Document:

exv10w21

EXHIBIT 10.21

     XXXXX INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED.
ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

COPROMOTION AGREEMENT

By and between

IMPAX LABORATORIES, INC.

and

WYETH

acting through its

WYETH PHARMACEUTICALS DIVISION

July 16, 2008

 

 

TABLE OF CONTENTS

Page

	 	 	 	 	 	 	 	 	 
	1.	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	APPOINTMENT AND OBLIGATIONS	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1.	 	Appointment	 	 	11	 
	 
	 	2.2.	 	Adjustment to Initiation Date	 	 	11	 
	 
	 	2.3.	 	Wyeth’s Option to Designate Substitute Products	 	 	11	 
	 
	 	2.4.	 	Permitted Subcontractors	 	 	13	 
	 
	 	2.5.	 	Undertaking not to Compete	 	 	13	 
	 
	 	2.6.	 	Obligations of Impax	 	 	13	 
	 
	 	2.7.	 	Obligations of Wyeth	 	 	22	 
	 
	 	2.8.	 	Coordination Meetings	 	 	24	 
	 
	 	2.9.	 	Ownership of Product	 	 	25	 
	 
	 	2.10.	 	No Distribution	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	3.	 	PAYMENTS	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1.	 	Detail Fee	 	 	27	 
	 
	 	3.2.	 	Adjustments to Detail Price	 	 	27	 
	 
	 	3.3.	 	No Payment for Extra Details	 	 	28	 
	 
	 	3.4.	 	Incentive Fee	 	 	28	 
	 
	 	3.5.	 	Taxes and Withholding	 	 	28	 
	 
	 	3.6.	 	Currency	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	4.	 	RECORD KEEPING; REPORTING AND AUDITS	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1.	 	Impax Records and Audits	 	 	28	 
	 
	 	4.2.	 	Impax Reports	 	 	29	 
	 
	 	4.3.	 	Market Research	 	 	30	 
	 
	 	4.4.	 	Wyeth Records and Audits	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	5.	 	RELATIONSHIP AND PUBLICITY	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1.	 	Relationship of Parties	 	 	31	 
	 
	 	5.2.	 	Public Announcements	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	6.	 	REGULATORY COMPLIANCE	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1.	 	Marketing Authorization	 	 	31	 
	 
	 	6.2.	 	Recalls	 	 	31	 
	 
	 	6.3.	 	Returns	 	 	31	 
	 
	 	6.4.	 	Adverse Drug Experiences	 	 	31	 
	 
	 	6.5.	 	Product Complaints	 	 	33	 
	 
	 	6.6.	 	Product Inquiries	 	 	34	 
	 
	 	6.7.	 	Communications with FDA	 	 	35	 
	 
	 	6.8.	 	Additional Responsibilities of the Parties	 	 	35	 

 

 

	 	 	 	 	 	 	 	 	 
	7.	 	REPRESENTATIONS, WARRANTIES AND COVENANTS	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1.	 	Mutual Representations and Warranties	 	 	35	 
	 
	 	7.2.	 	Impax Representations and Warranties	 	 	36	 
	 
	 	7.3.	 	Wyeth Representations and Warranties	 	 	36	 
	 
	 	7.4.	 	Wyeth Covenants	 	 	37	 
	 
	 	7.5.	 	Other Opportunities	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	8.	 	INDEMNIFICATION AND INSURANCE	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1.	 	Indemnification by Impax	 	 	37	 
	 
	 	8.2.	 	Indemnification by Wyeth	 	 	38	 
	 
	 	8.3.	 	Defense of Actions; Settlements	 	 	38	 
	 
	 	8.4.	 	Limitation of Liability	 	 	38	 
	 
	 	8.5.	 	Insurance Requirements	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	9.	 	TERM AND TERMINATION	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1.	 	Term	 	 	39	 
	 
	 	9.2.	 	Termination for Cause	 	 	39	 
	 
	 	9.3.	 	Termination by Wyeth	 	 	39	 
	 
	 	9.4.	 	Termination without Cause by Impax	 	 	39	 
	 
	 	9.5.	 	Effect of Termination	 	 	39	 
	 
	 	9.6.	 	Survival of Certain Provisions	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	10.	 	SAMPLES	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1.	 	Provision of Samples	 	 	40	 
	 
	 	10.2.	 	Shipping and Distribution of Samples	 	 	40	 
	 
	 	10.3.	 	Compliance with PDMA	 	 	41	 
	 
	 	10.4.	 	Sample Carry Program	 	 	42	 
	 
	 	10.5.	 	Sampling Activity System Audit	 	 	44	 
	 
	 	10.6.	 	Investigation, Corrective & Preventative Actions	 	 	44	 
	 
	 	10.7.	 	Monitoring & Auditing Programs	 	 	44	 
	 
	 	10.8.	 	Responsibility for Compliance	 	 	45	 
	 
	 	10.9.	 	In-Transit Losses	 	 	45	 
	 
	 	10.10.	 	Improper Handling	 	 	45	 
	 
	 	10.11.	 	Indemnity for Failure to Comply	 	 	45	 
	 
	 	10.12.	 	Additional Requirements	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	11.	 	CONFIDENTIALITY	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1.	 	Nondisclosure and Nonuse Obligations	 	 	46	 
	 
	 	11.2.	 	Permitted Disclosures	 	 	46	 
	 
	 	11.3.	 	Return of Confidential Information	 	 	47	 
	 
	 	11.4.	 	Disclosure of Agreement	 	 	47	 
	 
	 	11.5.	 	Equitable Relief	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	12.	 	MISCELLANEOUS	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 
	 	12.1.	 	Force Majeure	 	 	48	 
	 
	 	12.2.	 	Severability	 	 	48	 
	 
	 	12.3.	 	Assignability	 	 	48	 

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	 	12.4.	 	Notices	 	 	49	 
	 
	 	12.5.	 	Governing Law; Jurisdiction	 	 	49	 
	 
	 	12.6.	 	Dispute Resolution	 	 	49	 
	 
	 	12.7.	 	No Waiver	 	 	49	 
	 
	 	12.8.	 	Headings; Defined Terms	 	 	50	 
	 
	 	12.9.	 	Counterparts	 	 	50	 
	 
	 	12.10.	 	Entire Agreement; Amendments	 	 	50	 
	 
	 	12.11.	 	Further Actions	 	 	50	 

iii

 

     SCHEDULES

	 	 	 	 	 
	Schedule 1.79

	 	-
	 	Sample Receipt Forms
	 
	 	 	 	 
	Schedule 1.94

	 	-
	 	Wyeth Sales Training Program for the Initial Product
Exhibit A to Schedule 1.94
	 
	 	 	 	 
	Schedule 3.4

	 	-
	 	Sample Calculation of Incentive Fee
	 
	 	 	 	 
	Schedule 7.3

	 	-
	 	Initial Product Patents
	 
	 	 	 	 
	Schedule 6.4.6

	 	-
	 	Wyeth Form 1747(b)
	 
	 	 	 	 
	Schedule 6.6

	 	-
	 	Wyeth Form 8202

iv

 

COPROMOTION AGREEMENT

     This Copromotion Agreement (the “Agreement”) is made and entered into as of July 16, 2008 (the
“Effective Date”), by and between Wyeth, acting through its Wyeth Pharmaceuticals Division, having
a place of business at 500 Arcola Road, Collegeville, Pennsylvania 19426 (“Wyeth”) and Impax
Laboratories, Inc., having a place of business at 30831 Huntwood Avenue, Hayward, California 94544
(“Impax”). Wyeth and Impax may each be referred to herein individually as a “Party” and
collectively as the “Parties.”

     WHEREAS, Wyeth owns and/or controls marketing and proprietary rights to the Product (as
defined below); and

     WHEREAS, Impax has a sales and marketing organization that promotes certain pharmaceutical
products to physicians and other health care professionals;

     WHEREAS, the Parties desire that Impax participate in detailing the Product to Neurologists
(as defined below) in the United States;

     WHEREAS, the Parties have agreed to amicably settle patent litigation currently ongoing
between them, and on June 9, 2008, Wyeth and Impax entered into a Settlement and Release Agreement
(the “Settlement Agreement”) in connection therewith; and

     WHEREAS, the Settlement Agreement requires the Parties, upon the Settlement Date (as such term
is defined in the Settlement Agreement), to enter into this Agreement and a License Agreement (the
“License Agreement”) for the grant by Wyeth to Impax of a non-exclusive license under the Licensed
Patents (as such term is defined in the License Agreement) under which Impax would be permitted to
make, have made, use, sell, offer for sale, import, market, promote and/or distribute the 37.5 mg,
75 mg and 150 mg dosage strength extended release venlafaxine hydrochloride capsules that are the
subject of ANDA 78-057 filed by Impax on or about December 15, 2005 with the FDA for the treatment
of major depressive disorder, social anxiety disorder and panic disorder, subject to the terms and
conditions of the License Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties
hereto agree as follows:

	1.	 	DEFINITIONS.
	 
	 	 	The following capitalized terms shall have the following meanings for all purposes of this
Agreement:

	 	1.1.	 	“Affiliate” of any Party shall mean any Person, directly or indirectly
controlling, controlled by, or under common control with such Party. For purposes of
this Section 1.1, “control” shall mean (a) in the case of corporate entities, direct or
indirect ownership of more than fifty percent (50%) of the stock or shares having the
right to vote for the election of directors and (b) in the case of non-corporate
entities, direct or indirect ownership of at least fifty percent (50%) of the equity

 

 

	 	 	 	interest with the power to direct the management and policies of such non-corporate
entity, provided, however, for purposes of this Agreement, the term “Affiliate”
shall not include subsidiaries in which a Party or its Affiliates owns a majority of
the ordinary voting power to elect a majority of the Board of Directors, but is
restricted from electing such majority by contract or otherwise, until such time as
such restrictions are no longer in effect.
	 
	 	1.2.	 	“Agency” shall mean any applicable supra-national, federal, national, regional,
state or local regulatory agencies, departments, bureaus, commissions, councils or
other government entities regulating or otherwise exercising authority with respect to
the Marketing, sale, distribution or Promotion of the Product.
	 
	                                                       
	 	1.3.	 	“Annual Change in Market Share” shall mean, with respect to any Product and any
Contract Year, the Market Share for such Product during such Contract Year less the
Market Share for such Product with respect to the twelve (12) calendar month period
immediately preceding such Contract Year.
	                                                        
	 
	                                                       
	 	1.4.	 	“Annual Change in Target Neurologist Market Share” shall mean, with respect to
any Product and any Contract Year, the Target Neurologist Market Share for such Product
during such Contract Year less the Target Neurologist Market Share for such Product
with respect to the twelve (12) calendar month period immediately preceding such
Contract Year.
	                                                        
	 
	 	1.5.	 	“Applicable Laws” shall mean (a) the American Medical Association Guidelines on
Gifts to Physicians from Industry, (b) the PhRMA Code on Interactions with Healthcare
Professionals, (c) the FD&C Act and all other federal, state and local laws, and (d)
the rules, regulations, guidance, guidelines and requirements of all Agencies in effect
from time to time applicable to the manufacture, marketing, advertising, promotion,
distribution and sale of the Product, in each case as applicable to a Party’s
obligations hereunder.
	 
	                                                       
	 	1.6.	 	“Average Number of Tablets Per Prescription” shall mean, with respect to any
Product and any Contract Year, the average number of retail tablets per prescription
for such Product in the Territory during such Contract Year, as measured by IMS NPA
prescription data and based on September moving annual total for the previous calendar
year and once established shall remain constant for such Contract Year.
	                                                        
	 
	                                                       
	 	1.7.	 	“Average Selling Price per Tablet” shall mean, with respect to any Product and
any Contract Year, the total Net Sales for such Product during such Contract Year
divided by the total number of tablets of such Product sold in such Net Sales.
	                                                        
	 
	 	1.8.	 	“Breach” shall have the meaning set forth in Section 9.2.
	 
	 	1.9.	 	“Breaching Party” shall have the meaning set forth in Section 9.2.

2

 

	 	1.10.	 	“Business Day” shall mean any day other than (a) a day which is a Saturday or
a Sunday or (b) a day on which banks in New York City, New York are authorized or
obligated by law or executive order to not open or remain closed.
	 
	 	1.11.	 	“Calendar Quarter” shall mean the respective periods of three (3) consecutive
calendar months ending on March 31, June 30, September 30, or December 31, for so long
as this Agreement is in effect.
	 
	 	1.12.	 	“Claims” shall have the meaning set forth in Section 8.1.
	 
	 	1.13.	 	“Commercially Reasonable Efforts” shall mean commercially reasonable efforts
and resources.
	 
	 	1.14.	 	“Competing Product” shall mean any product that is labeled to treat one or
more indications, illnesses or conditions that the then-current Product is also labeled
to treat.
	 
	 	1.15.	 	“Confidential Information” shall mean any proprietary technical, business and
Marketing information of the other Party (including, without limitation, all sales and
Marketing plans) disclosed by one Party to the other under this Agreement after the
Effective Date, and whether or not such information is identified as confidential at
the time of disclosure. This Agreement (including the existence and terms and
conditions thereof) shall be considered Confidential Information of each Party.
	 
	 	1.16.	 	“Contract Year” shall mean any of Contract Year 1, Contract Year 2 or Contract
Year 3.
	 
	 	1.17.	 	“Contract Year 1” shall mean the period beginning on the Initiation Date and
ending on the day prior to the first anniversary of the Initiation Date.
	 
	 	1.18.	 	“Contract Year 2” shall mean the period beginning on the first day following
Contract Year 1 and ending on the day prior to the second anniversary of the Initiation
Date.
	 
	 	1.19.	 	“Contract Year 3” shall mean the period beginning on the first day following
Contract Year 2 and ending on the day prior to the third anniversary of the Initiation
Date.
	 
	 	1.20.	 	“CPI” shall mean the Consumer Price Index for All Urban Consumers (CPI-U):
U.S. City Average, published by the U.S. Department of Labor.
	 
	 	1.21.	 	“Cumulative Detail Maximum” shall have the meaning set forth m Section
2.6.12(a).
	 
	                                                       
	 	1.22.	 	“Cumulative Details” shall mean, with respect to a given period of time
period, the sum of Primary Details and Secondary Details actually performed during such
period.
	                                                        

3

 

	 	1.23.	 	“Detail” shall mean a face-to-face meeting, in an individual or group practice
setting, between a Neurologist and one or more Impax PSRs during which a complete
Product presentation that is consistent with Wyeth’s marketing and promotional
strategies as communicated to Impax, is communicated to such Neurologist, and which
meeting may also involve Sampling. When used as a verb, “Detail” shall mean to engage
in a Detail. A complete Product presentation made to more than one neurologist shall
constitute a separate Detail for each participating Neurologist (e.g., a complete
presentation made to three Neurologists simultaneously shall constitute three Details.)
	 
	 	1.24.	 	“Detailed Product” shall mean the Product and all prior products designated by
Wyeth as the Product pursuant to this Agreement, including, without limitation, the
Initial Product.
	 
	 	1.25.	 	“Disclosing Party” shall mean the Party who is disclosing its Confidential
Information to the Receiving Party.
	 
	 	1.26.	 	“Early Initiation Notice” shall have the meaning set forth in Section 2.2.
	 
	 	1.27.	 	“Extra Detail” shall have the meaning set forth in Section 2.6.12(b).
	 
	 	1.28.	 	“FDA” shall mean the United States Food and Drug Administration, or any
successor entity thereto.
	 
	 	1.29.	 	“FD&C Act” shall mean the United States Federal Food, Drug, and Cosmetic Act,
as amended, and the rules and regulations promulgated thereunder.
	 
	                                                       
	 	1.30.	 	“Impax Baseline PSR Cost” shall mean the Impax PSR Cost for the twelve (12)
month period prior to the Initiation Date.
	                                                        
	 
	                                                       
	 	1.31.	 	“Impax Cost Adjustment” shall mean, with respect to any Contract Year, the
percentage equal to the lesser of (a) the Impax Cost Increase for the previous Contract
Year or (b) the percent increase in the CPI during such previous Contract Year.
	                                                        
	 
	                                                       
	 	1.32.	 	“Impax Cost Increase” shall mean, with respect to any Contract Year, the
percentage increase (if any) in the Impax PSR Cost for such Contract Year over the
Impax PSR Cost for the prior Contract Year or, in the case of the Impax Cost Increase
for Contract Year 1, over the Impax PSR Baseline Cost.
	                                                        
	 
	 	1.33.	 	“Impax Director of Sales” shall mean Impax’s Vice President of Sales and
Marketing, or a position of similar seniority occupied by a full-time employee of
Impax, which position has primary oversight responsibility for the implementation of
Impax’s obligations under this Agreement, for leading and supervising the Impax Sales
Management Team and, in conjunction with the Impax Sales Management Team, for leading
and supervising the Impax PSRs.

4

 

	 	1.34.	 	“Impax Personnel” shall mean the Impax PSRs, the Impax Sales Management Team
and any other employee, representative or agent of Impax or any Permitted Subcontractor
that is involved in performing Impax’s obligations under this Agreement.
	 
	 	1.35.	 	“Impax PSR” shall mean a professional sales representative who is an employee
of either (a) Impax or (b) a Permitted Subcontractor (in accordance with Section 2.4
below), which professional sales representative is responsible for Detailing the
Product to Neurologists in accordance with this Agreement.
	 
	                                                       
	 	1.36.	 	“Impax PSR Cost” shall mean, with respect to any Contract Year, for the Impax
Baseline Cost, with respect to the twelve (12) month period ending on the Initiation
Date, Impax’s average out of pocket cost per Impax PSR for such Contract Year,
determined (in the case of any Impax PSR who is an employee of a Permitted
Subcontractor) by dividing the amount paid by Impax to XXXXX or any other Permitted
Subcontractor for providing such Impax PSRs during such Contract Year plus the Impax
Supervisory Costs for such Contract Year by the number of such PSRs provided during
such Contract Year. In the event that, during any Contract Year, Impax provides Impax
PSRs who are employees of Impax rather than employees of a Permitted Subcontractor, the
Parties shall agree in good faith on a method for including the compensation expense to
Impax of providing such Impax PSRs in Impax’s out of pocket costs on a basis that
allows for a fair and accurate determination of both Impax PSR Cost and any resulting
Impax Cost Increase.
	                                                        
	 
	 	1.37.	 	“Impax Regional Manager” shall mean a full time employee of Impax who is
responsible for supervising Impax PSRs in a specified collection of sales territories.
	 
	 	1.38.	 	“Impax Sales Force” shall mean the Impax PSRs and the Impax Sales Management
Team.
	 
	 	1.39.	 	“Impax Sales Management Team” shall mean (a) the Impax Regional Managers; (b)
Impax’s Director of Sales Operations or equivalent thereof; and (c) the Impax Director
of Sales.
	 
	                                                       
	 	1.40.	 	“Impax Supervisory Costs” shall mean, with respect to any Contract Year, that
portion of the compensation expense, plus any reimbursed or directly allocated
out-of-pocket expenses, incurred during such Contract Year by Impax to provide the
Impax Sales Management Team that is allocable to management and supervision of Impax
PSRs in performance of their obligations under this Agreement (and not to any other
responsibilities), determined in accordance with GAAP on a consistent basis.
	                                                        
	 
	 	1.41.	 	“IMS” shall mean IMS Health Incorporated.
	 
	 	1.42.	 	“Incentive Fee” shall have the meaning set forth in Section 3.4.

5

 

	                                                       
	 	1.43.	 	“Incremental Market Share” shall mean, with respect to any Product and any
Contract Year, the greater of (a) the Annual Change in Target Neurologist Market Share
for such Product for such Contract Year less the Annual Change in Market Share for such
Product for such Contract Year or (b) zero.
	                                                        
	                                                       
	 
	 	1.44.	 	“Incremental Net Sales” shall mean, with respect to any Product and any
Contract Year, XXXXX for such Product in the Territory for such Contract Year
XXXXX:

	 	(a)	 	XXXXX
	 
	 	(b)	 	XXXXX.

	 	 	 	In the case of any Product that is Detailed under this Agreement for only a portion
of a Contract Year (a “Partial Contract Year”), Incremental Net Sales shall be
determined by reference to such Partial Contract Year by determining the following
on the basis of such Partial Contract Year rather than the full Contract Year:
XXXXX.
	                                                        
	 
	 	1.45.	 	“Indemnified Party” shall have the meaning set forth in Section 8.3.
	 
	 	1.46.	 	“Indemnifying Party” shall have the meaning set forth in Section 8.3.
	 
	                                                       
	 	1.47.	 	“Initial Product” shall mean XXXXX currently Marketed by Wyeth under the brand
name XXXXX in the Territory.
	                                                        
	 
	 	1.48.	 	“Initial Training” shall have the meaning set forth in Section 2.6.8(a).
	 
	                                                       
	 	1.49.	 	“Initiation Date” shall mean July 1, 2009, or such earlier date as may be
established pursuant to Section 2.2.
	                                                        
	 
	 	1.50.	 	“Market” shall mean, when used as a verb, to market, sell, distribute,
Promote, or advertise a product.
	 
	                                                       
	 	1.51.	 	“Market Share” shall mean, with respect to any Product and any period, the
total prescriptions written for the Product in the Territory during such period as a
percentage of the total prescriptions written for all products in the Product’s
Therapeutic Category in the Territory during such period, each as measured by monthly
Xponent prescription data published by IMS; it being understood that the Therapeutic
Category for the Initial Product shall be the XXXXX Category, as defined by IMS.
	                                                        
	 
	 	1.52.	 	“Minimum Detail Requirement” shall have the meaning set forth in Section
2.6.12(a).
	 
	 	1.53.	 	“Monthly Detail Report” shall mean, collectively, the raw data, written report
and other information that Impax is required to deliver to Wyeth on a monthly basis
pursuant to Section 4.2.

6

 

	                                                       
	 	1.54.	 	“Net Sales” shall mean the aggregate gross amounts invoiced for the sale of
Product by or on behalf of Wyeth or any of its Affiliates (each a “Selling Person”) in
arm’s length transactions with Third Parties for use in the Territory, less the
following deductions, in each case to the extent specifically related to Product and
taken by the Selling Person or otherwise paid for, or accrued by, the Selling Person:
(i) cash discounts; (ii) adjustments on account of price adjustments, or billing
adjustments; (iii) returns of rejected or damaged goods; (iv) chargebacks; (v) the cost
of duties, insurance, freight handling or other transportation costs to the extent
included in any invoiced amount used to determine gross sales; and (vi) rebates,
promotional allowances, and similar payments to all direct customers, including
wholesalers and other distributors, buying groups, health care insurance carriers,
pharmacy benefit management companies, health maintenance organizations, Medicaid or
Medicare or similar type programs. Net Sales shall be determined using the accrual
method of accounting determined in a manner consistent with Wyeth’s practice for its
other pharmaceutical products. Sales of Product by and between Wyeth and its
Affiliates are not sales to Third Parties and shall be excluded from Net Sales
calculations for all purposes, it being understood that the sale of Product by Wyeth or
any of its Affiliates to a Third Party shall be utilized in calculating Net Sales under
this Agreement.
	                                                        
	 
	 	1.55.	 	“Neurologist” shall mean a medical doctor who is (a) licensed to practice
medicine in the Territory, (b) certified in the practice of neurology by the American
Board of Psychiatry and Neurology and (c) identified as a neurologist or as practicing
any subspecialty of neurology, other than pediatric neurology or any pediatric
subspecialty, based on the American Medical Association specialty code contained within
the monthly prescriber log delivered by IMS (or such other Third Party vendor as Wyeth
may utilize). “Neurologist” shall also include any nurse practitioner or physician’s
assistant having prescribing authority and acting under the supervision of a
Neurologist, provided, however, that for the purpose of determining the number of
Details, (i) any nurse practitioner or physician’s assistant together with his or her
supervising Neurologist shall be treated as a single Neurologist and (ii) any nurse
practitioner or physician’s assistant shall be treated as being under the supervision
of only one Neurologist.
	 
	 	1.56.	 	“New Hire Training” shall have the meaning set forth in Section 2.6.8(b).
	 
	 	1.57.	 	“Non-Breaching Party” shall have the meaning set forth in Section 9.2.
	 
	                                                       
	 	1.58.	 	“Non-Target Neurologist” shall mean a Neurologist practicing in the Territory
who is not a Target Neurologist.
	                                                        
	 
	                                                       
	 	1.59.	 	“Permissible Initiation Dates” shall mean each of the following: July 1, 2008,
October 1, 2008, January 1, 2009, April 1, 2009 and July 1, 2009.
	                                                        
	 
	 	1.60.	 	“Permitted Subcontractor” shall have the meaning set forth in Section 2.4.

7

 

	 	1.61.	 	“Person” shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
	 
	 	1.62.	 	“Prescribing Information” shall mean the prescribing information published by
Wyeth in connection with the Marketing of the Product.
	 
