaken the Proof of Concept Development with respect to such potential Future
Product, then the foregoing payment to Acura under this Section 8.6(a)(i) for [***] Products shall
be reduced by the total amount of Development costs and expenses incurred by King in conducting
such Proof of Concept Development, which costs and expenses for such [***] Products shall be (A)
substantially similar to the Acura Development Expenses that Acura is permitted to incur under
Section 8.3, (B) provided to Acura in form and detail substantially similar to what is required of
Acura under Section 8.5, and (C) for an [***] Product capped at an amount such that in no event
shall the payment to Acura pursuant to this Section 8.6(a)(i) be reduced by more than [***]. For
the avoidance of doubt, King shall not be entitled to reduce the payment under this Section
8.6(a)(i) for any Development costs or expenses incurred in connection with conducting Proof of
Concept Development for an [***] Product;

               (ii) paying a [***] fee (such fee to be non-refundable and non-creditable) to Acura, for up to
[***] or

               (iii) relinquishing its Future Product Option to such potential Future Product, whereupon
Acura shall retain all rights to such potential Future Product.

          (b) From and after the exercise of its Future Product Option with respect to a potential
Future Product, King shall assume responsibility for all of the activities, costs and expenses
related to the further Development and Commercialization of the applicable Future Product.

ARTICLE 9

ROYALTIES

     9.1 Royalty Payments. King shall pay to Acura royalty payments based on the Calendar Year Net
Sales of all Products Commercialized by King (or its Affiliates or sublicensees) in the Territory
based on the Net Sales ranges and corresponding applicable royalty rates (the “Applicable Royalty
Rate”) set forth in Table 9.1. The royalty payments for Net Sales of Products for each of the
first three Calendar Quarters of a Calendar Year shall be calculated by first multiplying the
actual Net Sales for such Calendar Quarter by four (4) (the “Projected Annual Net Sales”) to
determine, based on Table 9.1, the Applicable Royalty Rate for such Calendar Quarter. The actual
Net Sales for such Calendar Quarter shall then be multiplied by the Applicable Royalty Rate for
such Calendar Quarter to determine the royalty payment to Acura for such Calendar Quarter. The
royalty payment for Net Sales of Products for the fourth Calendar Quarter of each Calendar Year
shall be calculated by multiplying the actual Net Sales for such entire Calendar Year times the
Applicable Royalty Rate from Table 9.1 applicable to such entire Calendar Year Net Sales less the
sum of the royalty payments previously made for the first, second and third Calendar Quarters of
such Calendar Year.

 

			
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Table 9.1

	 	 	 	 	 	 	 	 	 
	Net Sales	 	 
	($ Millions)	 	 
	Greater than	 	Up to	 	Applicable Royalty Rate
	[***]
	 	 	[***]	 	 	 	5.0%	 
	[***]
	 	 	[***]	 	 	 	7.5%	 
	[***]
	 	 	[***]	 	 	 	10.5%	 
	[***]
	 	 	[***]	 	 	 	15.0%	 
	[***]
	 	 	[***]	 	 	 	20.0%
	[***]
	 	 	 	 	 	 	25.0%	 

The following example illustrates the calculation of royalty payments (for simplicity, all
dollar amounts are rounded to millions):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Illustration of Royalty Payments Calculation
	Calendar	 	Net Sales of	 	Projected	 	 	 	 	 	Royalty
	Quarter of a	 	All	 	Annual Net	 	Applicable	 	Payment
	Calendar	 	Products	 	Sales	 	Royalty	 	from King to Acura
	Year	 	(millions)	 	(millions)	 	Rate	 	(millions)
	First
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Second
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Third
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Fourth
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Calendar Year Total
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 

 

			
	*	 	Not Applicable

          (a) Term of Royalty Payments. King’s obligation to make royalty payments to Acura under this
Section 9.1 shall commence twelve (12) months after the First Commercial Sale of the first Product
in any country in the Territory (the “Royalty Commencement Date”) and shall expire upon the later
of (i) expiration of the last to expire Valid Claim Covering a Product in such country, or (ii)
fifteen (15) years from the First Commercial Sale of such Product in such country.

          (b) Timing of Royalty Payments and Reports. King shall make such royalty payments to Acura
within forty-five (45) days after the end of each Calendar Quarter beginning with the first
Calendar Quarter after the Royalty Commencement Date. Beginning with the month of the First
Commercial Sale, within five (5) business days after the end of each month, King shall provide to
Acura a good faith estimate of Net Sales for such month.

 

			
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          (c) Partial Calendar Year True-Up. In addition, in the event the first Calendar Year for
which royalty payments are due is a partial Calendar Year, the Parties shall undertake a one-time
true-up royalty recalculation following the twelve (12) month anniversary of the Royalty
Commencement Date (when a full twelve (12) month period (365 days) of Net Sales data is available
beginning with the first Net Sale on which royalties are due). Based on such full twelve (12)
months of data, the Applicable Royalty Rate shall be selected from Table 9.1. If such royalty rate
is the same as the royalty rate(s) that had been previously applied to some or all of such first
partial Calendar Year with respect to which royalties were due, then there shall be no adjustment
in such royalty payments. However, where such royalty rate is greater or less than the royalty
rate(s) that had been previously applied to some or all of such first partial Calendar Year with
respect to which royalties were due, the difference shall be applied to the applicable Net Sales
and paid as additional royalties or deducted from royalties due to Acura hereunder within
forty-five (45) days after such twelve (12) month anniversary of the Royalty Commencement Date.

ARTICLE 10

ACCOUNTING AND AUDITING

     10.1 Currency. All payments under this Agreement are stated in and shall be payable in US
dollars by wire transfer to a bank in the United States designated in writing by Acura or King, as
the case may be.

     10.2 Payments.

          (a) With each payment to Acura under this Agreement, King shall deliver to Acura the following
information, including payment methodology calculations:

               (i) Net Sales for each Product strength and pack size, details and methodology of the gross
sales to Net Sales calculation, and methodology and calculation for the royalty payments; and

               (ii) Details relating to any milestone payments to Acura.

          (b) Subject to Sections 8.5 and 10.4, in case of any delay in payment by a Party to the other
Party, interest on the overdue payment shall accrue at an annual interest rate, compounded monthly,
equal to the U.S. Prime Rate as reported in The Wall Street Journal, plus one and a half percentage
points (1.5%), as determined for each month on the last business day of that month, assessed from
the day payment was initially due. The foregoing interest shall be due from such delinquent Party
without any special notice.

          (c) Currency Conversion. Whenever, for the purpose of calculating any sums due under this
Agreement, conversion from any foreign currency shall be required, such conversion shall be made as
follows: (i) when calculating the Net Sales, the amount of such sales in foreign currencies shall
be converted into United States dollars using the average rate of exchange for such currencies for
the relevant period, and (ii) when calculating Development expenses that are incurred in a currency
other than in United States dollars, the amount in foreign

 

			
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currencies shall be converted into United States dollars using the exchange rates for such
currencies for the average monthly rate of the respective invoice. In respect of (i) and (ii)
above, such exchange rate shall be the mid-price exchange rate taken from The Wall Street Journal
as published on the date of the relevant invoice or such other publication as may be agreed between
the Parties from time to time.

     10.3 Taxes. If the laws or regulations of any country in the Territory require withholding of
taxes of any type, levies on Acura or its Affiliates, or other charges against Acura or its
Affiliates with respect to any amounts payable under this Agreement to Acura, King shall make such
withholding payments as may be required for and on behalf of Acura or its Affiliates to the proper
governmental authority and shall subtract such withholding payments from the royalties due
hereunder. King shall submit appropriate proof of payment of the withholding taxes to Acura within
a reasonable period of time.

     10.4 Accounting.

          (a) During the Term and for a period of three (3) years thereafter, each Party shall, and
shall cause its Affiliates and sublicensees to, maintain at its respective principal places of
business, records and books of account containing all particulars that may be necessary for the
purpose of calculating all payments due under this Agreement. During the Term and for a period of
three (3) years thereafter, but no more than once during any Calendar Year, each Party shall have
the right to engage an independent, certified public accountant(s), reasonably acceptable to the
other Party, to perform, on behalf of such Party, an audit of the other Party’s books and records
and those of its Affiliates and sublicensees as may be necessary to confirm any amounts payable to
the auditing Party under this Agreement for the period or periods requested by the auditing Party
or to confirm the accuracy of any report made under this Agreement.

          (b) Such audits shall be conducted during normal business hours upon reasonable prior written
notice from the auditing Party in such a manner as to not unnecessarily interfere with the audited
Party’s or its Affiliate’s or sublicensee’s normal business activities, and shall be permitted with
respect to records and books covering and including the three (3) years immediately preceding the
date of notification of the audit. The accountants shall report its conclusions and calculation to
both Parties; provided, however; that in no event shall the accountants disclose information of the
audited party except to the extent necessary to verify the accuracy of the payments due under this
Agreement, and at the request of the audited party such accountants shall execute appropriate
non-disclosure agreements.

          (c) The auditing Party shall use all information, data, documents and abstracts obtained
during an audit conducted pursuant to this Section 10.4 solely for the purposes described in
Section 10.4(a). The auditing Party shall treat all such information, data, documents and
abstracts as the audited Party’s Confidential Information subject to Article 12 of this Agreement
and, except in the event of a dispute between the Parties regarding amounts payable hereunder or
the results of any audit, the auditing Party shall not retain such information, data, documents and
abstracts for more than three (3) years from the end of the Calendar Year to which each shall
pertain.

 

			
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          (d) If any audit hereunder reveals an underpayment, the Party responsible for the underpayment
shall promptly make up such underpayment. If any audit hereunder reveals an overpayment, the Party
holding the overpayment shall promptly reimburse such overpayment. The auditing Party shall bear
the full cost of any audit under this Section 10.4, unless such audit discloses an underpayment by
the audited Party of more than five percent (5%) of the amount owed hereunder in which case the
audited Party shall bear the full cost of such audit.

          (e) The failure of an auditing Party to request verification of any payment calculation within
the three (3) year period following receipt of such payment shall be considered acceptance of such
calculation by the auditing Party.

ARTICLE 11

PATENT RIGHTS AND TRADEMARKS

     11.1 Ownership of Inventions.

          (a) Sole Inventions. Subject to Section 11.1(c), each Party shall exclusively own all
inventions, improvements, discoveries or new uses conceived solely by such Party, its employees,
agents and consultants made in the course of Developing a Product hereunder (“Sole Inventions”).
Sole Inventions conceived solely by Acura, its employees, agents and consultants are referred to
herein as “Acura Sole Inventions”. Sole Inventions conceived solely by King, its employees, agents
and consultants are referred to herein as “King Sole Inventions.”

          (b) Joint Inventions. Subject to Section 11.1(c), the Parties shall jointly own all
inventions made jointly by employees, agents and consultants of Acura and employees, agents and
consultants of King, which are made in the course of Developing a Product hereunder, on the basis
of each Party having an undivided interest in the whole (“Joint Inventions”).

          (c) Aversion Inventions. Notwithstanding Section 11.1(a) or Section 11.1(b), to the extent a
King Sole Invention or a Joint Invention is an invention, improvement, discovery or new use of or
relating to the Aversion Technology (an “Aversion Invention”), with or without one or more active
ingredients, such Aversion Invention shall be the sole and exclusive property of Acura, and King
agrees to assign, and hereby does assign, its entire right, title and interest in and to such
Aversion Invention to Acura.

          (d) To the extent patent applications and patents are filed on Acura Sole Inventions, Joint
Inventions and Aversion Inventions, such patent applications and patents shall be included within
the “Aversion Patent Rights” licensed to King under this Agreement, and to the extent inventions
are not patentable or no patent applications and patent are filed on such inventions, such
inventions shall be part of the “Aversion Technology” licensed to King under this Agreement.

          (e) License to Acura. King hereby grants to Acura a fully paid-up, non-exclusive license
under King Sole Inventions relating to any Product or the Aversion Technology to develop,
manufacture, use, sell, offer for sale and import products including Products (i)

 

			
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outside the Territory and (ii) inside the Territory outside the Field, including the right to grant
sublicenses.

          (f) Inventorship. For purposes of determining whether an invention is an Acura Sole
Invention, a King Sole Invention or a Joint Invention, questions of inventorship shall be resolved
in accordance with United States patent laws. Each Party agrees promptly to provide to the other
Party a complete written disclosure of any Acura Sole Inventions, King Sole Inventions and Joint
Inventions, as applicable, made by such Party.

     11.2 Prosecution and Maintenance of Patent Rights.

          (a) Aversion Patent Rights. Acura shall be solely responsible for the filing, prosecution and
maintenance of the Aversion Patent Rights; provided, however:

               (i) Acura shall not allow any Aversion Patent Rights to lapse or become abandoned and/or to
disclaim or concede priority with respect to any invention disclosed or claimed in the Aversion
Patent Rights claiming a Product or Aversion Composition without obtaining the prior written
consent of King and such consent not shall not be unreasonably withheld.

               (ii) Acura shall have full responsibility for, and shall control the preparation and
prosecution of, all patent applications and the maintenance of all Aversion Patent Rights. Acura
undertakes to maintain all Aversion Patent Rights during the term of this Agreement.

               (iii) Acura shall promptly provide copies to King of any filings made to, and any material
written communications received from, any patent office relating, in whole or in part, to any
Aversion Patent Rights. Acura shall give reasonable consideration to any comments that may be made
by King relating to the prosecution or maintenance of the Aversion Patent Rights.

               (iv) Acura shall be responsible for its costs and expenses in preparing, filing, prosecuting
and/or maintaining the Aversion Patent Rights covering Products in the Territory.

          (b) Other Patent Rights. Subject to Sections 11.2(a) and 11.1(c):

               (i) Each Party shall have full responsibility for, and shall control the preparation and
prosecution of, all patent applications and the maintenance of all patents relating to the
inventions owned solely by it (including the Patents) in the Territory. Each Party shall pay all
costs and expenses of filing, prosecuting and maintaining such patent applications and patents
relating to inventions solely owned by it. Acura shall pay all costs and expenses of filing,
prosecuting and maintaining such patent applications and patents relating to Joint Inventions.

               (ii) Acura shall determine whether any Acura Sole Invention or Joint Invention is patentable,
and if so, shall proceed with the preparation and prosecution of a patent application covering any
such Acura Sole Invention or Joint Invention. King shall determine

 

			
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whether any King Sole Invention
is patentable, and if so, shall proceed with the preparation and prosecution of a patent
application covering any such King Sole Invention.

               (iii) With respect to any King Sole Inventions and Joint Inventions: (A) each Party shall
promptly provide copies to the other Party of any filings made to, and any written communications
received from, any patent office relating, in whole or in part, to patent applications covering
King Sole Inventions or Joint Inventions, or patents granted thereon, reasonably in advance of the
relevant proposed filing or response date; and (B) Acura and its selected patent counsel and King
and its selected patent counsel shall give reasonable
consideration to any comments that may be made by the other Party reasonably in advance of any
proposed filing or response date relating to the filing and prosecution of such patent applications
or the maintenance of patents granted thereon.

          (c) Cooperation. Each Party agrees to cooperate with the other Party with respect to the
preparation, filing, prosecution and maintenance of the Aversion Patent Rights pursuant to this
Section 11.2.

     11.3 Third Party Infringement.

          (a) Notice. Each Party shall promptly report in writing to the other Party during the Term
any known (i) infringement of any of the Aversion Patent Rights or (ii) unauthorized use of any of
the Aversion Technology of which such Party becomes aware, in the case of either clause (i) or
clause (ii) involving the Development, manufacture or Commercialization by a Third Party of a
competing product including [***] or a pharmaceutically acceptable salt thereof, or a [***] (or a
pharmaceutically acceptable salt of thereof) being Developed or Commercialized in a Future Product
with respect to which King has exercised its Future Product Option (a “Competitive Infringement”)
in the Territory, and shall provide the other Party with all available evidence supporting such
known infringement or unauthorized use.

          (b) Initial Right to Enforce. Subject to Section 11.3(c), Acura shall have the first right
(but not the obligation) to initiate a suit or take other appropriate action that it believes is
reasonably required to protect (i.e., prevent or abate actual or threatened infringement or
misappropriation of) or otherwise enforce the Aversion Patent Rights in the Territory; provided,
however, that King shall have the first right (but not the obligation) to initiate a suit or take
other appropriate action that King believes is reasonably required to enforce claims in the
Aversion Patent Rights against any Third Party Developing or Commercializing a product that is (i)
[***] or a pharmaceutically acceptable salt thereof and the Aversion Composition, or (ii) the same
[***] (or a pharmaceutically acceptable salt thereof) in a Future Product with respect to which
King has exercised a Future Product Option and the Aversion Composition. In the event that Acura
does not pursue an enforcement action within a period of sixty (60) days following reasonable
notification of the Competitive Infringement of the Aversion Technology, then King shall have the
right to bring such action. In the event that King does not pursue an enforcement action within a
period of sixty (60) days following reasonable notification of the Competitive

 

			
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Infringement of the
Aversion Patent Rights for which King has the first right, then Acura shall have the right to bring
such action at its own expense.

          (c) Hatch-Waxman Certification. Notwithstanding anything else to the contrary in this
Agreement, King shall have the first right (but not obligation) to initiate and maintain a suit and
take other appropriate action that it believes is reasonably required to protect a Product, the
Aversion Technology and/or otherwise enforce the Aversion Patent Rights in the Territory against
any Third Party filing a Hatch-Waxman Certification under the U.S. Drug Price Competition Act and
Patent Term Restoration Act of 1984 or any amendment or reenactment thereof during any period which may result in an automatic stay or a stay by operation of law
of any regulatory approval for such Third Party.

          (d) Conduct of Certain Actions; Costs. The Party initiating suit shall have the sole and
exclusive right to select its counsel for any suit initiated by it pursuant to Section 11.3(b) or
(c). If required under applicable law in order for the initiating Party to initiate and/or
maintain such suit, the other Party shall join as a party to the suit. Such other Party shall
offer reasonable assistance to the initiating Party in connection therewith at no charge to the
initiating Party except for reimbursement of reasonable out-of-pocket expenses incurred in
rendering such assistance. The initiating Party shall assume and pay all of its own out-of-pocket
costs incurred in connection with any litigation or proceedings initiated by it pursuant to Section
11.3(b) or (c), including the fees and expenses of the counsel selected by it. The other Party
shall have the right to participate and be represented in any such suit that is based on a
Competitive Infringement by its own counsel at its own expense.

          (e) Recoveries. With respect to any suit or action referred to in Section 11.3(b), any
recovery obtained as a result of any such proceeding, by settlement or otherwise, shall be applied
in the following order of priority:

               (i) first, the Parties shall be reimbursed pro-rata for all costs incurred in connection with
such proceeding paid by the Parties and not otherwise recovered; and

               (ii) second, any remainder shall be paid to the Party that initiated such suit or action.

