Document:

exv10w4

 

Exhibit 10.4

Asset Purchase Agreement

BETWEEN

BENTLEY PHARMACEUTICALS, INC.

AND

YUNGTAI HSU

dated February 1, 1999 effective as of December 31, 1998

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE I

	 	DEFINITIONS
	 	 	1	 
	1.01

	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II

	 	SALE OF ASSETS AND CLOSING
	 	 	5	 
	2.01

	 	Purchase And Sale of Assets
	 	 	5	 
	2.02

	 	Assumption of Obligations And Liabilities
	 	 	5	 
	2.03

	 	Retained Liabilities
	 	 	6	 
	2.04

	 	Purchase Price; Allocation; Adjustment
	 	 	6	 
	2.05

	 	Closing
	 	 	7	 
	2.06

	 	Third-Party Consents
	 	 	8	 
	2.07

	 	Assignment
	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE III

	 	REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	9	 
	3.01

	 	Intentionally Omitted
	 	 	9	 
	3.02

	 	Legal Capacity
	 	 	9	 
	3.03

	 	Execution and Binding Effect
	 	 	9	 
	3.04

	 	Title
	 	 	9	 
	3.05

	 	Registrations
	 	 	9	 
	3.06

	 	Intellectual Property
	 	 	10	 
	3.07

	 	Absence of Certain Changes or Events
	 	 	10	 
	3.08

	 	Contracts
	 	 	11	 
	3.09

	 	Negotiations
	 	 	12	 
	3.10

	 	Litigation
	 	 	12	 
	3.11

	 	Compliance with Law
	 	 	12	 
	3.12

	 	Licenses and Regulatory Reports
	 	 	13	 
	3.13

	 	Inspections and Agreements with Governmental or Regulatory Authorities
	 	 	13	 
	3.14

	 	Affiliate Interests
	 	 	13	 
	3.15

	 	Absence of Undisclosed Liabilities
	 	 	14	 
	3.16

	 	Customers, Licensees and Suppliers
	 	 	14	 
	3.17

	 	Commitments
	 	 	14	 
	3.18

	 	Other Contracts
	 	 	14	 
	3.19

	 	Brokers and Finders
	 	 	14	 
	3.20

	 	Tax Matters
	 	 	15	 
	3.21

	 	Disclosure
	 	 	15	 
	3.22

	 	Purchase of Assets
	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE IV

	 	REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	16	 
	4.01

	 	Organization and Good Standing
	 	 	16	 
	4.02

	 	Authority
	 	 	16	 

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TABLE OF CONTENTS (cont’d)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	4.03

	 	Execution and Binding Effect
	 	 	17	 
	4.04

	 	Brokers and Finders
	 	 	17	 
	4.05

	 	Disclosure
	 	 	17	 
	 
	 	 	 	 	 	 
	ARTICLE V

	 	COVENANTS OF SELLER
	 	 	17	 
	5.01

	 	Regulatory and Other Approvals
	 	 	17	 
	5.02

	 	No Solicitations
	 	 	18	 
	5.03

	 	Conduct relating to the Assets
	 	 	18	 
	5.04

	 	Licenses; Filings
	 	 	19	 
	5.05

	 	Certain Restrictions
	 	 	19	 
	5.06

	 	Delivery of Business Information
	 	 	20	 
	5.07

	 	Non-competition
	 	 	20	 
	5.08

	 	Notice and Cure
	 	 	21	 
	5.09

	 	Fulfillment of Conditions
	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE VI

	 	COVENANTS OF PURCHASER
	 	 	21	 
	6.01

	 	Regulatory and Other Approvals
	 	 	21	 
	6.02

	 	Notice and Cure
	 	 	22	 
	6.03

	 	Delivery of Documents
	 	 	22	 
	6.04

	 	Fulfillment of Conditions
	 	 	22	 
	 
	 	 	 	 	 	 
	ARTICLE VII

	 	CONDITIONS TO OBLIGATIONS OF SELLER
	 	 	22	 
	7.01

	 	Representations Warranties and Covenants
	 	 	23	 
	7.02

	 	Performance
	 	 	23	 
	7.03

	 	Laws
	 	 	23	 
	7.04

	 	Officer’s Certificate
	 	 	23	 
	7.05

	 	Regulatory Consents and Approvals
	 	 	23	 
	7.06

	 	Opinion of Counsel
	 	 	23	 
	7.07

	 	Delivery of Documents
	 	 	23	 
	7.08

	 	Proceedings
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE VIII

	 	CONDITIONS TO OBLIGATIONS OF PURCHASER
	 	 	24	 
	8.01

	 	Representations, Warranties and Covenants
	 	 	24	 
	8.02

	 	Performance
	 	 	24	 
	8.03

	 	Laws
	 	 	24	 
	8.04

	 	Regulatory Consents and Approvals
	 	 	24	 
	8.05

	 	Third Party Consents
	 	 	24	 
	8.06

	 	Delivery of Assets and Documents
	 	 	25	 
	8.07

	 	Opinion of Counsel
	 	 	25	 
	8.08

	 	Tax Status
	 	 	25	 

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TABLE OF CONTENTS (cont’d)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	8.09

	 	Proceedings
	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE IX

	 	ADDITIONAL POST-CLOSING COVENANTS
	 	 	25	 
	9.01

	 	Further Assurances, Post-Closing Cooperation
	 	 	25	 
	9.02

	 	FDA Approvals
	 	 	27	 
	9.03

	 	Adverse Drug Experience; Recalls
	 	 	27	 
	9.04

	 	Delivery of Shares
	 	 	27	 
	9.05

	 	Non-Assertion of Patent
	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE X

	 	INDEMNIFICATION
	 	 	27	 
	10.01

	 	Survival of Representations, Warranties, Covenants and Agreements
	 	 	27	 
	10.02

	 	Purchaser’s Indemnified Liabilities
	 	 	28	 
	10.03

	 	Seller’s Indemnified Liabilities
	 	 	28	 
	10.04

	 	Notice and Defense of a Claim
	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE XI

	 	TERMINATION
	 	 	29	 
	11.01

	 	Termination
	 	 	29	 
	11.02

	 	Effect of Termination
	 	 	30	 
	 
	 	 	 	 	 	 
	ARTICLE XII

	 	MISCELLANEOUS
	 	 	30	 
	12.01

	 	Notices
	 	 	30	 
	12.02

	 	Amendments
	 	 	31	 
	12.03

	 	Binding Effect; Assignment
	 	 	31	 
	12.04

	 	Announcements
	 	 	32	 
	12.05

	 	Expenses
	 	 	32	 
	12.06

	 	Entire Agreement
	 	 	32	 
	12.07

	 	Descriptive Headings
	 	 	32	 
	12.08

	 	Counterparts
	 	 	32	 
	12.09

	 	Governing Law; Jurisdiction
	 	 	32	 
	12.10

	 	Arbitration of Disputes
	 	 	32	 
	12.11

	 	Severability
	 	 	33	 
	12.12

	 	Confidentiality
	 	 	34	 

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EXHIBITS

	 	 	 
	Exhibit A

	 	Disclosure Schedule
	Exhibit B

	 	Subscription Agreement
	Exhibit C

	 	Registration Rights Agreement
	Exhibit D

	 	Warrant Agreement
	Exhibit E

	 	Assumption Agreement
	Exhibit F

	 	General Assignment and Bill of Sale
	Exhibit G

	 	Form of Assignment of Intellectual Property
	Exhibit H

	 	Form of Opinion of Counsel of Purchaser
	Exhibit I

	 	Form of Opinion of Counsel of Seller
	Exhibit J

	 	Power of Attorney
	Exhibit K

	 	Letter to Drug Master File Staff

INDEX TO EXHIBITS — DISCLOSURE SCHEDULE

	 	 	 
	Schedule 1.01(b)

	 	Contracts
	Schedule 1.01(c)

	 	Suppliers and Supply Agreements
	Schedule 1.01(g)

	 	Licenses
	Schedule 1.01(h)

	 	Patents
	Schedule 2.04(a)

	 	Collaborative Parties
	Schedule 2.04(c)

	 	Allocation of Purchase Price
	Schedule 3.03

	 	Seller’s Required Filings
	Schedule 3.05

	 	Registrations
	Schedule 3.06

	 	License Agreements
	Schedule 3.07

	 	Changes or Events
	Schedule 3.10

	 	Litigation
	Schedule 3.16(a)

	 	Suppliers
	Schedule 3.16(b)

	 	Customers and Licensees
	Schedule 3.19

	 	Seller’s Brokers and Finders
	Schedule 4.03

	 	Purchaser’s Required Filings

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Asset Purchase Agreement

          THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is dated February 1, 1999 made and entered
into effective as of December 31, 1998 between YUNGTAI HSU, in his personal capacity (“Seller”) and
BENTLEY PHARMACEUTICAL, INC., a Florida corporation (“Purchaser”).

          WHEREAS, Seller purchased the Assets (as defined below) from Conrex Pharmaceutical
Corporation, a New Jersey corporation (“Conrex”);

          WHEREAS, simultaneously herewith the Seller and Purchaser have entered into a voting agreement
relating to the purchase of the Assets from Conrex;

          WHEREAS, Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser
the Assets (as defined below) which Seller purchased from Conrex, all on the terms and subject to
the conditions set forth herein; and

          NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     1.01 Definitions. As used in this Agreement, the following defined terms have the
meanings indicated below:

     “Action or Proceeding” means any action, claim, suit, proceeding, inquiry, arbitration
or Governmental or Regulatory Authority investigation or audit.

     “Affiliate” means any Person that directly, or indirectly through one of more
intermediaries, controls or is controlled by or is under common control with the Person specified.
For purposes of this definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by Contract or
otherwise and, in any event and without limitation of the previous sentence, any Person owning ten
percent or more of the voting securities of another Person shall be deemed to control that Person.

     “Assets” means:

          (a) the Technology;

 

 

          (b) the Business Information;

          (c) the Patents;

          (d) all Contracts relating to the Patents and Technology that are listed or described on
Schedule 1.01 (b) of the Disclosure Schedule, including without limitation, Seller’s rights to
receive goods and services, to assert claims and to take other action with respect to breaches,
defaults and other violations pursuant to all of the Contracts;

          (e) all Licenses;

          (f) lists of suppliers and supply agreements, if any, listed on Schedule 1.01(c) of the
Disclosure Schedule; and

          (g) all batch records in existence as of the date hereof and as of the Closing Date.

     “Assigned Contracts” means the Contracts to be assigned by Seller to Purchaser as set
forth on Schedule 1.01(b) of the Disclosure Schedule.

     “Assigned Licenses” means the Licenses to be assigned by Seller to Purchaser as set
forth on Schedule 1.01(g) of the Disclosure Schedule.

     “Associate” means, with respect to any Person, any corporation or other business
organization of which such Person is an officer or partner or is the beneficial owner, directly or
indirectly, of ten percent or more of any class of equity securities, any trust or estate in which
such Person has a substantial beneficial interest or as to which such Person serves as a trustee or
in a similar capacity and any relative or spouse of such Person, or any relative of such spouse,
who has the same home as such Person.

     “Assumed Liabilities” has the meaning ascribed to it in Section 2.02.

     “Business Day” means a day other than Saturday, Sunday or any day on which banks
located in the State of New York are authorized or obligated to close.

     “Business Information” means lists of, and all records, in written, electronic, or
other formats, and other data, regarding:

          (a) pharmaceutical research relating to the Patents and Technology,

          (b) suppliers, strategies, formulae, training manuals and customers relating to the
development of the Patents and Technology, performance statistics and all other correspondence,
records, reports, computer disks and programs (including source codes), tapes and other files,

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information and records, including, but not limited to, all regulatory files, records and other
correspondence, including the DMF and all original (laboratory) notebooks in a complete and
unabridged or altered form, and the records, reports and data relating thereto;

          (c) Seller’s files relating to potential applications of the Patents and Technology,

          (d) interest expressed by any Person in collaborating with Seller for researching, developing,
licensing, manufacturing or marketing the Patents and/or the Technology for pharmaceutical industry
applications (as defined by its intended indication);

          (e) Seller’s ownership and operation of the Assets; and

          (f) the Intellectual Property.

     “Closing” means the closing of the transactions contemplated by Section 2.01.

     “Closing Date” means February 11, 1999, effective as of December 31, 1998, or such
other date as Purchaser and Seller mutually agree upon in writing.

     “Contract” means any agreement, understanding, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract, whether written or oral.

     “Disclosure Schedule” means the record delivered to Purchaser by Seller and initialed
by Seller and Purchaser, dated as of the date hereof and attached hereto as Exhibit A, containing
all schedules as are required to be included pursuant to this Agreement.

     “DMF” means the Drug Master file as compiled by Seller;

     “Governmental or Regulatory Authority” means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city, municipality or other political
subdivision.

     “Indemnified Party” has the meaning ascribed to it in Section 10.04.

     “Indemnifying Party” has the meaning ascribed to it in Section 10.04.

     “Intellectual Property” means the Patents and all trade computer programs (including
all source codes) and related documentation, technical information, analytical methods,
manufacturing, engineering and technical drawings and know-how relating to the Technology.

     “Laws” means all laws, statutes, rules, regulations, ordinances, permits, orders,
writs, judgments, awards, injunctions or decrees or other pronouncements having the effect of law
of the

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United States, any foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Authority.

     “Licenses” means all licenses, permits, certificates of authority, authorizations,
approvals, registrations, franchises, concessions, grants, and similar consents granted or issued
by any Governmental or Regulatory Authority required in connection with researching, developing,
licensing, manufacturing and marketing the Technology and Patents, including those Licenses that
are currently being negotiated; and including without limitation, those listed on Schedule 1.01(g)
of the Disclosure Schedule.

     “Liens” means any mortgage, pledge, assessment, security interest, lease, lien,
adverse claim, levy, charge, restriction or other encumbrance or restriction of any kind, or any
conditional sale Contract, title retention Contract or other Contract to give any of the foregoing.

     “Loss” means any and all damages, fines, fees, penalties, deficiencies, losses and
expenses (including, without limitation, interest, court costs, fees of attorneys, accountants and
other experts or other expenses of litigation or other proceedings or of any claim, default or
assessment).

     “Order” means any writ, judgment, decree, injunction or similar order of any
Governmental or Regulatory Authority, in each such case whether preliminary or final.

     “Patents” means (i) United States Patent No. 5,023,252 (the “U.S. Patent”) and any
reissue thereof, any reexamination thereof, and any extension thereof and any patent application or
patent in any other country which discloses and claims subject matter which is disclosed in the
U.S. Patent, including the patents which are listed in Schedule 1.01(h) of the Disclosure Schedule,
and (ii) any patent application which is hereafter filed and which is entitled to the benefit of
the filing date of U. S. Application No. 08/954,869 (the “869 Application”), filed October 21,
1997, and which claims pharmaceutical subject matter that is disclosed in the 869 Application and
any patent which may issue thereon and any reissue thereof, any reexamination thereof, and any
extension thereof. “Patents” does not mean U.S. patent No. 5,731,303 (hereafter the “303 Patent”)
or any patent or patent application which discloses and claims subject matter which relates to a
composition that contains a cosmetic skin-treating compound or a cosmetic hair-treating compound,
as described in the 303 Patent, or to the use of such cosmetic composition.

     “Person” means any natural person, corporation, general partnership, limited
partnership, proprietorship, other business organization, trust, union, association or Governmental
or Regulatory Authority.

     “Purchase Price” has the meaning ascribed to it in Section 2.04.

     “Purchaser’s Indemnified Liabilities” has the meaning ascribed to it in Section 10.02.

     “Purchaser” means Bentley Pharmaceuticals, Inc., a Florida corporation.

-4-

 

     “Seller” means Yungtai Hsu, in his personal capacity, or any lawful successor in
interest to Yungtai Hsu.

     “Seller Documents” means the arrangements, documents, instruments and certificates
required to be executed and delivered by Seller in connection with this Agreement.

     “Seller’s Indemnified Liabilities” has the meaning ascribed to it in Section 10.03.

     “Taxes” means all Tax Returns of or relating to any foreign, federal, state or local
tax, assessment, levy, impost, duty, withholding or other similar governmental charge, all,
together with any penalties, additions to tax, fines, interest and similar charges thereon or
related thereto.

     “Tax Returns” means all returns, including, without limitation, income, franchise,
sales and use, unemployment compensation, excise, severance, property, gross receipts, profits,
payroll and withholding tax returns and information returns, and reports.

     “Technology” means any and all information relating to a composition containing a drug
and a compound (hereafter “Enhancer”) which increase the rate of passage of the drug across the
skin or other body membrane, for example, mucous membranes, or the blood brain barrier and to the
administration of such composition to treat humans (hereafter “pharmaceutical subject matter”),
such information including information related to all developmental and commercially practiced
processes and methodologies (including, but not limited to, methods of using, storing, identifying,
measuring, and analyzing the composition), formulations, trade secrets, know how, formulae and
manufacturing, processing and other technical information and underlying data as it applies to
pharmaceutical industry application (as defined by the FDA), prescription and over-the-counter
application. “Technology” does not mean information which relates to a cosmetic composition which
contains a cosmetic skin-treating compound or a cosmetic hair-treating compound and an Enhancer or
to the use of such cosmetic composition.

ARTICLE II

SALE OF ASSETS AND CLOSING

     2.01 Purchase And Sale of Assets. On the terms and subject to the conditions set forth
in this Agreement, at the Closing Purchaser shall purchase from Seller, and Seller shall sell,
transfer, assign, convey and deliver to Purchaser all of Seller’s right, title and interest in and
to the Assets, free and clear of any and all Liens. As a result of this transaction, Seller shall
retain no interest whatsoever in the Assets.

     2.02 Assumption of Obligations And Liabilities. On the terms and subject to the
conditions set forth in this Agreement, from and after the Closing, Purchaser will assume and pay,
perform, discharge and be responsible only for those obligations and liabilities of Seller under
the Assigned

-5-

 

Contracts and Assigned Licenses which accrue after the Closing Date (the “Assumed Liabilities”);
provided that Purchaser shall have the right, in its sole discretion, and without effect on the
Purchase Price, to add or delete Assigned Contracts or Assigned Licenses by written notice
delivered to Seller two Business Days prior to the Closing Date, or such earlier date as Seller’s
right to add or delete such Assigned Contracts or Assigned Licenses by written notice delivered to
Conrex terminates.

     2.03 Retained Liabilities. Notwithstanding anything herein or in the Seller Documents
to the contrary, Purchaser shall not assume or pay, perform, discharge or be responsible for any of
the obligations or liabilities of Seller, including but not limited to Seller’s liabilities to
Virna Pharmaceuticals, Inc. or with respect to and arising out of an agreement between Seller and
Virna Pharmaceuticals, Inc., effective as of December 1, 1990, as further amended (the “Retained
Liabilities”) other than the Assumed Liabilities. Seller shall discharge in a timely manner or
shall make adequate provision for the Retained Liabilities. Purchaser is not a successor to Seller
for any purpose and shall not be liable for any claim that may exist against Seller, including but
not limited to any products liability claims.

     2.04 Purchase Price; Allocation; Adjustment.

          (a) Purchase Price. The aggregate purchase price for the Assets and for the covenant
of Seller contained in Section 5.07 shall be (i) U.S. $1,074,000 (the “Cash Portion of the Purchase
Price”), subject to the adjustments as provided in paragraph (b) below; (ii) an aggregate of
$350,000 of shares of common stock (the “Shares”) of Purchaser according to the terms and
conditions of the Subscription Agreement and the Registration Rights Agreement, dated as of the
Closing Date, substantially in the forms of Exhibit B and C, respectively, hereto, (iii) a warrant
to purchase 450,000 shares of common stock of Purchaser according to the terms and conditions of
the Warrant Agreement, dated as of the Closing Date, substantially in the form of Exhibit D hereto,
(iv) 5% of the net profits received by Purchaser or its successors for fifteen years from the
Closing Date from the commercialization of any products developed by Purchaser or its successors
from the Assets and (v) the aggregate amount of the Assumed Liabilities ((i)-(v) collectively, the
“Purchase Price”).

          (b) Adjustment of Cash Portion of Purchase Price. The Cash Portion of the Purchase
Price shall be adjusted downward to an amount of $1,024,000 (the “Adjusted Cash Portion of the
Purchase Price”) to reflect a payment by Purchaser to Seller on December 3, 1998 of a $50,000
due-diligence deposit.

          (c) Allocation of Purchase Price. Purchaser and Seller hereby agree that for tax
purposes the Purchase Price will be allocated in accordance with Schedule 2.04(c) of the Disclosure
Schedule, which allocation shall be binding upon the Purchaser and the Seller, each of which agrees
to report the effect of the transactions contemplated hereby on all applicable Tax Returns or
filings in a manner consistent with such schedule. The Seller hereby assumes liability for and
shall pay all sales, transfer and similar Taxes incurred as a result of the sale of the Assets to
Purchaser.

-6-

 

     2.05 Closing.

          (a) The Closing will take place at the offices of Synnestvedt & Lechner LLP, 2600 Aramak
Tower, 1101 Market Street, Philadelphia, Pennsylvania 19107, or at such other place as Purchaser
and Seller mutually agree, at 10:00 A.M. Eastern Standard Time, on the Closing Date.

          (b) Deliveries by Purchaser to Seller. At the Closing, Purchaser will:

     (i) deliver to Seller an executed copy of this Agreement;

     (ii) pay the Adjusted Cash Portion of the Purchase Price by wire transfer of
immediately available funds to such account as Seller may reasonably direct by written
notice delivered to Purchaser by Seller at least two Business Days before the Closing
Date;

     (iii) deliver to Seller the Subscription Agreement, Registration Rights Agreement
and Warrant Agreement, duly executed by Purchaser;

     (iv) deliver to Seller an assumption agreement, dated as of the Closing Date,
substantially in the form of Exhibit E hereto, duly executed by Purchaser, pursuant to
which Purchaser assumes all of the Assumed Liabilities;

     (v) deliver to Seller the certificate referred to in Section 7.04; and

     (vi) deliver to Seller the opinion referred to in Section 7.06.

          (c) Deliveries by Seller to Purchaser. Simultaneously with the deliveries by
Purchaser, Seller will:

     (i) deliver to Seller an executed copy of this Agreement;

     (ii) assign and transfer to Purchaser good and valid title in and to the Assets
(free and clear of all Liens) by delivery of (A) a General Assignment and Bill of Sale
substantially in the form of Exhibit F hereto, duly executed by Seller, (B) an
assignment of the Intellectual Property in form and substance reasonably satisfactory to
Purchaser to vest in Purchaser all of Seller’s right, title and interest in, to and
under the Patents, including but not limited to instruments of assignment in a form
suitable for filing with the U.S. Patent and Trademark Office (including, but not
limited to, United States Patent and Trademark Office Form No. SB/41) to reflect the
transfer of the Patents included in the Assets and, upon filing such instrument with the
U.S. Patent and Trademark Office, to record the sale of all of Seller’s right, title and
interest in, to and under the Patents to the Purchaser, and (C) such other good and

-7-

 

sufficient instruments of conveyance, assignment and transfer, in form and substance
reasonably acceptable to Purchaser’s counsel, as shall be effective to vest in Purchaser
good and marketable title to the Assets, free of all Liens, including, but not limited
to, written notices from Seller to all parties under any Contract relating to the
Assets, addressed to such parties, in the form prepared by Seller and reasonably
acceptable to Purchaser, for the release of such Contracts;

     (iii) deliver to Purchaser a receipt for the Purchase Price;

     (iv) deliver to Purchaser regulatory consents and approvals and third-party
consents referred to in Sections 8.04 and 8.05;

     (v) deliver to Purchaser the opinion referred to in Section 8.07;

     (vi) make available to Purchaser, at the location of the Assets, all Assets; and

     (vii) Seller shall deliver to Purchaser, such further instruments of transfer as
Purchaser shall reasonably request, to vest in Purchaser all of Sellers’ right, title
and interest in and to the Assets, including, but not limited to, any documents
evidencing the assignment to Purchaser of the Intellectual Property (which documents are
attached hereto as Exhibit G), and take such other actions as Purchaser shall reasonably
request to enable Purchaser to use such Assets, as contemplated herein and in the Seller
Documents.

     2.06 Third-Party Consents. To the extent that any Contract or License is not
assignable without the consent of another party, this Agreement shall not constitute an assignment
or an attempted assignment thereof if such assignment or attempted assignment would constitute a
breach thereof. Seller and Purchaser shall use their best efforts to obtain the consent of such
other party to the assignment of any such Contract or License to Purchaser in all cases in which
such consent is or may be required for such assignment. If any such consent shall not be obtained,
Seller shall cooperate with Purchaser in any reasonable arrangement designed to provide for
Purchaser the benefits intended to be assigned to Purchaser under the relevant Contract or License,
including enforcement at the cost and for the account of Seller of any and all rights of Seller
against the other party thereto arising out of the breach or cancellation thereof by such other
party or otherwise. If and to the extent that such arrangement cannot be made, Purchaser shall have
no obligation pursuant to Section 2.02 or otherwise with respect to any such Contract or License.
The provisions of this Section 2.06 shall not affect the right of Purchaser not to consummate the
transactions contemplated by this Agreement if the condition to its obligations hereunder contained
in Section 8.05 has not been fulfilled.

     2.07 Assignment. Seller hereby assigns to Purchaser all of his rights under that
certain Asset Purchase Agreement dated February 1, 1999 effective as of December 31, 1998 between
Conrex and Seller (the “Conrex Agreement”).

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller understands that each of the following representations and warranties are material and
have been relied on by Purchaser. Seller represents, warrants and covenants to Purchaser that the
statements contained in this Article III are correct and complete as of the date of this Agreement,
and will be correct and complete as of the Closing Date (as though made on the Closing Date),
except as set forth in the Disclosure Schedule delivered to Purchaser on the date of this Agreement
and initialed by Seller and Purchaser.

     3.01 Intentionally Omitted.

     3.02 Legal Capacity. Seller has full power and legal capacity to execute, deliver and
perform this Agreement and the Seller Documents to which he is a party and to consummate the
transactions contemplated hereby and thereby.

     3.03 Execution and Binding Effect. This Agreement has been, and each of the Seller
Documents will be, at or prior to the Closing, duly executed and delivered by Seller and this
Agreement constitutes, and the Seller Documents when so executed and delivered, will constitute,
legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their
respective terms except as such enforceability may be limited by bankruptcy, insolvency or similar
laws and by equitable principles. None of the execution and delivery by Seller of this Agreement
and the Seller Documents, or the consummation of the transactions contemplated hereby or thereby,
or compliance by Seller with any of the provisions hereof or thereof will (a) conflict with,
violate, result in the breach or termination of, or constitute a default under (i) any Laws or (ii)
any requirement of any Governmental or Regulatory Authority applicable to Seller or by which the
Assets may be bound, or (c) except as set forth on Schedule 3.03 of the Disclosure Schedule,
require any filing, declaration or registration with, or permit, consent, approval, waiver,
clearance, order or authorization of, or the giving of any notice to, any Governmental or
Regulatory Authority or other Person or (d) result in the creation of any Lien (other than any lien
in favor of Purchaser) upon any of the Assets.

     3.04 Title. Seller has good and marketable title to all of the Assets and will convey
good and marketable title at the Closing, free and clear of any and all Liens. None of the Assets
is licensed or otherwise not owned by Seller. In transferring the Assets to Purchaser, Seller has
no intent to hinder, delay or defraud any entity to which Seller owes or will owe any debt, on or
after the Closing Date.

     3.05 Registrations. The registrations listed on Schedule 3.05 of the Disclosure
Schedule are the only registrations, as of the Closing Date, required by any Governmental or
Regulatory Authority to develop, manufacture, market and sell the Technology and Patents and any
products resulting from the Technology and the Patents. Such Registrations are and will be valid,
current and held exclusively by Seller as of the Closing Date.

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     3.06 Intellectual Property. The Intellectual Property constitutes all intellectual
property which is necessary or used by Seller, to develop, manufacture, market and sell products
developed from the Patents or the Technology. All of the Intellectual Property that is owned by
Seller is owned free and clear of all Liens and all Intellectual Property that is licensed or
otherwise used by Seller is licensed pursuant to valid and existing license agreements and such
interests are not subject to any Liens other than the applicable license agreement, if any. All
such license agreements are set forth on Schedule 3.06 of the Disclosure Schedule. Seller has not
granted to any Person any License, interest or other right in respect of the Intellectual Property
which does, or which will, as of the Closing or subsequent to the Closing, permit any other Person,
other than Purchaser, to use any of the Intellectual Property. All Intellectual Property, including
without limitation, the Patents, is valid, effective and enforceable. Seller is unaware of any
reason that the Intellectual Property, is or could be, invalid or unenforceable, including, but not
limited to, the failure of Seller to timely pay any fees or dues associated with the Intellectual
Property. To the best knowledge of Seller, no Actions or Proceedings are pending or threatened,
questioning the validity or effectiveness of any Intellectual Property or asserting that Seller is
infringing or otherwise adversely affecting the rights of any Person with regard to any
intellectual property of such Person. The Intellectual Property is not being infringed by any
Person and Seller, to the best of his knowledge, is unaware of any potential infringement of the
Intellectual Property. No third party intellectual property will be infringed as a result of the
use of the Assets. There are no royalties, fees or other amounts payable by or to Seller with
respect to any of the Intellectual Property. The consummation of the transactions contemplated by
this Agreement and the Seller Documents will not result in the loss of any Intellectual Property or
rights therein.

     3.07 Absence of Certain Changes or Events.

          (a) Except as set forth in Schedule 3.07 of the Disclosure Schedule, Seller has used the
Assets only in the ordinary and usual course of his business consistent with past practice, and has
not:

     (i) placed Liens or allowed Liens to be placed on the Assets;

     (ii) canceled or compromised any material claims, or waived any other material
rights, or sold, transferred or otherwise disposed of any of the Assets;

     (iii) sold, transferred, licensed, assigned or otherwise disposed of, or permitted
to lapse or disclosed to any Person (other than disclosure to his employees or agents,
as reasonably necessary in the ordinary and usual course of his business), any of the
Intellectual Property or Business Information;

     (iv) suffered any material adverse change in the manufacturing and development of
the Patents or Technology; or

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     (v) agreed in writing or otherwise to take any action described in this Section
3.07.

          (b) Except as set forth in Schedule 3.07 of the Disclosure Schedule, Seller is not aware of
any event, fact or condition that has occurred or could reasonably be expected to occur that has or
has resulted in, or is reasonably likely to result, in a material adverse change in research,
development, licensing, manufacture, marketing or sale of the Assets.

     3.08 Contracts.

          (a) Except as set forth in Schedule 1.01(b) of the Disclosure Schedule, none of the Assets is
subject to, and except as set forth in Schedule 1.01(b) of the Disclosure Schedule, Seller is not a
party to or bound by:

     (i) any Contract relating to the Assets;

     (ii) any Contract limiting the freedom of Purchaser or any affiliate thereof
following the Closing to engage in any line of business, to own, operate, sell,
transfer, pledge or otherwise dispose of or encumber the Assets or to compete with any
Person or to engage in any business or activity in any geographic area, within the
United States or outside of the United States, relating to the Assets;

     (iii) any Contract with any partnership, joint venture or other entity;

     (iv) any sale, loan, charge, Contract or other transaction between Seller and any
of his shareholders, affiliates, directors or officers; or

     (v) any Contract that is or might otherwise reasonably be expected to be material
to the Assets (for purposes of this clause (v), a Contract involving payments to or by
Seller shall be deemed to be material if such payments are in an aggregate amount of
$1,000 or more).

          (b) Seller is not in breach of any provision of, or in default (and knows of no event or
circumstance that with notice, or lapse of time or both, would constitute an event of default)
under the terms of any Contract described in Schedule 1.01(b) of the Disclosure Schedule nor is
there any Action or Proceeding or grievance alleging such a breach or default. Seller is not aware,
or could not be reasonably aware, of any breach by any other party to any Contract described in
Schedule 1.01 (b) of the Disclosure Schedule. All Contracts described in Schedule 1.01(b) of the
Disclosure Schedule are in full force and effect, will continue to be in full force and effect
after the Closing and Seller is not aware, or could not be reasonably aware, of any pending or
threatened disputes with respect to such Contracts. Seller is not engaged in any disputes with
customers or suppliers, and to Seller’s knowledge (i) no customer or supplier is considering
termination, non-renewal or any adverse

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modification of its arrangements with Seller, and (ii) the transactions contemplated by this
Agreement will not have an adverse affect on the business relationship with any of its suppliers or
customers.

          (c) All of the Contracts (i) have been entered into on an arm’s-length basis, (ii) are within
the scope of their corporate purpose and ordinary business, (iii) do not violate applicable Laws,
(iv) are not of a loss-making nature, that is known to be likely to result in a loss on completion
or performance and (v) contain termination provisions which are reasonable and customary for the
type of transactions and activities to which they relate. Seller has not entered into any Contract
which cannot be readily fulfilled or performed on time without undue or unusual expenditure of
money or effort.

     3.09 Negotiations. Schedule 2.04 (a) of the Disclosure Schedule sets forth, in a
complete and exhaustive manner, any and all negotiations and discussions between Seller and any
other Person relating to any of the Assets. Schedule 2.04(a) of the Disclosure Schedule sets forth
details regarding the status of negotiations for each party listed on such schedule.

     3.10 Litigation. Except as set forth on Schedule 3.10 of the Disclosure Schedule,
there is not currently, and there has not been at any time, any Actions or Proceedings pending or
threatened by or against Seller or any affiliate or employee of Seller, or with respect to the
Assets (including, without limitation, products liability claims) or the transactions contemplated
hereby, at law or in equity or before or by any Governmental Entity or arbitrator, which has had or
could have a material adverse affect on Purchaser or the Assets, and, to the best knowledge of
Seller, there is no valid basis for any such Action or Proceeding. Except as set forth on Schedule
3.10 of the Disclosure Schedule, there is no pending or threatened Action or Proceeding that seeks
to enjoin or obtain damages in respect of the consummation of the transactions contemplated by this
Agreement or that questions the validity of this Agreement, any of the Seller Documents or any
action to be taken by Seller in connection with the consummation of the transactions contemplated
hereby or thereby. Seller is not subject to any Laws or, to the best of Seller’s knowledge, any
proposed Laws, which has had or could have a material adverse affect on the Assets or on
Purchaser’s ability to manufacture any products from the Patents or Technology.

     3.11 Compliance with Law. Seller has operated and is currently conducting all
research, development, manufacture, and sales relating to the Assets, and all products resulting
from the Patents or Technology have been provided, developed, marketed and sold in compliance with
all applicable Laws of Governmental or Regulatory Authority. Seller has not received notice of, and
does not have knowledge of any such violation or alleged violation with respect to the Assets.
Seller has not received notice of (and does not have knowledge of) (a) any finding of any lack of
efficacy with respect to any products resulting from the Assets or (b) any findings,
determinations, studies, reports, analyses, investigations, inquiries or Legal Proceedings by or
for any Governmental or Regulatory Authority with respect to the efficacy of any products resulting
from the Assets. As of the date hereof and as of the Closing Date, all reports relating to the
Assets required to be filed by Seller with any Governmental or Regulatory Authority have been or
will have been filed and are and will be accurate and complete in all material respects when filed.

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     3.12 Licenses and Regulatory Reports.

          (a) Seller possesses all Licenses required to be possessed by it pursuant to all applicable
Laws and all such Licenses, as set forth on Schedule 1.01(g) of the Disclosure Schedule, are in
full force and effect. All Licenses that Seller has been negotiating, or are being negotiated, are
set forth on Schedule 1.01(g) of the Disclosure Schedule and include the name of the contact person
of the potential licensee, the name of the attorney representing the potential licensee and the
status of license being negotiated. Seller is in compliance with all of his Licenses and there is
no reasonable basis for the revocation or suspension of any thereof. The Licenses constitute all
the Licenses required for Seller’s ownership of the Assets and the research, development,
manufacture and marketing of products from the Assets, all of which are transferable and will be
transferred to Purchaser at the Closing, and none of which will expire within the twelve-month
period following the Closing Date. Seller has furnished to Purchaser copies of all reports of
inspections relating to the Assets by Governmental or Regulatory Authorities;

          (b) Seller has paid all fees, dues or assessments, due and payable in connection with any of
the Assets, including, but not limited to, fees related to the Patents. There is no unresolved
violation, criticism or exception by any entity with respect to any report or statement relating to
an examination of the Assets;

          (c) Seller has not prepared for filing, or has not filed with the FDA or any foreign
equivalent, any filings, reports, registrations or statements (including, but not limited to INDs,
ND As, and ANDAs) pertaining to the Assets and anything related to Seller’s business.

          (d) Seller has delivered to Purchaser complete and correct copies of any and all
correspondence between the Company and any Governmental or Regulatory Authority, including, but not
limited to, warning letters, notices of adverse findings and recall notifications.

     3.13 Inspections and Agreements with Governmental or Regulatory Authorities.

          (a) Seller has never received a notice of inspection, nor has ever been inspected by any
Governmental or Regulatory Authority, including, but not limited to, the FDA, OSHA or the Consumer
Product Safety Commission.

          (b) Seller is not subject to any cease-and-desist or other order issued by, or a party to any
agreement or memorandum of understanding with, any Governmental or Regulatory Authority relating to
or affecting, or which may affect the Assets.

     3.14 Affiliate Interests. Neither Seller nor any employee, debt-holder or affiliate of
Seller:

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          (a) owns any interest (other than through the ownership of five percent or less of any class
of securities registered under the Securities Exchange Act of 1934, as amended) in any Person which
is a competitor, supplier or customer of any business relating to the Assets;

          (b) owns, in whole or in part, any property, asset or right used in connection with the
research, development, manufacture, marketing and sales relating to the Assets, or products
resulting from the Assets;

          (c) has an interest in any Contract pertaining to the Assets; or

          (d) owes any money to, or is owed any money by, the Seller.

     3.15 Absence of Undisclosed Liabilities. The Seller has no liabilities or obligations
of any nature, whether absolute, accrued, contingent or otherwise, which individually or in the
aggregate are material to the Assets except for liabilities for performance obligations arising in
the ordinary course of the business relating to the Assets (and not as a result of a breach or
default by the Seller) under the Contracts listed on Schedule 1.01(b) of the Disclosure Schedule or
Contracts not required to be disclosed on that schedule.

     3.16 Customers, Licensees and Suppliers. Schedule 3.16(a) of the Disclosure Schedule
sets forth a list of the suppliers (on the basis of revenues for goods purchased) for any products
relating to the Assets for the year ended December 31, 1998. Since January 1, 1998, no such
supplier has ceased or materially reduced its sales to the Seller, or has threatened to cease or
materially reduce such sales and the Seller has not been engaged in and is not engaged in any
dispute with any of its suppliers. Schedule 3.16(b) of the Disclosure Schedule sets forth all
customers or licensees that the Seller is negotiating with, or has ever negotiated with, in
connection with any products relating to the Assets.

     3.17 Commitments. Seller is not bound under any Contracts to any purchase commitments,
blanket purchase orders, minimum research and development expenditure obligations or other minimum
expenditure obligations.

     3.18 Other Contracts. There are no other Contracts between the Seller and any other
Person, to acquire any of the Assets, and no other Person has any right or option to acquire any of
the Assets.