	                                                       
	 	1.63.	 	“Primary Detail” shall mean a Detail in which Product information is
communicated by an Impax PSR to a Target Neurologist or a Non-Target Neurologist, in
each case subject to the provisions of Section 2.6.12(b), with the specified content as
defined from time to time by Wyeth within its reasonably exercised discretion, where
(a) such information is the first such product information communicated by such Impax
PSR, (b) the predominant portion of time and emphasis during such communication is
focused on the Product and (c) such Detail involves the communication of information
with respect to no more than three (3) products.
	                                                        
	 
	 	1.64.	 	“Primary Detail Price” shall have the meaning set forth in Section 3.1.
	 
	 	1.65.	 	“Product” shall mean the Initial Product or such other product as Wyeth may
designate from time to time pursuant to Section 2.3 to have Detailed by Impax for Wyeth
under this Agreement.
	 
	 	1.66.	 	“Product Substitution Notice” shall have the meaning set forth in Section
2.3.1.
	 
	 	1.67.	 	“Promotion” shall mean those activities, including, without limitation,
detailing and distributing samples of a product, normally undertaken by a
pharmaceutical company’s sales force to implement marketing plans and strategies aimed
at encouraging the appropriate use of a particular prescription pharmaceutical product.
When used as a verb, “Promote” shall mean to engage in such activities.
	 
	                                                       
	 	1.68.	 	“Quarterly Detail Minimum” shall mean XXXXX (XXXXX) Cumulative Details (such
amount to be prorated for any partial period of three consecutive calendar months,
including that portion of such period during which there is a downward adjustment as
provided in this Section 1.68), provided that the Quarterly Detail Minimum shall be
adjusted downward by fifty percent (50%) during the first three calendar months
following the completion of any Initial Training of the Impax Sales Force with respect
to the Initial Product or a subsequent Product pursuant to Sections 2.6.8 and/or 2.3.3
and shall be reduced pro rata in the case of any suspension of Product Sales due to
regulatory action or a product suspension or recall or voluntary withdrawal by Wyeth
based on the percentage which represents the number of Business Days in the Calendar
Quarter during which Detailing of the Product is suspended or prohibited (other than as
a result of any action or omission by Impax or any Impax PSR) relative to the total
Business Days in such Calendar Quarter.
	                                                        
	 
	 	1.69.	 	“Quarterly Details” shall mean the number of Cumulative Details performed by
Impax during a given Calendar Quarter.

8

 

	 	1.70.	 	“Quarterly Meeting” shall mean those meetings between Impax and Wyeth as
described in Section 2.8.
	 
	 	1.71.	 	“Receiving Party” shall mean the Party who is receiving Confidential
Information from the Disclosing Party.
	 
	 	1.72.	 	“Refresher Training” shall have the meaning set forth in Section 2.7.6(c).
	 
	 	1.73.	 	“Retired Neurologist” shall mean a Neurologist that is deceased or is no
longer practicing in the Territory.
	 
	 	1.74.	 	“Sales Call” shall mean an interaction between an Impax PSR and a Neurologist
in which the Product is the subject of either a Primary Detail or a Secondary Detail.
	 
	 	1.75.	 	“Sales Call Plan” shall mean the plan established from time to time pursuant
to Section 2.6.11, which sets forth the Detailing reach (i.e., number of Neurologists)
and frequency (i.e., number of Details per Neurologist and the relevant timing of such
Details) objectives for the Impax PSRs.
	 
	 	1.76.	 	“Sample” shall mean a unit of the Product packaged as a sample, as used by
Wyeth, that is not intended to be sold and is intended to promote the sale of the
Product. When used as a verb, “Sample” shall mean to provide Samples to Neurologists.
	 
	 	1.77.	 	“Sample Audit” shall have the meaning set forth in Section 10.5.
	 
	 	1.78.	 	“Sample Carry Program” shall have the meaning set forth in Section 10.4.
	 
	 	1.79.	 	“Sample Receipt Forms” shall mean those multi-part forms, whether paper or
electronic, supplied by Impax or Impax’s Permitted Subcontractor for the purpose of
recording Detail and Sample activity performed by Impax PSRs during Sales Calls. These
forms shall also be used as Sample receipts on which to obtain a Neurologist’s
signature in acknowledgment of receipt of Samples. Each Sample Receipt Form shall
include, at a minimum, the information set forth in Schedule 1.79.
	 
	                                                       
	 	1.80.	 	“Secondary Detail” shall mean a Detail in which information about the Product
is communicated by an Impax PSR to a Target Neurologist or a Non-Target Neurologist, in
each case subject to the provisions of Section 2.6.12(b), with the specified content as
defined from time to time by Wyeth within its reasonably exercised discretion, where
(a) such information is the second product information communicated by such Impax PSR,
(b) the amount of time and emphasis of such communication is less than that for the
communication of information of the product that is the subject of the primary Detail
during such communication, but is more than that for the communication of information
with respect to any other product that is promoted during such Sales Call and (c) such
	                                                        

9

 

	 	 	 	Detail involves the communication of information with respect to no more than three
(3) products.
	 
	 	1.81.	 	“Secondary Detail Price” shall have the meaning set forth in Section 3.1.
	 
	 	1.82.	 	“Substitution Date” shall have the meaning set forth in Section 2.3.1.
	 
	                                                       
	 	1.83.	 	“Target List” shall have the meaning set forth in Section 2.7.3.
	                                                        
	 
	                                                       
	 	1.84.	 	“Target Neurologist Market Share” shall mean, with respect to any Product and
any period, the total prescriptions written for the Product by Target Neurologists in
the Territory during such period as a percentage of the total prescriptions written for
all products in the Product’s Therapeutic Category by Target Neurologists in the
Territory during such period, each as measured by monthly Xponent prescription data
published by IMS; it being understood that the Therapeutic Category for the Initial
Product shall be the XXXXX Category, as defined by IMS.
	                                                        
	 
	                                                       
	 	1.85.	 	“Target Neurologists” shall mean the group of Neurologists identified by Wyeth
on the then-current Target List.
	                                                        
	 
	                                                       
	 	1.86.	 	“Tier 1 Target Neurologists” shall mean the five hundred (500) Target
Neurologists identified by Wyeth from time to time as Tier I Target Neurologists.
	                                                        
	 
	                                                       
	 	1.87.	 	“Tier 2 Target Neurologists” shall mean any Target Neurologist other than a
Tier 1 Target Neurologist.
	                                                        
	 
	 	1.88.	 	“Term” shall have the meaning set forth in Section 9.1.
	 
	 	1.89.	 	“Territory” shall mean the fifty (50) states of the United States and the
District of Columbia.
	 
	 	1.90.	 	“Therapeutic Category” shall mean, with respect to any Product, the
therapeutic category or categories for which IMS reports prescriptions written for such
Product and other products included in the same category or categories.
	 
	 	1.91.	 	“Third Party” shall mean any Person other than Wyeth, Impax or any of their
respective Affiliates.
	 
	 	1.92.	 	“Trademark” shall have the meaning set forth in Section 2.9.2.
	 
	 	1.93.	 	“Wyeth Improvements” shall have the meaning set forth in Section 2.9.6.
	 
	 	1.94.	 	“Wyeth Policy on Sales and Marketing Practices” shall mean Wyeth’s promotion
guidelines for the Product, as the same may be amended from time to time by Wyeth, in
its sole discretion.

10

 

	 	1.95.	 	“Wyeth Sales Training Program” shall mean the sales training program described
in Schedule 1.95.

	2.	 	APPOINTMENT AND OBLIGATIONS

	 	2.1	 	Appointment. Wyeth hereby appoints Impax, on a non-exclusive basis, and Impax
agrees, to Detail the Product in the Territory to Neurologists, as of the Initiation
Date and thereafter during the Term in accordance with the terms and conditions of this
Agreement. Impax, without charge or expense to Wyeth (other than as expressly set
forth in Article 3 of this Agreement), shall provide all facilities, personnel
(including management and sales representatives) and other resources as are reasonably
necessary to successfully perform Impax’s obligations under this Agreement. The
Parties specifically agree that, without Wyeth’s written consent, which Wyeth may
withhold in its sole discretion, Impax shall not intentionally Detail the Product to
any physician other than a Neurologist, sell or distribute the Product, place journal
or other advertisements for the Product, issue press releases regarding the Product,
conduct opinion leader development activity in connection with the Product, establish
or participate in advisory boards concerning the Product, participate in or conduct
peer selling activity concerning the Product, enter into or discuss with customers or
potential customers (including, without limitation, managed care organizations)
contracts for the sale of or discounts or rebates on the sale of the Product, conduct
other general marketing activities with respect to the Product, or initiate, conduct or
participate in any studies for the Product other than Detailing of the Product to the
extent expressly permitted by this Agreement.

	                                                       
	 	2.2	 	Adjustment to Initiation Date. Impax shall begin Detailing the Product in
accordance with this Agreement no later than July 1, 2009. In the event that Impax
procures the necessary resources and is prepared to begin Detailing the Product prior
to July 1, 2009, Impax shall promptly notify Wyeth in writing (such notice referred to
herein as the “Early Initiation Notice”). If Wyeth receives the Early Initiation
Notice at least sixty (60) days prior to July 1, 2008, then the Initiation Date shall
automatically be adjusted to July 1, 2008. If Wyeth receives the Early Initiation
Notice at any other time prior to July 1, 2009, then the Initiation Date shall
automatically be adjusted to the first of the Permissible Initiation Dates to occur no
less than ninety (90) days following Wyeth’s receipt of such Early Initiation Notice,
provided that in no event shall the Initiation Date occur after July 1, 2009.
Notwithstanding any provision of this Section 2.2 to the contrary, in no event shall
Impax permit any member of the Impax Sales Force to begin Detailing the Product before
such individual has successfully completed all training required pursuant to Section
2.6.8.
	                                                        

	 	2.3	 	Wyeth’s Option to Designate Substitute Products.

	 	2.3.1	 	General. During the Term, Wyeth may, from time to time and in
its sole discretion, elect to designate an alternate product as the Product
that is to be Detailed by Impax under this Agreement, provided that (a)

11

 

	                                                       
	 	 	 	any such alternate product must (i) be indicated for the treatment of one
or more neurological conditions or (ii) target one or more illnesses or
conditions commonly treated by Neurologists, and (b) Wyeth may not
designate more than one (1) Product to be Detailed under this Agreement at
any given time during the Term. In the event Wyeth elects to substitute
an alternate product as the Product pursuant to this Section 2.3.1, Wyeth
shall notify Impax in writing of such substitution (each such notice
referred to herein as a “Product Substitution Notice”) no later than sixty
(60) days prior to the date specified in such Product Substitution Notice
as the date that such alternate product is to first be Detailed pursuant
to this Agreement which date shall be the later of the date of resolution
of any dispute under Section 2.3.2 and the date of the completion of
Initial Training for the substituted Product (the “Substitution Date”).
For the avoidance of doubt, Wyeth may elect to substitute an alternate
product as the Product under this Agreement on one or more occasions
during the Term, in its sole discretion provided that, without Impax’s
consent, such substitution shall not occur more than once in any twelve
(12) month period. Notwithstanding the foregoing limitation, in the event
that a Product undergoes a recall or voluntary withdrawal from the market
due to one or more adverse events, regulatory action, potential or actual
infringement of any patent or other intellectual property right of any
Third Party, or other reasons outside of Wyeth’s control, Wyeth may, and
shall, promptly designate a substitute Product. In such event and subject
to the limitations set forth in Section 2.6.12(a), with respect to the
time period for which Impax is not able to Detail any Product, Wyeth shall
pay to Impax a pro-rated amount based on the monthly average number of
Details performed over the previous three (3) months.
	                                                        

	 	2.3.2	 	Designation of Competitive Products. Notwithstanding any
provision of Section 2.3.1 to the contrary, if at the time Wyeth delivers a
Product Substitution Notice (a) Impax owns or otherwise controls a product (i)
that Impax is detailing to Neurologists or Promoting, selling or marketing;
(ii) for which Impax or any of its Affiliates has filed or, during the Term,
expects to file, an accepted marketing approval application with the FDA; and
which Impax reasonably expects to detail, Promote, sell or market during the
Term or (b) Impax has previously entered into an agreement with a Third Party
that obligates Impax to detail, Promote, sell or market one or more products on
behalf of such Third Party, and Impax believes that the Product Substitution
Notice can reasonably be expected to conflict with Impax’s activities under
clauses (a) and/or (b), above then Impax shall so notify Wyeth with five (5)
business days of delivery of such Product Substitution Notice. Within thirty
(30) business days after receipt of Impax’s notification, Wyeth will advise
Impax whether it agrees that such a conflict is reasonably likely. If Wyeth
agrees, Wyeth may elect, in its sole discretion, to either (i) designate
another substitute product as the

12

 

	 	 	 	Product pursuant to Section 2.3.1 or (ii) require Impax to continue
detailing the then-current Product. If Wyeth disagrees as to whether a
conflict is reasonably likely, the matter will be referred to the Wyeth
Pharmaceuticals President, U.S., Pharmaceuticals and Women’s Health Care
and the President of Impax Pharmaceuticals for further review, which
review shall be completed within ten (10) Business Days after such
referral. If after such referral, either Party, in its reasonable
judgment, believes a conflict is reasonably likely, Wyeth may elect, in
its sole discretion, to either (i) designate another substitute product as
the Product pursuant to Section 2.3.1 or (ii) require Impax to continue
detailing the then-current Product.

	 	2.3.3	 	Alternate Product Training. Following Wyeth’s delivery of a
Product Substitution Notice, each Party shall use Commercially Reasonable
Efforts to complete their respective Impax PSR training obligations under
Sections 2.6.8 and 2.7.6(a) with respect to the alternate product designated in
such Product Substitution Notice prior to the relevant Substitution Date.
Impax shall ensure that no Impax PSR engages in the Detailing of such alternate
product before such individual has successfully completed all training required
pursuant to Section 2.6.8.

	 	2.4	 	Permitted Subcontractors. Impax may enter into written agreements with one or
more nationally recognized contract sales organizations, whether such organization is a
Third Party or an Affiliate of Impax, having experience in the promotion and detailing
of pharmaceutical products (each a “Permitted Subcontractor”) whereby each such
Permitted Subcontractor provides professional sales representatives to serve as Impax
PSRs for purposes of Detailing the Product hereunder; it being understood and agreed
that XXXXX shall be a Permitted Subcontractor. The identity of any such Permitted
Subcontractor shall be subject to Wyeth’s prior approval, not to be unreasonably
withheld. Impax shall provide Wyeth with a copy of any such written agreement and all
amendments thereto with such Permitted Subcontractor no later than ten (10) days after
execution of such agreement or amendment thereto so that Wyeth can confirm that such
agreement or amendment complies with the terms of this Agreement. Impax may redact the
financial terms of any such agreement to the extent that such redaction does not relate
to any obligation of Impax to Wyeth hereunder. Without limiting Wyeth’s ability to
withhold approval for other valid reason, any such agreement or any amendment or
modification thereto shall provide for such Permitted Subcontractor to fulfill the
obligations imposed under this Agreement on Impax and/or its Permitted Subcontractors
and shall name Wyeth as a Third Party beneficiary with direct enforcement rights
against the Permitted Subcontractor.

	 	2.5	 	Undertaking not to Compete. During the Term, Impax shall not Promote to
physicians, sell or market, and Impax shall cause its Affiliates and each member of the
Impax Sales Force not to Promote to physicians, in the Territory, any Competing
Product, provided, however, that Impax shall not be prohibited under

13

 

	 	 	 	this Section 2.5 from (i) exercising its rights to sell, market and distribute
Licensed Products (as such term is defined in the License Agreement) to the extent
permitted under the License Agreement even if a License Product would otherwise be
considered to be a Competing Product under this Agreement, provided that any such
Licensed Product is not being Promoted by any member of the Impax Sales Force that
is Detailing the Product under this Agreement, or (ii) selling, marketing or
distributing any generic product that is AB rated to another product (other than the
XR Product, as such term is defined in the License Agreement) that, if sold,
marketed or distributed by Impax, would otherwise be a Competing Product under this
Agreement, provided such generic product is not AB rated to the Product under this
Agreement, in each case provided that any such product is not being Promoted by any
member of the Impax Sales Force that is Detailing the Product under this Agreement.
Any breach of this provision shall constitute a basis for termination by Wyeth
pursuant to Section 9.2.

	 	2.6	 	Obligations of Impax.

	 	2.6.1	 	Impax Sales Force. Impax shall, at its sole expense,
diligently Detail the Product in the Territory in accordance with the terms and
conditions of this Agreement. In connection therewith, Impax shall maintain,
in the Territory, a sales force trained in accordance with this Agreement of
full-time Impax PSRs to Detail the Product using promotional materials supplied
to Impax by Wyeth. Impax shall not permit any Impax PSR to Detail the Product
until such Impax PSR has been trained in accordance with Section 2.6.8 below
and has been certified in accordance with all certification standards
established by Wyeth. All Details provided by Impax PSRs shall be either
Primary Details or Secondary Details, subject to the limitations set forth in
Section 2.6.12. Impax shall supervise the sales force provided by it hereunder
and be responsible for its remuneration and incentives. Impax shall be an
independent contractor hereunder as further described in Section 5.1 and the
Impax PSRs shall remain exclusively under the authority of Impax and/or Impax’s
relevant Permitted Subcontractor.

	 	2.6.2	 	Removal of Impax Personnel. Impax shall promptly remove any
Impax Personnel from having any responsibilities relating to the Detailing of
the Product under this Agreement if required by any Applicable Laws. Further,
Wyeth may request Impax to promptly remove any Impax Personnel from such
responsibilities if any material events relating to the Detail of the Product
have occurred to justify such removal (e.g., failure of such Impax Personnel to
comply, in connection with the performance of such responsibilities, with any
Applicable Laws or the Wyeth Policy on Sales and Marketing Practices). Impax
shall honor any such request to the extent that Impax is permitted to do so
pursuant to applicable laws.

14

 

	 	2.6.3	 	Sales Management. Impax shall be responsible for supervising
the Impax PSRs, whether they are employees of Impax or a Permitted
Subcontractor. In connection therewith, Impax shall provide a sufficient
number of full time Impax employees to serve as Impax Regional Managers, such
that the average ratio of Impax Regional Managers to Impax PSRs shall be no
greater than XXXXX. Impax may, but shall not be obligated to appoint one or
more full time Impax employees to serve as regional directors having the
responsibility for supervising a group of Impax Regional Managers in a
particular geographic region of the Territory. Additionally, Impax shall
designate a full time Impax employee as the Impax Director of Sales who will be
responsible for (i) leading and supervising the Impax Sales Management Team,
(ii) together with the Impax Sales Management Team, leading and supervising the
Impax PSRs, (iii) the implementation of Impax’s responsibilities hereunder and
(iv) serving as Impax’s primary point of contact for communications between
Wyeth and Impax regarding the Detailing of the Product by Impax hereunder.

	 	2.6.4	 	Impax Personnel. Impax Personnel shall, at all times during
the Term, be employees of Impax or a Permitted Subcontractor for which Impax or
such Permitted Subcontractor shall have all responsibilities as an employer,
including hiring, firing, compensation and promotions. Impax Personnel shall
not be, and shall not be considered to be, “employees” or “joint employees” of
Wyeth for any purpose as a result of their activities under this Agreement.
Wyeth shall not be responsible for the control of any members of the Impax
Personnel, Impax and, as applicable, its Permitted Subcontractors, shall be
solely responsible for determining all conditions of employment of all Impax
Personnel. Impax shall and, as applicable, shall cause its Permitted
Subcontractors to, (i) maintain all necessary personnel and payroll records for
all Impax Personnel; (ii) compute wages for all Impax Personnel and withhold
applicable federal, state, and local taxes and Federal FICA payments; (iii)
remit employee withholdings to the proper governmental authorities and make
employer contributions for federal FICA and federal and state unemployment
insurance payments; (iv) pay net wages and fringe benefits, if any, directly to
the Impax Personnel; and (v) provide for liability and Workers’ Compensation
insurance coverage for all Impax Personnel.

	 	2.6.5	 	No Wyeth Benefits. Impax acknowledges and agrees that none of
the Impax Personnel, nor anyone acting on its or their behalf, shall receive
any employee benefits of any kind from Wyeth in connection with their
activities under this Agreement. In addition, Impax (on behalf of itself and
the Impax Personnel) declines any offer now or hereafter made to participate in
any of Wyeth’s benefit plans or programs. The acknowledgment and declination
set forth in this Section 2.6.5 is intended to apply even if Wyeth is
determined to be a co-employer or

15

 

	 	 	 	common law or statutory law employer of any of the Impax Personnel,
including the members of the Impax Sales Force, notwithstanding the
Parties’ express agreement to the contrary. Wyeth shall not maintain or
procure any workers’ compensation or unemployment compensation insurance
for or on behalf of the Impax Personnel.

	 	2.6.6	 	Equal Opportunity Employer. Impax shall not and shall cause
its Permitted Subcontractors to not discriminate because of race, color,
religion, sex, age, national origin, disability, or status as a Vietnam
veteran, as defined and prohibited by applicable laws, in the recruitment,
selection, training, utilization, promotion, termination, or other
employment-related activities concerning the Impax Personnel. In addition,
Impax represents and warrants that both it and its Permitted Subcontractors
each are and shall continue to be during the Term an equal opportunity employer
and shall comply with all applicable federal, state and local laws and
regulations including, to the extent required by such laws and regulations,
Title VII of the Civil Rights Act of 1964; the Equal Pay Act of 1963; the Age
Discrimination in Employment Act of 1967; the Immigration Reform and Control
Act of 1986; the Americans with Disabilities Act; Executive Order 11246; the
Rehabilitation act of 1972; the Vietnam Era Veterans Readjustment Assistance
Act of 1975; and any applicable additions or amendments to any of the
foregoing.

	 	2.6.7	 	Compliance with Applicable Laws. In connection with the
Detailing of the Product in the Territory, Impax shall comply and shall cause
each of its employees, representatives, Permitted Subcontractors and agents,
including, without limitation, all Impax Personnel, to comply with all
Applicable Laws and shall do nothing which Impax knows would jeopardize the
goodwill or reputation of Wyeth or the reputation of the Product. Any material
breach of this provision shall constitute a basis for termination by Wyeth of
this Agreement, at Wyeth’s option, pursuant to Section 9.2.

	 	2.6.8	 	Sales Training.

	 	(a)	 	Promptly following Impax’s delivery of an Early
Initiation Notice pursuant to Section 2.2, but in no event later than
the Initiation Date, Impax shall cause all members of the Impax Sales
Force to attend and complete the Wyeth Sales Training Program (whether
in person or remotely, as determined in Wyeth’s sole discretion), as
described in Section 2.7.6, to educate the Impax Sales Force on the
Product and the Detailing thereof. At any time that Wyeth elects to
designate an alternate product as the Product pursuant to Section 2.3,
Impax shall, promptly following its receipt of the applicable Product
Substitution Notice but in no event later than the Substitution Date
specified therein, cause all members of the

16

 

	 	 	 	Impax Sales Force to attend and complete the Wyeth Sales Training
Program with respect to such alternate product (such training for the
initial Product or an alternate Product, the “Initial Training”).
Impax shall ensure, record and track that each member of the Impax
Sales Force has successfully completed the Wyeth Sales Training
Program and is certified to Detail the Product by the Wyeth Sales
Training Department before such individual is permitted to engage in
any activity relating to the Detailing of the then-current Product.
Any Initial Training described in this Section 2.6.8(a) shall be held
at a location of Wyeth’s choosing that is reasonably acceptable to
Impax (unless Wyeth elects to hold such Initial Training remotely).
Impax shall bear the cost of all travel, lodging, meals, compensation
and ancillary expenses of all Impax Personnel who attend any Initial
Training. Wyeth shall bear the cost of delivering any Initial
Training pursuant to Section 2.7.6(a).

	 	(b)	 	After the Initial Training has occurred. Impax
shall ensure, record and track that each new member of the Impax Sales
Force has successfully completed the Wyeth Sales Training Program (“New
Hire Training”) and is certified to Detail the Product by the Wyeth
Sales Training Department before such individual is permitted to engage
in any activity relating to the Detailing of the then-current Product.
All New Hire Training shall be conducted by experienced Impax sales
training personnel who have themselves been trained by Wyeth’s sales
training personnel with respect to the Product and the Detailing
thereof. Impax shall offer New Hire Training three (3) times per
Contract Year, or more frequently as reasonably necessary based on
turnover of the Impax Sales Force. Impax shall be responsible for all
expenses incurred in connection with New Hire Training.

	 	(c)	 	On an ongoing basis during the Term, Impax
shall ensure, record and track that each member of the Impax Sales
Force successfully completes at least four (4) hours of Refresher
Training every six (6) months. All Refresher Training shall be
conducted by experienced Impax sales training personnel who have
themselves been trained by Wyeth’s sales training personnel with
respect to the Product and the Detailing thereof. Impax shall be
responsible for all expenses incurred in connection with Refresher
Training.