     11.4 Patent Invalidity Claim. Subject to Section 11.3(c), if a Third Party at any time
asserts a claim that any Aversion Patent Rights are invalid or otherwise unenforceable (an
“Invalidity Claim”), control of the response to such Invalidity Claim in the Territory shall, as
between the Parties, be determined in the same manner as enforcement rights with respect to such
Aversion Patent Rights are determined pursuant to Section 11.3(b). Neither Party shall settle or
compromise any Invalidity Claim without the consent of the other Party, which consent shall not be
unreasonably withheld. If an Invalidity Claim arises in connection with a suit or action referred
to in Section 11.3(b), the Parties shall confer with one another regarding the appropriateness of
having the Party that is controlling such suit or action in accordance with Section 11.3(b)
continue to control such suit or action and the sharing of cost and expenses with respect to such
suit or action; provided that in the absence of any agreement by the Parties to the contrary,
control of the Invalidity Claim shall remain with the same Party, and the costs and

 

			
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expenses of
responding to the Invalidity Claim shall be borne by the Parties in accordance with
Section 11.3(d). If the Invalidity Claim does not arise in connection with a suit or action
referred to in Section 11.3(b), the costs and expenses of responding to the Invalidity Claim shall
be borne by the Party that controlled such response.

     11.5 Claimed Infringement. In the event that a Party becomes aware of any Claim that the
practice by either Party of Aversion Technology in the Development, manufacture or
Commercialization of a Product infringes the intellectual property rights of any Third Party, such
Party shall promptly notify the other Party. In any such instance, the Parties shall
cooperate with one another. Each Party shall provide to the other Party copies of any notices it
receives from Third Parties regarding any patent nullity actions, any declaratory judgment actions
and any alleged infringement or misappropriation of Third Party intellectual property relating to
the Development, manufacture or Commercialization of a Product. Such notices shall be provided
promptly, but in no event after more than ten (10) days following receipt thereof. Notwithstanding
anything else to contrary under this Agreement, and without limiting any right or remedy King may
otherwise have under this Agreement or at law or in equity: (a) King shall, after consulting with
Acura, have the right (but not the obligation) to enter into intellectual property license
agreements with such Third Parties as King reasonably believes to be necessary to avoid or settle
allegations or claims regarding freedom to operate (other than for trademarks or copyrights)
against a Product (other than the [***] formulation characteristics or technology of a Product) by
such Third Party against either Party to this Agreement and (b) King may deduct from and set off
against any royalties owed to Acura hereunder fifty percent (50%) of any royalties and other
license payments paid under such license agreements to such Third Parties, up to a maximum amount
such that the resulting royalties shall not be less than eighty percent (80%) of what would
otherwise be payable to Acura hereunder at the Applicable Royalty Rate (for example, when the
Applicable Royalty Rate is 5%, then deductions pursuant to this Section 11.5 shall not reduce the
Applicable Royalty Rate payable to Acura below 4%, or for example if the Applicable Royalty Rate is
20%, then deductions pursuant to this Section 11.5 shall not reduce the Applicable Royalty Rate
below 16%.

     11.6 Patent Term Extensions. The Parties shall cooperate, if necessary and appropriate, with
each other in gaining patent term extension wherever applicable to Aversion Patent Rights in the
Territory that Cover Products. The Parties shall, if necessary and appropriate, use reasonable
efforts to agree upon a joint strategy relating to patent term extensions, but, in the absence of
mutual agreement with respect to any extension issue in the Territory, if Acura does not wish to
file for an extension of an Aversion Patent Right in the Territory that Covers a Product, then
Acura shall timely let King know sufficiently in advance so as to permit King to request Acura to
file for such extension, in which case, Acura shall file such extension at King’s expense.

     11.7 Patent Marking. King agrees to comply with the patent marking statutes in each country
in the Territory in which Products are sold by King, its Affiliates and/or its sublicensees.

     11.8 Trademarks.

 

			
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          (a) General. At King’s option, the Products may (but shall not required to) be Commercialized
in the Territory under the Trademarks.

          (b) Non-Use of Similar Marks. Notwithstanding any other provision in this Agreement, during
the Term, neither Party nor its Affiliates shall market, promote, sell and/or distribute any
product (other than the Products) under the Trademarks or any substantially similar trade names or
trademarks.

          (c) Trademark Filing and Expenses. Acura shall be solely responsible for the filing and
maintenance of the Trademarks in the Territory and all costs and expenses related thereto.

          (d) Trademark Infringement.

               (i) With respect to any and all claims instituted by Third Parties against Acura or King or
any of their respective Affiliates for trademark infringement involving the use, sale, license or
marketing of the Products (each, a “Trademark Infringement Claim”), King shall be solely
responsible for any and all losses arising out of or resulting from such Trademark Infringement
Claims. Acura shall assist King and cooperate in the defense and settlement of such Trademark
Infringement Claims at King’s request.

               (ii) In the event that a Party becomes aware of actual or threatened infringement of the
Trademark, that Party shall promptly notify the other Party in writing (a “Trademark Infringement
Notice”). Acura shall have the right, but not the obligation, to bring an action with respect to
such infringement against any Third Party for infringement of the Trademark. In the event that
Acura does not pursue an enforcement action within a period of sixty (60) days following the
Trademark Infringement Notice, then King shall have the right to bring such action at its own cost.
If King is not recognized by the applicable court or other relevant body as having the requisite
standing to pursue such action, then King may join Acura as party-plaintiff. If Acura elects to
pursue such infringement action, King may (i) elect to participate in such action, in which case
King shall bear one-half of the out-of-pocket costs and expenses of the action (including court
costs, reasonable fees of attorneys, accountants and other experts and other expenses of litigation
or proceedings) and shall share any recovery in such amount as the greater of (a) their costs for
such action and (b) in proportion to their actual damages, or (ii) elect not to participate in such
action, in which case King shall have no obligation to pay for any of the costs or expenses of the
action and shall not receive any portion of any recoveries and Acura shall bear all costs and
expenses of the action and retain all recoveries.

ARTICLE 12

CONFIDENTIAL INFORMATION

     12.1 Treatment of Confidential Information. In carrying out its obligations under this
Agreement, each Party will be sharing confidential and proprietary data and information
(“Confidential Information”) with the other Party. Except as expressly permitted by this
Agreement, each Party shall, and shall cause its Affiliates to, treat Confidential Information

 

			
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received from the other Party (the “Disclosing Party”) or its Affiliates as it treats its own
proprietary information of like nature and importance. During the Term and for a period of five
(5) years thereafter, the Party in receipt of the Disclosing Party’s Confidential Information (the
“Receiving Party”) shall not disclose, divulge or otherwise communicate such Confidential
Information to any Third Party, or use it for any purpose except pursuant to and in order to carry
out its obligations under this Agreement. Notwithstanding the foregoing, the Receiving Party may
disclose Confidential Information of the Disclosing Party to the Receiving Party’s directors,
officers, employees, Affiliates, consultants, subcontractors, sublicensees or agents to the
extent reasonably necessary to carry out its obligations under this Agreement, provided that such
directors, officers, employees, Affiliates, consultants, subcontractors, sublicensees or agents
have been advised of the confidential nature of such information and have agreed to maintain such
information as confidential to the same extent required by this Article 12.

     12.2 Exceptions to Definition of Confidential Information. Confidential Information shall not
include information that the Receiving Party can demonstrate:

          (a) was known by the Receiving Party or its Affiliates prior to the date it was disclosed to
the Receiving Party or its Affiliates by the Disclosing Party or its Affiliates, as evidenced by
the prior written records of the Receiving Party or its Affiliates;

          (b) is lawfully disclosed to the Receiving Party or its Affiliates by a Third Party rightfully
in possession of such information, either before or after the date of the disclosure to the
Receiving Party or its Affiliates;

          (c) becomes generally known to the public through no act or omission on the part of the
Receiving Party or its Affiliates, either before or after the date of the disclosure to the
Receiving Party or its Affiliates;

          (d) is independently developed by the Receiving Party or its Affiliates without reference to
or reliance upon any Confidential Information of the Disclosing Party or its Affiliates; or

          (e) is required to be disclosed by the Receiving Party or its Affiliates pursuant to a
judicial or governmental order, provided that the Receiving Party gives the Disclosing Party
sufficient notice to permit Disclosing Party to seek a protective order or other similar order with
respect to such Information.

     12.3 Exceptions. The restrictions set forth in this Article 12 shall not prevent either Party
from (i) disclosing Confidential Information in connection with preparing, filing, prosecuting or
maintaining the Aversion Patent Rights covering a Product in accordance with Article 11, (ii)
disclosing Confidential Information to governmental agencies to the extent required or desirable to
obtain a Regulatory Approval, (iii) disclosing Confidential Information to potential private
investors (under a confidentiality agreement at least as restrictive as the provisions of this
Article 12) in connection with fundraising activities, (iv) disclosing Confidential Information to
underwriters and financial advisors (under an obligation of confidentiality) in connection with the
public offering of securities, or (v) disclosing Confidential

 

			
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Information that is reasonably
determined is required to be disclosed by the Receiving Party (to comply with applicable securities
or other laws) to public investors or governmental agencies in connection with the public offering
of securities, provided that in all of the above cases, the Party disclosing Confidential
Information of the Disclosing Party shall use all reasonable efforts to provide prior written
notice of such disclosure to the Disclosing Party and to take reasonable and lawful actions to
avoid or limit such disclosure or to assist the Disclosing Party in avoiding or
limiting such disclosure. Further, either Party may also disclose the existence and terms of
this Agreement to its attorneys and advisors, to potential acquirors in connection with a potential
Change of Control or Sale of the Field Business and to existing and potential investors or lenders
of such Party, as a part of their due diligence investigations, or to potential permitted
assignees, in each case under an agreement to keep the terms of this Agreement confidential under
terms of confidentiality and non-use substantially similar to the terms contained in this
Agreement.

     12.4 Previous Confidentiality Agreement. Notwithstanding anything contained herein to the
contrary, that certain Confidentiality Agreement, dated as of October 12, 2006, by and between the
Parties shall remain in full force and effect as to the information disclosed between the Parties
prior to the date hereof.

     12.5 Publications. Subject to Section 12.6 and except as required pursuant to law or
regulation, the following provisions shall apply to the Parties with respect to all publications,
presentations and other public disseminations of any information relating to Products or to
Development, manufacturing, or Commercialization performed pursuant to the Agreement:

          (a) The Party desiring to publish, present or otherwise publicly disseminate such information
(the “Publishing Party”) shall provide the other Party with a copy of any proposed publication,
presentation or other public dissemination at least forty-five (45) days prior to submission for
publication, presentation or other public dissemination so as to provide such other Party an
opportunity to recommend any changes it reasonably believes are necessary to preserve the
Confidential Information belonging in whole or in part to such other Party or to preserve such
other Party’s ability to obtain a patent or patents Covering any invention. The incorporation of
such recommended changes shall not be unreasonably refused.

          (b) If such other Party provides written notice (“Notice”) to the Publishing Party within
thirty (30) days of receipt of the copy of the proposed publication, presentation or other public
dissemination that such publication, presentation or other public dissemination in its reasonable
judgment (i) discloses information about an invention for which the other Party desires patent
protection or (ii) discloses Confidential Information of the other Party, the Publishing Party
shall prevent such publication or delay such publication, presentation or other dissemination until
the Parties have agreed on mutually acceptable modifications thereto so as not to prejudice the
other Party’s right to obtain a patent and not to disclose the other Party’s Confidential
Information. In the case of inventions, a delay shall be for a period reasonably sufficient to
permit the timely preparation and filing of a patent application(s).

     12.6 Publicity. The Parties agree that the public announcement of the execution of this
Agreement shall be substantially in the form of the press release attached as Schedule 12.6
(the “Joint Press Release”). Neither Party shall issue any other news release or make any other

 

			
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public announcement, written or oral, relating to this Agreement, including its terms, or the
Products or potential Future Products, without the prior approval of the other Party, except solely
to the extent a Party is advised by its legal counsel that the same is required by law or as
otherwise permitted pursuant to Section 12.3; provided, however, the contents of any such
announcement or similar publicity that has been previously reviewed and approved by the reviewing
Party can be re-released by either Party without a requirement for re-approval. Each Party shall
limit public disclosure of the financial terms set forth in this Agreement to the minimum extent
required by law (by, for example, requesting confidential treatment of such terms in documents
required to be filed with the US Securities and Exchange Commission); provided, however, the
Parties may, after any required public disclosure for compliance with any applicable law, including
securities laws, reference such financial terms in news releases or oral statements without seeking
approval from the other Party.

ARTICLE 13

COVENANTS, REPRESENTATIONS AND WARRANTIES

     13.1 Covenants Not to Compete.

          (a) Acura’s Covenant.

               (i) Subject to Section 16.7(a), for a period beginning on the Effective Date and ending one
(1) year after the expiration or termination of this Agreement with respect to both Product A and
Product B, neither Acura nor its Affiliates shall, directly or indirectly: (A) Commercialize any
[***] products in the Territory containing orally administered oxycodone HCl or a pharmaceutically
acceptable salt thereof, [***] and/or the Aversion Composition, or (B) grant any right to a Third
Party to Commercialize any such product in the Territory.

               (ii) Subject to Section 16.7(a), for a period beginning on the Effective Date and continuing
until the later of (x) the expiration of the Future Products Option Term and (y) one (1) year after
the expiration or termination of this Agreement with respect to a Future Product for which King has
exercised its Future Product Option pursuant to Section 2.1(e), neither Acura nor its Affiliates
shall directly or indirectly, (A) Commercialize any products in the Territory containing a [***]
that is in such Future Product for which King has exercised its Future Product Option pursuant to
Section 2.1(e) and Section 8.6 or a pharmaceutically acceptable salt of such [***] and/or the
Aversion Composition, or (B) grant any right to a Third Party to Commercialize such product in the
Territory.

               (iii) In the event of (a) a Change of Control of Acura, or (b) Acura entering into a license,
asset or company acquisition, merger, joint venture, partnership or other business transaction or
combination with a Third Party, in each case where at the time of the consummation of any such
transaction the Third Party is developing, manufacturing or commercializing (or has licensed as
licensor or has any such rights to engage in such activities, or is receiving royalties or other
licensing compensation in respect of) an orally administered oxycodone HCl-containing product or
any [***]-containing product in the Territory, pursuant to an FDA approved NDA or ANDA (so long as
such product represents less than fifty percent

 

			
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(50%) of the net present value of such transaction as set forth in Acura’s final presentation
to its board of directors seeking corporate approval for such transaction), the covenants in
Section 13.1(a)(i) and Section 13.1(a)(ii), as applicable, shall not apply to such product, but
shall continue in all other respects pursuant to their terms.

          (b) King’s Covenant.

               (i) Subject to Section 16.7(a), for a period beginning on the Effective Date and ending one
(1) year after the expiration or termination of this Agreement with respect to a Product containing
any [***] neither King nor its Affiliates shall Commercialize any orally administered [***]
containing any such [***] as contained in such Product pursuant to an FDA approved NDA or ANDA,
except as contemplated by this Agreement (“King’s Covenant”); provided, however, King’s Covenant
shall automatically terminate for a [***] contained in a potential Future Product if King does not
exercise the Future Products Option with respect to such potential Future Product and King may at
its election be relieved of such covenant with respect to [***] and [***] if Acura has not
completed Proof of Concept of Product C or Product D, as applicable, within [***] after the
Effective Date. In the event that King so elects to be relieved of such covenant, Acura shall no
longer be required to offer King the Future Products Option with respect to Product C or Product D,
as applicable.

               (ii) In the event of (a) a Change of Control of King, (b) a Sale of the Field Business to a
Third Party or (c) King entering into a license, asset or company acquisition, merger, joint
venture, partnership or other business transaction or combination with a Third Party, in each case
where at the time of the consummation of any such transaction the Third Party is developing,
manufacturing or commercializing (or has licensed as licensor or has any such rights to engage in
such activities, or is receiving royalties or other licensing compensation in respect of) an
[***]-containing product in the Territory pursuant to an FDA approved NDA or ANDA that would
otherwise be the subject of the King’s Covenant, King’s Covenant shall not apply to such product so
long as such product represents less than fifty percent (50%) of the net present value of such
transaction as set forth in King’s final presentation to its board of directors seeking corporate
approval for such transaction.

     13.2 Mutual Representations and Warranties. Each Party warrants and represents to the other
Party on the Execution Date that:

               (a) Authority. It has the full right and authority to enter into this Agreement and that it
is not aware of any impediment that would inhibit its ability to perform the obligations imposed on
it by this Agreement.

               (b) Corporate Action. All corporate action on the part of such Party, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of this Agreement and
(ii) the performance of all obligations of such Party hereunder has been taken, and this Agreement
constitutes the legal and binding obligation of such Party, enforceable against such Party in
accordance with its terms.

 

			
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               (c) Execution. The execution of this Agreement and the performance of the transactions
contemplated by this Agreement by such Party will not conflict with or result in a breach of any of
the terms, conditions or provisions of, or constitute a default under any agreement or other
instrument to which such Party is a party or by which it or any of its property is bound.

     13.3 Additional Representations of Acura. In addition, Acura warrants and represents to King
on the Execution Date that:

               (a) No Inconsistent Grants. There is no Third Party license agreement in effect as of the
Execution Date which is inconsistent with the rights and licenses granted to King under Article 2.

               (b) Authority to Grant License. Acura has the full right, power and authority to grant, has
been granted any required consents, and is not prohibited by the terms of any agreement to which it
is a party from granting, the licenses granted to King under Article 2.

               (c) Confidentiality. To Acura’s knowledge, the material know-how within the Aversion
Technology existing at the Execution Date has been kept confidential or has been disclosed to Third
Parties only under terms of confidentiality, except where the failure to keep such know-how
confidential will not have a material effect on Development or Commercialization of Products in the
Territory in the Field.

               (d) Development and Manufacture In Compliance With Laws. The Development and manufacture of
Products have been conducted by Acura and its Affiliates and, to Acura’s knowledge, its
subcontractors, in compliance (in all material respects) with all applicable laws. Neither Acura
nor its Affiliates, nor to Acura’s knowledge, its subcontractors, have received any notice in
writing that any of the regulatory authorizations relating to any Product are not currently in good
standing with any governmental authority. Except as would not have a material adverse effect on
Product A or King’s rights under this Agreement, neither Acura nor its Affiliates has knowledge of
any facts, which have, or reasonably should have, led Acura to believe that any of the regulatory
authorizations relating to Product A are not currently in good standing with any governmental
authority.

               (e) Testing. Except as would not have a material adverse effect on the Products or King’s
rights under this Agreement, all testing, research and development by Acura and its Affiliates have
been conducted in compliance with cGCP and/or cGLP and/or cGMP, as applicable, and required at the
time such activity was performed.

               (f) Regulatory Authority. Except as would not have a material adverse effect on the Products
or King’s rights under this Agreement, there are no inquiries, actions or other proceedings pending
before or, to Acura’s knowledge, threatened by any governmental authority with respect to Products,
and neither Acura nor its Affiliates has received written notice threatening any such inquiry,
action or other proceeding.