     3.19 Brokers and Finders. Except as set forth on Schedule 3.19 of the Disclosure
Schedule, neither the Seller nor any of his employees or Affiliates have employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection
with the transactions contemplated by this Agreement or the Seller Documents. Except as set forth
on Schedule 3.19 of the Disclosure Schedule, no Person is entitled to any fee, commission or like
payment in respect thereof based in any manner on any agreement, arrangement or understanding made
by or on behalf of the Seller.

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     3.20 Tax Matters.

          (a) All Tax Returns for any Taxes that are required to be filed on or before the Closing Date,
by or on behalf of or with respect to the Seller or the Assets have been, or will be, timely filed
with the appropriate foreign, federal, state and local authorities. All Taxes required to be paid
by the Seller on or before the date hereof have been paid in full on or before the date hereof, and
all Taxes required to be paid by the Seller on or before the Closing Date will be paid on or before
such date. Seller additionally warrants that it shall be solely responsible for the payment of any
sales or use taxes arising from this transaction.

          (b) All Tax Returns and the information and data contained therein have been properly and
accurately compiled and completed, fairly present the information purported to be shown therein,
and reflect all liabilities for Taxes for the periods covered by such Tax Returns. Neither the
Internal Revenue Service nor any other taxing authority is now asserting against the Seller, with
respect to any Tax, any adjustment, deficiency or claim for additional Taxes, nor are there or have
there been any such discussions with or without notice from any such taxing authorities with
respect thereto nor, to the best knowledge of the Seller, is there any basis therefor. There are no
outstanding contracts or waivers extending the statutory period of limitation applicable to any
assessment or audit or any Tax or Tax Return of the Seller.

          (c) No Tax Liens exist on any of the Assets.

          (d) No written claim has been made by any taxing authority in a jurisdiction where the Seller
does not file Tax Returns that the Seller is or may be subject to taxation by that jurisdiction.

          (e) The Seller is not a party to any joint venture, partnership, or other arrangement which is
treated as a partnership for federal income tax purposes.

          (f) There is no Contract or consent made under Section 341(f) of the Internal Revenue Code of
1986, as amended (the “Code”), affecting the Seller.

          (g) The Seller is not a party to any tax sharing Contract, whether formal or informal.

          (h) Seller is not a “Foreign Person” within the meaning of Section 1445(f)(3) of the Code.

     3.21 Disclosure. Seller has disclosed in writing all information which is necessary
for an accurate appraisal of the Assets and to research, develop, market and manufacture products
resulting from the Assets; all information given by Seller relating to the Assets was, when given
accurate, complete and not misleading. The representations and warranties of Seller contained in
this Agreement do not contain any untrue statement of a material fact or omit to state any material
fact

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necessary in order to make the statements and information contained in this Agreement and in the
Seller Documents not misleading. The representations and warranties of Seller contained in this
Agreement are subject only to the exceptions expressly made therein which apply only to the
specific representation or warranty with respect in which they are made; (b) are not limited or
conditioned in any way by the fact that Purchaser, its officers, employees, advisors, consultants
and auditors have known or could have known by any means or as a result of the due diligence review
of Seller and the Assets pursued or to be pursued by Purchaser, its officers, employees, advisors,
consultants and auditors that any of the representations and warranties made by Seller are not
true, correct, exact, accurate and complete; and (c) the liability of Seller with respect to
Purchaser is not limited in any way by the fact that Purchaser, its officers, employees, advisors,
consultants and auditors have known or could have known by any means or as a result of the due
diligence review of Seller and the Assets pursued or to be pursued by Purchaser, its officers,
employees, advisors, consultants and auditors, that any of the representations and warranties made
by Seller are not true, correct, exact, accurate and complete.

     3.22 Purchase of Assets. Seller acquired the Assets from Conrex in an arms-length
transaction. Conrex has no rights to reacquire the Assets or challenge or affect in any way
detrimental to Purchaser the validity of its sale of the Assets to Seller or Seller’s sale of the
Assets to Purchaser. On the Closing Date, the Purchaser shall have all of the rights of Seller
under the Conrex Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser understands that each of the following representations and warranties are material
and have been relied on by Seller. Purchaser represents, warrants and covenants to Seller that the
statements contained in this Article IV are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made on the Closing Date).

     4.01 Organization and Good Standing. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida, and has all requisite
power and authority to carry on its business as it is as of the date hereof being conducted, and to
execute, deliver and perform this Agreement.

     4.02 Authority. The execution and delivery to Seller of this Agreement by Purchaser,
the performance by Purchaser of its obligations hereunder and the consummation by Purchaser of the
transactions contemplated hereby have been duly authorized by the board of directors of Purchaser,
and no other corporate act or proceeding on the part of Purchaser is necessary to approve the
execution and delivery of this Agreement, the performance of Purchaser’s obligations hereunder, or
the consummation of the transactions contemplated hereby.

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     4.03 Execution and Binding Effect. This Agreement has been duly executed and delivered
by Purchaser and this Agreement constitutes legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency or similar laws and by equitable principles. Neither the
execution and delivery by Purchaser of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the compliance by Purchaser with any of the provisions hereof will (a)
conflict with, or result in the breach of, any provision of Purchaser’s Certificate of
Incorporation and Bylaws, as of the Closing Date, (b) conflict with, violate, result in the breach
or termination of, or constitute a default under (i) any Contract, to which Purchaser is a party or
by which Purchaser is bound or subject, (ii) any Laws or (iii) any requirement of any Governmental
or Regulatory Authority applicable to Purchaser, or (c) except as set forth on Schedule 4.03 of the
Disclosure Schedule, require any filing, declaration or registration with, or permit, consent,
approval, waiver, clearance, order or authorization of, or the giving of any notice to, any
Governmental or Regulatory Authority or other Person.

     4.04 Brokers and Finders. Purchaser has not employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders’ fees in connection with the
transactions contemplated by this Agreement or the Seller Documents. No Person is entitled to any
fee, commission or like payment in respect thereof based in any manner on any agreement,
arrangement or understanding made by or on behalf of Purchaser

     4.05 Disclosure. The representations and warranties of Purchaser contained in this
Agreement do not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained in this Agreement and in the
Seller Documents not misleading.

ARTICLE V

COVENANTS OF SELLER

     Seller covenants and agrees with Purchaser that, at all times from and after the date hereof
until the Closing and, with respect to any covenant or agreement by its terms to be performed in
whole or in part after the Closing, for the period specified herein or, if no period is specified
herein, indefinitely, Seller will comply with all covenants and provisions of this Article V,
except to the extent Purchaser may otherwise consent in writing.

     5.01 Regulatory and Other Approvals. Seller will (a) take all commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable to obtain all consents, approvals or actions of, to
make all filings with and to give all notices to Governmental or Regulatory Authorities or any
other Person required of Seller to consummate the transactions contemplated hereby and by the
Seller Documents, (b) provide such other information and communications to such Governmental or
Regulatory Authorities

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or other Persons as Purchaser or such Governmental or Regulatory Authorities or other Persons may
reasonably request in connection therewith and (c) cooperate with Purchaser as promptly as
practicable in obtaining all consents, approvals or actions of, making all filings with and giving
all notices to Governmental or Regulatory Authorities or other Persons required of Purchaser to
consummate the transactions contemplated hereby and by the Seller Documents. Seller will provide
prompt notification to Purchaser when any such consent, approval, action, filing or notice referred
to in clause (a) above is obtained, taken, made or given, as applicable, and will advise Purchaser
of any communications (and, unless precluded by Law, provide copies of any such communications that
are in writing) with any Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Seller Documents.

     5.02 No Solicitations. Seller will not take, nor will it permit any Affiliate of
Seller (or authorize or permit any investment banker, financial advisor, attorney, accountant or
other Person retained by or acting for or on behalf of Seller or any such Affiliate) to take,
directly or indirectly, any action to initiate, assist, solicit, receive, negotiate, encourage or
accept any offer or inquiry from any Person (a) to reach any agreement or understanding (whether or
not such agreement or understanding is absolute, revocable, contingent or conditional) for, or
otherwise attempt to consummate, the sale of the Assets to any Person other than Purchaser or its
Affiliates or (b) to furnish or cause to be furnished any information with respect to the Assets to
any Person who Seller or such Affiliate (or any such Person acting for or on their behalf) knows or
has reason to believe is in the process of considering any acquisition of the Assets. If Seller or
any such Affiliate (or any such Person acting for or on their behalf) receives from any Person any
offer, inquiry or informational request referred to above, Seller will promptly advise such Person,
by written notice, of the terms of this Section 5.02 and will promptly, orally and in writing,
advise Purchaser of such offer, inquiry or request and deliver a copy of such notice to Purchaser.

     5.03 Conduct relating to the Assets. Seller will operate and conduct his business
relating to the Assets only in the ordinary course consistent with past practice such that, at the
Closing, no representation, warranty, covenant, obligation or agreement will be breached and no
condition in this Agreement will remain unfulfilled by reason of the actions or omissions of
Seller. Without limiting the generality of the foregoing, Seller will:

          (a) use commercially reasonable efforts to (i) preserve intact the present business
organization and reputation of the business relating to the Assets, (ii) maintain the Assets in
good order and condition, and (iii) maintain the goodwill of customers, suppliers, lenders and
other Persons to whom Seller sells goods or provides services or with whom Seller otherwise has
significant business relationships in connection with the Assets;

          (b) except to the extent required by applicable Law, cause all the Business Information to be
maintained in the usual, regular and ordinary manner;

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          (c) not sell, assign, license, transfer or permit to lapse any right or obligation with
respect to the Intellectual Property, including but not limited to making all filings required to
be made with respect to and to preserve all rights to the Intellectual Property; and

          (d) comply, in all material respects, with all Laws applicable to the Assets and promptly
following receipt thereof to give Purchaser copies of any notice received from any Governmental or
Regulatory Authority or other Person alleging any violation of any such Laws.

     5.04 Licenses: Filings. As promptly as practicable, Seller will deliver copies of all
License applications and other filings made by Seller in connection with the operation of the
Assets after the date hereof and before the Closing Date with any Governmental or Regulatory
Authority.

     5.05 Certain Restrictions. Seller will refrain from:

          (a) acquiring or disposing of any of the Assets;

          (b) entering into, amending, modifying, terminating (partially or completely), granting any
waiver under or giving any consent with respect to any Contract or any License relating to the
Assets;

          (c) violating, breaching or defaulting under in any material respect, or taking or failing to
take any action that (with or without notice or lapse of time or both) would constitute a material
violation or breach of, or default under, any term or provision of any Contract or License relating
to the Assets;

          (d) incurring, purchasing, canceling, prepaying or otherwise providing for a complete or
partial discharge in advance of a scheduled payment date with respect to, or waiving any right of
Seller under, any liability of or owing to Seller in connection with any of the Assets, other than
in the ordinary course of business consistent with past practice;

          (e) entering into a mortgage, pledge or otherwise subjecting to Lien any of the Assets;

          (f) engaging with any Person in any merger, consolidation or combination to which such Person
is a party, any sale, dividend, split or other disposition of capital stock or other equity
interests of such Person or any sale, dividend or other disposition of all or substantially all of
the assets and properties of such Person.

          (g) engaging in any transaction with respect to the Assets with any employee, debt-holder,
officer, director, Affiliate or Associate of Seller, or any Associate of any such employee,
debt-holder, officer, director or Affiliate, either outside the ordinary course of business
consistent with past practice or other than on an arm’s-length basis;

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          (h) entering into a contract which is deemed to be an Assigned Contract; and

          (i) entering into any Contract to do or engage in any of the foregoing.

     5.06 Delivery of Business Information. On the Closing Date, Seller will deliver or
make available to Purchaser at the location at which the Assets are held all of the Business
Information relating to the Assets which are or should be in Seller’s possession, and if at any
time after the Closing Seller discovers in his possession or under his control any other Business
Information or other Assets, it will forthwith deliver such Business Information or other Assets to
Purchaser.

     5.07 Non-competition.

          (a) Seller will, for a period often years from the Closing Date, refrain from, either alone or
in conjunction with any other Person, or directly or indirectly through his present or future
Affiliates:

     (i) causing or attempting to cause any client, customer or supplier of Purchaser to
terminate or materially reduce its business with Purchaser or any of its Affiliates
relating to the Assets; or

     (ii) participating or engaging in (other than through the ownership of five percent
or less of any class of securities registered under the Securities Exchange Act of 1934,
as amended), or otherwise lending assistance (financial or otherwise) to any Person
participating or engaged in, any business relating to the Assets.

          (b) The parties hereto recognize that the Laws and public policies of the various states of
the United States may differ as to the validity and enforceability of covenants similar to those
set forth in this Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the Laws and policies of each jurisdiction in
which enforcement may be sought, and that the unenforceability (or the modification to conform to
such Laws or policies) of any provisions of this Section shall not render unenforceable, or impair,
the remainder of the provisions of this Section. Accordingly, if any provision of this Section
shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall be
deemed to apply only with respect to the operation of such provision in the particular jurisdiction
in which such determination is made and not with respect to any other provision or jurisdiction.

          (c) The parties hereto acknowledge and agree that any remedy at Law for any breach of the
provisions of this Section would be inadequate, and Seller hereby consents to the granting by any
court of an injunction or other equitable relief, without the necessity of actual monetary loss
being proved, in order that the breach or threatened breach of such provisions may be effectively
restrained.

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     5.08 Notice and Cure. Seller will notify Purchaser in writing (where appropriate,
through updates to the Disclosure Schedule) of, and contemporaneously will provide Purchaser with
true and complete copies of any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event, transaction or circumstance,
as soon as practicable after it becomes known, or reasonably should have become known, to Seller,
occurring after the date of this Agreement, that causes or will cause any covenant or agreement of
Seller under this Agreement to be breached or that renders or will render untrue any representation
or warranty of Seller contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Seller also will notify Purchaser in writing (where
appropriate, through updates to the Disclosure Schedule) of, and will use all commercially
reasonable efforts to cure, before the Closing, any violation or breach, as soon as practicable
after it becomes known, or reasonably should have become known, to Seller, of any representation,
warranty, covenant or agreement made by Seller in this Agreement, whether occurring or arising
before, on or after the date of this Agreement. No notice given pursuant to this Section shall have
any effect on the representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining satisfaction of any condition contained herein or shall in any way
limit Purchaser’s right to seek indemnity under Article X.

     5.09 Fulfillment of Conditions. Seller will execute and deliver at the Closing each of
the Seller Documents that Seller is required hereby to execute and deliver as a condition to the
Closing, will take all commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each other condition to the obligations of Purchaser contained in this
Agreement and will not take or fail to take any action that could reasonably be expected to result
in the nonfulfillment of any such condition.

ARTICLE VI

COVENANTS OF PURCHASER

     Purchaser covenants and agrees with Seller that, at all times from and after the date hereof
until the Closing, and, with respect to any covenant or agreement by its terms to be performed in
whole or in part after the Closing, for the period specified herein or, if no period is specified
herein, indefinitely, Purchaser will comply with all covenants and provisions of this Article VI,
except to the extent Seller may otherwise consent in writing.

     6.01 Regulatory and Other Approvals. Purchaser will (a) take commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and use commercially
reasonable efforts, as promptly as practicable to obtain all consents, approvals or actions of, to
make all filings with and to give all notices to Governmental or Regulatory Authorities or any
other Person required of Purchaser to consummate the transactions contemplated hereby and by the
Seller Documents, (b) provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as Seller or such Governmental or Regulatory Authorities or
other Persons may

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reasonably request in connection therewith and (c) cooperate with Seller as promptly as practicable
in obtaining all consents, approvals or actions of, making all filings with and giving all notices
to Governmental or Regulatory Authorities or other Persons required of Seller to consummate the
transactions contemplated hereby and by the Seller Documents. Purchaser will provide prompt
notification to Seller when any such consent, approval, action, filing or notice referred to in
clause (a) above is obtained, taken, made or given, as applicable, and will advise Seller of any
communications (and, unless precluded by Law, provide copies of any such communications that are in
writing) with any Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Seller Documents.

     6.02 Notice and Cure. Purchaser will notify Seller in writing of, and
contemporaneously will provide Seller with true and complete copies of any and all information or
documents relating to, and will use all commercially reasonable efforts to cure before the Closing,
any event, transaction or circumstance, as soon as practicable after it becomes known, or
reasonably should have become known, to Purchaser, occurring after the date of this Agreement, that
causes or will cause any covenant or agreement of Purchaser under this Agreement to be breached or
that renders or will render untrue any representation or warranty of Purchaser contained in this
Agreement as if the same were made on or as of the date of such event, transaction or circumstance.
Purchaser also will notify Seller in writing of, and will use all commercially reasonable efforts
to cure, before the Closing, any violation or breach, as soon as practicable after it becomes
known, or reasonably should have become known, to Purchaser, of any representation, warranty,
covenant or agreement made by Purchaser in this Agreement, whether occurring or arising before, on
or after the date of this Agreement. No notice given pursuant to this Section shall have any effect
on the representations, warranties, covenants or agreements contained in this Agreement for
purposes of determining satisfaction of any condition contained herein or shall in any way limit
Seller’s right to seek indemnity under Article X.

     6.03 Delivery of Documents. Purchaser will execute and deliver to Seller the
Subscription Agreement, the Registration Rights Agreement and the Warrant.

     6.04 Fulfillment of Conditions. Purchaser will take all commercially reasonable
actions necessary or desirable and proceed diligently and in good faith to satisfy each other
condition to the obligations of Seller contained in this Agreement and will not take or fail to
take any action that could reasonably be expected to result in the nonfulfillment of any such
condition.

ARTICLE VII

CONDITIONS TO OBLIGATIONS OF SELLER

     The obligations of Seller hereunder are subject to the fulfillment, at or before the Closing,
of each of the following conditions (all or any of which may be waived in whole or in part by
Seller in his sole discretion):

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     7.01 Representations, Warranties and Covenants. Each of the representations and
warranties made by Purchaser in this Agreement shall be true and correct in all material respects
on the date hereof and on the Closing Date as though such representation or warranty was made on
and as of the Closing Date.

     7.02 Performance. Purchaser shall have performed and complied with each agreement,
covenant and obligation required by this Agreement to be so performed or complied with by Purchaser
at or before the Closing.

     7.03 Laws. There shall not be in effect on the Closing Date any Law that became
effective after the date of this Agreement restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this Agreement or any of
the Seller Documents.

     7.04 Officer’s Certificate. Purchaser shall have delivered to Seller a certificate,
dated the Closing Date and executed by an officer of Purchaser, certifying resolutions of
Purchaser’s Board of Directors authorizing the execution, delivery and performance of this
Agreement, together with incumbency and a signature certificate regarding the officer signing on
Purchaser’s behalf.

     7.05 Regulatory Consents and Approvals. All consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority necessary to permit Seller and
Purchaser to perform their obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (a) shall have been duly obtained, made
or given, (b) shall be in form and substance reasonably satisfactory to Seller (c) shall not be
subject to the satisfaction of any condition that has not been satisfied or waived and (d) shall be
in full force and effect, and all terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Seller Documents, shall have occurred.

     7.06 Opinion of Counsel. Seller shall have received the opinion of Parker Chapin
Flattau & Klimpl, LLP, counsel to Purchaser, dated the Closing Date, substantially in the form and
to the effect of Exhibit H hereto.

     7.07 Delivery of Documents. At the Closing, Purchaser shall execute and deliver to
Seller the documents described in Section 2.05(b).

     7.08 Proceedings. All proceedings to be taken on the part of Purchaser in connection
with the transactions contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Seller, and Seller shall have received copies of
all such documents and other evidences as Seller may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in connection therewith.

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ARTICLE VIII

CONDITIONS TO OBLIGATIONS OF PURCHASER

     The obligations of Purchaser hereunder are subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may be waived in whole or in part
by Purchaser in its sole discretion):

     8.01 Representations, Warranties and Covenants. Each of the representations and
warranties made by Seller in this Agreement (other than those made as of a specified date earlier
than the Closing Date) shall be true and correct in all material respects on and as of the Closing
Date as though such representation or warranty was made on the date hereof and on the Closing Date,
and any representation or warranty made as of a specified date earlier than the Closing Date shall
have been true and correct in all material respects on and as of such specified date.

     8.02 Performance. Seller shall have performed and complied with each agreement,
covenant and obligation required by this Agreement to be so performed or complied with by Purchaser
at or before the Closing.

     8.03 Laws. There shall not be in effect on the Closing Date any Law restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Seller Documents, or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the transactions
contemplated by this Agreement or any of the Seller Documents to Purchaser, and there shall not be
pending or threatened on the Closing Date any Action or Proceeding or any other action in, before
or by any Governmental or Regulatory Authority which could reasonably be expected to result in the
issuance of any such Order or the enactment, promulgation or deemed applicability to Purchaser or
the transactions contemplated by this Agreement or any of the Seller Documents of any such Law.

     8.04 Regulatory Consents and Approvals. All consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority necessary to permit Purchaser
and Seller to perform their obligations under this Agreement and any of the Seller Documents and to
consummate the transactions contemplated hereby and thereby (a) shall have been duly obtained, made
or given, (b) shall be in form and substance reasonably satisfactory to Purchaser, (c) shall not be
subject to the satisfaction of any condition that has not been satisfied or waived and (d) shall be
in full force and effect, and all terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Seller Documents shall have occurred.

     8.05 Third Party Consents. All consents (or in lieu thereof waivers) to the
performance by Seller of his obligations under this Agreement and the Seller Documents or to the
consummation of the transactions contemplated hereby and thereby as are required under any Contract
to which Seller is a party or by which any of the Assets are bound (a) shall have been obtained,
(b) shall be in form

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and substance reasonably satisfactory to Purchaser, (c) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived and (d) shall be in full force and effect.

     8.06 Delivery of Assets and Documents. At the Closing, Seller shall deliver all the
Assets to Purchaser and execute and deliver to Purchaser all the documents required to be delivered
by Seller as set forth in Section 2.05(c) and such additional documents as may be necessary in
order to consummate the transactions contemplated by this Agreement and the Seller Documents.

     8.07 Opinion of Counsel. Purchaser shall have received the opinion of Lagerlof,
Senecal, Bradley, Gosney & Kruse, LLP, counsel to Seller, dated the Closing Date, substantially in
the form and to the effect of Exhibit I hereto.

     8.08 Tax Status. Purchaser shall have received evidence of payment, including tax
clearance certificates, of all sales, use, transfer, value-added or other Taxes that are to be paid
by Seller on or before the Closing in Pennsylvania and any other applicable jurisdictions.

     8.09 Proceedings. All proceedings to be taken on the part of Seller in connection with
the transactions contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Purchaser, and Purchaser shall have received
copies of all such documents and other evidences as Purchaser may reasonably request in order to
establish the consummation of such transactions and the taking of all proceedings in connection
therewith.

ARTICLE IX

ADDITIONAL POST-CLOSING COVENANTS

     9.01 Further Assurances, Post-Closing Cooperation.

          (a) At any time or from time to time after the Closing, at Purchaser’s request and without
further consideration, Seller shall execute and deliver to Purchaser such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide such materials and information and
take such other actions as Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Purchaser, and to confirm Purchaser’s title to, all
of the Assets, and, to the fullest extent permitted by Law, to put Purchaser in actual possession
and operating control of the Assets and to assist Purchaser in exercising all rights with respect
thereto, and otherwise to cause Seller to fulfill his obligations under this Agreement, including
but not limited to, filings with any regulatory agencies to be made by Seller alone, or by Seller
and Purchaser jointly.

          (b) At any time or from time to time after the Closing, at Seller’s request and without
further consideration, Purchaser shall execute and deliver to Seller such other instruments,
provide such materials and information and take such other actions as Purchaser may reasonably

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deem necessary or desirable in order to give effect to Purchaser’s assumption of the Assumed
Liabilities.

          (c) Effective on the Closing Date, Seller hereby constitutes and appoints Purchaser the true
and lawful attorney of Seller, with full power of substitution, in the name of Seller or Purchaser,
but on behalf of and for the benefit of Purchaser; (i) to demand and receive from time to time any
and all the Assets and to make endorsements and give receipts and releases for and in respect of
the same and any part thereof; (ii) to institute, prosecute, compromise and settle any and all
Actions or Proceedings that Purchaser may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Assets, (iii) to defend or compromise any or all
Actions or Proceedings in respect of any of the Assets; and (iv) to do all such acts and things in
relation to the matters set forth in the preceding clauses (i) through (iii) as Purchaser shall
deem desirable. Seller hereby acknowledges that the appointment hereby made and the powers hereby
granted are coupled with an interest and are not and shall not be revocable by it at any time, in
any manner or for any reason. Seller shall deliver to Purchaser at Closing an acknowledged power of
attorney to the foregoing effect executed by Seller substantially in the form and to the effect of
Exhibit J hereto. Purchaser shall indemnify and hold harmless Seller and his agents and Affiliates
from any and all Losses caused by or arising out of any breach of Law by Purchaser in its exercise
of such power of attorney.

          (d) For a period of six (6) years following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business hours, reasonable access to the
books, records and other data relating to the Assets in its possession with respect to periods
prior to the Closing and the right to make copies and extracts therefrom, to the extent that such
access may be reasonably required by the requesting party in connection with (i) the preparation of
Tax returns, (ii) the determination or enforcement of rights and obligations under this Agreement,
(iii) compliance with the requirements of any Governmental or Regulatory Authority, (iv) the
determination or enforcement of the rights and obligations of any Indemnified Party or (v) in
connection with any actual or threatened Action or Proceeding. Further each party agrees for a
period extending six years after the Closing Date not to destroy or otherwise dispose of any such
books, records and other data relating to the Assets unless such party shall first offer in writing
to surrender such books, records and other data to the other party and such other party shall not
agree in writing to take possession thereof during the ten day period after such offer is made.

          (e) If, in order properly to prepare its Tax returns, other documents or reports required to
be filed with Governmental or Regulatory Authorities or its financial statements or to fulfill its
obligations hereunder, it is necessary that a party be furnished with additional information,
documents or records relating to the Assets not referred to in paragraph (c) above, and such
information, documents or records are in the possession or control of the other party, such other
party shall use its best efforts to furnish or make available such information, documents or
records (or copies thereof) at the recipient’s request, cost and expense. Any information obtained
by either party in accordance with this paragraph shall be held confidential by such party in
accordance with Section 12.12.

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          (f) Notwithstanding anything to the contrary contained in this section, if the parties are in
an adversarial relationship in litigation or arbitration, the furnishing of information, documents
or records in accordance with this section shall be subject to applicable rules relating to
discovery.

     9.02 FDA Approvals. Within seven days after the Closing Date, both Purchaser and
Seller will inform FDA of the ownership transfer of the Assets if required by Law.

     9.03 Adverse Drug Experience; Recalls. Seller shall notify Purchaser of all material
information of which Seller becomes aware concerning side effects, injury, toxicity or sensitivity
reactions including incidence and severity thereof associated with commercial or clinical uses,
studies, investigations or tests of any products relating to the Assets, whether or not determined
to be attributable to such products, which may constitute an adverse drug experience with respect
to such products under any Laws. Seller shall notify Purchaser of any complaints of which Seller
becomes aware concerning any of the Technology or products relating to the Assets.

     9.04 Delivery of Shares. As soon as practicable after the Closing Date, upon Seller
entering into the Subscription Agreement and the Registration Rights Agreement and upon receipt of
all authorizations, Purchaser will deliver the Shares to Seller.

     9.05 Non-Assertion of Patent. Seller agrees to not assert the 303 Patent or any other
patent which has one or more claims that are directed to subject matter which is disclosed in the
303 Patent and that refer to a composition which contains a skin-treating compound (as defined in
the 303 Patent) against the Purchaser of the U.S. Patent, or assignee or licensee thereof, or any
customer of the Purchaser, assignee or licensee (hereafter collectively referred to as “Section
9.05 Person”) in connection with the manufacture, use or sale by a Section 9.05 Person of a
composition which is within the scope of any claim of the U. S. Patent and which is sold only for a
pharmaceutical industry application, notwithstanding that such composition may also enhance one or
more properties of skin as described in the 303 Patent, beginning at column 22, line 11.

ARTICLE X

INDEMNIFICATION

     10.01 Survival of Representations, Warranties, Covenants and Agreements.
Notwithstanding any right of Purchaser fully to investigate the affairs of Seller or any other
party and notwithstanding any knowledge of the facts determined or determinable by Purchaser
pursuant to such investigation or right of investigation, Purchaser has the right to rely fully
upon the representations, warranties, covenants and agreements of Seller contained in this
Agreement and the Seller Documents. All such representations warranties, covenants and agreements
of Seller made in this Agreement and the Seller Documents delivered pursuant hereto shall survive
the execution and delivery hereof and the Closing.

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     10.02 Purchaser’s Indemnified Liabilities. Seller hereby agrees to indemnify
Purchaser, its directors, officers, employees, agents and Affiliates against any liability and will
hold each of them harmless from, against and with respect to, and will reimburse, any Loss which
Purchaser, its directors, officers, employees, agents and Affiliates incur, sustain or suffer
(“Purchaser’s Indemnified Liabilities”) arising out of or in connection with:

          (a) Seller’s misrepresentation, breach of any representation, warranty, agreement or covenant
or nonfulfillment of or failure to perform any covenant or agreement on the part of Seller
contained in this Agreement or in the Seller Documents;

          (b) the Retained Liabilities;

          (c) any liability for Taxes arising out of operations of Seller relating to the Assets on or
prior to the Closing or arising from the sale consummated hereunder;

          (d) any actual or alleged liability or obligation of Seller arising out of the ownership or
operation of the Assets on or prior to the Closing;

          (e) any litigation matter to which Seller, in connection with the Assets, or the Assets were
subject to on or prior to the Closing; or

          (f) any liability, loss of any of the Assets or other recovery resulting from or relating to
any litigation or other proceeding commenced by or involving Conrex, its officers, directors,
shareholders or Affiliates, which relates to the validity of the sale of the Assets from Conrex to
Seller.

     10.03 Seller’s Indemnified Liabilities. Purchaser hereby agrees to indemnify Seller,
his employees, agents and Affiliates against any liability and will hold each of them harmless
from, against and with respect to, and will reimburse, any Loss which Seller, his employees, agents
and Affiliates incur, sustain or suffer (“Seller’s Indemnified Liabilities”) arising out of or in
connection with:

          (a) Purchaser’s misrepresentation, breach of any representation, warranty, agreement or
covenant or nonfulfillment of or failure to perform any covenant or agreement on the part of
Purchaser contained in this Agreement;

          (b) the Assumed Liabilities; or

          (c) any actual or alleged liability or obligation of Purchaser arising out of the ownership or
operation of the Assets after the Closing.

     10.04 Notice and Defense of a Claim. If either party shall be presented with or have
actual notice of a claim against it which gives or may give rise to an Indemnified Liability, then
the party

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entitled to indemnification (the “Indemnified Party”) shall notify the other (the “Indemnifying
Party”) in writing thereof (in accordance with Section 12:01) within thirty days of notice of a
claim, otherwise the Indemnified Party shall waive its right to seek indemnification hereunder. The
Indemnifying Party may, at its expense, vigorously and diligently prosecute, defend and settle any
such claim; and if the Indemnifying Party assumes such defense it will notify the Indemnified Party
thereof, and thereafter the Indemnifying Party will not, except as provided below, be obligated to
pay any expenses of the Indemnified Party (including but not limited to, legal fees and
disbursements, court costs and the cost of appellate proceedings) in connection with such claim,
provided, however, that the Indemnified Party may, at the sole cost and expense of
the Indemnified Party, at any time prior to the Indemnifying Party’s delivery of the notice
referred to above, file any motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate to protect its interests. The
Indemnified Party will cooperate in the defense of any such claim, and the Indemnifying Party will
pay any costs incurred by the Indemnified Party in connection therewith. The Indemnified Party will
not settle any claims for which the Indemnifying Party may be liable without the prior written
consent of the Indemnifying Party unless (i) the Indemnified Party releases the Indemnifying Party
from all of the Indemnifying Party’s obligations to the Indemnified Party with respect to the
claim, or (ii) the Indemnifying Party is in default in its obligations under this Section. In the
case of a settlement pursuant to item (ii), the Indemnifying Party will promptly pay to or in
accordance with the instructions of the Indemnified Party any amount payable pursuant to such
settlement. Notwithstanding the foregoing, if both the Indemnifying Party and the Indemnified Party
are named as parties or subject to any claim and either such party determines with advice of
counsel and in its reasonable discretion that there may be one or more legal defenses available to
it that are different from or additional to those available to the other party or that a conflict
of interest between such parties may exist in respect of such claim, then the Indemnifying Party
may decline to assume the defense on behalf of the Indemnified Party or the Indemnified Party may
retain the defense on its own behalf, and, in either such case, after notice to such effect is duly
given to the other party (in accordance with Section 12.01), the Indemnifying Party shall be
relieved of its obligation to assume the defense on behalf of the Indemnified Party, but shall be
required to pay any legal or other expenses, including without limitation, reasonable attorneys’
fees and disbursements, incurred by the Indemnified Party in its defense.

ARTICLE XI

TERMINATION

     11.01 Termination. This Agreement and the Seller Documents may be terminated, and the
transactions contemplated hereby and thereby may be abandoned:

          (a) at any time before the Closing, by written agreement of Seller and Purchaser;

          (b) at any time before the Closing, by Seller or Purchaser, in the event (i) of a material
breach hereof by the non-terminating party if such non-terminating party fails to cure such

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breach within five Business Days following written notification thereof by the terminating party or
(ii) upon written notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party’s obligations under this Agreement or the
Seller Documents becomes impossible or impracticable with the use of commercially reasonable
efforts if the failure of such condition to be satisfied is not caused by a breach hereof by the
terminating party; or

          (c) at any time after March 15, 1999 by Seller or Purchaser upon written notification to the
non-terminating party by the terminating party if the Closing shall not have occurred on or before
such date and such failure to consummate is not caused by a breach of this Agreement or the Seller
Documents by the terminating party.

     11.02 Effect of Termination.

          (a) If this Agreement and the Seller Documents are validly terminated pursuant to Section
11.01, this Agreement and the Seller Documents will immediately become null and void, and there
will be no liability or obligation on the part of Seller or Purchaser (or any of their respective
officers, directors, employees, agents or other representatives or Affiliates); provided, however,
that if this Agreement is terminated for any reason other than Seller’s material breach or failure
to satisfy a condition, Seller shall refund the $50,000 due diligence deposit paid by Purchaser
pursuant to the letter agreement between the parties dated November 23, 1998. In the event of any
termination, the provisions with respect to “Expenses” in Section 12.05, “Entire Agreement” in
Section 12.06 and “Confidentiality” in Section 12.12 will continue to apply following any such
termination.

          (b) Notwithstanding any other provision in this Agreement to the contrary, upon termination of
this Agreement pursuant to Section 11.01(b) or (c), Seller will remain liable to Purchaser for any
breach of this Agreement by Seller existing at the time of such termination, and Purchaser will
remain liable to Seller for any breach of this Agreement by Purchaser existing at the time of such
termination, and Seller or Purchaser may seek such remedies, including damages and fees of
attorneys, against the other with respect to any such breach as are provided in this Agreement or
as are otherwise available at Law or in equity.

ARTICLE XII

MISCELLANEOUS

     12.01 Notices. All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to
have been given (a) when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender’s telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day, (c) one Business Day after the date
when sent to the recipient by reputable express courier service (charges prepaid) or (d) seven
Business Days after the date when mailed to the recipient by certified or registered mail, return
receipt requested and postage

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prepaid. Such notices, demands and other communications will be sent to Seller and to Purchaser at
the addresses indicated below:

	 	 	 
	If to Purchaser:

	 	Bentley Pharmaceuticals, Inc.
	 

	 	Two Urban Centre
	 

	 	Suite 400
	 

	 	4830 West Kennedy Blvd.
	 

	 	Tampa, Florida 33609
	 

	 	Attention: James R. Murphy
	 

	 	Facsimile No.: (813) 282-8941
	 
	 	 
	With a copy (which shall

	 	Parker, Chapin, Flattau & Klimpl, LLP
	not constitute notice) to:

	 	1211 Avenue of the Americas
	 

	 	New York, New York 10036
	 

	 	Attention: Jordan A. Horvath and Mark S. Hirsch
	 

	 	Facsimile No.: (212) 704-6288
	 
	 	 
	If to Seller:

	 	Yungtai Hsu
	 

	 	10725 East Rush Street
	 

	 	South El Monte, CA 91733
	 

	 	Facsimile No.: (626) 350-8886
	 
	 	 
	With a copy (which shall not
	 	 
	constitute notice) to:

	 	Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP
	 

	 	301 North Lake Avenue, 10th Floor
	 

	 	Pasadena, CA 91101
	 

	 	Attention: Timothy J. Gosney
	 

	 	Facsimile No.: (626) 793-5900

or to such other address as any party hereto may, from time to time, designate in writing
delivered pursuant to the terms of this Section.

     12.02 Amendments. The terms, provisions and conditions of this Agreement may not be
changed, modified or amended in any manner except by an instrument in writing duly executed by both
parties hereto.

     12.03 Binding Effect; Assignment. This Agreement and the rights and obligations
hereunder are assignable by Purchaser and any such assignment shall be binding in all respects on
Seller, as if Seller had sold all or part of the Assets directly to the assignee. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

-31-

 

     12.04 Announcements. All press releases, notices to customers and suppliers and other
announcements prior to the Closing Date with respect to this Agreement and the Seller Documents and
the transactions contemplated by this Agreement and the Seller Documents shall be approved by both
Purchaser and Seller prior to the issuance thereof, which approval shall not be unreasonably
withheld or delayed; provided that any party may make any public disclosure it believes in good
faith is required by law or regulation (in which case the disclosing party shall advise the other
party prior to making such disclosure and provide such other party an opportunity to review the
proposed disclosure).

     12.05 Expenses. Except as otherwise set forth in this Agreement, each party to this
Agreement shall bear all of its legal, accounting and other expenses incurred by it or on its
behalf in connection with the transactions contemplated by this Agreement, whether or not such
transactions are consummated.

     12.06 Entire Agreement. This Agreement and the Seller Documents constitute the entire
agreement between the parties hereto with respect to the subject matter hereof and supersede and
are in full substitution for any and all prior agreements, commitments, discussions, negotiations,
arrangements or understandings between the parties relating to such subject matter, including, but
not limited to, any letters of intent between the parties prior to the date hereof. The Seller
Documents, including but not limited to the Exhibits and Schedules to this Agreement, are hereby
incorporated and made a part hereof and are an integral part of this Agreement.

     12.07 Descriptive Headings. The descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

     12.08 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     12.09 Governing Law; Jurisdiction. This agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of New York without regard to
principles of choice of law or conflict of laws.

     12.10 Arbitration of Disputes

          (a) If any controversy or dispute arises under, out of or in relation to any of the provisions
hereof, such controversy or dispute shall be submitted for arbitration in New York, New York before
a panel of three arbitrators, one of which shall be selected by the party initiating such
arbitration, one of which shall be selected by the other party and the third of which (the “Third
Arbitrator”) shall be selected by the two arbitrators so selected; provided, however, that in the
event that such other arbitrators shall not agree on the selection of the Third Arbitrator, the
Third Arbitrator

-32-

 

shall be selected by the American Arbitration Association located in New York, New York. Any
dispute or controversy submitted to arbitration in accordance with the provisions of this Section
12.10 shall be determined by such arbitrators in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then existing.

