Document:

Exhibit 10.1

 

WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE
DENOTED BY AN ASTERISK *) SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED
SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.

 

 

NOTE PURCHASE AGREEMENT

 

BY AND BETWEEN

 

ACUSPHERE, INC.

 

AND

 

CEPHALON, INC.

 

 

DATED:   OCTOBER 24, 2008

 

 

*CONFIDENTIAL TREATMENT REQUESTED

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
  DEFINITIONS

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  PURCHASE AND
  SALE OF THE NOTE

  	
  10

  
	
  2.1

  	
  Purchase and
  Sale of the Note

  	
  10

  
	
  2.2

  	
  Closing

  	
  10

  
	
  2.3

  	
  Use of
  Proceeds

  	
  10

  
	
  2.4

  	
  Purchaser
  Deliveries

  	
  10

  
	
  2.5

  	
  Company
  Deliveries

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY

  	
  12

  
	
  3.1

  	
  Corporate
  Existence and Power

  	
  12

  
	
  3.2

  	
  Subsidiaries

  	
  12

  
	
  3.3

  	
  Corporate
  Authorization; No Contravention

  	
  13

  
	
  3.4

  	
  Governmental
  Authorization; Third Party Consents

  	
  14

  
	
  3.5

  	
  Binding
  Effect

  	
  14

  
	
  3.6

  	
  Capitalization
  of the Company and its Subsidiaries

  	
  14

  
	
  3.7

  	
  SEC
  Documents; Sarbanes-Oxley Compliance

  	
  15

  
	
  3.8

  	
  Absence of
  Certain Developments

  	
  16

  
	
  3.9

  	
  No
  Undisclosed Liabilities

  	
  17

  
	
  3.10

  	
  Compliance
  with Laws

  	
  17

  
	
  3.11

  	
  Litigation

  	
  18

  
	
  3.12

  	
  Material
  Contracts

  	
  18

  
	
  3.13

  	
  Environmental

  	
  19

  
	
  3.14

  	
  Taxes

  	
  21

  
	
  3.15

  	
  Title to
  Property and Assets; Leases

  	
  21

  
	
  3.16

  	
  Compliance
  with ERISA

  	
  23

  
	
  3.17

  	
  Labor
  Relations; Employees

  	
  24

  
	
  3.18

  	
  Regulatory
  Matters

  	
  25

  
	
  3.19

  	
  Insurance

  	
  26

  
	
  3.20

  	
  Intellectual
  Property

  	
  26

  
	
  3.21

  	
  Affiliate
  Transactions

  	
  28

  
	
  3.22

  	
  Investment
  Company Act

  	
  28

  
	
  3.23

  	
  Board
  Approval

  	
  28

  
	
  3.24

  	
  Conversion
  Shares

  	
  29

  
	
  3.25

  	
  No Brokers
  or Finders

  	
  29

  
	
  3.26

  	
  Disclosure

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE PURCHASER

  	
  29

  
	
  4.1

  	
  Existence
  and Power

  	
  29

  
	
  4.2

  	
  Authorization;
  No Contravention

  	
  30

  

 

i

 

	
  4.3

  	
  Governmental
  Authorization; Third Party Consents

  	
  30

  
	
  4.4

  	
  Binding
  Effect

  	
  30

  
	
  4.5

  	
  Purchase for
  Own Account, Etc

  	
  30

  
	
  4.6

  	
  No Brokers
  or Finders

  	
  31

  
	
  4.7

  	
  Litigation

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  COVENANTS OF
  THE COMPANY

  	
  31

  
	
  5.1

  	
  Conduct of
  Business

  	
  31

  
	
  5.2

  	
  No
  Solicitation

  	
  34

  
	
  5.3

  	
  Regulatory
  Approval; Litigation

  	
  36

  
	
  5.4

  	
  Access;
  Information Rights

  	
  37

  
	
  5.5

  	
  Notice to
  Stockholders

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  OTHER
  AGREEMENTS

  	
  39

  
	
  6.1

  	
  Preemptive
  Rights

  	
  39

  
	
  6.2

  	
  Registration
  Rights

  	
  40

  
	
  6.3

  	
  Rule 144

  	
  40

  
	
  6.4

  	
  Availability
  of Common Stock

  	
  40

  
	
  6.5

  	
  No Rights
  Plan

  	
  40

  
	
  6.6

  	
  Legends

  	
  40

  
	
  6.7

  	
  Board of
  Directors

  	
  40

  
	
  6.8

  	
  Takeover
  Statutes

  	
  41

  
	
  6.9

  	
  Amendments
  to the Certificate of Incorporation

  	
  41

  
	
  6.10

  	
  Imagify
  Product

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  CONDITIONS
  PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE

  	
  43

  
	
  7.1

  	
  Conditions
  to Closing

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  CONDITIONS
  PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE

  	
  44

  
	
  8.1

  	
  Conditions
  to Closing

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  TERMINATION
  OF AGREEMENT

  	
  45

  
	
  9.1

  	
  Termination

  	
  45

  
	
  9.2

  	
  Survival

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  INDEMNIFICATION

  	
  46

  
	
  10.1

  	
  Indemnification

  	
  46

  
	
  10.2

  	
  Terms of Indemnification

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  MISCELLANEOUS

  	
  47

  
	
  11.1

  	
  Survival

  	
  47

  

 

*CONFIDENTIAL TREATMENT REQUESTED

 

ii

 

	
  11.2

  	
  Fees and
  Expenses

  	
  47

  
	
  11.3

  	
  Notices

  	
  48

  
	
  11.4

  	
  Successors
  and Assigns

  	
  49

  
	
  11.5

  	
  Amendment
  and Waiver

  	
  49

  
	
  11.6

  	
  Counterparts

  	
  50

  
	
  11.7

  	
  Headings

  	
  50

  
	
  11.8

  	
  Governing
  Law; Consent to Jurisdiction; Waiver of Jury Trial

  	
  50

  
	
  11.9

  	
  Severability

  	
  50

  
	
  11.10

  	
  Entire
  Agreement

  	
  50

  
	
  11.11

  	
  Further
  Assurances

  	
  51

  
	
  11.12

  	
  Public
  Announcements

  	
  51

  
	
  11.13

  	
  Specific
  Performance

  	
  51

  

 

*CONFIDENTIAL TREATMENT REQUESTED

 

iii

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Note

  
	
  Exhibit B

  	
   

  	
  Security Agreement

  
	
  Exhibit C

  	
   

  	
  Registration Rights Agreement

  
	
  Exhibit D

  	
   

  	
  Celecoxib Agreement

  
	
  Exhibit E

  	
   

  	
  Assignment Agreement

  
	
  Exhibit F

  	
   

  	
  Imagify License

  
	
  Exhibit G

  	
   

  	
  Opinion of Goodwin Procter LLP

  

 

iv

 

NOTE PURCHASE AGREEMENT

 

NOTE PURCHASE AGREEMENT, dated
as of October 24, 2008 (this “Agreement”), by and between Cephalon, Inc.,
a Delaware corporation (the “Purchaser”), and Acusphere, Inc., a
Delaware corporation (the “Company”).

 

WHEREAS, the Purchaser wishes
to purchase from the Company, and the Company wishes to sell to the Purchaser,
an 8% Senior Convertible Note in the aggregate principal amount of Fifteen
Million Dollars ($15,000,000) in the form of Exhibit A (the “Note”), subject to and in accordance with the terms and
conditions of this Agreement;

 

WHEREAS, shares of common
stock, par value $0.01 per share, of the Company (the “Common Stock”)
shall be issuable upon the conversion of, and as interest payments on, the
Note;

 

WHEREAS, as a condition to the
consummation of the Closing of this Agreement, the Purchaser and the Company
have agreed to enter into a Pledge and Security Agreement in the form of Exhibit B
(the “Security Agreement”);

 

WHEREAS, as a condition to the
consummation of the Closing of this Agreement, the Purchaser and the Company
have agreed to enter into a Registration Rights Agreement in the form of Exhibit C
(the “Registration Rights Agreement”); and

 

WHEREAS, as a condition to the
consummation of the Closing of this Agreement, the Purchaser and the Company
have agreed to enter into a License Agreement in the form of Exhibit D
(the “Celecoxib License Agreement”).

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth herein and for
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1           Definitions.  As used in this Agreement, and unless the
context requires a different meaning, the following terms shall have the
meanings set forth below:

 

“Acquisition
Agreement” has the meaning assigned to such term in Section 5.2.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

 

“Acquisition
Proposal” has the meaning assigned to such term in Section 5.2.

 

“Action” means
any action, causes of action, suit, claim, complaint, Order, inquiry, hearing,
demand, litigation or legal, administrative or arbitral proceeding.

 

“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person and, for purposes of Section 3.21 only, with respect
to any individual, the spouse, parent, sibling, child, step-child, grandchild,
niece or nephew of such individual or the spouse thereof and any trust for the
benefit of such Stockholder or any of the foregoing.  For the purposes of this definition, “control”
when used with respect to any specified Person means the power to direct the
management and policies of such Person, whether through the ownership of Voting
Securities, by contract or otherwise; and the terms “controlling” and “controlled”
have meanings correlative to the foregoing.

 

“Agreement”
has the meaning assigned to such term in the preamble.

 

“Assignment
Agreement” means the Assignment Agreement by and between the Company
and the Purchaser in the form of Exhibit E.

 

“associate” has
the meaning assigned in Rule 12b-2 promulgated by the Commission under the
Exchange Act.

 

“beneficially own”
with respect to any securities means having “beneficial ownership” of such
securities as determined pursuant to Rule 13d-3 under the Exchange Act, as
in effect on the date hereof.

 

“Board of Directors”
means either the board of directors of the Company or any duly authorized
committee thereof.

 

“Business Day”
means any day other than (i) a Saturday or Sunday or (ii) a day on
which banking institutions in New York City are authorized or obligated by law
or executive order to remain closed.

 

“Bylaws”
means the bylaws of the Company, as the same may have been amended.

 

“Celecoxib
License Agreement” has the meaning assigned to such term in the
recitals.

 

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

 

“Certificate
Amendment” has the meaning assigned to such term in Section 6.9.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

2

 

“Certificate of Incorporation”
means the certificate of incorporation of the Company, as the same may have
been amended.

 

“Claims”
means losses, claims, damages, costs expenses, awards, liabilities, joint or
several, deficiencies or other charges.

 

“Closing” has
the meaning assigned to such term in Section 2.2.

 

“Closing Date”
has the meaning assigned to such term in Section 2.2.

 

“Code” means
the Internal Revenue Code of 1986, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time.

 

“Commission”
means the Securities and Exchange Commission or any similar agency then having
jurisdiction to enforce the Securities Act.

 

“Common Stock”
has the meaning assigned to such term in the recitals.

 

“Company” has
the meaning assigned to such term in the preamble.

 

“Company Agreements”
has the meaning assigned to such term in Section 3.12(b).

 

“Company Benefit Plans”
means all employee benefit plans providing benefits to any current or former
employee or director of the Company or any of its Subsidiaries or any
beneficiary or dependent thereof that are sponsored or maintained by the
Company or any of its Subsidiaries or ERISA Affiliates or to which the Company
or any of its Subsidiaries or ERISA Affiliates contributes or is obligated to
contribute or with respect to which the Company could have any liability,
including without limitation all employee welfare benefit plans within the
meaning of Section 3(1) of ERISA, all employee pension benefit plans
within the meaning of Section 3(2) of ERISA, all Company Plans and
all other bonus, incentive, deferred compensation, vacation, stock purchase,
stock option, restricted stock, severance, termination pay and fringe benefit
plans.

 

“Company
Disclosure Letter” means the Company Disclosure Letter delivered by
the Company to the Purchaser on the date hereof.

 

“Company Options” has
the meaning assigned to such term in Section 3.6.

 

“Company Plans”
has the meaning assigned to such term in Section 3.6.

 

“Company
Property” means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other
asset owned, leased or operated by the Company or any of its Subsidiaries.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

3

 

“Company
Stockholder Notice” has the meaning assigned to such term in Section 5.5.

 

“Confidentiality Agreement”
means the confidentiality agreement dated October 9, 2008, between the
Purchaser and the Company.

 

“Contaminant”
means any waste, pollutant, hazardous or toxic substance or waste, petroleum,
petroleum-based substance or waste, special waste, or any constituent of any
such substance or waste.

 

“Contract”
means any commitment, contract, purchase order, lease, license, sublicense, note,
instrument or other agreement, undertaking or arrangement of any nature,
whether written or oral.

 

“Conversion Shares”
the shares of Common Stock issuable upon conversion of the Note.

 

“Convertible
Securities” has the meaning assigned to such term in Section 6.1.

 

“Copyrights”
means United States and non-U.S. copyrights and mask works (as defined in 17
U.S.C. §901), whether registered or unregistered, and pending applications to
register the same.

 

“DGCL” means
the Delaware General Corporation Law.

 

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

 

“Environmental
Law” means all Requirements of Laws derived from or relating to all
non-U.S., federal, state and local laws or regulations relating to or
addressing the environment, health or safety, including CERCLA, OSHA and RCRA
and any state equivalent thereof.

 

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

 

“ERISA Affiliate”
means each entity which is a member of a “controlled group of corporations,”
under “common control” or an “affiliated service group” with the Company or its
Subsidiaries within the meaning of Sections 414(b), (c) or (m) of the
Code, or required to be aggregated with the Company or its Subsidiaries under Section 414(o) of
the Code, or is under “common control” with the Company or its Subsidiaries,
within the meaning of Section 4001(a)(14) of ERISA.

 

“Event of Default”
has the meaning assigned to such term in the Note.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

4

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder by the Commission from time to time.

 

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

 

“GAAP” means
United States generally accepted accounting principles consistently applied.

 

“Governance Notice”
has the meaning assigned to such term in Section 6.9.

 

“Governmental Authority” means
any court, tribunal, arbitrator, arbitrational panel or authority, agency,
commission, official or other instrumentality of the United States or any other
country, or any supra-national organization, state, county, city or other
political subdivision or any self-regulatory organization.

 

“Holding
Period” has the meaning assigned to such term in Section 5.4.

 

“HSR Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Indebtedness”
has the meaning assigned to such term in Section 3.12(a)(vi).

 

“Intellectual
Property” means Copyrights, Patent Rights, Trademarks
and Trade Secrets.

 

“Imagify
License” means the License Agreement by and between the Company and
the Purchaser in the form of Exhibit F to be entered into under certain
circumstances described in the Note and herein.

 

“Imagify
Product” means Imagify (perflubutane polymer microspheres for
delivery in an injectable suspension, formerly known as AI-700), a
cardiovascular drug and ultrasound imaging agent in development by the Company
for the detection of coronary artery disease as in existence on the date hereof
and all improvements thereto, including all Intellectual Property relating
thereto or embodied therein necessary to make, have made, sell, use or import
such product.

 

“Imagify
Restriction Period” has the meaning assigned to such term in Section 6.10(a).

 

“Knowledge of the Company”
means the actual knowledge of any executive officer of the Company or any of
its Subsidiaries, after reasonable inquiry of those persons employed by the
Company or its Subsidiaries charged with administrative or operational
responsibility for such matter.

 

“Lien” means
any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance,
lien (statutory or other), voting or other restriction, preemptive right or
other security interest of any kind or nature whatsoever.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

5

 

“Material Adverse Effect” means
any material adverse change in or affecting the business, properties, assets,
liabilities, operations, results of operations (financial or otherwise),
condition, or prospects of the Company and its Subsidiaries taken as a whole or
the ability of the Company or any of its Subsidiaries to consummate the
transactions contemplated by the Transaction Agreements.

 

“NASD” means
the National Association of Securities Dealers, Inc.

 

“NASDAQ”
means The Nasdaq Stock Market, Inc.

 

“NASDAQ
Announcement” has the meaning assigned to such term in Section 5.5.

 

“NASDAQ Voting Exception Provisions”
means Rule 4350(i)(2) of the NASDAQ Marketplace Rules.

 

“Note”
has the meaning assigned to such term in the recitals.

 

“Order”
means any writ, judgment, decree, injunction, award or similar order of any
Governmental Authority, including any award in an arbitration proceeding (in
each case, whether preliminary or final).

 

“Patent
Rights” means United States and non-U.S. patents, provisional patent
applications, patent applications, continuations, continuations-in-part,
divisions, reissues, patent disclosures, industrial designs, inventions
(whether or not patentable or reduced to practice) and improvements thereto.

 

“Permits” has
the meaning assigned to such term in Section 3.10(b).

 

“Permitted
Equity Offering” means the issuance of shares of Common Stock or
Company Options to investors (other than any Person whose principal business
activity is the development, marketing and sale of pharmaceuticals) in
connection with capital raising transactions that are consummated after the
Closing Date and prior to the conversion of the Note.

 

“Permitted
Liens” means (i) Liens for Taxes and other governmental charges
and assessments yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP; (ii) any statutory Lien arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due
or delinquent other than any Lien imposed by ERISA; (iii) any Lien created
by operation of law, such as materialmen’s liens, mechanics’ liens and other
similar liens, arising in the ordinary course of business with respect to a
liability that is not yet due or delinquent and for which adequate reserves
have been established in accordance with GAAP; and (iv) Liens (A) upon
or in any equipment acquired or held by the Company or any of its Subsidiaries
to secure the purchase price of such equipment or indebtedness incurred solely
for the purpose of 

 

*CONFIDENTIAL TREATMENT REQUESTED

 

6

 

financing the
acquisition or lease of such equipment, or (B) existing on such equipment
at the time of its acquisition, provided that the Lien is confined solely to
the property so acquired and improvements thereon, and the proceeds of such
equipment, (v) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clause (iv) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the Indebtedness being extended, renewed or refinanced does
not increase, (vi) leases or subleases and licenses and sublicenses
granted to others in the ordinary course of the Company’s business, not
interfering in any material respect with the business of the Company and its
Subsidiaries taken as a whole, (vii) Liens arising from judgments,
decrees or attachments in circumstances not constituting an Event of Default, (viii) Liens
securing the Company’s obligations under the Notes,  (ix) Liens
arising out of pledges or deposits under workmen’s compensation laws,
unemployment insurance, old age pensions, or other social security benefits
other than any Lien imposed by ERISA, (x) Liens incurred or deposits made
in the ordinary course of business to secure surety bonds provided that such
Liens shall extend only to cash collateral for such surety bonds and (xi) Liens
listed on Schedule 1.1(b) of the Company Disclosure Letter.

 

“Person” means
a legal person, including any individual, corporation, estate, partnership,
joint venture, association, joint-stock company, company, limited liability
company, trust, unincorporated association, Governmental Authority, or any
other entity of whatever nature.

 

“Preferred Stock”
has the meaning assigned to such term in Section 3.6.

 

“Products”
means the products of the Company described on Schedule 1.1(a) of the
Company Disclosure Letter.

 

“Purchase Price”
has the meaning assigned to such term in Section 2.1.

 

“Purchaser”
has the meaning assigned to such term in the preamble.

 

“Purchaser
Percentage Interest” means the percentage of the total voting power
of the Company, determined on the basis of the number of Voting Securities
actually outstanding, that is controlled directly or indirectly by the
Purchaser, including as beneficially owned.

 

“Qualifying
Ownership Interest” means shares of Common Stock that constitute 25%
or more of the Voting Securities.

 

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

 

“Real
Property Lease” has the meaning assigned to such term in Section 3.12(a)(vii).

 

“Registration Rights Agreement”
has the meaning assigned to such term in the recitals.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

7

 

“Release”
means any release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration of a Contaminant into the
indoor or outdoor environment or into or out of any Seller Property, including
the movement of Contaminants through or in the air, soil, surface water,
groundwater or Seller Property.

 

“Remedial
Action” means actions required to (i) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment; (ii) prevent
the Release or threatened Release or minimize the further Release of
Contaminants or (iii) investigate and determine if a remedial response is
needed and to design such a response and post-remedial investigation,
monitoring, operation and maintenance and care.

 

“Requirement of Law”
means any law, statute, code, treaty, Order, ordinance, rule, regulation or
other requirement promulgated or enacted by any Governmental Authority.

 

“Response
Proposal” has the meaning assigned to such term in Section 5.2.

 

“Restricted Period”
has the meaning assigned to such term in Section 5.1(b).

 

“Rule 144” means
Rule 144 promulgated by the Commission under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.

 

“SEC Reports”
means each registration statement, report, proxy statement or information
statement (other than preliminary materials) or other documents filed by the
Company or any of its Subsidiaries with the Commission pursuant to the
Securities Act or the Exchange Act or the rules and regulations
thereunder, each in the form (including exhibits and any amendments) filed with
the Commission.

 

“Securities Act”
means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder by the Commission from time to time.

 

“Security
Agreement” has the meaning assigned to such term in the recitals.

 

“Software”
means computer software programs and software systems, including databases,
compilations, tool sets, compilers, higher level or “proprietary” languages and
related documentation and materials, whether in source code, object code or
human readable form.

 

“Subsidiary”
of any specified Person means any other Person more than 50% of the outstanding
voting securities of which is owned or controlled, directly or indirectly, by
such specified Person or by one or more other Subsidiaries of such specified
Person, or by such specified Person and one or more other Subsidiaries of such
specified Person.  For the purposes of
this definition, “voting securities” means securities which ordinarily have
voting power for the election of directors (or other Persons having similar
functions), whether at all times or only so 

 

*CONFIDENTIAL TREATMENT REQUESTED

 

8

 

long as no
senior class of securities has such voting power by reason of any contingency,
or other ownership interests ordinarily constituting a majority voting
interest.

 

“Superior
Acquisition Proposal” has the meaning assigned to such term in Section 5.2.

 

“Tax” or “Taxes” means
any taxes, assessment, duties, fees, levies, imposts, deductions, or
withholdings, including income, gross receipts, ad valorem, value added,
excise, real or personal property, asset, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, estimated taxes,
withholding, employment, social security, workers’ compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes, or other governmental charges of any nature
whatsoever, imposed by any taxing authority of any government or country or
political subdivision of any country, and any liabilities with respect thereto,
including any penalties, additions to tax, fines or interest thereon and includes
any liability for Taxes of another Person by Contract, as a transferee or
successor, under Treasury Regulation Section 1.1502-6 or analogous state,
local or foreign Requirement of Law provision or otherwise.

 

“Tax Return” means
any return, report or similar statement requires to be filed with respect to
any Tax (including any attached schedules), including any information return,
claim for refund, amended return or declaration of estimated Tax.

 

“Trade
Secrets” means trade secrets and confidential ideas, know-how,
concepts, methods, processes, formulae, technology, algorithms, models,
reports, data, customer lists, supplier lists, mailing lists, business plans
and other proprietary information, all of which derive value, monetary or
otherwise, from being maintained in confidence.

 

“Trademarks”
means United States, state and non-U.S. trademarks, service marks, trade names,
Internet domain names, designs, logos, slogans and general intangibles of like
nature, whether registered or unregistered, and pending registrations and
applications to register the foregoing.

 

“Transaction Agreements” means this Agreement, the Note, the Security
Agreement, the Registration Rights Agreement, the Celecoxib License Agreement
and the Assignment Agreement.

 

“Voting
Securities” mean any class or classes of stock
of the Company pursuant to which the holders thereof have the general power
under ordinary circumstances to vote with respect to the election of the Board
of Directors, irrespective of whether or not, at the time, stock of any other
class or classes shall have, or might have, voting power by reason of the
happening of any contingency.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

9

 

ARTICLE 2

 

PURCHASE AND SALE OF THE NOTE

 

2.1                                 Purchase and Sale of the Note.  Subject to the terms set forth
herein, the Company shall issue and sell to the Purchaser and the Purchaser
shall purchase from the Company the Note, for an aggregate purchase price of
$15,000,000 (the “Purchase
Price”).

 

2.2                                 Closing. 
The issuance, sale and purchase of the Note shall take place
at a closing (the “Closing”) to be held at the offices of
Sidley Austin LLP, One South Dearborn, Chicago, Illinois, at 10:00 A.M.,
local time, on the Closing Date.  The
Closing shall occur on the first Business Day after the conditions set forth in
Sections 7.1 and 8.1 (other than those to be satisfied on the Closing Date,
which shall be satisfied or waived on such date) have been satisfied or waived
by the party entitled to waive such conditions or such later date and time as
the parties may agree in writing (the “Closing
Date”), (a) the
Purchaser shall (i) deliver to the Company by wire transfer in immediately
available funds to an account or accounts designated in writing by the Company
to the Purchaser at least two (2) Business Days prior to the Closing Date,
funds in an amount equal to the Purchase Price (which funds will be used by the
Company in accordance with Section 2.3) and (ii) make or cause to be
made the deliveries set forth in Section 2.4 and (b) the Company
shall (i) issue and deliver to the Purchaser the fully executed Note and (ii) make
or cause to be made the deliveries set forth in Section 2.5.

 

2.3                                 Use of Proceeds.  All of the proceeds received from
the Purchaser pursuant to Section 2.2 hereof shall be used by the Company
solely for general working capital purposes, capital expenditures, repayment of
debt and in the operation of the Company’s business.

 

2.4                                 Purchaser
Deliveries.  Subject to
fulfillment or waiver of the conditions set forth in Article 7, at the
Closing Purchaser shall deliver to the Company all of the following:

 

(a)                                  A certificate of good
standing of the Purchaser, issued as of a recent date by the Secretary of State
of Delaware.

 

(b)                                 The certificate contemplated
by Section 8.1(a), duly executed by an authorized representative of the
Purchaser.

 

(c)                                  The Assignment
Agreement, duly executed by an authorized officer of the Purchaser.

 

(d)                                 The Celecoxib License
Agreement, duly executed by an authorized officer of the Purchaser.

 

(e)                                  The Registration
Rights Agreement, duly executed by an authorized officer of the Purchaser.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

10

 

(f)                                    The Security
Agreement, duly executed by an authorized officer of the Purchaser.

 

(g)                                 Such other documents,
instruments, approvals or opinions relating to the transaction contemplated by
the Transaction Agreements as the Company may reasonably request.

 

2.5                                 Company
Deliveries.  Subject to
fulfillment or waiver of the conditions set forth in Article 8, at the
Closing the Company shall deliver to the Purchaser all of the following:

 

(a)                                  A copy of the
Certificate of Incorporation, as amended, certified as of a recent date by the
Secretary of State of Delaware.

 

(b)                                 A certificate of good
standing of the Company, issued as of a recent date by each of the Secretary of
State of Delaware and the Secretary of State of the Commonwealth of
Massachusetts.

 

(c)                                  Certificate of the
secretary of the Company, dated as of the Closing Date, in a form and substance
reasonably satisfactory to Purchaser, as to: (i) no amendments to the
Certificate of Incorporation since a specified date; (ii) the Bylaws; (iii) the
resolutions of the Board of Directors, or committee thereof, authorizing the
execution, delivery and performance of this Agreement, the other Transaction
Agreement and the transactions contemplated thereby; and (iv) incumbency
and signatures of the officers of the Company executing this Agreement and any
Transaction Agreement.

 

(d)                                 The certificate
contemplated by Section 7.1(a), duly executed by an executive officer of
the Company.

 

(e)                                  The legal opinion of
Goodwin Procter LLP, counsel to the Company, dated the Closing Date, addressed
to the Purchaser, in the form of Exhibit G.

 

(f)                                    The Note, duly
executed by an authorized officer of the Company.

 

(g)                                 The Assignment
Agreement, duly executed by an authorized officer of the Company.

 

(h)                                 The Celecoxib License
Agreement, duly executed by an authorized officer of the Company.

 

(i)                                     The Registration
Rights Agreement, duly executed by an authorized officer of the Company.

 

(j)                                     The Security
Agreement, duly executed by an authorized officer of the Company.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

11

 

(k)                                  All consents, waivers
or approvals obtain by the Company with respect to the consummation of the
transactions contemplated by the Transaction Agreements.

 

(l)                                     Such other
documents, instruments, approvals or opinions relating to the transaction
contemplated by the Transaction Agreements as the Purchaser may reasonably
request.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents
and warrants to the Purchaser as follows:

 

3.1                                 Corporate Existence and Power.  The Company (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (b) has all requisite corporate power and
authority to own and operate its properties, to lease the properties it
operates as lessee and to carry on its business as currently conducted and
currently contemplated to be conducted; (c) has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, the Note and each of the other Transaction Agreements; (d) has
all requisite corporate power and authority to issue the Note and the shares of
Common Stock issuable upon the conversion of the Note (the “Conversion Shares”), in the manner and for the purpose
contemplated by this Agreement, the Note and each of the other Transaction
Agreements; and (e) has all requisite corporate power and authority to
execute, deliver and perform its obligations under all other agreements and
instruments executed and delivered by it pursuant to or in connection with this
Agreement, the Note and each of the other Transaction Agreements.  The Company is duly qualified to do business
as a foreign corporation in, and is in good standing under the laws of, each
jurisdiction in which the conduct of its business or the nature of the property
owned requires such qualification except where the failure to be so qualified
or in good standing, individually or in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect.

 

3.2                                 Subsidiaries.  Except as set forth on Schedule
3.2 of the Company Disclosure Letter, the Company has no Subsidiaries and no
interest or investments in any corporation, partnership, limited liability
company, trust or other entity or organization. 
Each Subsidiary listed on Schedule 3.2 of the Company Disclosure Letter
has been duly organized, is validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite corporate (or,
in the case of an entity other than a corporation, other) power and authority
to own and operate its properties, to lease the properties it operates as
lessee and to carry on its business as currently conducted and currently
contemplated to be conducted, and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its business or
the nature of its properties requires such qualification except where the
failure to be so qualified or in good standing, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect.  Except as set forth on 

 

*CONFIDENTIAL TREATMENT REQUESTED

 

12

 

Schedule 3.2 of the Company Disclosure
Letter, all of the issued and outstanding stock (or equivalent interests) of
each Subsidiary set forth on Schedule 3.2 of the Company Disclosure Letter has
been duly authorized and validly issued, is fully paid and nonassessable and is
owned by the Company free and clear of any Liens and there are no rights,
options or warrants outstanding or other agreements to acquire shares of stock
(or equivalent interests) of such Subsidiary. 
Schedule 3.2 of the Company Disclosure Letter sets forth the capitalization
of each of the Subsidiaries, including the amount and kind of equity interests
held by the Company in the Subsidiary.

 

3.3                                 Corporate Authorization; No
Contravention.  The execution,
delivery and performance by the Company of this Agreement, the Note and each of
the other Transaction Agreements and the consummation of the transactions
contemplated thereby and delivery of the Conversion Shares (when issued), (a) have
been duly authorized by all necessary corporate action of the Company; (b) do
not contravene the terms of the Certificate of Incorporation or Bylaws or the
other organizational documents of the Company or its Subsidiaries; (c) do
not entitle any Person to exercise any statutory or contractual preemptive
rights to purchase shares of capital stock or any equity interest in the Company;
and (d) except as set forth in Schedule 3.3 of the Company Disclosure
Letter, do not, and will not, violate or result in any breach or contravention
of, a default under, or an acceleration of any obligation under or the creation
(with or without notice, lapse of time or both) of any Lien under, result in
the termination or loss of any right or the imposition of any penalty under,
any Contract of the Company or its Subsidiaries or by which their respective
assets or properties are bound or any Requirement of Law or Order applicable to
the Company or its Subsidiaries or by which their respective assets or
properties are bound.  The transactions
contemplated by this Agreement and the Transaction Agreements have been
approved by the Audit Committee of the Company in compliance with the NASDAQ
Voting Exception Provisions and the Company has received an written exception
from NASDAQ with respect to the transactions contemplated by this Agreement and
the Transaction Agreements, including the issuance of the Note, in accordance
with the NASDAQ Voting Exception Provisions. 
This Agreement constitutes and the Note and each of the other
Transaction Agreements when executed by the Company will constitute, valid and
legally binding obligations of the Company, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting
creditors’ rights generally and the general principles of equity, regardless of
whether considered in a proceeding in equity or at law.  No event has occurred and no condition exists
which (upon notice or the passage of time or both) would constitute, or give
rise to: (i) any breach, violation, default, change of control or right to
cause the Company to repurchase or redeem under, (ii) any Lien on the
assets of the Company or any of its Subsidiaries under, (iii) any
termination right of any party, or any loss of any right or imposition of any
penalty, under or (iv) any change or acceleration in the rights or
obligations of any party under, the Certificate of Incorporation or Bylaws or
the organizational documents of the Company’s Subsidiaries.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

13

 

3.4                                 Governmental Authorization; Third Party
Consents.  Except as set forth
on Schedule 3.4 of the Company Disclosure Letter and, with respect to the
conversion of the Note, except as required under the HSR Act, no approval,
consent, qualification, order, exemption, authorization or other action by, or
notice to, or filing with, any Governmental Authority, or any other Person in
respect of any Requirement of Law, Order, Contract or otherwise, and no lapse
of a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the issuance, sale and delivery of the Note) by the Company, or
enforcement against the Company, of this Agreement, the Note and each of the other
Transaction Agreements or the consummation of the transactions contemplated
thereby.

 

3.5                                 Binding Effect.  The Company has full power and
authority to execute, deliver and perform this Agreement, the Note and each of
the other Transaction Agreements.  The
execution, delivery and performance of this Agreement, the Note and each of the
other Transaction Agreements by Seller have been duly authorized and approved
by the Board of Directors and do not require any further authorization or
consent of the Company or its stockholders. 
This Agreement has been duly authorized, executed and delivered by the
Company and is the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, and the Note and each of the other
Transaction Agreements has been duly authorized by the Company and upon
execution and delivery by the Company will be a legal, valid and binding
obligation of the Company enforceable in accordance with its terms.

 

3.6                                 Capitalization of the Company and its
Subsidiaries.  The authorized
capital stock of the Company consists of (a) 98,500,000 shares of Common
Stock (and immediately following the filing of an amendment to the Certificate
of Incorporation pursuant to Section 7.1(g), 250,000,000 shares of Common
Stock) and (b) 5,000,000 shares of preferred stock, par value $0.01, of
the Company (the “Preferred
Stock”) of which 1,000,000
shares of Preferred Stock are designated as 6.5% Convertible Exchangeable
Preferred Stock.  As of the date hereof, (i) 310,000
shares of Convertible Exchangeable Preferred Stock are issued and outstanding, (ii) 49,488,907
shares of Common Stock are issued and outstanding, (iii) 15,321,645 shares
of Common Stock are reserved for or subject to issuance upon the exercise of
outstanding Company Options (as defined below) and (iv) 2,470,426 shares
of Common Stock are reserved for or subject to issuance upon the conversion of
Preferred Stock.  Schedule 3.6 of the
Company Disclosure Letter sets forth a true and correct list of all outstanding
rights, options or warrants to purchase shares of any class or series of
capital stock of the Company (collectively, “Company Options”) and a true and correct list of
each of the Company’s stock option, incentive, purchase or other plans pursuant
to which options or warrants to purchase stock of the Company may be issued
(collectively, the “Company Plans”).  Except (A) for shares of Common Stock
issued pursuant to the exercise of outstanding Company Options, (B) for
shares of Common Stock issuable upon conversion of the Preferred Stock and (C) for
shares of Common Stock issuable upon conversion of the Note, on the Closing
Date there are no shares of Common Stock or any other equity security of the
Company or any of its Subsidiaries issuable upon conversion or

 

*CONFIDENTIAL TREATMENT REQUESTED

 

14

 

exchange of any security of the Company or
any of its Subsidiaries nor any rights, options or warrants outstanding or
other agreements to acquire shares of stock of the Company or any of its
Subsidiaries nor is the Company or any of its Subsidiaries be contractually
obligated to issue any shares of stock or to purchase, redeem or otherwise
acquire any of its outstanding shares of stock. 
Neither the Company nor any of its Subsidiaries has created any “phantom
stock,” stock appreciation rights or other similar rights the value of which is
related to or based upon the price or value of the Common Stock.  Neither the Company nor any of its
Subsidiaries has outstanding debt or debt instruments providing for voting
rights with respect to the Company or any of its Subsidiaries to the holders
thereof.  No stockholder of the Company
or other Person is entitled to any preemptive or similar rights to subscribe
for shares of stock of the Company or any of its Subsidiaries.  All of the issued and outstanding shares of
Common Stock are duly authorized, validly issued, fully paid, and
nonassessable.  Except as set forth on
Schedule 3.6 of the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries has granted to any Person the right to demand or request that
the Company or such Subsidiary effect a registration under the Securities Act
of any securities held by such Person or to include any securities of such
Person in any such registration by the Company or such Subsidiary.

 

3.7                                 SEC Documents; Sarbanes-Oxley
Compliance.  (a)  The
Company has made available to the Purchaser the SEC Reports filed with the
Commission from January 1, 2006 to the date hereof.  The Company and each of its Subsidiaries have
timely filed each registration statement, report, proxy statement or
information statement (other than preliminary materials) or other documents
required to be filed by it with the Commission pursuant to the Securities Act
or the Exchange Act or the rules and regulations thereunder since January 1,
2005.  As of their respective dates, the
SEC Reports (i) were prepared in all material respects in accordance with
the applicable requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder and complied in all material respects with the then
applicable accounting requirements, (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading, except for
those statements, if any, as have been modified by subsequent filings with the
Commission prior to the date hereof and (iii) complied in all material
respects with the applicable requirements of the Sarbanes-Oxley Act of
2002.  The financial statements and other
financial information included in each of the SEC Reports fairly present, in all
material respects, the financial condition, results of operations and cash
flows of the Company and its Subsidiaries as of, and for the periods presented
in, the applicable SEC Reports.  Each of
the consolidated balance sheets of the Company and its Subsidiaries included in
or incorporated by reference into the SEC Reports (including the related notes
and schedules) present fairly, in all material respects, the financial position
of the Company and its Subsidiaries as of its date and each of the consolidated
statements of operations, cash flows and shareholders’ equity of the Company
and its Subsidiaries included in or incorporated by reference into the SEC
Reports (including any related notes and schedules) present fairly, in all
material respects, the results of operations and cash flows of the Company and
its Subsidiaries for the periods set forth, in each case in conformity

 

*CONFIDENTIAL TREATMENT REQUESTED

 

15

 

with GAAP consistently applied during the
periods involved, except as may be noted (subject, in the case of unaudited
statements, to those exceptions as may be permitted by Form 10-Q of the
Commission and to normal year-end audit adjustments).