	 	(d)	 	In the event Impax conducts any sales training
meetings related to the Product, Impax shall provide Wyeth with
reasonable notice and shall allow Wyeth to have one or more Wyeth
representatives attend such training at Wyeth’s expense.

17

 

	 	2.6.9	 	Adverse Event or Experience Reporting Procedures. Impax shall
maintain standard operating procedures consistent with and comparable to
Wyeth’s standard operating procedures for handling AEs and shall conduct
periodic training of the Impax Sales Force in all aspects of AE reporting and
maintain training records of such trainings. At Impax’s request, Wyeth will
provide training to the Impax Sales Force on standard operating procedures for
handling AEs.

	 	2.6.10	 	Meetings. At Wyeth’s request, Impax shall cause (i) the members of the Impax
Sales Management Team, other than the Impax Regional Managers, to attend, at
Impax’s expense, that portion of Wyeth’s senior sales management meetings
during which the Product is discussed and (ii) the Impax Regional Managers to
attend that portion of the semi-annual Wyeth district managers plan of action
(“POA”) meetings during which the Product is discussed. After attending each
such meeting, each Impax Regional Manager shall meet with the Impax PSRs under
his or her supervision to discuss the Product POA content. Impax shall provide
reasonable notice to Wyeth of similar meetings conducted by Impax during which
the Product is discussed and shall permit Wyeth representatives to attend any
such meeting at Wyeth’s expense.

	 	2.6.11	 	Sales Call Plan. No later than thirty (30) days prior to the Initiation
Date, Impax shall provide Wyeth with a copy of the proposed initial Sales Call
Plan. Such Sales Call Plan shall govern the Detailing efforts of the Impax
PSRs and the Impax Regional Managers. Thereafter, Impax shall propose
modifications to the Sales Call Plan from time to time, but not later than
sixty (60) days prior to the effective date of such modified Sales Call Plan,
to reflect Wyeth’s changes to the Target List and as otherwise necessary to
enable Impax to satisfy its obligations pursuant to Section 2.6.12.

	 	2.6.12	 	Performance of Details.

	 	(a)	 	General. During the Term, Impax shall complete
no less than XXXXX Cumulative Details (the “Minimum Detail
Requirement”) and no more than XXXXX Cumulative Details (the
“Cumulative Detail Maximum”) of the Product to Neurologists in
accordance with the terms of this Agreement and the then current Sales
Call Plan. Without limiting the foregoing, in no event shall Impax
deliver less than XXXXX or more than XXXXX Cumulative Details pursuant
to this Agreement during any Calendar Quarter without Wyeth’s prior
written consent. For the avoidance of doubt, Details completed with
respect to more than one Product in the event Wyeth elects to
substitute an alternate Product pursuant to Section 2.3 shall be
aggregated for the purposes of determining the foregoing amounts of
Cumulative Details.

18

 

	 	(b)	 	Detail Allocation. Impax shall ensure that at
least XXXXX percent (XXXXX%) of the Quarterly Details delivered by
Impax in each Calendar Quarter are delivered to Target Neurologists.
Impax shall Detail each accessible Target Neurologist at least XXXXX
every Calendar Quarter, but in no event XXXXX and (ii) with respect to
Tier 2 Target Neurologists, no more than XXXXX. In the event that
Impax elects to Detail any Non-Target Neurologist, Impax shall not
Detail such Non-Target Neurologist more than XXXXX per Calendar
Quarter. Any Details performed in excess of the limitations set forth
in this Section 2.6.12 or otherwise in contravention of any provision
of this Agreement (each, an “Extra Detail”) shall not be considered a
Detail performed by Impax under this Agreement for any purpose,
including, without limitation, for purposes of determining whether
Impax has delivered the minimum number of Details that it is required
to deliver during a given period. Further, notwithstanding any
provision of this Agreement to the contrary, Wyeth shall have no
obligation to pay Impax any amount with respect to the performance of
any Extra Detail.

	 	(c)	 	Detail Standards. Impax shall ensure that each
Detail performed hereunder is conducted in strict accordance with the
then-current Wyeth Policy on Sales and Marketing Practices and the
terms of this Agreement. Impax shall cause each Impax PSR when
conducting each Detail to leave a business card with each Neurologist
Detailed by such Impax PSR, which business card shall identify the
Impax PSR as an employee or representative of Impax. In no event shall
any member of the Impax Sales Force or any other Impax Personnel at any
time identify, either expressly or through implication, themselves as a
an employee or agent of Wyeth.

	 	2.6.13	 	Data Collection and Reporting Systems. Impax shall, at no expense to Wyeth,
establish and, during the Term and the three (3) year period following the
expiration or earlier termination of this Agreement, maintain data collection
and reporting systems, for all Details performed and all Samples distributed by
any member of the Impax Sales Force, which systems and the corresponding data
collection and reporting procedures shall be in compliance with Wyeth’s
accountability requirements, as the same may be communicated to Impax by Wyeth
in writing from time to time. In connection therewith, Impax, at its own
expense, shall provide each Impax Regional Manager and each Impax PSR with a
laptop computer and the necessary software to enable recording, reporting and
regular transmission of data over a secured line consistent with Wyeth
standards. Additionally, Impax, at its own expense, shall provide each member
of the Impax Sales Force with email and voicemail access for use by Impax, each
of its Permitted

19

 

	 	 	 	Subcontractors and Wyeth in communicating with the Impax Sales Force, as
the same may be communicated to Impax by Wyeth in writing from time to
time. Wyeth and Impax shall agree on a data format to provide for transfer
of Detail and Sample activity from Impax to Wyeth no later than sixty (60)
days prior to the Initiation Date. Wyeth shall provide Impax a file
format for the purpose of sending Impax PSR information to Wyeth no later
than thirty (30) days prior to the initiation of the Initial Training.

	 	2.6.14	 	Promotional Claims. Impax shall limit the claims of efficacy and safety for
the Product made by Impax Personnel to those which are consistent with (i)
Wyeth’s approved labeling for the Product in the Territory and (ii) the Wyeth
Sales Training Program. Impax shall not add, delete or modify claims of
efficacy or safety in its Detailing of the Product nor make any changes in
Promotion materials and literature provided by Wyeth. Impax’s Detailing of the
Product shall be in strict adherence to all regulatory, professional and legal
requirements including, without limitation, FDA’s regulations and guidelines
concerning the advertising and promotion of prescription drug products, the
American Medical Association’s Guidelines on Gifts to Physicians, the PhRMA
Code on Interactions with Health Care Professionals, the ACCME Standards for
Commercial Support of Continuing Medical Education, the Wyeth Policy on Sales
and Marketing Practices, and any amendments or updates applicable to any of the
foregoing. Upon notice to Impax of any breach of this Section 2.6.14, Impax
shall ensure that there is no continuance of any such offending activity.
Without limiting any other provision of this Agreement or any remedy Wyeth may
have hereunder, any breach of the previous sentence or any intentional breach
by Impax of the other provisions of this Section 2.6.14 by Impax shall
constitute a material breach for the purposes of Section 9.2.

	 	2.6.15	 	Promotional Materials. The determination of the content and the quantity of
any promotional materials related to the Product shall, subject to Section
2.7.7, be the sole responsibility of Wyeth. Wyeth shall send such promotional
material, at its own expense, to Impax at a single location within the
Territory and Impax shall be responsible, at its own expense, for distributing
such promotional materials to the Impax Sales Force. In connection with the
Detailing of the Product, Impax shall use only promotional materials provided
by Wyeth which shall be used only for the purposes of this Agreement and all
unused quantities of such promotional materials shall be returned to Wyeth upon
expiration or earlier termination of this Agreement. Impax shall not, and
shall cause its Permitted Subcontractors, each member of the Impax Sales Force
to not, alter, in any way, any promotional materials provided by Wyeth
hereunder. All copyright and other intellectual property rights in said
promotional materials shall remain vested solely in Wyeth. Impax shall not
create, distribute or use sales, promotion or

20

 

	 	 	 	other similar material relating to the Product without the prior written
consent of Wyeth. If any promotional materials provided to Impax by Wyeth
need to be withdrawn from use for any reason, Wyeth shall notify Impax of
such withdrawal and Impax shall cooperate with Wyeth in effectuating any
such withdrawal. Wyeth shall reimburse Impax for any reasonable and
documented incremental out-of-pocket costs incurred by Impax in connection
with conducting such withdrawal, except to the extent the withdrawal is
attributable to (a) the breach of this Agreement by Impax or (b) the
negligence or intentional misconduct of Impax or any of the Impax
Personnel, in which event Impax shall (i) bear its own costs in connection
with taking such actions and (ii) reimburse Wyeth for any reasonable and
documented out-of-pocket costs incurred by Wyeth in connection with
conducting such withdrawal to the extent that such withdrawal is
attributable to such breach, negligence or intentional misconduct.

	 	2.6.16	 	Sample Receipt Forms. Each Impax PSR shall complete a Sample Receipt Form
with respect to each Sample disbursed by such Impax PSR. In each instance
where a Sample is disbursed, the Impax PSR providing such Sample shall ensure
that the Neurologist receiving such Sample signs the applicable Sample Receipt
Form in acknowledgment of receipt of such Sample. Each Impax PSR shall mail to
Impax or Impax’s Permitted Subcontractor (as determined by Impax), in
pre-addressed, postage-paid envelopes provided by Impax, or send via electronic
means, on a regular basis no less frequently than quarterly the original
completed Sample Receipt Forms for Sample disbursements performed by such Impax
PSR during the period covered by the report. A copy of all such Sample Receipt
Forms shall be kept by Impax or its Permitted Subcontractor. Impax shall
ensure that each Impax PSR fills out the Sample Receipt Forms accurately,
completely and timely. For the avoidance of doubt, the foregoing obligations
are in addition to the procedures set forth in Article 10.

	 	2.6.17	 	Communications with Sales Representatives. Impax shall have full
responsibility for the dissemination of information regarding the Product to
the Impax Sales Force based on information provided by Wyeth. All written
communications from Impax to any member of the Impax Sales Force containing any
substantive drug information about the Product other than the Product name,
description and price shall be subject to prior written approval by Wyeth.
Communications such as tactical memos, competitive alerts and other routine
business reports which contain no substantive drug information about the
Product shall not require approval by Wyeth.

	 	2.6.18	 	Sales Force Compensation Plan. Impax shall establish and, throughout the
Term, maintain a sales force compensation and incentive plan. The Impax sales
force compensation and incentive plan may provide for

21

 

	 	 	 	compensation based, in part, on activities outside of Impax’s
responsibilities under this Agreement (e.g., the promotion of other
pharmaceutical products by the Impax PSRs to the extent permitted by this
Agreement), provided, however, that such sales force compensation and
incentive plan shall include, for each member of the Impax Sales Force, as
part of the total target bonus compensation available to be earned, a
target bonus compensation based on performance of the Product which shall
represent a portion of the total available target bonus compensation
equivalent to the effort such member of the Impax Sales Force is to apply
to activities relating to the Product being Detailed under this Agreement
expressed as a percentage of the overall work effort of such member in
Promoting all products on which such target bonus may be based, and
provided, further, that the percentage of such target bonus compensation
based on activities under this Agreement shall in no event be XXXXX
percent (XXXXX%).

	 	2.7	 	Obligations of Wyeth.

	 	2.7.1	 	Marketing Planning, Strategy and Content. Wyeth shall have
exclusive responsibility and authority for all Marketing planning and strategy
for the Product and the content of promotional message(s) for the Product.
Wyeth reserves the right, at its sole discretion and at any time, to change the
Marketing and sales strategy and tactics for the Product, the promotional
message(s) for the Product and the marketing budget for the Product.

	 	2.7.2	 	Product Promotion Guidelines. Wyeth shall provide Impax with
a complete copy of the Wyeth Policy on Sales and Marketing Practices no later
than thirty (30) days prior to the Initiation Date. Wyeth may subsequently
revise the Wyeth Policy on Sales and Marketing Practices upon written notice to
Impax, which notice shall specify all relevant revisions to the then-current
Wyeth Policy on Sales and Marketing Practices.

	 	2.7.3	 	Target Neurologists. Wyeth shall have exclusive responsibility
and authority for the establishment and maintenance of a list of no fewer than
three thousand five hundred (3,500) Target Neurologists (the “Target List”).
Impax shall provide Wyeth with Impax’s list of potential Target Neurologists at
least ninety (90) days prior to the Initiation Date. Wyeth shall provide the
initial Target List to Impax at least thirty (30) days prior to the Initiation
Date, with the Parties’ expectation being that substantially all of the Target
Neurologists on the initial Target List shall have been selected from Impax’s
list. For clarity, any individual who is included on the Target List shall be
deemed a Target Neurologist, regardless of whether such individual’s
credentials meet the technical definition of the term “Neurologist” in Section
1.55. Wyeth shall update the Target List with substitute

22

 

	 	 	 	Neurologists on a semi-annual basis such that the Target List contains at
least three thousand five hundred (3,500) Neurologists. The Target List
may be modified by Wyeth on a more frequent basis from time to time within
its reasonably exercised discretion upon sixty (60) days prior written
notice to Impax.

	 	2.7.4	 	Pricing. Wyeth shall have exclusive responsibility and
authority with respect to the pricing of the Product. Wyeth shall inform Impax
of list price increases or decreases for the Product in the Territory at the
time such information is generally announced to the trade by Wyeth.

	 	2.7.5	 	Distribution and Sale of Product. Except to the extent that
Impax distributes Samples of the Product to Neurologists in accordance with
this Agreement, Wyeth shall have the sole right and responsibility to arrange
for all distribution of the Product in the Territory, to effect and account for
all sales of the Product in the Territory, and to establish and modify the
terms and conditions with respect to the sale of the Product in the Territory,
including any terms and conditions relating to or affecting the price at which
the Product will be sold, any discount attributable to payments on receivables,
distribution of the Product, credit to be granted or refused and the like.

	 	2.7.6	 	Training,

	 	(a)	 	Wyeth shall cause its sales trainers to conduct
an Initial Training of all of the members of the Impax Sales Force with
respect to the Product and the Detailing thereof in accordance with the
Wyeth Sales Training Program, it being understood and agreed that Impax
is responsible for general sales training. Any Initial Training shall
be provided at such times and locations as Wyeth may designate and may
be conducted remotely at Wyeth’s election; provided that such times and
locations provide Impax with a reasonable opportunity to comply with
Impax’s obligations under Section 2.6.8(a). In connection with any
Initial Training, Wyeth shall provide training materials relating to
the initial training in sufficient quantities to adequately train the
Impax Sales Force. Wyeth shall be responsible for all expenses that it
incurs in connection with delivering training pursuant to this Section
2.7.6(a). Pursuant to Section 2.6.8(a), Impax shall bear the cost of
all travel, lodging, meals, compensation and incidental expenses of all
Impax Personnel who attend any such training.

	 	(b)	 	Within a reasonable period of time after the
Initiation Date and at reasonable intervals throughout the Term, Wyeth
shall cause one or more of Wyeth’s sales trainers to train Impax’s
designated professional sales trainers, who, in turn, will conduct New
Hire

23

 

	 	 	 	Training and Refresher Training of the Impax Sales Force with respect
to the Product and the Detailing thereof.

	 	(c)	 	From time to time during the Term, Wyeth shall
provide electronic training materials containing new information
relating to the Product or the Detailing thereof as Wyeth deems
necessary or appropriate to enable Impax to conduct ongoing training of
the Impax Sales Force in regard thereto (“Refresher Training”).

	 	2.7.7	 	Promotional Materials. Wyeth shall use its Commercially
Reasonable Efforts to provide Impax with promotional materials for Detailing
the Product to Neurologists (in such quantities as Wyeth shall reasonably
determine, taking into account the number of Details such Impax PSRs are
expected to deliver and which are the same as or comparable to the promotional
materials Wyeth supplies to its own Sales Force with respect to the Product).
Impax shall be responsible, at its own expense, for distributing such
promotional materials to the Impax PSRs in accordance with Section 2.6.15.

	 	2.7.8	 	Samples. Wyeth shall use Commercially Reasonable Efforts to
provide Impax with Samples for distribution to Neurologists as set forth in
Article 10 of this Agreement

	 	2.7.9	 	Promotion by Wyeth. Wyeth shall use Commercially Reasonable
Efforts (i) to minimize any targeted detailing of the Product to Target
Neurologists by Wyeth’s own sales force as part of their general sales efforts
in Detailing the Product and (ii) not to include Target Neurologists on any
target list created for use by Wyeth or any of its Affiliates or Third Parties
for use in Promoting the Product. Except as expressly provided herein, Wyeth
reserves the right to Promote, detail or distribute Samples of the Product to
any physician or other health care provider, at any time during the Term and/or
to retain one or more of its Affiliates and/or one or more Third Parties to
Promote, detail or distribute Samples of the Product to any such physician or
other health care provider.

	 	2.8	 	Coordination Meetings. Two (2) or more representatives of Wyeth and Impax
shall meet periodically as needed, but in no event less than once during each Calendar
Quarter during the Term, to discuss strategies relating to Promoting the Product,
including, without limitation, Detailing, field funding and program opportunities.
Each Party shall appoint a primary contact person (which, in Impax’s case, shall be the
Impax Director of Sales and, in Wyeth’s case, shall be Wyeth’s Global Business Manager
for the Product) to coordinate on its behalf meetings and communications between the
Parties. Each Party’s primary contact person shall involve such Party’s functional
experts as required to discuss any issues that arise under this Agreement. Wyeth shall
consider, in good faith, input from Impax in reaching its decisions; however, Wyeth
shall have final authority

24

 

	 	 	 	and responsibility for the Product’s Promotional strategy, identification of Target
Neurologists and for the content and selection of the sales and Promotional material
which it shall provide Impax under the terms of this Agreement.

	 	2.9	 	Ownership of Product.

	 	2.9.1	 	Ownership of Product. Wyeth retains and shall retain all
proprietary and property interests in and to the Product. Without limiting the
foregoing, Wyeth shall retain title to all Samples until delivered to
Neurologists in accordance with this Agreement. Impax shall not have nor
represent that it has any control over or proprietary or property interests in
the Product or any Samples thereof. Nothing contained in this Agreement shall
be deemed to grant to Impax, its Affiliates or any Third Party any license,
right, title or interest in or to any patent, trademark, copyright, domain
name, trade secret or other similar property of Wyeth except as may be
authorized, in writing, by Wyeth, as applicable, for Impax to Detail the
Product pursuant to this Agreement.

	 	2.9.2	 	Trademark. The initial Product shall be Detailed by Impax
under the trademark XXXXX owned by Wyeth. Any replacement product designated
by Wyeth pursuant to Section 2.3 shall be Detailed by Impax under the trademark
designated for such product in the relevant Product Substitution Notice. This
Agreement does not grant to Impax any property right or interest including
goodwill in the trademark XXXXX or any other trademarks, designs, logos,
slogans, taglines, trade names, domain names or trade dress which Wyeth or any
of its Affiliates own, use or control (collectively, the “Wyeth Trademarks”),
it being understood and agreed that Impax does not require any such right or
interest to fulfill its obligations under this Agreement. Impax recognizes the
validity of the right, title and interest of the Wyeth Trademarks, in any
country in connection with the Product, whether registered or not. Impax shall
not use, and shall cause its Affiliates and Permitted Subcontractors not to
use, or register in any way any Wyeth Trademark or any trademarks, designs,
logos, slogans, taglines, trade names, domain names or trade dress in the
course of performing Impax’s obligations under this Agreement which are
confusingly similar to any Wyeth Trademark.

	 	2.9.3	 	Trademark Infringement. Impax shall promptly advise Wyeth of
all cases of Third Party infringement of trademarks associated with the Product
that come to Impax’s attention, and shall, at the specific written request of
Wyeth, render all assistance reasonably requested in connection with any action
taken by Wyeth in relation to any alleged trademark infringement. The control
of such action, including whether to initiate action and/or to settle, shall
solely be under the control of Wyeth and Wyeth shall retain for its own account
any damages or other

25

 

	 	 	 	monetary relief in connection with such action. Impax shall not undertake
any action with respect to infringement of such trademarks or trade names
without Wyeth’s prior written consent.

	 	2.9.4	 	Patents and Patent Infringement. This Agreement does not
grant to Impax, its Affiliates or any other Third Party any license, right,
title or interest in or to any Patent Right owned or controlled by Wyeth or its
Affiliates. Impax shall promptly advise Wyeth of all cases of Third Party
infringement of patents associated with the Product that come to Impax’s
attention, in the course of performing Impax’s obligations under this Agreement
and shall, at the written request of Wyeth and, as between Impax and Wyeth, at
Wyeth’s cost, provide any information or documents generated or obtained in
connection with this Agreement as may be requested by Wyeth for use by Wyeth in
connection with actions taken or to be taken by Wyeth in relation to such
alleged patent infringement. The control of such action, including whether to
initiate action and/or to settle, shall solely be under the control of Wyeth.

	 	2.9.5	 	No Implied Licenses. Except as expressly set forth in this
Agreement, this Agreement provides Impax with no right, title or interest,
either express or implied, by estoppel or otherwise, in or to any intellectual
property rights owned or controlled by Wyeth or any of Wyeth’s Affiliates,
including, without limitation, any Patent Right, trademark, copyright, domain
name, trade secret or know-how.

	 	2.9.6	 	Ownership of Improvements. Wyeth or its designee shall own
all right, title and interest in and to any and all inventions, discoveries,
know how and other intellectual property, including any improvements thereto,
that are conceived, reduced to practice or otherwise made by Impax or any of
its employees or agents (whether solely or jointly with others) as a result of
or in connection with the performance of its obligations under this Agreement
to the extent related to any of the Detailed Products and any patent, trade
secret or other intellectual property rights with respect thereto
(collectively, the “Wyeth Improvements”). Impax shall promptly (a) disclose to
Wyeth in writing the conception, reduction to practice or making of any Wyeth
Improvements, as the same are conceived of, reduced to practice or made and (b)
without additional consideration, and, at Wyeth’s expense (for reasonable and
documented out-of-pocket costs incurred), assign and transfer, and cause each
of its employees and agents to assign and transfer, to Wyeth or its designee
any and all right, title and interest they each may have in and to such Wyeth
Improvements throughout the world.

	 	2.9.7	 	No Distribution. It is recognized by the Parties that Impax
and/or its Permitted Subcontractors may from time to time receive orders for
the Product directly from Third Parties. In such event, Impax promptly

26

 

shall advise or shall cause the Impax PSRs to advise the customer that
neither Impax nor its Permitted Subcontractors are authorized to accept
orders for the Product, but that Impax will forward the order to Wyeth for
acceptance or rejection at Wyeth’s sole discretion. Immediately
thereafter, Impax shall transmit said orders and purchase order numbers
promptly to Wyeth for acceptance or rejection at Wyeth’s sole discretion.

	3.	 	PAYMENTS.

	                                                       
	 	3.1	 	Detail Fee. In consideration for Impax’s Detailing of the Product during the
Term, subject to Section 3.3, Wyeth shall pay to Impax a fee (the “Detail Fee”) in the
amount of (i) XXXXX dollars ($XXXXX) for each Primary Detail (the “Primary Detail
Price”) and (ii) XXXXX dollars ($XXXXX) for each Secondary Detail (the “Secondary
Detail Price”), each amount as adjusted as provided in Section 3.2, delivered by the
Impax PSRs during the Term, provided that in the event that at the conclusion of any
Calendar Quarter during the Term Impax certifies to Wyeth in the applicable Monthly
Detail Report that the Product was the only product Detailed by Impax to Neurologists
during the preceding Calendar Quarter, the Primary Detail Price during such Calendar
Quarter shall equal XXXXX dollars ($XXXXX), subject to adjustment as provided
in Section 3.2. Each Detail Fee shall be due and payable within thirty (30) days after
Impax delivers an invoice to Wyeth stating the Detail Fee that is due for the relevant
Calendar Quarter.
	                                                        
	 
	 	3.2	 	Adjustments to Detail Price. At the beginning of Contract Year 2 and Contract
Year 3, the Primary Detail Price and Secondary Detail Price shall each be increased by
the amount, if any, of the Impax Cost Adjustment.