          (b) The arbitrators may award any relief which they shall deem proper in the circumstances,
without regard to the relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific performance, injunctive
relief and/or declaratory relief, however, such an award may not include punitive damages. The
award and findings of the arbitrators shall be conclusive and binding upon all of the parties
hereto, whether or not all parties hereto participate in the arbitration proceeding, and judgment
upon the award may be entered in any court of competent jurisdiction upon the application of any
party. The parties hereby agree that such courts of competent jurisdiction shall include, but not
be limited to, the courts located in any jurisdiction in which the party against whom such judgment
is being enforced maintains any assets.

          (c) The prevailing party in the arbitration proceeding shall be entitled to recover from the
other party its reasonable attorneys’ fees, costs and expenses incurred in the proceeding and in
any subsequent action to enforce or collect upon the decision rendered in the arbitration
proceeding.

          (d) Notwithstanding the foregoing, the parties reserve the right to seek and obtain injunctive
relief, whether in the form of a temporary restraining order, preliminary injunction, injunction to
enforce an arbitration award, or other order of similar import, from the federal and state courts
located in New York, New York prior to, during, or after commencement or prosecution or arbitration
proceedings of the final decision and award of the arbitrators; provided, however, that such
preliminary injunctive relief shall be subject to final arbitral decisions.

          (e) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to any
such action seeking injunctive or similar relief hereunder. In any dispute between the parties,
neither party will raise, and each party hereby expressly waives, any objection or defense to any
such court as an inconvenient forum. Each party hereby waives personal service of any summons,
complaint or other process, which may be delivered by any of the means permitted for notices under
Section 12.01 hereof

     12.11 Severability. In the event that any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision of this Agreement
or any other such instrument. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.

-33-

 

     12.12 Confidentiality. Seller and Purchaser agree to keep, and to cause each of their
Affiliates, directors, officers and employees to keep, confidential any and all confidential
information of the other party that either receives in the course of performing its obligations
hereunder (unless compelled by judicial or administrative process and except that such information
may be shared, on a confidential basis, with the party’s attorneys and auditors) and will not,
without the other party’s written consent, use any of such confidential information except as
reasonably necessary to perform its duties under this or another of its agreements with the other
party (for purposes of this Agreement, “confidential information” includes any and all trade
secrets (including information relating to the Technology, the Patents and the Business
Information), financial information not disclosed to the general public and other proprietary
information disclosed in the course of the negotiation of this Agreement and Purchaser’s due
diligence investigation). Furthermore, Seller agrees to refrain from, either alone or in
conjunction with any other Person, directly or indirectly through his present or future Affiliates,
and agrees to cause his Affiliates and employees to refrain from disclosing or using any Business
Information relating to the Assets or the Technology or any client, customer or supplier of the
Assets or the Technology. Upon termination of this Agreement, each party will return, and will
cause its Affiliates, directors, officers and employees to return, to the other party, all original
documents and copies of the confidential information which are in its possession.

-34-

 

          IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this Agreement as of the
day and year first written above.

	 	 	 	 	 
	 	 	 
	 	/s/ Yungtai Hsu
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy, Chairman and Chief 	 
	 	 	Executive Officer 	 

-35-

 

	 	 	 	 	 

          IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this Agreement as of the
day and year first written above.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ James R. Murphy
 	 
	 	 	James R. Murphy, Chairman and Chief 	 
	 	 	Executive Officer 	 
	 

-36-

 

EXHIBIT A

SCHEDULE 1.01(b)

Contracts:

Research, Development and Testing

Agreement between Virna

Pharmaceuticals, Inc. and Conrex

dated November 29, 1990

As Amended

April 5, 1996

 

 

SCHEDULE 1.01 (c)

Suppliers:

Firmenich Incorporated

250 Plainsboro Road, Plainsboro, New Jersey 08536

Haarmann Reimer Corporation

300 North Street, Teterboro NJ 07608

Supplier Agreements: None

 

 

SCHEDULE 1.01(g)

Licenses:

See Contracts 1.01(b) — Virna/Conrex

 

 

SCHEDULE l.0l(h)

Patents:

(1)

	 	 	 	 	 	 	 
	Country	 	Patent No.	 	Issue Date
	 
	 	 	 	 	 	 
	Belgium

	 	 	248,885	 	 	August 5, 1992
	Canada

	 	 	1,312,281	 	 	January 5, 1993
	Denmark

	 	 	167,343	 	 	October 18, 1993
	France

	 	 	248,885	 	 	August 5, 1992
	Germany

	 	P 	3,690,626.3	 	 	May 15, 1997
	Great Britain

	 	 	2,192,134	 	 	April 25, 1990
	Italy

	 	 	248,885	 	 	August 5, 1992
	Japan

	 	 	2,583,777	 	 	November 21, 1996
	Korea

	 	 	84,759	 	 	November 29, 1994
	Luxembourg

	 	WO 873,473
	 	November 11, 1987
	Switzerland

	 	 	666,813	 	 	August 31, 1988
	United States

	 	 	5,023,252	 	 	June 11, 1991

	(2)	 	U.S. maintenance fees of $1,089 have not been paid and are currently in the grace period
(which will expire on June 11, 1999).

	(3)	 	Title to foreign patents has been conveyed equitably from the inventor to Conrex but has not
been recorded.

 

 

Schedule 2.04(a)

Collaborative Parties

The following list identifies specific products that have been tested either by Conrex or by a
sponsoring company in collaborative ventures. Although at the time of establishing this agreement
no collaborative venture is active, in the event a collaborative venture is renewed with any of
these companies (as listed below), for the specific corresponding product, then a three percent
royalty will become payable as defined in section 2.04(a).

	 	 	 
	COMPANY	 	PRODUCTS
	 
	 	 
	Alcon Laboratories

	 	AL4862, AL5393A for Ocular use
	Alza Corporation

	 	Estradiol cream,
	Alza Corporation

	 	Estradiol in combination with Testosterone
	Bristol Myers-Squibb

	 	Estradiol, Betahistine
	Connaught Lab., Inc.

	 	Oral Flu Vaccine
	China Chemical & Pharmaceutical

	 	Diclofenac
	Ciba Consumer Products

	 	Fenistil Gel, Diclofenac, Calcitonin,
	Dow Corning

	 	Bicompartmental Estradiol & Levonorgestrel
	Eli Lilly Company

	 	Nasal delivery of Insulin
	Genta, Inc.

	 	Methotrexate and/or Isotretinoin
	Glaxo

	 	Fluticasone
	Hercon

	 	Estradiol and Testosterone
	Iolab

	 	Timolol, Declomycin both for ocular use
	Johnson & Johnson Consumer Pds

	 	Itraconazole for Nail-bed infections
	Janssen Pharm. Research

	 	Ketoconazole
	Noven Pharm. Inc

	 	Estradiol and Progestin combination in patches
	Schering Plough

	 	Clotrimazole, Lotrimin
	Sinphar Pharm. Co.

	 	Any collaboration acceptable to Bentley Pharm.
	Sintong Chemical Industrial Co.

	 	Any collaboration acceptable to Bentley Pharm.

In addition to the above list of specific companies and the corresponding product(s), a 3% royalty
(as defined in section 2.04(a)) will be payable for any collaboration which arises utilizing the
drugs and applications (listed below) with Conrex’ technology.

	 	•	 	The topical delivery of Diclofenac or Clotrimazole.
	 
	 	•	 	The intra-nasal delivery of Insulin or Calcitonin.
	 
	 	•	 	The patch delivery of Estradiol; Estradiol in combination with Testosterone; or
Estradiol in combination with Levonorgesirel.

 

 

SCHEDULE 2.04(c)

Allocation of Purchase

Price for Tax Purposes:

Patents and Drug Licenses      100%

 

 

SCHEDULE 3.03

Seller’s Required Filings:      None

 

 

SCHEDULE 3.05

Registrations:

Letter transferring right and title to Drug Master File No. 10260 from Conrex to Bentley.

 

 

SCHEDULE 3.06

License Agreements: See Schedule 1.01(b) Virna/Conrex

 

 

SCHEDULE 3.07

Certain Changes or Events: None

 

 

SCHEDULE 3.10

Litigation: None

 

 

SCHEDULE 3.l6(a)

Suppliers:

Firmenich Incorporated

250 Plainsboro Road, Plainsboro, New Jersey 08536

Haarmann Reimer Corporation

300 North Street, Teterboro NJ 07608

 

 

SCHEDULE 3.16(b)

Customers and Licenses: None

 

 

SCHEDULE 3.19

Brokers and Finders:

Nei-Wei Chu

The Essence of Life Co.     1120 S. San Gabriel Blvd. Suite 125, San Gabriel, CA 91776

 

 

SCHEDULE 4.03

Purchaser’s Required Filings:

Letter transferring right and title to Drug Master File which is part of the Assets from
Conrex to Bentley.

 

 

EXHIBIT B

SUBSCRIPTION AGREEMENT

 

BENTLEY PHARMACEUTICALS, INC.

 

Bentley Pharmaceuticals, Inc.

Two Urban Centre, Suite 400

4890 West Kennedy Blvd.

Tampa, Florida 33609

February 11, 1999

Dear Sir or Madam:

          Upon the terms and subject to the conditions of an Asset Purchase Agreement, dated February 1,
1999 effective as of December 31, 1998 (the “Asset Purchase Agreement”), between Bentley
Pharmaceuticals, Inc. (the “Company”) and Yungtai Hsu (“Hsu”), in which Hsu agreed to sell certain
of his assets to the Company, Hsu has agreed to accept as part of the Purchase Price (as defined in
the Asset Purchase Agreement) (a)            shares (the “Shares”) of common stock, $0.02 par value
per share (the “Common Stock”) of the Company, and (b) a warrant to purchase 450,000 shares of
Common Stock (the “Warrant”, collectively the Shares and the Warrant, the “Securities”). Therefore,
in consideration of the premises and the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Hsu hereby
agrees to:

          1. Subscription. Hsu hereby applies to subscribe for the Securities. Once this
Agreement is executed by both Hsu and the Company, it is intended to create a binding agreement
between Hsu and the Company with respect to the terms and conditions described below.

          2. Representations and Warranties of Hsu. Hsu acknowledges, represents, warrants and
agrees as follows:

               (a) Authorization. Hsu has full power and legal capacity to execute and deliver this
Agreement. This Agreement has been duly executed and delivered by Hsu and, assuming the execution
and delivery hereof and thereof by the Company, will constitute the legal, valid and binding
obligations of Hsu, enforceable against Hsu in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and the availability of equitable remedies.

 

 

               (b) Accredited Investor. Hsu is an accredited investor (as defined in Rule 501 of
Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Act”).
Hsu has such knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in
the Company and of protecting his interests in connection with this transaction. Hsu recognizes
that his investment in the Company involves certain risks which are set forth in the Company’s
Registration Statement on Form S-3 (SEC File No. 333-28593, the “Registration Statement”) declared
effective by the Securities and Exchange Commission on June 10, 1997 and any amendments thereto.

               (c) Due Diligence. Hsu has received a copy of such documents as requested by him, has
carefully reviewed such documents, has had the opportunity to obtain any additional information
necessary to verify the accuracy of the information contained in such documents and has been given
the opportunity to meet with representatives of the Company and to have them answer any questions
and provide any additional information regarding the terms and conditions of this particular
investment deemed relevant by Hsu, and all such questions have been answered and requested
information provided to Hsu’s full satisfaction. Among the documents received and reviewed by Hsu
are: (i) the Company’s Annual Report on Form 10-K for the year ended December 31, 1997; (ii) the
Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and
September 30, 1998 (such documents are collectively referred to in this Agreement as the “Exchange
Act Reports”); (iii) the Registration Statement and (iv) a Registration Rights Agreement between
the Company and Hsu with respect to the Shares, dated as of the date hereof (the “Registration
Rights Agreement.”) In making his decision to accept the Securities as part of the Purchase Price,
Hsu has relied solely upon his review of the documents referred to above and this Agreement and
independent investigations made by him or his representatives.

               (d) No Legal Advice from the Company. Hsu acknowledges that he has had the opportunity
to review this Agreement and the transactions contemplated by this Agreement with his own legal
counsel and tax advisors. Except for any statements or representations of the Company made in this
Agreement, in the Exchange Act Reports and in the Registration Rights Agreement, Hsu is relying
solely on such counsel and advisors and not on any statements or representations of the Company or
any of its representative or agents for legal, tax or investment advice with respect to this
investment, the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

               (e) Not an Affiliate. Hsu is not an officer, director or “affiliate” (as that term is
defined in Rule 405 of the Act) of the Company.

               (f) Reliance on Representations and Warranties. Hsu understands that the Securities
are being offered and sold to him in reliance on specific provisions of United States federal and
state securities laws and that the Company is relying upon the truth and

-2-

 

accuracy of the representations, warranties, agreements, acknowledgments and understandings of Hsu
set forth in this Agreement in order to determine the applicability of such provisions.

               (g) No Registration. Hsu understands that the sale of the Securities has not been
registered under the Act, in reliance upon an exemption therefrom by virtue of Section 4(2) and
Regulation D promulgated under the Act. Hsu understands that the Securities must be held
indefinitely and may not be offered, transferred, resold, pledged, hypothecated or otherwise
disposed of until the sale or other transfer thereof is registered under the Act, pursuant to the
terms and conditions of the Registration Rights Agreement or unless an exemption from such
registration is available at that time. Hsu is aware that he will be required to bear the financial
risks of this investment for an indefinite period of time unless transferred in accordance with the
above. Hsu covenants that he will not knowingly make any sale, transfer or other disposition of the
Securities or any interest therein in violation of the Act, the Exchange Act of 1934, as amended,
or the rules and regulations promulgated under either of said Acts.

               (h) Investment Intent. Hsu is acquiring the Securities solely for his own account as
principal and not with a view to the distribution thereof to or for the benefit or account of any
other person, in whole or in part, and no other person has a direct or indirect beneficial interest
in such Securities. Hsu understands and agrees that he must bear the economic risk of his
investment in the Securities for an indefinite period of time. Hsu will not take any short position
in the Securities and not otherwise engage in any hedging transactions such as option writing,
equity swaps or other types of derivative transactions with respect to the Securities.

               (i) Additional Transfer Restrictions. Hsu understands and agrees that, in addition to
the restrictions set forth in this Agreement, the following restrictions and limitations are
applicable to his purchase and any resales, pledges, hypothecations or other transfers of the
Securities:

                    (i) The following legend reflecting all applicable restrictions will be placed on any
certificate(s) or other document(s) evidencing the Securities and Hsu must comply with the terms
and conditions set forth in such legends prior to any resales, pledges, hypothecations or other
transfers of the Securities:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
OFFERED FOR SALE, SOLD, HYPOTHECATED, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN
THE

-3-

 

ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THE SECURITIES UNDER THE
ACT OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.

                    (ii) Stop transfer instructions have been or will be placed on any certificates or other
documents evidencing the Securities so as to restrict the resale, pledge, hypothecation or other
transfer thereof in accordance with the provisions hereof.

               (j) Termination of Restrictions. The restrictions described in Section 2 hereof upon
the transferability of the Securities shall cease and terminate as to any particular Securities (i)
when, in the opinion of Parker Chapin Flattau & Klimpl, LLP or other counsel reasonably acceptable
to the Company, such restrictions are no longer required in order to assure compliance with the Act
or (ii) when, in the opinion of Parker Chapin Flattau & Klimpl, LLP or other counsel reasonably
acceptable to the Company, such Securities shall have been registered under the Act or transferred
in reliance upon the exemption afforded by Section 4(1) of the Act by virtue of Rule 144.

               (k) Indemnification. Hsu shall indemnify and hold harmless the Company and each
officer, director or control person of any such entity, who is or may be a party or is or may be
threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of or arising from (i) any
actual or alleged misrepresentation or misstatement of facts or omission to represent or state
facts made or alleged to have been made by Hsu to the Company, (or its officers, directors,
employees, agents or representatives), or omitted or alleged to have been omitted by Hsu,
concerning Hsu, or Hsu’s authority to invest or financial position in connection with the offering
or sale of the Securities, or (ii) any breach of warranty or failure to comply with any covenant
contained in this Agreement, including, without limitation, any such misrepresentation,
misstatement or omission, or breach of any warranty or covenant, contained herein or any other
document submitted by Hsu, against losses, liabilities and expenses for which the Company, or its
officers, directors or control persons has not otherwise been reimbursed (including attorneys’
fees, judgments, fines and amounts paid in settlement in matters settled in accordance with the
provision of the following paragraph) incurred by the Company, or such officer, director or control
person in connection with such action, suit or proceeding; provided, however, that Hsu will not be
liable in any such case for losses, claims, damages, liabilities or expenses that a court of
competent jurisdiction shall have found in a final judgment to have arisen primarily from the gross
negligence or willful misconduct of the Company or the party claiming a right to indemnification.

-4-

 

               In case any proceeding shall be instituted involving any person with respect to whom indemnity
may be sought, such person (the “Indemnified Party”) shall promptly notify Hsu, and Hsu, upon the
request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and any others Hsu may designate in such proceedings and
shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own counsel at its own
expense, except that Hsu shall pay as incurred the fees and expenses of counsel retained by the
Indemnified Party in the event that (i) Hsu and the Indemnified Party shall have mutually agreed to
the retention of such counsel or, (ii) the named parties to any such proceeding (including any
impleaded parties) include both Hsu and the Indemnified Party and representation of both parties by
the same counsel would be inappropriate, in the reasonable opinion of the Indemnified Party, due to
actual or potential differing interests between them. Hsu shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, Hsu agrees to indemnify the Indemnified Party to the extent
set forth in this Agreement.

               In the event a claim for indemnification as described herein is determined to be unenforceable
by a final judgment of a court of competent jurisdiction, then Hsu shall contribute to the
aggregate losses, claims, damages or liabilities to which the Company or its officers, directors,
agents, employees or controlling persons may be subject in such amount as is appropriate to reflect
the relative benefits received by each of the undersigned and the party seeking contribution on the
one hand and the relative faults of Hsu and the party seeking contribution on the other, as well as
any relevant equitable considerations.

               The provisions of this Agreement relating to indemnification and contribution shall survive
termination of this Agreement and shall be binding upon any successors or assigns of Hsu.

          3. Representations and Warranties of the Company. The Company acknowledges,
represents, warrants and agrees as follows:

               (a) Organization and Authorization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of Florida and has all requisite
corporate power and authority to own and operate its properties and assets and to carry on its
business as currently conducted. The Company is not in default or violation of any material term or
provision of its Articles of Incorporation or Bylaws nor will the consummation of the transactions
contemplated by this Agreement cause any such default or violation. The Company has all requisite
corporate power and authority to enter into this Agreement, to sell the Securities hereunder and to
carry out and perform its obligations under the terms of this Agreement subject to the above. This
Agreement is a valid and binding obligation of the Company, enforceable in accordance with its
terms.

               (b) Capitalization. The authorized capital stock of the Company consists of 35,000,000
shares of Common Stock and 2,000,000 shares of Preferred Stock, par value $.02 per

-5-

 

share. Upon issuance of the Securities pursuant to the terms of this Agreement and payment therefor
pursuant to the terms of an Asset Purchase Agreement between Hsu and the Company, the Shares will
be duly authorized, validly issued, fully paid and nonassessable and the Warrant will be duly
authorized and validly issued. Upon issuance, the Shares will not be subject to any preemptive or
other preferential rights or similar statutory or contractual rights.

          The Closing shall take place as soon as practicable after (i) due execution by Hsu and
acceptance by the Company of this Subscription Agreement and (ii) the closings as contemplated by
the Asset Purchase Agreement and the Asset Purchase Agreement between Hsu and Conrex Pharmaceutical
Corporation.

          4. Miscellaneous.

               (a) Notices. All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to
have been given (a) when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender’s telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day (“Business Day” means a day other than
Saturday, Sunday or any day on which banks located in the State of New York are authorized or
obligated to close), (c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid) or (d) seven Business Days after the date when mailed to
the recipient by certified or registered mail, return receipt requested and postage prepaid. Such
notices, demands and other communications will be sent to Hsu and to the Company at the addresses
indicated below.

If to Hsu, to:

Yungtai Hsu 
10725 East Rush Street

South El Monte, CA 91733

Facsimile No.: (626) 350-8886

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

Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP

301 North Lake Avenue, 10th Floor

Pasadena, CA 91101

Attention: Timothy J. Gosney

Facsimile No.: (626) 793-5900

-6-

 

If to the Company, to:

Bentley Pharmaceuticals, Inc.

Two Urban Centre, Suite 400

4890 West Kennedy Blvd.

Tampa, Florida 33609

Attention: James R. Murphy

Facsimile: (813) 282-8941

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

Parker Chapin Flattau & Klimpl, LLP

1211 Avenue of the Americas

New York, New York 10036

Attention: Mark S. Hirsch

                  Jordan A. Horvath

Facsimile: (212) 704-6288

          (b) Assignment: Benefit. This Agreement may not be assigned by Hsu without the prior
written consent of the Company and any assignment without such consent shall be void. This
Agreement may be assigned by the Company to any person or entity which purchases all or
substantially all of the stock or assets of the Company or is the successor to the Company by
merger or consolidation. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Company and of Hsu.

          (c) Severability. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
each of which shall remain in full force and effect.

          (d) Amendments. This Agreement may be amended, supplemented or modified, and any
provision hereof may be waived, only pursuant to a written instrument making specific reference to
this Agreement signed by each of the parties hereto.

          (e) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

          (f) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contract executed and performed in such
State without giving effect to the conflicts of laws principles thereof, except that if it is
necessary in any other jurisdiction to have the law of such other jurisdiction govern this

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Agreement in order for this Agreement to be effective in any respect, then the laws of such other
jurisdiction shall govern this Agreement to such extent.

               (g) Arbitration of Disputes

                    (i) If any controversy or dispute arises under, out of or in relation to any of the provisions
hereof, such controversy or dispute shall be submitted for arbitration in New York, New York before
a panel of three arbitrators, one of which shall be selected by the party initiating such
arbitration, one of which shall be selected by the other party and the third of which (the “Third
Arbitrator”) shall be selected by the two arbitrators so selected; provided, however, that in the
event that such other arbitrators shall not agree on the selection of the Third Arbitrator, the
Third Arbitrator shall be selected by the American Arbitration Association located in New York, New
York. Any dispute or controversy submitted to arbitration in accordance with the provisions of this
Section shall be determined by such arbitrators in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then existing.

                    (ii) The arbitrators may award any relief which they shall deem proper in the circumstances,
without regard to the relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific performance, injunctive
relief and/or declaratory relief, however, such an award may not include punitive damages. The
award and findings of the arbitrators shall be conclusive and binding upon all of the parties
hereto, whether or not all parties hereto participate in the arbitration proceeding, and judgment
upon the award may be entered in any court of competent jurisdiction upon the application of any
party. The parties hereby agree that such courts of competent jurisdiction shall include, but not
be limited to, the courts located in any jurisdiction in which the party against whom such judgment
is being enforced maintains any assets.

                    (iii) The prevailing party in the arbitration proceeding shall be entitled to recover from the
other party its reasonable attorneys’ fees, costs and expenses incurred in the proceeding and in
any subsequent action to enforce or collect upon the decision rendered in the arbitration
proceeding.

                    (iv) Notwithstanding the foregoing, the parties reserve the right to seek and obtain
injunctive relief, whether in the form of a temporary restraining order, preliminary injunction,
injunction to enforce an arbitration award, or other order of similar import, from the federal and
state courts located in New York, New York prior to, during, or after commencement or prosecution
or arbitration proceedings of the final decision and award of the arbitrators; provided, however,
that such preliminary injunctive relief shall be subject to final arbitral decisions.

                    (v) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to any
such action seeking injunctive or similar relief

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EXHIBIT C

REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT, is made and entered into as of February 11, 1999 between
BENTLEY PHARMACEUTICALS, INC., a Florida corporation (the “Company”) and Yungtai Hsu (“Hsu”).

          WHEREAS, upon the terms and subject to the conditions of an Asset Purchase Agreement, dated
February 1, 1999, effective as of December 31, 1998 (the “Asset Purchase Agreement”), between the
Company and Hsu, in which Hsu agreed to sell certain of his assets to the Company, Hsu has agreed
to accept
                    
shares (the “Shares”) of common stock, $0.02 par value per share (the “Common
Stock”) of the Company as part of the Purchase Price (as defined in the Asset Purchase Agreement);

          WHEREAS, to induce Hsu to accept the Shares as part of the Purchase Price, the Company has
agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute (collectively, the “Act”), with
respect to the Shares;

          WHEREAS, as of the date hereof, Hsu and the Company entered into a Subscription Agreement with
respect to the Shares (the “Subscription Agreement”);

          NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Hsu hereby agree as follows:

          1. Definitions.

          (a) As used in this Agreement, the following terms shall have the following meanings:

          (i) “Register,” “Registered,” and “Registration” refer to a registration effected by preparing
and filing a Registration Statement in compliance with the Act and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities and Exchange
Commission (the “SEC”).

          (ii) “Registrable Securities” means the Shares.

          (iii) “Registration Statement” means a registration statement of the Company under the Act,
including any amendments or supplements thereto and prospectuses contained therein.

 

 

          (iv) “Stockholder” means Hsu and any permitted transferee or assignee who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 hereof.

          (b) Capitalized terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Asset Purchase Agreement.

          2. Restrictions on Transfer.

          (a) The Stockholder acknowledges and understands that prior to the registration of the Shares
as provided herein, the Shares are “restricted securities” as defined in Rule 144 promulgated under
the Act (“Rule 144”). The Stockholder understands that the Shares may not be offered, transferred,
resold, pledged, hypothecated or otherwise disposed of in the absence of (i) an opinion of Parker
Chapin Flattau & Klimpl, LLP or other counsel reasonably acceptable to the Company that such
transfer may be made without registration under the Act or (ii) an opinion of Parker Chapin Flattau
& Klimpl, LLP or other counsel reasonably acceptable to the Company that the Shares have been
Registered.

          (b) The Stockholder acknowledges that the Company has issued the Shares to the Stockholder
pursuant to an exemption from registration under the Act. Stockholder represents that (i) he has
acquired the Shares for investment and without any view toward distribution of any of Registrable
Securities to any other person, (ii) he will not sell or otherwise dispose of the Shares except in
compliance with the registration requirements or exemption provisions under the Act and (iii)
before any sale or other disposition of any of the Shares other than in a sale registered under the
Act or pursuant to Rule 144 or 144A (or any similar provisions then in force) under the Act (unless
the Company shall have been advised by counsel that the sale does not meet the requirements of Rule
144 or Rule 144A, as the case may be, for such sale), he will deliver to the Company an opinion of
counsel, in form and substance reasonably satisfactory to the Company, to the effect that such
registration is unnecessary.

          (c) Each instrument or certificate evidencing or representing the Shares, and any certificate
issued in exchange therefor or transfer thereof, shall bear legends substantially in the following
form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”) OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD,
HYPOTHECATED, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT COVERING THE SECURITIES UNDER THE ACT OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT

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REGISTRATION IS NOT REQUIRED UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

          3. Registration.

          (a) If at any time or from time to time following the date hereof, the Company shall determine
to register any distribution of its securities with the SEC, either for its own account or the
account of a security holder or holders, in a registration statement covering the sale of shares of
Common Stock to the general public pursuant to a public offering in compliance with the Act (except
with respect to any registration filed on Form S-4 or such other form which does not include
substantially the same information as would be included in a registration statement covering the
sale of shares of Common Stock to the general public), the Company will: (i) give to Stockholder
written notice thereof at least 30 days before the initial filing of such registration statement;
and (ii) include in such registration (and any related qualification under blue sky laws) and in
any underwriting involved therein, all the Shares, specified in a written request, made within 30
days after receipt of such written notice from the Company, by the Stockholder, except as set forth
in subparagraphs (b) or below. Notwithstanding the foregoing, the Stockholder shall not have
registration rights with respect to a particular registration statement in the event that any
investor or lender for whom the registration statement is filed objects to the inclusion of other
shares of Common Stock, including the Shares, in such registration statement.

          (b) If the distribution is to be underwritten, the right of the Stockholder to registration
pursuant to this Section shall be conditioned upon Stockholder’s participation in the underwriting
and the inclusion of the Shares and securities underlying the Shares, as the case may be, in the
underwriting to the extent provided herein. Notwithstanding any other provision of this Section, if
the underwriter determines that marketing factors require a limitation of the number of shares to
be underwritten, and such determination is made by such underwriter in writing, then the
underwriter may limit the number of the Stockholder’s Shares to be included in the registration and
underwriting, or may exclude the Shares from such underwriting.

          4. Obligations of the Company. In connection with a registration of the Registrable
Securities under Section 3 hereof, the Company shall do each of the following:

          (a) Prepare and file with the SEC, a Registration Statement with respect to the Registrable
Securities, and thereafter use its best efforts to cause each Registration Statement relating to
the Registrable Securities to become effective on or before 120 days from the filing of such
Registration Statement with the SEC, and keep the Registration Statement effective at all times
until the earliest (the “Registration Period”) of (i) the date that is three years after the
Closing Date; (ii) the date when the Stockholder may sell all Registrable Securities under Rule 144
or (iii) the date the Stockholder no longer owns any of the Registrable Securities, which
Registration Statement shall 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 therein, in light
of the circumstances in which they were made, not misleading;

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          (b) Prepare and file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement effective at all
times during the Registration Period, and, during the Registration Period, comply with the
provisions of the Act with respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement until such time as all of such Registrable Securities have
been disposed of in accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;

          (c) The Company shall permit a single firm of counsel designated by the Stockholder to review
the Registration Statement a reasonable period of time prior to the Company’s filing of the
Registration Statement with the SEC;

          (d) Furnish to the Stockholder (i) promptly after the Registration Statement is prepared and
publicly distributed, filed with the SEC, or received by the Company, one copy of the Registration
Statement, each prospectus, and each amendment or supplement thereto, and (ii) such number of
copies of a prospectus, and all amendments and supplements thereto and such other documents, as the
Stockholder may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Stockholder;

          (e) As promptly as practicable after becoming aware of such event, the Company shall notify
the Stockholder of (i) the issuance by the SEC of a stop order suspending the effectiveness of the
Registration Statement, (ii) the happening of any event of which the Company has knowledge as a
result of which the prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading, or (iii) the occurrence or existence of any pending corporate
development that, in the reasonable discretion of the Company, makes it appropriate to suspend the
availability of the Registration Statement, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue statement or omission,
and deliver such number of copies of such supplement or amendment to the Stockholder as hemad
reasonably request; provided that, for not more than twenty days (or a total of not more than forty
days in any twelve month period, the Company may delay the disclosure of material non-public
information concerning the Company (as well as prospectus or Registration Statement updating) the
disclosure of which at the time is not, in the good faith opinion of the Company, the best
interests of the Company and in the opinion of counsel to the Company (an “Allowed Delay”);
provided, further, that the Company shall promptly (i) notify the Stockholder in writing of the
existence of material non-public information giving rise to an Allowed Delay and (ii) advise the
Stockholder in writing to cease all sales under the Registration Statement until the end of the
Allowed Delay. Upon expiration of the Allowed Delay, the Company shall again be bound by the first
sentence of this Section 4(e) with respect to the information giving rise thereto;

          (f) As promptly as practicable after becoming aware of such event, notify the Stockholder who
holds Registrable Securities being sold (or, in the event of an underwritten offering,

-4-

 

the managing underwriters) of the issuance by the SEC of any notice declaring the effectiveness of
the Registration Statement or any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time; and

          (g) Take all other reasonable actions necessary to expedite and facilitate disposition by the
Stockholder of the Registrable Securities pursuant to the Registration Statement.

          5. Obligations of the Stockholder. In connection with the registration of the
Registrable Securities, the Stockholder shall have the following obligations:

          (a) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of the
Stockholder that the Stockholder shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such registration as the
Company may reasonably request. At least five days prior to the first anticipated filing date of
the Registration Statement, the Company shall notify the Stockholder of the information the Company
requires from the Stockholder (the “Requested Information”) if the Stockholder elects to have any
of the Stockholder’s Registrable Securities included in the Registration Statement. If at least
three Business Days (as defined below) prior to the filing date the Company has not received the
Requested Information from the Stockholder, then the Company may file the Registration Statement
without including Registrable Securities of the Stockholder;

          (b) The Stockholder by acceptance of the Registrable Securities agrees to cooperate with the
Company as reasonably requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless the Stockholder has notified the Company in writing of the
Stockholder’s election to exclude all of its Registrable Securities from the Registration
Statement; and

          (c) The Stockholder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(e) or 4(f), above, the Stockholder will immediately
discontinue disposition of Registrable Securities pursuant to the Registration Statement covering
such Registrable Securities until the Stockholder’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(e) or 4(f) and, if so directed by the Company, the
Stockholder shall deliver to the Company (at the expense of the Company) or destroy (and deliver to
the Company a certificate of destruction) all copies in the Stockholder’s possession, of the
prospectus covering such Registrable Securities current at the time of receipt of such notice.

          6. Expenses of Registration.

          (a) All reasonable expenses, other than as set forth in Section 6(b) hereof, filings or
qualifications pursuant to Section 4, including, without limitation, all registration, listing, and

-5-

 

qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the
Company, shall be borne by the Company.

          (b) All underwriting discounts and commissions incurred in connection with registrations shall
be paid by the Stockholder.

          7. Indemnification. Hsu shall indemnify and hold harmless the Company and each
officer, director or control person of any such entity, who is or may be a party or is or may be
threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of or arising from (i) any
actual or alleged misrepresentation or misstatement of facts or omission to represent or state
facts made or alleged to have been made by Hsu to the Company, (or its officers, directors,
employees, agents or representatives), or omitted or alleged to have been omitted by Hsu,
concerning Hsu, or Hsu’s authority to invest or financial position in connection with the offering
or sale of the Shares, or (ii) any breach of warranty or failure to comply with any covenant
contained in this Agreement, including, without limitation, any such misrepresentation,
misstatement or omission, or breach of any warranty or covenant, contained herein or any other
document submitted by Hsu, against losses, liabilities and expenses for which the Company, or its
officers, directors or control persons has not otherwise been reimbursed (including attorneys’
fees, judgments, fines and amounts paid in settlement in matters settled in accordance with the
provision of the following paragraph) incurred by the Company, or such officer, director or control
person in connection with such action, suit or proceeding; provided, however, that Hsu will not be
liable in any such case for losses, claims, damages, liabilities or expenses that a court of
competent jurisdiction shall have found in a final judgment to have arisen primarily from the gross
negligence or willful misconduct of the Company or the party claiming a right to indemnification.

          In case any proceeding shall be instituted involving any person with respect to whom indemnity
may be sought, such person (the “Indemnified Party”) shall promptly notify Hsu, and Hsu, upon the
request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and any others Hsu may designate in such proceedings and
shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own counsel at its own
expense, except that Hsu shall pay as incurred the fees and expenses of counsel retained by the
Indemnified Party in the event that (i) Hsu and the Indemnified Party shall have mutually agreed to
the retention of such counsel or, (ii) the named parties to any such proceeding (including any
impleaded parties) include both Hsu and the Indemnified Party and representation of both parties by
the same counsel would be inappropriate, in the reasonable opinion of the Indemnified Party, due to
actual or potential differing interests between them. Hsu shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, Hsu agrees to indemnify the Indemnified Party to the extent
set forth in this Agreement.

          In the event a claim for indemnification as described herein is determined to be unenforceable
by a final judgment of a court of competent jurisdiction, then Hsu shall contribute to

-6-

 

the aggregate losses, claims, damages or liabilities to which the Company or its officers,
directors, agents, employees or controlling persons may be subject in such amount as is appropriate
to reflect the relative benefits received by each of the undersigned and the party seeking
contribution on the one hand and the relative faults of Hsu and the party seeking contribution on
the other, as well as any relevant equitable considerations.

          The provisions of this Agreement relating to indemnification and contribution shall survive
termination of this Agreement and shall be binding upon any successors or assigns of Hsu.

          8. Termination of Registration Rights. The rights granted pursuant to this Agreement
shall terminate as to the Stockholder upon the occurrence of any of the following:

          (a) all of the Registrable Securities have been registered; or

          (b) all of the Registrable Securities may be sold without such registration pursuant to Rule
144.

          9. Miscellaneous.

          (a) A person or entity is deemed to be a holder of Registrable Securities whenever such person
or entity owns of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.

          (b) Notices. All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to
have been given (a) when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender’s telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day (“Business Day” means a day other than
Saturday, Sunday or any day on which banks located in the State of New York are authorized or
obligated to close), (c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid) or (d) seven Business Days after the date when mailed to
the recipient by certified or registered mail, return receipt requested and postage prepaid. Such
notices, demands and other communications will be sent to Hsu and to the Company at the addresses
indicated below.

If to Hsu, to:

Yungtai Hsu

10725 East Rush Street

South El Monte, CA 91733

Facsimile No.: (626) 350-8886

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

Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP

301 North Lake Avenue, 10th Floor

Pasadena, CA 91101

Attention: Timothy J. Gosney

Facsimile No.: (626) 793-5900

If to the Company, to

Bentley Pharmaceuticals, Inc.

Two Urban Centre, Suite 400

4890 West Kennedy Blvd.

Tampa, Florida 33609

Attention: James R. Murphy

Facsimile No.: (813) 282-8941

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

Parker Chapin Flattau & Klimpl, LLP 

1211 Avenue of the Americas

New York, New York 10036

Attention: Mark S. Hirsch

                   Jordan A. Horvath

Facsimile: (212) 704-6288

          (c) Assignment: Benefit. This Agreement may not be assigned by Hsu without the prior
written consent of the Company and any assignment without such consent shall be void. This
Agreement may be assigned by the Company to any person or entity which purchases all or
substantially all of the stock or assets of the Company or is the successor to the Company by
merger or consolidation. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Company and of Hsu.

          (d) Severability. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
each of which shall remain in full force and effect.

          (e) Amendments. This Agreement may be amended, supplemented or modified, and any
provision hereof may be waived, only pursuant to a written instrument making specific reference to
this Agreement signed by each of the parties hereto.

          (f) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

-8-

 

          (g) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contract executed and performed in such
State without giving effect to the conflicts of laws principles thereof, except that if it is
necessary in any other jurisdiction to have the law of such other jurisdiction govern this
Agreement in order for this Agreement to be effective in any respect, then the laws of such other
jurisdiction shall govern this Agreement to such extent.

          (h) Arbitration of Disputes

               (i) If any controversy or dispute arises under, out of or in relation to any of the provisions
hereof, such controversy or dispute shall be submitted for arbitration in New York, New York before
a panel of three arbitrators, one of which shall be selected by the party initiating such
arbitration, one of which shall be selected by the other party and the third of which (the “Third
Arbitrator”) shall be selected by the two arbitrators so selected; provided, however, that in the
event that such other arbitrators shall not agree on the selection of the Third Arbitrator, the
Third Arbitrator shall be selected by the American Arbitration Association located in New York, New
York. Any dispute or controversy submitted to arbitration in accordance with the provisions of this
Section shall be determined by such arbitrators in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then existing.

               (ii) The arbitrators may award any relief which they shall deem proper in the circumstances,
without regard to the relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific performance, injunctive
relief and/or declaratory relief, however, such an award may not include punitive damages. The
award and findings of the arbitrators shall be conclusive and binding upon all of the parties
hereto, whether or not all parties hereto participate in the arbitration proceeding, and judgment
upon the award may be entered in any court of competent jurisdiction upon the application of any
party. The parties hereby agree that such courts of competent jurisdiction shall include, but not
be limited to, the courts located in any jurisdiction in which the party against whom such judgment
is being enforced maintains any assets.