 

(b)                                 The management of the
Company has (i) designed disclosure controls and procedures to ensure that
material information relating to the Company, including its consolidated
Subsidiaries, is made known to the management of the Company by others within
those entities and (ii) has disclosed, based on its most recent
evaluation, to the Company’s outside auditors and the audit committee of the
Board of Directors (A) any significant deficiencies in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize and report financial data and have
identified for the Company’s outside auditors any material weaknesses in
internal controls and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company’s internal controls.  A summary
of any of those disclosures made by management to the Company’s auditors and
audit committee has been furnished to the Purchaser.  The Company and each of its Subsidiaries
maintains a system of internal accounting controls sufficient to provide reasonable
assurance that (w) transactions are executed in accordance with management’s
general or specific authorizations, (x) transactions are recorded as
necessary to permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability, (y) access to assets is permitted
only in accordance with management’s general or specific authorization and (z) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

(c)                                  Since January 1,
2005, neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any
director, officer, employee, auditor, accountant or representative of the
Company or any of its Subsidiaries has received or otherwise had or obtained
knowledge of any complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures, methodologies
or methods of the Company or any of its Subsidiaries or their respective
internal accounting controls, including any complaint, allegation, assertion or
claim that the Company or any of its Subsidiaries has engaged in questionable
accounting or auditing practices.

 

3.8                                 Absence of Certain Developments.  Since the date of the most recent
audited financial statements of the Company included in the SEC Reports, except
as described in the SEC Reports filed with the Commission prior to the date
hereof, or as contemplated by the Transaction Agreements, each of the Company
and its Subsidiaries has operated in the ordinary course and there has not
been:

 

(a)                                  any event, change,
effect, circumstance or development that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

16

 

(b)                                 any change to, or
resolutions adopted to effect any change to, the Certificate of Incorporation
or By-Laws;

 

(c)                                  any incurrence of any
Lien (except Permitted Liens) on any material assets of the Company or any of
its Subsidiaries;

 

(d)                                 any material loss,
damage or destruction to, or any material interruption in the use of, any
material assets of the Company or any of its Subsidiaries;

 

(e)                                  any acquisition, sale
or transfer (including by license) of any material asset by the Company or any
of its Subsidiaries;

 

(f)                                    any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any capital stock of the Company or
any repurchase for value by the Company of any capital stock of the Company;

 

(g)                                 any split, combination
or reclassification of any capital stock of the Company or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of capital stock of the Company;

 

(h)                                 any change in
accounting methods, principles or practices by the Company or any of its
Subsidiaries materially affecting the consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been required
by a change in GAAP; or

 

(i)                                     any change in
material elections with respect to Taxes by the Company or any of its
Subsidiaries or settlement or compromise by the Company or any of its
Subsidiaries of any material Tax liability or refund.

 

3.9                                 No Undisclosed Liabilities.  Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, except (a) liabilities or obligations
disclosed or reserved against in the SEC Reports filed with the Commission
prior to the date hereof and (b) liabilities or obligations which arose
after the last date of any such SEC Report, in the ordinary course of business
consistent with past practice that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect.

 

3.10                           Compliance with Laws.  (a)  Except as set forth in
the SEC Reports filed with the Commission prior to the date hereof or as set
forth on Schedule 3.10(a) of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries, is, or since January 1, 2005, has
been, in violation of any Requirement of Law in any material respect, or any Order,
applicable thereto.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

17

 

(b)                                 The Company and its
Subsidiaries as applicable, have obtained or made, as the case may be, all
permits, licenses, authorizations, orders and approvals, and all filings,
applications and registrations with, all Governmental Authorities (“Permits”), that are required to conduct
the businesses of the Company and its Subsidiaries in the manner and to the
full extent as currently conducted or currently contemplated to be conducted
except where such failure to obtain or make, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect.  None of such Permits is subject
to any restriction or condition that limits or would reasonably be expected to
limit in any material way the full operation of the business of the Company or
its Subsidiaries as currently conducted or currently contemplated to be
conducted.  Each of the Permits has been
duly obtained, is valid and in full force and effect, and is not subject to any
pending or threatened proceeding to limit, condition, suspend, cancel, suspend,
or declare such Permit invalid.  Neither
the Company nor any of its Subsidiaries is in default in any material respect
with respect to any of the Permits, and to the Knowledge of the Company, no event
has occurred which constitutes, or with due notice or lapse of time or both may
constitute, a default by the Company or any such Subsidiary under any Permit.

 

3.11                           Litigation. 
Except as set forth on Schedule 3.11 of the Company
Disclosure Letter, there is no Action or, to the Knowledge of the Company, other
legal, administrative or other governmental investigation or inquiry pending or
claims asserted (or, to the Knowledge of
the Company, any threat thereof) relating to the Company or
any of its Subsidiaries or relating to this Agreement, the Note, any of the
other Transaction Agreements or the Company Agreements or the transactions
contemplated thereby or against any officer, director or employee of the
Company in connection with such Person’s relationship with or actions taken on
behalf of the Company.  Except as set
forth on Schedule 3.11 of the Company Disclosure Letter, the Company is not
subject to any Order.

 

3.12                           Material Contracts.  (a)  Except as set forth in Schedule 3.12(a) of the
Company Disclosure Letter neither the Company nor any of its Subsidiaries is a
party to or bound by:

 

(i)                                     any
Contract for the purchase or sale of real property;

 

(ii)                                  any
Contract for the purchase of services, materials, supplies or equipment which
involved the payment of more than $250,000 in 2007, which the Company
reasonably anticipates will involve the payment of more than $250,000 in 2008
or which extends beyond December 31, 2009;

 

(iii)                               any
Contract for the sale of goods or services which involved the payment of more
than $250,000 in 2007, which the Company reasonably anticipates will involve
the payment of more than $250,000 in 2008 or which extends beyond December 31,
2009;

 

*CONFIDENTIAL TREATMENT REQUESTED

 

18

 

(iv)                              any
guarantee of the obligations of customers, suppliers, officers, directors,
employees, Affiliates or others;

 

(v)                                 any
Contract which limits or restricts where the Company or any of its Subsidiaries
may conduct its current business or the type or line of business in which the
Company or its Subsidiaries may engage;

 

(vi)                              any
Contract which provides for, or relates to, the incurrence of indebtedness for
borrowed money (including any interest rate or currency swap, cap, collar,
hedge or insurance agreements, or options or forwards on such agreements, or
other similar agreements for the purpose of managing the interest rate and/or
non-U.S. exchange risk associated with its financing) (“Indebtedness”);

 

(vii)                           any
Contract for the leasing (as lessor or lessee) of any real property (“Real Property Leases”);

 

(viii)                        any
Contract for the leasing (as lessor or lessee) of any personal property with an
annual rental amount in excess of $250,000; or

 

(ix)                                any
other Contract that is a “material contract” (as such term is defined in Item
601(b)(10) of regulation S-K under the Securities Act.

 

(b)                                 Except as set forth in
Schedule
3.12(b) of the Company Disclosure Letter, each of the
Contracts listed in Schedules 3.12(a), 3.16 and 3.20(c) of
the Company Disclosure Letter (collectively, the “Company Agreements”)
constitutes a valid and binding obligation of the parties thereto and is in
full force and effect and (except as set forth in Schedule 3.4 of
the Company Disclosure Letter) will
continue in full force and effect after the Closing Date without breaching the
terms thereof or resulting in the forfeiture or impairment of any rights
thereunder and without the consent, approval or act of, or the making of any
filing with, any other Person.  Each of
the Company and its Subsidiaries has fulfilled and performed its obligations
under each of the Company Agreements, and is not in, or alleged to be in,
breach or default under, nor is there or is there alleged to be any basis for
termination of, any of the Company Agreements and no other party to any of the
Company Agreements has breached or defaulted thereunder, and no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by the Company or any of its Subsidiaries or by any such other party.  Complete and correct copies of each of the
Company Agreements have heretofore been delivered or made available to the
Purchase by the Company.

 

3.13                           Environmental.  (a)  Except as set forth in Schedule
3.13 of the Company Disclosure Letter:

 

(i)                                     the
operations of the Company and its Subsidiaries comply in all material respects
with all applicable Environmental Laws;

 

*CONFIDENTIAL TREATMENT REQUESTED

 

19

 

(ii)                                  the
Company and its Subsidiaries have obtained all environmental, health and safety
Permits necessary for their operation, and all such Permits are in good
standing and the Company and its Subsidiaries are in compliance in all material
respects with all terms and conditions of such permits;

 

(iii)                               none
of the Company and its Subsidiaries nor any of their past or present operations
or properties is subject to any on-going investigation by, order from or
agreement with any Person respecting (A) any Environmental Law, (B) any
Remedial Action or (C) any Claim arising from the Release or threatened
Release of a Contaminant into the environment;

 

(iv)                              the
Company and its Subsidiaries are not subject to any Order alleging or
addressing a violation or liability under any Environmental Law;

 

(v)                                 the
Company and its Subsidiaries have not:

 

(A) reported a Release of a hazardous substance pursuant to Section 103(a) of
CERCLA, or any state equivalent;

 

(B) filed a notice pursuant to Section 103(c) of CERCLA;

 

(C) filed notice pursuant to Section 3010 of RCRA indicating
the generation of any hazardous waste, as that term is defined under 40 CFR Part 261
or any state equivalent; or

 

(D) filed any notice under any applicable Environmental Law
reporting a substantial violation of any applicable Environmental Law;

 

(vi)                              there
is not now, nor to the Knowledge of the Company, has there ever been, on or in any
Company Property:

 

(A) any treatment, recycling, storage or disposal of any hazardous
waste, as that term is defined under 40 CFR Part 261 or any state
equivalent, that requires or required a Permit pursuant to Section 3005 of
RCRA; or

 

(B) any underground storage tank or surface impoundment or
landfill or waste pile;

 

(vii)                           there
is not now on or in any Company Property any polychlorinated biphenyls (PCB)
used in pigments, hydraulic oils, electrical transformers or other equipment;

 

*CONFIDENTIAL TREATMENT REQUESTED

 

20

 

(viii)                        neither
the Company not any of its Subsidiaries have received any notice or claim to
the effect that it is or may be liable to any Person as a result of the Release
or threatened Release of a Contaminant;

 

(ix)                                no
Environmental Encumbrance has attached to any Company Property; and

 

(x)                                   any
asbestos-containing material which is on or part of any Company Property is in
good repair according to the current standards and practices governing such
material, and its presence or condition does not violate any currently
applicable Environmental Law.

 

3.14                           Taxes.  (a) 
Except as set forth on Schedule 3.14 of the Company Disclosure Letter:

 

(i)                                     all
Tax Returns required to be filed by the Company and each of its Subsidiaries
have been timely filed (after giving effect to any valid extensions of time in
which to make such filings) and all such Tax Returns are true, complete, and
correct in all material respects;

 

(ii)                                  all
Taxes that are due or claimed to be due from the Company and each of its
Subsidiaries have been timely paid;

 

(iii)                               there
are no proposed, asserted, ongoing or, to the Knowledge of the Company,
threatened, assessments, examinations, claims, deficiencies, Liens or other
litigation with regard to any Taxes or Tax Returns of the Company or any of its
Subsidiaries;

 

(iv)                              to
the Knowledge of the Company,
the accruals and reserves on the books and records of the Company and its
Subsidiaries in respect of any Tax liability for any taxable period not finally
determined are adequate to meet any assessments of Tax for any such period;

 

(v)                                 the
Company is not a United States real property holding corporation as defined in Section 897(c)(2) of
the Code;

 

(vi)                              the
Company and each of its Subsidiaries is not currently the beneficiary of any
extension of time within which to file any Tax Return;

 

(vii)                           all
material amounts required to be collected or withheld by the Company or any of
its Subsidiaries have been collected or withheld and any such amounts that are
required to be remitted to any taxing authority have been duly and timely
remitted;

 

*CONFIDENTIAL TREATMENT REQUESTED

 

21

 

(viii)                        neither
the Company nor any of its Subsidiaries has waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency;

 

(ix)                                the
Company and each of its Subsidiaries (A) has not been a member of a group
of corporations filing Tax Returns on a consolidated, combined or unitary basis
(other than a group of which the Company was the common parent) or (B) does
not have any liability for the Taxes of any Person (other than the Company)
under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign Requirement of Law), as a transferee or successor, by
contract, or otherwise; and

 

(x)                                   the
Company and each of its Subsidiaries will not be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result
of any: (A) “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign
income Tax Requirement of Law) executed on or prior to the Closing Date; or (B) prepaid
amount received on or prior to the Closing Date.

 

(b)                                 As a direct or
indirect result of the transactions contemplated by this Agreement, no payment
or other benefit, and no acceleration of the vesting of any options, payments
or other benefits, will be, an “excess parachute payment” to a “disqualified
individual” as those terms are defined in Section 280G of the Code and the
Treasury Regulations thereunder.  Except
as set forth on Schedule 3.14 of the Company Disclosure Letter, as a direct or
indirect result of the transactions contemplated by this Agreement and the
other Transaction Agreements, no payment or other benefit, and no acceleration
of the vesting of any options, payments or other benefits will be (or under Section 280G
of the Code and the Treasury Regulations thereunder be presumed to be) a “parachute
payment” to a “disqualified individual” as those terms are defined in Section 280G
of the Code and the Treasury Regulations thereunder, without regard to whether
such payment or acceleration is reasonable compensation for personal services
performed or to be performed in the future.

 

3.15                           Title to Property and Assets; Leases.  Except as set forth on Schedule
3.15 of the Company Disclosure Letter, each of the Company and its Subsidiaries
has good and marketable title, free and clear of all Liens to all of its
assets, including all real property leased, subleased or otherwise occupied by
the Company and its Subsidiaries and any assets and properties which it
purports to own, except for Permitted Liens. 
The Company and its Subsidiaries enjoy a peaceful and undisturbed
possession under all Real Property Leases to which any of them is a party as lessee.  With respect to each Real Property Lease, to
the Knowledge of the Company,
either (a) such Real Property Lease is not subject or subordinate to any
mortgage, deed of trust or other lien which has priority over such Real
Property Lease or (b) the holder of any such lien has entered into a
valid, binding and enforceable nondisturbance agreement in favor of the lessee
pursuant to which the Real Property Lease cannot be extinguished or terminated
by reason of any

 

*CONFIDENTIAL TREATMENT REQUESTED

 

22

 

foreclosure or other acquisition of title by
such holder if the lessee thereunder is not in default under the Real Property
Lease as of the date of acquisition of title. 
As used herein, the term “Real Property Lease”
shall also include subleases or other occupancy agreements (and any amendments
thereto) and the term “lessee” shall also include any sublessee or other
occupant.  Neither the Company nor any of
its Subsidiaries own any real property.

 

3.16                           Compliance with ERISA.  Schedule 3.16 of the Company Disclosure
Letter sets forth the name of each Company Benefit Plan.  The Company has made available to the
Purchaser true and complete copies of each Company Benefit Plan, as well as all
material related documents, including, but not limited to, (a) the
actuarial report for such Company Benefit Plan (if applicable) for each of the
last two (2) years, (b) the most recent determination letter from the
IRS (if applicable) for such Company Benefit Plan, (c) the two (2) most
recent annual reports (Series 5500 and related schedules) required under
ERISA (if any) and (d) the most recent summary plan descriptions (with all
material modifications).  Each of the
Company Benefit Plans has been operated and administered in all material
respects in compliance with its terms and all applicable laws and regulations
relating thereto, and there has been no notice issued by any governmental
authority questioning or challenging such compliance.  Each of the Company Benefit Plans intended to
be “qualified” within the meaning of Section 401(a) of the Code is so
qualified, and no circumstance exists which might cause such Company Benefit
Plan to cease being so qualified.  There
are no pending, or to the Knowledge of Company, threatened Actions or Claims
(other than routine Actions for benefits) by, on behalf of or against any of
the Company Benefit Plans or any trusts or assets related thereto.  Neither the Company nor any current or former
ERISA Affiliate currently sponsors, maintains or contributes to, and is not
required to contribute to, nor has ever sponsored, maintained or contributed
to, or been required to contribute to, incurred any liability, or has any
potential liability, with respect to any “employee benefit plan” (within the
meaning of Section 3(3) of ERISA) that is subject to Section 302
of the Code or Title IV of ERISA.  No
non-exempt “prohibited transaction,” within the meaning of Section 4975 of
the Code or Section 406 of ERISA, has occurred with respect to any Company
Benefit Plan which could, individually or in the aggregate, reasonably be
expected to result in a material liability to the Company.  The Company has no material liability of any
kind whatsoever, whether direct, indirect, contingent, or otherwise (i) on
account of any violation of the health care requirements of Part 6 of
Title I of ERISA or Section 4980B of the Code, or (ii) under Section 502(i) or
Section 502(l) of ERISA.  No
material liability under any Company Benefit Plan has been funded nor has any
such obligation been satisfied with the purchase of a contract from an
insurance company as to which the Company has received notice that such
insurance company is insolvent or is in rehabilitation or any similar
proceeding.  No Company Benefit Plan is
under audit or is the subject of a proceeding with respect to, or, to the
Knowledge of the Company, investigation by, the IRS, the Department of Labor or
the Pension Benefit Guaranty Corporation, and, to the Knowledge of the Company, no such
audit, investigation or proceeding is threatened.  Except as set forth on Schedule 3.16 of the
Company Disclosure Letter, with respect to each Company Benefit Plan which
provides medical benefits, short-term disability benefits or long-term
disability benefits (other than any “pension plan” within the

 

*CONFIDENTIAL TREATMENT REQUESTED

 

23

 

meaning of Section 3(2) of ERISA),
all Claims incurred by the Company under such Company Benefit Plan are either
insured pursuant to a contract of insurance whereby the insurance company bears
any risk of loss with respect to such Claims or covered under a contract with a
health maintenance organization pursuant to which such health maintenance
organization bears the liability for such Claims.  Except as set forth on Schedule 3.16 of the
Company Disclosure Letter or disclosed in the SEC Reports filed with the
Commission prior to the date hereof, neither the execution and delivery of this
Agreement, the Transaction Agreements nor the transactions contemplated thereby
will (either alone or in conjunction with any other event such as termination
of employment) (i) result in, or cause any increase, acceleration or
vesting of, any payment, benefit or award under any Company Benefit Plan to any
director or employee of Company or any of its Subsidiaries, (ii) give rise
to any obligation to fund for any such payments, awards or benefits, (iii) give
rise to any limitation on the ability of the Company or any of its Subsidiaries
to amend or terminate any Company Benefit Plan or (iv) result in any
payment or benefit that will or may be made by the Company or any of its
Subsidiaries or affiliates that will be characterized as an “excess parachute
payment,” within the meaning of Section 280G of the Code.  Except as set forth on Schedule 3.16 of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries or
ERISA Affiliates has any liability to provide any post-retirement or
post-termination life, health, medical or other welfare benefits to any current
or former employees or beneficiaries or dependents thereof which, individually
or in the aggregate, is material, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA
or applicable state healthcare continuation coverage laws which, individually
or in the aggregate, is at no material expense to the Company and its
Subsidiaries.  With respect to each
Company Benefit Plan, there are no understandings, agreements or undertakings
that would prevent the Company from amending or terminating such Company
Benefit Plan at any time without incurring material liability thereunder other
than in respect of accrued obligations and medical or welfare claims incurred
prior to such amendment or termination. 
All Company Benefit Plans subject to Section 409A of the Code are
in good faith compliance with the currently applicable requirements of Section 409A
and the regulations, rulings and notices thereunder.

 

3.17                           Labor Relations; Employees.  Except as set forth on Schedule
3.17 of the Company Disclosure Letter, the Company is not in any material
respect delinquent in payments to any of its current or former employees for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed by such employee or for reimbursement of expenses.  The Company is in compliance in all material
respects with all applicable Requirements of Law respecting employment,
employment practices, labor, terms and conditions of employment and wages and
hours.  The Company is not a party to any
Contract with any labor union, and no labor union has requested or sought to
represent any of the employees, representatives or agents of the Company.  There is no labor strike, dispute, slowdown
or stoppage pending or, to the Knowledge of
the Company, threatened against or involving the
Company.  To the Knowledge of the Company, no
executive officer of the Company has announced plans to terminate his or her
employment with the Company.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

24

 

3.18                           Regulatory Matters.  (a)  Complete and correct
copies of each submission of the Company or any of its Subsidiaries to the FDA
with respect to the Products, and all amendments and supplements thereto,
including all related pre-clinical and clinical data, have heretofore been
provided or made available to Purchaser by the Company.  Complete and correct copies of all
correspondence received by of the Company or any of its Subsidiaries from the
FDA with respect to the Products and the responses thereto have heretofore been
provided to Purchaser by the Company.

 

(b)                                 To the extent
applicable, the Company has been and is in substantial compliance with 21
U.S.C. Section 355 and applicable FDA implementing regulations, including
21 C.F.R. Parts 312 or 314, and similar Requirements of Laws and all terms and
conditions of the applicable new drug application and investigational new drug
exemption submission under Section 505(i) of the Federal Food, Drug,
and Cosmetic Act.  The Company has been
and is in substantial compliance with the clinical trial reporting and
disclosure requirements of 42 U.S.C. Section 282(j).  The Company and its officers, employees or
agents have included in the applications for the Products, where required, the
certification described in 21 U.S.C. Section 335a(k)(1) or any
similar Requirements of Law, and such certification and such list was in each
case true and accurate when made and remained true and accurate in all material
respects thereafter.  In addition, the
Company is in compliance in all material respects with all applicable
registration and listing requirements set forth in 21 U.S.C. Section 360
and 21 C.F.R. Part 207 and all similar Requirements of Laws with respect
to the Products.

 

(c)                                  Each article of the
Products manufactured and/or distributed by the Company (including Products in
inventory) is not adulterated within the meaning of 21 U.S.C. Section 351
(or similar Requirement of Law) or misbranded within the meaning of 21 U.S.C. Section 352
(or similar Requirement of Law), and is not in violation of 21 U.S.C. Section 355
(or similar Requirement of Law).

 

(d)                                 Neither the Company
nor any of its officers, employees or agents has made an untrue statement of a
material fact or fraudulent statement to the FDA or other Governmental Authority,
failed to disclose a material fact required to be disclosed to the FDA or any
other Governmental Authority, or committed an act, made a statement, or failed
to make a statement that, at the time such disclosure was made, could
reasonably be expected to provide a basis for the FDA or any other Governmental
Authority to invoke its policy respecting “Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10,
1991) or any similar policy and, to the Knowledge of the Company, neither the
Company nor any of its officers, employees or agents is the subject, officially
or otherwise, of any pending or threatened investigation by any Governmental
Authority under such policy or under the Federal Anti-Kickback Statute or the
Civil False Claims Act or any regulations promulgated thereunder.  Neither the Company nor any of its officers,
employees or agents has been convicted of any crime or engaged in any conduct
with respect to the Products for which

 

*CONFIDENTIAL TREATMENT REQUESTED

 

25

 

debarment is mandated by 21 U.S.C. Section 335a(a) or any
similar Requirement of Law or authorized by 21 U.S.C. Section 335a(b) or
any similar Requirement of Law.

 

(e)                                  To the Knowledge of
the Company, all pre-clinical and clinical investigations conducted or
sponsored by it with respect to the Products have been and are being conducted
in compliance with all recommendations of the FDA, 21 C.F.R. Parts 50, 54, 56,
58 and 312 and all other applicable Requirements of Laws, including those with
respect to good laboratory practices, investigational new drug requirements,
good clinical practice requirements (including informed consent and
institutional review boards designed to ensure the protection of the rights and
welfare of human subjects), and federal and state laws restricting the use and
disclosure of individually identifiable health information.

 

3.19                           Insurance. 
The Company and its Subsidiaries maintain, with financially
sound and reputable insurers, insurance in such amounts, including deductible
arrangements, and of such a character as is, in the judgment of the Board of
Directors, reasonable in light of the risks faced by the Company in the conduct
of its business.  All policies of title,
fire, liability, casualty, business interruption, workers’ compensation and
other forms of insurance including, but not limited to, directors and officers
insurance, held by the Company and its Subsidiaries, are in full force and
effect in accordance with their terms. 
Neither the Company nor any of its Subsidiaries is in default in any
material respect under any provisions of any such policy of insurance that has
not been remedied and no such Person has received notice of cancellation of any
such insurance.

 

3.20                           Intellectual Property.  (a)  Schedule 3.20(a) of
the Company Disclosure Letter contains a list and description (showing in each
case the registered or other owner, expiration date and registration or
application number, if any) of all Copyrights, Patent Rights and Trademarks
(including all assumed or fictitious names) owned by, licensed to or used by
the Company or any of its Subsidiaries.

 

(b)                                 Schedule 3.20(b) of
the Company Disclosure Letter contains a list and description (showing in each
case any owner, licensor or licensee) of all material Software licensed to or
used by the Company or any of its Subsidiaries, provided
that Schedule 3.20(b) of the Company Disclosure Letter does
not list mass market Software licensed that is commercially available and
subject to “shrink-wrap” or “click-through” license agreements.  The Company and its Subsidiaries do not own
any Software.

 

(c)                                  Schedule
3.20(c) contains of the Company Disclosure Letter a list and
description of all Contracts that relate to: 
(i) any Copyrights, Patent Rights or Trademarks required to be
identified in Schedule 3.20(a) of the Company
Disclosure Letter; (ii) any Trade Secrets owned by,
licensed to or used by the Company or any of its Subsidiaries; and (iii) any
Software required to be identified in Schedule 3.20(b) of
the Company Disclosure Letter.

 

(d)                                 Except as disclosed in
Schedule
3.20(d) of the Company Disclosure Letter, the Company
either:  (i) owns the entire right,
title and interest in and to the Intellectual Property and

 

*CONFIDENTIAL TREATMENT REQUESTED

 

26

 

Software listed on Schedule 3.20(a) and 3.20(b) of the
Company Disclosure Letter, free and clear of any Liens; or (ii) has the
perpetual, royalty-free right to use the same. 
Except as set forth in Schedule 3.20(d) of the Company
Disclosure Letter, the Company is listed in the records of the appropriate
United States, state or non-U.S. registry as the sole current owner of record
for each application or registration required to be identified in Schedule
3.20(a) of the Company Disclosure Letter as being owned by
the Company or any of its Subsidiaries. 
There exists no “Improvements” under and as defined in Section 3.08
of the Patent License Agreement, dated June 1, 2006, between the Company
and Bracco International BV.  Under the
Collaboration, License and Supply Agreement, dated as of July 6, 2004,
between the Company and Nycomed Danmark ApS, as amended, no indications have
been added to the “Field” (as defined therein), pursuant to Section 3.02(e) thereof
or otherwise.

 

(e)                                  Except as disclosed
in Schedule
3.20(e) of the Company Disclosure Letter:  (i) all registrations for Copyrights,
Patent Rights and Trademarks required to be identified in Schedule
3.20(a) of the Company Disclosure Letter as being owned by
the Company and its Subsidiaries are valid and in force, and all applications
to register any unregistered Copyrights, Patent Rights and Trademarks so
identified are pending and in good standing, all without challenge of any kind;
(ii) the Intellectual Property owned by the Company and its Subsidiaries
has not been cancelled or abandoned and is valid and enforceable; (iii) the
Company has the sole and exclusive right to bring actions for infringement,
misappropriation, dilution, violation or unauthorized use of the Intellectual
Property owned by the Company and its Subsidiaries, and to the Knowledge of the
Company, there is no basis for any such action; (iv) the Company and its
Subsidiaries have taken all actions reasonably necessary to protect and where
necessary register, the Intellectual Property owned by or licensed exclusively
to them; and (v) the Company and its Subsidiaries are not in breach of any
Contract affecting the Intellectual Property used by the Company and its
Subsidiaries and have not taken any action that would impair or otherwise
adversely affect their rights in the Intellectual Property used by the Company
and its Subsidiaries.  Correct and
complete copies of: (x) registrations for all registered Copyrights,
Patent Rights and Trademarks identified in Schedule 3.20(a) of
the Company Disclosure Letter as being owned by the Company and its
Subsidiaries; and (y) all pending applications to register unregistered
Copyrights, Patent Rights and Trademarks identified in Schedule 3.20(a) of
the Company Disclosure Letter as being owned by the Company and its
Subsidiaries (together with any subsequent correspondence or filings relating
to the foregoing) have heretofore been delivered or made available to the
Purchaser by the Company.

 

(f)                                    Except as set forth
in Schedule
3.20(f) of the Company Disclosure Letter:  (i) no infringement, misappropriation,
violation or dilution of any Intellectual Property, or any rights of publicity
or privacy relating to the use of names, likenesses, voices, signatures or
biographical information, of any other Person has occurred or results in any
way from the operations of the Company and its Subsidiaries; (ii) no claim
of any infringement, misappropriation, violation or dilution of any
Intellectual Property or any such rights of any other Person has been made or
asserted in respect of the operations of the Company and its Subsidiaries; (iii) no
claim of

 

*CONFIDENTIAL TREATMENT REQUESTED

 

27

 

invalidity of any Intellectual Property owned by the Company and its
Subsidiaries has been made by any other Person; (iv) no proceedings are
pending or, to the Knowledge of the Company, threatened that challenge the
validity, ownership or use of any Intellectual Property owned by the Company
and its Subsidiaries; and (v) the Company has not had notice of, or to the
Knowledge of the Company is there any basis for, a claim against the Company
and its Subsidiaries that the operations, activities, products, Software,
equipment, machinery or processes the Company and its Subsidiaries infringe,
misappropriate, violate or dilute any Intellectual Property or any such rights
of any other Person.

 

3.21                           Affiliate Transactions.  Except for transactions described
on Schedule 3.21 of the Company Disclosure Letter and except for the
transactions between the Company and the Purchaser, (a)(i) no current
officer, director or employee of the Company or any of its Subsidiaries, (ii) to
the Knowledge of the Company, no former officer, director or employee of the
Company or any of its Subsidiaries, (iii) to the Knowledge of the Company,
no Affiliate or associate of any current officer, director or employee of the
Company or any of its Subsidiaries and (iv) to the Knowledge of the
Company, no Affiliate or associate of any former officer, director or employee
of the Company or any of its Subsidiaries has, directly or indirectly, any
interest in any Contract or property (real or personal, tangible or intangible)
used by the Company or any such Subsidiary or in their respective businesses,
or in any supplier, distributor or customer of the Company or any such
Subsidiary (other than indirectly through such Person’s ownership of the
securities of a corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 1% of the stock of
such corporation is beneficially owned by such Person) and (b) neither the
Company nor any of its Subsidiaries shares any assets, rights or services with
any entity that is controlled by any current officer, director or employee of
the Company or any of its Subsidiaries or, to the Knowledge of the Company, by
any former officer, director or employee of the Company or any of its Subsidiaries.

 

3.22                           Investment Company Act.  Neither the Company nor any of its
Subsidiaries is, and, after giving effect to consummation of the transactions
contemplated hereby and by the other Company Agreements, will be, an “investment
company” or an entity “controlled by” an “investment company” (as such terms
are defined in the Investment Company Act of 1940, as amended).

 

3.23                           Board Approval.  (a)  The Finance Committee of
the Board of Directors, pursuant to the authority delegated to it by the Board
of Directors, at a meeting duly called and held has unanimously determined that
this Agreement and the transactions contemplated by the Transaction Agreements
are advisable and in the best interests of the Company and its stockholders and
has approved this Agreement, the Note, and the other Transaction Agreements and
the transactions contemplated thereby.

 

(b)                                 The Board of Directors
(or a committee thereof) has taken all action required in order to (i) exempt
the Purchaser, in respect to its purchase and conversion of the Note and any
other securities of the Company acquired pursuant to the transactions
contemplated by the

 

*CONFIDENTIAL TREATMENT REQUESTED

 

28

 

Transaction Agreements, from “interested
stockholder” status as defined under Section 203 of the DGCL and (ii) exempt
the transactions contemplated by the Transaction Agreements from the
requirements of, and from triggering any provisions under, any “moratorium,” “control
share,” “fair price,” “interested stockholder,” “affiliate transaction,” “business
combination” or other anti-takeover laws and regulations of any Governmental
Authority.

 

(c)                                  Except as set forth
on Schedule 3.23(c) of the Company Disclosure Letter, no approval of the
Transaction Agreements or of the transactions contemplated thereby by the
holders of any shares of capital stock or Indebtedness of the Company is
required in connection with the execution or delivery of the Transaction
Agreements or the consummation of the transactions contemplated by thereby,
whether pursuant to the DGCL, the Certificate of Incorporation or Bylaws, the rules and
regulations of the NASD, NASDAQ or otherwise.

 

3.24                           Conversion
Shares.  The Conversion Shares
will be duly and validly issued, fully paid and nonassessable and free and
clear of any Liens (other than any Liens granted by the Purchaser), not subject
to preemptive or similar rights and constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms, and such Conversion Shares will be issued in compliance with all
applicable federal and state securities laws, when issued, sold and delivered
in accordance with the terms of the Note and this Agreement.  The Conversion Shares will be listed on
NASDAQ.  No approval of the stockholders
of the Company is required to issue the Note or the Conversion Shares.

 

3.25                           No Brokers or Finders.  No agent, broker, finder, or
investment or commercial banker or other Person (if any) engaged by or acting
on behalf of the Company or any Subsidiary or Affiliate is or will be entitled
to any brokerage or finder’s or similar fee or other commission as a result of
this Agreement, the Note, the other Transaction Agreements or the transactions
contemplated thereby.

 

3.26                           Disclosure. 
Neither this Agreement nor any certificate, instrument or
written statement furnished or made to the Purchaser by or on behalf of the
Company in connection with the transactions contemplated by the Transaction
Agreements contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein in light of the circumstances under which they were made not
misleading.

 

ARTICLE 4

 

REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER

 

The Purchaser hereby represents
and warrants to the Company as follows:

 

4.1                                 Existence and Power.  The Purchaser (a) is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and (b) has all requisite power and

 

*CONFIDENTIAL TREATMENT REQUESTED

 

29

 

authority to execute, deliver and perform its obligations under this
Agreement and the other Transaction Agreements.

 

4.2                                 Authorization; No Contravention.  The execution, delivery and
performance by the Purchaser of this Agreement and each other Transaction
Agreement to which it is a party and the consummation of the transactions
contemplated thereby (a) have been duly authorized by all necessary
corporate or other action, (b) do not contravene the terms of the
Purchaser’s organizational documents and (c) do not violate, conflict with
or result in any breach or contravention of, or the creation of any Lien under,
any Contract of the Purchaser or any Requirement of Law or Order applicable to
the Purchaser, except for such violations, conflicts, breaches or Liens which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on the Purchaser’s ability to
consummate the transactions contemplated by this Agreement and the other
Transaction Agreements.

 

4.3                                 Governmental Authorization; Third Party
Consents.  Except as required
by the HSR Act and except for the consent referred to in Schedule 3.4 of the
Company Disclosure Letter, in each case with respect to the conversion of the
Note, no approval, consent, qualification, order, exemption, authorization or
other action by, or notice to, or filing with, any Governmental Authority, or
any other Person in respect of any Requirement of Law, Order, Contract or
otherwise, and no lapse of a waiting period under a Requirement of Law, is
necessary or required in connection with the execution, delivery or performance
by the Purchaser, or enforcement against the Purchaser, of this Agreement and
each of the other Transaction Agreements to which it is a party or the
consummation of the transactions contemplated thereby, except for the failure
of which to be obtained would not have a material adverse effect on the ability
of the Purchaser to consummate the transactions contemplated by the Transaction
Agreements.

 

4.4                                 Binding Effect.  This Agreement has been duly
executed and delivered by the Purchaser and constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or similar laws affecting creditors’ rights
generally and the general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

 

4.5                                 Purchase for Own Account, Etc.  (a)  Purchase for Own Account.  The Note is being acquired by the
Purchaser for its own account and with no current intention of distributing or
reselling the Note or any part thereof in any transaction that would be in
violation of the securities laws of the United States of America or any state,
without prejudice, however, to the rights of the Purchaser at all times to sell
or otherwise dispose of all or any part of the Conversion Shares under an
effective registration statement under the Securities Act or under an exemption
from said registration available under the Securities Act.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

30

 

(b)                                 Purchaser Status.  The Purchaser is an “Accredited
Investor” (as defined in Rule 501(a)) under the Securities Act.

 

(c)                                  Restricted Shares.  The Purchaser understands (i) Conversion Shares will not (other
than pursuant to the Registration Rights Agreement) be registered under the
Securities Act or any state securities laws, by reason of their issuance by the
Company in a transaction exempt from the registration requirements thereof and (ii) the
Conversion Shares may not be sold unless such disposition is registered under
the Securities Act and applicable state securities laws or is exempt from
registration thereunder.

 

4.6                                 No Brokers or Finders.  Except as contemplated by this
Agreement, no agent, broker, finder, or investment or commercial banker or
other Person (if any) engaged by or acting on behalf of the Purchaser or any of
its Affiliates is or will be entitled to any brokerage or finder’s or similar
fee or other commission as a result of this Agreement, the Transaction
Agreements or the transactions contemplated thereby.