	                                                       
	 	3.2.1	 	For example, assume that the increase in the Impax PSR Cost
for Contract Year 1 over the Impax PSR Baseline Cost is 2% and that the
increase in CPI during Contract Year 1 is 3%. The Impax Cost Increase for
Contract Year 1 is 2% and the Impax Cost Adjustment for Contract Year 2 is the
lesser of this amount (2%) or the CPI increase during Contract Year 1 (3%), or
2%. The Primary Detail Price and the Secondary Detail Price for Contract Year
2 shall be $XXXXX and $XXXXX, respectively ($XXXXX if the Product is the only
product Detailed by Impax to Neurologists). Assume further that the increase
in Impax PSR Cost for Contract Year 2 over the Impax PSR Cost for Contract Year
1 is 3% and that the increase in CPI during Contract Year 2 is 2.5%. The Impax
Cost Increase for Contract Year 2 is 3% and the Impax Cost Adjustment for
Contract Year 3 is the lesser of this amount (3%) or the CPI increase during
Contract Year 2 (2.5%), or 2.5%. The Primary Detail Price and the Secondary
Detail Price for Contract
	                                                        

27

 

	 	 	 	Year 3 shall be $XXXXX and $XXXXX, respectively ($XXXXX if the Product
is the only product Detailed by Impax to Neurologists).
	                                                        

	 	3.2.2	 	Impax shall report to Wyeth Impax’ calculation of the proposed
Impax Cost Adjustment for any applicable Contract Year, together with all
relevant back-up information, within sixty (60) days of the beginning of such
Contract Year.

	 	3.3	 	No Payment for Extra Details. Wyeth shall have no obligation to pay Impax any
amount with respect to the performance of any Extra Detail.
	                                                       
	 
	 	3.4	 	Incentive Fee. Within ninety (90) days after the end of each Contract Year,
Wyeth shall report to Impax the amount of Net Sales for each Product for which there
were Incremental Net Sales during such Contract Year, the amount of Incremental Net
Sales for each such Product for such Contract Year and the basis for Wyeth’s
calculation thereof. Together with such report, Wyeth shall pay to Impax an amount
equal to XXXXX percent (XXXXX%) of each such Product’s Incremental Net Sales (the
“Incentive Fee”) for such Contract Year. For the avoidance of doubt, the Incentive Fee
shall not be due for a partial Contract Year in the event this Agreement is terminated
pursuant to Section 9.2 or Impax terminates this Agreement pursuant to Section 9.3. By
way of example only, a sample calculation of the Incentive Fee is set forth on Schedule
3.4.
	                                                        
	 
	 	3.5	 	Taxes and Withholding. Impax shall be solely responsible for all taxes that
may be due to any governmental authority in connection with the payments made to it by
Wyeth hereunder. All payments under this Agreement will be made without any deduction
or withholding for or on account of any tax unless such deduction or withholding is
required by Applicable Laws. If Wyeth is so required to deduct or withhold, Wyeth will
(a) promptly notify Impax of such requirement, (b) pay to the relevant authorities the
full amount required to be deducted or withheld promptly upon the earlier of
determining that such deduction or withholding is required or receiving notice that
such amount has been assessed against Impax, and (c) promptly forward to Impax an
official receipt (or certified copy) or other documentation reasonably acceptable to
Impax evidencing such payment to such authorities.
	 
	 	3.6	 	Currency. All amounts payable and calculations hereunder shall be in United
States dollars.

	4.	 	RECORD KEEPING; REPORTING AND AUDITS.

	 	4.1	 	Impax Records and Audits. Impax shall keep complete and accurate records of
(i) all Details delivered by the Impax Sales Force, (ii) with respect to Samples
delivered by the Impax Sales Force, the quantity and dates of delivery of such Samples
to each Neurologist and (iii) all information required to determine any Impax Cost
Increase (including any information required to determine any Impax PSR Cost). Impax
also shall keep its copies of the completed Sample Receipt

28

 

	 	 	 	Forms. All such records shall be retained for not less than three (3) years
following the Contract Year in which they are generated and, at Wyeth’s request,
made available for review and copying by Wyeth or its designees during normal
business hours at an Impax facility in the United States. Wyeth, either itself or
using an Affiliate or Third Party auditor designated by Wyeth and reasonably
acceptable to Impax, shall have the right to audit Impax’s Detail and Sample
distribution activity reporting system to determine whether or not the reports
submitted by Impax to Wyeth under Section 4.2 are complete and accurate. Wyeth may
conduct such an audit once per year or more often as may be warranted in the event
of regulatory inquiries regarding Sample distribution or Detail activity or in the
event of discrepancies arising from market research activity conducted pursuant to
Section 4.3. If any audit or review conducted pursuant to this Section 4.1 reveals
an over-payment by Wyeth of any amount payable by Wyeth pursuant to Article 3, Impax
shall reimburse Wyeth the amount of such overpayment within thirty (30) days
following the date Wyeth delivers to Impax notice of such overpayment. Wyeth shall
bear any costs that it incurs with conducting any audit pursuant to this Section 4.1
unless such audit determines that Wyeth has overpaid by more than five percent (5%)
with respect to the payments subject to Wyeth’s audit, in which case Impax shall
reimburse Wyeth for the costs of the audit.
	 
	 	4.2	 	Impax Reports. Following the Initiation Date and during the Term, within
twenty-one (21) Business Days after the end of each calendar month, Impax shall provide
to Wyeth the raw electronic data generated in connection with Sales Call activity and
Sample disbursements (if any) and a written report, each formatted in such manner as
requested by Wyeth, setting forth:

	 	(i)	 	an updated list of full names, addresses and geographic sales
territory covered (identified by zip code(s)) with respect to each member of
the Impax Sales Force active during such calendar month;
	 
	 	(ii)	 	the number of Primary Details, the number of Secondary Details
and the total number of Cumulative Details delivered by each member of the
Impax Sales Force during such calendar month and Contract Year-to-date, and on
a cumulative basis for all members of the Impax Sales Force for such calendar
month;
	                                                       
	 
	 	(iii)	 	the number of Primary Details, the number of Secondary Details
and the total number of Cumulative Details delivered by the members of the
Impax Sales Force to each Neurologist during such calendar month and Contract
Year-to-date, sorted by Non-Target Neurologists and Target Neurologists;
	                                                        
	 
	 	(iv)	 	if applicable, the total number of Samples delivered by each
member of the Impax Sales Force during such calendar month, Contract
Year-to-date, and on a cumulative basis for all members of the Impax Sales
Force during such calendar month;

29

 

	                                                       
	 	(v)	 	if applicable, the total number of Samples delivered to each
Neurologist by the Impax Sales Force during such calendar month and Contract
Year-to-date, which report shall also identify each such Neurologist as either
a Target Neurologist or a Non-Target Neurologist;
	                                                        
	 
	 	(vi)	 	if applicable, the number of Samples remaining in Impax’s
inventory and/or in the possession of authorized Impax Personnel on the last
day of such calendar month;
	 
	 	(vii)	 	the calculated percentage of total Details delivered by the
Impax Sales Force which were Details to Target Neurologists during such
calendar month and for the Contract Year-to-date;
	                                                       
	 
	 	(viii)	 	the identity of any Third Party products Promoted by the Impax PSRs during
such calendar month; and
	                                                        
	 
	 	(ix)	 	the number of Cumulative Details since the Initiation Date as
of the end of such calendar month.
	 
	 	Wyeth shall treat each such Monthly Detail Report as Impax’s Confidential
Information pursuant to Article 11 of this Agreement.

	 	4.3	 	Market Research. Detailing performance by the Impax PSRs also may be measured
through review of market research. Without limiting Impax’s obligation under Section
2.6.12 and Wyeth’s rights under Sections 2.6.12, 9.2 or 9.3, in the event such review
reveals a discrepancy with the performance reported by Impax in accordance with Section
4.2 above, the Parties, upon Wyeth’s request, and in addition to Wyeth’s rights
pursuant to Section 4.1, shall promptly meet to discuss the matter and agree upon a
plan or mechanism to address the discrepancy.
	                                                       
	 
	 	4.4	 	Wyeth Records and Audits. Wyeth shall keep complete and accurate records of
all information required to determine any incremental Net Sales and any resulting
Incentive Fee. All such records shall be retained for not less than three (3) years
following the Contract Year in which they are generated and, at Impax’s request, made
available for review and copying by an independent third party auditor reasonably
acceptable to both Parties during normal business hours at a Wyeth facility in the
United States. Impax, either itself or using an Affiliate or Third Party auditor
designated by Impax and reasonably acceptable to Wyeth, shall have the right to audit
Wyeth’s records of Net Sales to determine whether or not the reports submitted by Wyeth
to Impax under Section 4.2 are complete and accurate. Impax may conduct such an audit
once per year. If any audit or review Wyeth conducted pursuant to this Section 4.4
reveals an under-payment by Wyeth of any amount payable by Wyeth pursuant to Section
3.4. Wyeth shall pay Impax the amount of such underpayment within thirty (30) days
following the date Impax delivers to Wyeth notice of such underpayment. Impax shall
bear any costs that it incurs with conducting any audit pursuant to this Section 4.4
unless
	                                                        

30

 

	 	 	 	such audit determines that Wyeth has underpaid by more than five percent (5%) with
respect to the payments subject to Impax’s audit, in which case Wyeth shall
reimburse Impax for the costs of the audit.

	5.	 	RELATIONSHIP AND PUBLICITY.

	 	5.1	 	Relationship of Parties. Neither Party shall have any responsibility for the
hiring, termination, compensation or benefits of the other Party’s employees. No
employees or representatives of either Party shall have any authority to bind or
obligate the other Party for any sum or in any manner whatsoever, or to create or
impose any contractual or other liability on the other Party without said Party’s
authorized written approval. For all purposes, and notwithstanding any provision of
this Agreement to the contrary, Impax’s legal relationship under this Agreement to
Wyeth shall be that of independent contractor.
	 
	 	5.2	 	Public Announcements. Subject to the provisions of Section 11.4, and except as
otherwise required by applicable laws or the terms of this Agreement, neither Party
shall distribute or have distributed any publicity or information which bears the name
of the other without the prior written approval of the other. Notwithstanding the
foregoing, but still subject to Section 11.4, either Party, to the extent required by
applicable laws, may issue a press release or other public announcement to announce the
Detailing arrangement contemplated hereunder, provided that the content thereof is
subject to prior review by the other Party, and that the announcing Party shall not
unreasonably refuse comments from the reviewing Party and shall redact any requested
Confidential Information of the reviewing Party.

	6.	 	REGULATORY COMPLIANCE.

	 	6.1	 	Marketing Authorization. As between the Parties, Wyeth shall have the sole
right and responsibility to take, and shall take, all actions with respect to the
Product as would normally be taken in accordance with the accepted business practices
and legal requirements in order to maintain the authorization to Market the Product as
a pharmaceutical product in the Territory.
	 
	 	6.2	 	Recalls. At Wyeth’s reasonable request and, as between Wyeth and Impax, at
Wyeth’s cost, Impax shall reasonably assist Wyeth in handling any recalls or voluntary
withdrawal of the Product. Impax shall make available to Wyeth, upon request, all
pertinent records of Impax which Wyeth may reasonably request to assist Wyeth in
effecting any such recall.
	 
	 	6.3	 	Returns. Any Product returned to Impax shall be shipped to a location
designated by Wyeth, with any reasonable direct cost to be paid by Wyeth.
	 
	 	6.4	 	Adverse Drug Experiences. For the reporting of adverse drug experiences, the
responsibilities of the Parties are as follows:

31

 

	 	6.4.1	 	Wyeth shall be responsible for follow-up of all reports of
adverse events or experiences (“AEs”) or Other Information Reportable to Wyeth
(as hereinafter defined) and for the preparation and submission to the FDA of
all safety reports required per US Code of Federal Regulations (CFR), title 21
§ 314.80.
	 
	 	6.4.2	 	An AE is any untoward, undesired, or unplanned event in the
form of signs, symptoms, disease, or laboratory or physiological observations
occurring in a person administered any Detailed Product or in a clinical study.
The event or experience does not need to be causally related to such Detailed
Product or clinical study. An AE includes, but is not limited to:

	 	(a)	 	Any clinically significant worsening of a
pre-existing condition;
	 
	 	(b)	 	An AE occurring from Detailed Product overdose
(i.e., a dose higher than that prescribed by a healthcare professional
for clinical reasons, or a dose higher than that described on the
Detailed Product label) whether accidental or intentional;
	 
	 	(c)	 	An AE occurring from abuse (e.g., use for
non-clinical reasons) of the Detailed Product;
	 
	 	(d)	 	An AE occurring from discontinuation of the
Detailed Product (Detailed Product withdrawal); and
	 
	 	(e)	 	Any failure of expected pharmacological action.

	 	6.4.3	 	“Other Information Reportable to Wyeth” means information not
meeting the definition of an AE and includes:

	 	(a)	 	Abuse (e.g., use for non-clinical reasons)
without an AE;
	 
	 	(b)	 	Inadvertent or accidental exposure, without an
AE;
	 
	 	(c)	 	An unexpected therapeutic or clinical benefit
from use of the product;
	 
	 	(d)	 	A case involving a pregnancy exposure to the
product;
	 
	 	(e)	 	Overdose without an AE;
	 
	 	(f)	 	Drug exposure through breast-feeding without an
AE;
	 
	 	(g)	 	Medication errors without an AE;
	 
	 	(h)	 	Any failure of expected pharmacological action;
or

32

 

	 	(i)	 	AEs of special interest as designated by Wyeth
or regulatory authority.

	 	6.4.4	 	To the extent Impax, any Permitted Subcontractor or any of the
Impax Personnel, including, without limitation, any member of the Impax Sales
Force, becomes aware of or receives any information regarding an AE related to
the use of any Detailed Product, Impax shall promptly provide Wyeth with such
information within two (2) Business Days of the date received by Impax, such
Permitted Subcontractor or any of the Impax Personnel, including, without
limitation, any member of the Impax Sales Force.
	 
	 	6.4.5	 	For all AEs, Impax shall not, and shall cause its Permitted
Subcontractors and the Impax Personnel not to, make any statement or give any
opinion (written or verbal) to anyone that could be construed as an admission
of fault on Wyeth’s part or a promise that Wyeth will compensate anyone.
Impax, Impax’s Permitted Subcontractors, and the Impax Personnel may only
promise to report the AE and follow the appropriate procedures as outlined
herein.
	 
	 	6.4.6	 	AE related information shall be forwarded (by fax or overnight
mail) to:
	 
	 	 	 	Wyeth Global Safety Surveillance, Epidemiology and Labeling (GSSEL)
on a Wyeth 1747(b) Form (a sample of which is attached hereto as Schedule
6.4.6):

	 	a.	 	Facsimile: 610-989-5544; or
	 	b.	 	Overnight courier to:

Global Safety Surveillance & Epidemiology

GSSE Triage Unit

Wyeth Research

Dock E

500 Arcola Road

Collegeville, PA 19426

	 	6.4.7	 	Wyeth and Impax shall each appoint a contact person to address
AE reporting issues as they arise.

	 	6.5	 	Product Complaints. In the event Impax receives any complaints regarding any
Detailed Product, Impax’s responsibilities shall be as follows:

	 	6.5.1	 	If any of the Impax Personnel, including without limitation,
any Impax PSR, receives a complaint concerning any Detailed Product, such
employee shall call Wyeth’s Product Quality Department at (800) 99-WYETH [(800)
999-9384] to report such complaint and follow Wyeth’s instructions regarding
the return and replacement of any Samples distributed by such employee.

33

 

	 	6.5.2	 	If any of the Impax Personnel, including, without limitation,
any Impax PSR, receives notice of a serious Detailed Product tampering, Wyeth
Product Quality should be immediately contacted by:

	 	(a)	 	E-mail at: PQProd@Wyeth.com
	 
	 	(b)	 	Phone at: 1-800-99-WYETH ((800) 999-9384);
	 
	 	(b)	 	Any other individuals as Wyeth may designate from time to time by
written notice to Impax.

	 	6.5.3	 	If any of the Impax Personnel, including, without limitation,
any Impax PSR, receives notice of or information concerning any incident that
causes any Detailed Product or its labeling to be mistaken for, or applied to
another article, the following should be called during business hours:

	 	(a)	 	PQProd@Wyeth.com, or 1-800-99-WYETH ((800)
999-9384);
	 
	 	(b)	 	Any other individuals as Wyeth may designate
from time to time by written notice to Impax.

	 	6.6	 	Product Inquiries. In the event that any of the Impax Personnel, including,
without limitation, any Impax PSR, receives any inquiries about any Detailed Product,
Impax’s responsibilities shall be as follows:

	 	6.6.1	 	For questions which Impax PSRs are unable to answer concerning
Detailed Product identification, Detailed Product ingredients or
stability/storage information, Impax and/or Impax’s Permitted Subcontractor(s)
shall contact Wyeth Product Quality, at (800) 999-9384 or at P.O. Box 26609,
Richmond, VA 23261-6609 (or such other person(s), address(es) and phone
number(s) as Wyeth may designate from time to time by written notice to Impax).
	 
	 	6.6.2	 	For medical inquiries, including those related to information
outside of labeling or which Impax PSRs are unable to answer, a form 8202 —
Health Care Professional Request for Medical Information (a sample of which is
attached hereto as Schedule 6.6) or equivalent (which equivalent is acceptable
to Wyeth) (any such form, an “RPI Form”) must be completed (including the
signature of the health care professional and such health care professional’s
complete mailing address, telephone number and email address or fax number) and
faxed to (800) 955-2534 or (888) 237-3389, or mailed to Wyeth Global Medical
Communications, P.O. Box 8299, Philadelphia, PA 19101 (or such other address as
Wyeth may designate from time to time by written notice to Impax). For
emergency medical inquiries, call 800-934-5556 (or such other phone number as
Wyeth may designate from time to time by written notice to Impax). Impax shall
not, and shall cause the Impax

34

 

	 	 	 	PSRs to not, (i) solicit such medical inquiries and (ii) submit adverse
event information on an RPI Form.
	 
	 	6.6.3	 	All responses to form 8202 inquiries from the medical
profession or other Third Parties shall be given solely by Wyeth, Impax shall
provide reasonable assistance to Wyeth to the extent deemed necessary by Wyeth
to fully respond to such communications.

	 	6.7	 	Communications with FDA. All communications with FDA concerning any Detailed
Product shall be the sole responsibility of Wyeth. Impax shall provide reasonable
assistance to Wyeth to the extent deemed necessary by Wyeth to fully respond to such
communications.
	 
	 	6.8	 	Additional Responsibilities of the Parties.

	 	6.8.1	 	Impax and Wyeth shall keep each other advised of significant
market, economic, regulatory and other developments which may affect the
Promotion or Detailing of the Product in the Territory during the Term.
	 
	 	6.8.2	 	Impax shall report promptly to Wyeth all other significant
information concerning any complaint of any kind regarding any Detailed
Product, its labeling, quality or packaging, including, but not limited to, any
adverse drug experience not reported pursuant to Section 6.4 above.
	 
	 	6.8.3	 	It is understood and agreed that the reporting requirements
set forth in this Article 6 are based on Wyeth policies and procedures and
regulatory reporting requirements. Accordingly, in the event of changes to
regulatory requirements or Wyeth policies and procedures, Impax agrees to
comply with all reasonable revised notification procedures as requested in
writing by Wyeth. Wyeth shall promptly advise Impax in the event of the change
of the person or phone number for any of the contacts specified above.
	 
	 	6.8.4	 	Wyeth shall retain sole responsibility for communicating with
all government agencies, including, without limitation, the FDA, and satisfying
all requirements regarding maintenance of approvals to Market any Detailed
Product in the Territory.

	7.	 	REPRESENTATIONS, WARRANTIES AND COVENANTS.

	 	7.1	 	Mutual Representations and Warranties. As of the Effective Date, each of Impax
and Wyeth hereby represents, warrants, and covenants to the other Party hereto as
follows:

	 	(a)	 	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;

35

 

	 	(b)	 	the execution, delivery and performance of this
Agreement by such Party has been duly authorized by all requisite
corporate action and does not require any shareholder action or
approval;
	 
	 	(c)	 	it has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder;
	 
	 	(d)	 	the execution, delivery and performance by such
Party of this Agreement and its compliance with the terms and
provisions hereof does not and will not conflict with or result in a
breach of any of the terms and provisions of or constitute a default
under (i) a loan agreement, guaranty, financing agreement, agreement
affecting a product or other agreement or instrument binding or
affecting it or its property; (ii) the provisions of its charter or
operative documents or bylaws; or (iii) any order, writ, injunction or
decree of any court or governmental authority entered against it or by
which any of its property is bound; and
	 
	 	(e)	 	it shall at all times comply with all
Applicable Laws relating to its activities under this Agreement.

	 	7.2	 	Impax Representations and Warranties. In addition to the representations,
warranties and covenants made by Impax elsewhere in this Agreement, Impax hereby
represents, warrants, and covenants to Wyeth that it has not been debarred and is not
subject to debarment and that it shall not use in any capacity, in connection with the
performance of its obligations under this Agreement, any Person who has been debarred
pursuant to Section 306 of the FD&C Act or who is the subject of a conviction described
in such section. Impax shall notify Wyeth in writing immediately if it or any of the
Impax Personnel is debarred or is the subject of a conviction described in Section 306
of the FD&C Act, or if any action, suit, claim, investigation, or legal or
administrative proceeding is pending or, to the best of Impax’s knowledge, is
threatened, relating to the debarment or conviction of Impax or any of the Impax
Personnel. Impax shall notify Wyeth in writing immediately if any Third Party
(including any agency) alleges that Impax’s Detailing activities pursuant to this
Agreement are not in compliance with Applicable Laws.
	 
	 	7.3	 	Wyeth Representations and Warranties. In addition to the representations,
warranties and covenants made by Wyeth elsewhere in this Agreement, Wyeth hereby
represents and warrants to Impax that, as of the Effective Date:

	 	(a)	 	Ownership. Wyeth is the sole and exclusive
owner of the entire right, title and interest in and to (i) the patents
listed on Schedule 7.3 (the “Initial Product Patents”), which
patents are listed by Wyeth in the FDA’s Approved Drug Products with
Therapeutic Equivalence Evaluations (the “Orange Book”) claiming the
Initial Product or the method of using the Initial Product, as required
by

36

 

	 	 	 	the FD&C Act, and are existing as of the Effective Date and (ii) the
Wyeth Trademarks,
	 
	 	(b)	 	Non-Infringement. To Wyeth’s knowledge, the
manufacture, use or sale of the Initial Product in the Territory or the
use of the Wyeth Trademarks in the Territory do not infringe or
misappropriate, and the Detailing by Impax as contemplated by this
Agreement will not infringe or misappropriate, the patent rights, trade
secret or other intellectual property rights of any Third Party.

	 	7.4	 	Wyeth Covenants.

	 	(a)	 	Compliance with Law. Wyeth will perform its
obligations under this Agreement in accordance with all Applicable
Laws, including without limitation provision of Promotional Materials
and the labeling of the Product or the Samples in compliance with all
Applicable Laws
	 
	 	(b)	 	Samples. The Samples provided by Wyeth to Impax
are not unfit for distribution under any Applicable Laws (including,
but not limited to, not being adulterated or misbranded as defined
under the FD&C Act or an article that may not, under the FD&C Act, be
introduced into interstate commerce).

	 	7.5	 	Other Opportunities. The Parties, within ninety (90) days after the Effective
Date, and with no obligation as to outcome, shall meet to discuss other potential
opportunities on which they may collaborate.

	8.	 	INDEMNIFICATION AND INSURANCE.

	 	8.1	 	Indemnification by Impax. Impax shall indemnify, defend and hold Wyeth, and its
officers, directors, agents, employees, and Affiliates, harmless from any claims,
damages, actions, liabilities, losses, costs and expenses, including attorneys’ fees
incurred in defending against them, (hereinafter, “Claims’’) of a Third Party, which
arise out of or in connection with (i) the breach by Impax, any Permitted Subcontractor
or any of the Impax Personnel of any of Impax’s representations, warranties or
obligations under this Agreement; (ii) any claims or cause of action brought by or on
behalf of any of the Impax Personnel in connection with their employment (including,
without limitation, the reassignment of any Impax PSR or other employee pursuant to
Section 2.6.2 as a result of a product liability claim) or the performance of Impax’s
obligations under this Agreement; (iii) any negligent or wrongful act or omission of
Impax, any Permitted Subcontractor, any member of the Impax Sales Force or any other
Impax Personnel; or (iv) a failure to comply with the PDMA or other Applicable Laws in
its Detailing of the Product under this Agreement, including any off-label promotion of
the Product or mishandling or improper distribution of Samples,

37

 

	 	 	 	except to the extent that such Claims are subject to indemnification by Wyeth
pursuant to Section 8.2 below.
	 
	 	8.2	 	Indemnification by Wyeth. Wyeth shall indemnify, defend and hold Impax, its
officers, directors, agents, employees, and Affiliates, harmless from any Claims of a
Third Party, which arise out of or in connection with (i) the breach by Wyeth of any of
its representations, warranties or obligations under this Agreement, (ii) the
manufacture, sale, or use of the Product and the manufacture or use of the Promotional
Materials, (iii) infringement or misappropriation of any Third Party patent, trade
secret or trademark by the Product or the Wyeth Trademarks, or (iv) any negligent or
wrongful act or omission of Wyeth, except to the extent that such Claims are subject to
indemnification by Impax pursuant to Section 8.1 above.
	 