 

			
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               (g) Documents Have Been Provided. Acura has, up to and including the Execution Date, made
available for King’s review, to the extent in Acura’s possession, (a) reports of FDA Form 483
inspection observations for the prior two years, (b) establishment inspection reports for the prior
two years, (c) warning letters for the prior two years, (d) for the prior two years, other
documents that assert ongoing lack of compliance in any material respect with any applicable laws,
in each case, to the extent received by Acura or any of its Affiliates and relating to Products,
(e) preclinical and clinical study reports for Products, (f) any material communications to or from
any governmental authority with respect to Products, NDA submissions, and any minutes of meetings
and telephone conferences, (g) any governmental authority requests for data and studies on
Products, and (h) NDA safety reports with respect to Products, that are material to assessing
Acura’s or any of its Affiliates’ compliance with the Federal Food, Drug and Cosmetic Act. Acura
has not, up through and including the Execution Date, withheld from or omitted to provide or make
available any material information to King requested by King in connection with King’s due
diligence relating to the Product, Aversion Technology, the Trademark, this Agreement and the
underlying transaction contemplated hereby.  To the best of Acura’s knowledge, information related
to Products, Aversion Technology and the Trademark that Acura has provided, or made available, to
King in connection with King’s due diligence prior to the Execution Date is complete and accurate
in all material respects.

               (h) Intellectual Property.

               (i) Schedule 1.9 sets forth a list of all Aversion Patent Rights.

               (ii) Acura has been assigned and owns all right, title and interest of each inventor listed
for each item listed on Schedule 1.9, free and clear of liens other than Existing Liens.

               (iii) All former and current employees of Acura have executed written agreements prohibiting
disclosure of confidential information and assigning to Acura, all rights to any inventions
relating to Aversion Technology made during their employment with Acura.

               (iv) Acura has taken commercially reasonable precautions to protect the secrecy of its trade
secrets.

               (v) Acura has not been alleged to infringe any intellectual property right of any Third Party
and there is no claim or action pending or, to Acura’s knowledge, threatened, alleging any such
infringement.

               (vi) To Acura’s knowledge, the making, using or selling of the Product or the Aversion
Composition does not infringe any valid claim in a granted patent owned by a Third Party.

               (vii) (a) Acura is not aware of any Third Party, or any Acura (or any of its Affiliate’s)
employee that has any claim of ownership with respect to Aversion Technology or the Trademarks
existing as of the Execution Date; (b) there is no court order or settlement

 

			
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agreement, consent agreement or other undertaking entered into by Acura that would restrict
the form or manner in which King may use or display Trademarks under this Agreement; (c) with
regard to the Aversion Technology existing as of the Execution Date, no Third Party claim
contesting the validity, enforceability, use or ownership of the Aversion Technology has been made
(or threatened in writing) and is currently outstanding; (d) Acura has not received any notices of,
nor is it aware of any facts which would indicate a reasonable likelihood of, any infringement or
misappropriation by any Third Party of the Aversion Patent Rights existing as of the Execution
Date; and (e) Acura has not received any notices, demands or requests that, and Acura has not
engaged in any discussions with any Third Party that, Acura license rights to any intellectual
property owned or controlled by any Third Party relating to the making, using or selling of the
Product or the Aversion Composition.

          (i) Contracts. The written contracts with CEDRA for [***] are the only written contracts,
commitments or agreements to which Acura is a party that (1) require Acura to expend more than
[***] in a Calendar Year and (2) are material to the Products in the Territory (the “Material
Contracts”). To Acura’s knowledge, (i) Acura is not (with or without the lapse of time or the
giving of notice, or both) in material breach or default under any Material Contract and (ii) no
party to any Material Contract is (with or without the lapse of time or the giving of notice, or
both) in material breach or default in any respect thereunder.

     13.4 Additional Representation of King. In addition, King warrants and represents to Acura
that prior to the Execution Date, King has conducted due diligence and has reviewed all documents
relating to the Products, potential Future Products, Aversion Technology, and other information
related to the transaction set forth in this Agreement and the underlying transaction hereby as has
been provided or made available to King by Acura.

     13.5 Disclaimer of Warranty. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN ARTICLE 13,
NEITHER PARTY MAKES ANY REPRESENTATIONS AND GRANTS NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN
FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY
OTHER REPRESENTATIONS AND WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS, STATUTORY OR IMPLIED,
INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR
ANY WARRANTY AS TO THE VALIDITY OF ANY PATENT RIGHTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.

     13.6 Conditions Precedent. This Agreement shall not become effective until each of the
following events have occurred:

               (a) The expiration or termination of the applicable waiting period under the HSR Act; and

               (b) The completion and official closing of any government investigations opened by means of a
second request or otherwise in relation to the HSR Act (if any).

 
 

			
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     13.7 Existing Liens; Negative Pledge. Simultaneous with the payment by King of the payment
set forth in Section 8.1, Acura, on the Effective Date, shall fully and completely satisfy Acura’s
debts and obligations under the Acura Loan Agreements. Immediately following the Effective Date,
Acura shall cause each Existing Lien, and the security interest evidenced thereby, to be
terminated, including filing of UCC-3 termination statements with respect to such Existing Liens.
As of the Execution Date, Acura represents and warrants that there are no liens or claims (other
than the Existing Liens) currently existing on or to any Aversion Technology (including any liens
or claims on or to rights to sue for past, present and future infringements thereof, any licenses,
claims, damages, and proceeds of suit arising therefrom, or any payments or rights to payments
arising out of the sale, lease, license, assignment, or other disposition thereof), any additions
to, and substitutions for, any or all of the foregoing or any “proceeds” (as defined in Article 9
of the Uniform Commercial Code) of any or all of foregoing that could reasonably be expected to
adversely affect King’s benefits and rights under this Agreement. Other than such liens and claims
created in connection with a financing or royalty monetization or assignment transaction undertaken
by Acura after the Effective Date (which liens and claims shall be subject to, and not take
priority over, the license rights granted to King in and to the Aversion Technology hereunder),
Acura (x) will not create, incur, or permit to exist on or to any Aversion Technology, (y) will
defend such Aversion Technology against, and (z) will take such other action as is necessary to
remove in respect to such Aversion Technology, any lien or claim, other than the liens or claims
created hereby.

     13.8 Efforts to Satisfy Conditions. Notwithstanding the need to satisfy the conditions
identified under Section 13.6 in order for this Agreement to become effective, each of the Parties
agrees to use its diligent, commercially reasonable efforts to close the transactions contemplated
by this Agreement in order for each of the conditions set forth in Section 13.6 to become satisfied
as soon as reasonably possible.

ARTICLE 14

INDEMNIFICATION AND INSURANCE

     14.1 By Acura. Acura shall defend, indemnify and hold harmless King and its Affiliates and
each of their officers, directors, shareholders, employees, successors and assigns (collectively,
“King Indemnitees”) from and against all claims, charges, complaints, actions, suits, proceedings,
hearings, investigations and demands (“Claims”) of Third Parties, and all associated Losses, to the
extent arising out of (a) the Development, use, manufacture or Commercialization of Products
outside the Territory by or under authority of Acura (other than by King, its Affiliates or
sublicensees pursuant to the licenses granted hereunder), (b) the Development, use, manufacture or
Commercialization by or under authority of Acura (other than by King, its Affiliates or
sublicensees pursuant to the licenses granted hereunder) of any products with respect to which
Acura has exercised any rights under Section 5.3(a), (c) any breach by Acura of any representation,
warranty, covenant or obligation given in this Agreement, or (d) the gross negligence or willful
misconduct of Acura in the performance of its obligations hereunder; provided, however, that in all
cases referred to in this Section 14.1, Acura shall not be liable to indemnify any King Indemnitee
for any Losses to the extent that King is obligated to indemnify an Acura Indemnitee for such
Losses pursuant to Section 14.2.

 

			
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     14.2 By King. King shall defend, indemnify and hold harmless Acura and its Affiliates and
each of their officers, directors, shareholders, employees, successors and assigns (collectively,
“Acura Indemnitees”) from and against all Claims of Third Parties, and all associated Losses, to
the extent arising out of (a) the Development, use, manufacture or Commercialization of Products in
the Territory, (b) the Development, use or manufacture by King or its Affiliates or permitted
sublicensees of Products outside the Territory, (c) any breach by King or any of its Affiliates of
any representation or warranty, covenant, or obligation given in this Agreement or (d) the gross
negligence or willful misconduct of King or any of its Affiliates in the performance of its
obligations hereunder; provided, however, that in all cases referred to in this Section 14.2, King
shall not be liable to indemnify any Acura Indemnitee for any Losses to the extent that Acura is
obligated to indemnify a King Indemnitee for such Losses pursuant to Section 14.1.

     14.3 Procedure for Indemnification.

          (a) Notice. Each Party will notify promptly the other if it becomes aware of a Claim (actual
or potential) by any Third Party (a “Third Party Claim”) for which indemnification may be sought by
that Party and will give such information with respect thereto as the other Party shall reasonably
request. If any proceeding (including any governmental investigation) is instituted involving any
Party for which such Party may seek an indemnity under Section 14.1 or Section 14.2 (the
“Indemnified Party”), the Indemnified Party shall not make any admission or statement concerning
such Third Party Claim, but shall promptly notify the other Party (the “Indemnifying Party”) orally
and in writing and the Indemnifying Party and Indemnified Party shall meet to discuss how to
respond to any Third Party Claims that are the subject matter of such proceeding. The Indemnifying
Party shall not be obligated to indemnify the Indemnified Party to the extent any admission or
statement made by the Indemnified Party or any failure by such Party to notify the Indemnifying
Party of the Claim materially prejudices the defense of such Claim.

          (b) Defense of Claim. The following provisions shall apply to any Claim to which a Party is
entitled to indemnification from the other Party under this Article 14. If the Indemnifying Party
elects to defend or, if local procedural rules or laws do not permit the same, elects to control
the defense of a Third Party Claim, it shall be entitled to do so provided it gives notice to the
Indemnified Party of its intention to do so within forty-five (45) days after the receipt of the
written notice from the Indemnified Party of the potentially indemnifiable Third Party Claim (the
“Litigation Condition”). Subject to compliance with the Litigation Condition, the Indemnifying
Party shall retain counsel reasonably acceptable to the Indemnified Party (such acceptance not to
be unreasonably withheld, refused, conditioned or delayed) to represent the Indemnified Party and
shall pay the fees and expenses of such counsel related to such proceeding. In any such
proceeding, the Indemnified Party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party. The Indemnified Party
shall not settle any Claim for which it is seeking indemnification without the prior consent of the
Indemnifying Party which consent shall not be unreasonably withheld, refused, conditioned or
delayed. The Indemnified Party shall, if requested by the Indemnifying Party, cooperate in all
reasonable respects in the defense of such Claim that is being managed and/or controlled by the
Indemnifying Party. The Indemnifying Party shall not,

 

			
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without the written consent of the Indemnified Party (which consent shall not be unreasonably
withheld, refused, conditioned or delayed), effect any settlement of any pending or threatened
proceeding in which the Indemnified Party is, or based on the same set of facts could have been, a
party and indemnity could have been sought hereunder by the Indemnified Party, unless such
settlement includes an unconditional release of the Indemnified Party from all liability on Claims
that are the subject matter of such proceeding. If the Litigation Condition is not met, then
neither Party shall have the right to control the defense of such Third Party Claim and the Parties
shall cooperate in and be consulted on the material aspects of such defense at each Party’s own
expense; provided that if the Indemnifying Party does not satisfy the Litigation Condition, the
Indemnifying Party may at any subsequent time during the pendency of the relevant Third Party Claim
irrevocably elect, if permitted by local procedural rules or laws, to defend and/or to control the
defense of the relevant Third Party Claim so long as the Indemnifying Party also agrees to pay the
reasonable fees and costs incurred by the Indemnified Party in relation to the defense of such
Third Party Claim from the inception of the Third Party Claim until the date the Indemnifying Party
assumes the defense or control thereof.

     14.4 Assumption of Defense. Notwithstanding anything to the contrary contained herein, an
Indemnified Party shall be entitled to assume the defense of any Third Party Claim with respect to
the Indemnified Party, upon written notice to the Indemnifying Party pursuant to this Section 14.4,
in which case the Indemnifying Party shall be relieved of liability under Section 14.1 or Section
14.2, as applicable, solely for such Third Party Claim and related Losses.

     14.5 No Consequential or Punitive Damages. NEITHER PARTY HERETO WILL BE LIABLE FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE OR MULTIPLE DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOST PROFITS ARISING FROM OR RELATING TO
ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION
14.5 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY
PURSUANT TO SECTIONS 14.1 AND 14.2 WITH RESPECT TO THIRD PARTY CLAIMS.

     14.6 Insurance. Each Party shall maintain product liability insurance for clinical trials
performed by such Party pursuant to this Agreement and King shall also maintain product liability
insurance for commercial sales of Products pursuant to this Agreement, in each case to support the
indemnity provided to the other Party pursuant to this Agreement, in such amounts customarily
maintained with respect to its other products and which is reasonable and customary in the
pharmaceutical industry for companies of comparable size and activities. Such insurance policies
shall remain in effect throughout the Term and for the period of time for which either Party has
indemnification obligations following termination of this Agreement and shall not be cancelled or
subject to a reduction of coverage without the prior written authorization of the other Party.
Upon request by the other Party, a Party shall furnish certificates of insurance for all of the
above noted policies. Each insurance policy that is required under this Section shall be obtained
from an insurance carrier with an A.M. Best rating of at least A-VII. King shall be entitled to
arrange coverage provided under this Section 14.6 by means of self-insurance and in such event
shall promptly notify Acura.

 

			
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ARTICLE 15

HSR

     15.1 HSR. Promptly following the Execution Date, King (or its Affiliates) and Acura (or its
Affiliates) shall use Commercially Reasonable Efforts to take (i) all actions necessary to make the
filing required under the HSR Act and (ii) reply at the earliest practicable date to any requests
for information received from the Federal Trade Commission (“FTC”) or Antitrust Division of the
U.S. Department of Justice (“DoJ”) pursuant to the HSR Act. The Parties shall, to the extent
reasonably practicable, consult with one another prior to making any filings, responses to
inquiries, or other contacts with the FTC or DoJ concerning the transactions contemplated hereby.
Each Party shall bear its own expenses in connection with activities under this Article 15, except
that King shall be responsible for the fee due to the FTC in respect of such filing.

ARTICLE 16

TERM AND TERMINATION

     16.1 Term. The Term shall commence on the Effective Date and expire, unless earlier
terminated upon the mutual written agreement of the Parties or in accordance with the provisions of
this Article 16, on the date of expiration of all royalty and other payment obligations (the
“Expiration Date”) under this Agreement. Upon the Expiration Date, the licenses granted to King by
Acura, shall become fully paid-up and irrevocable, subject to any obligations which have accrued
prior to the Expiration Date.

     16.2 Termination Prior to Closing. In the event the Effective Date has not occurred prior to
[***] either Party may terminate this Agreement in its entirety immediately upon giving notice to
the other Party.

     16.3 Termination by King. King may at any time after [***] terminate this Agreement in its
entirety or with respect to any Product, without cause, by giving Acura after such date no less
than twelve (12) months advance written notice of such termination. In addition, King may
terminate this Agreement in its entirety if Regulatory Approval of the NDA for Product A is not
received prior to [***] (provided such failure to receive Regulatory Approval by such date is not
caused by a clearly defined action or omission of King) and such termination shall be effective
upon King giving written notice of such termination to Acura following such date. Further, King
may terminate this Agreement with respect to a Product with respect to a country if Regulatory
Approval for such Product is withdrawn by a Regulatory Authority in such country and such
termination shall be effective upon King giving written notice of such termination to Acura
following such withdrawal.

     16.4 Termination by Acura. Acura may terminate this Agreement with regards to a Product in
the United States in the event that such Product is not commercially launched by King, an Affiliate
of King, or a sublicensee of King in the United States within one hundred twenty (120) days after
receipt of Regulatory Approval of such Product in the United States.

 

			
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     16.5 Termination for Breach or Bankruptcy.

          (a) Each Party (the “Non-Breaching Party”) shall be entitled to terminate this Agreement on a
Product-by-Product, country-by-country basis, by written notice to the other Party (the “Breaching
Party”) in the event that the Breaching Party is materially in default of any of its material
obligations hereunder relating to such Product and such country and fails to remedy such default
within sixty (60) days (or, in the case of payment defaults, within thirty (30)) days after
provision of written notice thereof by the Non-Breaching Party identifying the alleged breach in
reasonable detail.

          (b) The effective date of termination of this Agreement under this Section 16.5 for an
unremedied material breach of a material obligation shall be the date sixty (60) days (or, in the
case of an unremedied payment default, thirty (30) days) after provision of written notice thereof
by the Non-Breaching Party.

          (c) This Agreement may be terminated by a Party upon written notice to the other in the event
that (i) the other Party shall make an assignment for the benefit of its creditors, file a petition
in bankruptcy, petition or apply to any tribunal for the appointment of custodian, receiver or any
trustee for it or a substantial part of its assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect; or (ii) if there shall have been
filed against the other Party any such bona fide petition or application, or any such proceeding
shall have been commenced against it, in which an order for relief is entered or which remains
undismissed for a period of ninety (90) days or more; or (iii) if the other Party by any act or
omission shall indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian, receiver or
trustee for it or any substantial part of its assets, or shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period of ninety (90) days or more; or
(iv) anything analogous to any of the foregoing occurs in any applicable jurisdiction. Termination
shall be effective upon the date specified in such notice.

     16.6 Patent Challenge. Acura will be permitted to terminate this Agreement by written notice
effective upon receipt if King or its Affiliates (other than an Affiliate conducting such action
prior to a Change of Control of such Affiliate), directly or indirectly through assistance granted
to a Third Party, commence any interference or opposition proceeding, challenge the validity or
enforceability of, or oppose any extension of or the grant of a supplementary protection
certificate with respect to, any Aversion Patent Rights (each such action, a “Patent Challenge”).
King will include provisions in all agreements granting sublicenses of King’s rights hereunder
providing that if the sublicensee or its Affiliates undertake a Patent Challenge with respect to
any Aversion Patent Rights under which the sublicensee is sublicensed, King will be permitted to
terminate such sublicense agreement. If a sublicensee of King (or an Affiliate of such
sublicensee) undertakes a Patent Challenge of any such Aversion Patent Right under which such
sublicensee is sublicensed, then King upon receipt of notice from Acura of such Patent Challenge
will terminate the applicable sublicense agreement. If King fails to so terminate such sublicense
agreement, Acura may terminate King’s right to sublicense in the countr(ies) covered by such
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countr(ies) shall automatically terminate. In connection with such sublicense termination,
King shall cooperate with Acura’s reasonable requests to cause such a terminated sublicensee to
discontinue activities with respect to the Product in such countr(ies).

     16.7 Consequences of Termination.

          (a) Termination by either Party under Section 16.2. In the event this Agreement is terminated
in its entirety by either Party under Section 16.2, then, notwithstanding Section 16.9, any and all
rights, obligations and covenants of the Parties set forth in Article 13 shall terminate in their
entirety.