 

4.7                                 Litigation. 
There is no Action pending or, to the knowledge of the
Purchaser, threatened against or affecting the Purchaser or relating to any of
the Transaction Agreements or the transactions contemplated thereby which, if
determined adversely to the Purchaser would have a material adverse effect on
the Purchaser’s ability to consummate the transactions contemplated by the
Transaction Agreements.  The Purchaser is
not subject to any Action that would have a material adverse effect on the
Purchaser’s ability to consummate the transactions contemplated by the
Transaction Agreements.

 

ARTICLE 5

 

COVENANTS OF
THE COMPANY

 

5.1                                 Conduct of Business.  (a)  Except as expressly
contemplated by this Agreement or consented to in writing by the Purchaser,
from the date hereof through the Closing Date, the Company and its Subsidiaries
shall conduct their businesses in the ordinary course, consistent with past
practice.  The Company shall give the
Purchaser prompt notice of any event, condition or circumstance known or that
becomes known to the Company occurring from the date hereof through the Closing
Date that would constitute a violation or breach of (a) any representation
or warranty, whether made as of the date hereof or as of the Closing Date or (b) any
covenant of the Company contained in this Agreement; provided, however, that no such
notification shall relieve or cure any such breach or violation of any such
representation, warranty or covenant or otherwise affect the accuracy of any
such representation or warranty for the purposes of Section 7.1.

 

(b)                                 Without limiting the
provisions of Section 5.1(a), except as otherwise expressly contemplated
by the terms of this Agreement or agreed in writing by the Purchaser, from and
after the date hereof through the Closing Date and following the Closing Date
for so long as (x)

 

*CONFIDENTIAL TREATMENT REQUESTED

 

31

 

the Note remains convertible into Common Stock or (y) the
Purchaser owns a Qualifying Ownership Interest (collectively, the “Restricted Period”), the Company shall not, and will cause
its Subsidiaries not to:

 

(i)                                     amend
the Certificate of Incorporation or Bylaws or the organizational documents of
the Company or any of its Subsidiaries, or increase or decrease its authorized
capital, except (1) as contemplated by Sections 5.1(b)(iv), 6.4 and 6.9 or
Section 7(b) of the Note and (2) as required in order to
designate one or more series of Preferred Stock or to increase the number of
authorized shares of Common Stock, in each case, to the extent necessary to
consummate a Permitted Equity Offering;

 

(ii)                                  recapitalize
or otherwise change its capital structure in a manner that would result in a
change of control of the power to vote 50% or more of the Voting Securities or
other interests of the Company having the voting power to direct or cause the
direction of management policies of the Company;

 

(iii)                               authorize
or issue, or obligate itself to issue, any equity security (including any
Company Option or other security convertible into or exercisable or
exchangeable for any equity security), except for (A) the issuance of the
Note or the Conversion Shares, (B) the issuance of any Common Stock upon
the exercise of Company Options, (C) the issuance of Company Options to
purchase not more than 3,500,000 shares of Common Stock in the aggregate
pursuant to the Company Plans and (D) a Permitted Equity Offering (subject
to the terms of this Agreement including, without limitation, Sections
5.1(b)(ii), 5.2 and 6.1 hereof), or institute any stock option, incentive,
purchase or other similar plans;

 

(iv)                              purchase,
redeem, retire or otherwise acquire, split, combine or reclassify, directly or
indirectly, any of the Common Stock or other equity securities of the Company
or give notice of any intention to exercise any right to purchase, redeem or
otherwise acquire, split, combine or reclassify, any of the Common Stock or
other equity securities of the Company (including any such purchase, redemption
or acquisition in accordance with the terms of the Certificate of Incorporation
or Bylaws or any stockholders agreement), other than (1) redemptions in
accordance with any employee or consultant agreement approved by the Board of
Directors in connection with a separation of service and (2) a reverse
stock split consummated in order to maintain the listing of the Common Stock on
NASDAQ;

 

(v)                                 except
with respect to the shares of 6.5% Convertible Exchangeable Preferred Stock
issued and outstanding as of the Closing Date, declare or pay any dividends on
or make other distributions (whether in cash, stock or property or any
combination thereof), directly or indirectly, in respect of the Common Stock or
other equity securities;

 

*CONFIDENTIAL TREATMENT REQUESTED

 

32

 

(vi)                              enter
into or permit to exist any agreement or undertaking (other than this
Agreement) which prohibits, restricts or limits the ability of any Subsidiary
of the Company to pay dividends or distributions to the Company, or otherwise
to transfer assets or engage in transactions with the Company;

 

(vii)                           form
any material joint venture or partnership;

 

(viii)                        have
a subsidiary which is not wholly-owned by the Company, either directly or
indirectly through one or more of its Subsidiaries;

 

(ix)                                voluntarily
dissolve or liquidate;

 

(x)                                   incur,
create, assume, become or be liable in any manner with respect to, or permit to
exist, any Indebtedness other than (a) the Note, (b) trade payables
incurred in the ordinary course of business, (c) the Indebtedness listed
on Schedule 3.12(a) of the Company Disclosure Letter or (d) other
Indebtedness not to exceed $1,000,000 in the aggregate at any one time
outstanding;

 

(xi)                                enter
into any Contract with respect to the acquisition by the Company (whether by
purchase or merger or consolidation of the Company or any of its Subsidiaries
with another Person) of any business, assets (including by license of any
product) or property (real, personal or mixed, tangible or intangible,
including stock or other equity interests in, or evidences of the indebtedness
of, any other corporation, partnership or entity), other than acquisitions of
assets in the ordinary course of business and consistent with past practice and
other than any such acquisition resulting in an aggregate expenditure by the
Company and its Subsidiaries of less than $100,000;

 

(xii)                             other
than dispositions of the collateral secured by the Liens granted to General
Electric Capital Corporation listed on Schedule 1.1(b) of the Company
Disclosure Letter, sell, lease, license, surrender, relinquish, encumber,
pledge, transfer, assign, amend, convey or otherwise dispose of in one or more
transactions any business, property or assets (whether tangible or intangible)
having an aggregate market value of in excess of $100,000 individually or
$500,000 in the aggregate (it being understood that the foregoing shall not
prohibit any merger, consolidation or reorganization involving the Company
otherwise permitted by this Section 5.1(b));

 

(xiii)                          discontinue,
permit to lapse or otherwise fail to keep in full force and effect any material
policies of insurance or knowingly take any action that would cause any such
policy to terminate or be terminable prior to the expiration of its stated
term;

 

(xiv)                         settle
any Action of, or against, the Company or its Subsidiaries that is in excess of
$100,000;

 

*CONFIDENTIAL TREATMENT REQUESTED

 

33

 

(xv)                            change
any method of accounting or accounting practice used by the Company or any of
its Subsidiaries, except for any change required by GAAP, by any Governmental
Authority or by a change in Requirements of Law;

 

(xvi)                         file a
voluntary petition in bankruptcy or commence a voluntary legal procedure for
reorganization, arrangement, adjustment, release or composition of Indebtedness
in bankruptcy or other similar Requirements of Law now or hereafter in effect,
consent of the entry of an order for relief in an involuntary case under any
such Requirements of Law or apply for or consent to the appointment of a
rescuer, liquidator, assignee, custodian or trustee (or similar office) of the
Company or any of its Subsidiaries;

 

(xvii)                      enter into
the active management or business that is not primarily related to, or in
furtherance of, being a pharmaceutical company focused on the research,
development and commercialization of proprietary healthcare products;

 

(xviii)                   grant any put,
registration or similar rights to any Person that would reasonably be expected
to affect adversely the rights of the Purchaser under this Agreement, the Note
or the other Transaction Agreements;

 

(xix)                           prepare
or file any Tax Return inconsistent with past practice or, on any such Tax Return,
take any position, make any election, or adopt any method that is inconsistent
with positions taken, elections made or methods used in preparing or filing
similar Tax Returns in prior periods;

 

(xx)                              take
any corporate or other action in furtherance of any of the foregoing; or

 

(xxi)                           agree
to do any of the foregoing.

 

(c)                                  Without limiting Section 5.1(b)(v),
so long as the Note remains outstanding, the Company shall not declare or pay
any dividends on or make other distributions (whether in cash, stock or
property or any combination thereof), directly or indirectly, in respect of the
Common Stock without the prior written consent of the Purchaser.

 

(d)                                 To the extent
permitted by applicable Requirements of Law, the Company agrees to treat the
Note as indebtedness for United States federal tax purposes.

 

5.2                                 No Solicitation.  Without limiting the Company’s
other obligations under this Agreement, the Company agrees that, from the date
hereof until the Closing, neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall use
its reasonable best efforts to cause its and its Subsidiaries’ employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

34

 

its Subsidiaries) not to, directly or indirectly, (a) initiate,
solicit, encourage or knowingly facilitate (including by way of furnishing
information) any inquiries or the making of any proposal or offer with respect
to, or a transaction to effect, a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving it or any of its Subsidiaries, or any purchase
or sale of 15% or more of the consolidated assets (including without limitation
stock of its Subsidiaries) of it and its Subsidiaries, taken as a whole, or any
purchase or sale of, or tender or exchange offer for, the equity securities of
the Company that, if consummated, would result in any Person (or the
stockholders of such Person) beneficially owning or having the right to acquire
securities representing 15% or more of the Voting Securities (or of the surviving
parent entity in such transaction) (any such proposal, offer or transaction,
including any single or multi-step transaction or series of related
transactions (other than a proposal or offer made by the Purchaser or any of
its Affiliates) being hereinafter referred to as an “Acquisition Proposal”), (b) have any discussion
with or provide any confidential information or data to any Person relating to
an Acquisition Proposal, or engage in any negotiations concerning an
Acquisition Proposal, or take action to facilitate any effort or attempt to
make or implement an Acquisition Proposal, (c) approve or recommend, or
propose publicly to approve or recommend, any Acquisition Proposal or (d) approve
or recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement relating to an
Acquisition Proposal (an “Acquisition Agreement”)
or propose publicly or agree to do any of the foregoing related to any
Acquisition Proposal; provided,
however, that the provisions of this Section 5.2 (except for
the last five (5) sentences of this Section 5.2) shall not apply to
discussions with respect to a Permitted Equity Offering with the Persons listed
on Schedule 5.2 of the Company Disclosure Letter; provided,
further, however, the foregoing shall not prohibit the Company, (i) from
complying with Rule 14e-2 and Rule 14d-9 under the Exchange Act with
regard to a bona fide tender
offer or exchange offer or (ii) from participating in negotiations or
discussions with or furnishing information to any Person in connection with an
unsolicited bona fide Acquisition
Proposal which is submitted in writing by such Person to the Board of Directors
after the date hereof; provided,
further, however, that prior to participating in any such
discussions or negotiations or furnishing any information, (A) the Company
receives from such Person an executed confidentiality agreement on terms no
less favorable to the Company than the Confidentiality Agreement, a copy of
which shall be provided only for informational purposes to the Purchaser and (B) the
Board of Directors shall have concluded in good faith, after consulting with
its outside financial advisors and counsel, that such Acquisition Proposal is
reasonably likely to be or to result in a Superior Acquisition Proposal (as
defined below).  If, prior to the
Closing, the Board of Directors receives an Acquisition Proposal, the Company
shall promptly (and in no event later than 24 hours after receipt of such
Acquisition Proposal) inform the Purchaser in writing of the terms and
conditions of such proposal and the identity of the Person making it, and will
keep the Purchaser informed, on a current basis, of the status and terms of any
such proposals or offers by any Person (whether written or oral).  The Company will, and will cause its
Affiliates to, immediately cease and cause to be terminated any activities,
discussions or

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

35

 

negotiations existing as of the date hereof with any Persons (other
than the Purchaser and its Affiliates) conducted heretofore with respect to any
Acquisition Proposal, and request the return or destruction of all non-public
information furnished in connection therewith. 
The Company shall not release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which such party
or its Subsidiaries is a party.  If,
prior to the Closing, the Board of Directors receives a Superior Acquisition
Proposal that was not initiated, solicited, encouraged or facilitated in breach
of this Agreement and the Board of Directors determines in good faith, after
consultation with outside counsel, that it is necessary to do so in order to
comply with the directors’ fiduciary obligations to the Company’s stockholders
under applicable Requirements of Law, the Board of Directors may terminate this
Agreement and cause the Company to enter into an Acquisition Agreement with
respect to the Superior Acquisition Proposal; provided,
that the Company shall not be entitled to terminate this Agreement pursuant to
this Section 5.2 if the Company is not in compliance with the process of
this Section 5.2; provided, further, that the Board of Directors may not take the
actions specified above unless (1) the Board of Directors shall have first
provided prior written notice to the Purchaser of its intention to take such
actions, which notice shall describe the material terms of the transaction that
constitutes such Superior Acquisition Proposal, and shall attach the most
current draft of any written agreement relating thereto (if available) and (2) the
Purchaser does not make, within three (3) Business Days after the receipt
of such notice, a revised offer that the Board of Directors determines, in good
faith, after consultation with outside counsel and its financial advisor, is at
least as favorable to the stockholders of the Company as such Superior
Acquisition Proposal (a “Response Proposal”).  The Company agrees that during the three (3) Business
Day period prior to its effecting the actions specified above, the Company (as
directed by the Board of Directors) and its representatives shall negotiate in
good faith with the Purchaser regarding a possible Response Proposal to be
submitted by the Purchaser.  The Company
acknowledges and agrees that each successive material modification of a
Superior Acquisition Proposal shall be deemed to constitute a new Superior
Acquisition Proposal for purposes of this Section 5.2.  “Superior Acquisition
Proposal” means any written proposal made by any Person (other than
the Purchaser or its Subsidiaries) to acquire at least 75% of the equity
securities or consolidated assets of the Company, pursuant to a tender or
exchange offer, a merger, a consolidation, a liquidation or dissolution, a
recapitalization, or a sale of its assets, (x) on terms which the Board of
Directors determines in good faith after consultation with its outside counsel
and financial advisor to be more favorable from a financial point of view to
the Company’s stockholders than the transactions contemplated by this Agreement
and the other Transaction Agreements, taking into account all the terms and
conditions of such proposal and this Agreement (including any Response Proposal
by the Purchaser) and (y) that is reasonably capable of being completed,
taking into account all financial, regulatory, legal and other aspects of such
proposal.

 

5.3                                 Regulatory Approval; Litigation.  (a)  Each of the Purchaser
and the Company agrees that it will use its reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, and to assist
and cooperate with the other party in doing all things, which may be required
to obtain all necessary actions or non-actions, waivers, consents and approval
from

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

36

 

Governmental Authorities required to consummate the transactions
contemplated by the Transaction Agreements; provided, however, that, in
connection with obtaining any such action, non-action, waiver, consent or
approval, the Purchaser shall not be required to agree, and the Company,
without the written consent of the Purchaser shall not agree, to any condition
or action that the Purchaser reasonably believes would, individually or in the
aggregate, adversely affect Purchaser’s ability to obtain the benefits
(financial or otherwise) of the transactions contemplated by the Transaction Agreements.

 

(b)                                 The Company will act
diligently and reasonably in attempting to obtain, before the Closing Date, the
consent, approval or waiver, in form and substance reasonably satisfactory to
the Purchaser, from any party to any Company Agreement required to be obtained
to assign or transfer any such Agreements to the Purchase or to otherwise
satisfy the conditions set forth in Section 7.1;
provided, that neither the Company nor
the Purchaser shall have any obligation to offer or pay any consideration in
order to obtain any such consents or approvals; and provided, further, that the Company, without the written
consent of the Purchaser, shall not make any agreement or understanding, agree
to any condition or action that the Purchaser reasonably believes would,
individually or in the aggregate, adversely affect the Purchaser’s ability to
obtain the benefits of (financial or otherwise) of the transactions
contemplated by the Transaction Agreements.

 

(c)                                  During the period
prior to the Closing Date, the Company will notify the Purchaser of (i) any
Material Adverse Effect in the Company, (ii) any Action that is
threatened, brought, asserted or commenced against the Company or any of its
Subsidiaries which would have been listed in Schedule 3.11 of the Company Disclosure
Letter if such Action had arisen prior to the date hereof, (iii) any
notice or other communication from any third Person alleging that the consent
of such third Person is or may be required in connection with the transactions
contemplated by the Transaction Agreements and (iv) any material default
under any Company Agreement or event which, with notice or lapse of time or
both, would become such a default on or prior to the Closing Date and of which
the Company has knowledge.

 

5.4                                 Access; Information Rights.  (a) 
Except as otherwise expressly contemplated by the terms of this Agreement or
agreed in writing by the Purchaser, from and after the date hereof and for so
long as (x) the Note remains outstanding, (y) the Purchaser owns at
least 5% of the Voting Securities or (z) the Purchaser is required to
include or reflect the financial results of the Company in the Purchaser’s
financial statements included in its reports filed with the Commission
(collectively, the “Holding Period”),
upon reasonable notice, the Company shall (and shall cause its Subsidiaries to)
permit (i) the officers, employees, accountants, counsel, financial
advisors and other representatives of the Purchaser reasonable access during
normal business hours to all of its books, records, properties and personnel
(including the ability to discuss the Company’s affairs, finances and accounts
with its officers) and (ii) reasonable access during normal business hours
for the independent registered public accounting firm of the Purchaser to
perform audit procedures as needed to support work on the Purchaser’s audit.

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

37

 

(b)                                 During the Holding
Period, the Company shall deliver to the Purchaser:

 

(i)                                     as
soon as practicable, but in any event within ninety (90) days after the end of
each fiscal year of the Company, an income statement for such fiscal year, a
balance sheet of the Company and statement of stockholders’ equity as of the
end of such year, and a schedule as to the sources and applications of funds
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with GAAP, and audited and certified by independent
public accountants of nationally recognized standing selected by the Company;

 

(ii)                                  as
soon as practicable, but in any event within forty-five (45) days after the end
of each of the first three (3) quarters of each fiscal year of the
Company, an unaudited profit or loss statement and schedule as to the sources and
application of funds for such fiscal quarter and an unaudited balance sheet as
of the end of such fiscal quarter;

 

(iii)                               within
five (5) days of the end of each month, an unaudited income statement and
schedule as to the sources and application of funds and balance sheet for and
as of the end of such month, in reasonable detail and, within ten (10) days
of the end of each month, additional supporting documents and schedules
reasonably requested by the Purchaser, each prepared using accounting policies
reasonably acceptable to the Purchaser;

 

(iv)                              as
soon as practicable, but in any event fifteen (15) days prior to the end of
each fiscal year or fiscal quarter, as applicable, a budget and business plan
for the next fiscal year or fiscal quarter, as applicable, prepared on a
monthly basis, including balance sheets and sources and applications of funds
statements for such months and, as soon as prepared, any other budgets or
revised budgets prepared by the Company

 

(v)                                 with
respect to the financial statements called for in subsections (i), (ii) and
(iii) of this Section 5.4(b), an instrument executed by the chief
financial officer or chief executive officer of the Company and certifying that
such financials were prepared in accordance with GAAP consistently applied with
prior practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment;

 

(vi)                              a
copy of each report, schedule, registration statement and other document filed,
published, announced or received by the Company pursuant to the requirements of
Federal or state laws, as applicable; and

 

(vii)                           such
other information relating to the financial condition, business, properties,
personnel, prospects or corporate affairs of the Company as the Purchaser may
from time to time request.

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

38

 

The Purchaser will hold any information
obtained pursuant to this Section 5.4 in confidence in accordance with,
and will otherwise be subject to, the provisions of the Confidentiality
Agreement (it being understood that the Purchaser shall be permitted to
disclose such information to the extent required by applicable Requirements of
Law or the rules of any applicable securities exchange).  Any investigation by the Purchaser shall not
affect the representations and warranties of the Company or the conditions to
its obligations to consummate the transactions contemplated by this Agreement.

 

5.5                                 Notice to
Stockholders.  As soon as
practicable after the execution of this Agreement (but in no event later than
three (3) days after the date hereof), the Company shall (i) mail to all
of its stockholders a written notice complying with the NASDAQ Voting Exception
Provisions, in such form as shall be reasonably acceptable to the Purchaser
(the “Company Stockholder Notice”), and (ii) make
a public announcement, in such form as shall be reasonably acceptable to the
Purchaser, complying with the NASDAQ Voting Exception Provisions (the “NASDAQ Announcement”).

 

ARTICLE 6

 

OTHER AGREEMENTS

 

6.1                                 Preemptive
Rights.  During the Restricted
Period, in the event that the Company proposes to sell or otherwise issue
shares of Common Stock or other Voting Securities (or any warrants, options or
rights to acquire shares of Common Stock, other Voting Securities or other
securities convertible or exchangeable for shares of Common Stock, other Voting
Securities or securities convertible or exchangeable for securities that are
convertible or exchangeable for shares of Common Stock or other Voting
Securities (“Convertible Securities”), the
Purchaser shall have the right to acquire that number or amount of such shares
of Common Stock, other Voting Securities of Convertible Securities, at the
price and upon substantially the same terms and conditions as such shares of
Common Stock, other Voting Securities or Convertible Securities are to be sold
or otherwise issued to third parties, as shall enable the Purchaser to
maintain, on a fully diluted basis and assuming the conversion of all
Convertible Securities (including the Note) in accordance with their terms, the
greater of the percentage interest held by the Purchaser in the shares of
Common Stock and the percentage interest held by the Purchaser in the Voting
Securities.  No shares of Common Stock,
other Voting Securities or Convertible Securities shall be issued by the Company
to any Person unless the Company has first offered such shares of Common Stock,
other Voting Securities or Convertible Securities to the Purchaser pursuant to
this Section 6.1.  To the extent
applicable, any such notice shall be delivered to the Purchaser in reliance on Rule 100(b)(2)(ii) of
Regulation FD promulgated by the Securities and Exchange Commission.  This Section 6.1 shall not apply to (a) the
issuance of shares of Common Stock pursuant to the exercise of any Company
Option listed on Schedule 3.6 of the Company Disclosure Letter or (b) the
issuance of stock options pursuant to the Company Plans.

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

39

 

6.2                                 Registration Rights.  The Company shall not grant any
right of registration under the Securities Act relating to any of its
securities to any Person other than the Purchaser if such rights would or could
reasonably be expected to frustrate, impede or limit the Purchaser’s rights
pursuant to the Registration Rights Agreement.

 

6.3                                 Rule 144.  The Company shall file all reports
required to be filed by it under the Securities Act and the Exchange Act and
shall take such further action as the Purchaser may reasonably request, all to
the extent required to enable the Purchaser to sell the Common Stock into which
the Note may be converted pursuant to and in accordance with Rule 144.  Such action shall include, but not be limited
to, making available adequate current public information meeting the
requirements of paragraph (c) of Rule 144.

 

6.4                                 Availability of Common Stock.  The Company shall at all times
reserve and keep available out of its authorized but unissued Common Stock, for
the purpose of effecting the conversion of the Note, at least the full number
of shares of Common Stock then issuable upon the conversion of the Note.  The Company will, from time to time, take the
actions specified in Section 7 of the Note to increase the authorized
amount of Common Stock if at any time the number of shares of Common Stock
remaining unissued and available for issuance shall be insufficient to permit
conversion of the Note.

 

6.5                                 No Rights Plan.  From the date hereof through the
Closing Date and following the Closing Date for the Restricted Period, without
the prior written consent of the Purchaser, the Company shall not adopt or
enter into any “poison pill” rights plan or any similar plan or agreement or
declare or pay any dividend of any rights to purchase stock of the Company in
connection with such a plan or agreement.

 

6.6                                 Legends. 
Any legends placed on the Conversion Shares or other
securities issuable, if any, pursuant to the transactions contemplated by the
Transaction Agreements shall be removed by the Company upon delivery of an
opinion of counsel reasonably acceptable to the Company stating that such legend
is no longer necessary.

 

6.7                                 Board of
Directors.  (a)  From and
after the conversion of the Note and for so long as the Purchaser owns a
Qualifying Ownership Interest, the Purchaser shall have the right to designate that number of nominees to the Board of
Directors such that the total number of directors designated by the Purchaser
is at least proportional to (and not
less than) the Purchaser Percentage Interest; provided,
that, to the extent that the proportional number of designees to the Board of
Directors that the Purchaser is entitled to designate based on the Purchaser
Percentage Interest shall not be a whole number (because of the size of the
Board of Directors), the number of nominees to the Board of Directors that the
Purchaser shall be entitled to designate shall be rounded up to the next higher whole number.  So long as Frank Baldino shall be an
executive officer or director of the Purchaser, he shall be one of the
directors designated by the Purchaser pursuant to this Section 6.7(a).  The Purchaser’s nominees to the Board of
Directors shall satisfy all applicable Requirements of Law relating to service
as a director of the Company.  The Board

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

40

 

of Directors may elect to (a) increase
the size of the Board of Directors, (b) fill any vacancies resulting from
resignations, or (c) a combination of (a) and (b) to accomplish
the proportional representation of the Purchaser on the Board of Directors
pursuant to this Section 6.7(a); provided, that,
to the extent necessary to comply with applicable Requirements of Law or
applicable stock exchange rules, the Board of Directors shall increase the size
of the Board of Directors to accomplish proportional representation of the
Purchaser’s nominees on the Board of Directors pursuant to this Section 6.7(a).  The Company shall be required to recommend to
its stockholders the election of such designees of the Purchaser to the Board
of Directors at the Company’s stockholder meetings and shall
solicit proxies for them to the same extent as it does for any of its other
nominees to the Board of Directors.  So long as the Purchaser’s designated
nominees are members of the Board of Directors, any transactions between the
Purchaser and the Company shall be approved by a special committee of the Board
of Directors consisting entirely of directors that are independent of the
Purchaser.

 

(b)                                 Within five (5) Business
Days of the conversion of the Note, the Board of Directors and the Company shall
take or cause to be taken all necessary action not previously taken (including
any necessary Bylaw amendments to cause the numbers of directors constituting
the Board of Directors to be increased) to the extent necessary to accomplish
the proportional representation of the Purchaser’s nominees to the Board of
Directors pursuant to Section 6.7(a).

 

(c)                                  Each committee of the
Board of Directors (other than (i) any special committee or committee of
independent directors that may be constituted for purposes of making any
determination with respect to any agreement or transaction between the
Corporation and the Purchaser and (ii) the audit committee, the
compensation committee and the nominating committee) shall at all times include
a number of directors designated by the Purchaser that is at least proportional
to the Purchaser Percentage Interest.  To
the extent permitted by applicable Requirements of Law and applicable stock
exchange rules, the audit committee, the compensation committee and the
nominating committee of the Board of Directors shall, at the option of the
Purchaser, each have one member designated by the Purchaser. Any director
designated by the Purchaser to serve on any committee may designate as his or
her alternate another director designated by the Purchaser.

 

6.8                                 Takeover Statutes.  If any “fair price,” “moratorium,” “control
share acquisition” or other form of antitakeover statute or regulation shall
become applicable to the transactions contemplated by the Transaction
Agreements, the Board of Directors of the Company shall grant such approvals
and take such actions as are reasonably necessary so that the transactions
contemplated by the Transaction Agreements may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated by the Transaction Agreements.

 

6.9                                 Amendments
to the Certificate of Incorporation. 
During the Restricted Period, the Purchaser may at any time by delivery
of written notice to the Company (a “Governance Notice”)
request that the Company take all actions necessary to enact the Certificate
Amendment

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

41

 

(as defined below).  As promptly
as practicable following the Governance Notice, the Company shall call and hold
a meeting of its stockholders to seek approval of the Certificate Amendment, shall
file with the Commission a proxy statement and use its best efforts to solicit
proxies in favor of the Certificate Amendment, and shall use its best efforts
to respond to any comments of the Commission or its staff and to cause a
definitive proxy statement related to such stockholders’ meeting to be mailed
to the Company’s stockholders. The Board of Directors shall recommend the
Certificate Amendment and such recommendation shall be included in the proxy
statement filed with the Commission and disseminated to Company stockholders in
connection with such stockholders meeting. The “Certificate
Amendment” shall mean an amendment to the Certificate of
Incorporation that, at the sole discretion of the Purchaser, (i) will
provide that the Company expressly elects not to be governed by Section 203
of the DGCL and/or (ii) will provide that each member of the Board of
Directors shall be elected annually for a one (1) year term.

 

6.10                           Imagify
Product.  (a)  From the
date hereof until the date that is one (1) year following the Closing Date
(the “Imagify Restriction Period”), the Company
shall not sell, license, pledge, transfer, assign or convey any right of the
Company or its Subsidiaries relating to the Imagify Product in the Territory
(as defined in the Imagify License), or enter into any Contract relating to any
of the foregoing.

 

(b)                                 During the Imagify
Restriction Period, the Company shall, at its sole expense, pay all maintenance
fees, maintain the existence and present status of any existing registrations,
diligently prosecute all pending applications for patents included within the
Intellectual Property relating to or embodied in the Imagify Product, and
maintain the existence and status, as issued, of any patents issued pursuant to
any pending applications for patents included within the Intellectual Property
relating to or embodied in the Imagify Product necessary to make, have made,
sell, use or import the Imagify Product. 
If the Company (i) fails to pay any applicable maintenance fees, (ii) elects
not to prosecute any applications for registration, or (iii) otherwise
fails to maintain its ownership interest in any patent or application included
within the Intellectual Property relating to or embodied in the Imagify
Product, then it shall promptly provide notice thereof to the Purchaser and,
without limiting the Purchaser’s other rights hereunder or otherwise, the
Purchaser shall then have the option to pay the fee, or prosecute or maintain
the patent or application, that is the subject of the notice.  During the Imagify Restriction Period, if the
Company becomes aware of any infringement of the Intellectual Property relating
to or embodied in the Imagify Product, or any assertion that the Imagify
Product or any part thereof infringes or violates the Intellectual Property of
any other Person, it shall promptly notify the Purchaser thereof.  The Company shall take all reasonable
actions, at its sole cost, to enforce the Intellectual Property relating to or
embodied in the Imagify Product or defend the Imagify Product, as the case may
be, and the Company shall be entitled to retain all damages obtained as a
result thereof; provided, however,
that the Company shall not settle any such enforcement or defense proceeding
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.  The Company shall
keep the Purchaser

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

42

 

reasonably informed of any actions or suits under this Section 6.10(b).  The Purchaser shall have the right, at its
own cost, to participate in all decisions and actions concerning the validity
of any Intellectual Property relating to or embodied in the Imagify Product,
including the right to join as a party any such Action for infringement brought
by or against the Company with respect to any Intellectual Property relating to
or embodied in the Imagify Product where a defense or claim of patent
invalidity or unenforceability has been or will be raised.  The Purchaser shall have the right to retain
its own counsel, at its own expense, for the purpose of defending the validity
or enforceability of any of the Intellectual Property relating to or embodied
in the Imagify Product.

 

ARTICLE 7

 

CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE

 

7.1                                 Conditions to Closing.  The obligation of the Purchaser to
enter into and complete the Closing are subject to the fulfillment on or prior
to the Closing Date of the following conditions, any one or more of which may
be waived by the Purchaser:

 

(a)                                  The representations
and warranties of the Company contained in this Agreement shall be true and
correct in all material respects (other than those which are qualified as to
materiality, Material Adverse Effect or other similar term, which shall be true
and correct in all respects) on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date (except that
representations and warranties made as of a specific date shall be true and
correct in all material respects (except as aforesaid) on such date); the
Company shall have performed and complied with in all material respects all
covenants and agreements required by this Agreement to be performed or complied
with by the Company on or prior to the Closing Date; and the Company shall have
delivered to the Purchaser a certificate, dated the date of the Closing Date
and signed by an executive officer of the Company, to the foregoing effect.

 

(b)                                 No Action shall be
pending or threatened by any Governmental Authority or any other party against
the Company or any of its directors or the Purchaser, which Action is
reasonably likely to (i) restrain or prohibit the consummation of any of
the transactions contemplated by the Transaction Agreements, or (ii) result
in damages that alone or together with the costs and expenses of defending such
Action are material in relation to the Company and its Subsidiaries, taken as a
whole.

 

(c)                                  No Requirement of Law
or Order shall have been enacted, entered, promulgated or enforced by any
Governmental Authority that prohibits or makes illegal the consummation of any
of the transactions contemplated by the Transaction Agreements.

 

(d)                                 Since the date hereof,
no event or development shall have occurred (or failed to occur) and there
shall be no circumstance (and the Purchaser shall not have become aware of any

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

43

 

previously existing circumstance) that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.

 

(e)                                  The consents listed
on Schedule 7.1(e) of the Company Disclosure Letter shall have been
obtained and delivered to Purchaser.

 

(f)                                    The parties shall
have received all approvals and actions of or by all Governmental Authorities
which are necessary to consummate the transactions contemplated by the
Transaction Agreements, which are either specified in Schedule 3.4 of the
Company Disclosure Letter or otherwise required to be obtained prior to the
Closing by applicable Requirements of Laws or which are necessary to prevent a
Material Adverse Effect.

 

(g)                                 The Certificate of Incorporation shall have been
amended to increase the authorized Common Stock from 98,500,000 shares to
250,000,000 shares.

 

(h)                                 A period of at least ten (10) days shall have
elapsed since the mailing by the Company of the Company Stockholder Notice and
the issuance by the Company of the NASDAQ Announcement, in each case, in
accordance with Section 5.5.

 

(i)                                     The shares of
Common Stock issuable upon conversion of the Note shall have been approved for
listing on NASDAQ, subject only to official notice of issuance.

 

(j)                                     The Company shall
have entered into the Note, the Assignment Agreement, the Security Agreement,
the Registration Rights Agreement and the Celecoxib License Agreement.

 

ARTICLE 8

 

CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE

 

8.1                                 Conditions to Closing.  The obligation of the Company to
enter into and complete the Closing are subject to the fulfillment on or prior
to the Closing Date of the following conditions, any one or more of which may
be waived by the Company:

 

(a)                                  The representations
and warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date (except that
representations and warranties made as of a specific date shall be true and
correct in all material respects on such date); the Purchaser shall have
performed and complied with in all material respects all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date; and the Purchaser shall have delivered to the
Company a certificate, dated the date of the Closing Date and signed by an
executive officer of the Purchaser, to the foregoing effect.

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

44

 

(b)                                 No Action shall be
pending or threatened by any Governmental Authority or any other party against
the Company or any of its directors or the Purchaser, which Action is
reasonably likely to (i) restrain or prohibit the consummation of any of
the transactions contemplated by the Transaction Agreements or (ii) result
in damages that alone or together with the costs and expenses of defending such
Action are material in relation to the Company and its Subsidiaries, taken as a
whole.

 

(c)                                  No Requirement of Law
or Order shall have been enacted, entered, promulgated or enforced by any
Governmental Authority that prohibits or makes illegal the consummation of any
of the transactions contemplated by the Transaction Agreements.

 

(d)                                 A period of at least ten (10) days shall have
elapsed since the mailing by the Company of the Company Stockholder Notice and
the issuance by the Company of the NASDAQ Announcement, in each case, in
accordance with Section 5.5.

 

(e)                                  The parties shall
have received all approvals and actions of or by all Governmental Authorities
which are necessary to consummate the transactions contemplated by the
Transaction Agreements, which are either specified in Schedule 3.4 of the
Company Disclosure Letter or otherwise required to be obtained prior to the
Closing by applicable Requirements of Laws.

 

ARTICLE 9

 

TERMINATION OF AGREEMENT

 

9.1                                 Termination. 
(a)  This Agreement may be terminated prior to the
Closing as follows:

 

(i)                                     by
either the Purchaser or the Company if the Closing shall not have occurred
before  November 14,  2008;
provided, however,
that the right to terminate this Agreement under this Section 9.1(a)(i) shall
not be available to any party whose failure to perform any covenant or
obligation under this Agreement or breach of a representation or warranty has
been the cause of or resulted in the failure of the Closing to occur on or
before such date;

 

(ii)                                  at
the election of the Purchaser, if prior to the Closing Date there shall have
been a breach of any of the Company’s representations, warranties, covenants or
agreements, which breach would result in the failure to satisfy any of the
conditions set forth in Section 7.1, and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured within
fifteen (15) days after written notice thereof shall have been received by the
Company;

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

45

 

(iii)                               at
the election of the Company, if prior to the Closing Date there shall have been
a breach of any of the Purchaser’s representations, warranties, covenants or
agreements, which breach would result in the failure to satisfy any of the
conditions set forth in Section 8.1, and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured within
fifteen (15) days after written notice thereof shall have been received by the
Purchaser;

 

(iv)                              at
the election of the Company or the Purchaser, if any Governmental Authority has
taken any Action, which Action is final and not subject to appeal, seeking to
prevent the consummation of the Closing or any other transaction contemplated
by the Transaction Agreements;

 

(v)                                 at
the election of the Purchaser, if the Company shall enter into an Acquisition
Agreement with respect to an Acquisition Proposal;

 

(vi)                              at
the election of the Company in accordance with Section 5.2; or

 

(vii)                           at any
time on or prior to the Closing Date, by mutual written consent of the Company
and the Purchaser.

 

(b)                                 Any party desiring to
terminate this Agreement pursuant to this Section 9.1 shall give notice of
such termination to the other party to this Agreement.

 

9.2                                 Survival. 
If this Agreement is terminated pursuant to this Article 9,
all further obligations of the parties under this Agreement (other than
Sections 9.2, 10.1 and 10.2 and Article 11) shall be terminated without
further liability of any party to the other; provided
that nothing herein shall relieve any party from liability for its willful
breach of this Agreement.