	 	8.3	 	Defense of Actions; Settlements. Any Party seeking to be indemnified hereunder
(the “Indemnified Party”) shall provide prompt written notice to the other Party (the
“Indemnifying Party”) no later than thirty (30) days after becoming aware of any actual
claim in respect of which indemnification may be sought; provided, however, that the
failure by the Indemnified Party to provide such prompt notice to the Indemnifying
Party shall only be a bar to recovering losses to the extent that the Indemnifying
Party is actually prejudiced and directly damaged by such failure. The Indemnified
Party shall permit the Indemnifying Party, at the Indemnifying Party’s expense, to
assume the complete defense of any Claims with a full authority to conduct such defense
and to settle or otherwise dispose of the Claims. The Indemnified Party will fully
cooperate in such defense and shall provide the Indemnifying Party with all information
in its possession and shall provide assistance necessary to enable the indemnifying
Party to defend such claims. The Indemnifying Party will not, except with the consent
of the Indemnified Party, not to be unreasonably withheld, consent to the entry of any
judgment or enter into any settlement which provides for any relief other than the
payment of monetary damage and which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to the Indemnified Party a release from all
liability in respect thereof. The Indemnifying Party shall not be responsible for or
bound by any settlement made by the Indemnified Party without the prior written consent
of the Indemnifying Party.
	 
	 	8.4	 	Limitation of Liability. WITH RESPECT TO ANY CLAIM BY ONE PARTY AGAINST THE
OTHER ARISING OUT OF THE PERFORMANCE OR FAILURE OF PERFORMANCE OF THE OTHER PARTY UNDER
THIS AGREEMENT, THE PARTIES EXPRESSLY AGREE THAT THE LIABILITY OF SUCH PARTY TO THE
OTHER PARTY FOR SUCH BREACH SHALL BE LIMITED UNDER THIS AGREEMENT OR OTHERWISE AT LAW
OR EQUITY TO DIRECT DAMAGES ONLY AND IN NO EVENT SHALL A PARTY BE LIABLE FOR, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES. THE LIMITATIONS SET FORTH IN THIS SECTION 8.4 SHALL
NOT APPLY WITH RESPECT TO THE OBLIGATIONS OF EITHER PARTY UNDER ARTICLE 11 OR THEIR
OBLIGATION TO INDEMNIFY THE OTHER PARTY UNDER SECTIONS 8.1 OR 8.2 IN CONNECTION WITH A

38

 

	 	 	 	LIABILITY TO A THIRD PARTY OR IMPAX’S OBLIGATION TO INDEMNIFY WYETH UNDER SECTION
10.11.
	                                                       
	 
	 	8.5	 	Insurance Requirements. Impax shall obtain, and maintain during the Term, a
Commercial General Liability Insurance policy, including Products Liability Insurance,
on a claims made basis, with liability limits of no less than five million dollars
($5,000,000) per claim and in the aggregate. Such insurance policy shall be procured
from insurers having an A.M. Best Rating of A-VII or better and shall name Wyeth as an
additional insured. Impax shall provide Wyeth, upon request, with a certificate of
insurance evidencing its liability coverage.
	                                                        

	9.	 	TERM AND TERMINATION.

	 	9.1	 	Term. This Agreement shall be effective as of the Effective Date and shall
continue in effect until the third anniversary of the Initiation Date, unless
terminated earlier as set forth in this Article 9 (the “Term”).
	 
	 	9.2	 	Termination for Cause. Without prejudice to any remedy or claim it may have
against the other Party for material breach or non-performance of this Agreement,
either Party (the “Non-Breaching Party”) may terminate this Agreement for cause in the
event that the other Party (the “Breaching Party”) fails to materially comply with or
perform any material provision of this Agreement (a “Breach”) in accordance with the
following provisions:

	 	(a)	 	The Non-Breaching Party shall notify the
Breaching Party of any such Breach in writing, specifying such Breach
in reasonable detail and stating such Non-Breaching Party’s intention
to terminate this Agreement for cause (the “Notification”).
	 
	 	(b)	 	In the event that the Breaching Party fails to
cure such Breach within a period of thirty (30) days following receipt
by the Breaching Party of such Notification, this Agreement shall
terminate upon written notice by the Non-Breaching Party.

	                                                       
	 	9.3	 	Termination by Wyeth. In the event Impax fails to meet the Quarterly Detail
Minimum during any period of three consecutive calendar months, Wyeth may terminate
this Agreement effective immediately on notice to Impax, such right to be exercisable
within a period of three (3) months following the date on which Wyeth receives from
Impax the report due under Section 4.2 that discloses such failure.
	                                                        
	                                                       
	 
	 	9.4	 	Termination without Cause by Impax. Impax shall have the right to terminate
this Agreement at any time, without cause, upon no less than thirty (30) days prior
written notice to Wyeth.
	                                                        
	 
	 	9.5	 	Effect of Termination. Upon any termination or expiration of this Agreement,
Impax will immediately cease any and all Detailing of the Product and Impax will
cooperate with Wyeth in the collection and return to Wyeth of all promotional

39

 

	 	 	 	materials, items and literature, Samples, and other sales or sales training
materials in the possession of, or under the control of, Impax, Impax’s Permitted
Subcontractor(s), and/or any of the Impax Personnel as promptly as practicable after
the date thereof. Additionally, in the event this Agreement is terminated pursuant
to this Article 9, Impax shall be due no compensation under Sections 3.1 or 3.4 or
under any other provision of this Agreement for any activity conducted by Impax
after the effective date of such termination. Except as expressly provided otherwise
in this Section 9.5 or any other provision of this Agreement, termination of this
Agreement shall be without prejudice to (a) any remedies which any Party may then or
thereafter have hereunder or at law, (b) Impax’s right to receive any amounts
accrued under this Agreement prior to the effective date of termination but which
are unpaid or become payable thereafter and (c) either Party’s right to obtain
performance of any obligation provided for in this Agreement which shall survive
termination.
	 
	 	9.6	 	Survival of Certain Provisions. The provisions of this Agreement set forth in
Articles 1 (to the extent definitions are embodied in the following Articles and
Sections), 5, 8, 11 and 12 and Sections 2.6.13, 2.9, 2.10, 4.1, 4.2, 6.1-6.7, 9.6 and
10.11, to the extent applicable, and any remedies for the breach thereof, shall survive
the expiration or any termination of this Agreement.

	10.	 	SAMPLES.

	                                                       
	 	10.1	 	Provision of Samples. Wyeth shall use Commercially Reasonable Efforts to make
available to Impax Samples of the Product for use in Promoting the Product to
Neurologists as provided in Section 2.7.8 and as described in this Article 10. Subject
to availability of Samples, Wyeth shall provide Samples to Impax consistent with the
quantity of Samples provided to the Wyeth PSRs taking into account the number of
Details the Impax PSRs and Wyeth PSRs are respectively expected to deliver and the
deciles in which the Target Physicians are included in the Sales Call Plan for such
Impax PSRs.
	                                                        
	                                                       
	 
	 	10.2	 	Shipping and Distribution of Samples. Wyeth shall send Samples to Impax, on a
periodic basis, such quantities of Samples of the Product as Wyeth shall reasonably
determine, to a single location within the Territory designated by Impax. Impax shall
further distribute such Samples, in the case of the Sample Carry Program described in
Section 10.4 below, to the Impax Sales Force and shall cause the Samples to be
distributed to Neurologists in accordance with good business practices, strict first to
expire/first-out inventory practices and the applicable Sales Call Plan (to the extent
such Sales Call Plan addresses the distribution of Samples); provided, however, that at
least seventy-five percent (75%) of the Samples supplied by Wyeth shall ultimately be
distributed to Target Neurologists. The storage by Impax, Permitted Subcontractor(s),
and any of the Impax Personnel of such Samples shall be at Impax’s expense and Impax
shall be responsible for storing such Samples or causing such Samples to be stored
under environmental conditions that assure the integrity of the Product in accordance
with its labeled storage conditions and with adequate security to maintain the

40

 

	 	 	 	integrity and usability of such Samples. All Samples which are in the possession of
Impax, Permitted Subcontractor(s) or the Impax Personnel and which are undistributed
prior to three months prior to their expiration date shall be returned by Impax, at
Impax’s expense, to Impax’s or such Permitted Subcontractor’s preferred destruction
vendor reasonably agreeable to Wyeth. Destruction of expired Samples shall be at
Wyeth’s expense, provided, however, that if Impax has not adhered to first to
expire/first out inventory practices, such destruction shall be at Impax’s expense.
Destruction of Samples which are returned as the result of a recall shall, as
between Impax and Wyeth, be at Wyeth’s expense, provided however, that if the Sample
recall is the result of Impax’s or its Permitted Subcontractor(s)’ omission or
commission, such expense shall be Impax’s responsibility.
	 
	 	10.3	 	Compliance with PDMA.

	 	10.3.1	 	Designation as Authorized Distributor. Impax and Impax’s Permitted
Subcontractor(s) shall be an Authorized Distributor of Record solely for the
Product for purposes of the requirements of the Prescription Drug Marketing Act
of 1987 (“PDMA”) and shall comply with the PDMA, FDA regulations and applicable
state law requirements regarding the Marketing, sale and distribution of the
Product, including but not limited to applicable wholesale drug distribution
licensing guidelines and requirements. Impax and Impax’s Permitted
Subcontractor(s) shall indicate that it is a Wyeth Authorized Distributor
solely for the Products on Sample Receipt Forms and Sample Request Forms, if
any. Impax and Impax’s Permitted Subcontractor(s) shall not attempt to source,
purchase, trade, exchange or otherwise obtain Wyeth products or Products from
entities other than Wyeth and shall not represent to others that its Authorized
Distributor status for any product other than with the Products.
	 
	 	10.3.2	 	Compliance with PDMA. Impax shall take all steps necessary to ensure that its
Permitted Subcontractor(s), each member of the Impax Sales Force and all other
Impax Personnel comply with the requirements of the PDMA, all regulations
promulgated thereunder, and each State’s companion PDMA statutes and
regulations which relate to the distribution of samples of a prescription drug
product utilizing the Sample Carry Program set forth below in Sections 10.4.
	 
	 	10.3.3	 	Compliance with Company Procedures. Impax shall take all steps necessary to
ensure that Impax’s Permitted Subcontractor(s), each member of the Impax Sales
Force and all other Impax Personnel comply with all Impax rules, policies and
standard operating procedures for product sampling utilizing the Sample Carry
Program as more specifically outlined below in Sections 10.4.

41

 

	 	10.4	 	Sample Carry Program. Impax and Impax’s Permitted Subcontractor(s) shall
implement the following program for samples (“Sample Carry Program”) that includes the
following elements and shall operate such program in accordance with Applicable Law and
regulations and its company standard operating procedures for product sampling.

	 	10.4.1	 	Impax and Impax’s Permitted Subcontractor(s) shall receive sample shipments
from Wyeth at its licensed facility and immediately upon deliver of the
Products, to examine the Products to determine and confirm the quantities
delivered and that the Products are not damaged. If Impax or Impax’s Permitted
Subcontractor(s) determine that there are damages evident at the time of
delivery or shortages it shall make a notation on the delivery receipt and
immediately notify Wyeth Customer Service within seven (7) Business Days of
receipt of the Product at Impax or Impax’s Permitted Subcontractor(s)’ licensed
facility.
	 
	 	10.4.2	 	Impax and Impax’s Permitted Subcontractor(s) shall store, implement and
maintain appropriate inventory management practices to ensure that the product
is handled, transported and distributed in accordance with current Good
Manufacturing Practices and that the inventory of the Product is secured and
protected against theft, tampering, and diversion during storage and transport
to the Impax Sales Force.
	 
	 	10.4.3	 	Impax and Impax’s Permitted Subcontractor(s) shall distribute samples of the
Product to the Impax PSRs in sufficient quantities to support the Sales Call
Plan, Impax and Impax’s Permitted Subcontractor(s) shall track sample
distributions to the Impax Sales Force by lot number, sufficient to permit the
tracking of Sample units to the point of a licensed practioner.
	                                                       
	 
	 	10.4.4	 	Each member of the Impax Sales Force shall (i) in accordance with the party’s
standard operating procedures, secure the samples of the Product against theft,
tampering, and diversion during storage and transport by such member of the
Impax Sales Force and (ii) carry in their automobile or on their person only
those quantities of samples of the Product that can be used during two (2)
consecutive Business Days, provided that the Samples are stored in a controlled
temperature environment outside of normal detailing hours.
	                                                        
	                                                       
	 
	 	10.4.5	 	Prior to distribution of any samples of the Products by any Impax PSR, such
Impax PSR shall: (i) visually check the Product expiration date to ensure that
the sample has a reasonable dating period remaining; (ii) verify, in accordance
with its standard operating procedures for product sampling the Target
Neurologist or other Neurologist’s identity as a practitioner authorized by
Applicable Law to receive drug samples; (iii) confirm that Product packaging is
intact and includes the designation
	                                                        

42

 

	                                                       
	 	 	 	“sample” and package insert; (iv) obtain an executed sample request form
or electronic equivalent from such Neurologist in accordance with PDMA
requirements; and (v) confirm Product identity to be accurate by visual
inspection of the Product packaging, At the time of delivery, such Impax
PSR shall obtain a Sample Receipt Form (which may be electronic) from the
Target Neurologist or other Neurologist executed in accordance with the
requirements of the PDMA.
	                                                        
	 
	 	10.4.6	 	Impax and Impax’s Permitted Subcontractor(s) shall notify the FDA of
falsification of drug sample records, diversion, significant loss and theft of
drug samples according to its standard operating procedures and in compliance
with Applicable Laws. If the diversion, significant loss or theft involves
samples of the Product, Impax and Impax’s Permitted Subcontractor(s) shall
notify Wyeth by providing copies of all correspondence with the FDA regarding
the event within forty-eight (48) hours after delivery of the notification to
the FDA on the initial report and provide a copy of the draft follow-up report
to Wyeth twenty-four (24) hours prior to its submission to FDA.
	                                                       
	 
	 	10.4.7	 	Impax and Impax’s Permitted Subcontractor(s) shall provide Wyeth with monthly
drug accountability/inventory reports for each Impax PSR with respect to
samples of the Product within five (5) days after the end of each calendar
month. At least annually, Impax and Impax’s Permitted Subcontractor(s) shall
reconcile each Impax PSR’s quarterly or annual inventory with respect to
samples of the Product. In addition, Impax and Impax’s Permitted
Subcontractor(s) shall make drug accountability/inventory reports, information,
Sample Request and Sample Receipt Forms and any other records pertaining to
samples of the Products or matters relating to PDMA available to Wyeth within
one (1) Business Day after a request from Wyeth for such information.
	                                                        
	 
	 	10.4.8	 	When an Impax PSR leaves the sales force of either Impax or Impax’s Permitted
Subcontractor(s) that is detailing or had detailed the Product, Impax and
Impax’s Permitted Subcontractor(s) shall conduct a “close-out” inventory of
carried samples of the Product in accordance with its standard operating
procedures and reconcile such close-out inventory.
	 
	 	10.4.9	 	Upon reasonable advance notice to Impax and Impax’s Permitted
Subcontractor(s) and not more than once during any Calendar Year, Wyeth shall
be entitled, at the expense of Wyeth, to conduct an inspection and audit of
Impax’s and Impax’s Permitted Subcontractor(s) inventory of samples of the
Products (including samples held by any Impax PSR or Impax’s Permitted
Subcontractor(s), documents, records, and policies and procedures to ensure
compliance with the provisions of the Section 10.4.

43

 

	 	10.4.10	 	Impax shall maintain and provide to Wyeth an updated list of full names and
addresses of each member of the Impax Sales Force as well as the address of the
site(s) where Samples are stored. Impax shall provide Wyeth, on a monthly
basis, notice of any changes to this list including any change in employment
status or change of address.

	 	10.5	 	Sampling Activity System Audit. Impax and Impax’s Permitted Subcontractor(s)
shall not conduct any sampling activity with respect to the Product until the Parties
agree that appropriate systems are in place with respect to such activity to ensure
compliance with Applicable Law and appropriate reporting. Impax and Impax’s Permitted
Subcontractor(s) shall each submit to audits by Wyeth or by an outside auditor hired by
Wyeth to assess Impax and Impax’s Permitted Subcontractor(s) standard operating
procedures and distribution operations with respect to its sampling activities, and its
compliance with respect thereto, prior to Wyeth making Samples available to Impax. Upon
request by Wyeth. Impax shall provide to Wyeth copies of a certificate of compliance
with PDMA, state registration certificate as a licensed distribution center and state
board of pharmacy inspection report, DEA inspection report or similar governmental
inspection report for any agent that Impax intends to use as a distribution facility
for handling of the Product. Impax understands that no samples shall be shipped until
such agent is verified by Wyeth to be in compliance with PDMA. Further, at any time
during the Term, Impax and Impax’s Permitted Subcontractor(s) shall each submit to
audits by Wyeth or by an outside auditor hired by Wyeth to assess Impax and Impax’s
Permitted Subcontractor(s) standard operating procedures and distribution operations
with respect its sampling activities, and its compliance with respect thereto. If Wyeth
has a concern with respect to the results of the sample audit, then Wyeth shall submit
its concerns in writing to Impax and Impax’s Permitted Subcontractor(s) for review and
discussion. The Parties shall work to resolve such concerns. If Impax is not able to
resolve any material concerns Wyeth has with respect to the Sample Audit of Impax, then
Wyeth shall have the right in its sole discretion, to immediately terminate Impax’s
right to sample under this Article 10 or terminate this Agreement pursuant to Section
9.2. For the sake of clarity, a Sample Audit shall not be deemed an audit pursuant to
Section 4.1. All documentation of Sample transactions in the possession of Impax
and/or Impax’s Permitted Subcontractor(s) shall be provide to Wyeth no later than sixty
(60) days after expiration or any termination of this Agreement.
	 
	 	10.6	 	Investigation, Corrective & Preventative Actions. Impax and Impax’s Permitted
Subcontractor(s) shall each maintain its own investigation, corrective and preventive
action program for the handling of samples of Product in accordance with its internal
policies and procedures, applicable to its Sample Carry Program.
	 
	 	10.7	 	Monitoring & Auditing Programs. Impax and Impax’s Permitted Subcontractor(s)
shall each maintain its own monitoring and auditing programs

44

 

	 	 	 	capable of detecting losses, potential diversion and falsification of records
related to samples of the Product.
	 
	 	10.8	 	Responsibility for Compliance. Impax and Impax’s Permitted Subcontractor(s)
shall each be responsible for its own compliance with Applicable Law with respect to
Product samples and shall bear its own cost relating to such compliance.
	 
	 	10.9	 	In-Transit Losses. Impax shall notify Wyeth immediately upon learning that any
Samples shipped by Wyeth to Impax have been lost or have not been received as
scheduled.
	 
	 	10.10	 	Improper Handling. Each Party shall notify the other Party immediately upon
learning information which could raise a suspicion that any of the subject Samples had
not been properly handled or had been handled in a manner prohibited by law. Impax
shall take all steps necessary to conduct a full investigation of any suspected
mishandling of any Samples in accordance with the procedures referenced in Section
10.6, and shall notify Wyeth of the results of each such investigation promptly upon
completion thereof. Additionally, upon Wyeth’s request, Impax shall take all steps
necessary to aid and support Wyeth in any investigation of any suspected mishandling of
any Samples that Wyeth may elect to conduct.
	 
	 	10.11	 	Indemnity for Failure to Comply. In the event that Impax or any Impax
Personnel fail to comply or cause Wyeth to fail to comply with applicable legal
requirements and as a direct result a penalty(ies) is assessed against Wyeth or any of
its Affiliates or employees, then Impax shall hold harmless and indemnify Wyeth, its
Affiliates or its employees from any such civil or criminal penalty or other damages or
losses related thereto, including reasonable attorneys’ fees, costs and expenses
	 
	 	10.12	 	Additional Requirements.

	 	10.12.1	 	Pursuant to Section 2.6.13, Impax and its Permitted Subcontractor(s) shall
exchange with Wyeth data to enable the Parties to produce accurate and timely
reports and analysis of Impax’s Detailing and Sample distribution activities.
Data requirements, file formats and frequency of exchange shall be as
determined by Wyeth.
	 
	 	10.12.2	 	In the event of a request by FDA to Wyeth for any of the foregoing
information, Impax shall, immediately upon request from Wyeth, provide such
information to Wyeth’s Regulatory Affairs Department for submission to FDA.
Such information shall only be used by Wyeth to submit to FDA pursuant to 21
U.S.C.A. §353(d). Impax acknowledges Wyeth’s obligation to provide such
information to FDA within forty eight (48) hours of FDA’s request.

45

 

	 	10.12.3	 	Wyeth shall not initiate any direct communication between Wyeth and any
Impax PSR regarding the Promotion of the Product without the prior approval of
Impax, which shall not be unreasonably withheld or delayed.
	 
	 	10.12.4	 	Neither Party shall recruit or attempt to recruit any employee of the other
Party or any agent of the other Party (including, in the case of Impax, any
Permitted Subcontractor) who is engaged in performing activities under this
Agreement, unless such employee resigns without solicitation from the Party, is
terminated by the other Party or is responding to a general solicitation to the
public, general advertising or untargeted advertisements for employment

	11.	 	CONFIDENTIALITY.

	 	11.1	 	Nondisclosure and Nonuse Obligations. Each of Impax and Wyeth shall use
Confidential Information of the Disclosing Party only in accordance with and as
expressly Permitted by this Agreement and shall not disclose to any Third Party (except
as expressly provided in Section 11.2) any Confidential Information of the Disclosing
Party, in each case without the prior written consent of the Disclosing Party, which
consent may be provided or withheld in the Disclosing Party’s sole discretion. The
foregoing obligations shall survive the expiration or earlier termination of this
Agreement for a period of ten (10) years. The foregoing non-disclosure and non-use
obligations shall not apply to specific Confidential Information of a Disclosing Party
that the Receiving Party can demonstrate: (i) is known by the Receiving Party at the
time of its receipt other than through a prior disclosure by the Disclosing Party, as
documented by business records; (ii) is at the time of disclosure or thereafter becomes
published or otherwise part of the public domain without breach of this Agreement by
the Receiving Party; (iii) is subsequently disclosed to the Receiving Party by a Third
Party who has the right to make such disclosure not in confidence; (iv) is developed by
the Receiving Party independently of access to or use of any Confidential Information
received from the Disclosing Party and such independent development can be documented
by the Receiving Party; or (v) is required by law, regulation, rule, act or order of
any governmental authority or agency to be disclosed by the Receiving Party to a Third
Party, provided that to the extent practicable notice is promptly delivered to the
Disclosing Party and the Receiving Party agrees to reasonably assist the Disclosing
Party in order to provide an opportunity to seek a protective order or other similar
order with respect to such Confidential Information and thereafter the Receiving Party
discloses to the requesting entity only the minimum Confidential Information required
to be disclosed in order to comply with the request, whether or not a protective order
or other similar order is obtained by the Disclosing Party.
	 
	 	11.2	 	Permitted Disclosures. The Receiving Party may disclose specific Confidential
Information of the Disclosing Party to its (and, with respect to Wyeth, Wyeth’s
Affiliate’s, or, with respect to Impax, Impax’s Permitted Subcontractor’s)

46

 

	 	 	 	employees, consultants or professional advisors, only to the extent reasonably
required to accomplish the purposes of this Agreement and only if the Receiving
Party obtains prior written agreement from such employees, consultants and
professional advisors (other than legal counsel who are otherwise required to
maintain confidentiality) to hold in confidence and not make use of such
Confidential Information for any purpose other than those permitted by this
Agreement. The Receiving Party will use at least the same standard of care (but in
no event less than a reasonable standard of care) as it uses to protect its own
proprietary or confidential information of a similar nature to ensure that such
employees, agents, consultants or suppliers do not disclose or make any unauthorized
use of the Confidential Information of the Disclosing Party. Additionally, a
Receiving Party may use or disclose specific Confidential Information of the
Disclosing Party to the extent it is necessary to do so to take action against the
Receiving Party to enforce its rights under this Agreement.
	 
	 	11.3	 	Return of Confidential Information. Upon expiration or earlier termination of
this Agreement for any reason, the Receiving Party, upon receipt of a written request
from the Disclosing Party, shall return to the Disclosing Party all copies of the
Confidential Information received from the Disclosing Party hereunder, provided,
however, that the Receiving Party’s legal counsel may retain one copy of such
Confidential Information in a secure location solely for purposes of determining the
Receiving Party’s continuing obligations under this Article 11.
	 