          (b) Termination by King at Will or by Acura for King’s Breach or Bankruptcy or a Patent
Challenge. Upon any termination of this Agreement by King pursuant to Section 16.3 or by Acura
pursuant to Section 16.4, 16.5 or 16.6:

               (i) Any and all licenses granted by Acura to King under this Agreement shall terminate in
their entirety or with respect to the Product(s) and country(ies) to which the termination relates,
as the case may be, on the effective date of such termination, and the licenses granted by King to
Acura under this Agreement shall continue;

               (ii) King shall, upon Acura’s written request, assign and transfer to Acura, or its Affiliates
as requested by Acura, at no expense to Acura or its Affiliates, and free of any liens, pledges,
security interests and other financial encumbrances including those incurred in the
Commercialization of the Product, all of King’s right, title and interest in and to the trademarks
(including any goodwill associated therewith) which are solely used in connection with
Commercialization of Product(s) (for the avoidance of doubt, excluding the King housemark as well
as any other trademarks used in connection with any other product(s) or in connection with King’s
business in the Field generally), any registrations and design patents for any of the foregoing and
any internet domain name registrations for such trademarks and slogans, all regulatory filings
(such as INDs and NDAs), other Regulatory Approvals, and clinical trial agreements (to the extent
assignable and not cancelled) for such Product(s) in such country(ies), and all data, including
clinical data, materials and information of any kind or nature whatsoever, in King’s possession or
in the possession of its Affiliates or its or their respective agents related to such Product(s) in
such country(ies) developed under this Agreement. All such filings, approvals and data transferred
to Acura pursuant to this Section 16.7 shall be deemed to be Acura Confidential Information;

               (iii) If King is responsible for the commercial supply of Product at the time of termination,
then King shall supply, or cause to be supplied, to Acura, upon Acura’s written request, Acura’s or
its licensee’s commercial requirements of Product, pursuant to a supply agreement to be negotiated
in good faith by the Parties on commercially reasonable terms, provided that (1) any and all or
part of King’s remaining supply and inventory of Product shall be provided to Acura at King’s fully
burdened cost of goods plus [***] (2) any additional requirements for Product shall be supplied to
Acura or its licensee at King’s fully burdened cost of goods plus [***] (3) King’s supply
obligation shall not continue for more than twenty-four (24) months after the termination of this
Agreement, (4) King shall maintain the same quality

 

			
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and specifications for manufacturing Product as immediately prior to notice of termination,
and (5) Acura shall effect a transfer as soon as practicable of Product manufacturing activities
from King to another supplier. King shall also provide Acura or its designated supplier, at
Acura’s cost, reasonable assistance and cooperation in providing a manufacturing transfer package
with the goal of enabling Acura or such designated supplier to manufacture the Product; and

               (iv) Other than in Section 16.7(b)(iii) above, King shall cease Developing, manufacturing, and
Commercializing such Products under this Agreement and the licenses granted to King hereunder with
respect to such Products shall terminate.

          (c) Termination due to Acura’s Breach or Bankruptcy or Termination by Either Party Prior to
Closing. Upon any termination of this Agreement by King with respect to a Product or country under
Section 16.5(a) or termination of this Agreement in its entirety by King pursuant to Sections
16.5(a) or 16.5(c) or a termination by either Party pursuant to Section 16.2, any and all licenses
granted by Acura to King under this Agreement shall terminate in their entirety or with respect to
the Product(s) and country(ies) to which the termination relates, as the case may be, on the
effective date of such termination.

          (d) Royalty and Payment Obligations. Termination of this Agreement by either Party for any
reason will not release King from any obligation to pay royalties or milestones or to make any
payments to Acura which were accrued prior to the effective date of termination (including for
milestone events achieved under Article 8, prior to the date of termination) or that relate to
Product(s) or country/countries to which such termination does not relate. However, termination of
this Agreement by either Party for any reason will release King from any obligation to pay
royalties or make any payments to Acura which would have otherwise become accrued after the
effective date of termination (provided that King shall be obligated to pay royalties after the
effective date of termination for Products sold prior to such effective date).

          (e) Non-Exclusive Remedy for Breach. The provisions of this Section 16.7 are not intended to
be exclusive and are without prejudice to the rights of the Parties to seek any other rights and
remedies that they may have under this Agreement, at law or in equity or otherwise.

     16.8 Bankruptcy. Any licenses or rights granted under or pursuant to this Agreement by Acura
to King are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11, US
Code (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined under
Section 101(35A) of the Bankruptcy Code. The Parties agree that during the Term, King, as a
licensee of rights under this Agreement, shall retain and may fully exercise all of its rights and
elections under the Bankruptcy Code, subject to the continued performance of its obligations under
this Agreement.

     16.9 Survival of Obligations. Subject to Section 16.7(a), Sections 11.1, 11.2, 13.1 (for the
periods of time set forth therein), 13.2, 13.3, 13.4, 16.7, 16.8, 16.9 and Articles 10, 12, 14 and
17 and any definitions used in any such Section or Article shall survive the termination of this
Agreement in its entirety. Except for obligations which clearly are not intended to continue

 

			
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48

 

in respect of a partial termination pursuant to Section 16 (including the applicable diligence
obligation), with respect to the country or Product terminated, all obligations in this Agreement
shall survive such partial termination.

ARTICLE 17

MISCELLANEOUS

     17.1 Governing Law. This Agreement shall be governed by the laws of the State of New York
without regard to its conflict of laws rules or principles.

     17.2 Compliance with Law. Each Party hereby covenants and agrees to comply in all material
respects with all laws and regulations applicable to its activities in connection with the
Development, supply and Commercialization of the Products, including the requirements of the PDM
Act, the Controlled Substances Act and any import and export laws and regulations.

     17.3 Force Majeure. Neither Party shall be responsible to the other Party for nonperformance
or delay in performance of the terms or conditions of this Agreement due to acts of God, acts of
governments, war (declared or undeclared), acts of terrorism, riots, strikes, accidents in
transportation, or other causes beyond the reasonable control of such Party, but such force majeure
shall toll any and all obligations (other than payment obligations) and time periods for so long as
such force majeure continues. Upon the occurrence of an event of force majeure, the Party whose
performance is affected thereby shall notify the other Party promptly of such event. Upon the
cessation of such event, such Party shall take all reasonable steps within its power to resume with
the least possible delay compliance with its obligations hereunder.

     17.4 Waiver. The waiver by a Party of a breach or a default of any provision of this
Agreement by the other Party shall not be construed as a waiver of any subsequent breach of the
same or any other provision hereof, nor shall any delay or omission on the part of a Party to
exercise or avail itself of any right, power or privilege that it has or may have hereunder operate
as a waiver of that or any other right, power or privilege of such Party hereunder.

     17.5 Notices. Any notice or other communication required or permitted to be given in
connection with this Agreement must be in writing and may be given by any of the following methods:
(i) personal delivery with a signed acknowledgement of receipt; (ii) registered or certified mail,
postage prepaid, return receipt requested; or (iii) by overnight delivery service with a signed
acknowledgement of receipt. Notice shall be effective when delivered to the addressee at the
address listed below or such other address as the addressee shall have specified in a written
notice actually received by the addresser.

If to Acura:

Acura Pharmaceuticals, Inc.

616 N. North Court, Suite 120

Palatine, IL 60067

Attn: Andrew Reddick, President and CEO

 
 

			
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49

 

and

Morgan, Lewis & Bockius LLP

502 Carnegie Center

Princeton, NJ 08540

Attn: Randall B. Sunberg

If to King:

King Pharmaceuticals Research and Development, Inc.

c/o King Pharmaceuticals, Inc.

501 Fifth Street

Bristol, TN 37620

Attn: General Counsel

and

King Pharmaceuticals Research and Development, Inc.

c/o King Pharmaceuticals, Inc.

400 Crossing Blvd

8th Floor

Bridgewater, NJ 08801

Attn: General Counsel

     17.6 Relationship of the Parties. The Parties are independent contractors. Nothing herein is
intended, or shall be deemed, to constitute a partnership, agency, joint venture or employment
relationship between the Parties. Neither Party shall be responsible for the other Party’s acts or
omissions; and neither Party shall have authority to speak for, represent or obligate the other
Party in any way without prior written authority from the other Party. Subject to the terms of
this Agreement, the activities and resources of each Party shall be managed by such Party, acting
independently and in its individual capacity.

     17.7 Entire Agreement. This Agreement and the Schedules attached hereto (which Schedules are
incorporated herein by reference and are deemed to be a part of this Agreement for all purposes)
constitute the entire agreement of the Parties with respect to the subject matter hereof and
supersede all prior understandings and writings between the Parties relating thereto. No
amendment, waiver, alteration or modification of any of the provisions of this Agreement shall be
binding unless made in writing and signed by the Parties.

     17.8 Headings. The headings contained in this Agreement are for convenience of reference only
and shall not be considered in interpreting this Agreement.

     17.9 Severability. In the event that any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of

 

			
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any relevant jurisdiction, the validity of the remaining provisions of this Agreement shall
not be affected thereby, and the Parties shall negotiate a substitute provision that, to the extent
possible, accomplishes the original business purpose of the unenforceable provision. During the
period of such negotiation, and thereafter if no substituted provision is agreed upon in writing by
the Parties, any such provision which is enforceable in part but not in whole shall be enforced to
the maximum extent permitted by law.

     17.10 Assignment and Transfer. Neither this Agreement nor any right or obligation hereunder
may be assigned or otherwise transferred by either Party without the prior written consent of the
other Party, except each Party may, without consent of the other Party, assign or otherwise
transfer this Agreement and its rights and obligations hereunder in whole or in part: (a) to any
Affiliate; (b) in connection with a Change of Control; or (c) in connection with any Sale of the
Field Business; or (d) to any Third Party in connection with a transaction in which such Party
acquires control of another Third Party or any of its products, assets or businesses (whether by
license, asset or company acquisition, merger, joint venture, partnership or other business
transaction or combination), where in such transaction [***] represent less than fifty percent
(50%) of the net present value of such transaction (as set forth in such Party’s final presentation
to its board of directors seeking corporate approval for such transaction), and where the Federal
Trade Commission or Department of Justice of the United States requires such Party to divest the
Products that are the subject matter of this Agreement and only the Products. Any attempted
assignment or other transfer not in accordance with this Section 17.10 shall be void. Any
permitted assignee shall assume in writing all assigned obligations of its assignor under this
Agreement. The Party making any assignment or other transfer permitted under this Section 17.10
shall provide prompt written notice to the other Party of such assignment or transfer.
Notwithstanding any provision herein to the contrary, Acura shall be entitled to assign its rights
to receive payments under this Agreement to a Third Party and King shall be entitled to assign its
rights under this Agreement as security to any financial institution providing financing to King,
pursuant to the terms of the relevant security agreement; provided, further, that any permitted
assignment shall protect Acura’s rights under this Agreement.

     17.11 Successors and Assigns. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their successors and permitted
assigns.

     17.12 Interpretation.

          (a) General. Unless the context of this Agreement otherwise requires, (a) words of one gender
include the other gender; and (b) words using the singular or plural number also include the plural
or singular number, respectively. Whenever this Agreement refers to a number of days, unless
otherwise specified, such number shall refer to calendar days.

          (b) Other Definitional and Agreement References. References to any agreement, contract,
statute, act, or regulation are to that agreement, contract, statute, act, or regulation as
amended, modified or supplemented from time to time in accordance with the terms hereof and
thereof.

 

			
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          (c) Capitalization. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein, shall have the meaning as defined in this Agreement.

          (d) Date References. References from or through any date mean, unless otherwise specified,
from and including or through and including, respectively.

          (e) Schedules. All Schedules annexed hereto or referred to herein are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.

          (f) Person References. References to any person include the successors and permitted assigns
of that Person.

          (g) References to Parts of this Agreement. References to Articles, Sections, and Schedules
are to Articles, Sections and Schedules of this Agreement unless otherwise specified.

          (h) Other Definitional and Interpretative Provisions. The words “hereof”, “herein” and
“hereunder” and words of like import used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be followed by the
words “without limitation”, whether or not they are in fact followed by those words or words of
like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of
reproducing words (including electronic media) in a visible form.

     17.13 Counterparts. This Agreement may be executed manually, electronically in Adobe® PDF
file format, or by facsimile by the Parties, in any number of counterparts, each of which shall be
considered one and the same agreement and shall become effective when a counterpart hereof shall
have been signed by each of the Parties and delivered to the other Party.

     17.14 Further Actions. Each Party will duly execute and deliver, or cause to be duly executed
and delivered, such further instruments and do and cause to be done such further acts and things,
as may be necessary or as the other Party may reasonably request in connection with this Agreement
or to carry out more effectively the provisions and purposes, or to better assure and confirm unto
such other Party its rights under this Agreement, including executing and delivering appropriate
assignment and assumption agreements and bill of sale documentation in connection with the transfer
of ownership for NDA, copyright rights, domain names and regulatory filings which are to be
transferred hereunder.

[Signature Page Follows]

 

			
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     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their
names by their properly and duly authorized officers or representatives as of the date first
written above.

	 	 	 	 	 	 	 
	 	 	ACURA PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Andrew D. Reddick	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Andrew D. Reddick	 	 
	 	 	Title: CEO and President	 	 

	 	 	 	 	 	 	 
	 	 	KING PHARMACEUTICALS RESEARCH AND DEVELOPMENT, INC.	 	 
	 
	 

	 	By:
	 	Brian A. Markison	 	 
	 

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

King Pharmaceuticals, Inc. hereby irrevocably and unconditionally guarantees to Acura the prompt
and full discharge by King (as such term is defined under this Agreement) of all of King’s
covenants, agreements, obligations and liabilities under this Agreement including, without
limitation, the due and punctual payment of all amounts which are or may become due and payable by
King hereunder when and as the same shall become due and payable, in accordance with the terms
hereof.

	 	 	 	 	 	 	 
	 	 	KING PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Brian A. Markison	 	 
	 

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

[Signature Page to License, Development and Commercialization Agreement]

 

			
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SCHEDULE 1.9

AVERSION® PATENT RIGHTS

[***]

CONTINUED ON NEXT PAGE

[Schedule 4.1(A) to License, Development and Commercialization Agreement]

 

			
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AVERSION® PATENT RIGHTS

[***]

[Schedule 4.1(A) to License, Development and Commercialization Agreement]

 
 

			
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SCHEDULE 4.1(a)

Initial Product A Development Plan and Budget

[***]

[Schedule 4.1(A) to License, Development and Commercialization Agreement]

 
 

			
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SCHEDULE 4.1(a)

Initial Product A Development Budget 

[***]

[Schedule 4.1(A) to License, Development and Commercialization Agreement]

 

			
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SCHEDULE 6.2

Table of Contents of a Commercialization Plan for Each Product

[***]

[Schedule 6.2 to License, Development and Commercialization Agreement]

 

			
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SCHEDULE 8.2

Milestone Events And Payments

	 	 	 	 	 	 	 
	MILESTONE EVENT	 	PRODUCT AND PAYMENTS
	 	 	$ Millions
	 	 	 	 	 	 	Other Products
	 	 	Product A	 	Product B	 	(See Note Below)
	FDA approval of the
first NDA for each
Product

	 	[***]
	 	[***]
	 	[***]
	[***]

	 	[***]
	 	[***]
	 	[***]
	Calendar Year in which
Net Sales for Products
in the Territory
exceed $750 million	 	 	 	One-time payment of $50

	[***]

	 	[***]
	 	Not Applicable
	 	Not Applicable
	[***]

	 	[***]
	 	Not Applicable
	 	Not Applicable

NOTES: A one time milestone payment of [***] will be payable to Acura upon FDA approval [***] of
the first NDA for each Product containing [***] other than oxycodone HCl. For example, upon the
first NDA approved for Product C [***] will be payable, upon the first NDA approval for Product D
[***] will be payable, and upon the first NDA approval of any Product containing each additional
[***] an additional $20 million will be payable for each such [***] If there is the simultaneous
successful achievement of the [***] then the last two milestones shall be due at the same time.
Should King determine that [***]

[Schedule 8.2 to License, Development and Commercialization Agreement]

 
 

			
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SCHEDULE 12.6

Joint Press Release

      

PRESS RELEASE

			
	
	 	King Pharmaceuticals Contacts:
	 
	James E. Green, Executive Vice President, Corporate Affairs

423-989-8125

David E. Robinson, Senior Director, Corporate Affairs

423-989-7045
		 	 

Acura Pharmaceuticals Contact:

Peter A. Clemens, SVP Investor Relations & CFO

847-705-7709

FOR IMMEDIATE RELEASE

KING PHARMACEUTICALS AND ACURA PHARMACEUTICALS ENTER

AGREEMENT TO DEVELOP AND COMMERCIALIZE IMMEDIATE RELEASE PAIN

MEDICINES UTILIZING ACURA’S AVERSION® (ABUSE-DETERRENT)

TECHNOLOGY

Transaction Expands King’s Near-term Pipeline of Products

Designed to Deter Common Methods of Opioid Abuse

BRISTOL, TENNESSEE and PALATINE, ILLINOIS, October 31, 2007 – King Pharmaceuticals, Inc. (NYSE: KG)
and Acura Pharmaceuticals, Inc. (OTC.BB-ACUR) announced today that the companies have entered into
a License, Development and Commercialization Agreement (the “Agreement”) for the United States,
Canada, and Mexico (the “Territory”) encompassing a potentially wide range of opioid analgesic
products utilizing Acura’s patented Aversion® (abuse-deterrent) Technology platform.
The companies have initially targeted development and commercialization of four immediate release
opioid analgesic products, including ACUROXTM Tablets (oxycodone HCl, niacin, and a unique
combination of other ingredients), formerly known as OxyADF, for treating moderate to severe acute
pain.

Brian A. Markison, Chairman, President and CEO of King, stated, “This transaction demonstrates our
commitment to building on our strengths in specialty markets where we have a strong presence and
existing capabilities. We are excited about partnering with Acura, which directly aligns with our
recently announced emphasis on King’s neuroscience and hospital/acute care platforms, particularly
our growing pain management franchise.”

Andy Reddick, President and CEO of Acura said, “We believe King’s abuse-deterrent analgesic brand
product pipeline and neuroscience expertise perfectly complement our Aversion®
Technology platform. King is clearly leading the pharmaceutical industry with its understanding of
the opportunities and challenges relating to the market for products designed to discourage
prescription drug abuse.”

Mr. Reddick added, “We look forward to working closely with King to bring innovative immediate
release opioid analgesic products to market utilizing our Aversion® (abuse-deterrent)
Technology. Discouraging prescription drug abuse benefits patients, healthcare providers, third

[Schedule 12.6 to License, Development and Commercialization Agreement]

 

			
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party payors, and society as a whole, while at the same time we expect to create substantial value
for King and Acura shareholders.”

Dr. Eric Carter, Chief Science Officer of King, commented, “Opioid analgesics play a very important
role in the effective management of moderate to severe pain. However, abuse and misuse of these
medicines represents a major area of concern among physicians, pharmacists, patients, and the
health-care sector. At King, we are committed to addressing this important public health issue and
the needs of our customers by offering pain medicines that are proven effective and incorporate
safe and appropriate means to discourage abuse and misuse.”