               (iii) The prevailing party in the arbitration proceeding shall be entitled to recover from the
other party its reasonable attorneys’ fees, costs and expenses incurred in the proceeding and in
any subsequent action to enforce or collect upon the decision rendered in the arbitration
proceeding.

               (iv) Notwithstanding the foregoing, the parties reserve the right to seek and obtain
injunctive relief, whether in the form of a temporary restraining order, preliminary injunction,
injunction to enforce an arbitration award, or other order of similar import, from the federal and
state courts located in New York, New York prior to, during, or after commencement or prosecution
or arbitration proceedings of the final decision and award of the arbitrators; provided, however,
that such preliminary injunctive relief shall be subject to final arbitral decisions.

-9-

 

               (v) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to any
such action seeking injunctive or similar relief hereunder. In any dispute between the parties,
neither party will raise, and each party hereby expressly waives, any objection or defense to any
such court as an inconvenient forum. Each party hereby waives personal service of any summons,
complaint or other process, which may be delivered by any of the means permitted for notices under
Section 9(b) hereof.

          IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and
year first written above.

	 	 	 	 	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy, Chairman, President 	 
	 	 	and Chief Executive Officer 	 
	 
	 	 	 
	 	  	
 	 
	 	 	Yungtai Hsu 	 
	 	 	 	 
	 

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EXHIBIT D

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED AND MAY NOT BE TRANSFERRED
UNLESS (A) THE STOCKHOLDER WISHING TO TRANSFER SUCH SECURITIES PROVIDES AN OPINION OF COUNSEL
REASONABLY CONCURRED IN BY COUNSEL FOR BENTLEY PHARMACEUTICALS, INC. (THE “COMPANY”) STATING THAT
THE PROPOSED TRANSFER OF THE COMPANY’S SECURITIES IS EXEMPT FROM OR NOT SUBJECT TO THE REGISTRATION
PROVISIONS OF ALL APPLICABLE FEDERAL AND STATE LAWS; OR (B) SAID SECURITIES HAVE BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED.

February 11, 1999

BENTLEY PHARMACEUTICALS, INC.

The Transferability of this Warrant is

Restricted as Provided in Article 3

          In partial consideration of the purchase of certain assets under an Asset Purchase Agreement
dated February 1, 1999 effective as of December 31, 1998 between Bentley Pharmaceuticals, Inc. and
Yungtai Hsu and other good and valuable consideration, the receipt of which is hereby acknowledged
by BENTLEY PHARMACEUTICALS, INC., Two Urban Centre, Suite 400, 4890 West Kennedy Boulevard, Tampa,
Florida 33609, a Florida corporation (the “Company”), YUNGTAI HSU (the “Holder”) is hereby granted
the right to purchase, at the initial exercise price of $                     [closing price day prior to the
Closing] per share, at any time until 5 ;00 P.M., New York time, on December 31, 2008, Four Hundred
Fifty Thousand (450,000) shares of the Company’s common stock, $.02 par value per share (the
“Shares”).

          This Warrant initially is exercisable at a price of $                     per Share payable in cash or by
certified or official bank check in New York Clearing House funds, subject to adjustment as
provided in Article 6 hereof. Upon surrender of this Warrant, with the annexed Subscription Form
duly executed, together with payment of the Purchase Price (as hereinafter defined) for the Shares
purchased, at the offices of the Company, the registered holder of this Warrant (the “Holder”)
shall be entitled to receive a certificate or certificates for the Shares so purchased.

          THIS WARRANT MAY NOT BE EXERCISED AND THE SHARES MAY NOT BE ISSUED UNTIL A LISTING APPLICATION
RELATING TO THE SHARES HAS BEEN APPROVED BY ALL SECURITIES EXCHANGES ON WHICH THE SHARES OF THE
COMPANY’S COMMON STOCK MAY THEN BE LISTED AND/OR QUOTED.

 

 

1. Exercise of Warrant.

          The purchase rights represented by this Warrant are exercisable at the option of the Holder
hereof, in whole or in part (but not as to fractional Shares underlying this Warrant), during any
period in which this Warrant may be exercised as set forth above. In the case of the purchase of
less than all the Shares purchasable under this Warrant, the Company shall cancel this Warrant upon
the surrender hereof and shall execute and deliver a new Warrant of like tenor for the balance of
the Shares purchasable hereunder.

2. Issuance of Certificates.

          Upon the exercise of this Warrant, the issuance of certificates for Shares underlying this
Warrant shall be made forthwith (and in any event within five business days thereafter) without
charge to the Holder hereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions of Articles 3
hereof) be issued in the name of, or in such names as may be directed by, the Holder hereof;
provided, however, that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such certificates in a name
other than that of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid. The certificates representing the Shares underlying this Warrant shall
be executed on behalf of the Company by the manual or facsimile signature of one of the present or
any future Chairman or President of the Company and any present or future Vice President or
Secretary of the Company.

3. Restriction on Transfer of Warrant.

          The Holder of this Warrant, by its acceptance hereof, covenants and agrees that this Warrant
is being acquired as an investment and not with a view to the distribution hereof, and that it may
not be exercised, sold, transferred, assigned, hypothecated or otherwise disposed of, in whole or
in part except as provided in Section 13 below or unless in the opinion of counsel concurred in by
the Company’s counsel such transfer is in compliance with all applicable securities laws.

4. Price.

     (a) Initial and Adjusted Purchase Price. The initial purchase price shall be $______  per
Share. The adjusted purchase price shall be the price which shall result from time to time from any
and all adjustments of the initial purchase price in accordance with the provisions of Article 5
hereof.

     (b) Purchase Price. The term “Purchase Price” herein shall mean the initial purchase
price or the adjusted purchase price, depending upon the context.

-2-

 

5. Adjustments of Purchase Price and Number of Shares.

     (a) Subdivision and Combination In case the Company shall at any time subdivide or
combine the outstanding Shares, the Purchase Price shall forthwith be proportionately decreased in
the case of subdivision or increased in the case of combination.

     (b) Adjustment in Number of Shares. Upon each adjustment of the Purchase Price
pursuant to the provisions of this Article 5, the number of Shares issuable upon the exercise of
this Warrant shall be adjusted to the nearest full Share by multiplying a number equal to the
Purchase Price in effect immediately prior to such adjustment by the number of Shares issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained
by the adjusted Purchase Price.

     (c) Reclassification. Consolidation. Merger, etc. In case of any reclassification or
change of the outstanding Shares (other than a change in par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and which does not result
in any reclassification or change of the outstanding Shares, except a change as a result of a
subdivision or combination of such shares or a change in par value, as aforesaid), or in the case
of a sale or conveyance to another corporation of the property of the Company as an entirety, the
Holder of this Warrant shall thereafter have the right to purchase upon the exercise of this
Warrant the kind and number of shares of stock and other securities and property receivable upon
such reclassification. change, consolidation, merger, sale or conveyance as if the Holder were the
owner of the Shares underlying this Warrant immediately prior to any such events at the Purchase
Price in effect immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance as if such Holder had exercised this Warrant.

6. Exchange and Replacement of Warrant.

          This Warrant is exchangeable without expense, upon the surrender hereof by the registered
Holder at the principal executive office of the Company for a new Warrant of like tenor and date
representing in the aggregate the right to purchase the same number of Shares as are purchasable
hereunder in such denominations as shall be designated by the Holder hereof at the time of such
surrender.

          Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant.

-3-

 

7. Elimination of Fractional Interests.

          The Company shall not be required to issue certificates representing fractions of Shares on
the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional interests shall be
eliminated pursuant to Section 5(b).

8. Reservation and Listing of Securities.

          The Company shall at all times reserve and keep available out of its authorized Shares, solely
for the purpose of issuance upon the exercise of this Warrant, such number of Shares as shall be
issuable upon the exercise hereof and thereof. The Company covenants and agrees that, upon exercise
of this Warrant and payment of the Purchase Price therefor, all Shares issuable upon such exercise
shall be duly and validly issued, fully paid and non-assessable. As long as this Warrant shall be
outstanding, the Company shall use its reasonable best efforts to cause all Shares issuable upon
the exercise of this Warrant to be listed (subject to official notice of issuance) on all
securities exchanges on which the Shares of the Company’s Common Stock may then be listed and/or
quoted.

9. Repurchase at Option of Holder.

     (a) If on December 31, 2000 (the “Repurchase Date”), the Market Price (as defined herein) does
not equal or exceed 150 % of the Purchase Price, the Holder shall have the right (the “Put Right”)
to require the Company to purchase all or a portion of this Warrant relating to that number of
Shares which the Holder is relinquishing its right to purchase (the “Relinquished Shares”), for a
price equal to $0.50 (fifty cents) multiplied by the number of Relinquished Shares. The Put Right
must be exercised by a written notice from the Holder to the Company within ten (10) days of the
Repurchase Date and the Company shall pay to the Holder the amounts owing hereunder within ten (10)
days of receipt of such notice, this Warrant and such other documentation as the Company may
reasonably require.

     (b) The Put Right shall not be exercisable by the Holder if, during any twenty consecutive
trading days between the issuance of this Warrant and the Repurchase Date, the Market Price shall
be equal to or greater than $3.00 per share.

     (c) The “Market Price” per share on any date shall be deemed to be the daily closing price per
share. The closing price per Share for each day shall be the last reported sales price regular way
or, in case no such sale takes place on such day, the average of the closing bid and asked prices
regular way, in either case on the American Stock Exchange, or, if the Common Stock is not listed
or admitted to trading on the American Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is not listed or
admitted to trading on any national securities exchange or no such quotations are available, the
last reported sale price, or if not so reported, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to time by the Company for
that purpose, or,

-4-

 

if no such quotations are available, the fair market value as determined in good faith in the
exercise of their reasonable business judgment by the Board of Directors of the Company.

10. Repurchase at Option of the Company

          This Warrant may be redeemed at the option of the Company at any time, at a redemption price
of $0.05 per Share for which the Warrant is exercisable, provided the Market Price for the Shares
for any twenty (20) consecutive trading days after the issuance of this Warrant shall be equal to
or greater than $5.00 per share. Notice of redemption shall be given in writing to the Holder not
less than ten days before the date fixed for redemption. On and after the date fixed for
redemption, the Holder shall have no rights with respect to this Warrant except to receive the
$0.05 per Share upon surrender of the Warrant.

11. Notices.

          All notices, demands or other communications to be given or delivered under or by reason of
the provisions of this Warrant shall be in writing and shall be deemed to have been given (a) when
delivered personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender’s telecopy machine) if during normal business hours of the
recipient, otherwise on the next Business Day, (c) one Business Day after the date when sent to the
recipient by reputable express courier service (charges prepaid) or (d) seven Business Days after
the date when mailed to the recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications will be sent:

     (a) if to the registered Holder of this Warrant, to the address of such Holder as shown
on the books of the Company; or

     (b) if to the Company, to the address set forth on the first page of this Warrant or to
such other address as the Company may designate by notice to the Holder.

12. Amendments.

          The terms, provisions and conditions of this Warrant may not be changed, modified or amended
in any manner except by an instrument in writing duly executed by both parties hereto.

13. Binding Effect: Assignment.

          (a) This Warrant is not assignable or transferable without the written consent of the Company,
except by operation of law or as provided in (b) below.

          (b) This Warrant shall not be transferable by Holder other than to a “Permitted Transferee”
(as defined below); provided, that any Permitted Transferee shall be absolutely prohibited from
transferring all or any portion of this Warrant other than to Holder or another

-5-

 

Permitted Transferee of Holder; and provided further, that if Holder dies or becomes incapacitated,
this Warrant may be exercised by Holder’s estate, legal representative or beneficiary, as the case
may be, subject to all other terms and conditions contained in this Warrant.

          (c) For purposes of this Warrant, Permitted Transferees shall include only the members of the
Holder’s “immediate family” (which shall be limited to Holder’s spouse, children, and parents), and
to trusts for such person’s own benefit and/or for the benefit of members of Holder’s immediate
family; provided, that such Permitted Transferees must agree in writing to be bound by all of the
terms of this Warrant to the same extent as Holder hereunder, in form acceptable to counsel to the
Company, including but not limited to restrictions on the exercise of this Warrant and on transfers
of the Shares, as the case may be, following exercise of this Warrant, such that any Shares so
acquired shall be held subject to the terms of this Warrant.

14. Governing Law.

          This Warrant shall be governed by, and interpreted and enforced in accordance with, the laws
of the State of New York without regard to principles of choice of law or conflict of laws.

15. Arbitration of Disputes

          (a) If any controversy or dispute arises under, out of or in relation to any of the provisions
hereof, such controversy or dispute shall be submitted for arbitration in New York, New York before
a panel of three arbitrators, one of which shall be selected by the party initiating such
arbitration, one of which shall be selected by the other party and the third of which (the “Third
Arbitrator”) shall be selected by the two arbitrators so selected; provided, however, that in the
event that such other arbitrators shall not agree on the selection of the Third Arbitrator, the
Third Arbitrator shall be selected by the American Arbitration Association located in New York, New
York. Any dispute or controversy submitted to arbitration in accordance with the provisions of this
Section 12.10 shall be determined by such arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then existing.

          (b) The arbitrators may award any relief which they shall deem proper in the circumstances,
without regard to the relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific performance, injunctive
relief and/or declaratory relief, however, such an award may not include punitive damages. The
award and findings of the arbitrators shall be conclusive and binding upon all of the parties
hereto, whether or not all parties hereto participate in the arbitration proceeding, and judgment
upon the award may be entered in any court of competent jurisdiction upon the application of any
party. The parties hereby agree that such courts of competent jurisdiction shall include, but not
be limited to, the courts located in any jurisdiction in which the party against whom such judgment
is being enforced maintains any assets.

-6-

 

          (c) The prevailing party in the arbitration proceeding shall be entitled to recover from the
other party its reasonable attorneys’ fees, costs and expenses incurred in the proceeding and in
any subsequent action to enforce or collect upon the decision rendered in the arbitration
proceeding.

          (d) Notwithstanding the foregoing, the parties reserve the right to seek and obtain injunctive
relief, whether in the form of a temporary restraining order, preliminary injunction, injunction to
enforce an arbitration award, or other order of similar import, from the federal and state courts
located in New York, New York prior to, during, or after commencement or prosecution or arbitration
proceedings of the final decision and award of the arbitrators; provided, however, that such
preliminary injunctive relief shall be subject to final arbitral decisions.

          (e) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to any
such action seeking injunctive or similar relief hereunder. In any dispute between the parties,
neither party will raise, and each party hereby expressly waives, any objection or defense to any
such court as an inconvenient forum. Each party hereby waives personal service of any summons,
complaint or other process, which may be delivered by any of the means permitted for notices under
Section 11 hereof.

16. Descriptive Headings.

          The descriptive headings of the several sections of this Warrant are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof.

          WITNESS
the seal of the Company and the signature of its duly authorized officers.

	 	 	 	 	 
	[SEAL] 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy 	 
	 	 	Chairman and Chief Executive Officer 	 
	 

	 	 	 	 	 
	Attest: 	 	 
	 	 	 
	Michael D. Price, Secretary
 	 	 
	 	 	 
	 	 	 

-7-

 

	 	 	 	 	 

SUBSCRIPTION FORM

(To be Executed by the Registered Holder

in order to Exercise the Warrant)

     The undersigned hereby irrevocably elects to exercise the right to purchase                      Shares by this
Warrant according to the conditions hereof and herewith makes payment of the Purchase Price of such
Shares in full.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature

	 

	 	 	 	 
	 

	 	 	 	Address
	Dated: _________, ___.

	 	 	 	 
	 

	 	 	 	Social Security Number or

Taxpayer’s Identification Number

-8-

 

EXHIBIT E

ASSUMPTION AGREEMENT

          THIS ASSUMPTION AGREEMENT is made and entered into as of December 31, 1998 between YUNGTAI
HSU, in his personal capacity (“Seller”) and BENTLEY PHARMACEUTICALS, INC., a Florida corporation
(“Purchaser”).

          WHEREAS, Purchaser and Seller have entered into an Asset Purchase Agreement, dated February 1,
1999 effective as of December 31, 1998 (the “Asset Purchase Agreement”; capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Asset Purchase Agreement),
pursuant to which Seller has agreed to sell, transfer, assign, convey and deliver the Assets to
Purchaser and Purchaser has agreed to purchase the Assets from Seller, and Purchaser has agreed, in
partial consideration therefor, to assume the Assumed Liabilities;

          WHEREAS, pursuant to Section 2.05(b)(iv) of the Asset Purchase Agreement, Purchaser is
required to execute and deliver to Seller this Agreement whereby Purchaser assumes the Assumed
Liabilities;

          NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other
good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
Purchaser hereby undertakes and agrees from and after the date hereof, subject to the limitations
contained herein and in the Asset Purchase Agreement, to assume and pay, perform, discharge and be
responsible for the Assumed Liabilities.

          Nothing contained herein shall require Purchaser to pay or discharge any of the Assumed
Liabilities so long as Purchaser shall in good faith contest or cause to be contested the amount or
validity thereof.

          Other than as specifically stated above or in the Asset Purchase Agreement, Purchaser assumes
no debt, liability or obligation of Seller by this Agreement, including without limitation the
Retained Liabilities, which includes but is not limited to Conrex Pharmaceutical Corporation and/or
Seller’s liabilities to Virna Pharmaceuticals, Inc. or with respect to and arising out of an
agreement between Conrex Pharmaceutical Corporation and Virna Pharmaceuticals, Inc., effective as
of December 1, 1990, as further amended, and it is expressly understood and agreed that all debts,
liabilities and obligations not assumed hereby by Purchaser shall remain the sole obligation of
Seller, its successors and permitted assigns.

          Nothing in this Agreement, express or implied, is intended or shall be construed to confer
upon or give to any Person other than Seller, its successors and permitted assigns any rights,

 

 

remedies or claims under or by reason of this Agreement, or any term, covenant or condition hereof,
with respect to any liability not expressly included in the Assumed Liabilities.

          This Agreement may be executed in any number of counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.

          This Agreement shall be governed by and construed in accordance with the laws of the State of
New York applicable to a contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof, except that if it is necessary in any other jurisdiction to
have the law of such other jurisdiction govern this Agreement in order for this Agreement to be
effective in any respect, then the laws of such other jurisdiction shall govern this Agreement to
such extent.

          IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this Agreement on
February 11, 1999.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy, Chairman, President 	 
	 	 	and Chief Executive Officer 	 

2

 

	 	 	 	 	 

EXHIBIT F

GENERAL ASSIGNMENT AND BILL OF SALE

          THIS ASSIGNMENT AND BILL OF SALE is made and entered into as of December 31, 1998 between
YUNGTAI HSU, in his personal capacity (“Seller”) and BENTLEY PHARMACEUTICALS, INC., a Florida
corporation (“Purchaser”).

          WHEREAS, Purchaser and Seller have entered into an Asset Purchase Agreement, dated February 1,
1999 effective as of December 31, 1998 (the “Asset Purchase Agreement”; capitalized terms not
defined herein shall have the meanings ascribed to them in the Asset Purchase Agreement), pursuant
to which Seller has agreed to sell, transfer, assign, convey and deliver the Assets to Purchaser
and Purchaser has agreed to purchase the Assets from Seller, and Purchaser has agreed, in partial
consideration therefor, to assume the Assumed Liabilities in connection therewith by executing an
Assumption Agreement dated as of the date hereof;

          WHEREAS, pursuant to Section 2.01 of the Asset Purchase Agreement, Seller desires to sell,
transfer, assign, convey and deliver all of Seller’s right, title and interest in and to the
Assets, free and clear of any and all Liens, to Purchaser and Purchaser desires to accept the sale,
transfer, assignment, conveyance and delivery thereof;

          NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other
good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
Seller hereby irrevocably sells, transfers, assigns, conveys and delivers to Purchaser free and
clear of any and all Liens, all of Seller’s right, title and interest, in and to the Assets, as the
same shall exist on the date hereof, TO HAVE AND TO HOLD the Assets unto Purchaser, his successors
and assigns, to and for their own use and benefit forever.

          Purchaser hereby accepts the sale, transfer, conveyance, assignment and delivery of the
Assets.

          Seller represents, warrants, covenants and agrees that he: (a) has good and marketable title
to all of the Assets, free and clear of any and all Liens; and (b) will warrant and defend the sale
of the Assets against every Person whomsoever claiming against any or all of the Assets, subject to
the terms and provisions of the Asset Purchase Agreement.

          At any time or from time to time after the date hereof, at Purchaser’s request and without
further consideration, Seller shall execute and deliver to Purchaser such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide such materials and information and
take such other actions as Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Purchaser, and to confirm Purchaser’s title to, all
of the

 

 

Assets, and, to the fullest extent permitted by Law, to put Purchaser in actual possession and
operating control of the Assets and to assist Purchaser in exercising all rights with respect
thereto, including but not limited to, filings with any regulatory agencies to be made by Seller
alone, or by Seller and Purchaser jointly.

          This General Assignment and Bill of Sale may be executed in any number of counterparts, each
of which will be deemed an original, but all of which together will constitute one and the same
instrument.

          This General Assignment and Bill of Sale shall be governed by and construed in accordance with
the laws of the State of New York applicable to a contract executed and performed in such State
without giving effect to the conflicts of principles thereof, except that if it is necessary in any
other jurisdiction to have the law of such other jurisdiction govern this General Assignment and
Bill of Sale in order for this General Assignment and Bill of Sale to be effective in any respect,
then the laws of such other jurisdiction shall govern this General Assignment and Bill of Sale to
such extent.

          IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this General Assignment
and Bill of Sale on February 11, 1999.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy, Chairman, President 	 
	 	 	and Chief Executive Officer 	 

-2-

 

	 	 	 	 	 

EXHIBIT G

	 	 	 
	ASSIGNMENT OF PATENT
	 	Docket Number (optional)
	 
	 	16,194-B

Whereas, Conrex Pharmaceutical Corporation, a New Jersey Corporation, of 5127 West Chester Pike,
Newtown Square, Pennsylvania 19073, hereinafter referred to as “Conrex”, did obtain by Assignment a
United States Patent for an invention in TRANSDERMAL AND TRANS-MEMBRANE DELIVERY OF DRUGS, No.
5,023,252, dated June 11, 1991 (the “‘252 Patent”); and whereas, Conrex is now the sole owner of
the ‘252 Patent, and,

Whereas, Bentley Pharmaceuticals, Inc., a Florida Corporation, having a street and post office
address at One Urban Centre, Suite 548, 4830 West Kennedy Boulevard, Tampa, Florida 33609-2562,
hereinafter referred to as “Bentley”, is desirous of acquiring the entire right, title and interest
in the same;

Now, therefore, in consideration of the sum of one dollar ($1.00), and other good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged, Conrex, by these
presents does sell, assign and transfer unto said Bentley the entire right, title and interest in
and to the ‘252 Patent; the same to be held and enjoyed by Bentley for its own use and behoof, and
for Bentley’s legal representatives and assigns, to the full end of the term for which said ‘252
Patent is granted, as fully and entirely as the same would have been held by Conrex had this
assignment and sale not been made.

Executed this                      day of                     
        , 1999, at Philadelphia, Pennsylvania, United
States of America.

	 	 	 	 	 
	 	CONREX PHARMACEUTICAL CORPORATION

 	 
	 	By  	 	 
	 	 	Phyllis Hsieh, President and CEO 	 
	 	 	 	 
	 

	 	 	 
	Commonwealth of Pennsylvania

	    	:
	SS

	 	:
	County of Philadelphia

	 	:

Before me personally appeared said PHYLLIS HSIEH and acknowledged the foregoing instrument to be
her free act and deed this            day of 
                    
        , 1999.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Notary Public 	 
	 	 	 
	 

Seal

 

 

EXHIBIT G

ASSIGNMENT OF PATENTS IN COUNTRIES OTHER THAN THE U.S.A.

     Whereas, Conrex Pharmaceutical Corporation, a New Jersey Corporation, of 5127 West Chester
Pike, Newtown Square, Pennsylvania 19073 (hereinafter referred to as “Conrex”), did obtain by
Assignment patents in countries other than the United States of America, as listed on the attached
Schedule X (“Foreign Patents”), for an invention in TRANSDERMAL AND TRANS-MEMBRANE DELIVERY OF
DRUGS;

     Whereas, Conrex is now the equitable and sole owner of said Foreign Patents, and,

     Whereas, Bentley Pharmaceuticals, Inc., a Florida Corporation, having an address at One Urban
centre, Suite 548, 4830 West Kennedy Boulevard, Tampa, Florida 33609-2562 (hereinafter referred to
as “Bentley”), is desirous of acquiring the entire right, title and interest in the same;

     Now, therefore, in consideration of the sum of one dollar ($1.00), and other good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged, Conrex, by these
presents does sell, assign and transfer unto said Bentley the

 

 

entire right, title and interest in and to the said Foreign Patents, the same to be held and
enjoyed by the said Bentley for its own use and behoof, and for Bentley’s legal representatives and
assigns, to the full end of the terms for which said Foreign Patents are granted, as fully and
entirely as the same would have been held by Conrex had this assignment and sale not been made.

     Executed this                      day of                     
        , 1999, at Philadelphia, Pennsylvania, United
States of America.

	 	 	 	 	 
	 	CONREX PHARMACEUTICAL CORPORATION

 	 
	 	By  	 	 
	 	 	Phyllis Hsieh, President and CEO 	 
	 	 	 	 
	 

	 	 	 
	Commonwealth of Pennsylvania

	 	:
	SS

	    	:
	County of Philadelphia

	 	:

     Before me personally appeared said PHYLLIS HSIEH and acknowledged the foregoing instrument to be
her free act and deed this            day of 
        
                    , 1999.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Notary Public 	 
	 	 	 
	 

Seal

-2-

 

EXHIBIT G

INTELLECTUAL PROPERTY ASSIGNMENT

     This Assignment (the “Assignment”), made and entered into as of February 11, 1999 by Conrex
Pharmaceutical Corporation, a New Jersey corporation (“Assignor”), in favor of Bentley
Pharmaceuticals, Inc., a Florida corporation having a place of business at One Urban Centre, Suite
548, 4830 West Kennedy Boulevard, Tampa, Florida 33609-2562 (“Assignee”).

     WITNESSETH THAT:

     WHEREAS Assignor and Yungtai Hsu, in his personal capacity (“HSU”), have entered into an Asset
Purchase Agreement of even date herewith;

     WHEREAS the terms herein bearing initial capitalization are as defined in said Asset Purchase
Agreement;

     WHEREAS Hsu has assigned to Assignee his interest in said Asset Purchase Agreement; and

     WHEREAS Assignor desires to sell and transfer to Assignee, who desires to acquire, the
Intellectual Property, including the Patents and Technology;

     NOW, THEREFORE, in consideration of the premises, the sum of One Dollar ($1.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor
does hereby sell, assign, transfer and confirm unto Assignee, and its successors, assigns and legal
representatives, all right, title and interest in, to and under the Intellectual Property,
including the Patents and the Technology, throughout

 

 

all countries of the world, and Assignor further agrees to execute upon request of the Assignee
such additional documents, if any, as are necessary and proper to perfect title in the transferred
property in Assignee, throughout all countries of the world, and to otherwise give full effect to,
and perfect the rights of the Assignee under this Assignment.

     IN WITNESS WHEREOF Assignor has caused this Assignment to be duly executed and delivered, by
an officer of Assignor duly authorized so to do, on the
___ day of                     , 1999.

	 	 	 	 	 	 	 	 	 
	CONREX PHARMACEUTICAL CORPORATION
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Date:
	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Phyllis Hsieh, President
	 	 	 	 	 	 	 	 
	and Chief Executive Officer
	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 
	COMMONWEALTH OF Pennsylvania

	 	 	 	:
	 	 
	 

	 	 	 	:	 	 
	 

	 	SS
	 	:	 	 
	 

	 	 	 	:	 	 
	COUNTY OF Philadelphia

	 	 	 	:	 	 

     On this ___day of                     , 1999, appeared before me in person the above named Phyllis
Hsieh who acknowledged the above to be her signature and that she signed, sealed and delivered the
above Assignment as her voluntary act and deed for the uses and purposes therein set forth.

	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 
	 	Notary Public
	 	 

SEAL

-2-

 

Mr. Yungati Hsu

February 11, 1999

Page 2

          We have also made such examination of law as we have deemed relevant and necessary as a basis
for the opinions hereinafter expressed. In such examination we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and the conformity with
the original documents of all documents submitted to us as copies. As to any facts relevant to the
opinions expressed below, we have relied upon certificates and written and/or oral representations
of officers of the Company (including the representations of the Company set forth in the
Transaction Documents), and public officials and made such other investigations as we deemed
necessary under the circumstances. We have also assumed that the representations and warranties of
the Seller set forth in the Purchase Agreement are true and correct as of the date hereof. We have
not examined or reviewed any communication, instrument, agreement, document or other item or
conducted any independent inquiry or investigation of any matter except as otherwise expressly set
forth herein.

          This opinion is subject to a number of qualifications, exceptions, assumptions, limitations,
definitions and exclusions on coverage and other matters, all as more particularly set forth below
and each of our opinions set forth herein should be read in conjunction therewith.

          Our opinion is limited to the date hereof and we do not in any event undertake to advise you
of any facts or circumstances occurring or coming to our attention subsequent to the date hereof.

          We express no opinion respecting the enforceable nature of the Transaction Documents or any
document or instrument executed pursuant thereto or in connection therewith, insofar as the
enforceable nature thereof, or any right, power, privilege, remedy or interest intended to be
created thereunder, may be limited (i) by applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization or other laws or judicial decisions affecting any rights, powers,
privileges, remedies or interests of creditors or debtors generally, (ii) by rules or principles of
equity affecting the enforcement of obligations generally, whether at law, in equity or otherwise,
(iii) by the exercise of the discretionary powers of any court or other authority before which may
be brought any proceeding seeking equitable or other remedies, including, without limitation,
specific performance, injunctive relief and indemnification or (iv) insofar as rights to indemnity
and/or contribution are concerned, by federal or state securities laws or the public policy
underlying such laws. Furthermore, we assume that the Transaction Documents to which the Seller is
a party have been duly executed and delivered by the Seller and are the legal, valid and binding
obligations of the Seller, enforceable as written against the Seller in accordance with their terms
and provisions.

          We call to your attention to the fact that we are counsel admitted to practice in the State of
New York, and we do not express any opinion with respect to the applicable laws, or the effect or
applicability of the laws, of any jurisdiction other than those of the State of New York, and the
federal laws of the United States of America.

-2-

 

Mr. Yungati Hsu

February 11, 1999

Page 3

               Based upon and subject to the foregoing, we are of the opinion that:

	 	1.	 	The Company is a corporation validly existing and in good standing under the laws
of the State of Florida, and has all requisite power and authority to carry on its
business as it is being conducted, and to execute, deliver and perform the Purchase
Agreement.
	 
	 	2.	 	The execution and delivery to the Seller of the Purchase Agreement by the Company,
the performance by the Company of its obligations thereunder and the consummation by the
Company of the transactions contemplated thereby have been duly authorized by the Board
of Directors of the Company, and no other corporate act or proceeding on the part of the
Company is necessary to approve the execution and delivery of this Purchase Agreement,
the performance of the Company’s obligations thereunder, or the consummation of the
transactions contemplated hereby.
	 
	 	3.	 	The Purchase Agreement has been duly executed and delivered by the Company and the
Purchase Agreement constitutes legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms. Neither the execution and
delivery by the Company of the Purchase Agreement, nor the consummation of the
transactions contemplated thereby, nor the compliance by the Company with any of the
provisions thereof will conflict with, or result in the breach of, any provision of the
Company’s Certificate of Incorporation and Bylaws, as of the Closing Date.

     This opinion is rendered solely to the Seller in connection with the transactions contemplated
by the Purchase Agreement and only the Seller and its legal representatives, successors and assigns
are entitled to rely hereon. This opinion may not be used or relied on by the Seller for any other
purpose, or by any other Person for any purpose, without our prior written consent.

Very truly yours,

PARKER CHAPIN FLATTAU & KLIMPL, LLP

-3-

 

EXHIBIT I

[LETTERHEAD OF LAGERLOF, SENECAL, BRADLEY,

GOSNEY & KRUSE, LLP]

	1.	 	Seller has full power and legal capacity to execute, deliver and perform the Asset Purchase
Agreement and the Seller Documents to which he is a party and to consummate the transactions
contemplated hereby.

	2.	 	The Asset Purchase Agreement has been duly executed and delivered by Seller, and the Seller
Documents, when executed and delivered by Seller, constitute legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their respective terms
except as such enforceability may be limited by bankruptcy, insolvency or similar laws and by
equitable principles. None of the execution and delivery by Seller of the Asset Purchase
Agreement and the Seller Documents, or the consummation of the transactions contemplated
thereby, or compliance by Seller with any of the provisions thereof will (a) conflict with,
violate, result in the breach or termination of, or constitute a default under (I) any Laws,
(ii) any requirement of any Governmental or Regulatory Authority applicable to Seller or by
which the Assets may be bound, or (iii) any Contract, to which Purchaser is a party or by
which Purchaser is bound or subject or (b) except as disclosed to Purchaser in the Asset
Purchase Agreement, require any filing, declaration or registration with, or permit, consent,
approval, waiver, clearance, order or authorization of, or the giving of any notice to, any
Governmental or Regulatory Authority or other Person or (c) result in the creation of any Lien
(other than any lien in favor of Purchaser) upon any of the Assets.

	3.	 	Except as disclosed to Seller in the Asset Purchase Agreement, no act or event has occurred
and is continuing that violates, is in conflict with, results in a breach of or constitutes a
default (with or without the giving of notice or the passage of time, or both) under any term
or provision of (a) the Asset Purchase Agreement and the Seller Documents or (b) any Contract,
to which Seller is a party or by which Seller is bound or subject.

	4.	 	There are no Actions or Proceedings pending or threatened by or against Seller or any
affiliate or employee of Seller, or with respect to the Assets (including, without limitation,
products liability claims) or the transactions contemplated thereby, at law or in equity or
before or by any Governmental Entity or arbitrator, nor is there any reasonable basis for the
institution of any such Actions or Proceedings. Except as disclosed to Seller in the Asset
Purchase Agreement, there is no pending or threatened Action or Proceeding that seeks to
enjoin or obtain damages in respect of the consummation of the transactions contemplated by
the Asset Purchase Agreement or that questions the validity of the Asset Purchase Agreement,
any of the Seller Documents or any action to be taken by Seller in connection with the
consummation of the transactions contemplated thereby. Seller is not subject to any Laws

 

 

	 	 	or any proposed Laws, which has had or could have a material adverse affect on the Assets or
on Purchaser’s ability to manufacture any products from the Ingredients, Patents or
Technology.

	5.	 	Except as disclosed to Purchaser in the Asset Purchase Agreement, Seller has operated and is
currently conducting all research, development, manufacture, and sales relating to the Assets,
and all Ingredients or products resulting from the Ingredients, Patents or Technology have
been provided, developed, marketed and sold in compliance with all applicable Laws of
Governmental or Regulatory Authorities.

	6.	 	Pursuant to the Asset Purchase Agreement and the Seller Documents, Seller will convey to
Purchaser good and marketable title to all of the Assets, free and clear of any and all Liens.
The General Assignment is legally adequate to vest in Purchaser all of Seller’s rights, title
and interest in, to and under the Assets. The instruments of assignment of the Intellectual
Property are in a form suitable for filing with the U.S. Patent and Trademark Office and the
equivalent oversees entities to reflect the transfer of the Patents included in the Assets and
upon filing of such instruments with the U.S. Patent and Trademark Office and the equivalent
oversees entities all of Seller’s rights, title and interest in, to and under the Patents
shall vest in Purchaser. Except as disclosed to Purchaser in the Asset Purchase Agreement,
none of the Assets is licensed or otherwise not owned by Seller.

	7.	 	Seller possesses all Licenses required to be possessed by him pursuant to all applicable Laws
and all such Licenses, as disclosed to Purchaser in the Asset Purchase Agreement, are in full
force and effect. Seller is in compliance with all of his Licenses and there is no reasonable
basis for the revocation or suspension of any thereof. The Licenses constitute all the
Licenses required for Seller’s ownership of the Assets and the research, development,
manufacture and marketing of products from the Assets, all of which are transferable and will
be transferred to Purchaser at the Closing, and none of which will expire within the
twelve-month period following the Closing Date.

	8.	 	The Registrations, as disclosed to Purchaser in the Asset Purchase Agreement, are the only
registrations, as of the Closing Date, required by any Governmental or Regulatory Authority to
develop, manufacture, market and sell the Ingredients and any products resulting from the
Ingredients. Such Registrations are and will be valid, current and held exclusively by Seller
as of the Closing Date.

	9.	 	The Asset Purchase Agreement (the “Conrex Agreement”) entered into between Conrex
Pharmaceutical Corporation (“Conrex”) and Seller, dated as of December 31, 1998, and all
documents entered into thereunder have been duly executed and delivered and constitute legal,
valid and binding obligations of each of the parties thereto, enforceable against them in
accordance with their respective terms except as such enforceability may be limited by
bankruptcy, insolvency or similar laws and by equitable principles.

-2-

 

     This opinion may be relied upon by Purchaser, his legal representatives, successors and
permitted assignees under the Asset Purchase Agreement.

-3-

 

EXHIBIT J

POWER OF ATTORNEY

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	 	)	 	 	 	 	 
	 

	 	 	:	 	 	ss.:
	 	 
	COUNTY OF

	 	 	)	 	 	 	 	 

          KNOW ALL PERSONS BY THESE PRESENT, that on February 11, 1999, Yungtai Hsu (“Hsu”), domiciled
at 10725 East Rush Street, South El Monte, CA 91733, hereby nominates, constitutes and appoints
Bentley Pharmaceuticals, Inc. (“Bentley”) a Florida corporation, located at Two Urban Centre, Suite
400, 4830 West Kennedy Blvd., Tampa, Florida 33609, his true and lawful attorney-in-fact, with full
power of substitution, in the name of Hsu or Bentley, but on behalf of and for the benefit of
Bentley to:

          (a) to demand and receive from time to time any and all of the Assets and to make endorsements
and give receipts and, releases for and in respect of the same and any part thereof;

          (b) to institute, prosecute, compromise and settle any and all Actions or Proceedings that
Bentley may deem proper in order to collect, assert or enforce any claim, right or title of any
kind in or to the Assets; and

          (c) to defend or compromise any or all Actions or Proceedings in respect of any of the Assets.

          The undersigned gives and grants to his attorney-in-fact full power and authority to do, take,
and perform all and every act and thing whatsoever requisite, proper, or necessary to be done, in
the exercise of any of the rights and powers herein granted, as fully to all intents and purposes
as Hsu might or could do, with full power of substitution or revocation, hereby ratifying and
confirming all that said attorney-in-fact, or its substitute or assignee, shall lawfully do or
cause to be done by virtue of this power of attorney and the rights and powers herein granted.

          The undersigned hereby acknowledges that the appointment hereby made and the powers hereby
granted are coupled with an interest and are not and shall not be revocable by the undersigned in
any manner or for any reason. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Asset Purchase Agreement, dated as of February 1, 1999 effective as of
December 31, 1998 between Hsu and Bentley.