	 	11.4	 	Disclosure of Agreement. The Parties agree that, except as expressly provided
herein, neither Party shall disclose to any Third Party the terms and conditions of
this Agreement. Subject to the provisions of this Section 11.4, either Party may
disclose this Agreement and the terms and conditions thereof to (i) such Party’s
auditors in connection with such auditors’ audit of such Party’s financial statements;
(ii) to such Party’s legal counsel and financial advisors; (iii) to any permitted
assignee in connection with a permitted assignment by such Party and/or (iv) as
required by law, regulation, rule, act or order of any governmental authority or agency
to be disclosed, provided that to the extent practicable notice is promptly delivered
to the other Party and the disclosing Party seeks, and to allows the other Party to
seek, a protective order or other similar order with respect to any information to be
disclosed and that the disclosing Party discloses to the requesting entity only the
minimum information required to be disclosed in order to comply with the request,
whether or not a protective order or other similar order is obtained. Either Party may
make an announcement disclosing entry into this Agreement, with the prior approval of
the other Party, not to be unreasonably withheld or delayed.
	 
	 	11.5	 	Equitable Relief. The Parties acknowledge and agree that the restrictions set
forth in Section 11.1 are reasonable and necessary to protect the legitimate interests
of the Parties and that any material breach of Section 11.1 may result in irreparable
injury to the other Party for which there would be no adequate remedy at law. In the
event of an uncured material breach of Section 11.1 by a Party, the other Party shall
be authorized and entitled to seek from any court of competent

47

 

	 	 	 	jurisdiction injunctive relief, whether preliminary or permanent or specific
performance and the breaching Party agrees to waive any requirement that the
non-breaching Party post a bond or other security as a condition for obtaining any
such relief. Nothing in this Section 11.5 is intended, or shall be construed, to
limit the Parties’ rights to equitable relief or any other remedy for a breach of
any provision of this Agreement.

	12.	 	MISCELLANEOUS

	 	12.1	 	Force Majeure. Neither Party shall be liable to the other for delays in
delivery of Product or failure to perform any other provision of this Agreement if such
failure or delay results from an act of God, war conditions, sabotage, governmental
regulations or actions, embargo, fire, strike, labor trouble or any other cause beyond
the affected Party’s reasonable control. Upon the occurrence of any such event which
results or will result in failure or delay to perform hereunder as described above, the
Party whose performance is hereby prevented or delayed shall immediately give notice of
such occurrence and the effect and/or anticipated effect of such occurrence on the
performance of such Party to the other Party. The Party whose performance is so
affected shall use Commercially Reasonable Efforts to minimize disruptions in
performance and to resume full performance hereunder as soon as possible under the
circumstances.
	 
	 	12.2	 	Severability. If any provision of this Agreement or the application thereof to
any Party or circumstance will, to any extent, be held to be invalid or unenforceable,
then (i) the remainder of this Agreement, or the application of such provision to
Parties or circumstances other than those as to which it is held invalid or
unenforceable, will not be affected thereby and each provision of this Agreement will
be valid and be enforced to the fullest extent permitted by law, and (ii) the Parties
covenant and agree to renegotiate any such provision in good faith in order to provide
a reasonably acceptable alternative to such provision or the application thereof that
is invalid or unenforceable, it being the intent of the Parties that the basic purposes
and business intent of this Agreement are to be effectuated, with the consequence that
this Agreement shall terminate in full if the Parties are unable to renegotiate and
agree on such provision.
	                                                       
	 
	 	12.3	 	Assignability. Impax shall not assign, including by operation of law, this
Agreement or any of its rights or obligations hereunder to any Person without the prior
written consent of Wyeth, which consent may be provided or withheld in Wyeth’s sole
discretion, provided, however, that Impax may assign this Agreement and all of its
rights and obligations hereunder (a) to a Third Party successor in interest to all or
substantially all of the business of the Impax Pharmaceuticals division or (b) to any
of Impax’s Affiliates, provided, however, that any such assignee under (a) or (b) above
may not be an Excluded Person (as such term is defined in the License Agreement) or an
Affiliate of an Excluded Person at the time of such attempted assignment. Any such
permitted assignment shall not relieve Impax of any of its responsibilities for
performance of its obligations under this Agreement. Any assignment attempted in
contravention of

	                                                        

48

 

	 	 	 	this Section 12.3 shall be void and unenforceable. For the avoidance of doubt, Wyeth
may assign this Agreement and its rights and obligations hereunder without the
consent of Impax.
	 
	 	12.4	 	Notices. All notices given under this Agreement shall be in writing and
delivered by hand or sent by nationally recognized overnight delivery service, prepaid
registered or certified air mail, or by facsimile confirmed by prepaid first class,
registered or certified mail letter, and shall be deemed to have been properly served
to the addressee upon receipt of such written communication, Notices to Wyeth shall be
sent to: Wyeth Pharmaceuticals 500 Arcola Road Collegeville, Pennsylvania 19426 Attn:
Senior Vice President, Corporate Business Development Fax: (484) 865-6476 with a copy
to: Wyeth 5 Giralda Farms Madison, New Jersey 07940 Attn: General Counsel Fax: (973)
660-7156 Notices to Impax shall be sent to: Impax Laboratories, Inc. 30831 Huntwood
Avenue Hayward, CA 94544 Attn: President, Impax Pharmaceuticals Fax: (510) 471-1595
with a copy to: Impax Laboratories, Inc. 30831 Huntwood Avenue Hayward, CA 94544 Attn:
Legal Department Fax: (510) 476-2092. In the event that either Party changes its
address, such Party shall promptly notify and update the other Party in writing as to
such change.
	 
	 	12.5	 	Governing Law; Jurisdiction. This Agreement is subject to and governed by the
laws of the State of New York, excluding its conflict of laws provisions. Each of the
Parties hereby submits to the exclusive general jurisdiction of the courts of the State
of Delaware and the courts of the United States of America for the District of Delaware
in any action or proceeding arising out of or relating to this Agreement and to the
jurisdiction of the appellate courts to which appeals are required to be taken from any
of the foregoing. Each of the Parties irrevocably waives (i) any defense of
inconvenient forum to the maintenance of any such action or proceeding and (ii) its
right to a jury trial.
	 
	 	12.6	 	Dispute Resolution. In the event of the occurrence of a dispute, either Party
may, by written notice to the other Party, have such dispute referred to their
respective officers (designated below) or their successors or designees for attempted
resolution by good faith negotiations within thirty (30) days after such notice is
received. Said designated officers are as follows: For Wyeth: Wyeth Pharmaceuticals
President, U.S., Pharmaceuticals and Women’s Health Care For Impax: President, Impax
Pharmaceuticals. In the event the designated officers are not able to resolve such
dispute through good faith negotiations within such thirty (30) day period, either
Party may pursue any legal or equitable remedies available to it by filing a claim in
the state or federal courts designated in Section 12.5. Notwithstanding the foregoing,
nothing in this Section 12.6 shall prohibit a Party from seeking temporary or
injunctive relief from any state or federal court pending the resolution of a dispute
in accordance with the provisions of this Section 12.6.
	 
	 	12.7	 	No Waiver. The failure of either Party to require performance by the other
Party of any of that other Party’s obligations hereunder shall in no manner affect the

49

 

	 	 	 	right of such Party to enforce the same at a later time. No waiver by any Party of
any condition, or of the breach of any provision, term, representation or warranty
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver of
any such condition or breach, or of any other condition or of the breach of any
other provision, term, representation or warranty hereof.
	 
	 	12.8	 	Headings; Defined Terms. The headings and captions used in this Agreement are
solely for the convenience of reference and shall not affect its interpretation. The
term “including” means “including, without limitation,” and “herein”, “hereof’, and
“hereunder” refer to this Agreement as a whole. The word “will” shall be construed to
have the same meaning and effect as the word “shall”. All references herein to
Articles, Sections, Exhibits or Schedules shall be construed to refer to Articles,
Sections, Exhibits and Schedules of this Agreement, and references to this Agreement
include all Exhibits and Schedules hereto.
	 
	 	12.9	 	Counterparts. This Agreement may be executed in one or more counterparts each
of which shall be an original and all of which shall constitute together the same
document. Facsimile execution and delivery of this Agreement by either Party shall
constitute a legal, valid and binding execution and delivery of this Agreement.
	                                                       
	 
	 	12.10	 	Entire Agreement; Amendments. This Agreement (including all of the attached
Exhibits), and all the covenants, promises, agreements, warranties, representations,
conditions and understandings contained herein and therein, sets forth the complete,
final and exclusive agreement between the Parties with respect to the subject matter
hereof and supersedes and terminates all prior and contemporaneous agreements and
understandings between the Parties, whether oral or in writing, including the Letter of
Intent between the Parties dated April 1, 2008, with respect to the subject matter
hereof. There are no covenants, promises, agreements, warranties, representations,
conditions or understandings, either oral or written, between the Parties with respect
to the subject matter of this Agreement other than as are set forth in this Agreement.
No subsequent alteration, amendment, change, waiver or addition to this Agreement shall
be binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party. No understanding, agreement, representation or promise, not
explicitly set forth herein, has been relied on by either Party in deciding to execute
this Agreement. Notwithstanding the foregoing, this Agreement shall not relieve either
Party of any existing obligation under the Confidentiality Agreement between
the Parties dated October 8, 2007.
	                                                        
	 
	 	12.11	 	Further Actions. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all other acts, as may be necessary or appropriate in
order to carry out the purposes and intent of this Agreement.

[Remainder of page intentionally left blank]

50

 

     IN WITNESS WHEREOF, the Parties hereto have caused this Copromotion Agreement to be executed
by their duly authorized officers as of the Effective Date.

	 	 	 	 	 	 	 
	IMPAX LABORATORIES, INC.	 	WYETH, acting through its Wyeth
	 

	 	 	 	Pharmaceuticals Division
	 
	 	 	 	 	 	 
	By:

	 	/s/ Larry Hsu
	 	By:
	 	/s/ Gregory Norden
	 

	 	 
	 	 	 	 
	Name: Larry Hsu	 	Name: Gregory Norden
	Title: President & CEO	 	Title: Senior Vice President and CFO, Wyeth

51

 

SCHEDULE 1.79

Sample Receipt Forms

     Sample Receipt Forms utilized by Impax for distribution of Samples under this Agreement shall
contain the following information:

	                                                       
	 	•	 	Sample Receipt Number
	 
	 	•	 	PSR ID Number
	 
	 	•	 	PSR Name
	 
	 	•	 	Sales Territory Number
	 
	 	•	 	Call Date
	 
	 	•	 	Prescriber Information

	 	•	 	Name [Last, First, Middle Initial]
	 
	 	•	 	Address
	 
	 	•	 	Professional Designation [MD, DO, NP, PA, Other (specify)]
	 
	 	•	 	State License Number

	 	•	 	Product Information

	 	•	 	Product Name [e.g., XXXXX]
	 
	 	•	 	Dosage Strength/Package Size [e.g., 50mg (1 x 7)]
	 
	 	•	 	NDC Number [e.g., 1211-40]
	 
	 	•	 	Manufacturing Lot Number
	 
	 	•	 	Quantity distributed

	 	•	 	Practioner Signature
	 
	 	•	 	PSR Signature
	 
	 	•	 	The following disclosure language immediately under the Practioner Signature:

	 	•	 	“By signing, I certify: I am a licensed practitioner and can
legally prescribe in my state; if my authority is dependent, I have a current
collaborative agreement that includes the samples requested. I am requesting
samples so I may evaluate the efficacy & tolerability in an appropriate patient.
These samples will not be traded,
sold, offered for sale, bartered, or returned for credit, nor be submitted to any
public or private third-party payor for reimbursement. This is my personal
signature.”
	                                                        

 

 

SCHEDULE 1.94

Wyeth Sales Training Program for the Initial Product

	 	 	 	 	 
	Initial Training

	 	-
	 	XXXXX.
	POA Training

	 	-
	 	XXXXX.
	New Hire Training

	 	-
	 	XXXXX.

 

 

Exhibit A to Schedule 1.94

	                                                       
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Delivery	 	 
	 	 	 	 	 	 	 	 	 	 	Method*	 	Training
	 	 	 	 	 	 	Catalog	 	 	 	(Learning	 	Material
	Activity	 	Learning Activity Name	 	Category	 	Subcategory	 	Time)	 	Location*
	 
	þ
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Exam:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Exam:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Exam:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Exam:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Course:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 

	 	Exam:
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	 	XXXXX
	                                                        

 

SCHEDULE 3.4

Sample Calculation of Incentive Fee

	                                                       
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Market Share
	 	 	Contract Year 1	 	Contract Year 2	 	Change
	 
	 	 	 	 	 	 
	Total Prescriptions in XXXXX  Category

(All Prescribers)

	 	XXXXX
	 	XXXXX	 	 
	 
	 	 	 	 	 	 
	XXXXX TRx — All Prescribers

	 	XXXXX
	 	XXXXX	 	 
	 
	 	 	 	 	 	 
	XXXXX Market Share — All
Prescribers

	 	XXXXX%
	 	XXXXX%
	 	XXXXX%
	 
	 	 	 	 	 	 
	Total
Prescriptions in XXXXX Category

By Target Neurologists
	 	XXXXX
	 	XXXXX	 	 
	 
	 	 	 	 	 	 
	XXXXX TRx — Target
Neurologists

	 	XXXXX
	 	XXXXX	 	 
	 
	 	 	 	 	 	 
	XXXXX Market Share —
Target Neurologists

	 	XXXXX%
	 	XXXXX%
	 	XXXXX%
	 
	 	 	 	 	 	 
	Incremental Market Share (amount by which increase
in Target Neurologist
Market Share for XXXXX exceeds increase in Market Share for XXXXX for all prescribers)

	 	 	 	 	 	XXXXX%
	 
	Incremental Prescriptions
by Target Neurologists
above Baseline (Incremental
Market Share times Total
Prescriptions in XXXXX Category By Target Neurologists)
	 	 	 	 	 	XXXXX
	 
	 	 	 	 	 	 
	Average Selling Price per Tablet for XXXXX tablets

	 	 	 	 	 	$XXXXX
	 
	 	 	 	 	 	 
	XXXXX tablets per TRx

	 	 	 	 	 	XXXXX
	 
	 	 	 	 	 	 
	Value of each XXXXX TRx

	 	 	 	 	 	$XXXXX
	 
	 	 	 	 	 	 
	Incremental Net Sales (Net Sales resulting from Target
Neurologist TRxs above baseline)

	 	 	 	 	 	$XXXXX
	 
	 	 	 	 	 	 
	Incentive Fee: 15% of
Incremental Net Sales

	 	 	 	 	 	$XXXXX
	                                                        

 

Description of calculation

Market Share for XXXXX for all prescribers is calculated for Contract Year 1 and Contract Year 2 as
shown above. Market Share for all prescribers increased XXXXX% from year 1 to year 2 (XXXXX% -
XXXXX%). The same calculation is done for the Target Neurologist Market Share. This calculation
shows market share for the target neurologists increased by XXXXX% (to XXXXX% from XXXXX%). The
calculation shows that Target Neurologist Market Share increased by XXXXX % (XXXXX % — XXXXX %)
more than the increase in Market Share for all prescribers. A XXXXX % increase in Target
Neurologist Market Share translates into an incremental increase in TRxs of XXXXX (XXXXX * XXXXX%).
From Wyeth’s internal sales reporting system, Wyeth calculates that the average net selling price
per tablet of XXXXX during this year is $ XXXXX per tablet and Wyeth has determined that a TRx
of XXXXX contains 30 tablets, hence, each TRx of XXXXX is worth $XXXXX ($XXXXX * XXXXX) of Net
Sales value. The incremental increase in prescriptions for XXXXX obtained from Targeted
Neurologists above the general increase therefore results in Incremental Net Sales of $XXXXX (XXXXX
* $XXXXX). Impax is paid an incentive fee of XXXXX% of this amount or $XXXXX for the Contract Year.

 

SCHEDULE 6.4.6

Wyeth Form 1747(b)

SEE ATTACHED

 

 

	Send to: GSSE Triage Unit Form 1747B500 Arcola Road, Dock E WyethAdverse
Event Record            Collegeville, PA 19426-3930 Fax No.610-9S9-5544 Please Type Or
Print Lightly Using Black Ball-Point Pin Use Date format: DD-MMM-YYYY Wyeth
Report No.: Date Received: ? Initial? Follow-UpD Spontaneous? Study
Reporter Information (Report Source) Name;? Physician Specially; Facility
Name: ‘ D Pharmacist Street Address:D Nurse City:Stale/Province:Zip/Post
Code: Consumer ?Attorney Country;Telephone No.: Other: Patient In
formation Patient            Sex            Pregnant? Weight            Height
Birth Date            Race Initials/Identification(At Event) (At Event) Male
? Yes = Asian ? Black MO
? other Wyeth Product Information see
page 1 for additional space) Wyeth Product:Lot Number:Indication For
Use;Route Of Administration ?TO DW            Topical ? Device ?SC ? IV
? Other: Dose strength/form: Dose Frequency:Therapy Start Dale;Therapy Stop
Date: Additional Product;Lot Number.Indication FOR USERoute Of Administration
?PO            IM ? Topical ? Device ?SC            IV ? Other Dose
strength/form; Dose Frequency: Therapy Start Dale:
Therapy Slop Dale: Adverse

 

	Event or Other Reportable Information to GSSE (give pertinent detail! Killed to
event; see page 2 for additional space) If Adverse Event Not            If Adverse Event
Not Adverse Events or other”, , Did PatientTreatmentTreated: Did Event
Improve            Treated; Did Event Reappear Reportable Information to            On
DaleReqovsr?(Spfflijy)A(lcr pnjdiK[ Diaeon[fnucd            produ:l Was
PtTM GSSEOr Dose Reduced-1Reinlroduced? D Unknown” Ys            N            D N’A
D VcS            No            D WA YES NO            S 1 ? UnJaimM1nvis
DN” nwA            nves DN” CWA Yes No 1 Unknown            D Ves            Q No            CI N/A ?
Yes ? No ? N/A ? Yes ? No ? Unknown D VtS            No            C WA            D
Vt= Q No            NM Check All Ttat Apply: D R“uhed In Death (dateand
cmeofde-ih): ?Immediately UAHTIMW*!J-J Caiigffl.tii] a Bjrth
?R iiired Or Frulonged Lnpaiient H&apiteli2ationi-i || LJU1KT ?Re.ulted 1, A
Penitent Or Signrficant DistAi! g j            PREPARED BY:
(PRINT) SIGNATURE:DATE: PHONE ?
Send to: GSSE Triage Unit Form 1747B500 Arcola Road, Dock E WyethAdverse
Event Record            Collegeville, PA 19426-3930 Fax No.610-9S9-5544 Tittle Typt Or
Print Legibly Ullng Black Ball-Point Pen
lilt Bite format: DD-MMM-YYYY Wyelh Repurt Nil.: Cnninmlunt FroducMi) (incJmlt
ovtr-the-rauntrx, tltrbll ind nutflllonal prmluttt, tec am mem Itflklll btlow
for Iddilkiinl ipice) .. P1TM1“5.1
Indication For USE            Roule            P t            Dost
Fm ucncy            Therapy DaisOr Duiaiion (include ;mi;ni;
name) iirengih/farn] ‘ Reltvant Lahorsiory Data And Dltgnojtte
Testt/Proceduro (IK comment wttlflo below for addldoml ipice)
Dale            Tcsl/FKicedure            Rtsuit (include units) Nurmal Range (include units) Relevant
Medical History (e.g., ditgnuts, illergics, [miiiiii drug reactions, prejlllncy
with LMF and EDC, uiuiWng hitiury) STUDY SECTION (cotnpleit If Study h checked
on page 1) Paliunl Initials
lnvcsligatm No.PaticnlNo.FtiiKlumi/armn
No. PrajiKt Nu.
Prolucul No. According to the investigator, was Ihe event
praduct-rtlated? Q Yes ? Nti (see next box) According to the
invesrigjtor, if the eveni was not pinduct-related, was the event possibly
related to protocol’? (E.G., TO A PROTOCOL-RELATED PROCEDURE) ? Yts (explain):
QNo            Q N/A If nut product- or protocol-relate
d, is thEnranuihermore likely
explanation? G Yes(eipUin); ? No            Q N’A Cummtati            Initials; Dale:
1747B            PAGE 2 OF 2

 

 

FORM 1747B ADVERSE EVENT RECORD DIRECTIONS

GENERAL DIRECTIONS:

This form is for use by non-Local Safety Surveillance Unlt (LSSU)
personnel.

Ensure legibility and accuracy. Print or type in large clear (un-bolded) font as report
may be faxed/scanned multiple times. To ensure accurate interpretation, use only standard medical
terminology and avoid non-standard abbreviations or acronyms. All dates must be recorded in the
DD/MMM/YYYY format (e.g.10/NOV/2001).

Submit completed form within 24 hours of the date received by Wyeth if reporting initial or
follow-up study reports containing fatal or life-threatening adverse events that are considered
related to either study product or study protocol.

Submit completed form within 2 business days of the date received by Wyeth if reporting initial or
follow-up reports containing:

	 	•	 	other study serious adverse events (SAEs; excluding fatal or
life-threatening events),
	 
	 	•	 	serious and non-serious spontaneous AEs,
	 
	 	•	 	AEs with Special Interest/Circumstances including Product-Specific
Medically Important AEs and Potentially Medically Important AEs,
	 
	 	•	 	related SAEs from Investigator originated protocol (IOP) studies, or
	 
	 	•	 	other reportable information {i.e. pregnancy exposure, lactation
exposure, overdose, abuse, device malfunction, accidental exposure and medication error).

Submit completed 1747B forms to the GSSE Triage Unit via one of the following methods:

	 	 	 
	(1) Fax: Attention:

	 	GSSE Triage Unit
	 

	 	(610) 989-5544 
	 
	 	 
	(2) Intranet e-mail:

	 	GSSE Triage Unit
	 
	 	 
	(3) Interoffice mail:

	 	GSSE Triage Unit
	 

	 	Collegeville, Dock E
	 
	 	 
	(4) Overnight mail:

	 	GSSE
	 

	 	Wyeth Research
	 

	 	GSSE, Triage-Dock E
	 

	 	 500 Arcola Road 
	 

	 	Collegeville, PA 19426

NOTE: AE information should be mailed only if the GSSE Triage Unit will
receive it within two business days of the date received by Wyeth.

					
	 	 	 	 	 
	1747B DIRECTIONS
	 	PAGE 1 OF 6
	 	07OCT2005

 

 

FORM 1747B ADVERSE EVENT RECORD DIRECTIONS

Wyeth Report No.

	 	•	 	Enter Wyeth report number if known.

Date Received

	 	•	 	The date any Wyeth employee identifies information reportable to GSSE (including an
employee of a Wyeth Affiliate) or an agent of Wyeth (including contract research
organizations) received or learned of the AE or other reportable information (for example,
oral communication, telephone call, letter, fax or electronic transmission). Use date
format DD/MMM/YYYY.

Initial Or Follow-Up

	 	•	 	Identify report as initial or follow-up by checking the appropriate
box.

Spontaneous Or Study Information

	 	•	 	Identify report as spontaneous or study by checking the appropriate box.
	 
	 	•	 	If study, complete the Study Section on page 2.

Reporter Information

	 	•	 	This is the person who reports the facts about the AE or other reportable information.
Complete all fields if applicable.
	 
	 	•	 	Identify the occupation of the reporter (for example, physician) including
specialty if applicable. If “other” is chosen please specify.

Patient Information

	 	•	 	Provide the patient’s initials or some other type of identifier that will allow both the
submitter and the initial reporter (if different) to locate the case if contacted for follow up.
	 
	 	•	 	Identify the patient’s sex if known.
	 
	 	•	 	Indicate whether exposure to the product occurred during a pregnancy. If the patient is
an adult male and the patient’s female partner was impregnated/pregnant at the time of
exposure select “yes.” Specify additional details (e.g.,
last menstrual period) in relevant
medical history.
	 
	 	•	 	Provide the patient’s weight at the time of the first event, followed by the unit of weight.
	 
	 	•	 	Provide the patient’s height followed by the unit of height.
	 
	 	•	 	Provide the patient’s date-of-birth in the DD MM YYYY format.
	 
	 	•	 	Provide the patient’s age at the time of the first event, followed by the appropriate unit.
	 
	 	•	 	Select the patient’s race. If “other” please specify.

Wyeth Product Information

Wyeth Product

	 	•	 	Specify Wyeth Product

Lot Number

	 	•	 	Enter lot number provided or “Unknown” if applicable.

Indication for use

Route of Administration

	 	•	 	Check appropriate box. If “other” is chosen please specify.

					
	 	 	 	 	 
	1747B DIRECTIONS
	 	PAGE 2 OF 6
	 	07OCT2005

 

 

FORM 1747B ADVERSE EVENT RECORD DIRECTIONS

Dose Strength/Form

	 	•	 	Enter the strength (e.g. 100 mg, 5 ml) and the dose form (e.g. tablet, capsule, injection).

Dose Frequency

	 	•	 	Enter the frequency of the dose (e.g. once a day, twice weekly).