 

ARTICLE 10

 

INDEMNIFICATION

 

10.1                           Indemnification.  The Company hereby agrees to
indemnify, defend and hold harmless the Purchaser, its Affiliates and its
directors, officers, agents, advisors, representatives, employees, successors
and assigns (each, a “Purchaser
Indemnitee”)
from and against all Claims, including without limitation, interest, penalties
and attorneys’ fees and expenses, asserted against, resulting to, or imposed
upon or incurred by such Purchaser Indemnitee by a third party and arising out
of or resulting from any allegation or Action in respect of any wrongful action
or inaction by the Company in connection with the authorization, execution,
delivery and performance of this Agreement or the Transaction Agreements,
except to the extent that the Purchaser Indemnitee has committed a material
breach of its representations, warranties or obligations under this Agreement,
which breach is the cause of the Company’s wrongful action or inaction.  If the Closing occurs, any payment by the
Company to any Purchaser

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

46

 

Indemnitee pursuant to this Section 10.1 shall be treated for all
income tax purposes as an adjustment to the price paid by the Purchaser for the
Note pursuant to this Agreement.

 

10.2                           Terms of Indemnification.  The obligations and liabilities of
the Company with respect to Claims resulting from any Action by third parties
will be subject to the following terms and conditions: (a) a Purchaser
Indemnitee will give the Company prompt notice of any the facts giving rise to
any Claim to be indemnified herewith; provided that the failure of any Purchaser Indemnitee to
give notice as provided in this Section 10.2 shall not relieve the Company
of its obligations under this Article 10, except to the extent that such
failure has materially and adversely affected the rights of the Company; (b) such
Purchaser Indemnitee will have the right to undertake the defense, compromise
or settlement of such Claims on behalf of and for the account and at the risk
of the Company using counsel of its choice, the fees and expenses of which
shall be paid by the Company; provided, that
the Purchaser Indemnitee shall not subject, without the prior written consent
of the Company, settle or compromise any Claim or consent to entry of any
judgment relating to any such Claim; and (c) the Company will provide each
Purchaser Indemnitee reasonable access to all records and documents of the
Company relating to any Claim.

 

ARTICLE 11

 

MISCELLANEOUS

 

11.1                           Survival. 
All representations and warranties, covenants and agreements
of the Company and the Purchaser contained in this Agreement shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Purchaser or any controlling Person thereof or by or on
behalf of the Company, any of its officers and directors or any controlling
Person thereof; provided, that the
representations and warranties contained in Article 3 and 4 shall
terminate on the third anniversary of the Closing Date.  Except as otherwise provided herein, no Claim
shall be made for the breach of any representation or warranty contained in
Articles 3 or 4 after the date on which such representation or warranty
terminates as set forth in this Section 11.1.  The covenants and agreements contained herein
shall survive in accordance with their terms.

 

11.2                           Fees and Expenses.   (a)  Except as
provided below, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated by the Transaction Agreements shall
be paid by the party incurring such fees or expenses, whether or not such
transactions are consummated.

 

(b)                                 The Company shall pay
to the Purchaser a fee of $1,250,000 if (i) the Company terminates this
Agreement (A) pursuant to Section 9.1(a)(vi) or (B) pursuant
to Section 9.1(a)(i) and (1) prior to such termination any
Person shall have made and not withdrawn (or publicly disclosed its intentions
to make) an Acquisition Proposal and (2) within twelve (12) months of such
termination pursuant to Section 9.1(a)(i) the Company enters into an
Acquisition

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

47

 

Agreement with respect to, or consummates, an Acquisition Proposal with
a Person who made an Acquisition Proposal prior to such termination of this
Agreement or (ii) the Purchaser terminates this Agreement pursuant to Section 9.1(a)(v).

 

(c)                                  Any payments due
under this Section 11.2 shall be paid by wire transfer of same-day funds
within one (1) Business Day after becoming payable hereunder.

 

(d)                                 The parties agree that
the agreements contained in this Section 11.2 are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
the parties would not enter into this Agreement; accordingly, if either party
fails to pay within the time period set forth in Section 11.2(c) any
amounts due under this Section 11.2 and, in order to obtain such payment,
the other party commences a suit that results in a judgment against the
defaulting party for such amounts, the defaulting party shall pay interest on
such amounts from the date payment of such amounts were due to the date of
payment at the prime rate as quoted by Bank of America, NA as in effect on the date
such payment was due, together with the cost and expenses of the other party
(including reasonable legal fees and expenses) in connection with such suit.

 

11.3                           Notices. 
All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile
(with receipt confirmed telephonically) or sent by certified, registered or
express mail, postage prepaid.  Any such
notice shall be deemed given if delivered personally or facsimile, on the date
of such delivery or such confirmation is received, or if sent by reputable
overnight courier, on the first Business Day following the date of such
mailing, as follows:

 

(a)                                  if to the Company:

 

	
  Acusphere, Inc.  

  
	
  500 Arsenal
  Street

  
	
  Watertown,
  Massachusetts 02472

  
	
  Attn: Chief
  Executive Officer

  
	
  Facsimile:
  (617) 926-3605

  
	
   

  
	
  with a copy
  to (which shall not constitute notice):

  
	
   

  
	
  Goodwin
  Procter LLP

  
	
  Exchange
  Place 

  
	
  53 State
  Street

  
	
  Boston,
  Massachusetts 02109

  
	
  Attn:
  Lawrence S. Wittenberg

  
	
  Facsimile:
  (617) 570-1231

  

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

48

 

(b)                                 if to the Purchaser:

 

	
  Cephalon, Inc.

  
	
  41 Moores
  Road

  
	
  Frazer,
  Pennsylvania 19355

  
	
  Attn:
  General Counsel

  
	
  Facsimile:
  (610) 738-6258

  
	
   

  
	
  with a copy
  to (which shall not constitute notice):

  
	
   

  
	
  Sidley
  Austin LLP

  
	
  One South
  Dearborn

  
	
  Chicago,
  Illinois 60603

  
	
  Attn: Pran
  Jha

  
	
  Facsimile:
  (312) 853-7036

  

 

Any party may by notice given in accordance
with this Section 11.3 designate another address or Person for receipt of
notices hereunder.

 

11.4                           Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto.  Other than the parties
hereto and their successors and permitted assigns, and except as set forth in Article 10,
no Person is intended to be a beneficiary of this Agreement.  No party hereto may assign its rights under
this Agreement without the prior written consent of the other party hereto; provided, however,
that, without the prior written consent of the Company, (a) prior to the
Closing the Purchaser may assign all or any portion of its rights hereunder
(along with the corresponding obligations) to any Affiliate of the Purchaser
and (b) after the Closing the Purchaser may assign all or any portion of
its rights hereunder (along with the corresponding obligations) to any
purchaser or transferee of the Note.  Any
assignee of any Purchaser pursuant to the proviso of the foregoing sentence
shall be deemed to be a “Purchaser” for all purposes of this Agreement.

 

11.5                           Amendment and Waiver.  (a)  No failure or delay on
the part of the Company or the Purchaser in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.

 

(b)                         Any
amendment, supplement or modification of or to any provision of this Agreement
and any waiver of any provision of this Agreement shall be effective only if it
is made or given in writing and signed by the Company and the Purchaser.

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

49

 

11.6                           Counterparts.  This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
all of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

 

11.7                           Headings. 
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

 

11.8                           Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial.  This
Agreement shall be governed by and construed in accordance with the Requirements
of Law of the State of Delaware without giving effect to the principles of
conflict of laws.  Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Delaware or the United
States District Court for the District of Delaware and the appellate courts
having the jurisdiction with respect to appeals from such courts, for any
Action arising out of or relating to this Agreement and the transactions
contemplated by the Transaction Agreements (and agrees not to commence any
Action relating thereto except in such courts), and further agrees that service
of any process, summons, notice or document by U.S. registered mail to its
respective address set forth in this Agreement, or such other address as may be
given by one or more parties to the other parties in accordance with the notice
provisions of Section 11.3, shall be effective service of process for any
action, suit or proceeding brought against it in any such court.  Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of Delaware or the United States
District Court for the District of Delaware and the appellate courts having the
jurisdiction with respect to appeals from such courts, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such Action brought in any such court has been brought in
an inconvenient forum.  Each of the
parties irrevocably and unconditionally waives, to the fullest extent permitted
by applicable Requirements of Law, any and all rights to trial by jury in
connection with any action, suit or proceeding arising out of or relating to
this Agreement, the other transaction Agreements or the transactions
contemplated thereby.

 

11.9                           Severability.  If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable shall
substantially impair the benefits of the remaining provisions hereof.

 

11.10                     Entire Agreement.  This Agreement, together with the
schedules and exhibits hereto, and the other Transaction Agreements referred to
herein or delivered pursuant hereto, are intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein.  There are no restrictions, promises,
warranties or

 

*CONFIDENTIAL TREATMENT
REQUESTED

 

50

 

undertakings, other than those set forth or referred to herein or
therein.  This Agreement, together with
the schedules and exhibits hereto, and the other Transaction Agreements
referred to herein or delivered pursuant hereto, supersede all prior agreements
and understandings between the parties with respect to such subject matter.

 

11.11                     Further Assurances.  Subject to the terms and
conditions of this Agreement, from time to time after the Closing, the Company
and the Purchaser agree to cooperate with each other, and at the request of the
other party, to execute and deliver any further instruments or documents and
take all such further action as the other party may reasonably request in order
to evidence or effectuate the consummation of the transactions contemplated by
the Transaction Agreements and to otherwise carry out the intent of the parties
hereunder.

 

11.12                     Public Announcements.  Except as required by any
Requirement of Law or the rules of any securities exchange, none of the
parties hereto will issue or make any reports, statements or releases to the
public with respect to this Agreement or the transactions contemplated by the
Transaction Agreements without the approval of the other party (such approval
not to be unreasonably withheld or delayed).

 

11.13                     Specific Performance.  The parties acknowledge that money
damages are not an adequate remedy for violations of this Agreement and that
any party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as
such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable law,
each party waives any objection to the imposition of such relief or any
requirement for a bond.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

51

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed and delivered by their
respective officers hereunto duly authorized as of the date first above
written.

 

	
   

  	
  ACUSPHERE, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Lawrence A. Gyenes

  	
   

  
	
   

  	
   

  	
   Name: Lawrence A. Gyenes

  
	
   

  	
   

  	
   Title: Senior Vice President, CFO and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CEPHALON, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ J. Kevin Buchi

  	
   

  
	
   

  	
   

  	
   Name:J. Kevin Buchi

  
	
   

  	
   

  	
   Title: Executive Vice President and Chief Financial

  Officer

  

 

*CONFIDENTIAL TREATMENT REQUESTED

 

 

Exhibit A

 

 

Exhibit B

 

 

Exhibit C

 

 

Exhibit D

 

 

Exhibit E

 

ASSIGNMENT
AGREEMENT

 

THIS
ASSIGNMENT AGREEMENT (this “Assignment”) is dated as of November [    ],
2008, by and between CEPHALON, INC., a Delaware corporation (the “Purchaser”),
and ACUSPHERE, INC., a Delaware corporation (the “Company”). Capitalized terms
used and not otherwise defined herein are used as defined in the Purchase
Agreement (as defined below).

 

Reference
is hereby made to that certain Note Purchase Agreement, dated as October 24,
2008 (the “Purchase Agreement”), by and between the Purchaser and the Company.

 

1.             Upon the Closing, the Company
hereby sells, assigns, transfers and otherwise conveys to the Purchaser all
right, title and interest in and to the Contracts, documents and correspondence
listed on Schedule I attached hereto and the Product Clinical Data (as defined
in the Celecoxib License Agreement (the “Assigned Property”)) and free and
clear of all Liens;

 

2.             The Company covenants and agrees,
at the cost and expense of the Company, to do, execute, acknowledge and deliver
to, or cause to be done, executed, acknowledged and delivered to, the
Purchaser, its successors and assigns, all such further acts, deeds,
assignments, transfers, conveyances and assurances that may be required or
reasonably requested by the Purchaser to fully effect the purpose of this
Assignment.

 

3.             This Assignment shall be binding
upon the Company and its successors and assigns, and shall inure to the benefit
and be enforceable by the Purchaser and its successors and assigns.

 

4.             This Assignment may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
all of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

 

5.             This Assignment shall be governed
by and construed in accordance with the Requirements of Law of the State of
Delaware without giving effect to the principles of conflict of laws.

 

1

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed and delivered by their respective officers
hereunto duly authorized as of the date first above written.

 

 

	
   

  	
  ACUSPHERE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:
  

  	
  Sherri
  C. Oberg

  	
   

  
	
   

  	
   

  	
   Title:

  	
  President
  and Chief Financial 

  Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CEPHALON,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  	
  J.
  Kevin Buchi

  	
   

  
	
   

  	
   

  	
   Title:

  	
  Executive
  Vice President and

  Chief Financial Officer

  	
   

  

 

Assignment
Agreement

 

 

SCHEDULE I

 

THE
ASSIGNED PROPERTY

 

List
of regulatory documents pertaining to AI-525:

 

	
  Date

  	
   

  	
  Item

  
	
  26-FEB-07

  	
   

  	
  pIND
  meeting request

  
	
  20-MAR-07

  	
   

  	
  pIND
  acknowledgement

  
	
  22-MAR-07

  	
   

  	
  pIND
  scheduling

  
	
  24-APR-07

  	
   

  	
  Meeting
  package

  
	
  25-MAY-07

  	
   

  	
  FDA
  responses

  
	
  04-JUN-07

  	
   

  	
  Acusphere
  responses

  
	
  06-JUN-07

  	
   

  	
  Meeting
  minutes (Acusphere)

  
	
  05-JUL-07

  	
   

  	
  Meeting
  minutes (FDA)

  
	
  23-JUL-07

  	
   

  	
  Change
  request

  

 

There
are no clinical trial agreements.

 

 

Exhibit F

 

WHENEVER
CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED BY AN
ASTERISK *) SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

LICENSE AGREEMENT

 

This agreement (the “Agreement”), dated the [      ]th
day of [          ],
[          ]
(the “Effective Date”), is by and between [PURCHASER], a Delaware corporation (“Purchaser”),
and [THE COMPANY], a Delaware corporation (the “Company”).

 

INTRODUCTION

 

1.             The Company owns
the Product Intellectual Property (as such term is defined herein).

 

2.             The Purchaser is in
the business of developing and marketing pharmaceutical products.

 

3.             The Company and the
Purchaser are interested in establishing a licensing relationship pursuant to
which the Company shall grant the Purchaser certain rights and licenses under
the Product Intellectual Property.

 

NOW, THEREFORE, the Purchaser and the Company agree as follows:

 

Article I

Definitions

 

When used in this Agreement, each of the following terms shall have the
meanings set forth in this Article I:

 

Section 1.1             “Affiliate”
means, with respect to a Party, any Person that controls, is controlled by, or
is under common control with such Party. 
For purposes of this Section 1.1, “control” shall refer to (a) in
the case of a Person that is a corporate entity, direct or indirect ownership
of fifty percent (50%) or more of the stock or shares having the right to vote
for the election of directors of such Person and (b) in the case of a
Person that is not a corporate entity, the possession, directly or indirectly,
of the power to direct, or cause the direction of, the management or policies
of such Person, whether through the ownership of voting securities, by contract
or otherwise.

 

Section 1.2             “Bankruptcy
Code” means 11 U.S.C §§ 101-1330, as amended.

 

Section 1.3             “Confidential
Information” means non-public information disclosed by the Company to the
Purchaser relating to the Products, Licensed Patent Rights or Licensed
Know-How, but specifically excluding Product Clinical Data disclosed in
connection with the clinical development of, or regulatory approval for, a
Product.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

1

 

Section 1.4             “Control”
and cognates thereof means, with respect to any Licensed Know-How, Patent
Rights or Confidential Information, the possession by a Party, whether directly
or through Affiliates of such Party, of the ability to grant the right to access
or use, or to grant a license or the right to disclose or transfer such
Licensed Know-How, Patent Rights or Confidential Information, without violating
the terms of any agreement or other written arrangement with, or the rights of
any Third Party.

 

Section 1.5             “Cover”
and cognates thereof means, with respect to a product, that, but for a license
granted to a Party under a Valid Claim, the Development or Commercialization of
such product would infringe such Valid Claim.

 

Section 1.6             “Field”
means all current and future indications, purposes and uses for the Product.

 

Section 1.7             “FDA”
means the U.S. Food and Drug Administration.

 

Section 1.8             “Governmental
Authority” means any court, tribunal, arbitrator, arbitrational panel or
authority, agency, commission, official or other instrumentality of the United
States or any other country, or any supra-national organization, state, county,
city or other political subdivision or any self-regulatory organization.

 

Section 1.9             “Improvements”
means any improvements, modifications, developments or inventions which a Party
may make to the Product Intellectual Property after the Effective Date.

 

Section 1.10           “Licensed
Know-How” means all inventions, methods, processes, techniques,
improvements, designs, formulae, specifications, and technical, scientific and
business information (including, without limitation, all biological, chemical,
pharmacological, toxicological, clinical and assay information, data and
analyses), whether or not patentable, which are Controlled by the Company and
which relate to the Licensed Patent Rights or the Product in any way, in any
field or for any purpose and in whatever form existing (including, without
limitation, paper, notebooks, books, files, ledgers, records, tapes, discs,
diskettes, CD-Rom and any other media on which the foregoing can be stored).

 

Section 1.11           “Licensed
Patent Rights” means (a) the Patent Rights set forth on Exhibit A
hereto, (b) counterparts of the Patent Rights set forth on Exhibit A
in any country of the world and (c) all other patent rights owned or
licensed by the Company and related in any way to the Product.

 

Section 1.12           “Net
Sales” means the aggregate amount invoiced on account of sales of a Product
by the Purchaser or any of its Affiliates or sublicensees to a third party in
the Field (but not including sales between the Purchaser and its Affiliates
where the Product is intended for resale) less the following reductions
relating to such sales:

 

(i) trade,
quantity and cash discounts or rebates, which are not already reflected in the
amount invoiced;

 

*CONFIDENTIAL TREATMENT REQUESTED

 

2

 

(ii) any
adjustments or allowances on account of price adjustments, billing errors,
rejected goods, damaged goods, returns and withdrawal, recall or relabeling of
Product;

 

(iii) credits,
volume rebates, charge-back and prime vendor rebates, reimbursements or similar
payments granted or given to, or related administrative, processing or other
fees charged to, wholesalers and other distributors, buying groups, health care
insurance carriers, pharmacy benefit management companies, health maintenance
organizations or other institutions or health care organizations, which are not
already reflected in the amount invoiced;

 

(iv)  any tax, tariff, customs duty, excise or
other duty or other governmental charge including, without limitation, value
added taxes(other than a tax on income) levied on the manufacture, sale,
transportation or delivery of the Product and remitted to the applicable taxing
authority;

 

(v) payments or rebates paid in connection with
sales of the Product to any governmental or regulatory authority in respect of
any state or federal Medicare, Medicaid or similar programs, or other managed
care programs, which are not already reflected in the amount invoiced;

 

(vi) freight, postage, handling, shipping,
insurance or other transportation costs charged to the customer whether
invoiced separately or included within the selling price; and

 

(vii) amounts allocated for bad debt determined
by generally accepted accounting principles consistently applied.

 

For purposes of this definition, the Product shall be
considered “sold” and “reductions” allowed when so recorded in the Purchaser or
its Affiliates or sublicensees (as the case may be) consolidated and
consolidating financial statements prepared in accordance with generally
accepted accounting principles. The first sale to a third party in an
arms-length transaction shall be regarded as the first sale for the purpose of
calculating Net Sales.

 

Section 1.13           “NDA”
means a New Drug Application and amendments thereto filed pursuant to the
requirements of the FDA, as defined in 21 C.F.R. § 314 et seq., for FDA
approval of a new drug product.

 

Section 1.14           “Order”
means any writ, judgment, decree, injunction, award or similar order of any
Governmental Authority, including any award in an arbitration proceeding (in
each case, whether preliminary or final).

 

Section 1.15           “Parties”
means the Purchaser and the Company.

 

Section 1.16           “Party”
means the Purchaser or the Company, as the context may require.

 

Section 1.17           “Patent
Rights” means United States and foreign patents and patent applications and
all substitutions, divisions, continuations, continuations-in-part, requests
for continued examinations, reissues, reexaminations and extensions thereof.

 

Section 1.18           “Person”
means any natural person or any corporation, company, partnership, joint
venture, firm or other entity, including without limitation a Party.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

3

 

Section 1.19           “Product”
and cognates thereof mean ImagifyTM (perflubutane polymer microspheres) for
injectable suspension in all formulations and dosages.

 

Section 1.20           “Product
Clinical Data” means all pre-clinical and clinical data, databases and
intellectual property relating to the Product and the Licensed Patent Rights,
including without limitation, raw case report files, final study reports,
toxicology reports, regulatory information including all investigational new
drug applications and such other information and data as may have been
generated during or in connection with any pre-clinical and phase I clinical
studies or other studies conducted on the Product or with respect to any
Licensed Patent Rights.

 

Section 1.21           “Product
Intellectual Property” means all Product Clinical Data, Licensed Patent
Rights and Licensed Know-How, and any Improvements to any such Product
Intellectual Property to the extent performed by the Company or by a third
party at the Company’s direction in accordance with the terms of this
Agreement.

 

Section 1.22           “Regulatory
Milestone Payment” has the meaning ascribed to such term in Section 2.12.

 

Section 1.23           “Requirements
of Law” means any law, statute, code, treaty, Order, ordinance, rule,
regulation or other requirement promulgated or enacted by any Governmental
Authority.

 

Section 1.24           “Royalty”
has the meaning ascribed to such term in Section 2.13.

 

Section 1.25           “Tax”
and cognates thereof mean all of the following: (i) any sales, use ad
valorem, transfer, franchise, license, excise, stamp, production, withholding,
value added, environmental, or other tax, custom or duty or governmental fee or
other like assessment or charge to the extent directly related to the sale of Products
(thereby explicitly excluding any income, employment or profits tax or any
sort) that may be imposed by any Governmental Authority for such sale of
Products and (ii) any liability for the payment of amounts described in (i) above
as a result of being a member of an affiliated, consolidated, combined or
unitary group for any taxable period.

 

Section 1.26           “Territory”
means worldwide, except for Albania, Andorra, Armenia, Austria, Azerbaijan,
Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary,
Iceland, Ireland, Italy, Kazakhstan, Kyrgyzstan, Latvia, Liechtenstein,
Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal,
Republic of Moldova, Romania, Russian Federation, Slovakia, Slovenia, Spain,
Sweden, Switzerland, the former Yugoslav Republic of Macedonia, Turkey,
Tadzhikistan, Turkmenistan, Ukraine, Uzbekistan, United Kingdom and Yugoslavia.

 

Section 1.27           “Third
Party”  means any person or entity
other than a Party or any of its Affiliates.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

4

 

Section 1.28           “Valid
Claim” means a claim of any issued, unexpired United States or foreign
patent, which shall not have been donated to the public, disclaimed, nor held
invalid or unenforceable by a court of competent jurisdiction in an unappealed
or unappealable decision.

 

Article II

Grant of License; Disclosure of
Know-How; Clinical Data

 

Section 2.1             License
Grant.  Subject to the terms and
conditions of this Agreement, the Company hereby grants to the Purchaser the
exclusive, irrevocable right and license under the Licensed Patent Rights and
the Licensed Know-How in the Field in the Territory, including without
limitation, to develop, make, have made, use, offer for sale, sell and import
pharmaceutical formulations and products. 
The term of such license shall be determined on a country-by-country
basis, with such license to continue with respect to a specific country until
the expiration in such country of any Patent Rights owned by Company providing
market exclusivity to the Purchaser under the Product in the applicable
country, including any Licensed Patent Rights.

 

Section 2.2             Commercialization.  The Purchaser agrees to use
commercially reasonable efforts to develop and commercialize the Product in the
United States on a timely basis and thereafter to sell the Product in the
United States.

 

Section 2.3             Disclosure
of Licensed Know-How.    During the
term of this Agreement, the Purchaser shall have access, as reasonably
requested by the Purchaser, to personnel of the Company and its Affiliates at
reasonable times during normal business hours and upon prior notice for
discussions relating to regulatory, scientific, medical and other technology
contained in or relating to the Licensed Know-How.  In addition, to the extent required by the
Purchaser, the Purchaser shall have access to all documents of the Company and
its Affiliates related in any way to any such discussions.

 

Section 2.4             Transfer
of Pre-Clinical and Clinical Data. 
During the term of this Agreement, the Purchaser shall have access, as
reasonably requested by the Purchaser, to personnel of the Company and its
Affiliates at reasonable times during normal business hours and upon prior
notice for discussions relating to regulatory, scientific, medical and other
matters relating to preclinical and clinical data related in any way to the
Product or the Product Intellectual Property. 
In addition, to the extent required by the Purchaser, the Company shall
provide access to its, and its Affiliates, facilities, personnel and records in
connection with any regulatory filings or submissions that the Purchaser may
make with respect to the Product.  After
the transfer of such preclinical and clinical data related in any way to the
Product Intellectual Property, the Company shall have no right, title or
interest in such data.

 

Section 2.5             Sublicensees.  The Purchaser shall be entitled to grant one
or more sublicenses under the licenses granted pursuant to this Agreement,
provided, however, that the Purchaser shall not be permitted to sublicense
rights broader than those granted hereunder. 
Notwithstanding the foregoing, no such sublicense by Purchaser shall
alter Purchaser’s obligation to pay the Royalty to the Company in accordance
with Section 2.13.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

5

 

Section 2.6             Section 365(n) of
the Bankruptcy Code.  All rights and
licenses granted under or pursuant to this Agreement are, and shall otherwise
be, deemed to be, for purposes of Section 365(n) of the Bankruptcy
Code, licenses of rights to “intellectual property” as defined under Section 101(35A)
of the Bankruptcy Code.  The Parties shall
retain and may fully exercise all of their respective rights and elections
under the Bankruptcy Code.

 

Section 2.7             Improvements.  Each Party shall own all right, title and
interest in and to any Improvements it creates or develops.  To the extent that the Company creates or
develops Improvements, such Improvements shall become part of the Product
Intellectual Property and shall be licensed to the Purchaser pursuant hereto,
and the Company shall notify the Purchaser of such Improvements and deliver such
Improvements and all records, data, information and know-how related thereto to
the Purchaser, in each such case promptly after the creation or development of
such Improvements and no later than thirty (30) days after the creation or
development of such Improvements.

 

Section 2.8             Manufacturing.  Purchaser may, in its sole discretion,
manufacture the Products itself, by engaging a third party selected in its sole
discretion or by engaging the services of the Company to perform such
manufacturing services.  In the event
that Purchaser elects to engage the services of the Company to manufacture the
Products, the Company will perform such manufacturing services at a cost no
greater than the Company’s actual fully burdened manufacturing cost, and, if
Purchaser so elects, in accordance with a written agreement containing
customary terms and warranties, such written agreement to be in a form
substantially similar to the form of agreement attached as Exhibit D
hereto.

 

Section 2.9             Conversion
of Note.  On the Effective Date, the
Purchaser shall convert that certain Senior Convertible Note of the Company
dated as of [November]
[    ], 2008 in
the aggregate principal amount of $15,000,000 into the right to enter into this
Agreement pursuant to the terms of such Senior Convertible Note.

 

Section 2.10           Trademark
License.  On the Effective Date, the
Parties shall execute the Trademark License attached hereto as Exhibit E.

 

Section 2.11           Additional
Assignments.  On the Effective Date,
the Parties shall execute the Assignment Agreement attached hereto as Exhibit F.

 

Section 2.12           Regulatory
Milestone License Payment.  Upon the
Company’s notice to the Purchaser of the Company’s receipt from the FDA of
final approval of the first NDA for the Product, the Purchaser shall pay within
thirty (30) days of such final approval to the Company an additional one-time
payment of Forty Million U.S. Dollars ($40,000,000) (the “Regulatory Milestone
Payment”).

 

Section 2.13           Royalties.  In addition to the Regulatory Milestone
Payment, the Purchaser shall pay to the Company a royalty of * percent (*%) of
Net Sales of the Products in the Territory (the “Royalty”).  The Purchaser shall pay such royalty on a
country-by-country basis for the Net Sales of the Products in the Territory in
the applicable country during each calendar quarter, within forty-five (45)
days after the end of the applicable calendar quarter.  The Purchaser shall pay the Royalty
applicable to each country in US dollars. 
At the time of such

 

*CONFIDENTIAL TREATMENT REQUESTED

 

6

 

payment, the Purchaser shall also provide to the Company a written
statement of Net Sales showing in reasonably specific detail, on a
country-by-country basis, (a) the calculation of Net Sales; (b) royalties
payable in US dollars, which shall have accrued hereunder based upon Net Sales;
(c) withholding taxes, if any, required by law to be deducted with respect
to such sales; (d) the dates of the first commercial sales of the Product
in any jurisdiction during the reporting period; and (e) the exchange
rates used to determine the amount of US dollars (collectively, the “Royalty
Statement”).  If any currency conversion
shall be required in connection with the calculation of payments hereunder,
such conversion shall be made using the average exchange rates published by
OANDA.com or a comparable service for the applicable period in which Purchaser
records the sale giving rise to the payment obligation set forth herein.  Purchaser shall be entitled to deduct
Purchaser’s actual currency conversion costs from the Royalties payable
hereunder.

 

Section 2.14           Consideration.  The Regulatory Milestone Payment, the Royalty
payments and the mutual promises provided herein shall constitute consideration
for the licenses and other rights granted hereunder.

 

Section 2.15           Records
and Audit.  During the term of this
Agreement, for a period of three (3) years after the conclusion of the
applicable calendar year, the Purchaser shall keep complete and accurate
records of Net Sales in sufficient detail to permit the Company to confirm the
completeness and accuracy of: (i) the information presented in each
Royalty Statement and (ii) the calculation of Net Sales. The Purchaser
shall permit a recognized independent auditing firm reasonably acceptable to
the Purchaser to audit and/or inspect records of the Purchaser solely to the
extent required to verify: (A) the completeness and accuracy of the
Royalty Statements; (B) the calculation of Net Sales and (C) the
amount of Royalty payments for the Product for the previous year.  Such inspection shall be conducted during the
Purchaser’s normal business hours, no more than once in any twelve (12) month
period and upon at least thirty (30) days prior written notice by the Company
to the Purchaser.  If such firm
establishes that such payments were underpaid for the preceding year, the
Purchaser shall have the right to engage a recognized independent auditing firm
to verify the findings of the audit.  If
the firm engaged by Purchaser verifies the findings of the firm engaged by the
Company, the Purchaser shall pay the Company the amount of any such
underpayments for the preceding year, plus interest at a rate equal to the
Prime Rate of interest as reported in the Wall Street Journal on the date
payment is due, within thirty (30) days after the date the Purchaser delivers
to the Company the report of the firm engaged by the Purchaser, which report so
establishes that such payments were underpaid for the preceding year.  Notwithstanding the foregoing, the firm
engaged by the Purchaser shall deliver its findings in a prompt manner after
being engaged by the Purchaser.  If the
firm engaged by the Company establishes that such payments were overpaid for
the preceding year, the Company shall pay the Purchaser the amount of any such
overpayment for the preceding year, within thirty (30) days after the date the
Company delivers to the Purchaser such firm’s report so establishing that such
payments were overpaid for the preceding year. 
The Company shall bear the full cost of the firm it engages unless such
audit discloses an underpayment by more than five percent (5%) of the amount
due for the preceding year and such underpayment of more than five percent (5%)
is verified by the firm engaged by the Purchaser if it chooses to engage a firm
for audit verification purposes.  The
Purchaser shall bear the full cost of the firm it engages to verify the audit
findings.

 

*CONFIDENTIAL TREATMENT REQUESTED

 

7

 

Section 2.16           Payments.  The Regulatory Milestone Payment and the
Royalty payments shall be made electronically in US Dollars and to such place
and account as may be designated from time to time for that purpose by the
Company to Purchaser in writing.

 

Section 2.17           Withholding
Taxes. All sums payable by either Party under this Agreement (including
without limitation the Regulatory Milestone Payment and the Royalty payments)
shall be paid in full and without any set-off, counterclaim, taxes, duties,
levies, fees, charges, deduction or withholding on any ground whatsoever,
except as may be required by law. The Parties shall consider together to what
extent, if at all, it may lawfully be possible to mitigate the amount of such
deduction or withholding or of the amount required to be paid as aforesaid,
including the use of best efforts to make timely and procedurally correct
application for relief from withholding tax in respect of any such payment. For
any taxes, duties, levies, fees, charges, deduction or withholding on any ground
whatsoever withheld or to be withheld, each Party agrees to timely deliver all
certificates and forms as may be necessary and appropriate to establish an
exemption from Tax or file Tax returns as would be necessary with respect to
such Taxes.

 

Article III

Regulatory Issues, Intellectual Property Protection, Licensing and Related
Matters

 

Section 3.1             Prosecution
and Maintenance of Licensed Patent Rights; Preparation of FDA Filings.

 

(a)           Regulatory
Filings.  The Purchaser shall have
the sole right, but no obligation, to file and prosecute any regulatory filings
applicable to the any Products, including without limitation preparation of NDA
filings, which it shall perform in its sole discretion, provided, however, that
this provision shall not alter the Purchaser’s obligations under Section 2.2.

 

(b)           Right
to Prosecute and Maintain.  The
Purchaser shall have the sole right and option to file and prosecute any patent
applications and to maintain any patents included in the Licensed Patent Rights
or the Product Intellectual Property. 
The Purchaser shall provide the Company with copies of such filings or
applications promptly. Notwithstanding the foregoing, the Purchaser shall
cooperate with the Company to coordinate any patent applications or regulatory
filings applicable to the Products, including soliciting the Company’s input
and advice with respect to the Company’s existing licenses outside the
Territory, provided, however, that the Purchaser shall retain sole discretion
in such patent applications and regulatory filings.  The Purchaser shall, with respect to those
Licensed Patent Rights that constitute patent applications, (i) provide
all draft patent applications to the Company sufficiently in advance of filing
for the Company to have a reasonable opportunity to comment thereon and shall
take such comments into consideration in the application filed; (ii) promptly
furnish the Company with copies of all substantive communications between the
Purchaser and applicable patent offices relating to such patent applications,
and take the Company’s comments and suggestions into consideration when framing
responses and submissions to such patent offices; (iii) keep the Company
advised of the status of actual and prospective patent filings included in the
Licensed Patent Rights.  The Purchaser
shall give the Company the opportunity to provide comments upon and make
requests of the Purchaser concerning the preparation, filing, prosecution,
protection and maintenance of 

 

*CONFIDENTIAL
TREATMENT REQUESTED

 

8

 

those
Licensed Patent Rights constituting patent applications, and shall consider
such comments and requests in good faith; provided, however, that final
decision-making authority shall vest in the Purchaser.

 

(c)           Costs
and Expenses.  Each Party shall bear
its own costs and expenses in preparing, filing, prosecuting and maintaining
Licensed Patent Rights and other filings or applications (including regulatory
filings) arising out of the Product Intellectual Property.

 

(d)           Cooperation.  Each Party agrees to cooperate with the other
with respect to the filing, prosecution and maintenance of patents, patent
applications and regulatory filings pursuant to this Section 3.1,
including without limitation:

 

(i)            the
execution of all such documents and instruments and the performance of such
acts as may be reasonably necessary in order to permit the other Party to file,
prosecute or maintain patents and patent applications as provided for in this Section 3.1;

 

(ii)           making
its employees, agents and consultants reasonably available to the other Party
(or to the other Party’s authorized attorneys, agents or representatives), to
the extent reasonably necessary to enable the prosecuting Party to prepare,
file, prosecute and maintain patents and patent applications as provided for in
this Section 3.1;

 

(iii)          providing
available data, records and information to support preparation and prosecution
of patent applications; and

 

(iv)          providing
available data, records, information and personnel to support preparation of
all regulatory filings and consultant with regulatory authorities related
thereto.

 

Section 3.2          Third
Party Infringement.

 

(a)           Notifications
of Competitive Infringement.  Each
Party agrees to notify the other Party when it becomes aware of the reasonable
probability of infringement of the Licensed Patent Rights (“Competitive
Infringement”).

 

(b)           Infringement
Action.  The Purchaser shall have the
sole right, but no obligation, to institute an infringement suit or take other
appropriate action that it believes is reasonably required to protect the
Licensed Patent Rights or the Product Intellectual Property from such
Competitive Infringement.  The Purchaser
shall be permitted to act, or choose not to act, subject to its sole
discretion, including, if it so chooses, taking no action with respect to
Competitive Infringement or settling any such Competitive Infringement in its
sole discretion.  Subject to Section 3.4,
the expenses of any suit or suits that the Purchaser elects to bring shall be
paid for entirely by the Purchaser.

 

(i)            Recoveries.  The Purchaser shall have the sole right to
any recovery obtained as a result of any proceeding described in this Section 3.2.

 

Section 3.3             Infringement
of Third Party Patents.  If a claim
alleging infringement of Third Party patents is made against the Purchaser,
then the Purchaser shall defend against such a 

 

*CONFIDENTIAL TREATMENT REQUESTED

 

9

 

claim at its cost and expense, but the Company may be represented in
such event by legal counsel in an advisory capacity at its own expense.  The Purchaser shall keep the Company informed
of the status of the case.

 

Section 3.4             Cooperation.  In the event that the Purchaser takes action
pursuant to Section 3.2 or Section 3.3 above, the Company shall
participate in such action (including, without limitation, joining as a party
to such action) and cooperate with the Purchaser to the extent reasonably
requested by the Purchaser.  The Company
shall provide assistance and cooperation to the Purchaser without any charge to
the Purchaser, provided, however, that the Purchaser shall pay the Company’s
reasonable out-of-pocket expenses incurred in connection with such assistance
and cooperation.