	 	 	 
	 

	 	 

Yungtai Hsu

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	 	)	 	 	 	 	 
	 

	 	 	:	 	 	ss.:
	 	 
	COUNTY OF

	 	 	)	 	 	 	 	 

          BEFORE ME, personally appeared YUNGTAI HSU, who, after being duly sworn, acknowledged before
me that he executed the foregoing Power of Attorney for the purposes therein expressed.

          WITNESS my hand and official seal                                         , County of                
                         , State of
                                        ,
this ___ day of February 1999.

	 	 	 
	 
	 

NOTARY PUBLIC

	 	 

-2-

 

EXHIBIT K

[LETTERHEAD OF CONREX PHARMACEUTICAL CORPORATION]

VIA REGISTERED MAIL

Drug Master File Staff

Food and Drug Administration

12420 Parklawn Building

5600 Fishers Lane

Rockville Maryland 20852

February 11, 1999

               Re: Drug Master File No. 10260

Dear Sir or Madam:

     We hereby inform you that CONREX PHARMACEUTICAL CORPORATION [if the DMF is not in Conrex’s
name, then insert the correct name], with principal executive offices at 300 Kimberton Road, Suite
120, Phoenixville, PA 19460, transfers, as of the date hereof, all right and title to Drug Master
File No. 10260 (the “DMF”) to BENTLEY PHARMACEUTICALS, INC. (“Bentley”), with principal executive
offices at Two Urban Centre, Suite 400, 4830 West Kennedy Blvd., Tampa, Florida 33609. Dr. Robert
M. Stote is the authorized representative of Bentley who will be responsible for the integrity and
upkeep of the DMF.

     If you have any questions or comments, please call the undersigned at [telephone number] or
Dr. Stote at (813) 281-0961.

	 	 	 	 	 
	 	Yours sincerely,

 	 
	 	
 	 
	 	Phyllis Hsieh, President 	 
	 	 	 

 

 

	 	 	 	 	 

EXHIBIT K

[LETTERHEAD OF BENTLEY PHARMACEUTICALS, INC.]

VIA REGISTERED MAIL

Drug Master File Staff

Food and Drug Administration

12420 Parklawn Building

5600 Fishers Lane

Rockville Maryland 20852

February 11, 1999

               Re: Drug Master File No. 10260

Dear Sir or Madam:

     We refer you to a letter from Conrex Pharmaceutical Corporation, dated as of the date hereof,
which letter is attached hereto. Bentley Pharmaceuticals, Inc. (“Bentley”), with principal
executive offices at Two Urban Centre, Suite 400, 4830 West Kennedy Blvd., Tampa, Florida 33609,
hereby acknowledges acceptance of the ownership of all right and title to the Drug Master File No.
10260 (the “DMF”) and hereby accepts responsibility for the DMF and undertakes to meet the
regulatory requirements to keep the DMF current. The undersigned is the authorized representative
of Bentley who will be responsible for the integrity and upkeep of the DMF.

     If you have any questions or comments, please call the undersigned at (813) 281-0961.

	 	 	 	 	 
	 	Yours sincerely,

 	 
	 	
 	 
	 	Robert M. Stote, Chief Science Officer 	 
	 	 	 

 

 

VOTING AGREEMENT

          VOTING AGREEMENT (this “Agreement”) dated as of February 1, 1999, between Yungtai Hsu
(the “Proxy Holder”) and Bentley Pharmaceuticals, Inc. (“Bentley”).

          WHEREAS, concurrently herewith, the Proxy Holder and Phyllis Hsieh (“Hsieh”), the
holder of the majority of the shares of Common Stock (all of Hsieh’s shares being referred to as
the “Shareholder Shares”) of Conrex Pharmaceutical Corporation (the “Company”), are
entering into an Asset Purchase Agreement, dated February 1, 1999, effective as of December 31,
1998 (the “Asset Purchase Agreement”; capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Asset Purchase Agreement);

          WHEREAS, concurrently herewith, the Proxy Holder and Hsieh are entering into a Voting
Agreement (the “Voting Agreement”) dated as of February 1, 1999, whereby the Proxy Holder
has been granted an irrevocable proxy as attorney-in-fact to vote the Shareholder Shares in
accordance with the terms of the Voting Agreement;

          WHEREAS, the Proxy Holder has the right to vote the Shareholder Shares;

          WHEREAS, concurrently herewith, the Proxy Holder and Bentley are entering into an Asset
Purchase Agreement, dated as of February 1, 1999, effective as of December 31, 1998 (the
“Bentley Agreement”);

          WHEREAS, Bentley, as a condition to its willingness to enter into the Bentley Agreement, has
required the Proxy Holder to agree, and the Proxy Holder has agreed, to enter into this Agreement;
and

          NOW, THEREFORE, in consideration of the representations, warranties and agreements herein
contained, the parties hereto agree as follows:

ARTICLE I

AGREEMENT TO VOTE AND IRREVOCABLE PROXY

     1.1. Agreement to Vote. The Proxy Holder hereby agrees to (i) attend, in person or by
proxy, any meeting where the shareholders of the Company will be asked to approve and adopt the
transactions contemplated by the Asset Purchase Agreement, (ii) vote (or cause to be voted) all
shares of Common Stock and any other voting securities of the Company that the Proxy Holder owns,
hereafter acquires or has the right to vote, at any meeting of shareholders of the Company called
for approval and adoption of the transactions contemplated by the Asset Purchase Agreement, such
agreement to vote to apply to any adjournment or adjournments of such meeting, and (iii) vote
against any action or agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Asset Purchase Agreement or
that would result in any of the Company’s obligations under the Asset Purchase Agreement not being
fulfilled. The Proxy Holder shall not enter into any agreement or understanding with any

 

 

person or entity before the termination hereof to vote or give instructions after the termination
hereof in any manner inconsistent with the preceding sentence.

     1.2. Adjustments to Prevent Dilution, Etc. In the event of a stock dividend or
distribution, or any change in the Common Stock of the Company by reason of any stock dividend,
splitup, recapitalization, combination, exchange of shares or the like prior to the Closing Date
(as defined in the Asset Purchase Agreement), the term “Shareholder Shares” shall be deemed
to refer to and include the Shareholder Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shareholder Shares may be
changed or exchanged.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE PROXY HOLDER

     The Proxy Holder represents and warrants to Bentley as follows:

     2.1. Voting Power, Etc. The Voting Agreement between the Proxy Holder and Hsieh has
been duly and validly executed and delivered by both the Proxy Holder and Hsieh. Pursuant to the
Voting Agreement, (i) Hsieh has agreed to vote the Shareholder Shares to approve and adopt the
transactions contemplated by the Asset Purchase Agreement and (ii) Hsieh has granted to the Proxy
Holder a proxy to vote the Shareholder Shares to approve and adopt the transactions contemplated by
the Asset Purchase Agreement. The Shareholder Shares are all of the shares of the capital stock of
the Company that the Proxy Holder has the power to vote.

     2.2. Authorization of this Agreement. The Proxy Holder has the requisite power and
authority to execute and deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the Proxy Holder and is
a valid and binding obligation of the Proxy Holder enforceable against the Proxy Holder in
accordance with its terms.

     2.3. No Violations. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor delivery of this Agreement nor compliance
by the Proxy Holder with any of the provisions hereof will (x) result in a violation or breach of,
or constitute a default (or give rise to any right of termination, cancellation or acceleration)
under, any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to
which the Proxy Holder is a party, or by which it or any of his properties or assets is bound or
(y) assuming the truth of the representations and warranties of Bentley hereunder and its
compliance with all agreements contained herein and assuming the due making of all filings or
obtaining of all permits, authorizations, consents and approvals referred to in the preceding
sentence, violate any statute, rule, regulation, order, injunction, writ or decree of any public
body or authority by which the Proxy Holder or any of his properties or assets is bound excluding
from the foregoing clauses (x) and (y) conflicts, violations, breaches or defaults which, either
individually or in the aggregate, are not

-2-

 

reasonably likely to impair materially the ability of the Proxy Holder to perform his obligations
hereunder or to consummate the transactions contemplated hereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BENTLEY

     Bentley represents and warrants to the Proxy Holder that:

     3.1. Authorization of this Agreement. Bentley has the requisite capacity and authority
to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Bentley and the consummation by Bentley of the
transactions contemplated on its part hereby have been duly authorized by all necessary action on
the part of Bentley. This Agreement has been duly and validly executed and delivered by Bentley and
constitutes a valid and binding agreement of Bentley, enforceable against Bentley in accordance
with its terms.

     3.2. No Violations. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor compliance by Bentley with any of the
provisions hereof will (x) result in a violation or breach of, or constitute a default (or give
rise to any right of termination, cancellation or acceleration) under, any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which Bentley is a party, or by
which it or any of its properties or assets is bound or (y) assuming the truth of the
representations and warranties of the Proxy Holder hereunder and his compliance with all agreements
contained herein and assuming the due making of all filings or obtaining of all permits,
authorizations, consents and approvals referred to in the preceding sentence, violate any statute,
rule, regulation, order, injunction, writ or decree of any public body or authority by which
Bentley or any of its properties or assets is bound excluding from the foregoing clauses (x) and
(y) conflicts, violations, breaches or defaults which, either individually or in the aggregate, are
not reasonably likely to impair materially the ability of Bentley to perform its obligations
hereunder or to consummate the transactions contemplated hereby.

ARTICLE IV

COVENANTS

     4.1. Additional Covenants of the Proxy Holder. The Proxy Holder hereby covenants and
agrees that:

          (a) The Proxy Holder will not enter into any transaction, take any action, or by inaction
permit any event to occur that would result in any of the representations or warranties of the
Proxy Holder herein contained not being true and correct at and as of the time immediately after
the occurrence of such transaction, action or event;

-3-

 

          (b) Until the termination of this Agreement, the Proxy Holder will at all times use his best
efforts to vote the Shareholder Shares to prevent the Company from taking any action in violation
of the Asset Purchase Agreement;

          (c) From and after the date hereof until the termination of this Agreement, other than under
the circumstances contemplated by Section 1.1 hereof, the power to vote the Shareholder Shares held
by the Proxy Holder will not be sold, transferred, pledged, hypothecated, transferred by gift or
otherwise disposed of in any manner whatsoever without notifying Bentley in advance and obtaining
and delivering to the Company any evidence that the Company may reasonably request to evidence the
transferee’s agreement to be bound by this Agreement; provided, however, that in
the event of the Proxy Holder’s death during the term of this Agreement, the power to vote the
Shareholder Shares held by the Proxy Holder may be transferred in accordance with the Proxy
Holder’s last will and testament or, if none, in accordance with the applicable laws of intestate
succession, in either of which cases, the Shareholder Shares shall remain subject in all respects
to the terms of this Agreement; and

     (d) The Proxy Holder will execute and deliver any additional documents reasonably necessary or
desirable, in the opinion of Bentley’s counsel, to implement and effect the provisions of this
Agreement.

ARTICLE V

MISCELLANEOUS

     5.1. Termination. This Agreement shall terminate on the Closing Date under the Asset
Purchase Agreement.

     5.2. Assignment. Except as otherwise expressly provided herein, this Agreement is not
intended to confer upon any person not a party hereto any rights or remedies hereunder. Except as
otherwise expressly provided herein, this Agreement shall not be assigned by operation of law or
otherwise.

     5.3. Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if (i) delivered personally or by nationally-recognized overnight courier,
(ii) mailed by registered or certified mail, return receipt requested, postage prepaid or (iii)
transmitted by facsimile, and in each case, addressed to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice; provided that notices of a
change of address shall be effective only upon receipt thereof):

-4-

 

	 	(a)	 	if to the Proxy Holder:
	 
	 	 	 	Mr. Yungtai Hsu

c/o Pacific Best Incorporated

10725 East Rush Street

South El Monte, CA 91733

Facsimile No.: (626) 350-8886
	 
	 	 	 	with a copy to:
	 
	 	 	 	Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP

301 North Lake Avenue, 10th Floor

Pasadena, CA 91101

Attention: Timothy J. Gosney, Esq.

Facsimile No.: (626) 793-5900
	 
	 	(b)	 	if to the Company, to
	 
	 	 	 	Bentley Pharmaceuticals, Inc.

Two Urban Centre, Suite 400

4890 West Kennedy Blvd.

Tampa, Florida 33609

Attention: James R. Murphy

Facsimile: (813) 281-8941

	 
	 	 	 	with copies to:
	 
	 	 	 	Parker Chapin Flattau & Klimpl, LLP

1211 Avenue of the Americas

New York, NY 10036

Attention: Mark S. Hirsch, Esq. and Jordan A. Horvath, Esq.

Facsimile: (212) 704-6288

Any notice so addressed shall be deemed to be given (x) three business days after being mailed by
first-class, registered or certified mail, return receipt requested, postage prepaid and (y) upon
delivery, if transmitted by hand delivery, overnight courier or facsimile.

     5.4. Injunctive Relief; Remedies Cumulative. The Proxy Holder, on the one hand, and
Bentley, on the other hand, acknowledge that the other party will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the covenants or agreements of
such party that are contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies that may be available to the non-breaching party upon the breach by any other party
of such

-5-

 

covenants and agreements, the non-breaching party shall have the right to obtain injunctive relief
to restrain any breach or threatened breach of such covenants or agreements or otherwise to obtain
specific performance of any of such covenants or agreements.

     5.5. Effect of Partial Invalidity. Whenever possible, each provision of this Agreement
shall be construed in such a manner as to be effective and valid under applicable law. If any
provision of this Agreement or the application thereof to any party or circumstance shall be
prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition without invalidating the remainder of such provision or any other provisions of
this Agreement or the application of such provision to the other party or other circumstances.

     5.6. Governing Law. This Agreement shall be governed by the laws of the State of New
York (regardless of the laws that might otherwise govern under applicable principles of conflicts
of law) as to all matters, including but not limited to matters of validity, construction, effect,
performance and remedies.

     5.7. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     5.8. Entire Agreement. This Agreement, including the schedules hereto, embodies the
entire agreement and understanding of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements and the understandings between the parties with respect
to such subject matter.

     5.9. Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable
or against its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in effect and shall in no way be affected, impaired or
invalidated.

     5.10. Headings. The Article and Section headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or interpretation of any
provision of this Agreement.

[THE NEXT PAGE IS THE SIGNATURE PAGE]

-6-

 

     IN WITNESS WHEREOF, the Proxy Holder and Bentley have caused this Agreement to be signed, by
their respective duly authorized representatives or directly, as of the date first above written.

	 	 	 	 	 
	 	 	 
	 	/s/ Yungtai Hsu
 	 
	 	Yungtai Hsu 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy 	 
	 	 	 	 

-7-

 

	 	 	 	 	 

     IN WITNESS WHEREOF, the Proxy Holder and Bentley have caused this Agreement to be signed, by
their respective duly authorized representatives or directly, as of the date first above written.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Yungtai Hsu 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ James R. Murphy
 	 
	 	 	James R. Murphy, Chairman & CEO 	 
	 	 	 	 
	 

-7-

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED AND MAY NOT BE TRANSFERRED
UNLESS (A) THE STOCKHOLDER WISHING TO TRANSFER SUCH SECURITIES PROVIDES AN OPINION OF COUNSEL
REASONABLY CONCURRED IN BY COUNSEL FOR BENTLEY PHARMACEUTICALS, INC. (THE “COMPANY”) STATING THAT
THE PROPOSED TRANSFER OF THE COMPANY’S SECURITIES IS EXEMPT FROM OR NOT SUBJECT TO THE
REGISTRATION PROVISIONS OF ALL APPLICABLE FEDERAL AND STATE LAWS; OR (B) SAID SECURITIES HAVE BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED.

February 11, 1999

BENTLEY PHARMACEUTICALS, INC.

The Transferability of this Warrant is

Restricted as Provided in Article 3

          In partial consideration of the purchase of certain assets under an Asset Purchase Agreement
dated February 1, 1999 effective as of December 31, 1998 between Bentley Pharmaceuticals, Inc. and
Yungtai Hsu and other good and valuable consideration, the receipt of which is hereby acknowledged
by BENTLEY PHARMACEUTICALS, INC., Two Urban Centre, Suite 400, 4890 West Kennedy Boulevard, Tampa,
Florida 33609, a Florida corporation (the “Company”), YUNGTAI HSU (the “Holder”) is hereby granted
the right to purchase, at the initial exercise price of $1.50 per share, at any time until 5:00
P.M., New York time, on December 31, 2008, Four Hundred Fifty Thousand (450,000) shares of the
Company’s common stock, $.02 par value per share (the “Shares”).

          This Warrant initially is exercisable at a price of $1.50 per Share payable in cash or by
certified or official bank check in New York Clearing House funds, subject to adjustment as
provided in Article 6 hereof. Upon surrender of this Warrant, with the annexed Subscription Form
duly executed, together with payment of the Purchase Price (as hereinafter defined) for the Shares
purchased, at the offices of the Company, the registered holder of this Warrant (the “Holder”)
shall be entitled to receive a certificate or certificates for the Shares so purchased.

          THIS WARRANT MAY NOT BE EXERCISED AND THE SHARES MAY NOT
BE ISSUED UNTIL A LISTING APPLICATION RELATING TO THE SHARES HAS BEEN APPROVED BY ALL SECURITIES
EXCHANGES ON WHICH THE SHARES OF THE COMPANY’S COMMON STOCK MAY THEN BE LISTED AND/OR QUOTED.

 

 

	1.	 	Exercise of Warrant.

          The purchase rights represented by this Warrant are exercisable at the option of the Holder
hereof, in whole or in part (but not as to fractional Shares underlying this Warrant), during any
period in which this Warrant may be exercised as set forth above. In the case of the purchase of
less than all the Shares purchasable under this Warrant, the Company shall cancel this Warrant upon
the surrender hereof and shall execute and deliver a new Warrant of like tenor for the balance of
the Shares purchasable hereunder.

	2.	 	Issuance of Certificates.

          Upon the exercise of this Warrant, the issuance of certificates for Shares underlying this
Warrant shall be made forthwith (and in any event within five business days thereafter) without
charge to the Holder hereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions of Articles 3
hereof) be issued in the name of, or in such names as may be directed by, the Holder hereof;
provided, however, that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such certificates in a name
other than that of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid. The certificates representing the Shares underlying this Warrant
shall be executed on behalf of the Company by the manual or facsimile signature of one of the
present or any future Chairman or President of the Company and any present or future Vice
President or Secretary of the Company.

	3.	 	Restriction on Transfer of Warrant.

          The Holder of this Warrant, by its acceptance hereof, covenants and agrees that this Warrant
is being acquired as an investment and not with a view to the distribution hereof, and that it may
not be exercised, sold, transferred, assigned, hypothecated or otherwise disposed of, in whole or
in part except as provided in Section 13 below or unless in the opinion of counsel concurred in by
the Company’s counsel such transfer is in compliance with all applicable securities laws.

	4.	 	Price.

     (a) Initial and Adjusted Purchase Price. The initial purchase price shall be $1.50
per Share. The adjusted purchase price shall be the price which shall result from time to time
from any and all adjustments of the initial purchase price in accordance with the provisions of
Article 5 hereof.

     (b) Purchase Price. The term “Purchase Price” herein shall mean the initial purchase
price or the adjusted purchase price, depending upon the context.

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	5.	 	Adjustments of Purchase Price and Number of Shares.

     (a) Subdivision and Combination. In case the Company shall at any time subdivide or
combine the outstanding Shares, the Purchase Price shall forthwith be proportionately decreased in
the case of subdivision or increased in the case of combination.

     (b) Adjustment in Number of Shares. Upon each adjustment of the Purchase Price
pursuant to the provisions of this Article 5, the number of Shares issuable upon the exercise of
this Warrant shall be adjusted to the nearest full Share by multiplying a number equal to the
Purchase Price in effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of this Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Purchase Price.

     (c) Reclassification, Consolidation, Merger, etc. In case of any reclassification or
change of the outstanding Shares (other than a change in par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another corporation (other than
a consolidation or merger in which the Company is the surviving corporation and which does not
result in any reclassification or change of the outstanding Shares, except a change as a result of
a subdivision or combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the Company as an entirety,
the Holder of this Warrant shall thereafter have the right to purchase upon the exercise of this
Warrant the kind and number of shares of stock and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance as if the Holder were the
owner of the Shares underlying this Warrant immediately prior to any such events at the Purchase
Price in effect immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance as if such Holder had exercised this Warrant.

	6.	 	Exchange and Replacement of Warrant.

          This Warrant is exchangeable without expense, upon the surrender hereof by the registered
Holder at the principal executive office of the Company for a new Warrant of like tenor and date
representing in the aggregate the right to purchase the same number of Shares as are purchasable
hereunder in such denominations as shall be designated by the Holder hereof at the time of such
surrender.

          Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant.

-3-

 

	7.	 	Elimination of Fractional Interests.

          The Company shall not be required to issue certificates representing fractions of Shares on
the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional interests shall be
eliminated pursuant to Section 5(b).

	8.	 	Reservation and Listing of Securities.

          The Company shall at all times reserve and keep available out of its authorized Shares,
solely for the purpose of issuance upon the exercise of this Warrant, such number of Shares as
shall be issuable upon the exercise hereof and thereof. The Company covenants and agrees that,
upon exercise of this Warrant and payment of the Purchase Price therefor, all Shares issuable upon
such exercise shall be duly and validly issued, fully paid and non-assessable. As long as this
Warrant shall be outstanding, the Company shall use its reasonable best efforts to cause all
Shares issuable upon the exercise of this Warrant to be listed (subject to official notice of
issuance) on all securities exchanges on which the Shares of the Company’s Common Stock may then
be listed and/or quoted.

	9.	 	Repurchase at Option of Holder.

     (a) If on December 31, 2000 (the “Repurchase Date”), the Market Price (as defined herein)
does not equal or exceed 150 % of the Purchase Price, the Holder shall have the right (the “Put
Right”) to require the Company to purchase all or a portion of this Warrant relating to that
number of Shares which the Holder is relinquishing its right to purchase (the “Relinquished
Shares”), for a price equal to $0.50 (fifty cents) multiplied by the number of Relinquished
Shares. The Put Right must be exercised by a written notice from the Holder to the Company within
ten (10) days of the Repurchase Date and the Company shall pay to the Holder the amounts owing
hereunder within ten (10) days of receipt of such notice, this Warrant and such other
documentation as the Company may reasonably require.

     (b) The Put Right shall not be exercisable by the Holder if, during any twenty consecutive
trading days between the issuance of this Warrant and the Repurchase Date, the Market Price shall
be equal to or greater than $3.00 per share.

     (c) The “Market Price” per share on any date shall be deemed to be the daily closing price
per share. The closing price per Share for each day shall be the last reported sales price regular
way or, in case no such sale takes place on such day, the average of the closing bid and asked
prices regular way, in either case on the American Stock Exchange, or, if the Common Stock is not
listed or admitted to trading on the American Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is not listed or
admitted to trading on any national securities exchange or no such quotations are available, the
last reported sale price, or if not so reported, the average of the closing bid and asked prices
as furnished by any New York Stock Exchange member firm selected from time to time by the Company
for that purpose, or,

-4-

 

if no such quotations are available, the fair market value as determined in good faith in the
exercise of their reasonable business judgment by the Board of Directors of the Company.

	10.	 	Repurchase at Option of the Company

          This Warrant may be redeemed at the option of the Company at any time, at a redemption price
of $0.05 per Share for which the Warrant is exercisable, provided the Market Price for the Shares
for any twenty (20) consecutive trading days after the issuance of this Warrant shall be equal to
or greater than $5.00 per share. Notice of redemption shall be given in writing to the Holder not
less than ten days before the date fixed for redemption. On and after the date fixed for
redemption, the Holder shall have no rights with respect to this Warrant except to receive the
$0.05 per Share upon surrender of the Warrant.

	11.	 	Notices.

          All notices, demands or other communications to be given or delivered under or by reason of
the provisions of this Warrant shall be in writing and shall be deemed to have been given (a) when
delivered personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender’s telecopy machine) if during normal business hours of the
recipient, otherwise on the next Business Day, (c) one Business Day after the date when sent to
the recipient by reputable express courier service (charges prepaid) or (d) seven Business Days
after the date when mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications will be sent:

     (a) if to the registered Holder of this Warrant, to the address of such Holder as shown
on the books of the Company; or

     (b) if to the Company, to the address set forth on the first page of this Warrant or to
such other address as the Company may designate by notice to the Holder.

	12.	 	Amendments.

          The terms, provisions and conditions of this Warrant may not be changed, modified or amended
in any manner except by an instrument in writing duly executed by both parties hereto.

	13.	 	Binding Effect: Assignment.

          (a) This Warrant is not assignable or transferable without the written consent of the Company,
except by operation of law or as provided in (b) below.

          (b) This Warrant shall not be transferable by Holder other than to a “Permitted Transferee”
(as defined below); provided, that any Permitted Transferee shall be absolutely prohibited
from transferring all or any portion of this Warrant other than to Holder or another

-5-

 

Permitted Transferee of Holder; and provided further, that if Holder dies or
becomes incapacitated, this Warrant may be exercised by Holder’s estate, legal representative or
beneficiary, as the case may be, subject to all other terms and conditions contained in this
Warrant.

          (c) For purposes of this Warrant, Permitted Transferees shall include only the members of the
Holder’s “immediate family” (which shall be limited to Holder’s spouse, children, and parents),
and to trusts for such person’s own benefit and/or for the benefit of members of Holder’s
immediate family; provided, that such Permitted Transferees must agree in writing to be
bound by all of the terms of this Warrant to the same extent as Holder hereunder, in form
acceptable to counsel to the Company, including but not limited to restrictions on the exercise of
this Warrant and on transfers of the Shares, as the case may be, following exercise of this
Warrant, such that any Shares so acquired shall be held subject to the terms of this Warrant.

	14.	 	Governing Law.

          This Warrant shall be governed by, and interpreted and enforced in accordance with, the laws
of the State of New York without regard to principles of choice of law or conflict of laws.

	15.	 	Arbitration of Disputes

          (a) If any controversy or dispute arises under, out of or in relation to any of the
provisions hereof, such controversy or dispute shall be submitted for arbitration in New York, New
York before a panel of three arbitrators, one of which shall be selected by the party initiating
such arbitration, one of which shall be selected by the other party and the third of which (the
“Third Arbitrator”) shall be selected by the two arbitrators so selected; provided, however, that
in the event that such other arbitrators shall not agree on the selection of the Third Arbitrator,
the Third Arbitrator shall be selected by the American Arbitration Association located in New
York, New York. Any dispute or controversy submitted to arbitration in accordance with the
provisions of this Section 12.10 shall be determined by such arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then existing.

          (b) The arbitrators may award any relief which they shall deem proper in the circumstances,
without regard to the relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific performance, injunctive
relief and/or declaratory relief, however, such an award may not include punitive damages. The
award and findings of the arbitrators shall be conclusive and binding upon all of the parties
hereto, whether or not all parties hereto participate in the arbitration proceeding, and judgment
upon the award may be entered in any court of competent jurisdiction upon the application of any
party. The parties hereby agree that such courts of competent jurisdiction shall include, but not
be limited to, the courts located in any jurisdiction in which the party against whom such judgment
is being enforced maintains any assets.

-6-

 

          (c) The prevailing party in the arbitration proceeding shall be entitled to recover from the
other party its reasonable attorneys’ fees, costs and expenses incurred in the proceeding and in
any subsequent action to enforce or collect upon the decision rendered in the arbitration
proceeding.

          (d) Notwithstanding the foregoing, the parties reserve the right to seek and obtain
injunctive relief, whether in the form of a temporary restraining order, preliminary injunction,
injunction to enforce an arbitration award, or other order of similar import, from the federal and
state courts located in New York, New York prior to, during, or after commencement or prosecution
or arbitration proceedings of the final decision and award of the arbitrators; provided, however,
that such preliminary injunctive relief shall be subject to final arbitral decisions.

          (e) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to
any such action seeking injunctive or similar relief hereunder. In any dispute between the
parties, neither party will raise, and each party hereby expressly waives, any objection or
defense to any such court as an inconvenient forum. Each party hereby waives personal service of
any summons, complaint or other process, which may be delivered by any of the means permitted for
notices under Section 11 hereof.

	16.	 	Descriptive Headings.

          The descriptive headings of the several sections of this Warrant are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof.

          WITNESS the seal of the Company and the signature of its duly authorized officers.

	 	 	 	 	 
	 	BENTLEY PHARMACEUTICALS, INC. 

 	 
	[SEAL] 	By:  	/s/ James  R. Murphy
 	 
	 	 	James  R. Murphy 	 
	 	 	Chairman and Chief Executive Officer 	 
	 

	 	 	 	 	 
	Attest:

 	 	 
	/s/ Michael D. Price
 	 	 
	Michael D. Price, Secretary 	 	 
	 	 	 
	 

-7-

 

SUBSCRIPTION FORM

(To be Executed by the Registered Holder

in order to Exercise the Warrant)

          The undersigned hereby irrevocably elects to exercise the right to purchase
Shares by this Warrant according to the conditions hereof and herewith makes payment of the
Purchase Price of such Shares in full.

	 	 	 	 	 
	

Dated:                     ,           . 

 	
 Signature

Address

Social Security Number or Taxpayer’s

Identification Number

 	 
	 	 	 
	 	 	 
	 	 	 
	 

-8-

 

ASSUMPTION AGREEMENT

          THIS ASSUMPTION AGREEMENT is made and entered into as of December 31, 1998 between YUNGTAI
HSU, in his personal capacity (“Seller”) and BENTLEY PHARMACEUTICALS, INC., a Florida corporation
(“Purchaser”).

          WHEREAS, Purchaser and Seller have entered into an Asset Purchase Agreement, dated February
1, 1999 effective as of December 31, 1998 (the “Asset Purchase Agreement”; capitalized terms used
but not defined herein shall have the meanings ascribed to them in the Asset Purchase Agreement),
pursuant to which Seller has agreed to sell, transfer, assign, convey and deliver the Assets to
Purchaser and Purchaser has agreed to purchase the Assets from Seller, and Purchaser has agreed,
in partial consideration therefor, to assume the Assumed Liabilities;

          WHEREAS, pursuant to Section 2.05(b)(iv) of the Asset Purchase Agreement, Purchaser is
required to execute and deliver to Seller this Agreement whereby Purchaser assumes the Assumed
Liabilities;

          NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other
good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
Purchaser hereby undertakes and agrees from and after the date hereof, subject to the limitations
contained herein and in the Asset Purchase Agreement, to assume and pay, perform, discharge and be
responsible for the Assumed Liabilities.

          Nothing contained herein shall require Purchaser to pay or discharge any of the Assumed
Liabilities so long as Purchaser shall in good faith contest or cause to be contested the amount
or validity thereof.

          Other than as specifically stated above or in the Asset Purchase Agreement, Purchaser assumes
no debt, liability or obligation of Seller by this Agreement, including without limitation the
Retained Liabilities, which includes but is not limited to Conrex Pharmaceutical Corporation and/or
Seller’s liabilities to Virna Pharmaceuticals, Inc. or with respect to and arising out of an
agreement between Conrex Pharmaceutical Corporation and Virna Pharmaceuticals, Inc., effective as
of December 1, 1990, as further amended, and it is expressly understood and agreed that all debts,
liabilities and obligations not assumed hereby by Purchaser shall remain the sole obligation of
Seller, its successors and permitted assigns.

          Nothing in this Agreement, express or implied, is intended or shall be construed to confer
upon or give to any Person other than Seller, its successors and permitted assigns any rights,

 

 

remedies or claims under or by reason of this Agreement, or any term, covenant or condition
hereof, with respect to any liability not expressly included in the Assumed Liabilities.

          This Agreement may be executed in any number of counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.

          This Agreement shall be governed by and construed in accordance with the laws of the State of
New York applicable to a contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof, except that if it is necessary in any other jurisdiction to
have the law of such other jurisdiction govern this Agreement in order for this Agreement to be
effective in any respect, then the laws of such other jurisdiction shall govern this Agreement to
such extent.

          IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this Agreement on
February 11, 1999.

	 	 	 	 	 
	 	 	 
	 	                        /s/ Yungtai Hsu
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy, Chairman, President  	 
	 	 	and Chief Executive Officer 	 
	 

2

 

remedies or claims under or by reason of this Agreement, or any term, covenant or condition
hereof, with respect to any liability not expressly included in the Assumed Liabilities.

          This Agreement may be executed in any number of counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.

          This Agreement shall be governed by and construed in accordance with the laws of the State of
New York applicable to a contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof, except that if it is necessary in any other jurisdiction to
have the law of such other jurisdiction govern this Agreement in order for this Agreement to be
effective in any respect, then the laws of such other jurisdiction shall govern this Agreement to
such extent.

          IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this Agreement on
February 11, 1999.

	 	 	 	 	 
	 
	 
	 
	 	 	 
	 	

Yungtai Hsu, in his personal capacity

 	 
	 	 	 
	 	 	 
	 	 	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ James R. Murphy
 	 
	 	 	James R. Murphy, Chairman, President 	 
	 	 	 and Chief Executive Officer 	 
	 

3

 

GENERAL ASSIGNMENT AND BILL OF SALE

          THIS ASSIGNMENT AND BILL OF SALE is made and entered into as of December 31, 1998 between
YUNGTAI HSU, in his personal capacity (“Seller”) and BENTLEY PHARMACEUTICALS, INC., a Florida
corporation (“Purchaser”).

          WHEREAS, Purchaser and Seller have entered into an Asset Purchase Agreement, dated February
1, 1999 effective as of December 31, 1998 (the “Asset Purchase Agreement”; capitalized terms not
defined herein shall have the meanings ascribed to them in the Asset Purchase Agreement), pursuant
to which Seller has agreed to sell, transfer, assign, convey and deliver the Assets to Purchaser
and Purchaser has agreed to purchase the Assets from Seller, and Purchaser has agreed, in partial
consideration therefor, to assume the Assumed Liabilities in connection therewith by executing an
Assumption Agreement dated as of the date hereof;

          WHEREAS, pursuant to Section 2.01 of the Asset Purchase Agreement, Seller desires to sell,
transfer, assign, convey and deliver all of Seller’s right, title and interest in and to the
Assets, free and clear of any and all Liens, to Purchaser and Purchaser desires to accept the
sale, transfer, assignment, conveyance and delivery thereof;

          NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other
good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
Seller hereby irrevocably sells, transfers, assigns, conveys and delivers to Purchaser free and
clear of any and all Liens, all of Seller’s right, title and interest, in and to the Assets, as
the same shall exist on the date hereof, TO HAVE AND TO HOLD the Assets unto Purchaser, his
successors and assigns, to and for their own use and benefit forever.

          Purchaser hereby accepts the sale, transfer, conveyance, assignment and delivery of the
Assets.

          Seller represents, warrants, covenants and agrees that he: (a) has good and marketable title
to all of the Assets, free and clear of any and all Liens; and (b) will warrant and defend the
sale of the Assets against every Person whomsoever claiming against any or all of the Assets,
subject to the terms and provisions of the Asset Purchase Agreement.

          At any time or from time to time after the date hereof, at Purchaser’s request and without
further consideration, Seller shall execute and deliver to Purchaser such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide such materials and information
and take such other actions as Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Purchaser, and to confirm Purchaser’s title to, all
of the

4

 

Assets, and, to the fullest extent permitted by Law, to put Purchaser in actual possession and
operating control of the Assets and to assist Purchaser in exercising all rights with respect
thereto, including but not limited to, filings with any regulatory agencies to be made by Seller
alone, or by Seller and Purchaser jointly.

          This General Assignment and Bill of Sale may be executed in any number of counterparts, each
of which will be deemed an original, but all of which together will constitute one and the same
instrument.

          This General Assignment and Bill of Sale shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contract executed and performed in such
State without giving effect to the conflicts of principles thereof, except that if it is necessary
in any other jurisdiction to have the law of such other jurisdiction govern this General
Assignment and Bill of Sale in order for this General Assignment and Bill of Sale to be effective
in any respect, then the laws of such other jurisdiction shall govern this General Assignment and
Bill of Sale to such extent.

          IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this General Assignment
and Bill of Sale on February 11, 1999.

	 	 	 	 	 
	 	 	 
	 	                              /s/ Yungtai Hsu
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ James R. Murphy
 	 
	 	 	James R. Murphy, Chairman,  President and 	 
	 	 	Chief Executive Officer 	 
	 

-2-

 

SUBSCRIPTION AGREEMENT

 

BENTLEY PHARMACEUTICALS, INC.

 

Bentley Pharmaceuticals, Inc.

Two Urban Centre, Suite 400

4890 West Kennedy Blvd.

Tampa, Florida 33609

February 11, 1999

Dear Sir or Madam:

          Upon the terms and subject to the conditions of an Asset Purchase Agreement, dated February
1, 1999 effective as of December 31, 1998 (the “Asset Purchase Agreement”), between Bentley
Pharmaceuticals, Inc. (the “Company”) and Yungtai Hsu (“Hsu”), in which Hsu agreed to sell certain
of his assets to the Company, Hsu has agreed to accept as part of the Purchase Price (as defined
in the Asset Purchase Agreement) (a) 225,807 shares (the “Shares”) of common stock, $0.02 par
value per share (the “Common Stock”) of the Company, and (b) a warrant to purchase 450,000 shares
of Common Stock (the “Warrant”, collectively the Shares and the Warrant, the “Securities”).
Therefore, in consideration of the premises and the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Hsu
hereby agrees to:

          1. Subscription. Hsu hereby applies to subscribe for the Securities. Once this
Agreement is executed by both Hsu and the Company, it is intended to create a binding agreement
between Hsu and the Company with respect to the terms and conditions described below.

          2. Representations and Warranties of Hsu. Hsu acknowledges, represents, warrants and
agrees as follows:

                    (a) Authorization. Hsu has full power and legal capacity to
execute and deliver this Agreement. This Agreement has been duly executed and delivered by Hsu and,
assuming the execution and delivery hereof and thereof by the Company, will constitute the legal,
valid and binding obligations of Hsu, enforceable against Hsu in accordance with its terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and the availability of equitable
remedies.

 

               (b) Accredited Investor. Hsu is an accredited investor (as defined in Rule 501 of
Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the
“Act”). Hsu has such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment
in the Company and of protecting his interests in connection with this transaction. Hsu recognizes
that his investment in the Company involves certain risks which are set forth in the Company’s
Registration Statement on Form S-3 (SEC File No. 333-28593, the “Registration Statement”) declared
effective by the Securities and Exchange Commission on June 10, 1997 and any amendments thereto.

               (c) Due Diligence. Hsu has received a copy of such documents as requested by him, has
carefully reviewed such documents, has had the opportunity to obtain any additional information
necessary to verify the accuracy of the information contained in such documents and has been given
the opportunity to meet with representatives of the Company and to have them answer any questions
and provide any additional information regarding the terms and conditions of this particular
investment deemed relevant by Hsu, and all such questions have been answered and requested
information provided to Hsu’s full satisfaction. Among the documents received and reviewed by Hsu
are: (i) the Company’s Annual Report on Form 10-K for the year ended December 31, 1997; (ii) the
Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and
September 30, 1998 (such documents are collectively referred to in this Agreement as the “Exchange
Act Reports”); (iii) the Registration Statement and (iv) a Registration Rights Agreement between
the Company and Hsu with respect to the Shares, dated as of the date hereof (the “Registration
Rights Agreement.”) In making his decision to accept the Securities as part of the Purchase Price,
Hsu has relied solely upon his review of the documents referred to above and this Agreement and
independent investigations made by him or his representatives.