Therapy Start Date

	 	•	 	Enter the date the therapy was started.

Therapy Stop Date

	 	•	 	Enter the date the therapy was stopped. Note that stop date is defined as the last
day on which drug was received-not the first day off drug. If therapy continues, enter
“continues”.

Additional Product Information

Additional Product

	 	•	 	Enter additional dosage regimens and/or suspect products. If additional space is
needed use Concomitant Product(s) section on page 2.

Lot Number

	 	•	 	Enter lot number provided or “Unknown” If applicable.

Indication for use

Route of Administration

Dose Strength/Form

	 	•	 	Enter the strength (e.g. 100 mg, 5 ml) and the dose form (e.g. tablet, capsule, injection).

Dose Frequency

	 	•	 	Enter the frequency of the dose (e.g. once a day, twice weekly).

Therapy Start Date

	 	•	 	Enter the date the therapy was started.

Therapy Stop Date

	 	•	 	Enter the date the therapy was stopped. Note that stop date is defined as the last
day on which drug was received-not the first day off drug. If therapy continues, enter
“continues”.

Adverse Event or Other Reportable Information to GSSE

Adverse Event(s) or Other Reportable Information to GSSE

	 	•	 	List one diagnosis or other reportable information to GSSE per box.
	 
	 	•	 	if a diagnosis is not available, list the sign(s) and symptom(s).
	 
	 	•	 	Specify events/other reportable information to GSSE, not interventions/procedures (e.g.
cholelithiasis vs. cholecystectomy).
	 
	 	•	 	For more than four events or other reportable information to GSSE, attach an additional
page 1 and complete Adverse Event(s) or Other Reportable Information to GSSE and the
patient information.

Onset Date

	 	•	 	Provide the onset date of the event or other reportable information to GSSE.

					
	 	 	 	 	 
	1747B DIRECTIONS
	 	PAGE 3 OF 6
	 	07OCT2005

 

 

FORM 1747B ADVERSE EVENT RECORD DIRECTIONS

Did Patient Recover?

	 	•	 	Check yes, no or unknown as applicable.

Treatment (specify)

	 	•	 	List the treatment(s) used for the reported event or other reportable information to GSSE.

If Adverse Event Not Treated: Did Event Improve After Product Discontinued Or Dose Reduced?

	 	•	 	Check “N/A” when one of the following applies:

	 	•	 	The product was not discontinued.
	 
	 	•	 	After the product was discontinued, the reaction abated because of intervention
(i.e. treatment).
	 
	 	•	 	An irreversible event occurred (e.g. stroke, MI, blindness).
	 
	 	•	 	The Wyeth product was a one-dose product.
	 
	 	•	 	The event occurred after the product was discontinued.
	 
	 	•	 	The reported event/information was any of the following: death, congenital
anomaly, persistent disability, lack of drug effect, abuse, overdose, pregnancy,
accidental exposure, or device malfunction.
	 
	 	•	 	More than one drug’s dosage was reduced or more than one drug was
discontinued.
	 
	 	•	 	The event abates (improves, resolves or dissipates) spontaneously prior to
dechallenge,
	 
	 	•	 	Not enough time has elapsed to make a dechallenge assessment.

If Adverse Event Not Treated: Did Event Reappear When Product Was Reintroduced?

	 	•	 	Check “N/A” when one of the following applies:

	 	•	 	Rechallenge does not occur.
	 
	 	•	 	Rechallenge was unknown.
	 
	 	•	 	The product was never discontinued or the dose was never reduced.
	 
	 	•	 	The Wyeth product was a one-dose product.
	 
	 	•	 	The event occurred after the product was discontinued.
	 
	 	•	 	The event recurs after reintroduction of more than one drug.

Check All That Apply: This Section includes Serious Criteria

	 	 	 	NOTE: If more than one box is checked in this section, use the Comments section to list
each event with its corresponding serious criteria.

	 	•	 	Immediately Life Threatening - Life threatening events refer to
events that
place the subject at immediate risk of death from the events as they occur, i.e.,
it
does not include a reaction that, had it occurred in a more severe form, might
have caused death.
	 
	 	•	 	Required or Prolonged Inpatient Hospitalization - A patient is
admitted to the hospital for one or more days. This would include an emergency
visit that resulted in admission to the hospital. Note: Emergency room visits that
do not result in admission to the hospital should be evaluated for one of the
other serious criteria (e.g., life threatening).
	 
	 	•	 	Resulted in A Persistent Or Significant Disability - A substantial
disruption in a
person’s ability to conduct normal life functions.
	 
	 	•	 	Resulted in Death - Select death if death is the outcome of the
reported
adverse event. List date and cause of death.
	 
	 	•	 	Autopsy Performed? Check applicable response.
	 
	 	•	 	Congenital Anomaly or Birth Defect.
	 
	 	•	 	Cancer.

					
	 	 	 	 	 
	1747B DIRECTIONS
	 	PAGE 4 OF 6
	 	07OCT2005

 

 

FORM 1747B ADVERSE EVENT RECORD DIRECTIONS

	 	•	 	None Of The Above - check this box (if the event is a non-serious
event or considered an event that would be included in Other Information
Reportable to GSSE.

	 	 	 	NOTE: If reporting serious and non-serious events, use the comment section to
differentiate what event(s) are serious (as stated above in NOTE) and which
event(s) are non-serious.

Prepared By

	 	•	 	Preparer is required to legibly print name and phone number, sign and date 1747B form.

Wyeth Report No.

	 	•	 	Enter Wyeth report number if known.

Concomitant Product(s)

	 	•	 	Enter brand and generic names if available.
	 
	 	•	 	If a concomitant medication or therapy is suspected of causing the SAE,
indicate as
suspect medication.
	 
	 	•	 	Enter indication for use, lot #, dose/strength/form/frequency and therapy dates or
duration
if known.

Relevant Laboratory Data And Diagnostic Tests/Procedures

	 	•	 	If dates are unavailable, specify if the lab/test results relate to baseline, during
administration of Wyeth/suspect product, at the time of the AE/SAE, follow up to the
AE/SAE, etc.
	 
	 	•	 	Enter test/procedure, result (include units) and normal range (include units) if known.

Relevant Medical History

	 	•	 	Relevant information

Study Section

	 	•	 	All fields are mandatory for study reports
	 
	 	•	 	Complete Patient Initials, Investigator No., Patient No., Randomization No., Project
No.,
and Protocol No. boxes.
	 
	 	•	 	If Project No, or Protocol No. is unknown or study does not have an assigned number,
indicate type of study: Registry, Compassionate Use, or Named Patient Program.

Check Yes Box if Event Product-Related

	 	•	 	An AE is considered “product-related” for the purposes of regulatory reporting if either
the investigator, the medical monitor, the CR&D Project Team Leader, or the local
medical monitor assess the AE as product related. If the investigator’s assessment is
unknown or unclear, the AE is treated as product-related for purposes of reporting to
regulatory authorities. Of note, a product related assessment is not required for
situations of pregnancy exposure, lactation exposure, overdose, abuse, device
malfunction, accidental exposure, or medication error if no SAE occurred.

					
	 	 	 	 	 
	1747B DIRECTIONS
	 	PAGE 5 OF 6
	 	07OCT2005

 

 

FORM 1747B ADVERSE EVENT RECORD DIRECTIONS

Possible Cause of SAE Other Than Study Product - If “No” is checked in the product-related box,
specify another possible cause of the SAE. Check “Yes” box if protocol related and the event was
not product-related

	 	•	 	A protocol-related adverse event is an adverse event that is not related to the test
product or comparator but is considered by the investigator to be related to the research
conditions (e.g. a protocol required procedure or a protocol required concomitant
medication). For example, a subject has a syncopal episode, falls and experiences a
concussion during a protocol-required phlebotomy.
	 
	 	•	 	Another More Likely Explanation - Check “Yes” box if not product or protocol-related
and provide more likely explanation/cause.

Comments

Only complete the comments section if you need to explain an adverse event that you entered in the
AE Information Section or need more room to add additional AE’s. Provide information relevant to
the event. Summarize in chronological order and include the following information:

	 	•	 	Signs and symptoms that preceded event
	 
	 	•	 	Description of the event(s) with corresponding serious criteria if necessary
	 
	 	•	 	Diagnosis, treatment, prognosis and/or plan
	 
	 	•	 	Date of hospital admission and discharge, if applicable
	 
	 	•	 	Cause of death. If applicable

Initials and Date

					
	 	 	 	 	 
	1747B DIRECTIONS
	 	PAGE 6 OF 6
	 	07OCT2005

 

 

SCHEDULE 6.6

Wyeth Form 8202

SEE ATTACHED

 

 

DIRECTIONS FOR FORM USAGE: COMPLETELY FILL OUT ALL INFORMATION REQUESTED. REMOVE PART ONE, REMOVE
PROTECTIVE STRIP TO EXPOSE ADHESIVE, FOLD PART ONE IN HALF ON PERFORATION. PART ONE IS NOW A
MAILABLE DOCUMENT. RETAIN PART TWO FOR YOUR RECORDS.

WYETH

HEALTHCARE PROFESSIONAL’S

REQUEST FOR PRODUCT INFORMATION

Please fax completed RPI forms to: (800) 955-2534 or (888) 237-3389

	 	 	 	 	 	 	 
	Name
of Representative
MS.
MRS.
MR.

	 	Terr. #
	 	Voice Mail #
	 	Date of Request
	 

Submission of adverse events on this form is a violation of corporate policy. Adverse events should be reported
directly to Global Safety Surveillance and Epidemiology (GSSE) on an Adverse Experience Record (Form 1747).

PRODUCT:__________________(Product name must be recorded in address area on reverse side also)

Specific
Medical Information Requested:                                                    
                                                                        
                      

 

 

 

 

 

 

 

FOLD

Send Information To: (PLEASE TYPE OR PRINT LEGIBLY)

	 
	Name

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	Title
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	M.D. o

	 	D.O. o
	 	R.Ph. o
	 	Pharm.D. o
	 	R.N. o
	 	P.A. o
	 	N.P. o
	 	Other o      

	 	 	 
	 

	Specialty

	 	Facility
	 
	 

	Address
	 	 
	 
	 

	 
	 	 

	 	 	 
	 

	Email Address:

	 	Desired Response Method:
	 

	 	o Standard Mail o Fax o Email

	 	 	 
	 

	Phone

(              )

	 	Fax

(              )

I request the information described above to be sent to me by the
Global Medical Communications Department of Wyeth Pharmaceuticals. X

*Note: Signature of health-care professional is required for processing of inquiry

GLOBAL MEDICAL COMMUNICATIONS COPY RETURN TO HOME OFFICE

 

SCHEDULE 7.3

Initial Product Patents

U.S. Patent XXXXX

U.S. Patent XXXXXEXHIBIT 4.1

Exhibit 4.1

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of January 14, 2009, between
Health Benefits Direct Corporation, a Delaware corporation (the “Company”), and the investors
identified on the signature pages hereto (each, an “Investor” and collectively, the “Investors”).

     WHEREAS, the Company is offering, pursuant to one or more similar Agreements, (the “Other
Securities Purchase Agreements”), on a “best efforts” basis in a private placement to “accredited
investors” (as such term in defined in Regulation D promulgated under the Securities Act of 1933,
as amended (the “Securities Act”)) of units (the “Units”) of up to 1,250,000 shares of the
Company’s Series A Preferred Stock, $0.001 par value per share (the “Preferred Stock”) and
five-year warrants (all such warrants being the “Warrants”) to purchase shares of Preferred Stock,
in the form attached hereto at Exhibit A;

     WHEREAS, each Unit will be offered at a purchase price of $4.00 per Unit (the “Per Unit
Purchase Price”) and will consist of (i) one share of Preferred Stock and (ii) a Warrant to
purchase one share of Preferred Stock (which on and after the Common Stock Authorization Date set
forth in the Warrants, will entitle the holder only to purchase, subject to adjustment, 20 shares
of the Company’s Common Stock, $0.001 par value per share (the “Common Stock”)). The Preferred
Stock shall have the other rights set forth in the Certificate of Designation attached hereto as
Exhibit B (the “Certificate of Designation”);

     WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Investor, and each Investor, severally and not jointly, desires to purchase
from the Company certain securities of the Company, as more fully described in this Agreement.

     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and the Investors agree as follows:

ARTICLE I.

DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:

          “Action” means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened in writing against
or affecting the Company, any Subsidiary or any of their respective properties, or the Common
Stock, or any officers, directors or key employees of the Company or any of its Subsidiaries,
before or by any court, arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or trading facility.

 

 

     “Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144.

     “Bloomberg” means Bloomberg Financial Markets.

     “Business Day” means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of New York are authorized or required
by law or other governmental action to close.

     “Closing” means the closing of the purchase and sale of the Units pursuant to Section 2.1.

     “Closing Date” means the Business Day immediately following the date on which all of the
conditions set forth in Sections 5.1 and 5.2 hereof are satisfied or waived, or such other date as
the parties may agree, provided that such conditions continue to be so satisfied or waived on such
Business Day.

     “Co-Investment Fund” means The Co-Investment Fund II, L.P.

     “Commission” means the Securities and Exchange Commission.

     “Common Stock Equivalents” means any securities of the Company or any subsidiary which entitle
the holder thereof to acquire Common Stock at any time, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any time convertible into
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common Stock.

     “Common Stock Exchange Warrant” means a warrant to purchase a share of Common Stock
substantially in the form of Exhibit C

     “Company Counsel” means Morgan, Lewis & Bockius LLP.

     “Company Deliverables” has the meaning set forth in Section 2.2(a).

     “Company Shares” means the shares of Preferred Stock issued to the Investors by the Company
pursuant to this Agreement, including any securities into which such shares of Preferred Stock may
hereafter be reclassified or changed.

     “Common Stock Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

     “Company’s IP” has the meaning set forth in Section 3.1(p).

     “Confidential Information” means trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, processes, procedures and

2

 

techniques,
research and development information, computer program code, performance
specifications, support documentation, drawings, specifications, designs, business and
marketing plans, and customer and supplier lists and related information).

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

     “Delaware Courts” means the state and federal courts sitting in the City of Wilmington, State
of Delaware.

     “Designated Investor” has the meaning set forth in Section 4.15.

     “Disclosure Letter” means any of the disclosures hereto containing information relating to the
Company pursuant to Article III and other provisions hereof that has been provided to the Investors
on the date hereof.

     “Disclosure Materials” has the meaning set forth in Section 3.1(h).

     “Effective Date” means the date that the Registration Statement filed pursuant to Section
2(a), 2(b) or 2(c) of the Registration Rights Agreement (as applicable) is first declared effective
by the Commission.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended

     “Exchange Warrant” means a unit consisting of (i) one Preferred Stock Exchange Warrant and
(ii) one Common Stock Exchange Warrant.

     “Exchange Warrant Shares” means the shares of Preferred Stock or Common Stock issuable upon
exercise of the Exchange Warrants.

     “Follow-On Shareholder Financing” has the meaning set forth in Section 4.20.

     “Fundamental Transaction” means (1) any merger or consolidation of the Company with or into
another Person (whether or not the Company is the surviving corporation), (2) any sale, assignment,
transfer, or other disposition of all or substantially all of the Company’s assets in one or a
series of related transactions, (3) the completion of any purchase, tender offer or exchange offer
(whether by the Company or another Person) pursuant to which holders of Common Stock are permitted
to tender or exchange their shares for other securities, cash or property that is accepted by more
than 50% of the outstanding shares of Common Stock, or (3) any stock purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme or arrangement ) with another Person whereby such other Person acquires more than 50% of
the outstanding shares of Common Stock (4) any reorganization, recapitalization, or
reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property.

3

 

     “GAAP” means U.S. generally accepted accounting principles.

     “Infringe” has the meaning set forth in Section 3.1(p).

     “Intellectual Property” shall mean any or all of the following and all rights in, arising out
of, or associated therewith: (a) all United States, international and foreign registered patents
and applications therefor and all underlying patent rights, reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof; (b) all inventions
(whether patentable or not), ideas, processes, invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology, improvements, discoveries, technical data, customer
lists, proprietary processes and formulae, all source and object code, algorithms, architectures,
structures, display screens, layouts, development tools and all documentation and media
constituting, describing or relating to the above, including, without limitation, manuals,
memoranda and records; (c) all copyrights, copyrights registrations and applications therefor,
copyrightable material including derivative works, revisions, transformations and adaptations,
material that is subject to non-copyright disclosure protections, and all other works of authorship
and designs (whether or not copyrightable), and all other rights corresponding thereto throughout
the world; (d) all trade names, logos, trade dress, common law trademarks and service marks,
trademark and service mark registrations and applications therefor throughout the world; (e) domain
names; (f) web sites and related content; (g) intellectual property rights acquired by license or
agreement; (h) damages or benefits derived from any action arising out of or related to the
foregoing, including laws controlling computer and Internet rights; (i) all manuals, documentation
and materials relating to the above; and (j) any equivalent rights to any of the foregoing anywhere
in the world.

     “Investment Amount” means, with respect to each Investor, the Investment Amount indicated on
such Investor’s signature page to this Agreement.

     “Investor Deliverables” has the meaning set forth in Section 2.2(b).

     “Investor Party” has the meaning set forth in Section 4.7.

     “License Agreements” has the meaning set forth in Section 3.1(p).

     “Lien” means any lien, charge, encumbrance, security interest, preemptive or similar rights,
right of first refusal or other restrictions of any kind, other than restrictions on the transfer
of securities arising under federal or state securities laws and regulations.

     “Material Adverse Effect” means any of (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on operations
(including the results thereof), assets, liabilities, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
impairment to the Company’s ability to perform on a timely basis its obligations under any
Transaction Document.

4

 

     “Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.

     “Preferred Stock Exchange Warrant” means a warrant to purchase shares of Preferred Stock
substantially in the form of Exhibit D.

     “Preferred Stock Warrant Shares” means the Preferred Stock issuable upon exercise of the
Warrants.

     “Principal Market” means the National Association of Securities Dealers, Inc. OTC Bulletin
Board.

     “Prior Warrants” has the meaning set forth in Section 5.1(h).

     “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.

     “Proxy Statement” has the meaning set forth in Section 4.18.

     “Registrable Securities” has the meaning set forth in the Registration Rights Agreement.

     “Registration Statement” means a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale by the Investors of the Registrable
Securities (as defined therein) to the extent provided for therein.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date
of this Agreement, among the Company and the Investors, in the form of Exhibit E hereto.

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

     “SEC Reports” has the meaning set forth in Section 3.1(h).

     “Securities” means, collectively, the Company Shares, the Conversion Shares, the Warrants, the
Exchange Warrants, the Warrant Shares, the Exchange Warrant Shares and the Units.

     “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 of
Regulation SHO and include all types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, short sales, swaps and similar arrangements (including on a total
return
basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers
having the effect of hedging the securities or investment made under this Agreement.

5

 

     “Stockholder Approval” has the meaning set forth in Section 4.18.

     “Stockholder Approval Deadline” has the meaning set forth in Section 4.18.

     “Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation
S-X promulgated by the Commission under the Exchange Act, including without limitation those
entities listed in Exhibit 21.1 to the Form 10-KSB.

     “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or,
if the Principal Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is then traded;
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York City time).

     “Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange,
the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the
Principal Market on which the Common Stock is listed or quoted for trading on the date in question.

     “Transaction Documents” means this Agreement, the Registration Rights Agreement, the Warrants,
the Exchange Warrants, and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

     “VWAP” means, for any security as of any date, the dollar volume-weighted average price for
such security on the Principal Market (or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or securities market on
which the Common Stock is then traded) during the period beginning at 9:30:01 am., New York City
Time, and ending at 4:00:00 p.m., New York City Time, as reported by Bloomberg through its “Volume
at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of
such security in the over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York City Time, and ending at 4:00 p.m., New York
City Time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for
such security by Bloomberg for such hours, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If VWAP cannot be
calculated for such security on such date on any of the foregoing bases, the VWAP of such security
on such date shall be the fair market value as mutually determined by the Company and the Investor.
If the Company and the Investor are unable to agree upon the fair market value of such security,
then they shall agree in

6

 

good faith on a reputable investment bank to make such determination of
fair market value, whose determination shall be final and binding and whose fees and expenses shall
be borne by the Company. All such determinations shall be appropriately adjusted for any share
dividend, share split or other similar transaction during such period.

          “Warrant Shares” mean the shares of Preferred Stock or Common Stock issuable upon the exercise
of the Warrants being sold under this Agreement.

ARTICLE II.

PURCHASE AND SALE

     2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing, the Company shall issue and sell to the Investors, and the Investors shall, severally and
not jointly, purchase from the Company the portion of 1,250,000 Units representing such Investor’s
Investment Amount. The Closing shall take place at the offices of Morgan, Lewis & Bockius LLP,
1701 Market Street, Philadelphia, PA 19103 on the Closing Date, or at such other location or time
as the parties may agree.

     2.2  Closing Deliveries. (a)  At each Closing, the Company shall deliver or cause to
be delivered to each Investor the following (the “Company Deliverables”):

               (i) a stock certificate representing a number of Company Shares equal to such Investor’s
Investment Amount divided by the Per Unit Purchase Price, registered in the name of such Investor;

               (ii) a certificate evidencing the formation and good standing of the Company issued by the
Secretary of State of Delaware as of a date within fifteen (15) days of the Closing Date;

               (iii) a certified copy of the Certificate of Incorporation as certified by the Secretary of
State of the State of Delaware within fifteen (15) days of the Closing Date;

               (iv) evidence of the filing of the Certificate of Designation with the Secretary of State of
the State of Delaware;

               (v) a certificate, executed by the Assistant Secretary of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with Section 3(c) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Investor, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the Closing;

               (vi) a Warrant, registered in the name of such Investor pursuant to which such Investor shall
have the right to acquire the number of shares of Preferred Stock equal to the number of Company
Shares issuable to such Investor pursuant to Section 2.2(a)(i);

               (vii) the legal opinion of Company Counsel, in substantially the form previously provided to
the Investors, addressed to the Investors;

7

 

               (viii) the Registration Rights Agreement and any other Transaction Documents which the Company
is required to execute hereunder, duly executed by the Company; and

               (ix) such other documents relating to the transactions contemplated by this Agreement as such
Investor or its counsel may reasonably request.

          (b) At each Closing, each Investor shall deliver or cause to be delivered to the Company the
following (the “Investor Deliverables”):

               (i) its Investment Amount, in United States dollars and in immediately available funds, by
wire transfer to an account designated in writing by the Company for such purpose attached hereto
at Exhibit F ; and

               (ii) the Registration Rights Agreement, duly executed by such Investor.

ARTICLE III.

REPRESENTATIONS AND

WARRANTIES

     3.1 Representations and Warranties of the Company. The Company hereby makes the
following representations and warranties to each Investor:

          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than as
specified in the SEC Reports. The Company owns, directly or indirectly, all of the capital stock
of each Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights. The Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.

          (b) Organization and Qualification. The Company and each Subsidiary are duly
incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently
conducted and as presently proposed to be conducted, except in each case as would not, individually
or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or charter documents. The
Company and each Subsidiary are duly qualified to conduct its respective businesses and are in good
standing as a foreign corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

8

 

          (c) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution and delivery of
each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated hereby, including, without limitation, the issuance of the Securities and the
reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the
Warrants, have been duly authorized by all necessary corporate action on the part of the
Company and no consent or further corporate action is required by the Company, its Board of
Directors or its stockholders in connection therewith (except for the Stockholder Approval required
for the issuance of the Conversion Shares, the issuance of the Common Stock Warrant Shares, and, in
the event that all of the investors in the Company’s March 31, 2008 Common Stock and warrant
financing do not exchange all of their warrants for Exchange Warrants, for the issuance of Exchange
Warrant Shares in the form of Common Stock). Each Transaction Document has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as rights to indemnity and contribution may be limited
by state or federal securities laws or the public policy underlying such laws, and except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.

          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions contemplated
thereby do not and will not (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations and the rules and regulations of the Principal Market), or by which
any property or asset of the Company or a Subsidiary is bound or affected; except in the case of
each of clauses (ii) and (iii), such as would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.

9

 

          (e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing with the Commission of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, (ii) filings required by
state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iv) the filings required in accordance with
Sections 4.4 (and any related amendments to, or related prospectus supplements to, the Company’s
outstanding registration statement filed on Form SB-2) and 4.6, (iv) the Stockholder Approval
required for the issuance of the Conversion Shares and the Common Stock Warrant Shares and (v)
those that have been made or obtained prior to the date of this Agreement. The
Company and its subsidiaries are unaware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the registration, application or filings pursuant to
this Section 3.1(e).