 

Section 3.5             Third
Party Licenses.  All third-party
licenses pursuant to which the licenses or rights in this Agreement are granted
are attached in Exhibit B hereto (“Third Party Licenses”).  The Company hereby sublicenses to the
Purchaser, to the fullest extent permissible under the Third Party Licenses,
all rights and licenses of the Company under such licenses, including any
rights to grant further sublicenses.  To
the extent that the Third Party Licenses do not allow for a full sublicensing
by the Company of all its rights under such Third Party Licenses, the Company
will take all actions permissible under the applicable Third Party License in
order to allow the Purchaser to exercise its rights hereunder, including
without limitation: (i) appointing the Purchaser to act as a distributor
or agent of the Company, provided, however, that the benefits of such
relationship shall be accrue to the Purchaser in accordance with the terms of
this Agreement; and (ii) performing manufacturing or distribution in
accordance with the terms of such Third Party Licenses, the benefits of which
shall accrue to the Purchaser in accordance with the terms of this
Agreement.  The Company shall take such
additional actions, including without limitation granting additional rights to
the Purchaser or executing additional documents or filings, as may be
reasonably required by Purchaser in order for Purchaser to exercise the rights
granted hereunder.

 

Article IV

Confidentiality

 

Section 4.1             Confidential
Information.  All Confidential
Information disclosed by the Company to the Purchaser during the term of this
Agreement shall not be used by the Purchaser except in connection with the
activities contemplated by this Agreement (including, without limitation, the
licenses granted pursuant to Section 2.1), shall be maintained in
confidence by the Purchaser (except to the extent reasonably necessary in
connection with regulatory filings relating to the Product and/or relating to
practicing the Licensed Patent Rights or Licensed Know-How in any way, in any
field and for any purpose; for the filing, prosecution and maintenance of
Patent Rights; or to develop, make, have made, use, offer for sale, sell and
import pharmaceutical formulations and products Covered by the Licensed Patent
Rights or Licensed Know-How), and shall not otherwise be disclosed by the
Purchaser to any other person, firm, or agency, governmental or private (except
consultants, advisors and Affiliates in accordance with Section 5.4),
without the prior written consent of the Company, except to the extent that the
Confidential Information:

 

*CONFIDENTIAL TREATMENT REQUESTED

 

10

 

(a)                                  was
known or used by the Purchaser or its Affiliates prior to its date of
disclosure to the Purchaser; or

 

(b)                                 either
before or after the date of the disclosure to the Purchaser is lawfully
disclosed to the Purchaser or its Affiliates by sources other than the Company
rightfully in possession of the Confidential Information; or

 

(c)                                  either
before or after the date of the disclosure to the Purchaser becomes published
or generally known to the public through no fault or omission on the part of
the Purchaser; or

 

(d)                                 is
independently developed by or for the Purchaser or its Affiliates without
reference to or reliance upon the Confidential Information; or

 

(e)                                  is
required to be disclosed by the Purchaser or its Affiliates to comply with
applicable laws or regulations, to defend or prosecute litigation or to comply
with legal process.

 

Section 4.2                                      Employee,
Consultant and Advisor Obligations. 
The Purchaser agrees that it and its Affiliates shall provide
Confidential Information received from the Company only to its and their
respective employees, consultants and advisors who have a need to know such
Confidential Information.

 

Section 4.3                                      Term.  All obligations of confidentiality imposed
under this Article IV shall expire ten (10) years following
termination or expiration of this Agreement.

 

Article V

Representations and Warranties

 

Section 5.1                                      Representations
of Authority.  The Purchaser and the
Company each represents and warrants to the other that, as of the Effective
Date, it has full right, power and authority to enter into this Agreement and
to perform its respective obligations under this Agreement.

 

Section 5.2                                      Consents.  The Purchaser and the Company each represents
and warrants to the other that, as of the Effective Date, all necessary
consents, approvals and authorizations of all government authorities and other
persons required to be obtained by such Party in connection with execution,
delivery and performance of this Agreement have been obtained.

 

Section 5.3                                      No Conflict.  The Purchaser and the Company each represents
and warrants to the other that, as of the Effective Date, the execution and
delivery of this Agreement and the performance of such Party’s obligations
hereunder (a) do not conflict with or violate any requirement of
applicable laws or regulations and (b) do not conflict with, violate or
breach or constitute a default of, or require any consent under, any
contractual obligations of such Party, except such consents as have been
obtained as of the Effective Date.

 

Section 5.4                                      Employee,
Consultant and Advisor Obligations. 
The Purchaser and the Company each represents and warrants to the other
that, as of the Effective Date, each of its and its Affiliates’ employees,
consultants and advisors has executed an agreement or has an existing 

 

*CONFINDENTIAL TREATMENT REQUESTED

 

11

 

obligation under law obligating such employee, consultant or advisor to
maintain the confidentiality of Confidential Information to the extent required
under Article IV.

 

Section 5.5                                      Litigation.  The Company represents and warrants that
there is no pending or, to its knowledge, threatened litigation against it
relating to the Products or the Product Intellectual Property, except as
disclosed in Exhibit C hereto.

 

Section 5.6                                      Intellectual
Property.  The Company represents and
warrants to the Purchaser that, as of the Effective Date, and except as
described in Section 3.5, (a) the Company owns the entire right,
title and interest in and to the Licensed Patent Rights and Licensed Know-How, (b) the
Company has the right to grant to the Purchaser the rights and licenses under
the Licensed Patent Rights and Licensed Know-How granted in this Agreement, (c) none
of the Licensed Patent Rights was fraudulently procured from the relevant
governmental patent granting authority, (d) as of the Effective Date,
there is no claim or demand of any Person pertaining to, or any proceeding
which is pending or threatened, that asserts the invalidity, misuse or
unenforceability of the Licensed Patent Rights or challenges the Company’s
ownership of the Licensed Patent Rights or Licensed Know-How or makes any
adverse claim with respect thereto, and, to the knowledge of the Company, there
is no basis for any such claim, demand or proceeding, (e) to the knowledge
of the Company, as of the Effective Date, the Licensed Patent Rights are not
being infringed and the Licensed Know-How is not being used by any Third Party,
(f) to the knowledge of the Company, the Products and the processes used
to make the Products do not infringe any Third Party Patent Rights, except as
disclosed in Exhibit C, and (g) the Licensed Patent Rights
include all of the Patent Rights Controlled by the Company on the Effective
Date which Cover the Product, or, in the case of patent applications included
in the Patent Rights, claims if issued, would Cover the Product.

 

Section 5.7                                      No Warranties.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
HEREIN, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED.

 

Article VI

Term and Termination

 

Section 6.1                                      Term.  This Agreement shall become effective as of
the Effective Date, may be terminated as set forth in this Article VI, and
otherwise remains in effect until the expiration of all of the licenses described
in Section 2.1.

 

Section 6.2                                      Termination
For Material Breach.  Upon any
material breach of this Agreement by either Party (in such capacity, the “Breaching
Party”), the other Party may terminate this Agreement by providing sixty (60)
days’ written notice to the Breaching Party, specifying the material
breach.  The termination shall become
effective at the end of the sixty (60) day period unless the Breaching Party
cures such breach during such sixty (60) day period.

 

Section 6.3                                      Voluntary
Abandonment.  Should the Purchaser
determine that is wishes to abandon development, commercialization or sale of
the Product within any jurisdiction within the Territory, it shall so notify
the Company and shall terminate this Agreement solely with respect to such jurisdiction.

 

*CONFINDENTIAL TREATMENT REQUESTED

 

12

 

Section 6.4                                      Survival.  Upon expiration or termination of this
Agreement for any reason, nothing in this Agreement shall be construed to
release either Party from any obligations that matured prior to the effective
date of expiration or termination; and the following provisions shall expressly
survive any such expiration or termination: 
Article I, Section 2.5, Section 2.6, Section 2.7, Article IV,
Article V and Article VII.

 

Article VII

Miscellaneous Provisions

 

Section 7.1                                      Indemnification.

 

(a)                                  The
Purchaser.  The Purchaser agrees to
defend the Company, its Affiliates and their respective directors, officers,
employees and agents at the Purchaser ‘s cost and expense, and shall indemnify
and hold harmless the Company and its Affiliates and their respective
directors, officers, employees and agents from and against any liabilities,
losses, costs, damages, fees or expenses arising out of any Third Party claim
relating to (i) any breach by the Purchaser of any of its representations,
warranties or obligations pursuant to this Agreement or (ii) personal
injury, property damage or other damage resulting from the development or
commercialization by the Purchaser or its Affiliates or sublicensees of a
product Covered by any of the Licensed Patent Rights.

 

(b)                                 The
Company.  The Company agrees to
defend the Purchaser, its Affiliates and their respective directors, officers,
employees and agents at the Company’s cost and expense, and shall indemnify and
hold harmless the Purchaser and its Affiliates and their respective directors,
officers, employees and agents from and against any liabilities, losses, costs,
damages, fees or expenses arising out of any Third Party claim relating
to any breach by the Company of any of its representations, warranties or
obligations pursuant to this Agreement or (ii) personal injury, property
damage or other damage resulting from the development or commercialization by
the Company or its Affiliates or sublicensees of a product Covered by any of
the Licensed Patent Rights.

 

(c)                                  Claims
for Indemnification.  A person
entitled to indemnification under this Section 7.1 (an “Indemnified Party”)
shall give prompt written notification to the person from whom indemnification
is sought (the “Indemnifying Party”) of the commencement of any action, suit or
proceeding relating to a Third Party claim for which indemnification may be
sought or, if earlier, upon the assertion of any such claim by a Third Party
(it being understood and agreed, however, that the failure by an Indemnified
Party to give notice of a third-party claim as provided in this Section 7.1(c) shall
not relieve the Indemnifying Party of its indemnification obligation under this
Agreement except and only to the extent that such Indemnifying Party is
actually damaged as a result of such failure to give notice).  Within thirty (30) days after delivery of
such notification, the Indemnifying Party may, upon written notice thereof to
the Indemnified Party, assume control of the defense of such action, suit,
proceeding or claim with counsel reasonably satisfactory to the Indemnified
Party.  If the Indemnifying Party does
not assume control of such defense, the Indemnified Party shall control such defense.  The Party not controlling such defense may
participate therein at its own expense; provided  that, if the
Indemnifying Party assumes control of such defense and the Indemnified Party
reasonably concludes, based on advice from counsel, that the Indemnifying Party
and the Indemnified Party 

 

*CONFINDENTIAL TREATMENT REQUESTED

 

13

 

have conflicting interests with respect to such action, suit,
proceeding or claim, the Indemnifying Party shall be responsible for the
reasonable fees and expenses of counsel to the Indemnified Party solely in
connection therewith; provided, however, that in no event shall
the Indemnifying Party be responsible for the fees and expenses of more than
one counsel for all Indemnified Parties. 
The Party controlling such defense shall keep the other Party advised of
the status of such action, suit, proceeding or claim and the defense thereof
and shall consider recommendations made by the other Party with respect
thereto.  The Indemnified Party shall not
agree to any settlement of such action, suit, proceeding or claim without the
prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld, delayed or conditioned. 
The Indemnifying Party shall not agree to any settlement of such action,
suit, proceeding or claim or consent to any judgment in respect thereof that
does not include a complete and unconditional release of the Indemnified Party
from all liability with respect thereto or that imposes any liability or
obligation on the Indemnified Party without the prior written consent of the
Indemnified Party.

 

Section 7.2                                      Governing Law;
Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by and
construed in accordance with the Requirements of Law of the State of Delaware
without giving effect to the principles of conflict of laws.  Each of the parties hereto hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of Delaware or the United States District Court for the
District of Delaware and the appellate courts having the jurisdiction with
respect to appeals from such courts, for any action arising out of or relating
to this Agreement (and agrees not to commence any action relating thereto
except in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to its respective address
set forth in this Agreement, or such other address as may be given by one or
more parties to the other parties in accordance with the notice provisions of Section 7.5,
shall be effective service of process for any action, suit or proceeding
brought against it in any such court. 
Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in the courts of
the State of Delaware or the United States District Court for the District of
Delaware and the appellate courts having the jurisdiction with respect to
appeals from such courts, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action
brought in any such court has been brought in an inconvenient forum.  Each of the parties irrevocably and
unconditionally waives, to the fullest extent permitted by applicable
Requirements of Law, any and all rights to trial by jury in connection with any
action, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

 

Section 7.3                                      Assignment.  Neither this Agreement nor any rights or
obligations hereunder may be assigned or otherwise transferred by either Party
without the prior written consent of the other Party (which consent shall not
be unreasonably withheld); provided, however, that either
Party may assign this Agreement and its rights and obligations hereunder
without the other Party’s consent (a) in connection with the transfer or
sale of all or substantially all of the business of such Party to a Third
Party, whether by merger, sale of stock, sale of assets or otherwise or (b) to
any Affiliate; provided that  no such
assignment to an Affiliate shall relieve the assigning Party of its responsibilities
for performance of its obligations under this Agreement.

 

*CONFINDENTIAL TREATMENT REQUESTED

 

14

 

Section 7.4                                      Entire
Agreement; Amendments.  This
Agreement constitutes the entire agreement between the Parties with respect to
the subject matter hereof, and supersedes all previous arrangements with
respect to the subject matter hereof, whether written or oral.  Any amendment or modification to this
Agreement shall be made in writing signed by both Parties.

 

Section 7.5                                      Notices.

 

Notices to the Company shall be addressed to:

 

[COMPANY]

[

[              ]

Attention: Chief
Executive Officer

 

with a copy, which shall not constitute notice, to:

 

Goodwin Procter
LLP

53 State Street

Boston, MA 02109

Attention:  Lawrence S. Wittenberg

 

Notices to the Purchaser
shall be addressed to:

 

[PURCHASER]

[              ]

[              ]

Attention: 
General Counsel

 

with a copy, which shall not constitute notice, to:

 

Sidley Austin LLP

One South Dearborn Street

Chicago, IL 60603

Attention:  Pran Jha

 

Any
Party may change its address by giving notice to the other Party in the manner
herein provided.  Any notice required or
provided for by the terms of this Agreement shall be in writing and shall be (a) sent
by registered or certified mail, return receipt requested, postage prepaid, (b) sent
via a reputable overnight or international express courier service, or (c) personally
delivered, in each case properly addressed in accordance with the paragraph
above.  The effective date of notice
shall be the actual date of receipt by the Party receiving the same.

 

Section 7.6                                      Force Majeure.  No failure or omission by the Parties hereto
in the performance of any obligation of this Agreement shall be deemed a breach
of this Agreement or create any liability if the same shall arise from any
cause or causes beyond the control of the Parties, including, but not limited
to, the following: acts of God; acts or omissions of any government; any rules,
regulations or orders issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm; flood; earthquake;
accident;

 

*CONFINDENTIAL TREATMENT REQUESTED

 

15

 

war; rebellion; insurrection; riot; and invasion.  The Party claiming force majeure shall notify
the other Party with notice of the force majeure event as soon as practicable,
but in no event longer than ten (10) business days after its occurrence,
which notice shall reasonably identify such obligations under this Agreement
and the extent to which performance thereof will be affected.

 

Section 7.7                                      Public
Announcements.  Any public
announcements or publicity with respect to the execution of this Agreement
shall be agreed upon by the Parties in advance of such announcement, provided,
however, that the foregoing shall not be interpreted to prevent either Party
from taking any actions or making any disclosures which are required by any
Governmental Authority or which, in the reasonable opinion of such Party and
its advisors, are required or desirable in connection with such Party’s
regulatory obligations.

 

Section 7.8                                      Independent
Contractors.  It is understood and
agreed that the relationship between the Parties hereunder is that of
independent contractors and that nothing in this Agreement shall be construed
as authorization for either the Company or the Purchaser to act as agent for
the other.

 

Section 7.9                                      No Strict
Construction.  This Agreement has
been prepared jointly and shall not be strictly construed against any Party.

 

Section 7.10                                Headings.  The captions or headings of the sections or
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.

 

Section 7.11                                No Implied Waivers;
Rights Cumulative.  No failure on the
part of the Company or the Purchaser to exercise, and no delay in exercising,
any right, power, remedy or privilege under this Agreement, or provided by
statute or at law or in equity or otherwise, shall impair, prejudice or
constitute a waiver of any such right, power, remedy or privilege or be
construed as a waiver of any breach of this Agreement or as an acquiescence
therein, nor shall any single or partial exercise of any such right, power,
remedy or privilege preclude any other or further exercise thereof or the
exercise of any other right, power, remedy or privilege.

 

Section 7.12                                Severability.  If, under applicable law or regulation, any
provision of this Agreement is deemed invalid or unenforceable, or otherwise
directly or indirectly affects the validity or enforceability of any other
material provision(s) of this Agreement, such provision shall be deemed
modified to the extent required to most fully carry out the intent of the
original provision in a valid and enforceable manner.

 

Section 7.13                                Execution in
Counterparts.  This Agreement may be
executed in counterparts, each of which counterparts, when so executed and
delivered (whether in person, by mail, courier, facsimile or e-mail), shall be
deemed to be an original, and all of which counterparts, taken together, shall
constitute one and the same instrument.

 

Section 7.14                                No Third Party
Beneficiaries.  No person or entity
other than the Company, the Purchaser and their respective Affiliates and
permitted assignees hereunder shall be deemed an intended beneficiary hereunder
or have any right to enforce any obligation of this Agreement.

 

*CONFINDENTIAL TREATMENT REQUESTED

 

16

 

Section 7.15                                No Consequential
Damages.  NEITHER PARTY HERETO WILL
BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR
PUNITIVE 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 7.15 IS INTENDED
TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY
WITH RESPECT TO THIRD PARTY CLAIMS.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

*CONFINDENTIAL TREATMENT REQUESTED

 

17

 

IN WITNESS WHEREOF, the Parties have executed this
Agreement as of the date first set forth above.

 

 

	
   

  	
  [PURCHASER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [THE COMPANY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

Signature Page to Patent License
Agreement

 

 

Exhibit A

 

Pending and Issued Licensed Patent
Rights as of the Effective Date

 

See
attached Intellectual Property Schedule.

 

A-1

 

Exhibit A

 

Pending
and Issued Licensed Patent Rights as of the Effective Date

 

	
   

  	
   

  	
  Title

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  File Number

  	
   

  	
  Country Name

  	
   

  	
  Status Description

  	
   

  	
  Application Number

  	
   

  	
  Appl. Date

  	
   

  	
  Patent No.

  	
   

  	
  Date of Grant

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU102

  	
   

  	
  Microencapsulated Fluorinated Gases for Use as
  Imaging Agents

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Australia

  	
   

  	
  Grant

  	
   

  	
  21392/97

  	
   

  	
  Feb 27 1997

  	
   

  	
  721209

  	
   

  	
  Oct 12 2000

  
	
   

  	
   

  	
  Brazil

  	
   

  	
  Pending

  	
   

  	
  PI9707936-7

  	
   

  	
  Feb 27 1997

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Canada

  	
   

  	
  Grant

  	
   

  	
  2,247,151

  	
   

  	
  Feb 27 1997

  	
   

  	
  2,247,151

  	
   

  	
  May 20 2008

  
	
   

  	
   

  	
  China

  	
   

  	
  Grant

  	
   

  	
  97192870.3

  	
   

  	
  Feb 27 1997

  	
   

  	
  ZL97192870.3

  	
   

  	
  Jul 02 2003

  
	
   

  	
   

  	
  European Patent

  	
   

  	
  Gone National

  	
   

  	
  97906791.5

  	
   

  	
  Feb 27 1997

  	
   

  	
  0904113

  	
   

  	
  May 12 2004

  
	
   

  	
   

  	
  Hong Kong

  	
   

  	
  Grant

  	
   

  	
  99104237.7

  	
   

  	
  Sep 29 1999

  	
   

  	
  HK1020428

  	
   

  	
  Feb 25 2005

  
	
   

  	
   

  	
  Indonesia

  	
   

  	
  Grant

  	
   

  	
  P-970681

  	
   

  	
  Mar 05 1997

  	
   

  	
  ID 0007292

  	
   

  	
  Jan 31 2002

  
	
   

  	
   

  	
  Ireland

  	
   

  	
  Grant

  	
   

  	
  97906791.5

  	
   

  	
  Feb 27 1997

  	
   

  	
  0904113

  	
   

  	
  May 12 2004

  
	
   

  	
   

  	
  Japan

  	
   

  	
  Grant

  	
   

  	
  531838/97

  	
   

  	
  Feb 27 1997

  	
   

  	
  3,178,724

  	
   

  	
  Apr 13 2001

  
	
   

  	
   

  	
  Korea, Republic
  of (South)

  	
   

  	
  Grant

  	
   

  	
  98-706964

  	
   

  	
  Feb 27 1997

  	
   

  	
  0477857

  	
   

  	
  Mar 10 2005

  
	
   

  	
   

  	
  Malaysia

  	
   

  	
  Grant

  	
   

  	
  PI 9700858

  	
   

  	
  Mar 05 1997

  	
   

  	
  MY-124549-A

  	
   

  	
  Jun 30 2006

  
	
   

  	
   

  	
  New Zealand

  	
   

  	
  Grant

  	
   

  	
  331460

  	
   

  	
  Feb 27 1997

  	
   

  	
  331460

  	
   

  	
  Apr 26 1999

  
	
   

  	
   

  	
  Philippines

  	
   

  	
  Grant

  	
   

  	
  55726

  	
   

  	
  Mar 04 1997

  	
   

  	
  1-1997-55726

  	
   

  	
  Nov 15 2000

  
	
   

  	
   

  	
  Singapore

  	
   

  	
  Grant

  	
   

  	
  9805169-1

  	
   

  	
  Feb 27 1997

  	
   

  	
  56794

  	
   

  	
  Nov 16 1999

  
	
   

  	
   

  	
  South Africa

  	
   

  	
  Grant

  	
   

  	
  97/1812

  	
   

  	
  Mar 03 1997

  	
   

  	
  97/1812

  	
   

  	
  Jan 27 1999

  
	
   

  	
   

  	
  Taiwan

  	
   

  	
  Grant

  	
   

  	
  86102918

  	
   

  	
  Mar 10 1997

  	
   

  	
  I246426

  	
   

  	
  Jan 01 2006

  
	
   

  	
   

  	
  Thailand

  	
   

  	
  Pending

  	
   

  	
  036055

  	
   

  	
  Mar 05 1997

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United States of
  America

  	
   

  	
  Grant

  	
   

  	
  08/611,248

  	
   

  	
  Mar 05 1996

  	
   

  	
  5,611,344

  	
   

  	
  Mar 18 1997

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU102CON

  	
   

  	
  Method for Making Porous Microparticles by Spray
  Drying

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United States of
  America

  	
   

  	
  Grant

  	
   

  	
  08/745,676

  	
   

  	
  Nov 08 1996

  	
   

  	
  5,853,698

  	
   

  	
  Dec 29 1998

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU102CON(2)

  	
   

  	
  Ultrasound Contrast Agents Produced By Spray Drying

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United States of
  America

  	
   

  	
  Grant

  	
   

  	
  09/158,295

  	
   

  	
  Sep 22 1998

  	
   

  	
  6,132,699

  	
   

  	
  Oct 17 2000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU103

  	
   

  	
  Polymer-Lipid Microencapsulated Gases for Use as
  Imaging Agents

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Australia

  	
   

  	
  Grant

  	
   

  	
  33672/97

  	
   

  	
  Feb 27 1997

  	
   

  	
  720727

  	
   

  	
  Sep 21 2000

  
	
   

  	
   

  	
  Brazil

  	
   

  	
  Pending

  	
   

  	
  PI9711109-0

  	
   

  	
  Feb 27 1997

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Canada

  	
   

  	
  Grant

  	
   

  	
  2,260,938

  	
   

  	
  Feb 27 1997

  	
   

  	
  2,260,938

  	
   

  	
  May 06 2003

  
	
   

  	
   

  	
  China

  	
   

  	
  Grant

  	
   

  	
  97196876.4

  	
   

  	
  Feb 27 1997

  	
   

  	
  ZL97196876.4

  	
   

  	
  Oct 23 2002

  
	
   

  	
   

  	
  European Patent

  	
   

  	
  Gone National

  	
   

  	
  97929669.6

  	
   

  	
  Feb 27 1997

  	
   

  	
  0957942

  	
   

  	
  Jun 16 2004

  

 

A-2

 

	
   

  	
   

  	
  Hong
  Kong

  	
   

  	
  Grant

  	
   

  	
  00103029.9

  	
   

  	
  Feb
  27 1997

  	
   

  	
  HK1023939

  	
   

  	
  Apr
  22 2005

  
	
   

  	
   

  	
  Indonesia

  	
   

  	
  Grant

  	
   

  	
  P-970682

  	
   

  	
  Mar
  05 1997

  	
   

  	
  ID0006280

  	
   

  	
  May 03
  2001

  
	
   

  	
   

  	
  Israel

  	
   

  	
  Grant

  	
   

  	
  128163

  	
   

  	
  Feb
  27 1997

  	
   

  	
  128163

  	
   

  	
  Jun
  11 2002

  
	
   

  	
   

  	
  Japan

  	
   

  	
  Grant

  	
   

  	
  508764/98

  	
   

  	
  Feb
  27 1997

  	
   

  	
  2987212

  	
   

  	
  Oct
  01 1999

  
	
   

  	
   

  	
  Korea,
  Republic of (South)

  	
   

  	
  Grant

  	
   

  	
  99-7000708

  	
   

  	
  Feb
  27 1997

  	
   

  	
  0477876

  	
   

  	
  Mar
  10 2005

  
	
   

  	
   

  	
  Malaysia

  	
   

  	
  Grant

  	
   

  	
  PI
  9700890

  	
   

  	
  Mar
  05 1997

  	
   

  	
  MY-130324-A

  	
   

  	
  Jun
  29 2007

  
	
   

  	
   

  	
  New
  Zealand

  	
   

  	
  Grant

  	
   

  	
  333864

  	
   

  	
  Feb
  27 1997

  	
   

  	
  333864

  	
   

  	
  Aug
  17 1999

  
	
   

  	
   

  	
  Philippines

  	
   

  	
  Grant

  	
   

  	
  55724

  	
   

  	
  Mar
  04 1997

  	
   

  	
  1-1997-55724

  	
   

  	
  Dec
  08 1999

  
	
   

  	
   

  	
  Singapore

  	
   

  	
  Grant

  	
   

  	
  9900418-6

  	
   

  	
  Feb
  27 1997

  	
   

  	
  61311

  	
   

  	
  May 23
  2000

  
	
   

  	
   

  	
  South
  Africa

  	
   

  	
  Grant

  	
   

  	
  97/1813

  	
   

  	
  Mar
  03 1997

  	
   

  	
  97/1813

  	
   

  	
  Jan
  28 1998

  
	
   

  	
   

  	
  Taiwan

  	
   

  	
  Grant

  	
   

  	
  86102919

  	
   

  	
  Mar 10 1997

  	
   

  	
  NI-153017

  	
   

  	
  Jul 23 2002

  
	
   

  	
   

  	
  Thailand

  	
   

  	
  Grant

  	
   

  	
  036054

  	
   

  	
  Mar
  05 1997

  	
   

  	
  21009

  	
   

  	
  Dec
  06 2007

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  08/681,710

  	
   

  	
  Jul
  29 1996

  	
   

  	
  5,837,221

  	
   

  	
  Nov
  17 1998

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU104

  	
   

  	
  Method
  for Enhancing the Echogenicity and Decreasing the Attenuation of
  Microencapsulated Gases

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Brazil

  	
   

  	
  Pending

  	
   

  	
  PI9810371-7

  	
   

  	
  Jun
  30 1998

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Canada

  	
   

  	
  Allowed
  application

  	
   

  	
  2,294,199

  	
   

  	
  Jun
  30 1998

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  China

  	
   

  	
  Grant

  	
   

  	
  98806720.X

  	
   

  	
  Jun 30 1998

  	
   

  	
  ZL98806720.X

  	
   

  	
  Aug 09 2006

  
	
   

  	
   

  	
  European
  Patent

  	
   

  	
  Gone
  National

  	
   

  	
  98932957.8

  	
   

  	
  Jun
  30 1998

  	
   

  	
  0996470

  	
   

  	
  Jan
  24 2007

  
	
   

  	
   

  	
  Hong
  Kong

  	
   

  	
  Grant

  	
   

  	
  00106986.3

  	
   

  	
  Nov
  02 2000

  	
   

  	
  1029273

  	
   

  	
  Aug
  24 2007

  
	
   

  	
   

  	
  Israel

  	
   

  	
  Grant

  	
   

  	
  133595

  	
   

  	
  Jun
  30 1998

  	
   

  	
  133595

  	
   

  	
  Sep
  02 2004

  
	
   

  	
   

  	
  Japan

  	
   

  	
  Pending

  	
   

  	
  1999-505860

  	
   

  	
  Jun
  30 1998

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Korea,
  Republic of (South)

  	
   

  	
  Grant

  	
   

  	
  1999-7012433

  	
   

  	
  Jun
  30 1998

  	
   

  	
  10-0637022

  	
   

  	
  Oct
  16 2006

  
	
   

  	
   

  	
  Malaysia

  	
   

  	
  Grant

  	
   

  	
  PI9802974

  	
   

  	
  Jun
  30 1998

  	
   

  	
  MY-122120-A

  	
   

  	
  Mar
  31 2006

  
	
   

  	
   

  	
  Mexico

  	
   

  	
  Grant

  	
   

  	
  9911840

  	
   

  	
  Jun
  30 1998

  	
   

  	
  236136

  	
   

  	
  Apr
  24 2006

  
	
   

  	
   

  	
  Philippines

  	
   

  	
  Grant

  	
   

  	
  1-1998-01674

  	
   

  	
  Jul
  01 1998

  	
   

  	
  1-1998-01674

  	
   

  	
  May 26
  2003

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  08/885,933

  	
   

  	
  Jun
  30 1997

  	
   

  	
  6,045,777

  	
   

  	
  Apr
  04 2000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU108

  	
   

  	
  Spray
  Drying Apparatus And Methods Of Use

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Australia

  	
   

  	
  Grant

  	
   

  	
  769298

  	
   

  	
  Apr
  26 2000

  	
   

  	
  769298

  	
   

  	
  May 06
  2004

  
	
   

  	
   

  	
  Brazil

  	
   

  	
  Pending

  	
   

  	
  PI0011226-7

  	
   

  	
  Apr 26 2000

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Canada

  	
   

  	
  Grant

  	
   

  	
  2,372,194

  	
   

  	
  Apr
  26 2000

  	
   

  	
  2,372,194

  	
   

  	
  Jan
  18 2005

  
	
   

  	
   

  	
  China

  	
   

  	
  Grant

  	
   

  	
  00807223.X

  	
   

  	
  Apr 26 2000

  	
   

  	
  ZL00807223.X

  	
   

  	
  Apr 21 2004

  
	
   

  	
   

  	
  European Patent

  	
   

  	
  Gone National

  	
   

  	
  00928391.2

  	
   

  	
  Apr 26 2000

  	
   

  	
  1175257

  	
   

  	
  Mar 03 2004

  
	
   

  	
   

  	
  Israel

  	
   

  	
  Grant

  	
   

  	
  146265

  	
   

  	
  Apr 26 2000

  	
   

  	
  146265

  	
   

  	
  Apr 25 2005

  
	
   

  	
   

  	
  Japan

  	
   

  	
  Pending

  	
   

  	
  2000-615133

  	
   

  	
  Apr
  26 2000

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Korea,
  Republic of (South)

  	
   

  	
  Grant

  	
   

  	
  2001-7013974

  	
   

  	
  Apr
  26 2000

  	
   

  	
  0464065

  	
   

  	
  Dec
  20 2004

  
	
   

  	
   

  	
  Malaysia

  	
   

  	
  Grant

  	
   

  	
  PI20001901

  	
   

  	
  May 03
  2000

  	
   

  	
  MY-125075-A

  	
   

  	
  Jul
  31 2006

  
	
   

  	
   

  	
  New
  Zealand

  	
   

  	
  Grant

  	
   

  	
  515684

  	
   

  	
  Apr
  26 2000

  	
   

  	
  515684

  	
   

  	
  Sep
  08 2003

  
	
   

  	
   

  	
  Philippines

  	
   

  	
  Grant

  	
   

  	
  1-2000-01120

  	
   

  	
  May 03
  2000

  	
   

  	
  1-2000-01120

  	
   

  	
  Feb
  07 2006

  
	
   

  	
   

  	
  Singapore

  	
   

  	
  Grant

  	
   

  	
  200106762-8

  	
   

  	
  Apr 26 2000

  	
   

  	
  84699

  	
   

  	
  Feb 28 2005

  

 

A-3

 

	
   

  	
   

  	
  South
  Africa

  	
   

  	
  Grant

  	
   

  	
  2001/9553

  	
   

  	
  Apr
  26 2000

  	
   

  	
  2001/9553

  	
   

  	
  Aug
  27 2003

  
	
   

  	
   

  	
  Taiwan

  	
   

  	
  Grant

  	
   

  	
  89108409

  	
   

  	
  Jul
  13 2000

  	
   

  	
  NI-187729

  	
   

  	
  Feb
  05 2004

  
	
   

  	
   

  	
  Thailand

  	
   

  	
  Grant

  	
   

  	
  057275

  	
   

  	
  May 03
  2000

  	
   

  	
  23591

  	
   

  	
  Apr
  21 2008

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  09/304,257

  	
   

  	
  May 03
  1999

  	
   

  	
  6,223,455

  	
   

  	
  May 01
  2001

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU108CIP

  	
   

  	
  Spray
  Drying Apparatus And Methods Of Use

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  09/756,950

  	
   

  	
  Jan
  09 2001

  	
   

  	
  6,308,434

  	
   

  	
  Oct
  30 2001

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU108CIP(2)

  	
   

  	
  Spray
  Drying Apparatus And Methods Of Use

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  10/045,419

  	
   

  	
  Oct
  26 2001

  	
   

  	
  6,560,897

  	
   

  	
  May 13
  2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU116

  	
   

  	
  Ultrasound
  Contrast Agent Dosage Formulation

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Australia

  	
   

  	
  Pending

  	
   

  	
  2004320514

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Brazil

  	
   

  	
  Pending

  	
   

  	
  PI0418879-9

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Canada

  	
   

  	
  Pending

  	
   

  	
  2,569,134

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  China

  	
   

  	
  Pending

  	
   

  	
  200480043713.0

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  European
  Patent

  	
   

  	
  Pending

  	
   

  	
  04014021.2

  	
   

  	
  Jun
  15 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hong
  Kong

  	
   

  	
  Pending

  	
   

  	
  06106371.0

  	
   

  	
  Jun
  02 2006

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  India

  	
   

  	
  Pending

  	
   

  	
  7358/DELNP/2006

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Indonesia

  	
   

  	
  Pending

  	
   

  	
  W00200603448

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Israel

  	
   

  	
  Pending

  	
   

  	
  179594

  	
   

  	
  Jan
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Japan

  	
   

  	
  Pending

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Korea,
  Republic of (South)

  	
   

  	
  Pending

  	
   

  	
  2007-7000082

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mexico

  	
   

  	
  Pending

  	
   

  	
  PA/a/2006/01411

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  New
  Zealand

  	
   

  	
  Pending

  	
   

  	
  551986

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Philippines

  	
   

  	
  Pending

  	
   

  	
  1-2006-502433

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Singapore

  	
   

  	
  Pending

  	
   

  	
  200608260-6

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  South
  Africa

  	
   

  	
  Allowed
  application

  	
   

  	
  2006/09760

  	
   

  	
  Jun
  04 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Pending

  	
   

  	
  11/143,170

  	
   

  	
  Jun
  02 2005

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Pending

  	
   

  	
  11/834,111

  	
   

  	
  Aug
  06 2007

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU118CNT3

  	
   

  	
  Ultrasonic
  Contrast Agents, Process for Their Preparation and Their Use as a Diagnostic
  and Therapeutic Agent

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  08/072,748

  	
   

  	
  Jun
  07 1993

  	
   

  	
  5,425,366

  	
   

  	
  Jun
  20 1995

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU118CNT5

  	
   

  	
  Ultrasonic
  Contrast Agents, Process for Their Preparation and Their Use as a Diagnostic
  and Therapeutic Agent

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  08/477,642

  	
   

  	
  Jun
  07 1995

  	
   

  	
  6,071,496

  	
   

  	
  Jun
  06 2000

  

 

A-4

 

	
  ACU118CNT6

  	
   

  	
  Ultrasonic
  Contrast Agents, Process for Their Preparation and Their Use as a Diagnostic
  and Therapeutic Agent

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  08/474,468

  	
   

  	
  Jun
  07 1995

  	
   

  	
  6,177,062

  	
   

  	
  Jan
  23 2001

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU122

  	
   

  	
  Microparticle
  Preparations Made From Biodegradable Copolymers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  08/897,319

  	
   

  	
  Jul
  21 1997

  	
   

  	
  6,383,470

  	
   

  	
  May 07
  2002

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU123

  	
   

  	
  Active
  Principles and Gas Conatining Microparticles

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  08/605,174

  	
   

  	
  Aug
  05 1996

  	
   

  	
  6,068,857

  	
   

  	
  May 30
  2000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU123DIV

  	
   

  	
  New
  Microparticles Containing Active Ingredients, Agents Containing These
  Microparticles, Their Use for Ultrasound-Controlled Release of Active
  Ingredients, as well as a Process for their Production

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  09/459,578

  	
   

  	
  Dec
  13 1999

  	
   

  	
  6,284,280

  	
   

  	
  Sep
  04 2001

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU124

  	
   

  	
  Microparticles  That
  Contain Gas, Media That Contain The Latter, Their Use In Ultrasound
  Diagnosis, As Well As Process For The Production Of The Particles And Media

  
	
   

  	
   

  	
  Japan

  	
   

  	
  Pending

  	
   

  	
  7-522099

  	
   

  	
  Feb
  10 1995

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  09/129,953

  	
   

  	
  Aug
  06 1998

  	
   

  	
  6,306,366

  	
   

  	
  Oct
  22 2001

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU125

  	
   

  	
  Multi-State
  Method For Producing Gas-FIlled Microcapsules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hong
  Kong

  	
   

  	
  Grant

  	
   

  	
  03102710.2

  	
   

  	
  Apr
  15 2003

  	
   

  	
  HK1050492

  	
   

  	
  Sep
  16 2005

  
	
   

  	
   

  	
  Korea,
  Republic of (South)

  	
   

  	
  Grant

  	
   

  	
  10-2001-7015097

  	
   

  	
  May 23
  2000

  	
   

  	
  681369

  	
   

  	
  Feb
  05 2007

  
	
   

  	
   

  	
  Mexico

  	
   

  	
  Grant

  	
   

  	
  PA/A/2001/011998

  	
   

  	
  May 23
  2000

  	
   

  	
  228943

  	
   

  	
  Jul
  06 2005

  
	
   

  	
   

  	
  New
  Zealand

  	
   

  	
  Grant

  	
   

  	
  515147

  	
   

  	
  May 23
  2000

  	
   

  	
  515147

  	
   

  	
  Nov
  03 2003

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  09/979,554

  	
   

  	
  Mar
  27 2002

  	
   

  	
  6,652,782

  	
   

  	
  Nov
  25 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACU126

  	
   

  	
  Device
  and Process for Quantifying Bodies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  European
  Patent

  	
   

  	
  Pending

  	
   

  	
  03745194.5

  	
   

  	
  Mar
  27 2003

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Japan

  	
   

  	
  Pending

  	
   

  	
  2003-579664

  	
   

  	
  Mar
  27 2003

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  United
  States of America

  	
   

  	
  Grant

  	
   

  	
  10/400,928

  	
   

  	
  Mar
  28 2003

  	
   

  	
  6,872,180

  	
   

  	
  Mar
  29 2005

  

 

A-5

 

Exhibit B

 

Third Party Licenses

 

1.  License
Agreement between the Company and GE Healthcare AS, dated June 1, 2006, as
amended by the First Amendment to License Agreement between the Company and GE
Healthcare AS, dated May 11, 2007, and the Second Amendment to License
Agreement between the Company and GE Healthcare AS, dated May 15, 2008

 

2.  Patent License Agreement between the Company
and Bracco International BV, dated June 1, 2006, as amended by the
Amendment to License Agreement between the Company and Bracco International BV,
dated July 29, 2008

 

3.
Patent Transfer Agreement between Schering Aktiengesellschaft and the Company,
dated May 11, 2005, as amended by the Amendment to Patent Transfer
Agreement between Bayer Schering Pharma AG and the Company, dated April 27,
2007, and the Second Amendment to Patent Transfer Agreement between Bayer
Schering Pharma AG and the Company, dated May 15, 2008

 

B-1

 

Exhibit C

 

Litigation and Infringement
Disclosure

 

Although the Company does
not believe it infringes such patent rights, the Company has obtained the
licenses referenced on Exhibit B. 
The Company has complied with the licenses referenced on Exhibit B
since the dates thereof.