               (d) No Legal Advice from the Company. Hsu acknowledges that he has had the
opportunity to review this Agreement and the transactions contemplated by this Agreement with his
own legal counsel and tax advisors. Except for any statements or representations of the Company
made in this Agreement, in the Exchange Act Reports and in the Registration Rights Agreement, Hsu
is relying solely on such counsel and advisors and not on any statements or representations of the
Company or any of its representative or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

               (e) Not an Affiliate. Hsu is not an officer, director or “affiliate” (as that term is
defined in Rule 405 of the Act) of the Company.

               (f) Reliance on Representations and Warranties. Hsu understands that the Securities
are being offered and sold to him in reliance on specific provisions of United States federal and
state securities laws and that the Company is relying upon the truth and

-2-

 

accuracy of the representations, warranties, agreements, acknowledgments and understandings of Hsu
set forth in this Agreement in order to determine the applicability of such provisions.

               (g) No Registration. Hsu understands that the sale of the
Securities has not been registered under the Act, in reliance upon an exemption therefrom by
virtue of Section 4(2) and Regulation D promulgated under the Act. Hsu understands that the
Securities must be held indefinitely and may not be offered, transferred, resold, pledged,
hypothecated or otherwise disposed of until the sale or other transfer thereof is registered under
the Act, pursuant to the terms and conditions of the Registration Rights Agreement or unless an
exemption from such registration is available at that time. Hsu is aware that he will be required
to bear the financial risks of this investment for an indefinite period of time unless transferred
in accordance with the above. Hsu covenants that he will not knowingly make any sale, transfer or
other disposition of the Securities or any interest therein in violation of the Act, the Exchange
Act of 1934, as amended, or the rules and regulations promulgated under either of said Acts.

               (h) Investment Intent. Hsu is acquiring the Securities solely
for
his own account as principal and not with a view to the distribution thereof to or for the benefit
or account of any other person, in whole or in part, and no other person has a direct or indirect
beneficial interest in such Securities. Hsu understands and agrees that he must bear the economic
risk of his investment in the Securities for an indefinite period of time. Hsu will not take any
short position in the Securities and not otherwise engage in any hedging transactions such as
option writing, equity swaps or other types of derivative transactions with respect to the
Securities.

               (i) Additional Transfer Restrictions. Hsu understands and
agrees that, in addition to the restrictions set forth in this Agreement, the following
restrictions and limitations are applicable to his purchase and any resales, pledges,
hypothecations or other transfers of the Securities:

                    (i) The following legend reflecting all applicable restrictions will be placed on any
certificate(s) or other document(s) evidencing the Securities and Hsu must comply with the terms
and conditions set forth in such legends prior to any resales, pledges, hypothecations or other
transfers of the Securities:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”) OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT
BE OFFERED FOR SALE, SOLD, HYPOTHECATED, ASSIGNED,
PLEDGED OR OTHERWISE TRANSFERRED IN THE

-3-

 

ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
COVERING THE SECURITIES UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.

                    (ii) Stop transfer instructions have been or will be placed on any certificates or other
documents evidencing the Securities so as to restrict the resale, pledge, hypothecation or other
transfer thereof in accordance with the provisions hereof.

               (j) Termination of Restrictions. The restrictions described
in
Section 2 hereof upon the transferability of the Securities shall cease and terminate as to any
particular Securities (i) when, in the opinion of Parker Chapin Flattau & Klimpl, LLP or other
counsel reasonably acceptable to the Company, such restrictions are no longer required in order to
assure compliance with the Act or (ii) when, in the opinion of Parker Chapin Flattau & Klimpl, LLP
or other counsel reasonably acceptable to the Company, such Securities shall have been registered
under the Act or transferred in reliance upon the exemption afforded by Section 4(1) of the Act by
virtue of Rule 144.

               (k) Indemnification. Hsu shall indemnify and hold harmless
the
Company and each officer, director or control person of any such entity, who is or may be a party
or is or may be threatened to be made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by reason of or arising
from (i) any actual or alleged misrepresentation or misstatement of facts or omission to represent
or state facts made or alleged to have been made by Hsu to the Company, (or its officers,
directors, employees, agents or representatives), or omitted or alleged to have been omitted by
Hsu, concerning Hsu, or Hsu’s authority to invest or financial position in connection with the
offering or sale of the Securities, or (ii) any breach of warranty or failure to comply with any
covenant contained in this Agreement, including, without limitation, any such misrepresentation,
misstatement or omission, or breach of any warranty or covenant, contained herein or any other
document submitted by Hsu, against losses, liabilities and expenses for which the Company, or its
officers, directors or control persons has not otherwise been reimbursed (including attorneys’
fees, judgments, fines and amounts paid in settlement in matters settled in accordance with the
provision of the following paragraph) incurred by the Company, or such officer, director or control
person in connection with such action, suit or proceeding; provided, however, that Hsu will not be
liable in any such case for losses, claims, damages, liabilities or expenses that a court of
competent jurisdiction shall have found in a final judgment to have arisen primarily from the gross
negligence or willful misconduct of the Company or the party claiming a right to indemnification.

-4-

 

               In case any proceeding shall be instituted involving any person with respect to whom indemnity
may be sought, such person (the “Indemnified Party”) shall promptly notify Hsu, and Hsu, upon the
request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and any others Hsu may designate in such proceedings and
shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own counsel at its own
expense, except that Hsu shall pay as incurred the fees and expenses of counsel retained by the
Indemnified Party in the event that (i) Hsu and the Indemnified Party shall have mutually agreed to
the retention of such counsel or, (ii) the named parties to any such proceeding (including any
impleaded parties) include both Hsu and the Indemnified Party and representation of both parties by
the same counsel would be inappropriate, in the reasonable opinion of the Indemnified Party, due to
actual or potential differing interests between them. Hsu shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, Hsu agrees to indemnify the Indemnified Party to the extent
set forth in this Agreement.

               In the event a claim for indemnification as described herein is determined to be
unenforceable by a final judgment of a court of competent jurisdiction, then Hsu shall contribute
to the aggregate losses, claims, damages or liabilities to which the Company or its officers,
directors, agents, employees or controlling persons may be subject in such amount as is
appropriate to reflect the relative benefits received by each of the undersigned and the party
seeking contribution on the one hand and the relative faults of Hsu and the party seeking
contribution on the other, as well as any relevant equitable considerations.

               The provisions of this Agreement relating to indemnification and contribution shall survive
termination of this Agreement and shall be binding upon any successors or assigns of Hsu.

          3. Representations and Warranties of the Company. The Company acknowledges,
represents, warrants and agrees as follows:

               (a) Organization and Authorization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of Florida and has all requisite
corporate power and authority to own and operate its properties and assets and to carry on its
business as currently conducted. The Company is not in default or violation of any material term
or provision of its Articles of Incorporation or Bylaws nor will the consummation of the
transactions contemplated by this Agreement cause any such default or violation. The Company has
all requisite corporate power and authority to enter into this Agreement, to sell the Securities
hereunder and to carry out and perform its obligations under the terms of this Agreement subject
to the above. This Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms.

               (b) Capitalization. The authorized capital stock of the Company consists of
35,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock, par value $.02 per

-5-

 

share. Upon issuance of the Securities pursuant to the terms of this Agreement and payment
therefor pursuant to the terms of an Asset Purchase Agreement between Hsu and the Company, the
Shares will be duly authorized, validly issued, fully paid and nonassessable and the Warrant will
be duly authorized and validly issued. Upon issuance, the Shares will not be subject to any
preemptive or other preferential rights or similar statutory or contractual rights.

          The Closing shall take place as soon as practicable after (i) due execution by Hsu and
acceptance by the Company of this Subscription Agreement and (ii) the closings as contemplated by
the Asset Purchase Agreement and the Asset Purchase Agreement between Hsu and Conrex
Pharmaceutical Corporation.

          4. Miscellaneous.

               (a) Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement shall be in writing
and shall be deemed to have been given (a) when delivered personally to the recipient, (b) when
sent to the recipient by telecopy (receipt electronically confirmed by sender’s telecopy machine)
if during normal business hours of the recipient, otherwise on the next Business Day (“Business
Day” means a day other than Saturday, Sunday or any day on which banks located in the State of New
York are authorized or obligated to close), (c) one Business Day after the date when sent to the
recipient by reputable express courier service (charges prepaid) or (d) seven Business Days after
the date when mailed to the recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications will be sent to Hsu and to the
Company at the addresses indicated below.

          If to Hsu, to:

          Yungtai Hsu

          10725 East Rush Street

          South El Monte, CA 91733

          Facsimile No.: (626) 350-8886

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

          Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP

          301 North Lake Avenue, 10th Floor

           Pasadena, CA 91101

          Attention: Timothy J. Gosney

          Facsimile No.: (626) 793-5900

-6-

 

          If to the Company, to:

          Bentley Pharmaceuticals, Inc.

          Two Urban Centre, Suite 400

          4890 West Kennedy Blvd.

          Tampa, Florida 33609

          Attention: James R. Murphy

          Facsimile No.: (813) 282-8941

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

          Parker Chapin Flattau & Klimpl, LLP

          1211 Avenue of the Americas

           New York, New York 10036

           Attention: Mark S. Hirsch

                            Jordan A. Horvath

          Facsimile No.: (212) 704-6288

               (b) Assignment: Benefit. This Agreement may not be assigned by Hsu without the prior
written consent of the Company and any assignment without such consent shall be void. This
Agreement may be assigned by the Company to any person or entity which purchases all or
substantially all of the stock or assets of the Company or is the successor to the Company by
merger or consolidation. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Company and of Hsu.

               (c) Severability. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
each of which shall remain in full force and effect.

               (d) Amendments. This Agreement may be amended, supplemented or modified, and any
provision hereof may be waived, only pursuant to a written instrument making specific reference to
this Agreement signed by each of the parties hereto.

               (e) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

               (f) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contract executed and performed in such
State without giving effect to the conflicts of laws principles thereof, except that if it is
necessary in any other jurisdiction to have the law of such other jurisdiction govern this

-7-

 

Agreement in order for this Agreement to be effective in any respect, then the laws of such other
jurisdiction shall govern this Agreement to such extent.

               (g) Arbitration of Disputes

                    (i) If any controversy or dispute arises under, out of or in relation to any of the
provisions hereof, such controversy or dispute shall be submitted for arbitration in New York, New
York before a panel of three arbitrators, one of which shall be selected by the party initiating
such arbitration, one of which shall be selected by the other party and the third of which (the
“Third Arbitrator”) shall be selected by the two arbitrators so selected; provided, however, that
in the event that such other arbitrators shall not agree on the selection of the Third Arbitrator,
the Third Arbitrator shall be selected by the American Arbitration Association located in New
York, New York. Any dispute or controversy submitted to arbitration in accordance with the
provisions of this Section shall be determined by such arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then existing.

                    (ii) The arbitrators may award any relief which they shall deem proper in the circumstances,
without regard to the relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific performance, injunctive
relief and/or declaratory relief, however, such an award may not include punitive damages. The
award and findings of the arbitrators shall be conclusive and binding upon all of the parties
hereto, whether or not all parties hereto participate in the arbitration proceeding, and judgment
upon the award may be entered in any court of competent jurisdiction upon the application of any
party. The parties hereby agree that such courts of competent jurisdiction shall include, but not
be limited to, the courts located in any jurisdiction in which the party against whom such
judgment is being enforced maintains any assets.

                    (iii) The prevailing party in the arbitration proceeding shall be entitled to recover from
the other party its reasonable attorneys’ fees, costs and expenses incurred in the proceeding and
in any subsequent action to enforce or collect upon the decision rendered in the arbitration
proceeding.

                    (iv) Notwithstanding the foregoing, the parties reserve the right to seek and obtain
injunctive relief, whether in the form of a temporary restraining order, preliminary injunction,
injunction to enforce an arbitration award, or other order of similar import, from the federal and
state courts located in New York, New York prior to, during, or after commencement or prosecution
or arbitration proceedings of the final decision and award of the arbitrators; provided, however,
that such preliminary injunctive relief shall be subject to final arbitral decisions.

                    (v) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to any
such action seeking injunctive or similar relief

-8-

 

hereunder. In any dispute between the parties, neither party will raise, and each party hereby
expressly waives, any objection or defense to any such court as an inconvenient forum. Each party
hereby waives personal service of any summons, complaint or other process, which may be delivered
by any of the means permitted for notices under Section 6(a) hereof.

               (h) Entire Agreement. This Agreement constitutes the
entire
agreement between Hsu and the Company with respect to the subject matter hereof.

	 	 	 	 	 
	 	 	 
	 	/s/ Yungtai Hsu
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 

	 	 	 	 	 
	ACCEPTED AND AGREED:

BENTLEY PHARMACEUTICALS, INC.

 	 	 
	By:  	 	 	 
	 	James R. Murphy, Chairman, President  	 	 
	 	and Chief Executive Officer 	 	 

-9-

 

hereunder. In any dispute between the parties, neither party will raise, and each party hereby
expressly waives, any objection or defense to any such court as an inconvenient forum. Each party
hereby waives personal service of any summons, complaint or other process, which may be delivered
by any of the means permitted for notices under Section 6(a) hereof.

               (h) Entire Agreement. This Agreement constitutes the
entire
agreement between Hsu and the Company with respect to the subject matter hereof.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 

	 	 	 	 	 
	ACCEPTED AND AGREED:

BENTLEY PHARMACEUTICALS, INC.

 	 	 
	By:  	James R. Murphy
 	 	 
	 	James R. Murphy, Chairman, President 	 	 
	 	and Chief Executive Officer 	 	 

-9-

 

	 	 	 	 	 

REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT, is made and entered into as of February 11, 1999 between
BENTLEY PHARMACEUTICALS, INC., a Florida corporation (the “Company”) and Yungtai Hsu (“Hsu”).

          WHEREAS, upon the terms and subject to the conditions of an Asset Purchase Agreement, dated
February 1, 1999, effective as of December 31, 1998 (the “Asset Purchase Agreement”), between the
Company and Hsu, in which Hsu agreed to sell certain of his assets to the Company, Hsu has agreed
to accept 225,807 shares (the “Shares”) of common stock, $0.02 par value per share (the “Common
Stock”) of the Company as part of the Purchase Price (as defined in the Asset Purchase Agreement);

          WHEREAS, to induce Hsu to accept the Shares as part of the Purchase Price, the Company has
agreed to provide certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute (collectively, the “Act”),
with respect to the Shares;

          WHEREAS, as of the date hereof, Hsu and the Company entered into a Subscription Agreement
with respect to the Shares (the “Subscription Agreement”);

          NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Hsu hereby agree as follows:

          1. Definitions.

          (a) As used in this Agreement, the following terms shall have the following meanings:

          (i) “Register,” “Registered,” and “Registration” refer to a registration effected by
preparing and filing a Registration Statement in compliance with the Act and the declaration or
ordering of effectiveness of such Registration Statement by the United States Securities and
Exchange Commission (the “SEC”).

          (ii) “Registrable Securities” means the Shares.

          (iii) “Registration Statement” means a registration statement of the Company under the Act,
including any amendments or supplements thereto and prospectuses contained therein.

 

 

          (iv) “Stockholder” means Hsu and any permitted transferee or assignee who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 hereof.

          (b) Capitalized terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Asset Purchase Agreement.

          2. Restrictions on Transfer.

          (a) The Stockholder acknowledges and understands that prior to the registration of the Shares
as provided herein, the Shares are “restricted securities” as defined in Rule 144 promulgated under
the Act (“Rule 144”). The Stockholder understands that the Shares may not be offered, transferred,
resold, pledged, hypothecated or otherwise disposed of in the absence of (i) an opinion of Parker
Chapin Flattau & Klimpl, LLP or other counsel reasonably acceptable to the Company that such
transfer may be made without registration under the Act or (ii) an opinion of Parker Chapin Flattau
& Klimpl, LLP or other counsel reasonably acceptable to the Company that the Shares have been
Registered.

          (b) The Stockholder acknowledges that the Company has issued the Shares to the Stockholder
pursuant to an exemption from registration under the Act. Stockholder represents that (i) he has
acquired the Shares for investment and without any view toward distribution of any of Registrable
Securities to any other person, (ii) he will not sell or otherwise dispose of the Shares except in
compliance with the registration requirements or exemption provisions under the Act and (iii)
before any sale or other disposition of any of the Shares other than in a sale registered under
the Act or pursuant to Rule 144 or 144A (or any similar provisions then in force) under the Act
(unless the Company shall have been advised by counsel that the sale does not meet the
requirements of Rule 144 or Rule 144A, as the case may be, for such sale), he will deliver to the
Company an opinion of counsel, in form and substance reasonably satisfactory to the Company, to
the effect that such registration is unnecessary.

          (c) Each instrument or certificate evidencing or representing the Shares, and any certificate
issued in exchange therefor or transfer thereof, shall bear legends substantially in the following
form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”)
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR
SALE, SOLD, HYPOTHECATED, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THE
SECURITIES UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT

-2-

 

REGISTRATION IS NOT REQUIRED UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

          3. Registration.

          (a) If at any time or from time to time following the date hereof, the Company shall determine
to register any distribution of its securities with the SEC, either for its own account or the
account of a security holder or holders, in a registration statement covering the sale of shares of
Common Stock to the general public pursuant to a public offering in compliance with the Act (except
with respect to any registration filed on Form S-4 or such other form which does not include
substantially the same information as would be included in a registration statement covering the
sale of shares of Common Stock to the general public), the Company will: (i) give to Stockholder
written notice thereof at least 30 days before the initial filing of such registration statement;
and (ii) include in such registration (and any related qualification under blue sky laws) and in
any underwriting involved therein, all the Shares, specified in a written request, made within 30
days after receipt of such written notice from the Company, by the Stockholder, except as set forth
in subparagraphs (b) or below. Notwithstanding the foregoing, the Stockholder shall not have
registration rights with respect to a particular registration statement in the event that any
investor or lender for whom the registration statement is filed objects to the inclusion of other
shares of Common Stock, including the Shares, in such registration statement.

          (b) If the distribution is to be underwritten, the right of the Stockholder to registration
pursuant to this Section shall be conditioned upon Stockholder’s participation in the underwriting
and the inclusion of the Shares and securities underlying the Shares, as the case may be, in the
underwriting to the extent provided herein. Notwithstanding any other provision of this Section,
if the underwriter determines that marketing factors require a limitation of the number of shares
to be underwritten, and such determination is made by such underwriter in writing, then the
underwriter may limit the number of the Stockholder’s Shares to be included in the registration
and underwriting, or may exclude the Shares from such underwriting.

          4. Obligations of the Company. In connection with a registration of the
Registrable Securities under Section 3 hereof, the Company shall do each of the following:

          (a) Prepare and file with the SEC, a Registration Statement with respect to the Registrable
Securities, and thereafter use its best efforts to cause each Registration Statement relating to
the Registrable Securities to become effective on or before 120 days from the filing of such
Registration Statement with the SEC, and keep the Registration Statement effective at all times
until the earliest (the “Registration Period”) of (i) the date that is three years after the
Closing Date; (ii) the date when the Stockholder may sell all Registrable Securities under Rule
144 or (iii) the date the Stockholder no longer owns any of the Registrable Securities, which
Registration Statement shall 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 therein, in
light of the circumstances in which they were made, not misleading;

-3-

 

          (b) Prepare and file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement effective at all
times during the Registration Period, and, during the Registration Period, comply with the
provisions of the Act with respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement until such time as all of such Registrable Securities have
been disposed of in accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;

          (c) The Company shall permit a single firm of counsel designated by the Stockholder to review
the Registration Statement a reasonable period of time prior to the Company’s filing of the
Registration Statement with the SEC;

          (d) Furnish to the Stockholder (i) promptly after the Registration Statement is prepared and
publicly distributed, filed with the SEC, or received by the Company, one copy of the Registration
Statement, each prospectus, and each amendment or supplement thereto, and (ii) such number of
copies of a prospectus, and all amendments and supplements thereto and such other documents, as
the Stockholder may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Stockholder;

          (e) As promptly as practicable after becoming aware of such event, the Company shall notify
the Stockholder of (i) the issuance by the SEC of a stop order suspending the effectiveness of the
Registration Statement, (ii) the happening of any event of which the Company has knowledge as a
result of which the prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading, or (iii) the occurrence or existence of any pending corporate
development that, in the reasonable discretion of the Company, makes it appropriate to suspend the
availability of the Registration Statement, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue statement or
omission, and deliver such number of copies of such supplement or amendment to the Stockholder as
hemad reasonably request; provided that, for not more than twenty days (or a total of not more
than forty days in any twelve month period, the Company may delay the disclosure of material
non-public information concerning the Company (as well as prospectus or Registration Statement
updating) the disclosure of which at the time is not, in the good faith opinion of the Company,
the best interests of the Company and in the opinion of counsel to the Company (an “Allowed
Delay”); provided, further, that the Company shall promptly (i) notify the Stockholder in writing
of the existence of material nonpublic information giving rise to an Allowed Delay and (ii) advise
the Stockholder in writing to cease all sales under the Registration Statement until the end of
the Allowed Delay. Upon expiration of the Allowed Delay, the Company shall again be bound by the
first sentence of this Section 4(e) with respect to the information giving rise thereto;

          (f) As promptly as practicable after becoming aware of such event, notify the Stockholder who
holds Registrable Securities being sold (or, in the event of an underwritten offering,

-4-

 

the managing underwriters) of the issuance by the SEC of any notice declaring the effectiveness of
the Registration Statement or any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time; and

          (g) Take all other reasonable actions necessary to expedite and facilitate disposition by the
Stockholder of the Registrable Securities pursuant to the Registration Statement.

          5. Obligations of the Stockholder. In connection with the registration of the
Registrable Securities, the Stockholder shall have the following obligations:

          (a) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of the
Stockholder that the Stockholder shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such registration as
the Company may reasonably request. At least five days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify the Stockholder of the information the
Company requires from the Stockholder (the “Requested Information”) if the Stockholder elects to
have any of the Stockholder’s Registrable Securities included in the Registration Statement. If at
least three Business Days (as defined below) prior to the filing date the Company has not received
the Requested Information from the Stockholder, then the Company may file the Registration
Statement without including Registrable Securities of the Stockholder;

          (b) The Stockholder by acceptance of the Registrable Securities agrees to cooperate with the
Company as reasonably requested by the Company in connection with the preparation and filing of
the Registration Statement hereunder, unless the Stockholder has notified the Company in writing
of the Stockholder’s election to exclude all of its Registrable Securities from the Registration
Statement; and

          (c) The Stockholder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(e) or 4(f), above, the Stockholder will
immediately discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until the Stockholder’s receipt of the copies of
the supplemented or amended prospectus contemplated by Section 4(e) or 4(f) and, if so directed by
the Company, the Stockholder shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of destruction) all copies in the Stockholder’s
possession, of the prospectus covering such Registrable Securities current at the time of receipt
of such notice.

          6. Expenses of Registration.

          (a) All reasonable expenses, other than as set forth in Section 6(b) hereof, filings or
qualifications pursuant to Section 4, including, without limitation, all registration, listing,
and

-5-

 

qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the
Company, shall be borne by the Company.

          (b) All underwriting discounts and commissions incurred in connection with registrations
shall be paid by the Stockholder.

          7. Indemnification. Hsu shall indemnify and hold harmless the Company and each
officer, director or control person of any such entity, who is or may be a party or is or may be
threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of or arising from (i) any
actual or alleged misrepresentation or misstatement of facts or omission to represent or state
facts made or alleged to have been made by Hsu to the Company, (or its officers, directors,
employees, agents or representatives), or omitted or alleged to have been omitted by Hsu,
concerning Hsu, or Hsu’s authority to invest or financial position in connection with the offering
or sale of the Shares, or (ii) any breach of warranty or failure to comply with any covenant
contained in this Agreement, including, without limitation, any such misrepresentation,
misstatement or omission, or breach of any warranty or covenant, contained herein or any other
document submitted by Hsu, against losses, liabilities and expenses for which the Company, or its
officers, directors or control persons has not otherwise been reimbursed (including attorneys’
fees, judgments, fines and amounts paid in settlement in matters settled in accordance with the
provision of the following paragraph) incurred by the Company, or such officer, director or
control person in connection with such action, suit or proceeding; provided, however, that Hsu
will not be liable in any such case for losses, claims, damages, liabilities or expenses that a
court of competent jurisdiction shall have found in a final judgment to have arisen primarily from
the gross negligence or willful misconduct of the Company or the party claiming a right to
indemnification.

          In case any proceeding shall be instituted involving any person with respect to whom indemnity
may be sought, such person (the “Indemnified Party”) shall promptly notify Hsu, and Hsu, upon the
request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and any others Hsu may designate in such proceedings and
shall pay as incurred the fees and expenses of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own counsel at its own
expense, except that Hsu shall pay as incurred the fees and expenses of counsel retained by the
Indemnified Party in the event that (i) Hsu and the Indemnified Party shall have mutually agreed to
the retention of such counsel or, (ii) the named parties to any such proceeding (including any
impleaded parties) include both Hsu and the Indemnified Party and representation of both parties by
the same counsel would be inappropriate, in the reasonable opinion of the Indemnified Party, due to
actual or potential differing interests between them. Hsu shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, Hsu agrees to indemnify the Indemnified Party to the extent
set forth in this Agreement.

          In the event a claim for indemnification as described herein is determined to be
unenforceable by a final judgment of a court of competent jurisdiction, then Hsu shall contribute
to

-6-

 

the aggregate losses, claims, damages or liabilities to which the Company or its officers,
directors, agents, employees or controlling persons may be subject in such amount as is appropriate
to reflect the relative benefits received by each of the undersigned and the party seeking
contribution on the one hand and the relative faults of Hsu and the party seeking contribution on
the other, as well as any relevant equitable considerations.

          The provisions of this Agreement relating to indemnification and contribution shall survive
termination of this Agreement and shall be binding upon any successors or assigns of Hsu.

          8. Termination of Registration Rights. The rights granted pursuant to this Agreement
shall terminate as to the Stockholder upon the occurrence of any of the following:

          (a) all of the Registrable Securities have been registered; or

          (b) all of the Registrable Securities may be sold without such registration pursuant to Rule
144.

          9. Miscellaneous.

          (a) A person or entity is deemed to be a holder of Registrable Securities whenever such
person or entity owns of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.

          (b) Notices. All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to
have been given (a) when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender’s telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day (“Business Day” means a day other than
Saturday, Sunday or any day on which banks located in the State of New York are authorized or
obligated to close), (c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid) or (d) seven Business Days after the date when mailed to
the recipient by certified or registered mail, return receipt requested and postage prepaid. Such
notices, demands and other communications will be sent to Hsu and to the Company at the addresses
indicated below.

If to Hsu, to:
 

Yungtai Hsu

10725 East Rush Street

South El Monte, CA 91733

Facsimile No.: (626) 350-8886

-7-

 

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

Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP

301 North Lake Avenue, 10th Floor

Pasadena, CA 91101

Attention: Timothy J. Gosney

Facsimile No.: (626) 793-5900

If to the Company, to:

Bentley Pharmaceuticals, Inc.

Two Urban Centre, Suite 400

4890 West Kennedy Blvd.

Tampa, Florida 33609

Attention: James R. Murphy

Facsimile No.: (813)282-8941

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

Parker Chapin Flattau & Klimpl, LLP

1211 Avenue of the Americas

New York, New York 10036

Attention: Mark S. Hirsch

                 Jordan A. Horvath

Facsimile No.: (212)704-6288

          (c) Assignment: Benefit. This Agreement may not be assigned by Hsu without the prior
written consent of the Company and any assignment without such consent shall be void. This
Agreement may be assigned by the Company to any person or entity which purchases all or
substantially all of the stock or assets of the Company or is the successor to the Company by
merger or consolidation. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Company and of Hsu.

          (d) Severability. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, each of which shall remain in full force and effect.

          (e) Amendments. This Agreement may be amended, supplemented or modified, and any
provision hereof may be waived, only pursuant to a written instrument making specific reference to
this Agreement signed by each of the parties hereto.

          (f) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

-8-

 

          (g) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contract executed and performed in such
State without giving effect to the conflicts of laws principles thereof, except that if it is
necessary in any other jurisdiction to have the law of such other jurisdiction govern this
Agreement in order for this Agreement to be effective in any respect, then the laws of such other
jurisdiction shall govern this Agreement to such extent.

          (h) Arbitration of Disputes

               (i) If any controversy or dispute arises under, out of or in relation to any of the
provisions hereof, such controversy or dispute shall be submitted for arbitration in New York, New
York before a panel of three arbitrators, one of which shall be selected by the party initiating
such arbitration, one of which shall be selected by the other party and the third of which (the
“Third Arbitrator”) shall be selected by the two arbitrators so selected; provided, however, that
in the event that such other arbitrators shall not agree on the selection of the Third Arbitrator,
the Third Arbitrator shall be selected by the American Arbitration Association located in New
York, New York. Any dispute or controversy submitted to arbitration in accordance with the
provisions of this Section shall be determined by such arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then existing.

               (ii) The arbitrators may award any relief which they shall deem proper in the circumstances,
without regard to the relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific performance, injunctive
relief and/or declaratory relief, however, such an award may not include punitive damages. The
award and findings of the arbitrators shall be conclusive and binding upon all of the parties
hereto, whether or not all parties hereto participate in the arbitration proceeding, and judgment
upon the award may be entered in any court of competent jurisdiction upon the application of any
party. The parties hereby agree that such courts of competent jurisdiction shall include, but not
be limited to, the courts located in any jurisdiction in which the party against whom such
judgment is being enforced maintains any assets.

               (iii) The prevailing party in the arbitration proceeding shall be entitled to recover from
the other party its reasonable attorneys’ fees, costs and expenses incurred in the proceeding and
in any subsequent action to enforce or collect upon the decision rendered in the arbitration
proceeding.

               (iv) Notwithstanding the foregoing, the parties reserve the right to seek and obtain
injunctive relief, whether in the form of a temporary restraining order, preliminary injunction,
injunction to enforce an arbitration award, or other order of similar import, from the federal and
state courts located in New York, New York prior to, during, or after commencement or prosecution
or arbitration proceedings of the final decision and award of the arbitrators; provided, however,
that such preliminary injunctive relief shall be subject to final arbitral decisions.

-9-

 

               (v) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to any
such action seeking injunctive or similar relief hereunder. In any dispute between the parties,
neither party will raise, and each party hereby expressly waives, any objection or defense to any
such court as an inconvenient forum. Each party hereby waives personal service of any summons,
complaint or other process, which may be delivered by any of the means permitted for notices under
Section 9(b) hereof.

          IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and
year first written above.

	 	 	 	 	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/  James R. Murphy
 	 
	 	 	James R. Murphy, Chairman, President  	 
	 	 	and Chief Executive Officer 	 
	 
	 	
  

Yungtai Hsu, in his personal capacity

 	 
	 	 	 

-10-

 

               (v) Each party hereby consents and agrees that the federal and state courts located in New
York, New York each shall have exclusive personal jurisdiction and proper venue with respect to
any such action seeking injunctive or similar relief hereunder. In any dispute between the
parties, neither party will raise, and each party hereby expressly waives, any objection or
defense to any such court as an inconvenient forum. Each party hereby waives personal service of
any summons, complaint or other process, which may be delivered by any of the means permitted for
notices under Section 9(b) hereof.

          IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and
year first written above.

	 	 	 	 	 
	 	BENTLEY PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	James R. Murphy, Chairman, President 	 
	 	 	and Chief Executive Officer 	 
	 
	 	 	 
	 	                                                           /s/ Yungtai Hsu
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 

-10-

 

	 	 	 
	 	 	 
	ASSIGNMENT OF PATENT
	 	Docket Number (optional)
	 	 	 
	 
	 	16,194—B

Whereas, Conrex Pharmaceutical Corporation, a New Jersey Corporation, of 5127 West
Chester Pike, Newtown Square, Pennsylvania 19073, hereinafter referred to as “Conrex”, did
obtain by Assignment a United States Patent for an invention in TRANSDERMAL AND TRANS-MEMBRANE
DELIVERY OF DRUGS, No. 5,023,252, dated June 11, 1991 (the “252 Patent”); and whereas, Conrex
is now the sole owner of the ‘252 Patent, and,

Whereas, Bentley Pharmaceuticals, Inc., a Florida Corporation, having a street and post
office address at One Urban Centre, Suite 548, 4830 West Kennedy Boulevard, Tampa, Florida
33609-2562, hereinafter referred to as “Bentley”, is desirous of acquiring the entire
right, title and interest in the same;

Now, therefore, in consideration of the sum of one dollar ($1.00), and other good and
valuable consideration, the receipt and sufficiency whereof are hereby acknowledged. Conrex,
by these presents does sell, assign and transfer unto said Bentley the entire right, title
and interest in and to the ‘252 Patent; the same to be held and enjoyed by Bentley for its
own use and behoof, and for Bentley’s legal representatives and assigns, to the full end of
the term for which said ‘252 Patent is granted, as fully and entirely as the same would have
been held by Conrex had this assignment and sale not been made.

Executed this 11 day of February, 1999, at Philadelphia, Pennsylvania, United
States of America.

	 	 	 	 	 
	 	CONREX PHARMACEUTICAL CORPORATION

 	 
	 	By  	/s/ Phyllis Hsieh
 	 
	 	 	Phyllis Hsieh, President and CEO 	 
	 	 	 	 
	 

	 	 	 	 	 
	Commonwealth of Pennsylvania	 	 	 	:
	 

	 	SS
	 	:
	County of Philadelphia

	 	 	 	:

Before me personally appeared said PHYLLIS HSIEH and acknowledged the foregoing instrument to
be her free act and deed this 11th day of February, 1999.

	 	 	 	 	 
	 	 	 
	 	          /s/ BARBARA E.HOFFMAN
 	 
	 	Notary Public 	 
	 	 	 
	 

Seal

(Assignment of Patent (PTO/SB/41) [16-1] — page 1 of 1)

 

 

ASSIGNMENT OF PATENTS IN COUNTRIES OTHER THAN THE U.S.A.

     Whereas, Conrex Pharmaceutical Corporation, a New Jersey Corporation, of 5127 West Chester
Pike, Newtown Square, Pennsylvania 19073 (hereinafter referred to as “Conrex”), did obtain by
Assignment patents in countries other than the United States of America, as listed on the attached
Schedule X (“Foreign Patents”), for an invention in TRANSDERMAL AND TRANS-MEMBRANE DELIVERY OF
DRUGS;

     Whereas, Conrex is now the equitable and sole owner of said Foreign Patents, and,

     Whereas, Bentley Pharmaceuticals, Inc., a Florida Corporation, having an address at One Urban
Centre, Suite 548, 4830 West Kennedy Boulevard, Tampa, Florida 33609-2562 (hereinafter referred to
as “Bentley”), is desirous of acquiring the entire right, title and interest in the same;

     Now, therefore, in consideration of the sum of one dollar ($1.00), and other good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged, Conrex, by these
presents does sell, assign and transfer unto said Bentley the

 

 

entire right, title and interest in and to the said Foreign Patents, the same to be held and
enjoyed by the said Bentley for its own use and behoof, and for Bentley’s legal representatives and
assigns, to the full end of the terms for which said Foreign Patents are granted, as fully and
entirely as the same would have been held by Conrex had this assignment and sale not been made.

Executed this 11 day of February, 1999, at Philadelphia, Pennsylvania, United
States of America.

	 	 	 	 	 
	 	CONREX PHARMACEUTICAL CORPORATION

 	 
	 	By  	/s/ Phyllis Hsieh
 	 
	 	 	Phyllis Hsieh, President and CEO 	 
	 	 	 	 
	 

	 	 	 	 	 
	Commonwealth of Pennsylvania	 	 	 	:
	 

	 	SS
	 	:
	County of Philadelphia

	 	 	 	:

Before me personally appeared said PHYLLIS HSIEH and acknowledged the foregoing instrument to be
her free act and deed this 11th day of February, 1999.

	 	 	 	 	 
	 	 	 
	 	/s/ BARBARA E. HOFFMAN
 	 
	 	Notary Public 	 
	 	 	 
	 

Seal

-2-

 

INTELLECTUAL PROPERTY ASSIGNMENT

     This Assignment (the “Assignment”) , made and entered into as of February 11, 1999 by Conrex
Pharmaceutical Corporation, a New Jersey corporation (“Assignor”), in favor of Bentley
Pharmaceuticals, Inc., a Florida corporation having a place of business at One Urban Centre, Suite
548, 4830 West Kennedy Boulevard, Tampa, Florida 33609-2562 (“Assignee”).

     WITNESSETH THAT:

     WHEREAS Assignor and Yungtai Hsu, in his personal capacity (“HSU”), have entered into an Asset
Purchase Agreement of even date herewith;

     WHEREAS the terms herein bearing initial capitalization are as defined in said Asset Purchase
Agreement;

     WHEREAS Hsu has assigned to Assignee his interest in said Asset Purchase Agreement; and

     WHEREAS Assignor desires to sell and transfer to Assignee, who desires to acquire, the
Intellectual Property, including the Patents and Technology;

     NOW, THEREFORE, in consideration of the premises, the sum of One Dollar ($1.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor
does hereby sell, assign, transfer and confirm unto Assignee, and its successors, assigns and legal
representatives, all right, title and interest in, to and under the Intellectual Property,
including the Patents and the Technology, throughout

 

 

all countries of the world, and Assignor further agrees to execute upon request of the Assignee
such additional documents, if any, as are necessary and proper to perfect title in the transferred
property in Assignee, throughout all countries of the world, and to otherwise give full effect to,
and perfect the rights of the Assignee under this Assignment.

     IN WITNESS WHEREOF Assignor has caused this Assignment to be duly executed and delivered, by
an officer of Assignor duly authorized so to do, on the 11 day of February, 1999.

	 	 	 	 	 
	CONREX PHARMACEUTICAL CORPORATION

 	 	 
	/s/ Phyllis Hsieh
 	 	Date: 2/11/99 
	Phyllis Hsieh, President  	 	 
	and Chief Executive Officer 	 	 
	 

	 	 	 	 	 
	COMMONWEALTH OF Pennsylvania	 	 	 	:
	 

	 	SS
	 	:
	COUNTY OF Philadelphia

	 	 	 	:

     On this 11th day of February, 1999, appeared before me in person
the above named Phyllis Hsieh who acknowledged the above to be her signature and that she signed,
sealed and delivered the above Assignment as her voluntary act and deed for the uses and purposes
therein set forth.

	 	 	 	 	 
	 	 	 
	 	/s/ BARBARA E. HOFFMAN
 	 
	 	Notary Public 	 
	 	 	 
	 

SEAL

-2-

 

Parker Chapin Flattau & Klimpl, llp

COUNSELLORS AT LAW

1211 AVENUE OF THE AMERICAS

NEW YORK, NY 10036-8735

(212) 704-6000

					
	 	 	 	 	 
	 
	 	CABLE LAWPARK

FAX (212) 704-6288

TELEX 640347
	 	175 GREAT NECK ROAD
	 
	 	 
	GREAT NECK, NY 11021
	 
	 	 
	(516) 482-4422
	 
	 	 	FAX (516) 482-4469

WRITER’S DIRECT DIAL NUMBER

February 11, 1999

Mr. Yungtai Hsu

10725 East Rush Street

South El Monte, CA 91733

	 	Re: 	 	 Bentley Pharmaceuticals. Inc.