Dr. Carter added, “We believe Acura and our long-established partner, Pain Therapeutics, have
developed unique platforms designed to address the challenges related to abuse and misuse of
immediate release and long-acting pain medicines. Acura’s innovative and proprietary Aversion®
Technology has the potential to significantly reduce common methods of abuse associated with
immediate release opioids used for the treatment of acute pain. Similarly, REMOXYTM
(long acting oral oxycodone) and other long-acting opioids that we are jointly developing with Pain
Therapeutics utilizing Durect Corporation’s SABERTM formulation technology have
significant potential to deter common methods of abuse associated with long-acting opioids used for
the treatment of chronic pain.”

“Our alliance with Acura will help further address this growing opportunity and adds considerable
strength to King’s pipeline, allowing for the development of multiple future medicines,” concluded
Dr. Carter.

About the License, Development and Commercialization Agreement

The Agreement provides King with an exclusive license in the Territory for ACUROXTM Tablets
(formerly OxyADF) and another undisclosed opioid product utilizing Acura’s Aversion®
Technology. In addition, the Agreement provides King with an option to license in the Territory
all future opioid analgesic products developed utilizing Acura’s Aversion® Technology.

Under the terms of the Agreement, King will make an upfront cash payment to Acura of $30 million.
Depending on the achievement of certain development and regulatory milestones, King could also make
additional cash payments to Acura of up to $28 million relating to ACUROXTM Tablets and similar
amounts with respect to each subsequent Aversion® Technology product developed under the
Agreement. King will reimburse Acura for all research and development expenses incurred beginning
from September 19, 2007 for ACUROXTM Tablets and all research and development expenses related to
future products after King’s exercise of its option to an exclusive license for each future
product. King will record net sales of all products and pay Acura a royalty ranging from 5% to 25%
based on the level of combined annual net sales for all products subject to the Agreement. King
will also make a one-time cash payment to Acura of $50 million in the first year in which the
combined annual net sales of all products exceed $750 million.

King and Acura will form a joint steering committee to coordinate development and commercialization
strategies. With King’s oversight, Acura will conduct all ACUROXTM Tablet

[Schedule 12.6 to License, Development and Commercialization Agreement]

 
 

			
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development activities through approval of a New Drug Application (“NDA”) and thereafter King will
commercialize ACUROXTM in the U.S. With respect to all other products subject to the Agreement,
King will be responsible for development and regulatory activities following either acceptance of
an Investigational New Drug Application by the U.S. Food and Drug Administration (“FDA”) or Acura’s
demonstration of certain stability and pharmacokinetic characteristics for each future product.
All products developed pursuant to the Agreement will be manufactured by King or a third party
contract manufacturer under the direction of King. Subject to the Agreement, King will have final
decision making authority with respect to all development and commercialization activities for all
products licensed.

The Agreement closing is subject to antitrust review under the Hart-Scott-Rodino Antitrust
Improvements Act.

The United States Patent and Trademark Office has granted U.S. Patent No. 7,201,920 relating to
Acura’s Aversion® (abuse-deterrent) Technology, which expires on March 16, 2025.

About ACUROXTM Tablets

ACUROXTM (formerly OxyADF) is an orally administered immediate release tablet containing oxycodone
HCl as an active analgesic ingredient, niacin as an active ingredient in subtherapeutic amounts,
and a unique combination of other ingredients. ACUROXTM Tablets are intended to effectively treat
moderate to moderately severe pain while discouraging the three most common methods of prescription
drug abuse including (i) intravenous injection of dissolved tablets, (ii) nasal snorting of crushed
tablets and (iii) intentional swallowing of excessive numbers of tablets.

Earlier this year, Acura reached agreement with the FDA on a Special Protocol Assessment for a
pivotal Phase 3 clinical trial evaluating ACUROXTM Tablets. This clinical trial is a randomized,
double-blind, placebo-controlled, multi-center, repeat-dose study evaluating the safety and
efficacy of ACUROXTM Tablets for the treatment of acute, moderate to moderately severe postoperative
pain. The 3-arm clinical trial compares two dose levels of ACUROXTM Tablets to placebo and is
targeted to enroll 135 patients per arm (approximately 405 patients in total). Study medication
will be administered to patients every six hours for 48 hours following the onset of moderate to
severe pain following bunionectomy surgery. This pivotal Phase 3 clinical trial began enrolling
patients in September with a final study report expected in the second half of 2008.

About King Pharmaceuticals

King, headquartered in Bristol, Tennessee, is a vertically integrated branded pharmaceutical
company. King, an S&P 500 Index company, seeks to capitalize on opportunities in the pharmaceutical
industry through the development, including through in-licensing arrangements and acquisitions, of
novel branded prescription pharmaceutical products in attractive markets and the strategic
acquisition of branded products that can benefit from focused promotion and marketing and
life-cycle management.

[Schedule 12.6 to License, Development and Commercialization Agreement]

 

			
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About Acura Pharmaceuticals

Acura Pharmaceuticals, Inc. is a specialty pharmaceutical company engaged in research, development
and manufacture of innovative Aversion® (abuse deterrent) Technology and related product
candidates.

Forward-looking Statements

This release contains forward-looking statements which reflect managements’ current views of future
events and operations, including, but not limited to, statements pertaining to the expected
benefits to the companies’ shareholders as a result of the Agreement; statements pertaining to the
potential of the Aversion® Technology and SABERTM formulation technology to
reduce some common methods of abuse of opioids; statements pertaining to the expected timetable for
the ACUROXTM Tablets Phase 3 clinical trial; and statements pertaining to the potential
for the companies to successfully develop multiple future products. These forward-looking
statements involve certain significant risks and uncertainties, and actual results may differ
materially from the forward-looking statements. Some important factors which may cause actual
results to differ materially from the forward-looking statements include dependence on the
successful development and commercialization of ACUROXTM Tablets and other products
subject to the Agreement; dependence on the companies’ abilities to obtain the necessary regulatory
approvals and close the transaction as expected; dependence on the companies’ abilities to
successfully manufacture products subject to the Agreement following the necessary regulatory
approval; dependence on the companies’ compliance with FDA and other government regulations that
relate to their respective businesses; dependence on the successful development and
commercialization of REMOXYTM and other products that King is jointly developing with
Pain Therapeutics; dependence on unexpected changes in technologies and technological advances;
dependence on changes in general economic and business conditions, current pricing levels, federal
and state laws and regulations, and competition; and dependence on manufacturing capacity
constraints. Other important factors that may cause actual results to differ materially from the
forward-looking statements are discussed in the “Risk Factors” section and other sections of each
of King’s and Acura’s respective Form 10-K for the year ended December 31, 2006 and their
respective Form 10-Q for the quarter ended June 30, 2007, which are on file with the U.S.
Securities and Exchange Commission. The companies do not undertake to publicly update or revise
any of their forward-looking statements even if experience or future changes show that the
indicated results or events will not be realized.

# # #

EXECUTIVE OFFICES

KING PHARMACEUTICALS, INC.

501 FIFTH STREET, BRISTOL, TENNESSEE 37620

ACURA PHARMACEUTICALS, INC.

616 N. NORTH COURT, PALATINE, ILLINOIS 60067

[Schedule 12.6 to License, Development and Commercialization Agreement]

 

			
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EXHIBIT 10.2

	ADOPTION AGREEMENT
1.01 PREAMBLE
By the execution of this Adoption Agreement the Plan Sponsor

hereby [complete (a) or (b)]
(a) adopts a new plan as of  [month, day, year]
(b) amends and restates its existing plan as of 01/01/2008 
[month, day, year] which is the Amendment Restatement Date.
Original Effective Date: 07/27/2005 [month, day, year]
Pre-409A Grandfathering: Yes No
1.02 PLAN
—
Plan Name: King Pharmaceuticals, Inc. Deferred Compensation Plan
—
Plan Year: ends 12/31
—
1.03 PLAN SPONSOR
—
Name: King Pharmaceuticals, Inc.
—
Address: 501 Fifth Street, Bristol, TN 37620
—
Phone # : 423-989-8000
—
EIN: 54-1684963
—
Fiscal Yr: 12/31
—
Is stock of the Plan Sponsor, any Employer or any Related Employer publicly traded on an
established securities market?
Yes            No
1.04 EMPLOYER
The following entities have been authorized by the Plan Sponsor to participate in and have
adopted the Plan (insert “Not Applicable” if none have been authorized):
Entity Publicly Traded on Est. Securities Market
Yes            No
King Pharmaceuticals, Inc.
—
Monarch Pharmaceuticals, Inc.
—
King Pharmaceuticals Research and Development, Inc.
—
Parkedale Pharmaceuticals, Inc.
—
Meridian Medical Technologies, Inc.
—
Gentrac, Inc.
—
JMI-Daniels Pharmaceuticals, Inc.
—

- 1 -

 

	ADMINISTRATOR
The Plan Sponsor has designated the following party or parties to be responsible for the
administration of the Plan:
Committee designated by the Compensation and Human Resources
Committee of the Board of Directors of the Company, by written
Name: resolution
—
Address: 501 Fifth Street, Bristol, TN 37620
—
Note: The Administrator is the person or persons designated by the Plan Sponsor to
be responsible for the administration of the Plan. Neither Fidelity Employer Services
Company nor any other Fidelity affiliate can be the Administrator.
1.05 KEY EMPLOYEE DETERMINATION DATES
The Employer has designated 09/30  as the Identification Date for
purposes of determining Key Employees.
In the absence of a designation, the Identification Date is December 31.
The Employer has designated 01/01  as the effective date for purposes
of applying the six month delay in distributions to Key Employees.
In the absence of a designation, the effective date is the first day of the fourth month
following the Identification Date.

- 2 -

 

	2.01 PARTICIPATION
(a) Employees [complete (i), (ii) or (iii)]
(i) Eligible Employees are selected by the Employer.
(ii) Eligible Employees are those employees of the Employer who satisfy the
following criteria:
Employees who are Vice President or higher.
—
Employees who, regardless of whether they are Vice President or higher, have
actually participated in the Plan prior to the Amendment Restatement Date
—
(iii) Employees are not eligible to participate.
(b) Directors [complete (i), (ii) or (iii)]
(i) All Directors are eligible to participate.
(ii) Only Directors selected by the Employer are eligible to participate.
(iii) Directors are not eligible to participate.

- 3 -

 

	3.01 COMPENSATION
For purposes of determining Participant contributions under Article 4 and Employer
contributions under Article 5, Compensation shall be defined in the following manner
[complete (a) or (b) and select (c) and/or (d), if applicable]:
(a) Compensation is defined as:
Base Salary
—
Performance Bonus
—
Sales Bonus
—
(b) Compensation as defined in [insert name of qualified plan]
without regard to the limitation in Section 401(a)(17) of the Code for
such Plan Year.
—
(c) Director Compensation is defined as:
(d) Compensation shall, for all Plan purposes, be limited to $ .
—
(e) Not Applicable.
3.02 BONUSES
Compensation, as defined in Section 3.01 of the Adoption Agreement, includes the following
type of bonuses:
| | |
Will be treated as Performance
Type            Based Compensation
——  —
| | |
Yes            No
Performance Bonus
Sales bonus
—
Not Applicable.

- 4 -

 

	4.01 PARTICIPANT CONTRIBUTIONS
If Participant contributions are permitted, complete (a), (b), and (c). Otherwise

complete (d).
(a) Amount of Deferrals
A Participant may elect within the period specified in Section 4.01(b) of the
Adoption Agreement to defer the following amounts of remuneration. For each type of
remuneration listed, complete “dollar amount” and / or “percentage amount”.
(i) Compensation Other than Bonuses [do not complete if you
complete (iii)]
Type of Remuneration            Dollar Amount      % Amount            Increment
——  ——  ——  —
Min            Max            Min            Max
——  ——  ——  —
(a) Base Salary 0% 75% 1%
——   —  -—  —
(b)
—
(c)
—
Note: The increment is required to determine the permissible deferral amounts. For
example, a minimum of 0% and maximum of 20% with a 5% increment would allow an
individual to defer 0%, 5%, 10%, 15% or 20%.
(ii) Bonuses [do not complete if you complete (iii)]
Type of Bonus            Dollar Amount      % Amount            Increment
——  ——  ——  —
Min            Max            Min            Max
——  ——  ——  —
(a) Management
Bonus 0% 90% 1%
——   —  -—  —
(b) Sales Bonus 0% 90% 1%
——   —  -—  —
(c)
—
(iii) Compensation [do not complete if you completed (i) and (ii)]
Dollar Amount      % Amount            Increment
——  ——  —
Min            Max            Min            Max
——  ——  ——  —
(iv) Director Compensation
Type of Compensation            Dollar Amount      % Amount            Increment
——  ——  ——  —
Min            Min            Min            Max
——  ——  ——  —
Annual Retainer
—
Meeting Fees
—
Other:
—
Other:
—

- 5 -

 

	(b) Election Period
(i) Performance Based Compensation
A special election period
Does            Does Not
apply to each eligible type of performance based compensation referenced in
Section 3.02 of the Adoption Agreement.
The special election period, if applicable, will be determined by the Employer.
(ii) Newly Eligible Participants
An employee who is classified or designated as an Eligible Employee during a
Plan Year
May            May Not
elect to defer Compensation that is Base Salary earned during the remainder of
the Plan Year by completing a deferral agreement within the 30 day period
beginning on the date he is eligible to participate in the Plan.
(c) Revocation of Deferral Agreement
A Participant’s deferral agreement
Will
Will Not
be cancelled for the remainder of any Plan Year during which he receives a hardship
distribution of elective deferrals from a qualified cash or deferred arrangement
maintained by the Employer. If cancellation occurs, the Participant may resume
participation in accordance with Article 4 of the Plan.
(d) No Participant Contributions
Participant contributions are not permitted under the Plan.

- 6 -

 

	5.01 EMPLOYER CONTRIBUTIONS
If Employer contributions are permitted, complete (a) and/or (b). Otherwise

complete (c).
(a) Matching Contributions
(i) Amount
For each Plan Year, the Employer shall make a Matching Contribution on behalf of
each Participant who defers Compensation for the Plan Year and satisfies the
requirements of Section 5.01(a)(ii) of the Adoption Agreement equal to [complete
the ones that are applicable]:
(A)   [insert percentage] of the Compensation
the Participant has elected to defer for the Plan Year
(B) An amount determined by the Employer in its sole
discretion
(C) Matching Contributions for each Participant shall be
limited to $  and/or  % of Compensation.
(D) Other:
 

 
(E) Not Applicable [Proceed to Section 5.01(b)]
(ii) Eligibility for Matching Contribution
A Participant who defers Compensation for the Plan Year shall receive an
allocation of Matching Contributions determined in accordance with Section
5.01(a)(i) provided he satisfies the following requirements [complete the ones
that are applicable]:
(A) Describe requirements:
—
—
—
—
(B) Is selected by the Employer in its sole discretion to receive an
allocation of Matching Contributions
(C) No requirements

- 7 -

 

	(iii) Time of Allocation
Matching Contributions, if made, shall be treated as allocated [select one]:
(A) As of the last day of the Plan Year
(B) At such times as the Employer shall determine in its sole
discretion
(C) At the time the Compensation on account of which the Matching
Contribution is being made would otherwise have been paid to the
Participant
(D) Other:
—
—
—
—
(b) Other Contributions
(i) Amount
The Employer shall make a contribution on behalf of each Participant who
satisfies the requirements of Section 5.01(b)(ii) equal to [complete the ones
that are applicable]:
(A) An amount equal to [insert number] % of the Participant’s
Compensation
—
(B) An amount determined by the Employer in its sole discretion
(C) Contributions for each Participant shall be limited to $
—
(D) Other:
—
—
—
—
—
—
(E) Not Applicable [Proceed to Section 6.01]

- 8 -

 

	(ii) Eligibility for Other Contributions
A Participant shall receive an allocation of other Employer contributions
determined in accordance with Section 5.01(b)(i) for the Plan Year if he
satisfies the following requirements [complete the one that is applicable]:
(A) Describe requirements:
—
—
—
—
(B) Is selected by the Employer in its sole discretion to receive an
allocation of other Employer contributions
(C) No requirements
(iii) Time of Allocation
Employer contributions, if made, shall be treated as allocated [select one]:
(A) As of the last day of the Plan Year
(B) At such time or times as the Employer shall determine in its sole
discretion
(C) Other:
—
—
—
—
—
—
(c) No Employer Contributions
Employer contributions are not permitted under the Plan.

- 9 -

 

	6.01 DISTRIBUTIONS
The timing and form of payment of distributions made from the Participant’s vested Account
shall be made in accordance with the elections made in this Section 6.01 of the Adoption
Agreement except when Section 9.6 of the Plan requires a six month delay for certain
distributions to Key Employees of publicly traded companies.
(a) Timing of Distributions
(i) All distributions shall commence in accordance with the following [choose one]:
(A) As soon as administratively feasible following the distribution event
(B) Monthly on specified day [insert day]
—
(C) Annually on specified month and day [insert month and day]
—
(D) Calendar quarter on specified month and day [ month of quarter
(insert 1,2 or 3); ___day (insert day)]
—
(ii) The timing of distributions as determined in Section 6.01(a)(i) shall
be modified by the adoption of:
(A) Event Delay – Distribution events other than those
based on Specified Date or Specified Age will be
treated as not having occurred for 10 days.
—
(B) Hold Until Next Year – Distribution events other than
those based on Specified Date or Specified Age will
be treated as not having occurred for twelve months
from the date of the event if payment pursuant to
Section 6.01(a)(i) will thereby occur in the next
calendar year or on the first payment date in the
next calendar year in all other cases.
(C) Immediate Processing – The timing method selected by
the Plan Sponsor under Section 6.01(a)(i) shall be
overridden for the following distribution events
[insert events]:
—
—
—
—
(D) Not applicable.

- 10 -

 

	(b) Distribution Events
If multiple events are selected, the earliest to occur will trigger payment. For
installments, insert the range of available periods (e.g., 5-15) or insert the periods
available (e.g., 5,7,9).
| | |
Lump Sum            Installments
——  —
(i) Specified Date            X 2-5 years
——  —
| | |
(ii) Specified Age ——  years
——  —
(iii) Separation from Service            X 2-10 years
——  —
(iv) Separation from Service plus 6 months ——  years
——  —
(v) Separation from Service plus ——  years
months [not to exceed            months]
——  ——  —
(vi) Retirement ——  years
——  —
(vii) Retirement plus 6 months ——  years
——  —
(viii) Retirement plus            months [not to ——  years
exceed            months]
——  ——  —
(ix) Later of Separation from Service or ——  years
Specified Age
——  —
(x) Later of Separation from Service or ——  years
Specified Date
——  —
(xi) Disability ——  years
——  —
(xii) Death ——  years
——  —
(xiii) Change in Control ——  years
——  —
The minimum deferral period for Specified Date or Specified Age event shall be 
 years.
Installments may be paid [select each that applies]
Monthly
Quarterly
Annually
(c) Specified Date and Specified Age elections may not extend beyond age Not
Applicable .

- 11 -

 

	(d) Separation from Service Override
A Separation from Service override
Shall Apply. [If this is elected, “Separation from Service” cannot be selected
as a distribution event in Section 6.01(b)]
Shall Not Apply.