 

C-1

 

Exhibit D

 

Form of Manufacturing Agreement

 

D-1

 

Exhibit D

 

TOLL MANUFACTURING
AND PACKAGING AGREEMENT

 

This Toll
Manufacturing and Packaging Agreement (this “Agreement”) is made as of this
             day
of         ,  2006 (the “Effective Date”), by and between
Purchaser (“PURCHASER”) and 
                                                  
(“[MANUFACTURER]”).

 

WHEREAS, PURCHASER holds
certain rights to manufacture, market and sell in the United States the
pharmaceutical product [PRODUCT];

 

WHEREAS, PURCHASER wishes to engage [MANUFACTURER] to
formulate and package [PRODUCT] for subsequent commercial sale by PURCHASER in
the United States and for certain clinical and other purposes; and

 

WHEREAS, [MANUFACTURER] has suitable facilities and
equipment and sufficient qualified personnel to formulate and package
commercial quantities of [PRODUCT] in dosage form, and is willing to provide
such services on the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereto, intending to be
legally bound, agree as follows:

 

I.              DEFINITIONS

 

As used in this Agreement:

 

1.1                                 “Active Drug Substance” means [CHEMICAL
NAME] having those specifications as set forth on Schedule A hereto.

 

1.2                                 “Adverse Experience” or “AE” shall mean
any unfavorable and unintended change in the structure, function, or chemistry
of the body temporally associated with any use of a Product or of a derivative
thereof, whether or not the adverse experience is considered to be related to
the use of the Product, including but not limited to any of the following:  an unexpected side effect, injury, toxicity
or sensitivity reaction, which may include an experience of unexpected
incidence and severity; an adverse experience occurring in the course of the
use of a drug product in professional practice; an adverse experience occurring
in clinical studies; an adverse experience occurring from drug overdose,
whether accidental or intentional; an adverse experience occurring from drug
abuse; an adverse experience occurring from drug withdrawal; and any
significant failure of expected pharmacological action.

 

1.3                                 “Affiliate” means any corporation or
other business entity which, directly or indirectly, is controlled by,
controls, or is under common control with PURCHASER or [MANUFACTURER].  For this purpose, “control” shall be deemed
to mean ownership of fifty percent (50%) or more of the stock or other equity
of such entity.

 

D-2

 

1.4                                 “cGMP” means the then current good
manufacturing practices promulgated by the FDA under the U.S. Food, Drug and
Cosmetic Act, 21 C.F.R. Sections 210-211, as amended from time to time.

 

1.5                                 “Commodities” means the raw materials
necessary to package the Product as set forth in Schedule A hereto.

 

1.6                                 “Components” means the raw material
necessary to formulate the Product as set forth in Schedule A hereto.

 

1.7                                 “Confidential Information” means all
information, data, know-how and all other business, technical and financial
data disclosed hereunder by one party or any of its Affiliates to the other
party or any of its Affiliates, except any portion thereof which:

 

(a)           at
the time of disclosure, is public knowledge;

 

(b)                                 after disclosure, becomes public
knowledge by publication or otherwise, except by breach of this Agreement by
the recipient;

 

(c)                                  the recipient can demonstrate by its
written records was in the recipient’s possession at the time of such
disclosure, and which was not acquired, directly or indirectly, from the
disclosing party;

 

(d)                                 is lawfully disclosed to the recipient on
a non-confidential basis by a third party who is not obligated to the
disclosing party or any other third party to retain such Confidential
Information in confidence;

 

(e)                                  results from research and development by
the recipient independent of such disclosure as shown by competent evidence; or

 

(f)                                    is required to be disclosed by legal
process; provided, in each case the party so disclosing information
timely informs the other party and uses its reasonable efforts to limit the
disclosure and maintain confidentiality to the extent possible and, if possible,
permits the other party to attempt by appropriate legal means to limit such
disclosure.

 

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

 

1.9                                 “Product” means [PRODUCT] in final
packaged dosage form meeting the Specifications set forth in Schedule A hereto.

 

1.10                           “Quality Technical Agreement” means the
form of quality assurance/quality control agreement to be entered into by
PURCHASER and [MANUFACTURER] as set forth in Schedule B

 

D-3

 

1.11                           “Specifications” means the
Commodities-and /or Component and/or Product specifications seth forth in
Schedule A as the case may be.

 

1.12.                        “Territory” means the United States of
America, including Puerto Rico, and any other territories and possessions of
the United States of America.

 

1.13                           “Trademark” or “Trademarks” shall mean
[PRODUCT], as well as any other trademark owned or used by PURCHASER in
connection with the Product, including, but not limited to, those trademarks
listed on Schedule A hereto.

 

II.            APPOINTMENT AND TERM

 

2.1                                 Appointment. 
PURCHASER hereby appoints [MANUFACTURER], and [MANUFACTURER] hereby
accepts appointment, as a toll manufacturer to formulate and package the
Product.

 

2.2                                 Manufacturing and Packaging Services. 
During the term of this Agreement, [MANUFACTURER] shall formulate
Product, and prepare the Product for PURCHASER commercial sale to customers and
for clinical and other purposes.  In
addition, [MANUFACTURER] shall label and package Product in accordance with
those specifications and instructions set forth in Schedule A hereto, or
otherwise as may be provided by PURCHASER and reasonably agreed to by
[MANUFACTURER] in writing.  PURCHASER
will supply approved artwork for labels, package inserts and packaging.  The content of the labels, package inserts
and packaging shall be the sole and exclusive responsibility of PURCHASER.

 

2.3                                 Cooperation. 
PURCHASER and [MANUFACTURER] will cooperate with each other as may be
necessary and customary in consideration of industry practice, and will
disclose all material information necessary to enable each other to perform
under this Agreement in a timely fashion.

 

2.4                                 Specific Duties. 
In addition to its general obligations relating to formulating and
packaging, [MANUFACTURER] shall perform the following services at
[MANUFACTURER]’s cost, except where indicated:

 

 (i)                                  placing orders for, acquiring and storing all
Commodities and Components;

 

(ii)           quality control and testing of all Active
Drug Substance, Commodities and Components, in process materials and finished
dosage Product,  in order to monitor
compliance with all applicable standards and specifications required by this
Agreement, including any Schedules hereto;

 

D-4

 

(iii)          conducting stability testing of Product
in accordance with the procedures set forth in the Quality Technical Agreement;

 

(iv)                              summarizing implemented changes and
supplying latest versions of approved critical documentation, and providing
other information necessary for PURCHASER to prepare, submit, obtain and
maintain all regulatory filings relating to the manufacture of the Product
under the terms of this Agreement; and

 

(v)           performing such other services as agreed
upon in writing by the parties.

 

III.           PRODUCT QUANTITY, QUALITY AND
MANUFACTURING PROCESSES

 

3.1                                 Quantity.  Subject to the
terms and conditions of this Agreement, [MANUFACTURER] will manufacture,
package and supply to PURCHASER quantities of Product ordered by PURCHASER or
an Affiliate thereof for subsequent sale by PURCHASER or an Affiliate or
sublicensee thereof, or for certain clinical or other purposes in the
Territory.    [MANUFACTURER] agrees to
reserve capacity for the quantities of Product as defined in Schedule C.    [MANUFACTURER] shall have no obligation to
supply quantities in excess of those set forth in Schedule C, but shall use its
commercially reasonable efforts to accommodate PURCHASER demand for excess
quantities.

 

3.2                                 Quality.  All Product
manufactured and packaged by [MANUFACTURER] for PURCHASER under this Agreement
will meet the Specifications as well as the quality assurance standards
established in the Quality Technical Agreement.   The Specifications, as well as the terms and
conditions of the Quality Technical Agreement, are subject to modification from
time to time by mutual written agreement of the parties. Prior to
implementation of any Specification changes, the Parties agree to negotiate in
good faith in an attempt to reach agreement on (a) the new price for any
Product manufactured hereunder by [MANUFACTURER] which embodies such changes,
based solely on the effect of such changes on [MANUFACTURER]’s manufacturing
costs for the Product and (b) any other amendments to this Agreement which
may be necessitated by such changes (i.e., an adjustment to the lead
time for purchase orders).  PURCHASER
agrees to reimburse [MANUFACTURER] for the reasonable, documented expenses
incurred by [MANUFACTURER] as a result of such changes, including, but not limited
to, reimbursing [MANUFACTURER] for its validation and development costs,
capital expenditure costs and costs for any packaging components or other
materials and in-process materials rendered unusable as a result of such
changes.  If during the term of this
Agreement PURCHASER amends or is required by law to amend the Specifications so
as to render Commodities or Components or in-process materials for the Product
obsolete, PURCHASER shall purchase from [MANUFACTURER], at [MANUFACTURER]’s
cost that amount of inventory of Commodities and/or Components,  in-process materials and/or Product, as the
case may be, so rendered obsolete.

 

D-5

 

3.3           Manufacturing Processes. 
[MANUFACTURER] has furnished to PURCHASER a copy of its production procedures
and in the Quality Technical Agreement the parties will agree upon the
equipment to be used to produce the Product. Costs incurred by [MANUFACTURER]
as a result of any changes or modifications requested by the FDA or by
PURCHASER and relating solely to the production of the Product will be borne by
PURCHASER; costs for other changes affecting [MANUFACTURER]’s cGMP compliance
or affecting other products generally will be borne by [MANUFACTURER].

 

3.4           Documentation.   PURCHASER shall provide [MANUFACTURER] with
initial methods and specifications for manufacturing and packaging the Product
as set forth in the attached Schedule A.  
PURCHASER shall also promptly provide [MANUFACTURER] with all available
safety data and information concerning the Product, process and related
materials, including without limitation all Material Safety Data Sheets (“MSDS”).

 

3.5           Communication. 
[MANUFACTURER] and PURCHASER will respond to requests for support,
information and approvals within ten (10) business days.  If a complete response is not possible within
such ten (10) business day period, the party owing the response shall
communicate within such ten (10) business day period the reason for the
delay and when the response will be available.

 

3.6           Quality Technical Agreement. 
Within sixty (60) days after the date of this Agreement, representatives
of the parties’ Quality Assurance departments shall meet to develop, agree and
approve a Quality Technical Agreement outlining responsibilities and key
contacts for quality and compliance related issues.  [MANUFACTURER] will provide PURCHASER with
certain production and control information for review prior to release as
specified in the Quality Technical Agreement. 
The Quality Technical Agreement will also address, without limitation,
annual product reviews, returned goods, regulatory audits, compliance with FDA
cGMPs,  and such other quality related
concerns deemed appropriate.

 

IV.           CONFIDENTIAL INFORMATION

 

4.1                                 The parties acknowledge that they have
provided Confidential Information to each other in connection with the
formulation and packaging of the Product, and further acknowledge that all such
Confidential Information (as well as any additional Confidential Information
provided by one party to the other hereunder) shall be subject to the
provisions of this Article IV.  Any
and all information, knowledge, technology, and trade secrets relating to the
Product and provided by PURCHASER shall be deemed Confidential Information.

 

4.2                                 [MANUFACTURER] will disclose to PURCHASER
all Confidential Information concerning the Product developed by or for
[MANUFACTURER] during the term of this Agreement, promptly as it is developed.

 

D-6

 

4.3           During the term of this Agreement and for
five (5) years thereafter, all Confidential Information disclosed or
confirmed in writing and designated as confidential by the disclosing party,
shall be held in confidence by the receiving party, shall not be used by the
receiving party for any purpose except as provided hereunder and shall not be
disclosed to third parties except for disclosure to its Affiliates or
governmental authorities, or except as otherwise necessary to carry out the
receiving party’s obligations under this Agreement.  If a receiving party finds it necessary to
disclose such Confidential Information to a third party, the receiving party
will not do so without first obtaining the written consent of the disclosing
party (which shall not be unreasonably withheld) and entering into an agreement
with the third party which binds the third party to the same obligations of
restricted use and disclosure as are undertaken by the parties in this
Agreement.

 

4.4           Neither party shall distribute any
Confidential Information of the other except to its employees or agents who
have a need to know in connection with the performance of their duties in
satisfying the obligations of such party hereunder.  Any employee or agent who receives
Confidential Information shall be advised as to the confidential nature thereof
and the prohibitions contained herein. 
All copies of any portions of any Confidential Information distributed
as provided in this section will be identified as confidential.  Upon termination of this Agreement, and upon
the request of the disclosing party, the receiving party shall return or
destroy all such Confidential Information and any copies thereof in its
possession, except that each party may retain one copy of Confidential
Information solely for archival purposes.

 

4.5                                 Termination of this Agreement shall not
operate to extinguish either party’s obligation to treat Confidential
Information as provided herein.

 

4.6                                 Nothing contained herein shall be deemed
to grant either party, either express or implied, a license or other right or
interest in the Confidential Information of the other or in any patent,
trademark or other similar property of the other, except as expressly provided
hereunder.

 

4.7                                 [MANUFACTURER] shall use the name of
CEPAHLON, nor disclose the existence or terms of this Agreement for any
purpose, without the prior written consent of PURCHASER, which shall not be
unreasonably withheld or delayed.

 

V.            COMPONENT AND COMMODITY SUPPLY; PACKAGING

 

5.1           Commodities and Components. 
[MANUFACTURER] will obtain at its expense, Commodities and Components
which meets the Specifications . 
[MANUFACTURER] assumes full responsibility and liability for the storage
and handling of all Commodities and Components.

 

5.2                                 Packaging.  [MANUFACTURER]
will label and package the Product in

 

D-7

 

accordance with
instructions and Specifications provided by PURCHASER.  [MANUFACTURER] will submit to PURCHASER for
PURCHASER’s approval,   which approval
shall not be unreasonably withheld or delayed, artwork proofs of all labels,
package inserts and packaging prior to labeling and packaging by
[MANUFACTURER].

 

VI.           [INTENTIONALLY OMITTED]

 

VII.          FORECASTS AND ORDERS

 

7.1           Orders.  PURCHASER
will submit firm written purchase orders to [MANUFACTURER] not less than
         ( ) days lead time in advance
of the requested delivery date.

 

7.2                                 Forecasts.  Upon the
Effective Date, PURCHASER shall provide [MANUFACTURER] with a binding purchase
order with PURCHASER’s Product requirements, for the
       ( ) month period commencing with the month
which contains the Effective Date of this Agreement.  PURCHASER shall also provide a forecast of
its requirements for Product, for an additional
       ( ) month period following the initial
       ( ) month period.  The        ( )
month forecast shall represent PURCHASER’s reasonable estimates only, not
purchase orders, to facilitate [MANUFACTURER]’s planning.

 

7.3                                 Forecasts Changes and Forecast Updates.  
On or before the tenth (10th) day of each month thereafter, PURCHASER
shall provide [MANUFACTURER] with an additional one (1) month purchase
order to supplement the remaining
           ( ) months of firm
purchase orders, thereby establishing a new
       ( ) month period of purchase orders, and
shall provide an updated forecast of its estimated requirements of Product for
the          ( ) months succeeding such
new        ( ) month period of firm purchase
orders.  Provided PURCHASER’s purchase
orders do not exceed [MANUFACTURER]’s reserve capacity set forth in Schedule C,
[MANUFACTURER] shall accept all PURCHASER purchase orders and shall supply
PURCHASER in accordance with them. 
PURCHASER can increase or decrease its firm order quantities with
[MANUFACTURER]’s prior agreement and [MANUFACTURER] can adjust its shipping
quantities with PURCHASER’s prior agreement. 
Both parties shall use their commercially reasonable efforts to
accommodate reasonable change requests from the other.

 

VIII.        PRICE, SHIPMENT AND PAYMENT

 

8.1                                 [MANUFACTURER]’s Responsibilities. 
[MANUFACTURER] will properly prepare the Product so that it may be
lawfully and safely shipped to PURCHASER or its designee in the United States.
[MANUFACTURER] will prepare and execute all reasonably necessary shipping
documents, including a packing list, Dangerous Goods Declaration, and MSDS’s.  PURCHASER will choose the carrier by
indicating the same on its purchase order provided to [MANUFACTURER].

 

D-8

 

8.2           Terms of Shipment. 
[MANUFACTURER] will ship Product [INSERT SHIPPPING CODE].   Shipment shall be made by common carrier
designated by PURCHASER to the shipping point designated by PURCHASER.  If PURCHASER does not designate a common
carrier, [MANUFACTURER] may select the common carrier.  Risk of loss shall pass from [MANUFACTURER]
to PURCHASER when the Product is delivered to the common carrier.   All transport costs will be borne by
PURCHASER.

 

8.3           Price.   [MANUFACTURER]
shall invoice PURCHASER for (i) the applicable fee for all Product
delivered and (ii) other fees, each as set forth in Schedule D.

 

8.4           Terms of Payment. 
PURCHASER will pay [MANUFACTURER] the toll fee within thirty (30) days
after the date on which PURCHASER receives said invoice from [MANUFACTURER],
together with copies of all documentation required for Product release as provided
herein and in the Technical Quality Agreement.  
Late payments shall bear interest at the rate of 1 1/2 % per month, or
if less, the highest rate permitted under applicable law.  The invoice for Product shall not be
generated prior to date of shipment. 
Invoices for other fees shall be delivered to PURCHASER promptly as
incurred

 

IX.           INSPECTION AND ANALYSIS

 

9.1           Inspection by [MANUFACTURER].   [MANUFACTURER]  will  analyze  each  Product  lot  for  compliance  with  the  Specifications  set  forth  in  Schedule  A.  [MANUFACTURER]  will  send  to  PURCHASER  a  certificate  of  analysis  and  a  certificate  of  release  (together  with  any  other  documentation  required  under  the  Technical  Quality  Agreement  )  prior  to,  or  together  with,  each  shipment  of  Product.  In  this  regard,  [MANUFACTURER]  agrees  to  retain  all  records and documents necessary to fulfill the
requirements established by all applicable regulatory agencies.

 

9.2           Inspection by PURCHASER. 
PURCHASER or its authorized representative will inspect all shipments
upon their receipt and will report any reasonably discernible defects in the
Product to [MANUFACTURER] within thirty (30) days of its receipt of the Product
and related records.  Any defects not
reasonably discernible will be reported to [MANUFACTURER] by PURCHASER within
ten (10) days of PURCHASER’s discovery of the same.

 

9.3           Non-Conforming Product. 
If any Product does not meet the warranties set forth in Section XI,
as determined by PURCHASER’s testing and inspection of the Product, then at its
option PURCHASER may, as its sole remedy, either (i) require that
[MANUFACTURER] remanufacture or repackage (as appropriate) said Product at no
charge to PURCHASER and pay all round-trip shipping charges to and from the
destination of the original shipment,  or
(ii) be relieved of 

 

D-9

 

any obligation to pay
[MANUFACTURER] the tolling fees otherwise payable for the manufacture of said
Product, and [MANUFACTURER] shall reimburse PURCHASER for the reasonable costs
incurred by PURCHASER in properly disposing of such non-conforming
Product.  Any notice given hereunder
shall specify the manner in which the Product fails to conform to the purchase
order therefor or fails to meet such warranty or the Specifications.

 

9.4                                 Independent Testing. 
If PURCHASER notifies [MANUFACTURER] that any Product does not meet the
warranties in Section 10, and [MANUFACTURER] does not agree with PURCHASER’s
position, the parties will attempt to reach a mutually acceptable resolution of
the dispute.  If they are unable to do so
after a reasonable period of time (such period not to exceed thirty (30) days
from the date of original notification), the matter will be submitted to an
independent testing laboratory acceptable to both parties.  Both parties will accept the judgment of the
independent laboratory.  The cost of such
testing will be borne by the party whose position is determined to have been in
error.  If the Product is determined by
said independent laboratory to have been conforming, then the provisions of Section 9.3
hereof shall not apply, and PURCHASER shall not be relieved of its obligations
to pay [MANUFACTURER] for the production of such Product.

 

X.            REGULATORY MATTERS; REGULATORY FILINGS
AND APPROVALS

 

General. 
[MANUFACTURER] shall be responsible for obtaining and maintaining all
site licenses for the manufacture of the Product and shall comply on behalf of
PURCHASER with other applicable laws and regulations promulgated by, but not
limited to, the FDA in connection with [MANUFACTURER]’s manufacture of the
Product.

 

XI.           REPRESENTATIONS AND WARRANTIES

 

11.1                           General.

 

(a)           [MANUFACTURER] represents and
warrants to PURCHASER that (i) it has and will maintain throughout the
pendency of this Agreement, the expertise, with respect to personnel and equipment,
to fulfill the obligations established hereunder, and has obtained all
requisite material licenses, authorizations and approvals (the “Permits”)
required by federal, state or local government authorities including, but not
limited to, the FDA,  Environmental
Protection Agency (“EPA”), and the Occupational Safety and Health
Administration (“OSHA”) (or such analogous government authorities) to
manufacture the Product; (ii) the production facility, equipment and
personnel to be employed to formulate and package the Product will be qualified
to manufacture product according to cGMP at the time each such batch of Product
is produced, and that the production facility to be employed is in compliance
with all applicable material laws and regulations;  (iii) there are no pending or
uncorrected citations or adverse conditions noted in any inspection of the
production facility to be 

 

D-10

 

employed to manufacture
the Product that would cause the Product to be misbranded or adulterated within
the meaning of the US Food, Drug and Cosmetic Act, as amended; (iv)  the
execution, delivery and performance of this Agreement by [MANUFACTURER] does
not conflict with, or constitute a breach of any order, judgment, agreement, or
instrument to which [MANUFACTURER] is a party; (v) the execution, delivery
and performance of this Agreement by [MANUFACTURER] does not require the
consent of any person or the authorization of (by notice or otherwise) any
governmental or regulatory authority (other than those relating to the granting
of approval to commercialize the Product); and (vi) [MANUFACTURER] has not
been debarred by the United States Food and Drug Administration under the
Generic Drug Enforcement Act of 1992 (or by any analogous agency or under any
analogous law or regulation), and neither it nor, to its knowledge, any of its
officers or directors has ever been convicted of a felony under the laws of the
United States for conduct relating to the development or approval of a drug
product or relating to the marketing or sale of a drug product, and further, to
its knowledge, that no individual or firm debarred by any governmental
authority will participate in the performance, supervision, management or
review of the production of Product supplied to PURCHASER under this Agreement.

 

(b)                                 PURCHASER represents and warrants to
[MANUFACTURER] that (i) the execution, delivery and performance of this
Agreement by PURCHASER does not conflict with, or constitute a breach of any
order, judgment, agreement, or instrument to which PURCHASER is a party; and (ii) the
execution, delivery and performance of this Agreement by PURCHASER does not
require the consent of any person or the authorization of (by notice or
otherwise) any governmental or regulatory authority (other than those relating
to the granting of approval to commercialize the Product).

 

11.2                           Manufacturing Warranty. 
[MANUFACTURER] warrants that all Products supplied to PURCHASER will be
manufactured in accordance with cGMPs and the Quality Technical Agreement in
effect at the time of manufacture.

 

11.3                           Product Warranty. 
[MANUFACTURER] hereby warrants that all Product delivered to PURCHASER (i) will
not be adulterated, misbranded, or otherwise prohibited within the meaning of
any national, state or local law or regulation in the Territory, and (ii) will
conform to Specifications as established in Schedule A hereto.

 

11.3                           Warranty Disclaimer.   
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, EACH PARTY EXPRESSLY
DISCLAIMS ANY WARRANTIES, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

 

D-11

 

XII.         QUALITY CONTROL, RECORDS AND INSPECTIONS

 

12.1         Product and Component Samples. 
[MANUFACTURER] will maintain a sample of each chemical component
(including Active Drug Substance) as required by applicable regulatory
standards or as otherwise mutually agreed by PURCHASER and [MANUFACTURER].  [MANUFACTURER] will be responsible for
maintaining retention samples of the Product as may be required by applicable
regulatory standards.

 

12.2         Validation. 
[MANUFACTURER] will validate all process, methods, equipment, utilities,
facilities and computers used in the formulation, packaging, storage, testing
and release of Product in conformance with all applicable laws and
regulations.  PURCHASER will have the
right to review the results of said validation upon request.

 

12.3         Quality Compliance. 
[MANUFACTURER] will provide PURCHASER with timely notification of all
significant deviations, notes to file, and other deficiencies that may
reasonably be expected to impact the quality of the Product, as well as all FDA
reports regarding testing, manufacture, packaging or labeling of the Product.

 

12.4         Manufacturing Records. 
[MANUFACTURER] will maintain complete and accurate records relating to
the Product and the manufacture, packaging, labeling and testing thereof for
the period required by applicable regulatory standards, and [MANUFACTURER]
shall provide copies thereof to PURCHASER upon PURCHASER’s request.  The records shall be subject to audit and
inspection under this Article XII.

 

12.5         Batch Records. Records which include the information
relating to the manufacturing, packaging and quality operation for each lot of
Product will be prepared by [MANUFACTURER] at the time such operations occur.
[MANUFACTURER] will prepare such records in accordance with cGMP’s, the Specifications
and the Technical Quality Agreement.

 

12.6         Records Retention. 
[MANUFACTURER] will retain records and documents for periods meeting all
applicable regulations of the FDA.

 

12.7         Regulatory Inspections. 
[MANUFACTURER] will without undue delay inform PURCHASER of any contact,
inspection or audit by any governmental agency (other than EPA and OSHA
inspections) related to or affecting the Product (other than contacts,
inspections or audits affecting products generally).  [MANUFACTURER] will without undue delay provide
PURCHASER with copies of any government-issued inspection observation reports
(including without limitation FDA Form 483s and equivalent forms from
other regulatory bodies) and agency correspondence that may reasonably be
expected to adversely affect the Product. 
[MANUFACTURER] and PURCHASER will cooperate in resolving any concerns
with any governmental agency. 
[MANUFACTURER] will also inform PURCHASER of any action taken by any
governmental agency 

 

D-12

 

against [MANUFACTURER] or any of its officers and employees which may
reasonably be expected to adversely affect the Product or [MANUFACTURER]’s
ability to supply Product hereunder within 24 hours after the action is taken.

 

12.8         PURCHASER Inspections. 
PURCHASER employees or PURCHASER authorized representatives will have
the right during normal business hours, at reasonable intervals and on
reasonable prior notice, to conduct inspections, at PURCHASER’s expense, of
[MANUFACTURER]’s facilities used in the manufacturing, packaging, storage,
testing, shipping or receiving of Product, Commodities and Components.  All such employees and representatives shall
be qualified to conduct such inspections, shall be escorted by [MANUFACTURER]
employees or representatives at all times while at [MANUFACTURER]’s facility,
shall be bound by the same confidentiality obligations as contained herein, and
shall abide at all times with [MANUFACTURER]’s rules and regulations,
including without limitation safety rules and regulations.  Such inspections may include cGMP inspections
and system audits. Persons conducting such inspections will have access only to
documents, records, reports, data, procedures, facilities, regulatory submissions,
and all other information required to be maintained by applicable law and
government regulations relating to the Product. 
[MANUFACTURER] shall take appropriate actions to adopt reasonable
suggestions of PURCHASER to correct any deficiencies identified by such
inspection or audit.  In addition,
PURCHASER shall have the right to observe from time to time the manufacture,
packaging and quality control testing of the Product by [MANUFACTURER]. No
testing of the Product by PURCHASER and no inspection or audit by PURCHASER of
the [MANUFACTURER] production facility under this Agreement shall operate as a
waiver of or otherwise diminish [MANUFACTURER]’s responsibility with respect to
Product quality under this Agreement. 
The duration of an audit will be limited to no more than 3 days, and
audits may not interfere with [MANUFACTURER]’s normal operations.

 

XIII.        COMPLAINTS, ADVERSE EXPERIENCES AND RECALLS

 

13.1         Product Complaints and AE’s.  PURCHASER shall maintain complaint files with respect
to the Product in accordance with cGMPs.  [MANUFACTURER] will promptly
notify PURCHASER by facsimile transmission of all Product complaints and AEs
received by [MANUFACTURER] within two (2) days of its receipt
thereof.  All such notices shall be sent
to the attention of the Director, Medical Affairs at PURCHASER, facsimile
number (610) 738-6313. PURCHASER shall promptly provide [MANUFACTURER] with
copies of any complaints received by PURCHASER relating to the manufacture or
packaging of the Product. PURCHASER shall have responsibility for responding to
all complaints, and for promptly providing [MANUFACTURER] with a copy of any
responses to complaints relating to the manufacture or packaging of the
Product.  PURCHASER or its affiliates
shall have responsibility for reporting all complaints relating to the Product
to the FDA and any other regulatory 

 

D-13

 

authorities, including, but not limited to, complaints
relating to the manufacture or packaging of the Product as well as adverse
experience (AE) reports.  PURCHASER will
correspond with complainants as to any complaints associated with Product,
whether received during or after the term hereof.  [MANUFACTURER] will assist PURCHASER in
investigating Product complaints relating to the manufacture or packaging of
the Product by analyzing Product, manufacturing processes and components to
determine the nature and cause of an alleged Product manufacturing defect or
alleged Product failure.  [MANUFACTURER]
will also assist PURCHASER in the investigation of any Adverse Experience (AE)
reported to either party when such AEs are reasonably believed to be
attributable to the manufacture or packaging of the Product.  If PURCHASER determines that any reasonable
physical, chemical, biological or other evaluation should be conducted in
relation to an AE or Product complaint relating to the manufacture or packaging
of the Product, [MANUFACTURER] will conduct the evaluation and provide
PURCHASER with a written report of such evaluation within thirty (30) days from
receipt of PURCHASER’s written request for same, together with samples of the
Product from the relevant lot.

 

13.2         Recall Action.  If PURCHASER
should elect or be required to initiate a Product recall, withdrawal or field
correction because of (i) supply by [MANUFACTURER] of Product that does
not conform to the Specifications and warranties established by this Agreement
or (ii) the negligent or intentional wrongful act or omission of
[MANUFACTURER], PURCHASER will notify [MANUFACTURER] and provide [MANUFACTURER]
a copy of its recall letter prior to initiation of the recall.  [MANUFACTURER] will assist PURCHASER (and its
designated Affiliate) in an investigation to determine the cause and extent of
the problem.  All regulatory authority
contacts and coordination of any recall activities will be initiated by, and
will be the sole responsibility of, PURCHASER.

 

13.3         Recall Expenses.  If any Product
is recalled as a result of (i) supply by [MANUFACTURER] of Product that
does not conform to the warranties contained in Sections 11.1, 11.2 or 11.3
hereof or (ii) the negligent or intentional wrongful act or omission of
[MANUFACTURER], then [MANUFACTURER] will bear all reasonable costs and expenses
of such recall. Recalls for any other reason will be at PURCHASER’s sole
expense.

 

13.4         Recall Records.  [MANUFACTURER]
will maintain complete and accurate records for such periods as may be required
by applicable law or regulation.

 

XIV.        INSURANCE

 

14.1         During the term hereof, [MANUFACTURER] shall maintain
product liability/completed operations insurance, providing coverage of not
less than TEN MILLION AND 00/100 DOLLARS ($10,000,000.00) per occurrence and in
the aggregate, insuring [MANUFACTURER] against all costs, fees, judgments, and 

 

D-14

 

liabilities arising out of or alleged to arise out of
its obligations and representations and warranties under this Agreement.  In addition, [MANUFACTURER] will maintain at
all times sufficient property casualty insurance to cover the total quantity of
Active Drug Substance and Product on hand at its full cost of replacement.  [MANUFACTURER] will provide to PURCHASER,
upon request, evidence of such insurance coverages.  [MANUFACTURER] further agrees to cause such
policies to name PURCHASER as an additional insured at no cost to CEPHLAON.

 

14.2         During the term hereof, PURCHASER agrees to maintain,
and upon request, to provide evidence of product liability insurance for and
providing coverage of not less than TEN MILLION AND 00/100 DOLLARS
($10,000,000.00) per occurrence and in the aggregate providing a defense for
and insuring PURCHASER against all costs, fees, judgments and liabilities
arising out of or alleged to arise out of its obligations and representations
and warranties under this Agreement.  PURCHASER
will provide to [MANUFACTURER], upon request, evidence of such insurance
coverages.

 

XV.         TRADEMARKS

 

15.1         [MANUFACTURER] shall have the non-exclusive right to
use the Trademarks in packaging the Product in connection with fulfilling its
obligations hereunder.  The rights
granted [MANUFACTURER] hereunder to use the Trademarks shall in no way affect
PURCHASER’s ownership of such Trademarks. 
No other right, title or interest in the Trademarks is established
hereby, and nothing herein shall be construed to grant any right or license to
[MANUFACTURER] to use the PURCHASER trademark or the name PURCHASER, other than
as specifically set forth herein.

 

15.2         [MANUFACTURER] will only manufacture the Product using
the relevant Trademarks as listed in Schedule A during the term of this
Agreement.  Upon termination of this
Agreement, [MANUFACTURER] will cease all use of the Trademarks and cancel any
license to such Trademarks granted hereunder.

 

15.3         [MANUFACTURER] will use the Trademarks in strict
accordance with the instructions given by PURCHASER, and shall refrain from
making any changes in connection therewith without first obtaining PURCHASER’s
written consent.

 

15.4         In the event of any claim or litigation by a third
party against [MANUFACTURER] alleging that any of the Trademarks imitates or
infringes a trademark of such third party or is invalid, [MANUFACTURER] shall
promptly give notice of such claims or litigation to PURCHASER and PURCHASER
shall assume responsibility for and control of the handling, defense, or
settlement thereof. [MANUFACTURER] shall cooperate fully with PURCHASER during
the pendency of any such claim or litigation, at PURCHASER’s expense. PURCHASER
shall keep [MANUFACTURER] notified of the current status of 

 

D-15

 

any trademark
claim, litigation or infringement of any of the Trademarks and shall permit
[MANUFACTURER] to assume the handling, defense or settlement thereof if
PURCHASER declines to do so, at [MANUFACTURER]’s expense.  PURCHASER may at any time modify, adopt or
withdraw from use any Trademark without any liability to [MANUFACTURER].

 

XVI.     INVENTIONS

 

Any patentable or
unpatentable inventions, discoveries, improvements, or trade secrets made by
[MANUFACTURER] (the “Developments”) in the performance of this Agreement as
they may specifically relate to the Product or its manufacture (including any
new use or any change in the method of producing, testing or storing the
Product) shall be owned by PURCHASER.  
[MANUFACTURER] shall execute such instruments as shall be required to
evidence or effectuate the other party’s ownership of any such Developments,
shall cooperate upon reasonable request (and at the expense of the requesting
party) in the prosecution of patents and other intellectual property rights
related to any such Developements and shall diligently respond
to all reasonable requests on the part of PURCHASER to secure information that
may be otherwise necessary to secure or perfect an intellectual property right
in any such Developments.

 

XVII.    INDEMNIFICATION

 

17.1         By [MANUFACTURER]. 
[MANUFACTURER] will indemnify, defend and hold harmless PURCHASER, its
Affiliates, directors, officers, employees, agents, successors, and assigns
from any and all liability, damage, loss, cost, or expense (including
reasonable attorneys’ fees) arising out of third-party claims, which arise from
i) [MANUFACTURER]’s breach of any of the warranties, and representations
contained in Article XI hereof, or ii) [MANUFACTURER]’s negligence or
other willful misconduct.  .