Dear Mr. Hsu:

          We have acted as counsel to Bentley Pharmaceuticals, Inc., a Florida corporation (the
“Company”), in connection with the negotiation, execution and delivery of the Asset Purchase
Agreement, dated February 1, 1999, effective as of December 31, 1998 (the “Purchase
Agreement”), between the Company and Yungtai Hsu (the “Seller”), the Subscription Agreement,
dated February 11, 1999 between the Company and the Seller (the “Subscription Agreement”), the
Registration Rights Agreement, dated February 11, 1999, between the Company and the Seller
(the “Registration Rights Agreement”), the Warrant, dated February 11, 1999, issued by the
Company to the Seller (the “Warrant”), the Assumption Agreement, dated February 11, 1999,
effective as of December 31, 1998, between the Company and the Seller (the “Assumption
Agreement”), and the General Assignment and Bill of Sale, dated February 11, 1999, effective
as of December 31, 1998, between the Company and the Seller (the “Bill of Sale”). The Purchase
Agreement, the Subscription Agreement, the Registration Rights Agreement, the Warrant, the
Assumption Agreement and the Bill of Sale are sometimes referred to herein collectively as the
“Transaction Documents.”

          Capitalized terms used and not otherwise defined in this opinion shall have the
respective meanings set forth in the Purchase Agreement.

          In connection with rendering this opinion, we have examined the Transaction Documents,
the resolutions duly adopted by the Board of Directors of the Company relating to the
transactions contemplated by the Transaction Documents, and the Certificate of Status issued
by the State of Florida dated February 3, 1998.

 

 

Parker Chapin Flattau & Klimpl, llp

Yungtai Hsu

February 11, 1999

Page 2

          We have also made such examination of law as we have deemed relevant and necessary as a
basis for the opinions hereinafter expressed. In such examination we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us as originals
and the conformity with the original documents of all documents submitted to us as copies. As to
any facts relevant to the opinions expressed below, we have relied upon certificates and written
and/or oral representations of officers of the Company (including the representations of the
Company set forth in the Transaction Documents), and public officials and made such other
investigations as we deemed necessary under the circumstances. We have also assumed that the
representations and warranties of the Seller set forth in the Purchase Agreement are true and
correct as of the date hereof. We have not examined or reviewed any communication, instrument,
agreement, document or other item or conducted any independent inquiry or investigation of any
matter except as otherwise expressly set forth herein.

          This opinion is subject to a number of qualifications, exceptions, assumptions,
limitations, definitions and exclusions on coverage and other matters, all as more particularly
set forth below and each of our opinions set forth herein should be read in conjunction
therewith.

          Our opinion is limited to the date hereof and we do not in any event undertake to advise
you of any facts or circumstances occurring or coming to our attention subsequent to the date
hereof.

          We express no opinion respecting the enforceable nature of the Transaction Documents or
any document or instrument executed pursuant thereto or in connection therewith, insofar as the
enforceable nature thereof, or any right, power, privilege, remedy or interest intended to be
created thereunder, may be limited (i) by applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization or other laws or judicial decisions affecting any rights,
powers, privileges, remedies or interests of creditors or debtors generally, (ii) by rules or
principles of equity affecting the enforcement of obligations generally, whether at law, in
equity or otherwise, (iii) by the exercise of the discretionary powers of any court or other
authority before which may be brought any proceeding seeking equitable or other remedies,
including, without limitation, specific performance, injunctive relief and indemnification or
(iv) insofar as rights to indemnity and/or contribution are concerned, by federal or state
securities laws or the public policy underlying such laws. Furthermore, we assume that the
Transaction Documents to which the Seller is a party have been duly executed and delivered by
the Seller and are the legal, valid and binding obligations of the Seller, enforceable as
written against the Seller in accordance with their terms and provisions.

          We call to your attention to the fact that we are counsel admitted to practice in the
State of New York, and we do not express any opinion with respect to the applicable laws, or
the effect or applicability of the laws, of any jurisdiction other than those of the State of
New York, and the federal laws of the United States of America.

          Based upon and subject to the foregoing, we are of the opinion that:

-2-

 

Parker Chapin Flattau & Klimpl, llp

Yungtai Hsu

February 11, 1999

Page 3

	 	1.	 	The Company is a corporation validly existing and in good standing
under the laws of the State of Florida, and has all requisite power and authority
to carry on its business as it is being conducted, and to execute, deliver and
perform the Purchase Agreement.
	 
	 	2.	 	The execution and delivery to the Seller of the Purchase Agreement
by the Company, the performance by the Company of its obligations thereunder and
the consummation by the Company of the transactions contemplated thereby have
been duly authorized by the Board of Directors of the Company, and no other
corporate act or proceeding on the part of the Company is necessary to approve
the execution and delivery of this Purchase Agreement, the performance of the
Company’s obligations thereunder, or the consummation of the transactions
contemplated hereby.
	 
	 	3.	 	The Purchase Agreement has been duly executed and delivered by the
Company and the Purchase Agreement constitutes legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
its terms. Neither the execution and delivery by the Company of the Purchase
Agreement, nor the consummation of the transactions contemplated thereby, nor the
compliance by the Company with any of the provisions thereof will conflict with,
or result in the breach of, any provision of the Company’s Certificate of
Incorporation and Bylaws, as of the Closing Date.

     This opinion is rendered solely to the Seller in connection with the transactions
contemplated by the Purchase Agreement and only the Seller and its legal representatives,
successors and assigns are entitled to rely hereon. This
opinion may not be used or relied on by the Seller for any other purpose, or by any other
Person for any purpose, without our prior written consent.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ Parker Chapin Flattau & Klimpl, LLP
 	 
	 
	 	PARKER CHAPIN FLATTAU & KLIMPL, LLP 	 
	 	 	 
	 

-3-

 

Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP

					
	M. JESS SENECAL
	 	Lawyers
	 	GEORGE W. DRYER
	JACK T. SWAFFORD
	 	10th Floor
	 	1891-1959
	JOHN F. BRADLEY. SR.
	 	301 North Lake Avenue
	 	RAYMOND R. HAILS
	TIMOTHY J. GOSNEY
	 	Pasadena California 91101-4108
	 	1889-1959
	WILLIAM F. KRUSE
	 	(626) 793-9400
	 	JOSEPH J. BURRIS
	THOMAS S. BUNN III
	 	 

	 	1913-1980
	ANDREW D. TURNER
	 	FACSIMILE (626) 793-5900
	 	STANLEY C. LAGERLOF
	REBECCA J. THYNE
	 	 	 	1915-1998
	JAMES D. CIAMPA	 	 	 	 
	SHAUN O. KWON	 	 	 	 

February 10, 1999

Bentley Pharmaceuticals, Inc.

Two Urban Centre, Suite 400

4830 West Kennedy Blvd.

Tampa, FL 33609

     Re: Opinion of Counsel — Hsu-Bentley Asset Purchase Agreement, dated December
31,1998

Ladies and Gentlemen:

     This firm has acted as counsel to Yungtai Hsu, the seller in the above-referenced
transaction. In our capacity as Mr. Hsu’s counsel, we have been requested by you to
render our opinion with regard to certain aspects of the transaction, as hereinafter
set forth. Capitalized terms herein shall have the same meaning as in the Asset
Purchase Agreement between Yungtai Hsu (“Seller”) and Bentley Pharmaceuticals, Inc.
(“Purchaser”), dated December 31, 1998. Our opinion follows:

	1.	 	Seller has full power and legal capacity to execute, deliver and perform
the Asset Purchase Agreement and the Seller Documents to which he is a party and
to consummate the transactions contemplated thereby.

	2.	 	The Asset Purchase Agreement has been duly executed and delivered by
Seller, and the Seller Documents, when executed and delivered by Seller,
constitute legal, valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency or similar laws and by equitable
principles, including the possible unavailability of specific performance or
injunctive relief. None of the execution and delivery by Seller of the Asset
Purchase Agreement and the Seller Documents, or the consummation of the
transactions contemplated thereby, or compliance by Seller with any of the
provisions thereof, will (a) conflict with, violate, result in the breach or
termination of, or constitute a default under (i) any Laws, (ii) any requirement
of any Governmental or Regulatory Authority applicable to Seller or by which the
Assets may be bound, or (iii) any Contract, to which Seller is a party or by which
Seller is bound or subject; or (b) based on information supplied to us by Seller,
except as disclosed to Purchaser in the Asset Purchase Agreement, require any
filing, declaration or registration with, or permit, consent, approval, waiver,
clearance, order or authorization of, or the giving of any notice to, any
Governmental or Regulatory Authority or other Person or (c) based on information
supplied to us by Seller, result in the creation of any Lien (other than any lien
in favor of Purchaser) upon any of the Assets.

 

 

	 	 	 
	Lagerlof, Senecal, Bradley, 

	 	 
	Gosney & Kruse, llp

	 	 
	lawyers

	 	 

Bentley Pharmaceuticals, Inc.

February 10,1999

Page 2

	3.	 	Except as disclosed by Seller in the Asset Purchase Agreement and the schedules appended
thereto, to our actual knowledge, no act or event has occurred and is continuing that
violates, is in conflict with, results in a breach of or constitutes a default (with or
without the giving of notice or the passage of time, or both) under any term or provision of
(a) the Asset Purchase Agreement and the Seller Documents or (b) any Contract, to which Seller
is a party or by which Seller is bound or subject.
	 
	4.	 	To our actual knowledge, there are no Actions or Proceedings pending or threatened by or
against Seller or any affiliate or employee of Seller, with respect to the Assets (including,
without limitation, products liability claims) or the transactions contemplated by the Asset
Purchase Agreement, at law or in equity or before or by any Governmental Entity or arbitrator,
nor is there any reasonable basis for the institution of any such Actions or Proceedings.
Except as disclosed by Seller in the Asset Purchase Agreement and the schedules appended
thereto, to our actual knowledge, there is no pending or threatened Action or Proceeding that
seeks to enjoin or obtain damages in respect of the consummation of the transactions
contemplated by the Asset Purchase Agreement or that questions the validity of the Asset
Purchase Agreement, any of the Seller Documents or any action to be taken by Seller in
connection with the consummation of the transactions contemplated thereby. Seller is not
subject to any Laws or any proposed Laws, which have had or could have a material adverse
effect on the Assets or on Purchaser’s right to manufacture any products from the Patents or
Technology.
	 
	5.	 	Pursuant to the Asset Purchase Agreement and the Seller Documents, Seller is to convey to
Purchaser good and marketable title to all of the Assets, free and clear of any and all
Liens. To our actual knowledge, there are no Liens on the Assets, other than certain Liens in
favor of Seller with respect to the U.S. Patent, consisting of a UCC-1 filing and a document
filed with United States Patent and Trademark Office on May 23,1997. To our actual knowledge,
Seller is in the process of releasing, and will release, those existing Liens. The General
Assignment and other documents to be executed in accordance with the Asset Purchase Agreement
are legally adequate to vest in Purchaser all of Seller’s rights, title and interest in, to
and under the Assets. The instruments of assignment of the Intellectual Property are suitable
in form and substance to vest in Purchaser all of Seller’s right, title and interest in, to
and under the Patents and is in a form suitable to record with the U.S. Patent and Trademark
Office the transfer to Purchaser of the U.S. Patent included in the Assets.
	 
	6.	 	The Asset Purchase Agreement (the “Conrex Agreement”) entered into between Conrex
Pharmaceutical Corporation (“Conrex”) and Seller, dated as of December 31,1998, and all
documents entered into thereunder were duly executed and delivered by Seller and constitute

 

 

	 	 	 
	Lagerlof, Senecal, Bradley, 

	 	 
	Gosney & Kruse, llp

	 	 
	lawyers

	 	 

Bentley Pharmaceuticals, Inc.

February 10, 1999

Page 3

legal, valid and binding obligations of Seller, enforceable by or against Seller in
accordance with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency or similar laws and by equitable principles. Counsel for Conrex has
separately opined as to the execution and delivery by Conrex of the Conrex Agreement and to
the validity and enforceability of that agreement as to Conrex.

     We are members of the bar of the State of California and do not express any opinion as to
laws other than those of the State of California and applicable Federal Law. Our opinion herein is
based on the existing laws of the State of California, and we express no opinion as to any laws or
regulations of other states or jurisdictions as they may pertain to the Asset Purchase Agreement,
or with respect to the effect of non-compliance under any such laws or regulations of any other
jurisdictions. This opinion may be relied upon by Purchaser, its legal representatives, successors
and permitted assignees under the Asset Purchase Agreement. No other party is entitled to rely
hereon. This opinion is as of this date, and we expressly decline any undertaking to advise you of
any matters arising subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.

	 	 	 	 	 
	 	Very truly yours,

LAGERLOF, SENECAL, BRADLEY,
GOSNEY & KRUSE, LLP

 	 
	 	/s/ LAGERLOF, SENECAL, BRADLEY, GOSNEY & KRUSE, LLP  	 
	 	 	 
	 	 	 

 

 

	 	 	 	 	 

I certify from the records of this office that BENTLEY PHARMACEUTICALS, INC. is a corporation
organized under the laws of the State of Florida, filed on February 11,1974.

The document number of this corporation is 446121.

I further certify that said corporation has paid all fees and penalties due this office through
December 31, 1998, that its most recent annual report was filed on May 5, 1998, and its status is
active.

I further certify that said corporation has not filed Articles of Dissolution.

	 	 	 	 	 
	 	Given under my hand and the

Great Seal of the State of Florida

at Tallahassee, the Capitol, this the
Third day of February, 1999
 	 
	 	 	 
		 	 
	 
	CR2E022 (1-99)	 	 
	 

 

 

TWO Urban Centre, Suite 400

4890 West Kennedy Boulevard

Tampa, Florida 33609

819.281.0961 Fax 813.282.8941

http: //www.bentleypharm.com

Traded
on the AMEX: BNT

VIA REGISTERED MAIL

Drug Master File Staff

Food and Drug Administration

12420 Parklawn Building

5600 Fishers Lane

Rockville Maryland 20852

February 11, 1999

               Re: Drug Master File No. 10260

Dear Sir or Madam:

     We refer you to a letter from Conrex Pharmaceutical Corporation, dated as of the date
hereof, which letter is attached hereto. Bentley Pharmaceuticals, Inc. (“Bentley”), with
principal executive offices at Two Urban Centre, Suite 400, 4830 West Kennedy Blvd., Tampa,
Florida 33609, hereby acknowledges acceptance of the ownership of all right and title to the
Drug Master File No. 10260 (the “DMF”) and hereby accepts responsibility for the DMF and
undertakes to meet the regulatory requirements to keep the DMF current. The undersigned is
the authorized representative of Bentley who will be responsible for the integrity and
upkeep of the DMF.

     If you have any questions or comments, please call the undersigned at (813) 281-0961.

	 	 	 	 	 
	 	Yours sincerely,

 	 
	 	/s/  James R. Murphy
 	 
	 	James R. Murphy 	 
	 	President 	 

 

 

	 	 	 	 	 

CONREX PHARMACEUTICAL CORPORATION

 
5127 West Chester Pike, Newtown Square, PA 19073, USA. Tel: (610) 355-2454; Fax: (610) 355-2453

VIA REGISTERED MAIL

Drug Master File Staff

Food and Drug Administration

12420 Parklawn Building

5600 Fishers Lane

Rockville Maryland 20852

February 11, 1999

               Re:
Drug Master File No. 10260

Dear Sir or Madam:

     We hereby inform you that CONREX PHARMACEUTICAL CORPORATION [if the DMF is not in Conrex’s
name, then insert the correct name], with principal executive offices at 300 Kimberton Road, Suite
120, Phoenixville, PA 19460, transfers, as of the date hereof, all right and title to Drug Master
File No. 10260 (the “DMF”) to BENTLEY PHARMACEUTICALS, INC. (“Bentley”), with principal executive
offices at Two Urban Centre, Suite 400, 4830 West Kennedy Blvd., Tampa, Florida 33609. Dr. Robert
M. Stote is the authorized representative of Bentley who will be responsible for the integrity and
upkeep of the DMF.

     If you have any questions or comments, please call the undersigned at [telephone number] or
Dr. Stote at (813) 281-0961.

	 	 	 	 	 
	 	Yours sincerely,

 	 
	 	/s/ Phyllis Hsieh
 	 
	 	Phyllis Hsieh, President 	 
	 	 	 

 

 

	 	 	 	 	 

RECEIPT

     Reference is hereby made to the agreement (the “Asset Purchase Agreement”), dated February 1,
1999 effective as of December 31, 1998, between Bentley Pharmaceuticals, Inc. (“Bentley”), a
Florida corporation, and Yungtai Hsu (“Hsu”). Capitalized terms used herein and not defined herein
shall have the meanings given such terms in the Asset Purchase Agreement.

     Hsu hereby acknowledges receipt of $1,074,000 representing the payment by Bentley to Hsu of
the cash portion of the purchase price relating to the transferred Assets, pursuant to Section
2.05(c) of the Asset Purchase Agreement.

Dated: February 11, 1999

	 	 	 	 	 
	 	 	 
	 	                                              /s/ Yungtai Hsu
 	 
	 	Yungtai Hsu, in his personal capacity 	 
	 	 	 
	 

 

 

OFFICER’S CERTIFICATE

     I, James R. Murphy, do hereby certify that I am the Chairman, Chief Executive Officer
and President of Bentley Pharmaceuticals, Inc., a Florida corporation (“Bentley”), that I
have custody of the corporate records (other than the accounting records) and seal of
Bentley, and that, as such, I am authorized to execute this Certificate on behalf of Bentley
in connection with the Asset Purchase Agreement, dated February 1, 1999 effective as of
December 31, 1998 (the “Asset Purchase Agreement”), by and between Bentley and
Yungtai Hsu (“Hsu”), and the transactions contemplated thereby, and I hereby further certify
to Hsu that:

     1. Attached hereto as Exhibit A is a true, complete and correct copy of resolutions duly
and validly adopted by the unanimous written consent of the directors of Bentley which are
the only resolutions adopted by the Board of Directors of Bentley with respect to the Asset
Purchase Agreement and the transactions contemplated thereby, which resolutions have not been
amended, modified or rescinded and which remain in full force and effect on the date hereof.

     2. As of the date hereof, the following persons are duly elected, qualified and acting
incumbent officers of Bentley holding the offices set forth opposite their names below and
the signature set forth opposite each respective name below is the genuine signature of each
such person:

	 	 	 	 	 
	NAME	 	TITLE	 	SIGNATURE
	 
	 	 	 	 
	James R. Murphy

	 	Chairman, Chief Executive

Officer, President
	 	/s/ James R. Murphy
 

	 
	 	 	 	 
	Michael D. Price

	 	Vice President, Chief

Financial Officer, Treasurer,

Secretary
	 	/s/ Michael D. Price
 

	 
	 	 	 	 
	Robert M. Stote

	 	Senior Vice President,

Chief Science Officer
	 	 

Dated: February 11, 1999.

	 	 	 	 	 
	 	 	 
	 	                                               /s/ James R. Murphy
 	 
	 	Name:  	James R. Murphy 	 
	 	Title:  	Chairman, Chief Executive Officer, President 	 

 

 

	 	 	 	 	 

As of December 31, 2007

Attn: Yungtai Hsu

Dear Mr. Hsu:

This letter amendment (“Amendment”) is made as of the last date set forth below between Yungtai Hsu
and Bentley Pharmaceuticals, Inc. and shall amend the Asset Purchase Agreement between Yungtai Hsu
and Bentley Pharmaceuticals, Inc., dated February 1, 1999, effective as of December 31, 1998 (the
“Agreement”). Unless otherwise defined, all capitalized terms used herein shall have the meaning
ascribed to them in the Agreement.

In consideration of the mutual covenants and obligations set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Yungtai Hsu
and Bentley Pharmaceuticals, Inc. hereby amend the Agreement as follows:

1. Section 2.04(a) of the Agreement is deleted in its entirety and replaced with the following
paragraph:

2.04 Purchase Price: Allocation: Adjustment.

     (a) Purchase Price. The aggregate purchase price for Assets and for the
covenant of Seller contained in Section 5.07 shall be (i) U.S. $1,074,000 (the “Cash Portion
of the Purchase Price”), subject to the adjustments as provided on paragraph (b) below; (ii)
an aggregate of $350,000 of shares of common stock (the ‘Shares”) of Purchaser according to
the terms and conditions of the Subscription Agreement and the Registration Rights
Agreement, dated as of the Closing Date, substantially in the forms of Exhibit B and C,
respectively, hereto, (iii) a warrant to purchase 450,000 shares of common stock of
Purchaser according to the terms and conditions of the Warrant Agreement, dated as of the
Closing Date, substantially in the form of Exhibit D hereto, (iv) royalties payable by
Purchaser to Seller, through Feb. 11th, 2014 in the amount of (x) 5% of the
difference between any cash received by Bentley Pharmaceuticals, Inc., a Delaware
corporation (“Bentley”), by any of the parties listed on Schedule 2.04(a) prior to the
commercialization of any product arising out of a collaboration between Bentley and any such
party and any research and development for such product funded by Bentley without
reimbursement by a third party, or such fees received relating to a collaboration between
another company authorized by Purchaser and Purchaser and (y) 5% of the “net sales” (as
defined below) received by Bentley from the products developed under Section 2.04(a)(iv)(x)
following commercialization of such products; and (v) the aggregate amount of the Assumed
Liabilities ((i)-(v) collectively, the “Purchase Price”). “Net Sales” referred to in
paragraph (iv)(y) above shall mean gross sales minus: discounts, returns, and customer
allowances actually extended to customers.

2. The parties agree that no royalties are owed to Yungtai Hsu as of the date of this
Amendment.

 

 

3. Except as modified by this Amendment, the Agreement will remain in full force and in effect in
accordance with its terms.

4. This Amendment may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed effective as of
the date first above written.

ACCEPTED AND AGREED TO:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	YUNGTAI HSU	 	 	 	BENTLEY PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Yungtai HSU	 	 	 	By:	 	/s/ James R Murphy	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	YUNGTAI HSU
	 	 	 	 	 	Name:
	 	JAMES R MURPHY	 	 
	 

	 	Title:
	 	MR.
	 	 	 	 	 	Title:
	 	CHAIRMAN & CEO	 	 
	 	 	 	 	8 FEB 2008exv10w5

 

EXHIBIT 10.5

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (the “COMMISSION”). THE OMISSIONS HAVE BEEN
INDICATED BY ASTERISKS (“****”), AND THE OMITTED TEXT HAS BEEN FILED SEPARATELY WITH THE COMMISSION

LICENSE AGREEMENT

     THIS LICENSE AGREEMENT is made as of the 31st day of May, 2000 by and between BENTLEY
PHARMACEUTICALS, INC., a Delaware corporation, with offices at 65 Lafayette Road, 3rd Floor, North
Hampton, New Hampshire 03862-2403 (hereinafter, “BENTLEY” or “Licensor”), and AUXILIUM A2, INC., a
Delaware corporation having a principal place of business at 160 W. Germantown Pike, Suite D-5,
East Norriton, Pennsylvania 19401 (hereinafter, “AUXILIUM” or” Licensee”). BENTLEY and AUXILIUM may
be referred to as a “Party” or, collectively, as “Parties.”

RECITALS

     WHEREAS AUXILIUM is engaged in the research, development, manufacture, marketingand sale of
pharmaceutical products;

     WHEREAS BENTLEY is engaged in the development of pharmaceutical formulations and drug delivery
systems and has developed certain formulations which contain a therapeutic drug and drug delivery
systems included under BENTLEY Patents and BENTLEY Technology;

     WHEREAS under a Research Services Agreement of even date herewith (the “Research Agreement”)
BENTLEY will prepare and test topical pharmaceutical formulations, excluding patch applications,
which contain the therapeutic drug testosterone and CPE-215 (hereinafter, the “Compound”) under
BENTLEY Patents and BENTLEY Technology;

     WHEREAS AUXILIUM wishes to obtain a license under BENTLEY Patents and BENTLEY Technology to
undertake development of products containing the Compound which meet criteria set forth in the
Research Agreement for commercialization in the Territory; and

     WHEREAS BENTLEY is willing to grant such a license under certain terms and conditions.

     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and
INTENDING TO BE LEGALLY BOUND HEREBY, the Parties agree as follows:

 

 

ARTICLE I

DEFINITIONS

     1.1 The following terms, as used herein, shall have the following meanings:

     “Act” shall mean the United States Federal Food Drug and Cosmetic Act and applicable
regulations.

     “Affiliate” means, when used with reference to a Party, any person directly or indirectly
Controlling, Controlled by or under common Control with a Party.

     “Bankruptcy Event” means the person in question becomes insolvent, or voluntary or involuntary
proceedings by or against such person are instituted in bankruptcy or under any insolvency law, or
a receiver or custodian is appointed for such person, or proceedings are instituted by or against
such person for corporate reorganization or the dissolution of such person, which proceedings, if
involuntary, shall not have been dismissed within one hundred eighty days after the date or filing,
or such person makes an assignment for the benefit of creditors, or substantially all of the assets
of such person are seized or attached and not released within one hundred eighty days thereafter.

     “BENTLEY Know-How” shall mean any and all present and future information and any materials,
including, without limitation, formulations, processes, techniques, formulas, biological, chemical,
assay control and manufacturing data, methods, software, equipment designs, know-how, and trade
secrets, patentable or otherwise, tangible or intangible, that are owned or controlled by Licensor
that relate to the preparation, purification, characterization, stabilization, processing, and
formulation and/or use of a testosterone topical formulation containing CPE-215.

     “BENTLEY Patents” shall mean United States Patent No. 5,023,252 and any and all continuations,
continuations-in-part, additions, divisions, renewals, extensions, re-examinations and reissues
thereof and any and all foreign counterparts of the foregoing as set forth in Schedule A hereto and
any other Bentley U.S. or foreign patent application which is filed hereafter and which includes a
claim that covers a testosterone topical formulation which contains CPE-215 and/or the preparation
and/or use thereof and any U.S. or foreign patent issuing therefrom and any renewal, extension,
re-examination or reissue thereof.

     “BENTLEY Technology” means BENTLEY Know-How and Improvements.

     “Calendar Quarter” means each three-month period, or any portion thereof, beginning on January
1, April 1, July 1 and October 1.

     “Combination Products” means any and all pharmaceutical compositions which contain: (A)
testosterone as an active ingredient in combination with any other steroids, hormones,
somatotropics, emollients, or therapeutic soy products; and (B) the Compound; and which fall within
the scope of any composition, method, or article claim of the BENTLEY Patents and which is intended
to be applied topically to the user of the composition.

     “Compound” is defined above in the Recitals.

 

 

     “Confidential Information” means (i) BENTLEY Technology, (ii) any other information or
material in tangible form that is confidential or proprietary to the furnishing Party at the time
it is delivered to the receiving Party, (iii) proprietary information of the furnishing party, (iv)
information that is furnished orally if the furnishing party identifies such information as
confidential or proprietary when it is disclosed, and (v) patent applications not yet in the public
domain.

     “Control”, “Controlling,” and “Controlled by” mean the direct or indirect ownership of over
50% of the outstanding voting securities of an entity, or the right to receive over 50% of the
profits or earnings of a person, or the right to control the policy decisions of a person.

     “Effective Date” means the date of receipt by BENTLEY of written notice from AUXILIUM pursuant
to Section 9.1 of the Research Agreement that it wishes to proceed with development of Product.
Such notice shall be provided on or before 30 September, 2000.

     “Improvement” shall mean any formulations and/or any enhancement or other desirable change to
the technical/pharmacological characteristics of formulations of Product, whether patentable or
not, which is useful for commercializing Product developed by BENTLEY during the term of this
Agreement which may take the form of, without limitation, new or improved methods of
administration, manufacture, improved shelf life or packaging.

     “IND” shall mean an Investigational New Drug Exemption application filed under the Act, or
comparable filing in any major market in the Territory the approval of which permits clinical
investigation of Product in humans.

     “NDA” means a New Drug Application submitted under the Act to permit commercial sale of
Product in the United States or a comparable marketing license in another major market in the
Territory.

     “Net Sales Price” means the gross amount charged by Licensee for the sale of a Product, net of
returns and credits for rejected goods, and after deducting (i) trade and quantity discounts
actually allowed, (ii) sales, use or value added taxes, the legal obligation of which is on
Licensee, and (iii) freight allowances, insurance and customs duties, to the extent any of the
foregoing are identified on the invoice for the product. If a product is sold for consideration
other than solely cash, the fair market value of such other consideration shall be included in the
Net Sales Price. If a Product is sold in a package or kit containing another product which is not a
Product, the Net Sales price for purposes of calculating the royalty under Section 3.2 hereof shall
be calculated by multiplying the Net Sales Price of the combination product by the fraction of
A/A+B, where “A” is the Net Sales Price of Product when sold separately “B” is the Net Sales Price
of the other product or products when sold separately. If either the Product or the other product
is not sold separately, the Net Sales Price of the Product shall be negotiated in good faith by the
Parties.

     “Person” or “Persons” means any corporation, partnership, joint venture or natural person.

     “Products” means any and all pharmaceutical compositions which contain (A) testosterone as the
single active drug ingredient; and (B) the Compound; and which fall within the scope of any
composition, method or article claim of the BENTLEY Patents and which is intended to be applied
topically to the user of the composition.

 

 

     “Sale” or any variation thereof means the sale, assignment, lease or other disposition of a
Product by Licensee to a non-Affiliate. A Product shall be deemed to have been sold for purposes of
calculating royalties under Article III hereof upon the first to occur of the following: (i) the
transfer of title in the Product from Licensee to a non-Affiliate; or (ii) shipment of the Product
from the manufacturing facilities of Licensee to a non-Affiliate.

     “Territory” shall mean all countries and territories of the world except Spain.

     “Use Patents” shall mean any patent granted in the Territory for the use of the Product in a
specific therapeutic indication.

ARTICLE II

GRANT OF LICENSE 

     2.1 Grant of License. Subject to the terms and conditions contained in this
Agreement, the Licensor hereby grants to Licensee a sole and exclusive, worldwide (except Spain),
royalty-bearing license under BENTLEY Patents and BENTLEY Technology with the right to sublicense
to make, have made, use and sell Products in the Territory pursuant to the terms and conditions of
this License Agreement. In addition, Licensee shall have the exclusive right to enter into another
License Agreement with BENTLEY to acquire rights in BENTLEY Patents and BENTLEY Technology for the
development of Combination Products, such right to expire upon the termination of this Agreement.
Licensor and Licensee agree to negotiate the terms of such License Agreement in good faith.

     2.2 Disclosure of BENTLEY Know-How. Promptly following the Effective Date BENTLEY
shall make available to Licensee any and all BENTLEY Know How not disclosed under the Research
Agreement to enable Licensee to develop Products.

ARTICLE III

PAYMENTS IN CONSIDERATION FOR LICENSE 

     3.1 Milestone Payments. In partial consideration for the license rights granted
hereunder, Licensee shall make the following non-refundable payments to Licensor within ten (10)
days after the achievement of the following milestones in the development of the first Product:
****

     3.2 Royalties. In further consideration for the license rights granted under this
Agreement Licensee shall also pay to Licensor the following royalty amounts on annual Net Sales of
Products in those countries in the Territory in which

          (a) there is an enforceable BENTLEY Patent at the time of sale:

 

			
	****	 	Portions of this Exhibit have been omitted pursuant to a request for confidential treatment
filed with the Commission.

 

 

	 	 	 	 	 
	The First $**** Million of Annual Net Sales
	 	 	*	***%
	The Next $**** Million of Annual Net Sales
	 	 	*	***%
	The Next $**** Million of Annual Net Sales
	 	 	*	***%
	Net Sales over $**** Million of Annual Net Sales
	 	 	*	***%

          (b) there is no enforceable BENTLEY Patent in the country when there is an enforceable BENTLEY
Patent in another country at the time of sale:

	 	 	 	 	 
	All Annual Net Sales over $****
	 	 	*	***%

          (c) there is no enforceable BENTLEY Patent in any country at the time of sale:

	 	 	 	 	 
	All Annual Net Sales over $****
	 	 	*	***%

     3.3 Royalty Payments. Royalties under this Agreement shall be paid within ninety (90)
days in the case of no sublicense, and one hundred twenty (120) days, in the case of royalties
received from a sublicensee, following the last day of the Calendar Quarter in which the royalties
and other amounts accrue. The last such payment shall be made within ninety (90) days after
termination of this Agreement. Payments shall be deemed paid as of the day on which they are
received by Licensor in the manner designated by Section 3.4. Licensor and Licensee agree to
negotiate in good faith any future implication on royalties caused by withholding taxes.

     3.4 Currency, Place of Payment, Interest.

          (a) All dollar amounts referred to in this Agreement shall be expressed in United States
dollars. All payments to the Licensor under this Agreement shall be made in United States dollars,
as directed by the Licensor, by wire transfer to the Licensor or in such other manner as the
Licensor may designate from time to time.

          (b) If Licensee receives revenues from sales of Products in a currency other than United
States dollars, royalties shall be converted into United States dollars at a quarterly conversion
rate for each foreign currency calculated as the average of the conversion rate for such currency
published in the Exchange Rates table in the eastern edition of the Wall Street Journal for the
first business day of each month of the quarter.

          (c) Amounts that are not paid when due shall accrue interest from the due date until paid, at
an annual rate equal to the Prime Rate plus 1% as published in the eastern edition of the Wall
Street Journal as of the due date. The Licensor may treat unpaid payments as a breach of this
Agreement in a manner consistent with Article XI notwithstanding the payment of interest.

 

			
	****	 	Portions of this Exhibit have been omitted pursuant to a request for confidential treatment
filed with the Commission.

 

 

     3.5 Records. Licensee will maintain complete and accurate books and records which
enable the royalties payable hereunder to be verified. The records for each Calendar Quarter shall
be maintained for three years. Upon reasonable prior notice to Licensee, the Licensor and its
accountants shall have access to the books and records of Licensee necessary to enable Licensor to
verify the royalties paid hereunder. Such access shall be available during normal business hours
from time to time during the term of this Agreement, and, during the period from expiration or
termination of this Agreement until three years after such date, not more often than once each
calendar year. If it is ultimately determined that Licensee has underpaid royalties by 10% or more,
Licensee will pay the costs and expenses of the Licensor’s accountant in connection with its review
or audit of the sales records of the Product, together with any interest as provided in Section 3.4
(c) above.

     3.6 Co-Marketing. In the event Licensee enters into a co-marketing or sub-license
arrangement with a third party, the royalty payments due to Licensor will be calculated using Net
Sales of Product of Licensee and Net Sales of Product of Licensee’s co-marketing partner combined.

     3.7 Sales in Spain. Licensor shall pay to Licensee a royalty of ****% on all annual
Net Sales in Spain over $**** million.

ARTICLE IV

CERTAIN OBLIGATIONS OF LICENSEE

     4.1 Government Approvals. Licensee will be responsible for obtaining, at its cost and
expense, all governmental approvals required for marketing and sale of Products in the Territory.

     4.2 Licensee Efforts.

          (a) Licensee shall use its reasonable best efforts to develop for commercial sale and to
market Products in the Territory, and to continue to market Products as long as commercially
viable, all in a manner consistent with sound and reasonable business practices. For purposes of
this Agreement reasonable best efforts in the case of Product development in any major market shall
mean at least that diligence required on the part of an NDA applicant in undertaking the
development of a drug product to qualify for the maximum patent term extension under the Act.

          (b) Licensee shall notify Licensor within ten (10) days after the first commercial sale of a
Product and of any formal written notice from the FDA or other equivalent regulatory authority
(“Regulator”) in which CPE-215 is the Regulator’s primary focus, apart from the use of CPE-215 in
the Licensee’s Product.

 

			
	****	 	Portions of this Exhibit have been omitted pursuant to a request for confidential treatment
filed with the Commission.

 

 

     4.3 Manufacture of Product. Prior to commercialization of the Product, the Parties
may, if appropriate for both parties, negotiate in good faith a manufacturing and supply agreement
to provide for Licensor to fulfill the manufacturing requirements of Licensee for Product for sale
in the European market. The cost of such manufacturing shall not be greater than **** percent
(****%) of the cost of any competitor cGMP contract manufacturing facility that proposes to
manufacturer the Product for Licensee.

ARTICLE V

WARRANTIES AND REPRESENTATIONS 

     5.1 Mutual Representations. Each of the Parties hereto represents, warrants and
covenants:

          (i) It is a corporation or entity duly organized and validly existing under the
laws of the state or other jurisdiction of its incorporation or formation.

          (ii) The execution, delivery and performance of this Agreement by such Party
has been duly authorized by all requisite corporate action.

          (iii) It has the power and authority to execute and deliver this Agreement and
perform its obligations hereunder.

          (iv) The execution, delivery and performance by such Party of this Agreement
does not and will not conflict with or result in breach of the terms and provisions
of any other agreement or constitute a default under (a) a loan agreement, guaranty,
financing agreement, affecting a product or other agreement or instrument binding or
affecting it or its property; (b) the provisions of its charter or operative
documents or bylaws; or (c) any order, writ, injunction or decree of any court or
governmental authority entered against it or by which any of its property is bound.

          (v) The execution, delivery and performance of this Agreement by such Party
does not require the consent, approval or authorization of, or notice, declaration,
filing or registration with, any governmental or regulatory authority in the
Territory and the execution, delivery and performance of this Agreement does not
violate any law, rule or regulation applicable to such Party.

          (vi) This Agreement has been duly authorized, executed and delivered and
constitutes such Party’s legal, valid, and binding obligation enforceable against it
in accordance with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors’ rights and to the availability of particular remedies under general
equity principles.

 

			
	****	 	Portions of this Exhibit have been omitted pursuant to a request for confidential
treatment filed with the Commission.

 

 

          (vii) It shall comply with all applicable laws and regulations relating to its
activities under this Agreement.

          (viii) Each warrants that it is not debarred and has not and will not use in
any capacity the services of any person debarred under subsections 306 (a) and (b),
of the Generic Drug Enforcement Act of 1992. If at any time during the term of this
Agreement this warranty is no longer accurate, the affected party shall immediately
notify the other.

     5.2 BENTLEY Warranties.

          (i) BENTLEY Patents. BENTLEY represents and warrants that: (a) BENTLEY is the
owner of all right, title and interest in and to the BENTLEY Technology and BENTLEY
Patents; and (b) BENTLEY has not received any written notice that the Technology or
Patents infringes the proprietary rights of any third party nor is the Licensor in
any other way aware of any infringement of third party proprietary rights; (d)
except for those claims explained in detail in Schedule B hereto, there are no
claims, judgments or settlements against or owed by BENTLEY, or pending or
threatened claims, or litigation, relating to BENTLEY Patents.