	A Separation from Service override provides that a Participant whose Separation from
Service occurs before Retirement shall receive the vested amount credited to his
Account as a lump sum payment.
(e) Involuntary Cashouts
If the Participant’s vested Account at the time of his Separation from Service
does not exceed $25,000 distribution of the vested Account shall automatically
be made in the form of a single lump sum in accordance with Section 9.5 of the
Plan.
—
There are no involuntary cashouts.
(f) Retirement
Retirement shall be defined as a Separation from Service that occurs on or
after the Participant [insert description of requirements]:
—
—
—
—
No special definition of Retirement applies.

- 12 -

 

	(g) Distribution Election Change
A Participant
Shall
Shall Not
be permitted to modify a scheduled distribution date and/or payment option in
accordance with Section 9.2 of the Plan.
A Participant shall generally be permitted to elect such modification any
number of times.
Administratively, allowable distribution events will be modified to reflect all
options necessary to fulfill the distribution change election provision.
(h) Frequency of Elections
The Plan Sponsor
Has
Has Not
Elected to permit annual elections of a time and form of payment for amounts deferred
under the Plan.

- 13 -

 

	7.01 VESTING
(a) Matching Contributions
The Participant’s vested interest in the amount credited to his Account attributable to
Matching Contributions shall be based on the following schedule:
Years of Service            Vesting %
0 ——  (insert ‘100’ if there is immediate vesting)
—
1 —
—
2 —
—
3 —
—
4 —
—
5 —
—
6 —
—
7 —
—
8 —
—
9 —
—
Other:
As determined by the Employer in its sole discretion
—
at the time amounts are credited to the account
—
Class year vesting applies.
Not applicable.
(b) Other Employer Contributions
The Participant’s vested interest in the amount credited to his Account attributable to
Employer contributions other than Matching Contributions shall be based on the following
schedule:
Years of Service            Vesting %
0 ——  (insert ‘100’ if there is immediate vesting)
—
1 —
—
2 —
—
3 —
—
4 —
—
5 —
—
6 —
—
7 —
—
8 —
—
9 —
—
Other:
As determined by the Employer in its sole discretion
—
at the time amounts are credited to the account
—
—
—
Class year vesting applies.
Not applicable.

- 14 -

 

	(c) Acceleration of Vesting
A Participant’s vested interest in his Account will automatically be 100% upon the
occurrence of the following events: [select the ones that are applicable]:
(i) Death
(ii) Disability
(iii) Change in Control
(iv) Eligibility for Retirement
(v) Other:
—
—
—
(vi) Not applicable.
(d) Years of Service
(i) A Participant’s Years of Service shall include all service performed
for the Employer and
Shall
Shall Not
include service performed for the Related Employer.
(ii) Years of Service shall also include service performed for the following
entities:
(iii) Years of Service shall be determined in accordance with (select one)
(A) The elapsed time method in Treas. Reg. Sec.  1.410(a)-7
(B) The general method in DOL Reg. Sec. 2530.200b-1 through b-4
(C) The Participant’s Years of Service credited under [insert name of plan]
—
(D) Other:
—
—
—
—
—
(iv) Not applicable.

- 15 -

 

	8.01 UNFORESEEABLE EMERGENCY
(a) A withdrawal due to an Unforeseeable Emergency as defined in Section 2.24:
Will
Will Not [if Unforeseeable Emergency withdrawals are not permitted, proceed to
Section 9.01]
be allowed.
(b) Upon a withdrawal due to an Unforeseeable Emergency, a Participant’s deferral
election for the remainder of the Plan Year:
Will
Will Not
be cancelled. If cancellation occurs, the Participant may resume participation in
accordance with Article 4 of the Plan.

- 16 -

 

	9.01 INVESTMENT DECISIONS
Investment decisions regarding the hypothetical amounts credited to a Participant’s Account
shall be made by [select one]:
(a) The Participant or his Beneficiary
(b) The Employer

- 17 -

 

	10.01 GRANTOR TRUST
The Employer [select one]:
Does
Does Not
intend to establish a grantor trust in connection with the Plan.

- 18 -

 

	TERMINATION UPON CHANGE IN CONTROL
The Plan Sponsor
Reserves
Does Not Reserve
the right to terminate the Plan and distribute all vested amounts credited to Participant
Accounts upon a Change in Control as described in Section 9.7.

[Fidelity considers that this right is implied b/c of selection in 11.02. Could be
confusing to check the box to have an automatic distribution. B but need to consider: what
if CIC is not hostile?]
11.01 AUTOMATIC DISTRIBUTION UPON CHANGE IN CONTROL
Distribution of the remaining vested balance of each Participant’s Account
Shall
Shall Not
automatically be paid as a lump sum payment upon the occurrence of a Change in Control as
provided in Section 9.7.
11.02 CHANGE IN CONTROL
A Change in Control for Plan purposes includes the following [select each definition that
applies]:
(a) A change in the ownership of the Employer as described in Section 9.7(c) of the
Plan.
(b) A change in the effective control of the Employer as described in Section
9.7(d) of the Plan.
(c) A change in the ownership of a substantial portion of the assets of the
Employer as described in Section 9.7(e) of the Plan.
(d) Not Applicable.

- 19 -

 

	12.01	 	GOVERNING STATE LAW
	 
	 	 	The laws of Tennessee shall apply in the administration of the Plan to the extent
not preempted by ERISA.

- 20 -

 

EXECUTION PAGE

The Plan Sponsor has caused this Adoption Agreement to be executed this ___ day
of ___, 20___.

	 	 	 	 	 
	PLAN SPONSOR:
	 	 	 	 
	 

	 	 	 	 
	By:
	 	 	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 

- 21 -

 

APPENDIX A

SPECIAL EFFECTIVE DATES

Subject to the timing requirements of Section 6.01(a), the time and form of distribution of the In
Service Accounts established prior to the effective date of this amended and restated Plan shall be
made in accordance with the payment schedules established for those accounts.

- 22 -

 

King Pharmaceuticals, Inc. Deferred

Compensation Plan

IMPORTANT NOTE

This document has not been approved by the Department of Labor, Internal Revenue Service or any
other governmental entity. An adopting Employer must determine whether the Plan is subject to the
Federal securities laws and the securities laws of the various states. An adopting Employer may
not rely on this document to ensure any particular tax consequences or to ensure that the Plan is
“unfunded and maintained primarily for the purpose of providing deferred compensation to a select
group of management or highly compensated employees” under Title I of the Employee Retirement
Income Security Act of 1974, as amended, with respect to the Employer’s particular situation.
Fidelity Employer Services Company, its affiliates and employees cannot provide you with legal
advice in connection with the execution of this document. This document should be reviewed by the
Employer’s attorney prior to execution.

September 2007

 

 

TABLE OF CONTENTS

PREAMBLE

	 	 	 
	ARTICLE 1 – GENERAL
	1.1

	 	Plan
	1.2

	 	Effective Dates
	1.3

	 	Amounts Not Subject to Code Section 409A
	 
	 	 
	ARTICLE 2 – DEFINITIONS
	2.1

	 	Account
	2.2

	 	Administrator
	2.3

	 	Adoption Agreement
	2.4

	 	Beneficiary
	2.5

	 	Board or Board of Directors
	2.6

	 	Bonus
	2.7

	 	Change in Control
	2.8

	 	Code
	2.9

	 	Compensation
	2.10

	 	Director
	2.11

	 	Disabled
	2.12

	 	Eligible Employee
	2.13

	 	Employer
	2.14

	 	ERISA
	2.15

	 	Identification Date
	2.16

	 	Key Employee
	2.17

	 	Participant
	2.18

	 	Plan
	2.19

	 	Plan Sponsor
	2.20

	 	Plan Year
	2.21

	 	Related Employer
	2.22

	 	Retirement
	2.23

	 	Separation from Service
	2.24

	 	Unforeseeable Emergency
	2.25

	 	Valuation Date
	2.26

	 	Years of Service
	 
	 	 
	ARTICLE 3 – PARTICIPATION
	3.1

	 	Participation
	3.2

	 	Termination of Participation

i

 

	 	 	 
	ARTICLE 4 – PARTICIPANT ELECTIONS
	4.1

	 	Deferral Agreement
	4.2

	 	Amount of Deferral
	4.3

	 	Timing of Election to Defer
	4.4

	 	Election of Payment Schedule and Form of Payment
	 
	 	 
	ARTICLE 5 – EMPLOYER CONTRIBUTIONS
	5.1

	 	Matching Contributions
	5.2

	 	Other Contributions
	 
	 	 
	ARTICLE 6 – ACCOUNTS AND CREDITS
	6.1

	 	Establishment of Account
	6.2

	 	Credits to Account
	 
	 	 
	ARTICLE 7 – INVESTMENT OF CONTRIBUTIONS
	7.1

	 	Investment Options
	7.2

	 	Adjustment of Accounts
	 
	 	 
	ARTICLE 8 – RIGHT TO BENEFITS
	8.1

	 	Vesting
	8.2

	 	Death
	8.3

	 	Disability
	 
	 	 
	ARTICLE 9 – DISTRIBUTION OF BENEFITS
	9.1

	 	Amount of Benefits
	9.2

	 	Method and Timing of Distributions
	9.3

	 	Unforeseeable Emergency
	9.4

	 	Termination Before Retirement
	9.5

	 	Cashouts of Amounts Not Exceeding Stated Limit
	9.6

	 	Required Delay in Payment to Key Employees
	9.7

	 	Change in Control
	9.8

	 	Permissible Delays in Payment

ii

 

	 	 	 
	ARTICLE 10 – AMENDMENT AND TERMINATION
	10.1

	 	Amendment by Plan Sponsor
	10.2

	 	Plan Termination Following Change in Control or Corporate Dissolution
	10.3

	 	Other Plan Terminations
	 
	 	 
	ARTICLE 11 – THE TRUST
	11.1

	 	Establishment of Trust
	11.2

	 	Grantor Trust
	11.3

	 	Investment of Trust Funds
	 
	 	 
	ARTICLE 12 – PLAN ADMINISTRATION
	12.1

	 	Powers and Responsibilities of the Administrator
	12.2

	 	Claims and Review Procedures
	12.3

	 	Plan Administrative Costs
	 
	 	 
	ARTICLE 13 – MISCELLANEOUS
	13.1

	 	Unsecured General Creditor of the Employer
	13.2

	 	Employer’s Liability
	13.3

	 	Limitation of Rights
	13.4

	 	Anti-Assignment
	13.5

	 	Facility of Payment
	13.6

	 	Notices
	13.7

	 	Tax Withholding
	13.8

	 	Indemnification
	13.9

	 	Permitted Acceleration of Payment
	13.10

	 	Governing Law

iii

 

PREAMBLE

The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for
the purpose of providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended, or an “excess benefit plan” within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended, or a
combination of both. The Plan is further intended to conform with the requirements of Internal
Revenue Code Section 409A and the final regulations issued thereunder and shall be implemented and
administered in a manner consistent therewith.

 

 

ARTICLE 1 – GENERAL

	1.1	 	Plan. The Plan will be referred to by the name specified in the Adoption Agreement.
	 
	1.2	 	Effective Dates.

	 	(a)	 	Original Effective Date. The Original Effective Date is the date as
of which the Plan was initially adopted.
	 
	 	(b)	 	Amendment Effective Date. The Amendment Effective Date is the date
specified in the Adoption Agreement as of which the Plan is amended and restated.
Except to the extent otherwise provided herein or in the Adoption Agreement, the Plan
shall apply to amounts deferred and benefit payments made on or after the Amendment
Effective Date.
	 
	 	(c)	 	Special Effective Date. A Special Effective Date may apply to any
given provision if so specified in Appendix A of the Adoption Agreement. A Special
Effective Date will control over the Original Effective Date or Amendment Effective
Date, whichever is applicable, with respect to such provision of the Plan.

	1.3	 	Amounts Not Subject to Code Section 409A
	 
	 	 	Except as otherwise indicated by the Plan Sponsor in Section 1.01 of the Adoption
Agreement, amounts deferred before January 1, 2005 that are earned and vested on December
31, 2004 will be separately accounted for and administered in accordance with the terms of
the Plan as in effect on December 31, 2004

1-1

 

ARTICLE 2 – DEFINITIONS

Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the
context clearly indicates otherwise. Wherever used herein, the following terms have the meanings
set forth below, unless a different meaning is clearly required by the context:

	2.1	 	“Account” means an account established for the purpose of recording amounts credited on
behalf of a Participant and any income, expenses, gains, losses or distributions included
thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a
device for the measurement and determination of the amounts to be paid to a Participant or to
the Participant’s Beneficiary pursuant to the Plan.
	 
	2.2	 	“Administrator” means the person or persons designated by the Plan Sponsor in Section 1.05 of
the Adoption Agreement to be responsible for the administration of the Plan. If no
Administrator is designated in the Adoption Agreement, the Administrator is the Plan Sponsor.
	 
	2.3	 	“Adoption Agreement” means the agreement adopted by the Plan Sponsor that establishes the
Plan.
	 
	2.4	 	“Beneficiary” means the persons, trusts, estates or other entities entitled under Section 8.2
to receive benefits under the Plan upon the death of a Participant.
	 
	2.5	 	“Board” or “Board of Directors” means the Board of Directors of the Plan Sponsor.
	 
	2.6	 	“Bonus” or “Performance Bonus” means an amount of incentive remuneration payable by the
Employer to a Participant, pursuant to an incentive plan established by Compensation Committee
of the Board of Directors, including but not limited to the Executive Management Incentive
Award Plan, the Management Incentive Award Plan, and the Team Based Employee Incentive Award
Plan.
	 
	2.7	 	“Change in Control” means the occurrence of an event involving the Plan Sponsor that is
described in Section 9.7.
	 
	2.8	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	2.9	 	“Compensation” has the meaning specified in Section 3.01 of the Adoption Agreement.

2-1

 

	2.10	 	“Director” means a non-employee member of the Board who has been designated by the Employer
as eligible to participate in the Plan.
	 
	2.11	 	“Disabled” means a determination by the Administrator that the Participant is either (a)
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, or (b) is, by reason of any
medically determinable physical or mental impairment which can be expected to result in death
or last for a continuous period of not less than twelve months, receiving income replacement
benefits for a period of not less than three (3) months under an accident and health plan
covering employees of the Employer. A Participant will be considered Disabled if he is
determined to be totally disabled by the Social Security Administration or the Railroad
Retirement Board.
	 
	2.12	 	“Eligible Employee” means an employee of the Employer who satisfies the requirements in
Section 2.01 of the Adoption Agreement.
	 
	2.13	 	“Employer” means the Plan Sponsor and any other entity which is authorized by the Plan
Sponsor to participate in and, in fact, does adopt the Plan.
	 
	2.14	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
	 
	2.15	 	“Identification Date” means the date as of which Key Employees are determined which is
specified in Section 1.05 of the Adoption Agreement.
	 
	2.16	 	“Key Employee” means an employee who satisfies the conditions set forth in Section 9.6.
	 
	2.17	 	“Participant” means an Eligible Employee or Director who commences participation in the Plan
in accordance with Article 3.
	 
	2.18	 	“Plan” means the unfunded plan of deferred compensation set forth herein, including the
Adoption Agreement and any trust agreement, as adopted by the Plan Sponsor and as amended from
time to time.
	 
	2.19	 	“Plan Sponsor” means the entity identified in Section 1.03 of the Adoption Agreement.
	 
	2.20	 	“Plan Year” means the period identified in Section 1.02 of the Adoption Agreement.
	 
	2.21	 	“Related Employer” means the Employer and (a) any corporation that is a member of a
controlled group of corporations as defined in Code Section 414(b) that includes the Employer
and (b) any trade or business

2-2

 

	 	 	that is under common control as defined in Code Section 414(c) that includes the Employer.
	 
	2.22	 	“Retirement” has the meaning specified in 6.01(f) of the Adoption Agreement.
	 
	2.23	 	“Separation from Service” means the date that the Participant dies, retires or otherwise has
a termination of employment with respect to all entities comprising the Related Employer. A
Separation from Service does not occur if the Participant is on military leave, sick leave or
other bona fide leave of absence if the period of leave does not exceed six months or such
longer period during which the Participant’s right to re-employment is provided by statute or
contract. If the period of leave exceeds six months and the Participant’s right to
re-employment is not provided either by statute or contract, a Separation from Service will be
deemed to have occurred on the first day following the six-month period. If the period of
leave is due to 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 six
months, where the impairment causes the Participant to be unable to perform the duties of his
or her position of employment or any substantially similar position of employment, a 29 month
period of absence may be substituted for the six month period.
	 
	 	 	Whether a termination of employment has occurred is based on whether the facts and
circumstances indicate that the Related Employer and the Participant reasonably anticipated
that no further services would be performed after a certain date or that the level of bona
fide services the Participant would perform after such date (whether as an employee or as
an independent contractor) would permanently decrease to no more than fifty percent (50%)
of the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding 36 month period (or the full period
of services to the Related Employer if the employee has been providing services to the
Related Employer for less than 36 months).
	 
	 	 	An independent contractor is considered to have experienced a Separation from Service with
the Related Employer upon the expiration of the contract (or, in the case of more than one
contract, all contracts) under which services are performed for the Related Employer if the
expiration constitutes a good-faith and complete termination of the contractual
relationship.
	 
	 	 	If a Participant provides services as both an employee and an independent contractor of the
Related Employer, the Participant must separate from service both as an employee and as an
independent contractor to be treated as having incurred a Separation from Service. If a

2-3

 

	 	 	Participant ceases providing services as an independent contractor and begins providing
services as an employee, or ceases providing services as an employee and begins providing
services as an independent contractor, the Participant will not be considered to have
experienced a Separation from Service until the Participant has ceased providing services
in both capacities.
	 
	 	 	If a Participant provides services both as an employee and as a member of the board of
directors of a corporate Related Employer (or an analogous position with respect to a
noncorporate Related Employer), the services provided as a director are not taken into
account in determining whether the Participant has incurred a Separation from Service as an
employee for purposes of a nonqualified deferred compensation plan in which the Participant
participates as an employee that is not aggregated under Code Section 409A with any plan in
which the Participant participates as a director.
	 
	 	 	If a Participant provides services both as an employee and as a member of board of
directors of a corporate related Employer (or an analogous position with respect to a
noncorporate Related Employer), the services provided as an employee are not taken into
account in determining whether the Participant has experienced a Separation from Service as
a director for purposes of a nonqualified deferred compensation plan in which the
Participant participates as a director that is not aggregated under Code Section 409A with
any plan in which the Participant participates as an employee.
	 
	 	 	All determinations of whether a Separation from Service has occurred will be made in a
manner consistent with Code Section 409A and the final regulations thereunder.
	 
	2.24	 	“Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from
an illness or accident of the Participant, the Participant’s spouse, the Participant’s
Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to
Code section 152(b)(i), (b)(2) and (d)(i)(B)); loss of the Participant’s property due to
casualty; or other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant.
	 
	2.25	 	“Valuation Date” means each business day of the Plan Year.
	 
	2.26	 	“Years of Service” means each one year period for which the Participant receives service
credit in accordance with the provisions of Section 7.01(d) of the Adoption Agreement.