 

17.2         By PURCHASER.  PURCHASER
will indemnify, defend and hold harmless [MANUFACTURER], its Affiliates,
directors, officers, employees, agents, successors, and assigns harmless from
any and all liability, damage, loss, cost, or expense (including reasonable
attorneys’ fees) arising out of third-party claims which arise from i)  PURCHASER’s breach of any of the warranties
and representations contained in Article XI hereof or ii)  PURCHASER’s negligence or other willful
misconduct.

 

17.3         By Each Party.  In the event
that negligence or willful misconduct of both [MANUFACTURER] and PURCHASER
contribute to any such loss, damage, claim, injury, cost or expense,
[MANUFACTURER] and PURCHASER will each indemnify and hold harmless the other
with respect to that portion of the loss, damage, claim, injury, cost or
expense attributable to its negligence or willful misconduct.

 

D-16

 

17.4         LIMITATION
OF LIABILITY.  IN NO EVENT SHALL ABBOTT OR PURCHASER BE
LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT
DAMAGES ARISING IN ANY WAY OUT OF THE MANUFACTURE AND SUPPLY OF THE PRODUCT TO
THE OTHER HOWEVER CAUSED AND BASED ON ANY THEORY OF LIABILITY; PROVIDED
HOWEVEER, THIS LIMIATION SHALL NOT APPLY TO THIRD PARTY CLIAMS FOR WHICH THE
OTHER PARTY IS INEDMNIFIED HEREUNDER.

 

17.5         Procedures.  In the event
that one party receives notice of a claim, lawsuit, or liability for which it
is entitled to indemnification by the other party, the party receiving notice
shall give prompt notification to the indemnifying party.  The party being indemnified shall cooperate
fully with the indemnifying party throughout the pendency of the claim, lawsuit
or liability, and the indemnifying party shall have complete control over the
conduct and disposition of the claim, lawsuit, or liability including the
retention of legal counsel engaged to handle such matter.  The indemnifying party hereunder will not be
liable for any costs associated with the settlement of any claim or action
brought against it or the other party unless it has received prior notice of
the settlement negotiations and has agreed to the settlement.

 

XVIII.     TERM; TERMINATION

 

18.1         Term.  Unless
terminated in accordance with the provisions of this Article XVIII, this
Agreement will remain in effect for a period of
[                      ]
from the Effective Date (the “Initial Term”), and, unless either party gives
written notice of non-renewal at least
[                                  ]
prior to the end of the Initial Term (or any renewal term), this Agreement
shall be renewed for consecutive terms of two years.

 

18.2         Breach.  If either
party hereto commits a material breach of any of its obligations hereunder, the
non-breaching party may, at its option, terminate this Agreement by giving the
other party at least ninety (90) days prior written notice of its intent to
terminate this Agreement, which notice shall specify the breach and the
termination date, unless the breaching party cures said breach prior to the
specified termination date (or prior to the expiration of a longer period as
may be reasonably necessary to cure a breach, provided that the breaching party
is making diligent efforts to cure such breach, and provided further that such longer
period shall not in any event exceed one hundred twenty (120) days from the
date of notice).

 

18.3         Insolvency.  Either party
may terminate this Agreement immediately in its entirety if the other Party
files a petition of bankruptcy, is adjudged bankrupt, takes advantage of any
insolvency act, or executes a bill of sale, deed of trust, or assignment for
the benefit of creditors.

 

D-17

 

18.4         Survival.  The rights and
obligations in the following Articles will survive any termination or
expiration of this Agreement: IV, XI, XIII, XVI, XVII, XVIII and XX will
survive termination of this Agreement, as will any rights to payment or other
rights or obligations that have accrued under this Agreement prior to termination.  Termination will not affect the liability of
either party by reason of any act, default, or occurrence prior to said
termination.

 

18.5         Transfer.  If either
party terminates this Agreement, [MANUFACTURER] will upon request and at
PURCHASER’s expense provide reasonable assistance in transferring production of
Product to a facility owned by PURCHASER or a third party selected by
PURCHASER.

 

18.6         Return of Product and Components. 
Upon termination under this Article XVIII, [MANUFACTURER] shall, at
PURCHASER’s expense, return promptly to PURCHASER all Product, Active Drug
Substance, Commodities, Components and in process materials in its possession
on the effective date of termination.

 

XIX.        DISPUTE RESOLUTION

 

Any dispute concerning or arising out of this Agreement or concerning
the existence or validity hereof, shall be determined by the following
procedure.

 

19.1         Both parties understand and appreciate that their long
term mutual interest will be best served by effecting a rapid and fair
resolution of any claims or disputes which may arise out of services performed
under this contract or from any dispute concerning contract terms.  Therefore, both parties agree to use their
best efforts to resolve all such disputes as rapidly as possible on a fair and
equitable basis.  Toward this end both
parties agree to develop and follow a process for presenting, rapidly
assessing, and settling claims on a fair and equitable basis.

 

19.2         If any dispute or claim arising under this contract
cannot be readily resolved by the parties pursuant to the process described in Section 19.1,
the parties agree to refer the matter to a panel consisting of one (1) senior
executive employed by each party who is not directly involved in the claim or
dispute for review and resolution.  A
copy of the contract terms, agreed upon facts (and areas of disagreement), and
concise summary of the basis for each side’s contentions will be provided to
both such senior executives who shall review the same, confer, and attempt to
reach a mutual resolution of the issue.

 

19.3         If the matter has not been resolved utilizing the
process set forth in this Article XIX, and the parties are unwilling to
accept the non-binding decision of the panel, either or both parties may elect
to pursue resolution through litigation according to Section 20.9.

 

D-18

 

XX.         MISCELLANEOUS

 

20.1         Headings.  The headings
and captions used herein are for the convenience of the parties only and are
not to be construed to define, limit or affect the construction or
interpretation hereof.

 

20.2         Severability. In the event that any provision of this Agreement is
found to be invalid or unenforceable, then the offending provision shall not
render any other provision of this Agreement invalid or unenforceable, and all
other provisions shall remain in full force and effect and shall be
enforceable, unless the provisions which have been found to be invalid or
unenforceable shall substantially affect the remaining rights or obligations
granted or undertaken by either party.

 

20.3         Entire Agreement.  This
Agreement, including all those Schedules appended hereto, contains the entire
agreement of the Parties regarding the subject matter hereof and supersedes all
prior agreements, understandings or conditions (whether oral or written)
regarding the same.  Further, this
Agreement may not be changed, modified, amended or supplemented except by a
written instrument signed by both parties.

 

20.4         Assignability.  This
Agreement and the rights hereunder may not be assigned or transferred by either
party without the prior written consent of the other party; provided however,
that either party may assign this Agreement to an Affiliate, and provided
further that in the event of a merger, acquisition or sale of substantially all
of the assets of either party, the rights and obligations of such party under
this Agreement may be assigned to the survivor or purchaser in that
transaction.  In the event that this
Agreement is assigned, it shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.

 

20.5         Further Assurances.  Each party
hereto agrees to execute, acknowledge and deliver such further instruments, and
to take such other actions, as may be necessary or appropriate in order to
carry out the purposes and intent of this Agreement.

 

20.6         Waiver.  The waiver by
either party of a breach of any provisions contained herein shall be effective
only if made in writing and shall in no way be construed as a waiver of any
succeeding breach of such provision or the waiver of the provision itself.

 

20.7         Force Majeure.  A party shall
not be liable for nonperformance or delay in performance (other than of
obligations regarding any payments or of confidentiality) caused by any event
reasonably beyond the control of such party including, without limitation,
wars, hostilities, revolutions, riots, civil disturbances, national
emergencies, strikes, lockouts, unavailability of supplies, epidemics, fires,
floods, earthquakes, other forces of nature, explosions, embargoes, or any
other Acts of God, or any laws, proclamations, regulations, ordinances, or
other acts or orders of any court, government or governmental agency.  Any occurrence of Force Majeure shall be
reported promptly to the other 

 

D-19

 

party.  A party whose performance has been excused
will perform such obligation as soon as is reasonably practicable after the
termination or cessation of such event or circumstance.

 

20.8         Remedies.  Each party
agrees and acknowledges that its disclosure of Confidential Information in
breach of this Agreement may cause irreparable harm to other party, and
therefore that any such breach or threatened breach may entitle such party to
injunctive relief, in addition to any other legal remedies available in a court
of competent jurisdiction.

 

20.9         Governing Law and Dispute Settlement. 
This Agreement shall in all respects be construed and enforced in
accordance with the law of the State of Delaware disregarding its conflicts of
laws principles.

 

20.10       Independent Contractors.  The parties
are independent contractors under this Agreement.  Nothing contained in this Agreement is to be
construed so as to constitute PURCHASER and [MANUFACTURER] as partners, agents
or employees of the other, including with respect to this Agreement.  Neither party hereto shall have any express
or implied right or authority to assume or create any obligations on behalf of,
or in the name of, the other party or to bind the other party to any contract,
agreement or undertaking with any third party unless expressly so authorized in
writing by the other party.

 

20.11       Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall be
considered and shall have the force and effect of an original.

 

20.12       Notices.  Except as set
forth in Section 13.1 above, or as otherwise stated herein, all notices,
consents or approvals required by this Agreement shall be in writing and sent
by certified or registered mail, postage prepaid, by commercial overnight
courier service, or by facsimile (confirmed by such certified, registered or
overnight mail) to the parties at the following addresses or such other
addresses as may be designated in writing by the respective parties.  Notices shall be deemed effective on the date
of mailing.

 

If to PURCHASER:

 

All [MANUFACTURER] invoices and/or charges in billing should be
directed to the Accounting Department at:

 

If to [MANUFACTURER]:

 

Attention:

Facsimile:

 

D-20

 

IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be executed as of the date first above written.

 

	
   

  	
  PURCHASER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [MANUFACTURER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

D-21

 

Schedule
A

 

Active Drug Substance, Commodities and Components
Specifications

 

The parties have
agreed upon all those applicable specifications for the Active Drug Substance,
Commodities and Components as set forth in the following documents.  The parties shall agree upon any
modifications to any such specifications.

 

TRADEMARKS

 

D-22

 

Schedule
B

 

Quality Technical Agreement

 

D-23

 

Schedule C

 

[MANUFACTURER] Reserve Capacity

 

The minimum annual
capacity to be reserved by [MANUFACTURER], is as follows for the Initial Term
of this agreement:

 

D-24

 

Schedule D

 

Pricing

 

D-25

 

Exhibit E

 

Form of
Trademark License

 

E-1

 

Exhibit E

 

TRADEMARK
LICENSE AGREEMENT

 

This
Trademark License Agreement (the “Agreement”), dated the [    ]  day of [      ],
2008 (the “Effective Date”), is entered into by and between [PURCHASER], a
Delaware corporation (“Purchaser”), and [THE COMPANY], a Delaware corporation
(the “Company”).

 

W I T N E S S E T H

 

WHEREAS, the Company is the owner of the
Licensed Marks (as such term is defined herein);

 

WHEREAS, the Purchaser is in the business of
developing and marketing pharmaceutical products;

 

WHEREAS, the Parties have entered into the Patent
License Agreement (as such term is defined herein);

 

WHEREAS, the Company and the Purchaser are
interested in establishing a licensing relationship pursuant to which the
Company shall grant the Purchaser certain rights and licenses under the
Licensed Marks.

 

NOW, THEREFORE, the Purchaser and the Company agree as
follows:

 

1.             Definitions.  When used in this Agreement, each of the
following terms shall have the meanings set forth in this Section 1.

 

1.1.          “Affiliate” shall mean, with respect to a Party, any
Person that controls, is controlled by, or is under common control with such
Party.  For purposes of this Section 1.1,
“control” shall refer to (a) in the case of a Person that is a corporate
entity, direct or indirect ownership of fifty percent (50%) or more of the
stock or shares having the right to vote for the election of directors of such
Person and (b) in the case of a Person that is not a corporate entity, the
possession, directly or indirectly, of the power to direct, or cause the
direction of, the management or policies of such Person, whether through the
ownership of voting securities by contract or otherwise.

 

1.2.          “Confidential Information” shall mean non-public
information disclosed by the Company to the Purchaser relating to the Products
and Licensed Marks.

 

1.3.          “Licensed Marks” shall mean the trademarks set forth
in Schedule A.

 

1.4.          “Parties” shall mean the Purchaser and the Company.

 

1.5.          “Party” shall mean the Purchaser or the Company, as
the context may require.

 

1.6.          “Patent License Agreement” shall mean the License 

 

E-2

 

Agreement between the Parties dated as of [**].

 

1.7.          “Person” shall mean any natural person or any
corporation, company, partnership, joint venture, firm or other entity,
including without limitation a Party.

 

1.8.          “Product” and cognates thereof shall mean ImagifyTM
(perflubutane polymer microspheres) in all delivery methods, formulations and
dosages.

 

1.9.          “Territory” shall mean worldwide, except for
Albania, Andorra, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and
Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Kazakhstan, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta,
Monaco, Netherlands, Norway, Poland, Portugal, Republic of Moldova, Romania,
Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, the former
Yugoslav Republic of Macedonia, Turkey, Tadzhikistan, Turkmenistan, Ukraine,
Uzbekistan, United Kingdom and Yugoslavia.

 

1.10.        “Third Party” shall mean any person or entity other
than a Party or any of its Affiliates.

 

2.             License.

 

2.1.          Grant.  The
Company grants to the Purchaser an exclusive, royalty-free, perpetual,
irrevocable license, to use the Licensed Marks in the applicable jurisdictions
for the purpose of manufacturing, advertising, marketing, sale, and
distribution of the Products in the Territory, in connection with the exercise
of Purchaser’s rights under the Patent License Agreement.  Purchaser shall be entitled to grant one or
more sublicenses under the license granted pursuant to this Agreement and in
connection with sublicenses granted under the Patent License Agreement,
provided, however, that the Purchaser shall not be permitted to sublicense
rights broader than those granted hereunder.

 

2.2.          Additional Jurisdictions.  To the extent that the Purchaser wishes to
establish registered trademark rights in jurisdictions in addition to those in
which the Licensed Marks are currently registered, the Company shall take all
commercially reasonable actions as may be required for the Purchaser to do so,
including executing such additional documents or taking such additional actions
as the Purchaser may reasonably require. 
The Company agrees that it does not currently, and will not during the
term of this Agreement, use marks similar to the Licensed Marks in any
jurisdictions outside of the jurisdictions in which the Licensed Marks are
registered.

 

3.             Enforcement.

 

3.1.          If any infringements or suspected infringement or illegal
use or suspected illegal use of the Licensed Marks by any person in the
Territory or elsewhere shall come to the attention of the Purchaser, the
Purchaser shall promptly give notice thereof in writing to the Company.  Company shall take all reasonable actions
necessary to preserve the Purchaser’s rights hereunder, including, as the case 

 

E-3

 

may require, filing suit against suspected
infringers or illegal users of the Licensed Marks.  If requested, the Purchaser will cooperate
fully in stopping any such conduct in the Territory and participate in the
conduct of the action at the Company’s expense. 
If the Company determines not to bring any such action, Purchaser may
then bring such action in order to protect its rights hereunder in its own name
at its own expense provided it obtains the consent of the Company, which
consent shall not be unreasonably withheld. If requested to do so, the Company
shall cooperate with the Purchaser in any such action at the Purchaser’s
expense.

 

3.2.          In the event a third party institutes an infringement
action against the Purchaser for its use of the Licensed Marks as provided in
this Agreement, the Purchaser shall promptly notify the Company of such suit in
writing. Company shall defend, at its own expense, any such action, and the
Purchaser shall cooperate in such defense as reasonably requested by the
Company, at the Company’s expense. Company shall pay all judgments and
settlements resulting from such suits.

 

4.             Maintenance.  At all times during the term of this
Agreement, the Company shall take all actions necessary to maintain the
Licensed Marks as valid and in full force and effect.  To the extent that the Company fails to so
maintain the Licensed Marks, the Company shall promptly notify the Purchaser
and the Purchaser shall be entitled to take any and all actions which may be
necessary to maintain the Licensed Marks as valid and in full force and
effect.  To the extent so required in
order for the Purchaser to so maintain such Licensed Marks, the Company shall
take all such additional actions, including executing additional documents, as
may be reasonably required by the Purchaser in order for the Purchaser to so
maintain such Licensed Marks.

 

5.             Quality
Control.  Purchaser shall maintain
the quality of the Products using the Licensed Marks in a manner consistent
with the past business practices of the the Company and the goodwill associated
with the Licensed Marks.

 

6.             Representations
and Warranties.

 

6.1.          The Purchaser. 
The Purchaser represents and warrants to the other that it has full
power and authority to enter into this Agreement and perform its obligations as
set forth herein.

 

6.2.          The Company. 
The Company represents and warrants to the other that:

 

6.2.1.  the Company has full
power and authority to enter into this Agreement and perform its obligations as
set forth herein;

 

6.2.2.  the Company is the owner
of all right, title, and interest in and to the Licensed Marks and no Third
Party has made or asserted a claim of any infringement, misappropriation,
violation or dilution of the Licensed Marks.

 

6.3.          Disclaimer. 
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED.

 

E-4

 

7.             Indemnification.

 

7.1.          The Purchaser. 
The Purchaser agrees to defend the Company, its Affiliates and their
respective directors, officers, employees and agents at the Purchaser’s cost
and expense, and shall indemnify and hold harmless the Company and its
Affiliates and their respective directors, officers, employees and agents from
and against any Third Party claim solely to the extent relating to the
Purchaser’s use or sublicense of the Licensed Marks, or the sale or use of any
product sold under any of the Licensed Marks (including products liability
claims), except for Third Party claims relating to infringement by the
Purchaser or its Affiliates or sublicensees of any Third Party trademark,
service mark, or trade name.

 

7.2.          The Company. 
The Company agrees to defend the Purchaser, its Affiliates and their
respective directors, officers, employees and agents at the Company’s cost and
expense, and shall indemnify and hold harmless the Purchaser and its Affiliates
and their respective directors, officers, employees and agents from and against
any liabilities, losses, costs, damages, fees or expenses arising out of any
Third Party claim relating to (i) any breach by the Company of any of its
representations, warranties or obligations pursuant to this Agreement, (ii) personal
injury, property damage or other damage resulting from the development or
commercialization by the Company or its Affiliates or sublicensees of the
Licensed Marks or (iii) any claim that the use by the Purchaser or its
Affiliates or sublicensees of the Licensed Marks as provided in this Agreement
infringes upon any Third Party trademark, service mark, or trade name.

 

8.             Confidential
Information.  All Confidential
Information disclosed by the Company to the Purchaser during the term of this
Agreement shall not be used by the Purchaser except in connection with the
activities contemplated by this Agreement (including, without limitation, the
licenses granted pursuant to Section 2), shall be maintained in confidence
by the Purchaser (except to the extent reasonably necessary in connection with
regulatory filings relating to the Product and/or relating to using the
Licensed Marks in any way, in any field and for any purpose, and shall not
otherwise be disclosed by the Purchaser to any other person, firm, or agency,
governmental or private, without the prior written consent of the Company,
except to the extent that the Confidential Information:

 

8.1.          was known or
used by the Purchaser or its Affiliates prior to its date of disclosure to the
Purchaser; or

 

8.2.          either before
or after the date of the disclosure to the Purchaser is lawfully disclosed to
the Purchaser or its Affiliates by sources other than the Company rightfully in
possession of the Confidential Information; or

 

8.3.          either before
or after the date of the disclosure to the Purchaser becomes published or
generally known to the public through no fault or omission on the part of the
Purchaser; or

 

8.4.          is
independently developed by or for the Purchaser or its Affiliates without
reference to or reliance upon the Confidential Information; or

 

8.5.          is required to
be disclosed by the Purchaser or its Affiliates to comply with applicable laws
or regulations, to defend or prosecute litigation or to 

 

E-5

 

comply with legal process.

 

9.             Miscellaneous.

 

9.1.          Governing Law. 
This Agreement shall be construed and the respective rights of the
Parties determined according to the substantive laws of the State of Delaware,
USA, notwithstanding the provisions governing conflict of laws under such
Delaware law to the contrary.

 

9.2.          Assignment. 
The Company may not assign this Agreement in whole or in part without
the consent of the Purchaser, including in the case of assignment by operation
of law or in connection with the sale or transfer of all or substantially all
of the business and assets of the Company. 
The Purchaser may transfer or assign its rights or obligations under
this agreement in whole or in part, including to an Affiliate or in connection
with a sale of all or substantially all of the business or assets of the
Purchaser, provided, however, that the Purchaser shall notify the Company of
such transfer or assignment promptly after the performance thereof.

 

9.3.          Entire Agreement; Amendments.  This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof, and
supersedes all previous arrangements with respect to the subject matter hereof,
whether written or oral.  Any amendment or
modification to this Agreement shall be made in writing signed by both Parties.

 

9.4.          Notices.

 

	
  Notices to the Company shall be
  addressed to:

  	
   

  
	
  [COMPANY]

  	
   

  
	
  [              

  	
   

  
	
  [              ]

  	
   

  
	
  Attention: Chief Executive
  Officer

  	
   

  
	
   

  	
   

  
	
  with a copy, which shall not
  constitute notice, to:

  	
   

  
	
  Goodwin Procter LLP

  	
   

  
	
  53 State Street

  	
   

  
	
  Boston, MA 02109

  	
   

  
	
  Attention: Lawrence S.
  Wittenberg

  	
   

  
	
   

  	
   

  
	
  Notices to the Purchaser shall
  be addressed to:

  	
   

  
	
  [PURCHASER]

  	
   

  
	
  [              ]

  	
   

  
	
  [              ]

  	
   

  
	
  Attention: General Counsel

  	
   

  
	
   

  	
   

  
	
  with a copy, which shall not
  constitute notice, to:

  	
   

  
	
  Sidley Austin LLP

  	
   

  
	
  One South Dearborn Street

  	
   

  
	
  Chicago, IL 60603

  	
   

  
	
  Attention: Pran Jha

  	
   

  

 

E-6

 

Any Party may change its
address by giving notice to the other Party in the manner herein provided.  Any notice required or provided for by the
terms of this Agreement shall be in writing and shall be (a) sent by
registered or certified mail, return receipt requested, postage prepaid, (b) sent
via a reputable overnight or international express courier service, or (c) personally
delivered, in each case properly addressed in accordance with the paragraph
above.  The effective date of notice
shall be the actual date of receipt by the Party receiving the same.

 

9.5.          Force Majeure. 
No failure or omission by the Parties hereto in the performance of any
obligation of this Agreement shall be deemed a breach of this Agreement or
create any liability if the same shall arise from any cause or causes beyond
the control of the Parties, including, but not limited to, the following: acts
of God; acts or omissions of any government; any rules, regulations or orders
issued by any governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake; accident; war;
rebellion; insurrection; riot; and invasion. 
The Party claiming force majeure shall notify the other Party with
notice of the force majeure event as soon as practicable, but in no event
longer than ten (10) business days after its occurrence, which notice
shall reasonably identify such obligations under this Agreement and the extent
to which performance thereof will be affected.

 

9.6.          Public Announcements.  Any public announcements or publicity with
respect to the execution of this Agreement shall be agreed upon by the Parties
in advance of such announcement.

 

9.7.          Independent Contractors.  It is understood and agreed that the
relationship between the Parties hereunder is that of independent contractors
and that nothing in this Agreement shall be construed as authorization for
either the Company or the Purchaser to act as agent for the other.

 

9.8.          No Strict Construction.  This Agreement has been prepared jointly and
shall not be strictly construed against any Party.

 

9.9.          Headings.  The
captions or headings of the sections or other subdivisions hereof are inserted
only as a matter of convenience or for reference and shall have no effect on
the meaning of the provisions hereof.

 

9.10.        No Implied Waivers; Rights Cumulative.  No failure on the part of the Company or the
Purchaser to exercise, and no delay in exercising, any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity
or otherwise, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.

 

9.11.        Severability. 
If, under applicable law or regulation, any provision of this Agreement
is deemed invalid or unenforceable, or otherwise directly or indirectly affects
the validity or enforceability of any other material provision(s) of this
Agreement, such provision shall be deemed modified to the extent required to 

 

E-7

 

most fully carry out the intent of the
original provision in a valid and enforceable manner.

 

9.12.        Execution in Counterparts.  This Agreement may be executed in
counterparts, each of which counterparts, when so executed and delivered
(whether in person, by mail, courier, facsimile or e-mail), shall be deemed to
be an original, and all of which counterparts, taken together, shall constitute
one and the same instrument.

 

9.13.        No Third Party Beneficiaries.  No person or entity other than the Company,
the Purchaser and their respective Affiliates and permitted assignees hereunder
shall be deemed an intended beneficiary hereunder or have any right to enforce
any obligation of this Agreement.

 

9.14.        No Consequential Damages.  NEITHER PARTY HERETO WILL BE LIABLE FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE 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 9.14 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY WITH RESPECT TO THIRD
PARTY CLAIMS.

 

E-8

 

IN WITNESS WHEREOF, the Parties have executed this
Agreement as of the date first set forth above.

 

 

	
  [PURCHASER]

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  [THE
  COMPANY]

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

E-9

 

Schedule
A

 

Licensed
Trademarks

 

	
  Trademark

  	
   

  	
  Country

  	
   

  	
  Status

  	
   

  	
  Appl.
  No.

  	
   

  	
  Reg No.

  	
   

  	
  Filing
  Date

  	
   

  	
  RegDate

  	
   

  
	
  IMAGIFY

  	
   

  	
  Brazil

  	
   

  	
  Published

  	
   

  	
  828.898.464

  	
   

  	
   

  	
   

  	
  21-Dec-2006

  	
   

  	
   

  	
   

  
	
  IMAGIFY

  	
   

  	
  Canada

  	
   

  	
  Approved
  for Publ

  	
   

  	
  1307213

  	
   

  	
   

  	
   

  	
  28-Jun-2006

  	
   

  	
   

  	
   

  
	
  IMAGIFY

  	
   

  	
  China
  (Peoples Republic)

  	
   

  	
  Pending

  	
   

  	
  5752532

  	
   

  	
   

  	
   

  	
  28-Nov-2006

  	
   

  	
   

  	
   

  
	
  IMAGIFY

  	
   

  	
  European
  Community

  	
   

  	
  Registered

  	
   

  	
  5170378

  	
   

  	
  5170378

  	
   

  	
  29-Jun-2006

  	
   

  	
  07-Jun-2007

  	
   

  
	
  IMAGIFY

  	
   

  	
  Japan

  	
   

  	
  Registered

  	
   

  	
  2006-110894

  	
   

  	
  5043084

  	
   

  	
  30-Nov-2006

  	
   

  	
  20-Apr-2007

  	
   

  
	
  IMAGIFY

  	
   

  	
  Mexico

  	
   

  	
  Registered

  	
   

  	
  826468

  	
   

  	
  1003404

  	
   

  	
  19-Dec-2006

  	
   

  	
  21-Sep-2007

  	
   

  
	
  IMAGIFY

  	
   

  	
  United
  States of America

  	
   

  	
  ExtReq#1

  	
   

  	
  78/919287

  	
   

  	
   

  	
   

  	
  28-Jun-2006

  	
   

  	
   

  	
   

  
	
  XACTURIS

  	
   

  	
  Canada

  	
   

  	
  Approved
  for Publ

  	
   

  	
  1307215

  	
   

  	
   

  	
   

  	
  28-Jun-2006

  	
   

  	
   

  	
   

  
	
  XACTURIS

  	
   

  	
  European
  Community

  	
   

  	
  Registered

  	
   

  	
  5170535

  	
   

  	
  5170535

  	
   

  	
  29-Jun-2006

  	
   

  	
  29-Aug-2007

  	
   

  
	
  XACTURIS

  	
   

  	
  United
  States of America

  	
   

  	
  ExtReq#1

  	
   

  	
  78/919263

  	
   

  	
   

  	
   

  	
  28-Jun-2006

  	
   

  	
   

  	
   

  
	
  ZACUNOST

  	
   

  	
  Brazil

  	
   

  	
  Published

  	
   

  	
  828.898.456

  	
   

  	
   

  	
   

  	
  21-Dec-2006

  	
   

  	
   

  	
   

  
	
  ZACUNOST

  	
   

  	
  Canada

  	
   

  	
  Approved
  for Publ

  	
   

  	
  1307214

  	
   

  	
   

  	
   

  	
  28-Jun-2006

  	
   

  	
   

  	
   

  
	
  ZACUNOST

  	
   

  	
  China
  (Peoples Republic)

  	
   

  	
  Pending

  	
   

  	
  5752533

  	
   

  	
   

  	
   

  	
  28-Nov-2006

  	
   

  	
   

  	
   

  
	
  ZACUNOST

  	
   

  	
  European
  Community

  	
   

  	
  Registered

  	
   

  	
  5170469

  	
   

  	
  5170469

  	
   

  	
  29-Jun-2006

  	
   

  	
  29-Aug-2007

  	
   

  
	
  ZACUNOST

  	
   

  	
  Japan

  	
   

  	
  Registered

  	
   

  	
  2006-110893

  	
   

  	
  5043083

  	
   

  	
  30-Nov-2006

  	
   

  	
  20-Apr-2007

  	
   

  
	
  ZACUNOST

  	
   

  	
  Mexico

  	
   

  	
  Registered

  	
   

  	
  826473

  	
   

  	
  1004021

  	
   

  	
  19-Dec-2006

  	
   

  	
  26-Sep-2007

  	
   

  
	
  ZACUNOST

  	
   

  	
  United
  States of America

  	
   

  	
  ExtReq#1

  	
   

  	
  78/919274

  	
   

  	
   

  	
   

  	
  28-Jun-2006

  	
   

  	
   

  	
   

  

 

E-10

 

Exhibit F

 

Assignment Agreement

 

F-1

 

Exhibit F

 

ASSIGNMENT
AGREEMENT

 

THIS
ASSIGNMENT AGREEMENT (this “Assignment”) is dated as of [          ],
by and between CEPHALON, INC., a Delaware corporation (the “Purchaser”), and
ACUSPHERE, INC., a Delaware corporation (the “Company”). Capitalized terms used
and not otherwise defined herein are used as defined in the Purchase Agreement
(as defined below).

 

Reference
is hereby made to that certain Note Purchase Agreement, dated as October 24,
2008 (the “Purchase Agreement”), by and between the Purchaser and the Company.

 

1.             The Company hereby sells, assigns,
transfers and otherwise conveys to the Purchaser all right, title and interest
in and to the Contracts, documents and correspondence listed on Schedule I
attached hereto and the Product Clinical Data (as defined in the Imagify
License Agreement (the “Assigned Property”) and free and clear of all Liens;

 

2.             The Company covenants and agrees,
at the cost and expense of the Company, to do, execute, acknowledge and deliver
to, or cause to be done, executed, acknowledged and delivered to, the
Purchaser, its successors and assigns, all such further acts, deeds,
assignments, transfers, conveyances and assurances that may be required or
reasonably requested by the Purchaser to fully effect the purpose of this
Assignment.

 

3.             This Assignment shall be binding
upon the Company and its successors and assigns, and shall inure to the benefit
and be enforceable by the Purchaser and its successors and assigns.

 

4.             This Assignment may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
all of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

 

5.             This Assignment shall be governed
by and construed in accordance with the Requirements of Law of the State of
Delaware without giving effect to the principles of conflict of laws.

 

F-2

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed and delivered by their respective officers
hereunto duly authorized as of the date first above written.

 

 

	
   

  	
  ACUSPHERE,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CEPHALON,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Assignment Agreement

 

 

SCHEDULE I

 

THE
ASSIGNED PROPERTYExhibit 10.2

 

NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT.  NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

ACUSPHERE,
INC.

 

Senior
Convertible Note

 

	
  Issuance Date:        , 2008

  	
   

  	
  Principal: U.S.
  $15,000,000

  

 

FOR VALUE RECEIVED, Acusphere, Inc.,
a Delaware corporation (the “Company”), hereby promises to pay to the order of Cephalon, Inc.,
a Delaware corporation, or registered and permitted assigns (“Holder”), the amount set forth
above as the Principal (the “Principal”) when due, whether on the Maturity Date (as
defined below), upon acceleration or otherwise (in each case in accordance with
the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at a rate per annum
equal to the Interest Rate (as defined below), from the date set forth above as
the Issuance Date (the “Issuance
Date”) until the same becomes due and payable, whether on the
Maturity Date, upon acceleration or otherwise (in each case in accordance with
the terms hereof). This Senior Convertible Note (including all Senior
Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is being
issued on the Issuance Date pursuant to the Note Purchase Agreement (as defined
below).  Certain capitalized terms are
defined in Section 23.

 

(1)                                  MATURITY.  On
the Maturity Date, the Company shall pay to the Holder (the “Maturity Date Payment”) an
amount in cash representing all outstanding Principal, an amount, at the option
of the Company as described in Section 2, payable in cash or shares of
Common Stock (as defined below), representing accrued and unpaid Interest and an
amount in cash representing all accrued and unpaid Late Charges, if any.  The “Maturity Date” shall be November [    ],
2011, as may be extended at the option of the Holder in the event that, and for
so long as, an Event of Default (as defined in Section 4(a)) shall have
occurred and be continuing.

 

(2)                                  INTEREST; INTEREST RATE. 
Interest on this Note shall commence accruing on the Issuance Date and
shall be computed on the basis of a 365-day year based on actual days elapsed
and shall be payable in arrears on each November [    ]
during the period beginning on the Issuance Date and ending on, and including,
the Maturity Date and on the Maturity Date (each, an “Interest Date”) with the first Interest
Date being November [    ], 2009.  Interest shall 

 

 

be
payable on each Interest Date, at the option of the Company, either in cash by
wire transfer or by the issuance and delivery to the Holder of a certificate,
registered in the name of the Holder or its designee, for a number of shares of
Common Stock (with fractional shares being rounded to the next higher whole
number) equal to the amount of Interest due on such Interest Payment Date
divided by the Average Closing Price on the Interest Payment Date.  Prior to the payment of Interest on the first
Interest Date, Interest on this Note shall accrue at the Interest Rate and be
payable by way of inclusion of the Interest in the Conversion Amount in
accordance with Section 3(b)(i). 
From and after the occurrence of an Event of Default, the Interest Rate
shall be increased to fifteen percent (15%) per annum as described in Section 19
below.  In the event that such Event of
Default is subsequently cured, the adjustment referred to in the preceding
sentence shall cease to be effective as of the date of such cure; provided that
the Interest as calculated at such increased rate during the continuance of
such Event of Default shall continue to apply to the extent relating to the
days after the occurrence of such Event of Default through and including the
date of cure of such Event of Default.

 

(3)                                  CONVERSION OF NOTE.  At the option of the Holder, this Note shall
be convertible into (i) shares of Common Stock of the Company, par value
$.01 per share (the “Common
Stock”), (ii) the Imagify License (as defined below) or (iii) (A) a
credit in an amount equal to the Conversion Amount against any required
Regulatory Milestone Payment (as defined below) and (B) an amount payable,
at the option of the Company, in cash or by delivery of a number of shares of
Common Stock determined in accordance with Section 3(a) equal to the
excess of the Conversion Amount over the amount of the Regulatory Milestone
Payment (the “Conversion Amount Excess”), on the
terms and conditions set forth in this Section 3.

 

(a)                                  Conversion Right.  Subject to the provisions of Sections 3(c) and
3(d), at any time between the Issuance Date and 5:00 p.m. New York Time on
November [    ], 2009 (the “Conversion Deadline”), the Holder shall be entitled to
convert all but not less than all of the outstanding and unpaid Conversion
Amount (as defined below) into either (i) fully paid and nonassessable
shares of Common Stock (a “Share Conversion”)
in accordance with Sections 3(b) and 3(c), (ii) the right to enter
into the Imagify License or (iii) (A) a credit in an amount equal to
the Conversion Amount against any required Regulatory Milestone Payment and (B) at
the option of the Company, (x) cash in an amount equal to the Conversion
Amount Excess or (y) delivery to the Holder of a number of shares of
Common Stock (with fractional shares being rounded to the next higher whole
number equal to the Conversion Amount Excess divided by the Average Closing
Price on the Conversion Date (as defined below).  In the case of a Share Conversion, the
Company shall not issue any fraction of a share of Common Stock upon any
conversion.  If the issuance would result
in the issuance of a fraction of a share of Common Stock, the Company shall
round such fraction of a share of Common Stock up to the nearest whole
share.  The Company shall pay any and all
transfer, stamp and similar taxes that may be payable with respect to the
issuance and delivery of shares of Common Stock upon conversion of any
Conversion Amount; provided, that the Company shall not be responsible for the
payment of any income taxes that may be incurred by the Holder as a result of
such conversion.

 

(b)                                 Conversion Rate For Share Conversion.  In connection with a Share Conversion, the
number of shares of Common Stock issuable upon conversion of any Conversion
Amount pursuant to Section 3(a) shall be the greater of (i) the
amount determined by dividing (x) such Conversion Amount by (y) the
Conversion Price and (ii) such number of shares of Common 

 

2

 

Stock as shall represent immediately after giving effect to such
conversion 51% of the Common Stock Deemed Outstanding.

 

(i)                                     “Conversion Amount”
means the sum of (A) the Principal, (B) accrued and unpaid Interest
with respect to such Principal and (C) accrued and unpaid Late Charges with
respect to such amount being converted.

 

(ii)                                  “Conversion Price”
means, as of any Conversion Date (as defined below) or other date of
determination, and subject to adjustment as provided herein, U.S.$0.486.

 

(c)                                  Mechanics of Conversion.