ARTICLE VI

INSURANCE

     6.1 Insurance Requirements for Licensee. Prior to commencing work with Product in
human clinical trials under this Agreement and during the entire term of this Agreement and for a
period of three (3) years thereafter, AUXILIUM, at its sole expense, shall maintain in full force
and effect with an insurance company or companies having an A. M. Best Rating of “A-: Class VII” or
better and supply a Certificate of Insurance to BENTLEY evidencing Product Liability insurance
(including coverage for human clinical trials and contractual liability) coverage in the amount of
three million dollars ($3,000,000) per each occurrence and in the general aggregate, respectively,
during the clinical trial phase and prior to commercialization of the Products and three million
dollars ($3,000,000) per each occurrence and in the general aggregate, respectively. Endorsement
shall be furnished reflecting the inclusion of BENTLEY, its officers, directors and employees as
additional insured. The policy providing the above insurance shall be endorsed to contain the
following undertaking: “It is agreed that this insurance will not be cancelled, materially changed
or non-renewed without at least thirty (30) days notice to BENTLEY, by certified mail-Return
Receipt Requested.” Any type of insurance or increase in liability limits not described in the
foregoing which AUXILIUM requires for its own protection shall be its own responsibility and at its
sole expense. The minimum insurance amounts specified herein shall not be deemed a limitation on
AUXILIUM’S indemnification liability under this Agreement.

     6.2 Insurance Requirements for Licensor. Prior to commencing work with Product in
human clinical trials under this Agreement and during the entire term of this Agreement and for a
period of three (3) years thereafter, BENTLEY, at its sole expense shall maintain in full force and
effect with an insurance company or companies having A. M. Best Rating of an “A-: Class

 

 

VII” or better and supply a Certificate of Insurance to AUXILIUM evidencing Product Liability
insurance (including coverage for human clinical trials and contractual liability) coverage in the
amount of three million dollars ($3,000,000) per each occurrence and in the general aggregate,
respectively. The policy providing the above insurance shall be endorsed to contain the following
undertaking: “It is agreed that this insurance will not be cancelled, materially changed or
non-renewed without at least thirty (30) days notice to AUXILIUM, by certified mail-“Return Receipt
Requested”. Any type of insurance or increase in liability limits not described in the foregoing
which BENTLEY requires for its own protection shall be its own responsibility and at its sole
expense.

ARTICLE VII

INDEMNIFICATION 

     7.1 Indemnification by BENTLEY. BENTLEY will indemnify and hold AUXILIUM, its
directors, officers, employees and agents harmless against any and all liability, damage, loss,
cost or expense (including reasonable attorney’s fees) resulting from any third party claims made
or suits brought against AUXILIUM which arise from an act or failure to act by BENTLEY or BENTLEY’s
breach of its representations, warranties or agreements contained herein.

     7.2 Indemnification by AUXILIUM. AUXILIUM will indemnify and hold BENTLEY, its
directors, officers, employees and agents harmless against any and all liability, damage, loss,
cost or expense(including reasonable attorney’s fees) resulting from any third party claims made or
suits brought against BENTLEY which arise from the breach of any of AUXILIUM’s representations,
warranties or agreements contained herein, or which arise out of the development, manufacture,
promotion, distribution, use, testing or sale, distribution or other disposition of Product,
including, without limitation, any claims, express, implied or statutory, made as to the efficacy,
safety or use to be made of Product, and claims made by reason of any Product labeling or any
packaging containing Product. This indemnification obligation shall not apply where the basis for
the claim is the negligence or willful malfeasance of BENTLEY.

     7.3 Limitations on Indemnification Obligations. BENTLEY AND AUXILIUM EACH AGREE THAT
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM A DEFAULT OR BREACH OF THIS AGREEMENT.

     7.4 Procedures. The indemnified Party shall notify the indemnifying Party of any
claim or action giving rise to a liability within fifteen (l5) days after receipt of knowledge of
the claim. If notice is not given within fifteen (15) days, the indemnifying Party shall maintain
its obligation to indemnify unless such failure to timely notify has a material, adverse effect on
the outcome of the claim. The indemnifying Party shall control the defense or settlement of the
claim. However, the indemnifying Party shall not settle or compromise any such claim or action in a
manner that imposes any restrictions or obligations on the indemnified Party without the
indemnified Party’s written consent. The indemnified Party shall cooperate reasonably, assist and
give all necessary authority and reasonably required information.

 

 

ARTICLE VIII

INTELLECTUAL PROPERTY 

     8.1 Intellectual Property Rights. The inventorship of inventions developed under this
Agreement and relating to Products (“Inventions”) shall be determined in accordance with U.S. Law.
Inventions made solely by employees of BENTLEY or owned by BENTLEY (“BENTLEY Inventions”) shall be
the exclusive property of BENTLEY. Inventions made solely by employees of AUXILIUM (“AUXILIUM
Inventions”) shall be the exclusive property of AUXILIUM, except that AUXILIUM Inventions that
relate to the use of Products shall be the joint property of AUXILIUM and BENTLEY, each with an
undivided one-half interest. Inventions other than BENTLEY Inventions and AUXILIUM Inventions shall
belong jointly to BENTLEY and AUXILIUM, each with an undivided one-half interest.

ARTICLE IX

PATENTS, TRADEMARKS AND INFRINGEMENT 

     9.1 Prosecution of Patents.

          (a) The Licensor shall be solely responsible for preparing, prosecuting and maintaining the
BENTLEY Patents.

          (b) Each Party shall cooperate with the other Party to execute all required papers and
instruments and to make all required oaths and declarations as may be necessary in the preparation
and prosecution of all such patents and other applications and protections referred to in this
Section 9.1.

     9.2 Ownership. The Licensor shall retain all right, title and interest in and to the
BENTLEY Patents and any patents, copyrights and other protections related thereto, regardless of
which party prepares, prosecutes or maintains the patents, copyrights or other protections related
to the BENTLEY Technology, subject to the express license granted to Licensee under this Agreement.

          (a) In the event of Licensor wishing to abandon any BENTLEY Patents, Licensor will offer to
assign to Licensee, free of charge, any such Patent prior to effectuating the abandonment. Licensee
will bear the costs connected to any assignment hereunder. In the event that any of the BENTLEY
Patents is assigned to AUXILIUM and AUXILIUM decides thereafter to abandon the assigned Patent,
AUXILIUM agrees that, at the request of BENTLEY, it will offer to assign the assigned Patent to a
third party licensee that is licensed by BENTLY under the assigned Patent as such third party
licensee is identified by BENTLEY to AUXILIUM.

     9.3 Trademarks. Licensee shall have the right, in its sole discretion and at its own
expense, to select and register such trademarks as it wishes to employ in connection with the sale
of the Products throughout the Territory and Licensee shall have legal and equitable ownership of
the entire right, title and interest in and to the trademarks and registrations Licensee elects to
use. Licensee will acknowledge BENTLEY’S CPE-215 by adding
“CPE-215(TM), BENTLEY” to its listing of
ingredients wherever such listing is appropriate or used by Licensee. It is hereby

 

 

expressly agreed that this Section 9.3 shall survive the expiration or termination of this
Agreement.

     9.4 Infringement of Patents. If either Party has knowledge of any infringement of
BENTLEY Patents or BENTLEY Technology, the Party having such knowledge shall promptly inform the
other of such infringement. The Parties shall thereafter discuss what action should be taken,
including whether any legal proceeding should be instituted. If the Parties mutually agree on the
course of action to be taken in respect of any such infringement, they shall jointly select counsel
and equally share any expenses. Any settlement or recovery shall be shared equally by the Parties.
If either party determines to take action, but the other Party does not desire to do so, the first
Party may take action at its own expense and through counsel of its own choice, and any settlement
or recovery shall in such case belong solely to the Party taking action.

     9.5 If one party institutes and carries on a legal proceeding to enforce a BENTLEY Patent
against an alleged infringing party, the other Party shall fully cooperate with and supply all
assistance reasonably requested by the Party instituting and carrying or such proceeding.

ARTICLE X

CONFIDENTIALITY

     10.1 Confidentiality

          (a) Licensee and Licensor shall maintain in confidence and shall not disclose to any third
party the Confidential Information received pursuant to this Agreement, without the prior written
consent of the other Party except that the Confidential Information may be disclosed only to those
third parties (x) who have a need to know the information in connection with the exercise of rights
and obligations under this Agreement and who agree in writing to keep the information confidential
to the same extent as is required of each Party under this Section 10.1, or (y) to whom the Party
is legally obligated to disclose the Information. The foregoing obligation shall not apply to:

          (i) information that is known to the other Party or independently developed by
the other Party prior to the time of disclosure, in each case, to the extent
evidenced by written records promptly disclosed to the other Party upon receipt of
the Confidential Information; or

          (ii) information that becomes patented, published or otherwise part of the
public domain as a result of acts by a Party or a third person obtaining such
information lawfully as a matter of right; or

          (iii) information that becomes patented, published or otherwise part of the
public domain as a result of acts by the Licensor or a third person obtaining such
information lawfully as a matter of right; or

          (iv) information that is required by any law, rule, regulation, order,
decision, decree, or subpoena or other judicial, administrative or legal process to
be disclosed, provided, however that each Party, as applicable, gives

 

 

the other prompt written notice of such request/order to permit the other party
to seek a protective order or other similar order with respect to such Confidential
Information and thereafter discloses only the minimum Confidential Information
required to be disclosed in order to comply.

          (b) Each Party will take all reasonable steps to protect the Confidential Information of the
other Party with the same degree of care it uses to protect its own confidential proprietary
information. Without limiting the foregoing, each party shall ensure that all of its employees
having access to the Confidential Information of the other Party are obligated in writing to keep
such information confidential to the same extent as is required of each Party under this Section
10.1.

     10.2 Injunctive Relief. Because damages at law may be an inadequate remedy for breach
of any of the covenants, promises and agreements contained in Section 10.1 hereof, both the
Licensor and Licensee shall be entitled to injunctive relief in any state or federal court located
within the District of Delaware, including specific performance or an order enjoining the breaching
Party from any threatened or actual breach of such covenants, promises or agreements. Each of the
Licensee and the Licensor hereby waives any objection it may have to the personal jurisdiction or
venue of any such court with respect to any such action. The rights set forth in this Section 10.2
shall be in addition to any other rights which the Licensor and Licensee may have at law or in
equity.

     10.3 This Article X shall survive the expiration or termination of this Agreement.

ARTICLE XI

TERM AND TERMINATION

     11.1 Term. This Agreement and the licenses granted herein shall commence on the
Effective Date and shall continue in effect in perpetuity subject to earlier termination under
Section 11.2 hereof.

     11.2 Termination by the Licensor or Licensee.

          (a) Upon the occurrence of any of the events set forth below (“Events of Default”), the
Licensor shall have the right to terminate this Agreement by giving written notice of termination,
such termination effective with the giving of such notice:

          (i) In the event of nonpayment of any material amount payable to the Licensor
after completion of an audit provided for under Section 3.5 hereof, which nonpayment
is continuing thirty (30) calendar days after the Licensor gives Licensee written
notice of such non-payment.

          (ii) In the event that Licensee fails to initiate clinical trials within two
(2) years of availability of final formulation in quantities adequate for clinical
testing and associated documentation for clinical trials, unless such failure is
outside of the control of Licensee. See Auxilium Development Plan attached as
Schedule C hereto.

 

 

          (iii) In the event that Licensee does not submit an application for marketing
approval in a major market within a five (5) year period after the Effective Date
unless such failure to submit is outside of the control of Licensee.

          (iv) In the event that Licensee does not launch Product in a major market
within six (6) months after marketing approval.

          (v) In the event that Licensee becomes subject to a Bankruptcy Event provided,
however, that so long as Licensor continues to receive royalty payments from
Licensee under this Agreement, such Bankruptcy Event shall not be a basis for
termination of this Agreement by Licensor.

          (b) Upon the occurrence of any of the events set forth below (“Events of Default”), Licensee
shall have the right to terminate this Agreement by giving written notice of termination, such
termination effective with the giving of such notice:

          (i) breach by Licensor of any covenant or any representation or warranty
contained in this Agreement that is continuing thirty (30) calendar days after
Licensee gives written notice of such breach;

          (ii) Licensor fails to comply with the terms of the license granted hereunder
and such noncompliance is continuing thirty (30) calendar days after Licensee gives
notice of such noncompliance;

          (iii) Licensor becomes subject to a Bankruptcy Event; or

          (iv) the dissolution or cessation of operations by Licensor.

          (c) No exercise by the Licensor or Licensee of any right of termination shall constitute a
waiver of any right of the Licensor or Licensee for recovery of any monies then due to it hereunder
or any other right or remedy the Licensor or Licensee may have at law or under this Agreement.

ARTICLE XII

FORCE MAJEURE 

     12.1 Either Party shall be relieved of its obligations under this Agreement to the extent that
fulfillment of such obligations shall be prevented by strikes, embargoes, riots, fires, floods,
war, hurricanes, windstorms, acts or defaults of common carriers, governmental laws, acts or
regulations, shortages of materials or any other occurrence, whether or not similar to the
foregoing, beyond the reasonable control of the Party affected thereby.

     12.2 If either Party is prevented from fulfilling its obligations under this Agreement by
reason of a circumstance covered by this Article 12, the Party unable to fulfil its obligations
shall, upon the occurrence of any such circumstances, promptly notify the other Party upon the
cessation of such circumstance and of the likely duration thereof, and shall promptly notify the
other party upon the cessation of such circumstance.

 

 

ARTICLE XIII

ADDITIONAL PROVISIONS 

     13.1 Arbitration.

          (a) All disputes arising between the Licensor and Licensee under this Agreement shall be
settled by arbitration conducted in accordance with the Rules of the American Arbitration
Association. The Parties shall cooperate with each other in causing the arbitration to be held in
as efficient and expeditious a manner as practicable.

          (b) Licensee and Licensor each irrevocably and unconditionally consents to the jurisdiction of
any such proceeding and waives any objection that it may have to personal jurisdiction or the
laying of venue of any such proceeding.

     13.2 Assignment. No rights hereunder may be assigned by the Licensee, directly or by
merger or other operation of law, except assignment to an Affiliate, without the express written
consent of the other Party, such consent not to be unreasonably withheld; provided, however,
without such consent, either Party may assign this Agreement in connection with the sale of all or
substantially all of its assets or business or its merger or consolidation with another company.
Any prohibited assignment of this Agreement or the rights hereunder shall be null and void. No
assignment shall relieve Licensee or Licensor of responsibility for the performance of any accrued
obligations which they have prior to such assignment. This Agreement shall inure to the benefit of
permitted assigns.

     13.3 No Waiver. A waiver by either Party of a breach or violation of any provision of
this Agreement will not constitute or be construed as a waiver of any subsequent breach or
violation of that provision or as a waiver of any breach or violation of any other provision of
this Agreement.

     13.4 Independent Contractor. Nothing herein shall be deemed to establish a
relationship of principal and agent between the Licensor and Licensee, nor any of their agents or
employees for any purpose whatsoever. This Agreement shall not be construed as constituting the
Licensor and Licensee as partners, or as creating any other form of legal association or
arrangement which could impose liability upon one Party for the act of the other Party.

     13.5 Notices. Any notice under this Agreement shall be sufficiently given if sent in
writing by overnight courier, prepaid, first class, certified or registered mail, return receipt
requested, addressed as follows:

          If to the Licensor, to:

BENTLEY PHARMACEUTICALS, Inc.

65 Lafayette Road, 3rd Floor

North Hampton, NH 03862-2403

Attention: President

 

 

          If to the Licensee, to:

AUXILIUM A(2), Inc.

160 W. Germantown Pike

Suite D-5, Norriton Office Center

Norristown, PA 19401

Attention: President

Copy to General Counsel

or to such other addresses as may be designated from time to time by notice given in accordance
with the terms of this Section.

     13.6 Severability. Any of the provisions of this Agreement which are determined to be
invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity
or unenforceability in such jurisdiction, without rendering invalid or unenforceable the remaining
provisions hereof or affecting the validity or unenforceability of any of the terms of this
Agreement in any other jurisdiction.

     13.7 Headings and Titles. Any headings and titles used in this Agreement are for
convenience or reference only and shall not affect its construction or interpretation.

     13.8 No Third Party Benefits. Nothing in this Agreement, express or implied, is
intended to confer on any person other than the Parties hereto or their permitted assigns, any
benefits, rights or remedies.

     13.9 Governing Law. This Agreement shall be construed, governed, interpreted and
applied in accordance with the laws of the State of Delaware, without giving effect to conflict of
law provisions.

     13.10 Counterparts. This Agreement shall become binding when any one or more
counterparts hereof, individually or taken together, shall bear the signatures of each of the
parties hereto. This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original as against the party whose signature appears thereon, but all of which taken
together shall constitute but one and the same instrument.

     13.11 Entire Agreement. This Agreement is the entire agreement between the parties
regarding the subject matter herein, and supercedes all prior existing understandings between the
Parties relating to the subject matter hereof. This Agreement may not be modified except in writing
signed by both Parties.

     13.12 Press Releases. The Parties will not disclose, via any press release or public
announcement, the existence of this Agreement or the Research Agreement until the Effective Date.

 

 

     IN WITNESS WHEREOF, the parties hereto have duly executed this License Agreement as of the
date first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BENTLEY PHARMACEUTICALS, INC.	 	 	 	AUXILIUM A2, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ JAMES R. MURPHY	 	 	 	By:	 	/s/ GERALDINE A. HENWOOD	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	James R. Murphy
	 	 	 	 	 	Name:
	 	Geraldine A. Henwood	 	 
	 

	 	Title:
	 	Chief Executive Officer
	 	 	 	 	 	Title:
	 	Chief Executive Officer	 	 

 

 

SCHEDULE A/APPENDIX A

BENTLEY PATENTS

	 	 	 	 	 	 	 
	COUNTRY	 	PATENT NO.	 	GRANT DATE	 	EXPIRATION DATE
	Belgium
	 	248,885	 	Aug. 5, 1992	 	Nov. 28, 2006
	Canada
	 	1,312,281	 	Jan. 5, 1993	 	Jan. 05, 2010
	Denmark
	 	167,343	 	Oct. 18, 1993	 	Nov. 28, 2006
	France
	 	248,885	 	Aug. 5, 1992	 	Nov. 28, 2006
	Germany
	 	P3,690,626.3	 	May 15, 1997	 	Nov. 28, 2006
	Great Britain
	 	2,192,134	 	Apr. 25, 1990	 	Nov. 28, 2006
	Italy
	 	248,885	 	Aug. 5, 1992	 	Nov. 28, 2006
	Japan
	 	2,583,777	 	Nov. 21, 1996	 	Nov. 28, 2006
	Korea
	 	84,759	 	Nov. 29, 1994	 	Nov. 28, 2006
	Luxembourg
	 	WO 873,473	 	Nov. 11, 1987	 	Nov. 28, 2006
	Switzerland
	 	666,813	 	Aug. 31, 1988	 	Nov. 28, 2006
	United States
	 	5,023,252	 	June 11, 1991	 	Jun. 11, 2008

Other patents are filed as provisional applications or are in the preparation or developmental
stages and will be amended, if applicable, to this Agreement.

 

 

SCHEDULE B

Claims Made Against Bentley Pharmaceuticals, Inc.

In November 1999, Creative Technologies, Inc. (“Creative”) commenced a lawsuit against the Bentley
Pharmaceuticals, Inc. and others in the Superior Court of New Jersey, Essex County, asserting that
the Bentley breached a brokerage or finder’s fee contract with Creative regarding its 1999
acquisition of permeation enhancement technology. Creative also asserts claims for breach of the
implied covenant of good faith and fair dealing and for tortious interference with contract.
Bentley has made a motion to dismiss the complaint and each count therein for failure to state a
cause of action and for lack of personal jurisdiction over Bentley.

 

 

AMENDMENT NO. 1 TO LICENSE AGREEMENT

     THIS
AMENDMENT NO. 1 TO LICENSE AGREEMENT (the “Amendment”) is made as of the ___ day of
October 2000 by and between BENTLEY PHARMACEUTICALS, INC., a Delaware corporation with offices at
65 Lafayette Road, Third Floor, North Hampton, New Hampshire 03862-2403 (hereinafter “Bentley” or
“Licensor”) and AUXILIUM A2 , INC., a Delaware corporation with offices at 160 W. Germantown Pike,
Suite D-5, Norriton Office Center, Norristown, Pennsylvania 19401 (hereafter, “Auxilium” or
“Licensee”). Bentley and Auxilium may be referred to as a “Party” or, collectively, as “Parties.”

     WHEREAS, the parties have entered into that certain License Agreement dated May 31, 2000
relating to the grant by Bentley to Auxilium of a license of certain technology (the “License
Agreement”);

     WHEREAS, as reflected in the third recital of the License Agreement, the parties intended not
to include patch applications as part of the license;

     WHEREAS, the parties wish to clarify the definitions in the License Agreement to indicate that
patch applications are not included in the scope of the license;

     NOW THEREFORE, the parties hereby amend the License Agreement as follows:

	 	1.	 	The definition of “Combination Products” in Section 1.1 of the License
Agreement is hereby modified in its entirety to read as follows:

          “Combination Products” means any and all pharmaceutical compositions, other
than patch applications, which contain (A) testosterone as an active ingredient in
combination with any other steroids, hormones, somatotropics, emollients, or
therapeutic soy products; and (B) the Compound; and which fall within the scope of
any composition, method, or article claim of the BENTLEY Patents and which is
intended to be applied topically to the user of the composition.

	 	2.	 	The definition of “Products” in Section 1.1 of the License Agreement is hereby
modified in its entity to read as follows:

          “Products” means any and all pharmaceutical compositions, other than patch
applications, which contain (A) testosterone as the single active ingredient; and
(B) the Compound; and which fall within the scope of any composition, method, or
article claim of the BENTLEY Patents and which is intended to be applied topically
to the user of the composition.

	 	3.	 	As modified by this Amendment, the License Agreement remains in full force and
effect.

     IN WITNESS WHEREOF, the parties have executed this Amendment by their duly authorized
representatives as of the date set forth above.

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BENTLEY PHARMACEUTICALS, INC.	 	 	 	AUXILIUM A2, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ JAMES R. MURPHY	 	 	 	By:	 	/s/ JANE A. HOLLINGSWORTH	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	James R. Murphy
	 	 	 	 	 	Name:
	 	Jane A. Hollingsworth	 	 
	 

	 	Title:
	 	Chairman and
CEO
	 	 	 	 	 	Title:
	 	EVP	 	 

 

 

AMENDMENT NO. 2 TO LICENSE AGREEMENT

     THIS AMENDMENT NO. 2 TO LICENSE AGREEMENT is made as of the 31st day of May, 2001 by and
between BENTLEY PHARMACEUTICALS, INC., a Delaware corporation, with offices at 65 Lafayette Road,
3rd Floor, North Hampton, New Hampshire 03862-2403 (hereinafter, “BENTLEY” or “Licensor”), and
AUXILIUM A2, INC., a Delaware corporation having a principal place of business at 160 W. Germantown
Pike, Suite D-5, East Norriton, Pennsylvania 19401 (hereinafter, “AUXILIUM” or “Licensee”). BENTLEY
and AUXILIUM may be referred to as a “Party” or, collectively, as “Parties.”

RECITALS

WHEREAS the parties have entered into that certain License Agreement, dated May 31, 2000, relating
to the grant by BENTLEY to AUXILIUM of a license of certain technology (the “License Agreement”);

WHEREAS the parties clarified the License Agreement by entering into Amendment No. 1 to the License
Agreement, dated October 31, 2000 (“Amendment No. 1”); and

WHEREAS the Parties wish to further amend the License Agreement to change certain sections of the
License Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and
INTENDING TO BE LEGALLY BOUND HEREBY, the Parties further amend the License Agreement as follows:

ARTICLE I

DEFINITIONS

     1.1 Except as amended below, the terms defined in the License Agreement, as amended in
Amendment No. 1, shall remain unchanged.

     1.2 “Territory” shall mean all countries and territories of the world, including Spain.

ARTICLE
II

GRANT OF LICENSE 

     2.1 The grant of license in Section 2.1 of the License Agreement shall include Spain.

ARTICLE
III

PAYMENTS IN CONSIDERATION FOR LICENSE 

     3.1 Except as amended below, all payments set forth in Article III of the License Agreement
shall remain unchanged.

 

 

     3.2 Section 3.2 (a) of the License Agreement shall be amended to read as follows:

          (a) there is an enforceable BENTLEY Patent at the time of sale:

	 	 	 	 	 
	The First $**** Million of Annual Net Sales
	 	 	*	***%
	The Next $**** Million of Annual Net Sales
	 	 	*	***%
	The Next $**** Million of Annual Net Sales
	 	 	*	***%
	Net Sales over $**** Million of Annual Net Sales
	 	 	*	***%

     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 2 to License
Agreement as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BENTLEY PHARMACEUTICALS, INC.	 	 	 	AUXILIUM A2, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ JORDAN HORVATH	 	 	 	By:	 	/s/ GERALDINE A. HENWOOD	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Jordan Horvath
	 	 	 	 	 	Name:
	 	Geraldine A. Henwood	 	 
	 

	 	Title:
	 	Vice
President & General
Counsel
	 	 	 	 	 	Title:
	 	Chief Executive Officer	 	 

 

			
	****	 	Portions of this Exhibit have been omitted pursuant to a request for confidential treatment
filed with the Commission.

 

 

AMENDMENT NO. 3 TO LICENSE AGREEMENT

     THIS AMENDMENT NO. 3 TO LICENSE AGREEMENT is made as of the 6th day of September, 2002 by and
between BENTLEY PHARMACEUTICALS, INC., a Delaware corporation, with offices at 65 Lafayette Road,
3rd Floor, North Hampton, New Hampshire 03862-2403 (hereinafter, “BENTLEY” or “Licensor”), and
AUXILIUM PHARMACEUTICALS, INC. (formerly Auxilium A(2), Inc.), a Delaware corporation having a
principal place of business at 160 W. Germantown Pike, Suite D-5, East Norriton, Pennsylvania 19401
(hereinafter, “AUXILIUM” or “Licensee”). BENTLEY and AUXILIUM may be referred to as a “Party” or,
collectively, as “Parties.”

RECITALS

     WHEREAS the parties have entered into that certain License Agreement, dated May 31, 2000,
relating to the grant by BENTLEY to AUXILIUM of a license of certain technology (the “License
Agreement”);

     WHEREAS the parties clarified certain aspects of the License Agreement by entering into
Amendments Nos. 1 and 2 to the License Agreement, dated October 31, 2000 and May 31, 2001,
respectively (“Previous Amendments”); and

     WHEREAS, BENTLEY would like to provide incentives to AUXILIUM to enter into
sub-licenses for the Products in territories outside the United States; and

     WHEREAS, BENTLEY would like to provide further incentives to AUXILIUM to extend the commercial
life of the Products licensed under the License Agreement; and

     WHEREAS the Parties wish to further amend the License Agreement to change
certain sections of the License Agreement;

     NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and
INTENDING TO BE LEGALLY BOUND HEREBY, the Parties further amend the License Agreement as follows:

ARTICLE I

DEFINITIONS

     1.1 Except as amended below, the terms defined in the License Agreement, as amended by the
Previous Amendments, shall remain unchanged. Unless otherwise defined in this Amendment, all
capitalized terms in this Amendment shall have the meanings ascribed to them in the License
Agreement, as amended by the Previous Amendments.

 

 

ARTICLE II

PAYMENTS IN CONSIDERATION FOR LICENSE

     2.1 Except as amended below, all payments set forth in Article III of the
License Agreement shall remain unchanged.

     2.2 (a) of the License Agreement shall be amended to read as follows:

                 (a) there is an enforceable BENTLEY Patent at the time of sale:

	 	 	 	 	 
	All Annual Net Sales in the United States and Canada
	 	 	*	***
	All Annual Net Sales outside the United States and Canada
	 	 	*	***

     “Product Royalties” shall mean all payments received by Auxilium which are based on sales of
Products, but shall not include milestone payments related to achievements which are not sales
based.

ARTICLE III

INTELLECTUAL PROPERTY

     3.1 Article VIII of the License Agreement is amended in its entirety to read as
follows:

            8.1 Intellectual Property Rights. The inventorship of inventions developed under
this Agreement and relating to Products (“Inventions”) shall be determined in
accordance with U.S. Law. Inventions made solely by employees of BENTLEY or owned by
BENTLEY (“BENTLEY Inventions”) shall be the exclusive property of BENTLEY.
Inventions made solely by employees of AUXILIUM (“AUXILIUM Inventions”) shall be the
exclusive property of AUXILIUM, except that AUXILIUM Inventions that relate to the
use of Products shall be owned by BENTLEY and shall be included in the license
granted under this License Agreement and included in the definition of BENTLEY
Patents. Inventions made by employees of BENTLEY and employees of AUXILIUM shall
also be owned by BENTLEY and shall be included in the license granted under this
License Agreement and included in the definition of BENTLEY Patents.

 

			
	****	 	Portions of this Exhibit have been omitted pursuant to a request for confidential treatment
filed with the Commission.

 

 

     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 3 to License
Agreement as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BENTLEY PHARMACEUTICALS, INC.	 	 	 	AUXILIUM PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ JAMES R. MURPHY	 	 	 	By:	 	/s/ GERALDINE A. HENWOOD	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	James R. Murphy	 	 	 	 	 	Geraldine A. Henwood	 	 
	 

	 	Chief Executive Officer
	 	 	 	 	 	Chief Executive Officer
	 	 

 

 

AMENDMENT NO. 4 TO LICENSE AGREEMENT

THIS AMENDMENT NO. 4 TO LICENSE AGREEMENT is made as of the 25th day of March, 2004 by and between
BENTLEY PHARMACEUTICALS, INC., a Delaware corporation, with offices at Bentley Park, 2 Holland Way,
Exeter, New Hampshire 03833 (hereinafter, “BENTLEY” or “Licensor”), and AUXILIUM PHARMACEUTICALS,
INC. (formerly Auxilium A2, Inc.), a Delaware corporation having a principal place of business at
160 W. Germantown Pike, Norristown, Pennsylvania 19401 (hereinafter, “AUXILIUM” or “Licensee”).
BENTLEY and AUXILIUM may be referred to as a “Party” or, collectively, as “Parties.”

RECITALS

WHEREAS the parties have entered into that certain License Agreement, dated May 31, 2000, relating
to the grant by BENTLEY to AUXILIUM of a license of certain technology (the “License Agreement”);

WHEREAS the parties clarified certain aspects of the License Agreement by entering into Amendment
Nos. 1, 2 and 3 to the License Agreement, dated October 31, 2000, May 31, 2001 and September 6,
2002, respectively (“Previous Amendments”); and

WHEREAS, BENTLEY would like to provide incentives to AUXILIUM to enter into sub-licenses for the
Products in territories outside the United States; and

WHEREAS the Parties wish to further amend the License Agreement to clarify certain sections of the
License Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and
INTENDING TO BE LEGALLY BOUND HEREBY, the Parties further amend the License Agreement as follows:

ARTICLE I

DEFINITIONS

          1.1 Except as amended below, the terms defined in the License Agreement, as amended by the
Previous Amendments, shall remain unchanged. Unless otherwise defined in this Amendment, all
capitalized terms in this Amendment shall have the meanings ascribed to them in the License
Agreement, as amended by the Previous Amendments.

          “Net Sales Price” means, with respect to the Product, the gross amount invoiced by Licensee
for such Product, less deductions for:

(i) returned goods; (ii) trade and quantity discounts; (iii) rebates, including
those in respect of any governmental subsidized program, rebate payments given to
wholesalers, buying groups, healthcare insurance carriers or other institutions;
(iv) sales or other taxes actually paid by Licensee or its sublicensee or
distributor, not including taxes assessed on the income resulting from such sales;
and (v) freight allowances, insurance and customs duties, to the extent any of the

 

 

foregoing are
identified on the invoice for the Product. If Product is sold for consideration
other than cash, the fair market value of such other consideration shall be included
in Net Sales. If a Product is sold in a package or kit containing another product
which is not a Product, the Net Sales price for purposes of calculating the royalty
under Section 3.2 hereof shall be calculated by multiplying the Net Sales Price of
the combination product by the fraction of A/A+B, where “A” is the Net Sales Price
of Product when sold separately “B” is the Net Sales Price of the other product or
products when sold separately. If either the Product or the other product is not
sold separately, the Net Sales Price of the Product shall be negotiated in good
faith by the Parties.

          “Commercial Sale” means the sale of Product (as indicated by shipment of Product) to an
unaffiliated third-party of the Licensee, or of its sublicensee or distribution partner, such as a
wholesaler, managed care organization, hospital or pharmacy and shall exclude (i) any transfer of
Product by Licensee to its sublicensee, distribution partner or Affiliate and (ii) any distribution
of Product for use in research, development, pre-clinical and clinical trials.

ARTICLE
II

PAYMENTS IN CONSIDERATION FOR LICENSE

          2.1 Except as amended below, all payments set forth in Article III of the License Agreement
shall remain unchanged.

          2.2 Section 3.2 of the License Agreement is hereby amended to include the following
additional paragraph (d):

“(d) Notwithstanding any contrary provisions in this Section 3.2, the royalty
payments due under Sections 3.2 (a), (b) or (c) above shall be paid on a
country-by-country basis only until the later of (i) the termination of Bentley
Patent rights in such country or (ii) ten years from the date of first Commercial
Sale of Product in such country.

ARTICLE
III

CERTAIN OBLIGATIONS OF LICENSEE

          3.1 A new Section 4.4 shall be added to the License Agreement as follows:

          3.2 Drug Master File. Licensee shall make certain data generated during the research
and development of Testim accessible to Licensor through the preparation and filing of one or more
Drug Master Files (“DMF”). Such DMF shall (a) be filed by or on behalf of the Licensee with the
United States Food and Drug Administration (“FDA”) on or before June 30, 2004 and (b) shall contain
the data listed on the index attached as Exhibit A to this Amendment 4 to the License Agreement
(the “Data Index”). Licensee will designate Licensor, or its licensee if requested in writing by
Licensor, as having a right of reference with the FDA to the DMF (the “Right of Reference”).
Licensor shall treat the Data Index as confidential information of Licensee and may disclose the
Data Index only to those persons or third parties who have agreed

 

 

in writing to maintain its confidentiality and to use the Data Index solely for purposes of
evaluation of a potential business opportunity with Licensor.

ARTICLE
IV

PATENTS, TRADEMARKS AND INFRINGEMENT

4.1 Section 9.2(a) of the License Agreement shall be deleted in its entirety and replaced
with the following:

               (a) In the event of Licensor wishing to abandon any BENTLEY Patents, Licensor will offer to
assign to Licensee or a sublicense of Licensee, at Licensee’s option, free of charge, any such
Patent prior to effectuating the abandonment. Licensee will bear the costs connected to any
assignment hereunder.

4.2 A new Section 9.6 shall be added to the License Agreement as follows:

               9.6 Bentley Trademark. In cooperation with Licensee, Licensor shall register in the
United States Patent and Trademark Office and such other countries of the world where the trademark
is registrable, a trademark to be used to describe the unique qualities of the technology contained
in the Bentley Patents (the “New Trademark”). Licensee shall have a perpetual, royalty free,
worldwide, sole and exclusive license with the right to sublicense, to use the New Trademark in
connection with the Product or any other product, patents, technology or similar rights licensed
from Licensor now or in the future which contain the ingredient pentadecalactone. Nothing in this
Section 9.6 shall prevent Licensee from using or registering any trademark of its own in connection
with the Product or any characteristic of or ingredient in the Product.

ARTICLE
V

TERM AND TERMINATION

5.1 Except as amended below, all provisions of Article XI Term and Termination of the License
Agreement shall remain unchanged.

5.2 Section 11.1 of the License Agreement shall be deleted in its entirety and replaced with
the following:

               11.1 Term. This Agreement and the licenses granted herein shall commence on the
Effective Date and shall continue until all royalty obligations of Licensee under Section 3.2 of
this Agreement are ended, subject to earlier termination under Section 11.2 hereof. Once all such
royalty obligations of Licensee have ended Licensee shall have a fully paid up license under this
Agreement.

5.3 Section 11.2 (a) of the License Agreement shall be deleted in its entirety and replaced
with the following:

 

 

               (a) Upon the occurrence of any of the events set forth below (“Events of Default”), the
Licensor shall have the right to terminate this Agreement by giving written notice of termination,
such termination effective with the giving of such notice:

               (i) In the event of nonpayment of any material amount payable to the Licensor
after completion of an audit provided for under Section 3.5 hereof, which nonpayment
is continuing thirty (30) calendar days after the Licensor gives Licensee written
notice of such non-payment.

               (ii) In the event that Licensee fails to initiate clinical trials within two
(2) years of availability of final formulation in quantities adequate for clinical
testing and associated documentation for clinical trials, unless such failure is
outside of the control of Licensee. See Auxilium Development Plan attached as
Schedule C hereto.

               (iii) In the event that Licensee does not submit an application for marketing
approval in a major market within a five (5) year period after the Effective Date
unless such failure to submit is outside of the control of Licensee.

               (iv) In the event that Licensee becomes subject to a Bankruptcy Event provided,
however, that so long as Licensor continues to receive royalty payments from
Licensee under this Agreement, such Bankruptcy Event shall not be a basis for
termination of this Agreement by Licensor.

ARTICLE
VI

ADDITIONAL PROVISION

6.1 Section 13.5 of the License Agreement shall be deleted in its entirety and replaced with
the following:

          13.5 Notices. Any notice under this Agreement shall be sufficiently given if sent in
writing by overnight courier, prepaid, first class, certified or registered mail, return receipt
requested, addressed as follows:

If to the Licensor, to:

BENTLEY PHARMACEUTICALS, INC.

Bentley Park

2 Holland Way

Exeter, New Hampshire 03833

Attention: President

 

 

If to the Licensee, to:

AUXILIUM PHARMACEUTICALS, INC.

160 W. Germantown Pike

Norristown, PA 19401

Attention: President

Copy to General Counsel

or to such other addresses as may be designated from time to time by notice given in accordance
with the terms of this Section.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 4 to License Agreement
as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BENTLEY PHARMACEUTICALS, INC.	 	 	 	AUXILIUM PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ James R. Murphy	 	 	 	By:	 	/s/ Geraldine A Henwood	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	James R. Murphy	 	 	 	 	 	Geraldine A. Henwood	 	 
	 

	 	Chief Executive Officer
	 	 	 	 	 	Chief Executive Officer
	 	 

 

 

EXHIBIT A

Format and Proposed Contents of the Drug Master File for CPD

	 	 	 
	Non-clinical
	 	 
	2.6.6

	 	Toxicology Written Summary
	2.6.6.1

	 	Summary
	2.6.6.2

	 	RepeatDose Toxicity
	2.6.6.3

	 	Genotoxicity
	2.6.6.4

	 	Reproductive and Developmental Toxicity
	 
	 	 
	Chemistry
	 	 
	3.2.S

	 	Novel Excipient CPD (also known as
oxacylcohexadecan-2-one; CPE-215)
	 
	 	 
	3.2.S.1

	 	General Information
	3.2.S.1.1

	 	          Nomenclature
	3.2.S.1.2

	 	          Structure
	 
	 	 
	3.2.S.3

	 	Characterization
	3.2.S.3.1

	 	          Elucidation of Structure and other Characteristics
	3.2.S.3.2

	 	          Impurities
	 
	 	 
	3.2.S.4

	 	Control of Novel Excipient
	3.2.S.4.1

	 	          Specification
	3.2.S.4.2

	 	          Analytical Procedures
	3.2.S.4.3

	 	          Validation of Analytical Procedures
	 
	 	 
	3.2.S.5

	 	Reference Standards or Materials
	 
	 	 
	3.2.S.6

	 	Container Closure System
	 
	 	 
	3.2.S.7

	 	Stability

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