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ARTICLE 3 – PARTICIPATION

	3.1	 	Participation. The Participants in the Plan shall be those employees of the Employer who
satisfy the requirements of Section 2.01 of the Adoption Agreement.
	 
	3.2	 	Termination of Participation. The Administrator may terminate a Participant’s participation
in the Plan in a manner consistent with Code Section 409A.

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ARTICLE 4 – PARTICIPANT ELECTIONS

	4.1	 	Deferral Agreement. If permitted by the Plan Sponsor in accordance with Section 4.01 of the
Adoption Agreement, each Eligible Employee may elect to defer his Compensation within the
meaning of Section 3.01 of the Adoption Agreement by executing in writing or electronically, a
deferral agreement in accordance with rules and procedures established by the Administrator
and the provisions of this Article 4.
	 
	 	 	A new deferral agreement must be timely executed for each Plan Year during which the
Eligible Employee desires to defer Compensation. An Eligible Employee who does not timely
execute a deferral agreement shall be deemed to have elected zero deferrals of Compensation
for such Plan Year.
	 
	 	 	A deferral agreement may be changed or revoked during the period specified by the
Administrator. Except as provided in Section 9.3 or in Section 4.01(c) of the Adoption
Agreement, a deferral agreement becomes irrevocable at the close of the specified period.
	 
	4.2	 	Amount of Deferral. An Eligible Employee may elect to defer Compensation in any amount
permitted by Section 4.01(a) of the Adoption Agreement.
	 
	4.3	 	Timing of Election to Defer. Each Eligible Employee who desires to defer Compensation
otherwise payable during a Plan Year must execute a deferral agreement within the period
preceding the Plan Year specified by the Administrator. Each Eligible Employee who desires to
defer Compensation that is a Bonus must execute a deferral agreement within the period
preceding the Plan Year during which the Bonus is earned that is specified by the
Administrator, except that if the Bonus can be treated as performance based compensation as
described in Code Section 409A(a)(4)(B)(iii), the deferral agreement may be executed within
the period specified by the Administrator, which period, in no event, shall end after the date
which is six months prior to the end of the period during which the Bonus is earned. In
addition, if the Compensation qualifies as ‘fiscal year compensation’ within the meaning of
Reg. Sec. 1.409A -2(a)(6), the deferral agreement may be made not later than the end of the
Employer’s taxable year immediately preceding the first taxable year of the Employer in which
any services are performed for which such Compensation is payable.

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	 	 	Except as otherwise provided below, an employee who is classified or designated as an
Eligible Employee during a Plan Year may elect to defer Compensation otherwise payable
during the remainder of such Plan Year in accordance with the rules of this Section 4.3 by
executing a deferral agreement within the thirty (30) day period beginning on the date the
employee is classified or designated as an Eligible Employee, if permitted by Section 2.01
of the Adoption Agreement. If Compensation is based on a specified performance period that
begins before the Eligible Employee executes his deferral agreement, the election will be
deemed to apply to the portion of such Compensation equal to the total amount of
Compensation for the performance period multiplied by the ratio of the number of days
remaining in the performance period after the election over the total number of days in the
performance period. The rules of this paragraph shall not apply unless the Eligible
Employee can be treated as initially eligible in accordance with Reg. Sec. 1.409A-2(a)(7).
	 
	4.4	 	Election of Payment Schedule and Form of Payment.
	 
	 	 	All elections of a payment schedule and a form of payment will be made in accordance with
rules and procedures established by the Administrator and the provisions of this Section
4.4.
	 
	(a)	 	If the Plan Sponsor has elected to permit annual distribution elections in accordance
with Section 6.01(h) of the Adoption Agreement the following rules apply. At the time an
Eligible Employee completes a deferral agreement, the Eligible Employee must elect a
distribution event (which includes a specified time) and a form of payment for the
Compensation subject to the deferral agreement and for any Employer contributions that may
be credited to the Participant’s Account during the Plan Year from among the options the
Plan Sponsor has made available for this purpose and which are specified in 6.01(b) of the
Adoption Agreement. If an Eligible Employee fails to elect a distribution event, he shall
be deemed to have elected Separation from Service as the distribution event. If he fails
to elect a form of payment, he shall be deemed to have elected a lump sum form of payment.
	 
	(b)	 	If the Plan Sponsor has elected not to permit annual distribution elections in
accordance with Section 6.01(h) of the Adoption Agreement the following rules apply. At
the time an Eligible Employee first completes a deferral agreement, the Eligible Employee
must elect a distribution event (which includes a specified time) and a form of payment for
amounts credited to his Account from among the options the Plan Sponsor has made available
for this purpose and which are specified in Section 6.01(b) of the Adoption Agreement. If
an Eligible Employee or Director fails to elect a distribution event, he shall be deemed to
have elected Separation from Service in the distribution event. If the fails to elect a
form of

4-2

 

	 	 	payment, he shall be deemed to have elected a lump sum form of payment.

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ARTICLE 5 – EMPLOYER CONTRIBUTIONS

	5.1	 	Matching Contributions. If elected by the Plan Sponsor in Section 5.01(a) of the Adoption
Agreement, the Employer will credit the Participant’s Account with a matching contribution
determined in accordance with the formula specified in Section 5.01(a) of the Adoption
Agreement. The matching contribution will be treated as allocated to the Participant’s
Account at the time specified in Section 5.01(a)(iii) of the Adoption Agreement.
	 
	5.2	 	Other Contributions. If elected by the Plan Sponsor in Section 5.01(b) of the Adoption
Agreement, the Employer will credit the Participant’s Account with a contribution determined
in accordance with the formula or method specified in Section 5.01(b) of the Adoption
Agreement. The contribution will be treated as allocated to the Participant’s Account at the
time specified in Section 5.01(b)(iii) of the Adoption Agreement.

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ARTICLE 6 – ACCOUNTS AND CREDITS

	6.1	 	Establishment of Account. For accounting and computational purposes only, the Administrator
will establish and maintain an Account on behalf of each Participant which will reflect the
credits made pursuant to Section 6.2, distributions or withdrawals, along with the earnings,
expenses, gains and losses allocated thereto, attributable to the hypothetical investments
made with the amounts in the Account as provided in Article 7. The Administrator will
establish and maintain such other records and accounts, as it decides in its discretion to be
reasonably required or appropriate to discharge its duties under the Plan.
	 
	6.2	 	Credits to Account. A Participant’s Account will be credited for each Plan Year with the
amount of his elective deferrals under Section 4.1 at the time the amount subject to the
deferral election would otherwise have been payable to the Participant and the amount of
Employer contributions treated as allocated on his behalf under Article 5.

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ARTICLE 7 – INVESTMENT OF CONTRIBUTIONS

	7.1	 	Investment Options. The amount credited to each Account shall be treated as invested in the
investment options designated for this purpose by the Administrator.
	 
	7.2	 	Adjustment of Accounts. The amount credited to each Account shall be adjusted for
hypothetical investment earnings, expenses, gains or losses in an amount equal to the
earnings, expenses, gains or losses attributable to the investment options selected by the
party designated in Section 9.01 of the Adoption Agreement from among the investment options
provided in Section 7.1. If permitted by Section 9.01 of the Adoption Agreement, a
Participant (or the Participant’s Beneficiary after the death of the Participant) may, in
accordance with rules and procedures established by the Administrator, select the investments
from among the options provided in Section 7.1 to be used for the purpose of calculating
future hypothetical investment adjustments to the Account or future credits to the Account
under Section 6.2 effective as the Valuation Date coincident with or next following notice to
the Administrator. Each Account shall be adjusted as of each Valuation Date to reflect: (a)
the hypothetical earnings, expenses, gains and losses described above; (b) amounts credited
pursuant to Section 6.2; and (c) distributions or withdrawals. In addition, each Account may
be adjusted for its allocable share of the hypothetical costs and expenses associated with the
maintenance of the hypothetical investments provided in Section 7.1.

7-1

 

ARTICLE 8 – RIGHT TO BENEFITS

	8.1	 	Vesting. A Participant, at all times, has the 100% nonforfeitable interest in the amounts
credited to his Account attributable to his elective deferrals made in accordance with Section
4.1.
	 
	 	 	A Participant’s right to the amounts credited to his Account attributable to Employer
contributions made in accordance with Article 5 shall be determined in accordance with the
relevant schedule specified in Section 7.01 of the Adoption Agreement.
	 
	8.2	 	Death. The balance or remaining balance credited to a Participant’s vested Account shall be
paid to his Beneficiary at the time specified in Section 6.01(a) of the Adoption Agreement in
a single lump sum payment following the date of death, unless additional forms of payment have
been made available for this purpose in Section 6.01(b) of the Adoption Agreement and the
Participant has made a valid election (or valid elections) of a form of payment in accordance
with the provisions of Article 4. If additional forms have been made available, payment to
the Beneficiary shall be made at the time specified in Section 6.01(a) of the Adoption
Agreement in the form elected by the Participant in accordance with the provisions of Article
4. If multiple Beneficiaries have been designated, each Beneficiary shall receive payment of
his specified portion of the Account at the time specified in Section 6.01(a) of the Adoption
Agreement in the form elected by the Participant.
	 
	 	 	A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation
of Beneficiary or Beneficiaries in accordance with rules and procedures established by the
Administrator.
	 
	 	 	A copy of the death notice or other sufficient documentation must be filed with and
approved by the Administrator. If upon the death of the Participant there is, in the
opinion of the Administrator, no designated Beneficiary for part or all of the
Participant’s vested Account, such amount will be paid to his estate (such estate shall be
deemed to be the Beneficiary for purposes of the Plan) in a single lump sum payment.

8-1

 

	8.3	 	Disability. The balance or remaining balance credited to a Participant’s vested Account
shall be paid to the Participant at the time specified in Section 6.01(a) of the Adoption
Agreement in a single lump sum cash payment following the date a Participant incurs a
Disability as defined in Section 2.11, unless additional forms of payment have been made
available for this purpose in Section 6.01(b) of the Adoption Agreement and the Participant
has made a valid election of a different form of payment. If additional forms have been made
available, payment shall be made at the time specified in Section 6.01(a) of the Adoption
Agreement and in the form elected by the Participant in accordance with the provisions of
Article 4. The Administrator, in its sole discretion, shall determine whether a Participant
has experienced a Disability for purposes of this Section 8.3. If the payment of all or any
portion of the Participant’s vested Account is being delayed in accordance with Section 9.6 at
the time he incurs a Disability, the amount being delayed shall not be subject to the
provisions of this Section 8.3 until the expiration of the six month period of delay required
by Section 9.6.

8-2

 

ARTICLE 9 – DISTRIBUTION OF BENEFITS

	9.1	 	Amount of Benefits. The vested amount credited to a Participant’s Account as determined
under Articles 6, 7 and 8 shall determine and constitute the basis for the value of benefits
payable to the Participant under the Plan.
	 
	9.2	 	Method and Timing of Distributions. Except as otherwise provided in this Article 9,
distributions under the Plan shall be made in accordance with the elections made or deemed
made by the Participant under Article 4. Subject to the provisions of Section 9.6 requiring a
six month delay for certain distributions to Key Employees, distributions following a payment
event shall commence at the time specified in Section 6.01(a) of the Adoption Agreement. If
permitted by Section 6.01(g) of the Adoption Agreement, a Participant may elect, at least
twelve months before a scheduled distribution event, to delay the payment date for a minimum
period of sixty months from the originally scheduled date of payment. The distribution
election change must be made in accordance with procedures and rules established by the
Administrator. The Participant may, at the same time the date of payment is deferred, change
the form of payment but such change in the form of payment may not effect an acceleration of
payment in violation of Code Section 409A or the provisions of Reg. Sec. 1.409A-2(b). For
purposes of this Section 9.2, a series of installment payments is always treated as a single
payment and not as a series of separate payments.
	 
	9.3	 	Unforeseeable Emergency. A Participant may request a distribution due to an Unforeseeable
Emergency if the Plan Sponsor has elected to permit Unforeseeable Emergency withdrawals under
Section 8.01(a) of the Adoption Agreement. The request must be in writing and must be
submitted to the Administrator along with evidence that the circumstances constitute an
Unforeseeable Emergency. The Administrator has the discretion to require whatever evidence it
deems necessary to determine whether a distribution is warranted. Whether a Participant has
incurred an Unforeseeable Emergency will be determined by the Administrator on the basis of
the relevant facts and circumstances in its sole discretion, but, in no event, will an
Unforeseeable Emergency be deemed to exist if the hardship can be relieved: (a) through
reimbursement or compensation by insurance or otherwise, (b) by liquidation of the
Participant’s assets to the extent such liquidation would not itself cause severe financial
hardship, or (c) by cessation of deferrals under the Plan. A distribution due to an
Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the
emergency need and may include any amounts necessary to pay any federal, state, local, or
foreign income taxes and

9-1

 

	 	 	penalties reasonably anticipated to result from the distribution. The distribution will be
made in the form of a single lump sum cash payment. If permitted by Section 8.01(b) of the
Adoption Agreement, a Participant’s deferral elections for the remainder of the Plan Year
will be cancelled upon a withdrawal due to Unforeseeable Emergency. If the payment of all
or any portion of the Participant’s vested Account is being delayed in accordance with
Section 9.6 at the time he experiences an Unforeseeable Emergency, the amount being delayed
shall not be subject to the provisions of this Section 9.3 until the expiration of the six
month period of delay required by section 9.6.
	 
	9.4	 	Termination Before Retirement. If the Plan Sponsor has elected a Separation from Service
override in accordance with Section 6.01(d) of the Adoption Agreement, the following
provisions apply. A Participant who experiences a Separation from Service before Retirement
for any reason other than death shall receive the vested amount credited to his Account at the
time specified in Section 6.01(a) of the Adoption Agreement in a single lump sum payment
following such termination or cessation of service regardless of whether the Participant had
made different elections of time or form of payment as to the vested amounts credited to his
Account or whether the Participant was receiving installment payouts at the time of such
termination.
	 
	9.5	 	Cashouts Of Amounts Not Exceeding Stated Limit. If the vested amount credited to the
Participant’s Account does not exceed the limit established for this purpose by the Plan
Sponsor in Section 6.01(e) of the Adoption Agreement at the time of his Separation from
Service with the Related Employer for any reason, the Employer shall distribute such amount to
the Participant at the time specified in Section 6.01(a) of the Adoption Agreement in a single
lump sum cash payment following such termination regardless of whether the Participant had
made different elections of time or form of payment as to the vested amount credited to his
Account or whether the Participant was receiving installments at the time of such termination.
A Participant’s Account, for purposes of this Section 9.5, shall include any amounts
described in Section 1.3.
	 
	9.6	 	Required Delay in Payment to Key Employees. Except as otherwise provided in this Section
9.6, a distribution made because of Separation from Service (or Retirement, if applicable) to
a Participant who is a Key Employee as of the date of his Separation from Service (or
Retirement, if applicable) shall not occur before the date which is six months after the
Separation from Service (or Retirement, if applicable).

(a) A Participant is treated as a Key Employee if (i) he is employed by a Related Employer
any of whose stock is publicly traded on an established securities market, and (ii) he
satisfies the requirements of Code Section

9-2

 

416(i)(1)(A)(i), (ii) or (iii), determined without regard to Code Section 416(i)(5), at any
time during the twelve month period ending on the Identification Date.

(b) A Participant who is a Key Employee on an Identification Date shall be treated as a Key
Employee for purposes of the six month delay in distributions for the twelve month period
beginning on the first day of a month no later than the fourth month following the
Identification Date. The Identification Date and the effective date of the delay in
distributions shall be determined in accordance with Section 1.06 of the Adoption
Agreement.

(c) The Plan Sponsor may elect to apply an alternative method to identify Participants who
will be treated as Key Employees for purposes of the six month delay in distributions if
the method satisfies each of the following requirements. The alternative method is
reasonably designed to include all Key Employees, is an objectively determinable standard
providing no direct or indirect election to any Participant regarding its application, and
results in either all Key Employees or no more than 200 Key Employees being identified in
the class as of any date. Use of an alternative method that satisfies the requirements of
this Section 9.6(c ) will not be treated as a change in the time and form of payment for
purposes of Reg. Sec. 1.409A-2(b).

(d) The six month delay does not apply to payments described in Section 13.9 or to payments
that occur after the death of the Participant.

	9.7	 	Change in Control. If the Plan Sponsor has elected to permit distributions upon a Change in
Control, the following provisions shall apply. A distribution made upon a Change in Control
will be made at the time specified in Section 6.01(a) of the Adoption Agreement in the form
elected by the Participant in accordance with the procedures described in Article 4.
Alternatively, if the Plan Sponsor has elected in accordance with Section 11.02 of the
Adoption Agreement to require distributions upon a Change in Control, the Participant’s
remaining vested Account shall be paid to the Participant or the Participant’s Beneficiary at
the time specified in Section 6.01(a) of the Adoption Agreement as a single lump sum payment.
A Change in Control, for purposes of the Plan, will occur upon a change in the ownership of
the Plan Sponsor, a change in the effective control of the Plan Sponsor or a change in the
ownership of a substantial portion of the assets of the Plan Sponsor, but only if elected by
the Plan Sponsor in Section 11.02 of the Adoption Agreement. The Plan Sponsor, for this
purpose, includes any corporation identified in this Section 9.7. All distributions made in
accordance with this Section 9.7 are subject to the provisions of Section 9.6.

9-3

 

	 	 	If a Participant continues to make deferrals in accordance with Article 4 after he has
received a distribution due to a Change in Control, the residual amount payable to the
Participant shall be paid at the time and in the form specified in the elections he makes
in accordance with Article 4 or upon his death or Disability as provided in Article 8.
	 
	 	 	Whether a Change in Control has occurred will be determined by the Administrator in
accordance with the rules and definitions set forth in this Section 9.7. A distribution to
the Participant will be treated as occurring upon a Change in Control if the Plan Sponsor
terminates the Plan in accordance with Section 10.2 and distributes the Participant’s
benefits within twelve months of a Change in Control as provided in Section 10.3.

	 	(a)	 	Relevant Corporations. To constitute a Change in Control for purposes of the
Plan, the event must relate to (i) the corporation for whom the Participant is
performing services at the time of the Change in Control, (ii) the corporation that is
liable for the payment of the Participant’s benefits under the Plan (or all
corporations liable if more than one corporation is liable) but only if either the
deferred compensation is attributable to the performance of services by the
Participant for such corporation (or corporations) or there is a bona fide business
purpose for such corporation (or corporations) to be liable for such payment and, in
either case, no significant purpose of making such corporation (or corporations)
liable for such payment is the avoidance of federal income tax, or (iii) a corporation
that is a majority shareholder of a corporation identified in (i) or (ii), or any
corporation in a chain of corporations in which each corporation is a majority
shareholder of another corporation in the chain, ending in a corporation identified in
(i) or (ii). A majority shareholder is defined as a shareholder owning more than
fifty percent (50%) of the total fair market value and voting power of such
corporation.
	 