 

(i)                                     Share Conversion Notice.  To convert any Conversion Amount into shares
of Common Stock on any Conversion Date,
the Holder shall (A) transmit by facsimile (or otherwise deliver), for
receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of
an executed notice of conversion in the form attached hereto as Exhibit A (the “Share
Conversion Notice”)
to the Company’s chief executive officer and chief financial officer, with a
copy by facsimile or email to:

 

Lawrence S. Wittenberg, Esq.

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 02129

Email:  lwittenberg@goodwinprocter.com

Fax: (617) 523-1231

 

and (B) physically surrender the Note to the Company for
cancellation in connection with such conversion.

 

(ii)                                  Share Delivery. On or before
the first Business Day following the date of receipt of a Share Conversion
Notice in connection with a Share Conversion, the Company shall transmit by
facsimile a confirmation of receipt of such Share Conversion Notice to the
Holder and the Transfer Agent.  On or
before the third Business Day following the later of (A) the date of
receipt of a Share Conversion Notice and the Company’s receipt of the Note from
the Holder and (B) the expiration of any applicable waiting period under
the HSR Act (as defined below) (the “Share Delivery Date”), the Company shall issue and deliver
to such address of the Holder as is set forth in the Note Purchase Agreement or
such other address as specified in the Share Conversion Notice, a certificate,
registered in the name of the Holder or its designee, for the number of shares
of Common Stock to which the Holder shall be entitled. The Person entitled to
receive the shares of Common Stock issuable upon a conversion of this Note
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.

 

(d)                                 Deliveries in
Connection with the Imagify License.  To convert this Note into the right to enter
into the Imagify License on any Conversion Date, the Holder shall (A) transmit
by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m.,
New York Time, on such date, a letter signed by an authorized officer of the
Holder electing to convert this Note into the 

 

3

 

Imagify License in accordance with the terms of the Note (the “Imagify Conversion
Notice”) to the Company’s chief executive officer and chief
financial officer, with a copy by facsimile or email to:

 

Lawrence S. Wittenberg, Esq.

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 02129

Email:  lwittenberg@goodwinprocter.com

Fax: (617) 523-1231

 

and (B) physically surrender the Note to the Company for
cancellation in connection with such conversion.  No later than the second Business Day
following the later of (A) the date of receipt of such Imagify Conversion
Notice and the Company’s receipt of the Note from the Holder and (B) the
expiration of any applicable waiting period under the HSR Act, the Company
shall delivery to the Holder duly executed original copies of (i) the Imagify
License, (ii) the Assignment Agreement (as defined below) and (iii) the
Trademark License (as defined below).

 

(e)                                  Deliveries in
Connection with the Regulatory Milestone Payment Credit.  To convert this Note into the right to
receive a credit against any required Regulatory Milestone Payment and the
amount of cash, if any, specified in Section 3(a) on any Conversion
Date, the Holder shall (A) transmit by facsimile (or otherwise deliver),
for receipt on or prior to 11:59 p.m., New York Time, on such date, a
letter signed by an authorized officer of the Holder electing to convert this
Note into a credit towards the Regulatory Milestone Payment plus the amount of
cash, if any specified in Section 3(a) in accordance with the terms
of the Note (the “Regulatory Milestone
Payment Notice”)
to the Company’s chief executive officer and chief financial officer, with a
copy by facsimile or email to:

 

Lawrence S. Wittenberg, Esq.

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 02129

Email:  lwittenberg@goodwinprocter.com

Fax: (617) 523-1231

 

and (B) physically surrender the Note to the Company for
cancellation in connection with such conversion.  No later than the second Business Day
following the later of (A) the date of receipt of such Regulatory
Milestone Payment Notice and the Company’s
receipt of the Note from the Holder and (B) the expiration of any
applicable waiting period under the HSR Act, the Company
shall deliver to the Holder (1) a duly executed original copy of a
confirmation of the satisfaction of all of the Holder’s obligations with
respect to the Regulatory Milestone Payment and (2) at the option of the
Company, (x) a cash payment, by wire transfer to the account specified by
the Holder, in an amount equal to the Conversion Amount Excess, or (y) a
certificate registered in the name of the Holder or its designee, for a number
of shares of Common Stock (with fractional shares being rounded to the next
higher whole number) equal to the Conversion Amount Excess divided by the
Average Closing Price on the Conversion Date.

 

4

 

(f)                                    If the
expiration of any applicable waiting period under the HSR Act with respect to a
conversion of the Note shall not have occurred within sixty (60) days following
the delivery of the Share Conversion Notice, the Imagify Conversion Notice or
the Regulatory Milestone Payment Notice, as applicable, the Purchaser shall
have the right to withdraw such Share Conversion Notice, Imagify Conversion
Notice or Regulatory Milestone Payment Notice, as applicable, by delivery of
written notice to the Company within five (5) Business Days after the
expiration of such sixty (60) day period and, without waiving or limiting any
other rights of the Holder hereunder (including the right to convert the Note
pursuant to the terms hereof), the conversion of this Note shall be deemed not
to have occurred and the Note shall be deemed to remain outstanding.

 

(4)                                  RIGHTS UPON EVENT OF DEFAULT.

 

(a)                                  Event of Default.  Each of the following events shall constitute
an “Event of Default”:

 

(i)                                     the Company’s
failure to pay to the Holder any amount of Principal, Interest, Late Charges or
other amounts when and as due under this Note, except, in the case of a failure
to pay Interest and Late Charges when and as due, in which case only if such
failure continues for a period of at least three (3) Business Days;

 

(ii)                                  the Company or
any of its Subsidiaries (as defined in the Note Purchase Agreement) shall fail
to make any payment due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) on any other Indebtedness (as defined in the
Note Purchase Agreement) in excess of $50,000 and such failure shall continue
after the applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness; or any other default or event under any
agreement or instrument relating to any such Indebtedness in excess of $50,000
shall occur and shall continue after the applicable grace period, if any,
specified in such agreement or instrument if the effect of such default or
event is to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness in excess of  $50,000 or any
such Indebtedness in excess of $50,000 shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof;

 

(iii)                               any
representation or warranty made by the Company in any Transaction Agreement (as
defined in the Note Purchase Agreement) shall prove to have been untrue in any
material respect when made or deemed to be made or any event occurs, or
condition or state of facts comes into existence, which, if such event,
condition or state of facts had occurred or been in existence on the date
hereof, would have caused the representations and warranties contained clauses (i) (except
for the words “all without challenge of any kind” contained therein), (ii) (except
for the words “has not been cancelled or abandoned and” contained therein) and (v) (except
with respect to the transactions contemplated by the Transaction Agreements (as
defined in the Note Purchase Agreement)) of the first sentence of Section 3.20(e) of
the Note Purchase Agreement to be untrue in any material respect as of the date
hereof;

 

5

 

(iv)                              default by the
Company in the due observance or performance or any covenant or agreement
contained in any Transaction Agreement and such default shall continue for
twenty (20) Business Days after written notice thereof to the Company by the
Holder;

 

(v)                                 the Company or
any of its Subsidiaries shall (i) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator or similar official (a “Custodian”) for itself or for a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii) become
unable, or admit in writing its inability, to pay its debts as they become due,
(iv) voluntarily or involuntarily dissolve, liquidate or wind up its
affairs, or (v) take action for the purpose of effecting any of the
foregoing;

 

(vi)                              a proceeding
under any bankruptcy, reorganization, arrangement of debts, insolvency or
receivership law (collectively, “Bankruptcy Law”)
is filed by or against the Company or any of its Subsidiaries, or the Company
or any of its Subsidiaries takes any action to authorize any of the foregoing
matters, and in the case of any such proceeding instituted against the Company
or any of its Subsidiaries (but not instituted by the Company or any of its
Subsidiaries), either such proceeding shall remain undismissed or unstayed for
a period of 30 days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee or other similar official for the Company or
any of its Subsidiaries or any substantial part of its property) shall be
granted or shall occur;

 

(vii)                           except in
connection with those matters set forth on Schedule 4(a)(vii) hereto, a
final, non-appealable judgment or series of judgments for the payment of money
aggregating in excess of $50,000 is rendered against the Company or any of its
Subsidiaries and which judgments are not, within sixty (60) days after the
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within sixty (60) days after the expiration of such stay; provided,
however, that any judgment which is covered by insurance or an indemnity from a
credit worthy party shall not be included in calculating the $50,000 amount set
forth above so long as the Company provides the Holder as promptly as
practicable with a written statement from such insurer or indemnity provider
(which written statement shall be in a form reasonably satisfactory to the
Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company will receive the proceeds of such insurance or
indemnity in the time frame provided under the applicable insurance policy;

 

(viii)                        any breach or
failure in any respect to comply with Section 7 of this Note;

 

(ix)                                any of the
Governmental Approvals or any other consent or approval necessary for the
continuing operation of the Company or any of its Subsidiaries shall cease to
be in full force and effect; provided, that a failure to secure approval of the
Imagify Product (as defined in the Note Purchase Agreement) by the Food and
Drug Administration shall not be considered a default under this paragraph;

 

(x)                                   For any reason
any Transaction Agreement shall not be in full force and effect or shall not be
enforceable in accordance with its terms, or any security interest or lien
granted pursuant thereto shall fail to be perfected or to have its intended
priority, or any party thereto 

 

6

 

other than the Holder shall contest the validity of any Lien granted
under, or shall disaffirm its obligations under any Transaction Agreement;

 

(xi)                                an ERISA Event
described in clause (b) of the definition thereof shall have occurred or
any other ERISA Event shall have occurred that, when taken together with all
other such ERISA Events, could reasonably be expected to result in liability of
the Company and its ERISA Affiliates in an aggregate amount exceeding $50,000;

 

(xii)                             any material
portion of the Collateral (as defined in the Security Agreement) shall be
transferred or otherwise disposed of, either voluntarily or involuntarily, in
any manner not permitted by the Security Agreement or shall be lost, stolen,
damaged or destroyed and such loss, theft, damage or destruction is not covered
materially by insurance; or

 

(xiii)                          for any reason,
the Company or any of its material Subsidiaries ceases to operate its business
or ceases to own any of its Governmental Approvals necessary for the continuing
conduct of its business.

 

(b)                                 Rights Upon an Event of Default.

 

(i)                                     If an Event of
Default has occurred with respect to this Note and the Holder has provided
written notice to the Company of such Event of Default, the unpaid principal of
this Note shall bear interest at a rate of fifteen percent (15%) per annum from
the occurrence and during the continuance of such Event of Default.  Upon the occurrence of an Event of Default,
except in the case of the events described in paragraphs (v) and (vi) above:  (X) the Holder may, by written notice to
the Company, accelerate the maturity of this Note whereupon the entire amount
of Principal, together with all accrued and unpaid Interest thereon and all
other liabilities of the Company hereunder, shall become due and payable
immediately; provided, however, that with respect to an Event of Default
described in paragraph (v) or (vi) above, this Note, and all such
Principal, Interest and other liabilities of the Company hereunder shall
automatically become due and payable without presentment, demand, notice of
nonperformance, protest, notice of protest or notice of dishonor, all of which
are expressly waived by the Company and (Y) the Holder may exercise all or
any other remedies provided in the Note Purchase Agreement or the Security
Agreement or available at law or equity.

 

(ii)                                  Demand,
presentment, protest and notices of nonpayment, protest, dishonor and
acceptance are hereby waived by the Company. 
The Company also waives the benefit of all valuation, appraisal and
exemption laws and the posting of any bond required of the Holder in connection
with any judicial process to realize on the Collateral, to enforce any judgment
or other court order entered in favor of the Holder or to enforce by specific
performance, temporary restraining order, or preliminary or permanent
injunction, this Note or any other Transaction Agreement.  The Company waives the right, if any, to the
benefit of, or to direct the application of, any Collateral.  The Company hereby acknowledges that the Holder
has no obligation to resort to any Collateral or make claim against any other
Person before seeking payment or performance from the Company.

 

(iii)                               In addition to
any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of 

 

7

 

any Event of Default, the Holder is hereby authorized at any time or
from time to time, without notice to the Company or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all balances held by it at any of its offices for the account of
the Company (regardless of whether such balances are then due to the Company)
and any other properties or assets any time held or owing by the Company to or
for the credit or for the account of the Company against and on account of any
of the Secured Obligations (as defined in the Security Agreement) then due.  The Company hereby agrees that the foregoing
provisions are intended to be construed so as to satisfy the requirements of Section 553
of the Federal Bankruptcy Code or amendments thereto (including any requirement
of mutuality of obligations therein).

 

(5)                                  RIGHTS UPON CORPORATE EVENTS.  In addition to and not in substitution for
any other rights hereunder (but not in duplication of any adjustment made
pursuant to Section 6), prior to the consummation of any transaction
pursuant to which all holders of outstanding shares of Common Stock are
entitled to receive securities or other assets with respect to or in exchange
for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right to receive
upon a conversion of this Note for shares of Common Stock (i.e.
not into the right to enter into the Imagify License or receive a credit
against any required Regulatory Milestone Payment), (i) in addition to the
shares of Common Stock receivable upon such conversion, such securities or
other assets to which the Holder would have been entitled with respect to such
shares of Common Stock had such shares of Common Stock been held by the Holder
upon the consummation of such Corporate Event (without taking into account any
limitations or restrictions on the convertibility of this Note) or (ii) in
lieu of the shares of Common Stock otherwise receivable upon such conversion,
such securities or other assets received by the holders of shares of Common
Stock in connection with the consummation of such Corporate Event in such
amounts as the Holder would have been entitled to receive had this Note
initially been issued with conversion rights for the form of such consideration
(as opposed to shares of Common Stock) at a conversion rate for such
consideration commensurate with the terms of conversion set forth in Section 3.
Provision made pursuant to the preceding sentence shall be in a form and
substance satisfactory to the Holder. 
The provisions of this Section 5 shall apply similarly and equally
to successive Corporate Events and shall be applied without regard to any
limitations on the conversion of this Note.

 

(6)                                  RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

 

(a)                                  Adjustment of Conversion Price upon Issuance of shares of Common Stock.  If and whenever during the period beginning
on after the Issuance Date, the Company issues or sells, or in accordance with
this Section 6(a) is deemed to have issued or sold, any shares of
Common Stock (including the issuance or sale of shares of Common Stock owned or
held by or for the account of the Company, but excluding shares of Common Stock
deemed to have been issued or sold by the Company in connection with any
Excluded Security) for a consideration per share less than a price (the “Applicable Price”)
equal to the Conversion Price in effect immediately prior to such issue or sale
(the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the
Conversion Price then in effect shall be reduced to an amount equal to the
product of (A) the Applicable Price and (B) the quotient determined
by dividing (1) the sum of (I) the product derived by multiplying the
Applicable Price times the number of shares of Common Stock Deemed Outstanding
immediately prior to such Dilutive Issuance plus 

 

8

 

(II) the consideration, if any, received (or deemed to be
received) by the Company upon such Dilutive Issuance, by (2) the product
derived by multiplying (I) the Applicable Price by (II) the number of
shares of Common Stock Deemed Outstanding immediately after such Dilutive
Issuance.  For purposes of determining
the adjusted Conversion Price under this Section 6(a), the following shall
be applicable:

 

(i)                                     Issuance of Options.  If the Company in any manner grants or sells
any Options and the lowest price per share for which one share of Common Stock
is issuable upon the exercise of any such Option or upon conversion or exchange
or exercise of any Convertible Securities issuable upon exercise of such Option
is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per share. For
purposes of this Section 6(a)(i), the “lowest price per share for which
one share of Common Stock is issuable upon the exercise of any such Option or
upon conversion or exchange or exercise of any Convertible Securities issuable
upon exercise of such Option” shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon granting or sale of the Option, upon
exercise of the Option and upon conversion or exchange or exercise of any Convertible
Security issuable upon exercise of such Option. No further adjustment of the
Conversion Price shall be made upon the actual issuance of such share of Common
Stock or of such Convertible Securities upon the exercise of such Options or
upon the actual issuance of such share of Common Stock upon conversion or
exchange or exercise of such Convertible Securities.

 

(ii)                                  Issuance of Convertible Securities.  If the Company in any manner issues or sells
any Convertible Securities and the lowest price per share for which one share
of Common Stock is issuable upon such conversion or exchange or exercise
thereof is less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the Company
at the time of the issuance of sale of such Convertible Securities for such
price per share.  For the purposes of
this Section 6(a)(ii), the “price per share for which one share of Common
Stock is issuable upon such conversion or exchange or exercise” shall be equal
to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon
the issuance or sale of the Convertible Security and upon the conversion or
exchange or exercise of such Convertible Security.  No further adjustment of the Conversion Price
shall be made upon the actual issuance of such share of Common Stock upon
conversion or exchange or exercise of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustment of the Conversion Price had been or are to be made
pursuant to other provisions of this Section 6(a), no further adjustment
of the Conversion Price shall be made by reason of such issue or sale.

 

(iii)                               Change in Option Price or Rate of Conversion.  If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion, exchange or exercise of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable or
exercisable for shares of Common Stock changes at any time, the Conversion
Price in effect at the time of such change shall be adjusted to the Conversion
Price which would have been in effect at such time had such Options or
Convertible Securities provided for such changed purchase price, additional
consideration or 

 

9

 

changed conversion rate, as the case may be, at the time initially
granted, issued or sold. For purposes of this Section 6(a)(iii), if the
terms of any Option or Convertible Security that was outstanding as of the
Issuance Date are changed in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change.  No adjustment shall be made if such
adjustment would result in an increase of the Conversion Price then in effect.

 

(iv)                              Calculation of Consideration Received.  In case any Option or Convertible Securities
are issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options or Convertible Securities by the
parties thereto, the Options or Convertible Securities will be deemed to have
been issued for a consideration of $.01. 
If any shares of Common Stock, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the net amount received by
the Company therefor.  If any shares of
Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such consideration, except
where such consideration consists of securities, in which case the amount of
consideration received by the Company will be the closing sale price of such
securities (if then traded on a national securities exchange or
over-the-counter market) on the date of receipt.  If any shares of Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be.  The fair value of
any consideration other than cash or securities will be determined jointly by
the Company and the Holder.  If such
parties are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Business
Days after the tenth day following the Valuation Event by an independent,
nationally recognized appraiser jointly selected by the Company and the
Holder.  The determination of such
appraiser shall be deemed binding upon all parties absent manifest error.  The fees and expenses of such appraiser shall
be borne by the party whose determination or fair value most differs from such
appraiser’s determination.

 

(v)                                 Record Date.  If the Company takes a record of the holders
of shares of Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in shares of Common Stock, Options or
in Convertible Securities or (B) to subscribe for or purchase shares of
Common Stock, Options or Convertible Securities, then such record date will be
deemed to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.

 

(b)                                 Adjustment of Conversion Price upon Subdivision or Combination of
shares of Common Stock.  If the Company at any time on or after the
Issuance Date subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding 

 

10

 

shares of Common Stock into a greater number of shares, the Conversion
Price in effect immediately prior to such subdivision will be proportionately
reduced.  If the Company at any time on
or after the Issuance Date combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior to
such combination will be proportionately increased.

 

(c)                                  Other Events.  If any event occurs of the type contemplated
by the provisions of this Section 6 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the Holder under this Note;
provided that no such adjustment will increase the Conversion Price as
otherwise determined pursuant to this Section 6.

 

(7)                                  RESERVATION OF AUTHORIZED SHARES.

 

(a)                                  Reservation.  The Company initially shall reserve out of
its authorized and unissued shares of Common Stock a number of shares of Common
Stock for the Note equal to the maximum number of shares of Common Stock into
which the Conversion Amount of the Note is convertible as of the Issuance
Date.  So long as the Note is outstanding,
the Company shall take all action necessary to reserve and keep available out
of its authorized and unissued shares of Common Stock, solely for the purpose
of effecting the conversion of the Note, the number of shares of Common Stock
as shall from time to time be necessary to effect the conversion of the Note
pursuant to Section 3 (the “Required Reserve Amount”).

 

(b)                                 Insufficient Authorized Shares.  If at any time while the Note remains
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Note at least a number of shares of Common
Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then
the Company shall immediately take all action necessary to increase the Company’s
authorized shares of Common Stock to an amount sufficient to allow the Company
to reserve the Required Reserve Amount for the Note.  Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the occurrence of
an Authorized Share Failure, but in no event later than 60 days after the
occurrence of such Authorized Share Failure, the Company shall take all
necessary actions to obtain stockholder approval of an increase in the number of
authorized shares of Common Stock.  In
connection with a meeting of stockholders, the Company shall provide each
stockholder with a proxy statement and shall use its reasonable best efforts to
solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its Board of Directors to recommend to the
stockholders that they approve such proposal.

 

(8)                                  VOTING RIGHTS.  The Holder shall have no voting rights as the
holder of this Note, except as required by law, including but not limited to
applicable laws of the State of Delaware, and as expressly provided in this
Note.

 

11

 

(9)                                  RANK; ADDITIONAL INDEBTEDNESS; LIENS.

 

(a)                                  Rank.  No
Indebtedness of the Company or its Subsidiaries shall rank senior to the
payments due under this Note without the prior written consent of the
Purchaser.

 

(b)                                 Incurrence of Indebtedness.  So long as this Note is outstanding, the
Company shall not, and the Company shall not permit any of its Subsidiaries to,
directly or indirectly, incur or guarantee, assume or suffer to exist any
Indebtedness, other than (i) the Indebtedness evidenced by this Note and (ii) Permitted
Indebtedness.

 

(c)                                  Existence of Liens.  So long as this Note is outstanding, the
Company shall not, and the Company shall not permit any of its Subsidiaries to,
directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its
Subsidiaries (collectively, “Liens”) other than Permitted Liens.

 

(d)                                 Restricted Payments.  Except with respect to the dividend payments
on the Company’s 6.5% Convertible Exchangeable Preferred Stock outstanding on
the date hereof, as set forth in the Company’s certificate of incorporation,
the Company shall not, and the Company shall not permit any of its Subsidiaries
to, directly or indirectly, redeem, defease, repurchase, repay or make any
payments in respect of, by the payment of cash or cash equivalents (in whole or
in part, whether by way of open market purchases, tender offers, private
transactions or otherwise), all or any portion of any Permitted Indebtedness
except for payments of principal or interest required pursuant to Permitted
Indebtedness described under clause (i) or (ii) of the definition of
Permitted Indebtedness, whether by way of payment in respect of principal of
(or premium, if any) or interest on, such Indebtedness if at the time such
payment is due or is otherwise made or, after giving effect to such payment, an
Event of Default has occurred and is continuing.

 

(10)                            PARTICIPATION.  The Holder, as the holder of this Note, shall
be entitled to such dividends paid and distributions made to the holders of
shares of Common Stock to the same extent as if the Holder had converted this
Note into shares of Common Stock (without regard to any limitations on
conversion herein or elsewhere) and had held such shares of Common Stock on the
record date for such dividends and distributions.  Payments under the preceding sentence shall
be made concurrently with the dividend or distribution to the holders of shares
of Common Stock.  The provisions of this Section 10
shall not operate in duplicate of Section 5 or Section 6 hereof and
with respect to cash dividends, Section 10 shall control.

 

(11)                            CHANGE TO TERMS OF THE NOTE.  Any amendment, supplement or modification of
or to any of the provisions of this Note shall be effective only if it is made
in writing and signed by the Company and the Holder.

 

(12)                            TRANSFER. 
Prior to and including the Conversion Deadline, this Note may not be
offered, sold, assigned or transferred by the Holder, other than to an
Affiliate (as defined in the Note Purchase Agreement) without the prior written
consent of the Company.  After the
Conversion Deadline, this Note may be offered, sold, assigned or transferred by
the Holder without the consent of the Company.

 

12

 

(13)                            REISSUANCE OF THIS NOTE.

 

(a)                                  Transfer. 
If this Note is to be transferred in accordance with Section 12,
the Holder shall surrender this Note to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Note (in
accordance with Section 13(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if
less then the entire outstanding Principal is being transferred, a new Note (in
accordance with Section 13(d)) to the Holder representing the outstanding
Principal not being transferred.

 

(b)                                 Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with Section 13(d))
representing the outstanding Principal.

 

(c)                                  Note Exchangeable for Different Denominations.  This Note is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a new Note or
Notes (in accordance with Section 13(d) and in principal amounts of
at least $500,000) representing in the aggregate the outstanding Principal of
this Note, and each such new Note will represent such portion of such
outstanding Principal as is designated by the Holder at the time of such
surrender.

 

(d)                                 Issuance of New Notes.  If the Company is required to issue a new
Note pursuant to the terms of this Note, such new Note (i) shall be of
like tenor with this Note, (ii) shall represent, as indicated on the face
of such new Note, the Principal remaining outstanding (or in the case of a new
Note being issued pursuant to Section 13(a) or Section 13(c),
the Principal designated by the Holder which, when added to the principal
represented by the other new Notes issued in connection with such issuance,
does not exceed the Principal remaining outstanding under this Note immediately
prior to such issuance of new Notes), (iii) shall have an issuance date,
as indicated on the face of such new Note, which is the same as the Issuance
Date of this Note, (iv) shall have the same rights and conditions as this
Note and (v) shall represent accrued Interest and Late Charges (if any) on
the Principal and Interest of this Note, from the Issuance Date.

 

(14)                            REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF.  The
remedies provided in this Note shall be cumulative and in addition to all other
remedies available under this Note and the other Transaction Agreements at law
or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the Holder’s right to pursue
actual and consequential damages for any failure by the Company to comply with
the terms of this Note.  Amounts set
forth or provided for herein with respect to payments, conversion and the like
(and the computation thereof) shall be the amounts to be received by the Holder
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof).  The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Holder and that
the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled, in
addition to all other available remedies, to seek an injunction restraining any
breach, 

 

13

 

without the necessity of showing economic
loss and without any bond or other security being required.

 

(15)                            PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (i) this Note is placed in the hands
of an attorney for collection or enforcement or is collected or enforced
through any legal proceeding or the Holder otherwise takes action to collect
amounts due under this Note or to enforce the provisions of this Note or (ii) there
occurs any bankruptcy, reorganization, receivership of the Company or other
proceedings affecting Company creditors’ rights and involving a claim under
this Note, then the Company shall pay the documented costs incurred by the
Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, but
not limited to, attorneys’ fees and disbursements.

 

(16)                            SECURITY
AGREEMENT. The payment of Principal, Interest and all other liabilities of
the Company hereunder is secured by a security interest in certain collateral
of the Company as described in the Security Agreement (as defined below).

 

(17)                            CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
person as the drafter hereof.  The
headings of this Note are for convenience of reference and shall not form part
of, or affect the interpretation of, this Note.

 

(18)                            FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of the Holder
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

 

(19)                            NOTICES; PAYMENTS.

 

(a)                                  Notices. 
Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with Section 12.3
of the Note Purchase Agreement.  The
Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Note, including in reasonable detail a description of
such action and the reason therefore. 
Without limiting the generality of the foregoing, the Company will give
written notice to the Holder (i) immediately upon any adjustment of the
Conversion Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least twenty (20) days prior to
the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common Stock, (B) with
respect to any pro rata subscription offer to holders of shares of Common Stock
or (C) for determining rights to vote with respect to any transaction
described in Section 5, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.

 

(b)                                 Payments. 
Whenever any payment of cash is to be made by the Company to the Holder
pursuant to this Note, such payment shall be made in lawful money of the United
States of America by wire transfer of immediately available funds to the bank
account specified by the Holder to the Company in writing prior to such
payment. Whenever any amount expressed to be 

 

14

 

due by the terms of this Note is due on any
day which is not a Business Day, the same shall instead be due on the next succeeding
day which is a Business Day.  Any amount
of Principal which is not paid when due shall result in a late charge being
incurred and payable by the Company in an amount equal to interest on such
amount at the rate of 15% per annum from the date such amount was due until the
same is paid in full (“Late
Charge”).

 

(20)                            CANCELLATION. 
After all Principal, accrued Interest and other amounts at any time owed
on this Note has been paid in full, whether by payment of cash or upon the
conversion of the Note as set forth in Section 3, this Note shall
automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.

 

(21)                            WAIVER OF NOTICE. 
To the extent permitted by law, the Company hereby waives demand,
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Note and the
Note Purchase Agreement.

 

(22)                            GOVERNING LAW. 
This Note shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance
of this Note shall be governed by, the internal laws of the State of Delaware,
without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Delaware.

 

(23)                            CERTAIN DEFINITIONS.  For purposes of this Note, the following
terms shall have the following meanings:

 

(a)                                  “Assignment Agreement” means the Assignment Agreement between
the Company and the Purchaser, in the form of Exhibit B.

 

(b)                                 “Average Closing Price” means the average closing price of
the Common Stock on the Nasdaq Stock Market or such other national securities
exchange or trading system on which the Common Stock is then principally traded
during the ten (10) trading day period immediately prior to the date in
question.

 

(c)                                  “Benefit Plan” means any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA
or Section 412 of the Tax Code or Section 307 of ERISA, and in
respect of which the Company or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.

 

(d)                                 “Business Day”
means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain
closed.

 

(e)                                  “Common Stock Deemed
Outstanding” means, at any given time, the number of shares of
Common Stock actually outstanding at such time, plus the number of shares of
Common Stock issuable upon the exercise or conversion of all outstanding
Options or Convertible Securities, such number to be determined in the manner
set forth in Section 6(a)(i) and 6(a)(ii), regardless of whether the
Options or Convertible Securities are actually exercisable 

 

15

 

at such time, but excluding (i) any
shares of Common Stock owned or held by or for the account of the Company, (ii) solely
for purposes of Section 6 and not for purposes of Section 3, shares
of Common Stock issuable upon conversion of this Note and (iii) any shares
of Common Stock issuable upon the conversion of any Options having an exercise
price per share of Common Stock into which such Option is convertible (or, in
the case of Options to subscribe for or purchase Convertible Securities, having
an aggregate exercise price in connection with any conversion into such
Convertible Securities and any further conversion into Common Stock) that is
greater than the greater of (i) 3 times the Average Closing Price of the
Common Stock on the date in question or (ii) $8.00 (appropriately adjusted
for any event of the type described in Section 6(b))

 

(f)                                    “Conversion Date” means the date, which shall be prior to the
Conversion Deadline, on which this Note is converted in accordance with Section 3(a).

 

(g)                                 “Convertible Securities”
means any stock or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of Common Stock.

 

(h)                                 “ERISA” mean the Employee Retirement Income Security Act of
1974, as amended from time to time, regulations promulgated thereunder and any
successor thereto.

 

(i)                                     “ERISA Affiliate” means any entity (whether or not
incorporated) that, together with the Company is treated as a single employer
under Section 414(b) or (c) of the Tax Code, or solely for
purposes of Section 302 of ERISA and Section 412 of the Tax Code, is
treated as a single employer under Section 414 of the Tax Code.

 

(j)                                     “ERISA Event” means (a) any “reportable event”, as
defined in Section 4043 of ERISA or the regulations issued thereunder,
with respect to a Benefit Plan (other than an event for which the 30-day notice
period is waived); (b) the existence with respect to any Benefit Plan of
an “accumulated funding deficiency” (as defined in Section 412 of the Tax
Code or Section 302 of ERISA), whether or not waived; (c) the filing
pursuant to Section 412(d) of the Tax Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Benefit Plan; (d) the incurrence by the Company or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect
to the termination of any Benefit Plan or the withdrawal or partial withdrawal
of the Company or any of its ERISA Affiliates from any Benefit Plan or
Multiemployer Plan; (e) the receipt by the Company or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Benefit Plan or Plans or to appoint a trustee to
administer any Benefit Plan; (f) the adoption of any amendment to a
Benefit Plan that would require the provision of security pursuant to Section 401(a)(29)
of the Tax Code or Section 307 of ERISA; (g) the receipt by the
Company or any of its ERISA Affiliates of any notice, or the receipt by any
Multiemployer Plan from the Company or any of its ERISA Affiliates of any
notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the
occurrence of a “prohibited transaction” involving a Benefit Plan with respect
to which the Company or any of the Subsidiaries is a “disqualified person”
(within the meaning of Section 4975 of the Tax Code) or with respect to
which the Company or any such Subsidiary could 

 

16

 

otherwise be liable; or (i) any other
event or condition with respect to a Benefit Plan or Multiemployer Plan that
could result in liability of the Company or any Subsidiary of the Company.

 

(k)                                  “Governmental Approval” means any license, permit or
certificate of public convenience and necessity issued or required to be issued
to the Company or any of its Subsidiaries by any Governmental Authority.

 

(l)                                     “Governmental Authority” means any United States federal,
state, local or other political subdivision thereof and any United States or
foreign entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

(m)                               “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

 

(n)                                 “Interest Rate”
means 8.00% per annum, subject to adjustment pursuant to Section 2.

 

(o)                                 “Imagify License” means the License Agreement between the
Company and the Purchaser, in the form attached hereto as Exhibit C.

 

(p)                                 “Late Charges” has the meaning given such term in Section 19(b).

 

(q)                                 “Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

 

(r)                                    “Note Purchase Agreement” means the Note Purchase Agreement
dated as of October 24, 2008 by and between the Company and the Purchaser.

 

(s)                                  “Options” means any
rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.

 

(t)                                    “Permitted Indebtedness”
means (i) the Indebtedness set forth in Schedule 3.12 of the Company
Disclosure Letter (as defined in the Note Purchase Agreement under the heading “Loan
Agreements”), (ii) trade payables incurred in the ordinary course of
business, (iii) other Indebtedness not exceeding $2 million in the
aggregate at any one time outstanding and (iv) any other Indebtedness
consented in writing by the Purchaser.

 

(u)                                 “Permitted Liens”
means (i) any Lien for taxes not yet due or delinquent or being contested
in good faith by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principals in the
United States (“GAAP”), (ii) any statutory Lien arising in the ordinary
course of business by operation of law with respect to a liability that is not
yet due or delinquent, other than any Lien imposed by ERISA, (iii) any
Lien created by operation of law, such as materialmen’s liens, mechanics’ liens
and other similar liens, arising in the ordinary course of business with
respect to a liability that is not yet due or delinquent and for which adequate
reserves have been established in accordance with GAAP, (iv) Liens (A) upon
or in any equipment acquired or held by the Company or any of its Subsidiaries
to secure the purchase price of such equipment or indebtedness incurred solely 

 

17

 

for the purpose of financing the acquisition
or lease of such equipment, or (B) existing on such equipment at the time
of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such equipment, (v) Liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clause (iv) above; provided,
that any extension, renewal or replacement Lien shall be limited to the
property encumbered by the existing Lien and the principal amount of the
Indebtedness being extended, renewed or refinanced does not increase, (vi) leases
or subleases and licenses and sublicenses granted to others in the ordinary
course of the Company’s business, not interfering in any material respect with
the business of the Company and its Subsidiaries taken as a whole, (vii) Liens
arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default, (viii) Liens securing the Company’s
obligations under the Notes,  (ix) Liens
arising out of pledges or deposits under workmen’s compensation laws,
unemployment insurance, old age pensions, or other social security benefits
other than any Lien imposed by ERISA, (x) Liens incurred or deposits made
in the ordinary course of business to secure surety bonds provided that such
Liens shall extend only to cash collateral for such surety bonds and (xi) Liens
listed on Schedule 1.1(b) of the Company Disclosure Letter (as defined in
the Note Purchase Agreement).

 

(v)                                 “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.

 

(w)                               “Purchaser” means Cephalon, Inc., a Delaware
corporation.

 

(x)                                   “Regulatory Milestone Payment” means the $15,000,000 payment
to be paid by the Purchaser pursuant to Section 2.9 of the Celecoxib
License Agreement (as defined in the Note Purchase Agreement).

 

(y)                                 “Security Agreement” means the Security Agreement dated as of
          , 2008 by and
between the Company and the Purchaser.

 

(z)                                   “Tax Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time.

 

(aa)                            “Trademark License” means the Trademark License between the
Company and the Purchaser in the form as attached to the Imagify License.

 

(bb)                          “Transfer  Agent” means
American Stock Transfer & Trust Company.

 

(cc)                            “Withdrawal Liability” means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of
Title IV of ERISA.

 

[Signature Page Follows]

 

18

 

IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the Issuance Date
set out above.

 

	
   

  	
   

  	
  ACUSPHERE,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT
A

 

ACUSPHERE,
INC.

CONVERSION NOTICE

 

Reference is made to the Senior Convertible
Note (the “Note”)
issued to the undersigned by [COMPANY] (the “Company”).  In accordance with and pursuant to the Note,
the undersigned hereby elects to convert the Conversion Amount (as defined in
the Note) of the Note indicated below into shares of Common Stock of the
Company, par value $.01 per share (the “Common Stock”), as of the date specified below.

 

	
   

  	
  Date of Conversion:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Aggregate Conversion Amount to be converted:

  	
   

  	
   

  
					

 

Please confirm the following information:

 

	
   

  	
  Conversion Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of shares of Common Stock to be issued:

  	
   

  	
   

  
					

 

Please issue the shares of Common Stock into
which the Note is being converted in the following name and to the following
address:

 

	
   

  	
  Issue to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile Number:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Authorization:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
       By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
               Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Account Number:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (if electronic book entry transfer)

  
	
   

  	
   

  
	
   

  	
  Transaction Code Number:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (if electronic book entry transfer)

  
													

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges
this Conversion Notice and hereby directs
                  
to issue the above indicated number of shares of Common Stock in accordance
with the Transfer Agent Instructions dated 
                      
from the Company acknowledged and agreed to by
                              .

 

	
   

  	
  ACUSPHERE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Exhibit B

 

Assignment Agreement

 

 

Exhibit C

 

Imagify License

 

 

Schedule 4(a)(vii)

 

Litigation

 

Claim filed by Miguel Torres
with the Commonwealth of Massachusetts – Commission Against Discrimination (MCAD),
Claim No. 08BEM01015

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}]]