	 	(b)	 	Stock Ownership. Code Section 318(a) applies for purposes of determining
stock ownership. Stock underlying a vested option is considered owned by the
individual who owns the vested option (and the stock underlying an unvested option is
not considered owned by the individual who holds the unvested option). If, however, a
vested option is exercisable for stock that is not substantially vested (as defined by
Treasury Regulation Section 1.83-3(b) and (j)) the stock underlying the option is not
treated as owned by the individual who holds the option.
	 
	 	(c)	 	Change in the Ownership of a Corporation. A change in the ownership of a
corporation occurs on the date that any one person or more than one person acting as a
group, acquires ownership of

9-4

 

	 	 	 	stock of the corporation that, together with stock held by such person or group,
constitutes more than fifty percent (50%) of the total fair market value or total
voting power of the stock of such corporation. If any one person or more than one
person acting as a proxy is considered to own more than fifty percent (50%) of the
total fair market value or total voting power of the stock of a corporation, the
acquisition of additional stock by the same person or persons is not considered to
cause a change in the ownership of the corporation (or to cause a change in the
effective control of the corporation as discussed below in Section 9.7(d)). An
increase in the percentage of stock owned by any one person, or persons acting as a
group, as a result of a transaction in which the corporation acquires its stock in
exchange for property will be treated as an acquisition of stock. Section 9.7(c)
applies only when there is a transfer of stock of a corporation (or issuance of
stock of a corporation) and stock in such corporation remains outstanding after the
transaction. For purposes of this Section 9.7(c), persons will not be considered to
be acting as a group solely because they purchase or own stock of the same
corporation at the same time or as a result of a public offering. Persons will,
however, be considered to be acting as a group if they are owners of a corporation
that enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the corporation. If a person, including an
entity, owns stock in both corporations that enter into a merger, consolidation,
purchase or acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a corporation prior to
the transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.
	 
	 	(d)	 	Change in the effective control of a corporation. A change in the effective
control of a corporation occurs on the date that either (i) any one person, or more
than one person acting as a group, acquires (or has acquired during the twelve month
period ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the corporation possessing thirty (30%) or more of the total
voting power of the stock of such corporation, or (ii) a majority of members of the
corporation’s board of directors is replaced during any twelve month period by
directors whose appointment or election is not endorsed by a majority of the members
of the corporation’s board of directors prior to the date of the appointment or
election, provided that for purposes of this paragraph (ii), the term corporation
refers solely to the relevant corporation identified in Section 9.7(a) for which no
other corporation is a majority shareholder for purposes of Section 9.7(a). In the
absence of an event described in Section 9.7(d)(i) or (ii), a change in the effective
control of a corporation will not have occurred. A change in effective control may
also occur in

9-5

 

	 	 	 	any transaction in which either of the two corporations involved in the transaction
has a change in the ownership of such corporation as described in Section 9.7(c) or
a change in the ownership of a substantial portion of the assets of such corporation
as described in Section 9.7(e). If any one person, or more than one person acting
as a group, is considered to effectively control a corporation within the meaning of
this Section 9.7(d), the acquisition of additional control of the corporation by the
same person or persons is not considered to cause a change in the effective control
of the corporation or to cause a change in the ownership of the corporation within
the meaning of Section 9.7(c). For purposes of this Section 9.7(d), persons will or
will not be considered to be acting as a group in accordance with rules similar to
those set forth in Section 9.7(c) with the following exception. If a person,
including an entity, owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of stock, or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a
corporation only with respect to the ownership in that corporation prior to the
transaction giving rise to the change and not with respect to the ownership interest
in the other corporation.
	 
	 	(e)	 	Change in the ownership of a substantial portion of a corporation’s assets.
A change in the ownership of a substantial portion of a corporation’s assets occurs on
the date that any one person, or more than one person acting as a group (as determined
in accordance with rules similar to those set forth in Section 9.7(d)), acquires (or
has acquired during the twelve month period ending on the date of the most recent
acquisition by such person or persons) assets from the corporation that have a total
gross fair market value equal to or more than forty percent (40%) of the total gross
fair market value of all of the assets of the corporation immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the
value of the assets of the corporation of the value of the assets being disposed of
determined without regard to any liabilities associated with such assets. There is no
Change in Control event under this Section 9.7(e) when there is a transfer to an
entity that is controlled by the shareholders of the transferring corporation
immediately after the transfer. A transfer of assets by a corporation is not treated
as a change in ownership of such assets if the assets are transferred to (i) a
shareholder of the corporation (immediately before the asset transfer) in exchange for
or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total
value or voting power of which is owned, directly or indirectly, by the corporation,
(iii) a person, or more than one person acting as a group, that owns, directly or
indirectly, fifty percent (50%) or more of the total value or voting power of all the
outstanding stock of the corporation, or (iv) an entity, at least fifty (50%) of the
total value or

9-6

 

	 	 	 	voting power of which is owned, directly or indirectly, by a person described in
Section 9.7(e)(iii). For purposes of the foregoing, and except as otherwise
provided, a person’s status is determined immediately after the transfer of assets.

	9.8	 	Permissible Delays in Payment. Distributions may be delayed beyond the date payment would
otherwise occur in accordance with the provisions of Articles 8 and 9 in any of the following
circumstances as long as the Employer treats all payments to similarly situated Participants
on a reasonably consistent basis.

	 	(a)	 	The Employer may delay payment if it reasonably anticipates that its
deduction with respect to such payment would be limited or eliminated by the
application of Code Section 162(m). Payment must be made during the Participant’s
first taxable year in which the Employer reasonably anticipates, or should reasonably
anticipate, that if the payment is made during such year the deduction of such payment
will not be barred by the application of Code Section 162(m) or during the period
beginning with the Participant’s Separation from Service and ending on the later of
the last day of the Employer’s taxable year in which the Participant separates from
service or the 15th day of the third month following the Participant’s Separation from
Service. If a scheduled payment to a Participant is delayed in accordance with this
Section 9.8(a), all scheduled payments to the Participant that could be delayed in
accordance with this Section 9.8(a) will also be delayed.
	 
	 	(b)	 	The Employer may also delay payment if it reasonably anticipates that the
making of the payment will violate federal securities laws or other applicable laws
provided payment is made at the earliest date on which the Employer reasonably
anticipates that the making of the payment will not cause such violation.
	 
	 	(c)	 	The Employer reserves the right to amend the Plan to provide for a delay in
payment upon such other events and conditions as the Secretary of the Treasury may
prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

9-7

 

ARTICLE 10 – AMENDMENT AND TERMINATION

	10.1	 	Amendment by Plan Sponsor. The Plan Sponsor reserves the right to amend the Plan (for itself
and each Employer) through action of the Compensation and Human Resources Committee of the
Board of Directors, or any successor committee to same. No amendment can directly or
indirectly deprive any current or former Participant or Beneficiary of all or any portion of
his Account which had accrued prior to the amendment.
	 
	10.2	 	Plan Termination Following Change in Control or Corporate Dissolution. If so elected by the
Plan Sponsor in 11.01 of the Adoption Agreement, the Plan Sponsor reserves the right to
terminate the Plan and distribute all amounts credited to all Participant Accounts within the
30 days preceding or the twelve months following a Change in Control as determined in
accordance with the rules set forth in Section 9.7. For this purpose, the Plan will be treated
as terminated only if all agreements, methods, programs and other arrangements sponsored by
the Related Employer immediately after the Change in Control which are treated as a single
plan under Reg. Sec. 1.409A-1(c)(2) are also terminated so that all participants under the
Plan and all similar arrangements are required to receive all amounts deferred under the
terminated arrangements within twelve months of the date the Plan Sponsor irrevocably takes
all necessary action to terminate the arrangements. In addition, the Plan Sponsor reserves the
right to terminate the Plan within twelve months of a corporate dissolution taxed under Code
Section 331 or with the approval of a bankruptcy court pursuant to 11 U. S. C. Section
503(b)(1)(A) provided that amounts deferred under the Plan are included in the gross incomes
of Participants in the latest of (a) the calendar year in which the termination occurs, (b)
the first calendar year in which the amount is no longer subject to a substantial risk of
forfeiture, or (c) the first calendar year in which payment is administratively practicable.
	 
	10.3	 	Other Plan Terminations. The Plan Sponsor retains the discretion to terminate the Plan if
(a) all arrangements sponsored by the Plan Sponsor that would be aggregated with any
terminated arrangement under Code Section 409A and Reg. Sec. 1.409A-1(c)(2) are terminated,
(b) no payments other than payments that would be payable under the terms of the arrangements
if the termination had not occurred are made within twelve months of the termination of the
arrangements, (c) all payments are made within twenty-four months of the termination of the
arrangements, (d) the Plan Sponsor does not adopt a new arrangement that would be aggregated
with any terminated arrangement under Code Section 409A and the regulations thereunder at any
time within the three year period following the date of termination of the arrangement, and
(e) the

10-1

 

	 	 	termination does not occur proximate to a downturn in the financial health of the Plan
sponsor. The Plan Sponsor also reserves the right to amend the Plan to provide that
termination of the Plan will occur under such conditions and events as may be prescribed by
the Secretary of the Treasury in generally applicable guidance published in the Internal
Revenue Bulletin.

10-2

 

ARTICLE 11 – THE TRUST

	11.1	 	Establishment of Trust. The Plan Sponsor may but is not required to establish a trust to
hold amounts which the Plan Sponsor may contribute from time to time to correspond to some or
all amounts credited to Participants under Section 6.2. If the Plan Sponsor elects to
establish a trust in accordance with Section 10.01 of the Adoption Agreement, the provisions
of Sections 11.2 and 11.3 shall become operative.
	 
	11.2	 	Grantor Trust. Any trust established by the Plan Sponsor shall be between the Plan Sponsor
and a trustee pursuant to a separate written agreement under which assets are held,
administered and managed, subject to the claims of the Plan Sponsor’s creditors in the event
of the Plan Sponsor’s insolvency. The trust is intended to be treated as a grantor trust
under the Code, and the establishment of the trust shall not cause the Participant to realize
current income on amounts contributed thereto. The Plan Sponsor must notify the trustee in
the event of a bankruptcy or insolvency.
	 
	11.3	 	Investment of Trust Funds. Any amounts contributed to the trust by the Plan Sponsor shall be
invested by the trustee in accordance with the provisions of the trust and the instructions of
the Administrator. Trust investments need not reflect the hypothetical investments selected
by Participants under Section 7.1 for the purpose of adjusting Accounts and the earnings or
investment results of the trust need not affect the hypothetical investment adjustments to
Participant Accounts under the Plan.

11-1

 

ARTICLE 12 – PLAN ADMINISTRATION

	12.1	 	Powers and Responsibilities of the Administrator. The Administrator has the full power and
the full responsibility to administer the Plan in all of its details, subject, however, to the
applicable requirements of ERISA. The Administrator’s powers and responsibilities include,
but are not limited to, the following:

	 	(a)	 	To make and enforce such rules and procedures as it deems necessary or proper
for the efficient administration of the Plan;
	 
	 	(b)	 	To interpret the Plan, its interpretation thereof to be final, except as
provided in Section 12.2, on all persons claiming benefits under the Plan;
	 
	 	(c)	 	To decide all questions concerning the Plan and the eligibility of any person
to participate in the Plan;
	 
	 	(d)	 	To administer the claims and review procedures specified in Section 12.2;
	 
	 	(e)	 	To compute the amount of benefits which will be payable to any Participant,
former Participant or Beneficiary in accordance with the provisions of the Plan;
	 
	 	(f)	 	To determine the person or persons to whom such benefits will be paid;
	 
	 	(g)	 	To authorize the payment of benefits;
	 
	 	(h)	 	To comply with the reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA;
	 
	 	(i)	 	To appoint such agents, counsel, accountants, and consultants as may be
required to assist in administering the Plan;
	 
	 	(j)	 	By written instrument, to allocate and delegate its responsibilities,
including the formation of an Administrative Committee to administer the Plan.

12-1

 

	12.2	 	Claims and Review Procedures.

	 	(a)	 	Claims Procedure.
	 
	 	 	 	If any person believes he is being denied any rights or benefits under the Plan,
such person may file a claim in writing with the Administrator. If any such claim
is wholly or partially denied, the Administrator will notify such person of its
decision in writing. Such notification will contain (i) specific reasons for the
denial, (ii) specific reference to pertinent Plan provisions, (iii) a description
of any additional material or information necessary for such person to perfect such
claim and an explanation of why such material or information is necessary, and (iv)
a description of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the person’s right to bring a civil
action following an adverse decision on review. Such notification will be given
within 90 days (45 days in the case of a claim regarding Disability) after the
claim is received by the Administrator. The Administrator may extend the period
for providing the notification by 90 days (30 days in the case of a claim regarding
Disability) if special circumstances require an extension of time for processing
the claim and if written notice of such extension and circumstance is given to such
person within the initial 90 day period (45 day period in the case of a claim
regarding Disability). If such notification is not given within such period, the
claim will be considered denied as of the last day of such period and such person
may request a review of his claim.
	 
	 	(b)	 	Review Procedure.
	 
	 	 	 	Within 60 days (180 days in the case of a claim regarding Disability) after the
date on which a person receives a written notification of denial of claim (or, if
written notification is not provided, within 60 days (180 days in the case of a
claim regarding Disability) of the date denial is considered to have occurred),
such person (or his duly authorized representative) may (i) file a written request
with the Administrator for a review of his denied claim and of pertinent documents
and (ii) submit written issues and comments to the Administrator. The
Administrator will notify such person of its decision in writing. Such
notification will be written in a manner calculated to be understood by such person
and will contain specific reasons for the decision as well as specific references
to pertinent Plan provisions. The notification will explain that the person is
entitled to receive, upon request and free of charge,

12-2

 

	 	 	 	reasonable access to and copies of all pertinent documents and has the right to
bring a civil action following an adverse decision on review. The decision on
review will be made within 60 days (45 days in the case of a claim regarding
Disability). The Administrator may extend the period for making the decision on
review by 60 days (45 days in the case of a claim regarding Disability) if special
circumstances require an extension of time for processing the request such as an
election by the Administrator to hold a hearing, and if written notice of such
extension and circumstances is given to such person within the initial 60-day
period (45 days in the case of a claim regarding Disability). If the decision on
review is not made within such period, the claim will be considered denied.

	12.3	 	Plan Administrative Costs. All reasonable costs and expenses (including legal, accounting,
and employee communication fees) incurred by the Administrator in administering the Plan shall
be paid by Plan to the extent not paid by the Employer.

12-3

 

ARTICLE 13 – MISCELLANEOUS

	13.1	 	Unsecured General Creditor of the Employer. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or claims in any
property or assets of the Employer. For purposes of the payment of benefits under the Plan,
any and all of the Employer’s assets shall be, and shall remain, the general, unpledged,
unrestricted assets of the Employer. Each Employer’s obligation under the Plan shall be
merely that of an unfunded and unsecured promise to pay money in the future.
	 
	13.2	 	Employer’s Liability. Each Employer’s liability for the payment of benefits under the Plan
shall be defined only by the Plan and by the deferral agreements entered into between a
Participant and the Employer. An Employer shall have no obligation or liability to a
Participant under the Plan except as provided by the Plan and a deferral agreement or
agreements. An Employer shall have no liability to Participants employed by other Employers.
	 
	13.3	 	Limitation of Rights. Neither the establishment of the Plan, nor any amendment thereof, nor
the creation of any fund or account, nor the payment of any benefits, will be construed as
giving to the Participant or any other person any legal or equitable right against the
Employer, the Plan or the Administrator, except as provided herein; and in no event will the
terms of employment or service of the Participant be modified or in any way affected hereby.
	 
	13.4	 	Anti-Assignment. Except as may be necessary to fulfill a domestic relations order within the
meaning of Code Section 414(p), none of the benefits or rights of a Participant or any
Beneficiary of a Participant shall be subject to the claim of any creditor. In particular, to
the fullest extent permitted by law, all such benefits and rights shall be free from
attachment, garnishment, or any other legal or equitable process available to any creditor of
the Participant and his or her Beneficiary. Neither the Participant nor his or her
Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber, or assign
any of the payments which he or she may expect to receive, contingently or otherwise, under
the Plan, except the right to designate a Beneficiary to receive death benefits provided
hereunder. Notwithstanding the preceding, the benefit payable from a Participant’s Account
may be reduced, at the discretion of the administrator, to satisfy any debt or liability to
the Employer.
	 
	13.5	 	Facility of Payment. If the Administrator determines, on the basis of medical reports or
other evidence satisfactory to the Administrator, that the recipient of any benefit payments
under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity
or other incapacity, the Administrator may

13-1

 

	 	 	direct the Employer to disburse such payments to a person or institution designated by a
court which has jurisdiction over such recipient or a person or institution otherwise
having the legal authority under State law for the care and control of such recipient. The
receipt by such person or institution of any such payments therefore, and any such payment
to the extent thereof, shall discharge the liability of the Employer, the Plan and the
Administrator for the payment of benefits hereunder to such recipient.
	 
	13.6	 	Notices. Any notice or other communication to the Employer or Administrator in connection
with the Plan shall be deemed delivered in writing if addressed to the Plan Sponsor at the
address specified in Section 1.03 of the Adoption Agreement to the attention of the Plan
Administrator, care of Human Resources and if either actually delivered at said address or, in
the case or a letter, 5 business days shall have elapsed after the same shall have been
deposited in the United States mails, first-class postage prepaid and registered or certified.
	 
	13.7	 	Tax Withholding. If the Employer concludes that tax is owing with respect to any deferral or
payment hereunder, the Employer shall withhold such amounts from any payments due the
Participant, as permitted by law, or otherwise make appropriate arrangements with the
Participant or his Beneficiary for satisfaction of such obligation. Tax, for purposes of this
Section 13.7 means any federal, state, local or any other governmental income tax, employment
or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts
deferred, any earnings thereon, and any payments made to Participants under the Plan.
	 
	13.8	 	Indemnification. Each Employer shall indemnify and hold harmless each employee, officer, or
director of an Employer to whom is delegated duties, responsibilities, and authority with
respect to the Plan against all claims, liabilities, fines and penalties, and all expenses
reasonably incurred by or imposed upon him (including but not limited to reasonable attorney
fees) which arise as a result of his actions or failure to act in connection with the
operation and administration of the Plan to the extent lawfully allowable and to the extent
that such claim, liability, fine, penalty, or expense is not paid for by liability insurance
purchased or paid for by an Employer. Notwithstanding the foregoing, an Employer shall not
indemnify any person for any such amount incurred through any settlement or compromise of any
action unless the Employer consents in writing to such settlement or compromise.
Indemnification under this Section 13.8 shall not be applicable to any person if the cost,
loss, liability, or expense is due to the person’s gross negligence, fraud or willful
misconduct or if the person refuses to assist in the defense of the claim against him.

13-2

 

	13.9	 	Permitted Acceleration of Payment. The Plan may permit acceleration of the time or schedule
of any payment or amount scheduled to be paid pursuant to a payment under the Plan provided
such acceleration would be permitted by the provisions of Reg. Sec. 1.409A-3(j)(4).
	 
	13.10	 	Governing Law. The Plan will be construed, administered and enforced according to the laws
of the State specified by the Plan Sponsor in Section 12.01 of the Adoption Agreement.

13-3

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