          (f) Issuance of the Securities. The Company Shares, the Warrants, and the Preferred
Stock Warrant Shares have been duly authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and
clear of all Liens. Upon Stockholder Approval, the Conversion Shares will be duly authorized and,
upon issuance pursuant to the Company Shares, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. Upon Stockholder Approval, the Common Stock Warrant
Shares and the Exchange Warrants Shares in the form of Common Stock will be duly authorized and,
when issued and paid for in accordance with the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens.. The Company has reserved from
its duly authorized capital stock the Preferred Shares issuable pursuant to this Agreement and the
Warrants in order to issue the Company Shares and the Preferred Stock Warrant Shares. When issued
pursuant to the terms of the Company Shares and the Warrants, the Conversion Shares, the Warrant
Shares, and the Exchange Warrant Shares will be validly issued, fully paid and non-assessable and
free from all Liens, with the holders being entitled to all rights accorded to a holder of
Preferred Stock or Common Stock, as the case may be. Upon exercise in accordance with the Warrants
and the Exchange Warrants, the Warrant Shares and Exchange Warrant Shares will be validly issued,
fully paid and nonassessable and free from all Liens, Subject to the accuracy of the
representations and warranties of the Investors in this Agreement, the offer and issuance by the
Company of the Securities is exempt from registration under the Securities Act.

          (g) Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of 10,000,000 shares of preferred stock, $0.001 par value per share, none of which
is issued and outstanding, and 90,000,000 shares of Common Stock, of which as of the date hereof,
41,354,645 shares are issued and outstanding, 6,700,000 shares are reserved for issuance pursuant
to the Company’s stock option and purchase plans and 10,874,186 shares are reserved for issuance
pursuant to warrants exercisable for shares of Common Stock (subject to increase to cover the
anti-dilution provisions associated therewith). All of such outstanding shares are duly authorized
and have been, or upon issuance will be, validly issued and are fully paid and nonassessable.
Except as specified in Section 3.1(g) of the Disclosure Letter, no securities of the
Company are entitled to preemptive or similar rights, and no Person has any

10

 

right of first refusal,
preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as specified in Section 3.1(g) of the
Disclosure Letter, there are no outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of capital stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of capital stock, or
securities or rights convertible or exchangeable into shares of capital stock. Except as specified
in Section 3.1(g) of the Disclosure Letter, the issue and sale of the Securities will not,
immediately or with the passage of time, obligate the Company to issue shares of capital stock or
other securities to any Person (other than the Investors) and will not
result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities (including, without limitation, under any
anti-dilution or similar provisions).

          (h) SEC Reports; Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding
the date hereof (or such shorter period as the Company was required by law to file such reports)
(the foregoing materials and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein being collectively referred to
herein as the “SEC Reports” and, together with the Disclosure Letter, the “Disclosure Materials”)
on a timely basis or has timely filed a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. The Company has made available to
the Investors or their respective representatives true, correct and complete copies of each of the
SEC Reports not available on the EDGAR system (if any). As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. The financial statements
of the Company included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing (or amendment, as applicable). Such financial statements have been
prepared in accordance with GAAP, applied on a consistent basis, during the periods involved,
except as may be otherwise specified in such financial statements or the notes thereto, and fairly
present in all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments or which will not be material, either individually or in the aggregate.

          (i) Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed
all foreign, federal and state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other

11

 

governmental
assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and (iii) has set aside on its
books provision reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply, except in each case as would not
reasonably be expected to have a Material Adverse Effect. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

          (j) Material Changes. Since the date of the latest financial statements included in
the SEC Reports, except as set forth in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that would reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A)
trade payables, accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with
the Commission, (iii) the Company has not altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, (v) the Company has not sold any assets outside of the ordinary
course of business, (vi) the Company has not made any material capital expenditures and (vi) the
Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to existing Company stock option plans. The Company does not have pending before the Commission any
request for confidential treatment of information. Neither the Company nor any of its Subsidiaries
has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.

          (k) Litigation. There is no Action which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents against the Company or the
Securities or (ii) except as specifically disclosed in the SEC Reports, would, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in
a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof (in his or her capacity as such), is or has been the subject of any Action involving a
claim of violation of or liability under federal or state securities laws or a claim of breach of
fiduciary duty, except as specifically disclosed in the SEC Reports. There has not been, and to the
knowledge of the Company, there is not pending any investigation by the Commission involving the
Company or any current or former director or officer of the Company (in his or her capacity as
such). The Commission has not issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.

          (l) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company. Neither the Company nor
any of its Subsidiaries is a party to any collective bargaining agreement or

12

 

employs any member of
a union. The Company and its Subsidiaries believe that their relations with their employees are
good. No executive officer (as defined in Rule 501(f) of the Securities Act) of the Company or any
of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to
leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the
Company or any such Subsidiary. No executive officer of the Company or any of its Subsidiaries is,
or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any
other contract or agreement or any restrictive covenant, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any liability with
respect to any of the foregoing matters.

          (m) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Company or any Subsidiary under), nor has
the Company or any Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (except to the extent such
default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or governmental body, or (iii) is or has been in violation of any statute,
ordinance, rule or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, pollution, environmental protection,
occupational health and safety, product quality and safety or employment and labor matters, except
in each case as would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. Without limiting the generality of the foregoing, the Company
is not in violation of any of the rules, regulations or requirements of the Principal Market and
has no knowledge of any facts or circumstances that could reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future. The Company is in compliance with all
effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
thereunder, that are applicable to it, except where such noncompliance would not have or reasonably
be expected to result in a Material Adverse Effect.

          (n) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations, licenses and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess any such certificates, authorizations, licenses or
permits would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate, authorization,
license or permit.

          (o) Title to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them that is material to their respective businesses
and good and marketable title in all personal property owned or used by them that is material to
their respective businesses, in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially interfere with the use

13

 

made and
proposed to be made of such property by the Company or any of its Subsidiaries. Any real property
and facilities held under lease by the Company or any of its Subsidiaries are held by them under
valid, subsisting and, to the Company’s knowledge, enforceable leases of which the Company and the
Subsidiaries are in compliance, except as would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.

          (p) Patents and Trademarks.

               (i) Section 3.1(p) of the Disclosure Letter accurately sets forth all material
Intellectual Property that is owned and/or used in the business of the Company and its
Subsidiaries, viewed as a whole, as presently conducted (“Company’s IP”). No Intellectual Property
other than the Company’s IP is material to the business of the Company or any of its Subsidiaries
as presently conducted or as presently proposed to be conducted. The Company or one of its
Subsidiaries is the sole and exclusive owner of all right, title and interest in and to
Company’s IP (with no breaks in the chain of title thereof) free and clear of, to its
knowledge, any claim, security interest, lien, pledge, option, charge or encumbrance of any kind
whatsoever. Company’s IP has not been used or enforced or failed to be used or enforced in a
manner that would result in the abandonment, cancellation or unenforceability of any of Company’s
material rights in and to Company’s IP.

               (ii) The Company has not transferred any rights or interest in, or granted any exclusive
license with respect to, any of the Company’s IP to any third party.

               (iii) All of Company’s IP is currently in compliance in all material respects with all legal
requirements (including timely filings, proofs and payments of fees) and is, to the Company’s
knowledge, valid and enforceable. None of Company’s IP which is necessary for the conduct of
Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted has been or is now involved in any pending or threatened
cancellation, dispute or litigation of which the Company is aware. No patent of the Company or its
Subsidiaries has been or is now involved in any interference, reissue, re-examination or opposition
proceeding.

               (iv) All of the licenses and sublicenses and consent, royalty or other agreements concerning
Company’s IP which are necessary for the conduct of the Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound (other than
 generally commercially available, non-custom, off-the-shelf software application programs having a
retail acquisition price of less than $25,000 per license) (collectively, “License Agreements”) are
valid and binding obligations of the Company or its Subsidiaries that are parties thereto and, to
the Company’s knowledge, the other parties thereto, enforceable in accordance with their terms,
except to the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement
of creditors’ rights generally, and there exists no event or condition which, to the Company’s
knowledge, will result in a material violation or breach of or constitute (with or without due
notice or lapse of time or both) a default by the Company or any of its Subsidiaries under any such
License Agreement.

14

 

               (v) The Company and its Subsidiaries own or have the valid right to use all of the
Intellectual Property that is necessary for the operation of the Company’s and each of its
Subsidiaries’ respective businesses as currently conducted or as currently proposed to be
conducted. The Company and its Subsidiaries have a valid and enforceable right to use all third
party Intellectual Property and Confidential Information used or held for use as the Company’s IP.

               (vi) To the best knowledge of the Company, the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe or otherwise impair or conflict with
(collectively, “Infringe”) any Intellectual Property rights of any third party or any
confidentiality obligation owed to a third party, and, to the Company’s knowledge, the Company’s IP
which are necessary for the conduct of Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be
conducted are not being Infringed by any third party. There is no litigation or order pending
or outstanding or, to the Company’s knowledge, threatened or imminent, that seeks to limit or
challenge or that concerns the ownership, use, validity or enforceability of any of the Company’s
IP or, to the Company’s knowledge, the Company’s and its Subsidiaries’ use of any Intellectual
Property or Confidential Information owned by a third party, and, to the Company’s knowledge, there
is no valid basis for the same.

               (vii) The consummation of the transactions contemplated hereby and by the other Transaction
Documents will not result in the alteration, loss, impairment of or restriction on the Company’s or
any of its Subsidiaries’ ownership or right to use any of the Company’s IP which is necessary for
the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted
or as currently proposed to be conducted.

          (q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses in which the Company and the Subsidiaries are engaged. The Company has
no reason to believe that it will not be able to renew its and the Subsidiaries’ existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business on terms consistent in all material respects with market
for similar size companies as the Company and its Subsidiaries for the lines of business of the
Company and its Subsidiaries at a cost that would not have a Material Adverse Effect. Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought or applied for.

          (r) Transactions With Affiliates and Employees. None of the officers or directors of
the Company and, to the knowledge of the Company, none of the employees of the Company is presently
a party to any transaction with the Company or any Subsidiary (other than for ordinary course
services as employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real

15

 

or
personal property to or from, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director, trustee or partner, which
in each case is required to be disclosed in the SEC Reports and has not been so disclosed.

          (s) Internal Accounting Controls. The Company and each of the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset and liability accountability,
(iii) access to assets or incurrence of liabilities is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any differences. The Company has established
disclosure controls and procedures (as defined in Exchange Act rules 13a-14 and 15d-14) for the
Company and designed such disclosure controls and procedures so that they are effective in ensuring
that information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the Commission, including, without limitation,
controls and procedures designed to ensure that material information relating to the Company,
including its Subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s Form 10-K or 10-Q, as the case may
be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of the
Company’s controls and procedures in accordance with Item 307 of Regulation S-K under the Exchange
Act for the Company’s most recently ended fiscal quarter or in accordance with Item 307 of
Regulation S-B under the Exchange Act for the Company’s most recently ended fiscal year (such date,
the “Evaluation Date”). The Company presented in its most recently filed Form 10-KSB or Form 10-Q
the conclusions of the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company’s internal controls (as such term is defined in
Item 308(c) of Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other
factors that would significantly affect the Company’s internal controls. Neither the Company nor
any of its Subsidiaries has received any written notice or correspondence from any accountant
relating to any potential material weakness in any part of the system of internal accounting
controls of the Company or any of its Subsidiaries.

          (t) Solvency. Based on the financial condition of the Company as of the date here of
and as of the Closing Date (assuming that the Closing shall have occurred), (i) the Company’s
present fair saleable value of its assets exceeds the amount that will be required to be paid on or
in respect of the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital requirements of
the business conducted by the Company, and projected capital requirements and capital

16

 

availability
thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such
amounts are required to be paid. The foregoing representation and warranty is also true and correct
as to the Company and the subsidiaries on a consolidated basis. Neither the Company nor any
subsidiary intends to incur debts beyond its or their ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its or their
debt).

          (u) Certain Fees. Except as described in Section 3.1(u) of the Disclosure
Letter, no brokerage or finder’s fees or commissions are or will be payable by the Company to
any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this Agreement. The Investors shall
have no obligation with respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by such Investor which fees
or commissions shall be the sole responsibility of such Investor) made by or on behalf of other
Persons for fees of a type contemplated in this Section 3.1(u) that may be due in connection with
the transactions contemplated by this Agreement.

          (v) Certain Registration Matters. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3.2(b)-(e), no registration under the
Securities Act is required for the offer and sale of the Units by the Company to the Investors
under the Transaction Documents. The Company is eligible to register the Registrable Securities for
resale by the Investors under Form S-1 promulgated under the Securities Act, except to the extent
that the Commission communicates to the Company that such resale would not constitute a “secondary
offering” permitted by Rule 415 of the Securities Act (as to which the Company makes no
representation or warranty, notwithstanding anything contained in the Transaction Documents to the
contrary). Except as specified in the Registration Rights Agreement and in Section 3.1(v) of
the Disclosure Letter, the Company has not granted or agreed to grant to any Person any rights
(including “piggy-back” registration rights) to have any securities of the Company registered with
the Commission or any other governmental authority that have not been satisfied.

          (w) Listing and Maintenance Requirements. The Company has not, in the two years
preceding the date hereof, received notice from any Trading Market to the effect that the Company
is not in compliance with the listing or maintenance requirements thereof. The Company is, and has
no reason to believe that it will not in the foreseeable future continue to be, in compliance with
the listing and maintenance requirements for continued listing of the Common Stock on the Trading
Market on which the Common Stock is currently listed or quoted. The issuance and sale of the
Securities under the Transaction Documents does not contravene the rules and regulations of the
Trading Market on which the Common Stock is currently listed or quoted, and no approval of the
stockholders of the Company thereunder is required for the Company to issue and deliver to the
Investors the Securities contemplated by Transaction Documents (other than the Stockholder Approval
required for the issuance of the Conversion Shares and for the issuance of Common Stock Warrant
Shares and Exchange Warrant Shares in the form of Common Stock.

17

 

          (x) Investment Company. The Company is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an “investment company,” an Affiliate of an
“investment company,” a company controlled by an “investment company” or an “affiliated person” of,
or “promoter” or “principal underwriter” for, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

          (y) Application of Takeover Protections. The Company and its Board of Directors have
taken all necessary action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar
charter documents) or the laws of its state of incorporation that is or would become applicable to
any of the Investors as a direct result of the transactions contemplated by this Agreement,
including without limitation, the Company’s issuance of the Securities to the Investors. The
Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations
of beneficial ownership of Common Stock or a change in control of the Company.

          (z) No Additional Agreements. The Company does not directly or indirectly have any
agreement or understanding with any Investor with respect to the transactions contemplated by the
Transaction Documents other than as specified in the Transaction Documents and the Disclosure
Materials.

          (aa) Disclosure. The Company confirms that neither it nor, to its knowledge, any
Person acting on its behalf has provided any Investor or its respective agents or counsel with any
information that the Company believes constitutes material, non-public information, except insofar
as the existence and terms of the proposed transactions hereunder and the information contained
herein or in the other Transaction Documents may constitute such information. The Company
understands and confirms that the Investors will rely on the foregoing representations and
warranties in effecting transactions in securities of the Company. The Company acknowledges and
agrees that no Investor makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Sections 3.2 and 4.14.

          (bb) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings
and is not so disclosed and that would be reasonably likely to have a Material Adverse Effect.

          (cc) U.S. Real Property Holding Corporation. The Company is not, and has never been, a
U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue
Code of 1986, as amended, and the Company shall so certify upon the request of any Investor.

18

 

          (dd) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor
any director, officer, agent, employee or other Person acting on behalf of the Company or any of
its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its
Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee, except in each case as
would not have a Material Adverse Effect.

     3.2 Representations and Warranties of the Investors. Each Investor hereby, for itself
and for no other Investor, represents and warrants to the Company as follows:

          (a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such Investor of the
transactions contemplated by this Agreement has been duly authorized by all necessary corporate
or, if such Investor is not a corporation, such partnership, limited liability company or
other applicable like action, on the part of such Investor. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Investor, and when delivered by such
Investor in accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Investor, enforceable against it in accordance with its terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws or the public
policy underlying such laws, and except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by other equitable
principles of general application.

          (b) Investment Intent. Such Investor is acquiring the Securities as principal for its
own account for investment purposes only and not with a view to or for distributing or reselling
such Securities or any part thereof, without prejudice, however, to such Investor’s right at all
times to sell or otherwise dispose of all or any part of such Securities in compliance with
applicable federal and state securities laws. Subject to the immediately preceding sentence,
nothing contained herein shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time. Such Investor is acquiring the Securities hereunder in the
ordinary course of its business. Such Investor does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.

          (c) Investor Status. At the time such Investor was offered the Securities, it was,
and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the
Securities Act. Such Investor has completed and executed the Investor Questionnaire (attached to
this Agreement as Exhibit E attached hereto and incorporated herein as representations and

19

 

warranties of such Investor under this Section 3.2) and that the information contained in such
document is complete and accurate. Such Investor is not a registered broker-dealer under Section 15
of the Exchange Act. Such Investor, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Investor is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of
such investment.

          (d) General Solicitation. Such Investor is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the Securities published in
any newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.

          (e) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries and their respective
financial condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without unreasonable effort
or expense that is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or on behalf of such
Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to
rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents.

          (f) Certain Trading Activities. Such Investor has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such Investor, engaged in any
transactions in the securities of the Company (including, without limitations, any Short Sales
involving the Company’s securities or “locking-up” up borrow with respect to any of the Company’s
securities) since the earlier to occur of (1) the time that such Investor was first contacted by
the Company or any other Person regarding an investment in the Company and (2) the 30th
day prior to the date of this Agreement.

          (g) Independent Investment Decision. Such Investor has independently evaluated the
merits of its decision to purchase Securities pursuant to this Agreement, and such Investor
confirms that it has not relied on the advice of any other Investor’s business and/or legal counsel
in making such decision.

          (h) Reliance. Such Investor understands and acknowledges that: (i) the Securities are
being offered and sold to it without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act and (ii) the availability of
such exemption depends in part on, and the Company will rely upon the accuracy and truthfulness of,
the foregoing representations and such Investor hereby consents to such reliance.

20

 

          (i) Residency. Such Investor is a resident of the jurisdiction set forth immediately
below such Investor’s name on the signature pages hereto.

The Company acknowledges and agrees that no Investor has made or makes any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set
forth in this Section 3.2 and Section 4.14.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

     4.1 Reasonable Best Efforts. Each party shall use its reasonable best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in Sections 5.1 and 5.2 of
this Agreement.

     4.2 Legends.

          (a) Sales of Securities. Securities may only be disposed of in compliance with state
and federal securities laws. In connection with any transfer of any Securities other than pursuant
to an effective registration statement, to the Company, to an Affiliate of an Investor or in
connection with a pledge as contemplated in Section 4.2(d), the Company may, pursuant to the
provisions of Section 4.2(e) below, require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.

          (b) Register. The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to each holder of Securities),
a register for the Securities in which the Company shall record the name and address of the Person
in whose name the Securities have been issued (including the name and address of each transferee)
and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The
Company shall keep the register open and available at all times during business hours for
inspection of any Investor or its legal representatives.

          (c) Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent, and any subsequent transfer agent, to issue certificates or credit shares to
the applicable balance accounts at The Depository Trust Company (“DTC”) (if DTC is then offered by
the Company and its transfer agent and such Securities qualify for deposit with DTC in accordance
with its rules), registered in the name of each Investor or its respective nominee(s), for the
Securities in such amounts as specified from time to time by each Investor to the Company upon
conversion of the Company Shares or exercise of the Warrants or Exchange Warrants.. The Company
represents and warrants that no instruction other than the irrevocable instructions to its transfer
agent referred to in this Section 4.2(c) will be given by the Company to its transfer agent with
respect to the Securities and that the Securities shall otherwise be freely

21

 

transferable on the
books and records of the Company, as applicable, and to the extent provided in this Agreement and
the other Transaction Documents, except as it may reasonably determine are necessary to comply or
to ensure compliance with those applicable laws that are enacted or modified after the Closing. If
an Investor effects a sale, assignment or transfer of the Securities in accordance with the terms
of the Transaction Documents, the Company shall permit the transfer and shall promptly instruct its
transfer agent to issue one or more certificates or credit shares to the applicable balance
accounts at DTC (if DTC is then offered by the Company and its transfer agent and such Securities
qualify for deposit with DTC in accordance with its rules) in such name and in such denominations
as specified by such Investor to effect such sale, transfer or assignment. In the event that such
sale, assignment or transfer involves Securities sold, assigned or transferred pursuant to an
effective registration statement or in compliance with Rule 144 (provided that in the case of a
sale, transfer or assignment under Rule 144 the foregoing is not an “affiliate” of the Company or
any of its Subsidiaries (as defined in Rule 144)), the transfer agent shall issue such Securities
to the Investor, assignee or transferee, as the case may be, without any restrictive legend in
accordance with Section 4.2(e) below. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to an Investor. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this Section 4.2(c) will
be inadequate and agrees, in the event of a breach or threatened breach by the Company of any
provisions of this Section 4.2(c), that an Investor shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and without any bond or other
security being required. The Company shall cause its counsel to issue the legal opinion referred to
in the irrevocable transfer agent instructions required to be delivered pursuant
to the terms of the Registration Rights Agreement to the Company’s transfer agent on each
Effective Date. Any fees (with respect to the transfer agent, counsel to the Company or otherwise)
associated with the issuance of such opinion or the removal of any legends on any of the Securities
shall be borne by the Company.

          (d) Certificates evidencing the Securities will contain the following legend, until such time
as they are not required under Section 4.1(e):

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) (A) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (II) RULE 144 OR
RULE 144A UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH
SECURITIES.

22

 

          The Company acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in some or all of the Securities in accordance with all applicable
federal and state securities laws pursuant to a bona fide margin agreement in connection with a
bona fide margin account and, if required under the terms of such agreement or account, such
Investor may transfer pledged or secured Securities to the pledgees or secured parties. Such a
pledge or transfer would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the
pledge, but such legal opinion may be required in connection with a subsequent transfer by the
pledgee or secured party following default by such Investor or otherwise. No notice shall be
required of such pledge. At the appropriate Investor’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities.

          (e) Certificates evidencing the Securities shall not contain any legend (including the legend
set forth in Section 4.1(d)) at such time as an Investor has provided reasonable evidence to the
Company (including any customary broker’s or selling stockholder’s letters but expressly excluding
an opinion of counsel other than with respect to clauses (iv) or (v) below), that: (i) there has
been a sale of such Securities pursuant to an effective registration statement (including the
Registration Statement(s)), (ii) there has been a sale of such Securities pursuant to Rule 144
(assuming the transferor is not an Affiliate of the Company), (iii) such Securities are
then eligible for sale under Rule 144(b)(i), (iv) in connection with a sale, assignment or
other transfer (other than under Rule 144) provided that, upon request of the Company, such
Investor provides the Company with an opinion of counsel to such Investor, in a reasonably
acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made
without registration under the applicable requirements of the Securities Act or (v) if such legend
is not required under applicable requirements of the Securities Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by the Commission). Following such
time as restrictive legends are not required to be placed on certificates representing Securities
pursuant to the preceding sentence, the Company will, no later than three (3) Trading Days
following the delivery by an Investor to the Company or the Company’s transfer agent of a
certificate representing Securities containing a restrictive legend and the foregoing evidence (and
opinion if applicable), deliver or cause to be delivered to such Investor a certificate
representing such Securities that is free from all restrictive and other legends or credit the
balance account of such Investor’s or such Investor’s nominee with DTC (if DTC is then offered by
the Company and its transfer agent and such Securities qualify for deposit with DTC in accordance
with its rules) with a number of shares of Preferred Stock or Common Stock equal to the number of
shares represented by the certificate so delivered by such Investor (the date by which such
certificate is required to be delivered to such Investor or such shares were required to be
credited to such Investor’s account with DTC (as the case may be) pursuant to the foregoing is
referred to herein as the “Required Delivery Date”). The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge the restrictions on

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transfer set forth in this Section, except as it may reasonably determine are necessary or
appropriate to comply or to ensure compliance with those applicable laws that are enacted or
modified after the Closing.

     4.3 Form D and Blue Sky. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each Investor who
requests one promptly after such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary in order to obtain an exemption
for, or to, qualify the Securities for sale to the Investors at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to
obtain an exemption from such qualification), and shall provide evidence of any such action so
taken to the Investors on or prior to the Closing Date. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under applicable securities or
“Blue Sky” laws of the states of the United States following the Closing Date.

     4.4 Furnishing of Information. As long as any Investor owns any of the Securities,
until the consummation of a Fundamental Transaction (as defined in the Warrants) where the Company
is no longer publicly traded following such Fundamental Transaction (the “Reporting Period”), the
Company covenants to use reasonable best efforts (i) to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act and (ii) to not terminate its status
as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules
and regulations thereunder would no longer require or otherwise permit such termination. Without
limiting any of the Company’s obligations under the Registration Rights Agreement, during the
Reporting Period, if the Company is not required to file reports pursuant
to such laws, it will use reasonable best efforts to prepare and furnish to the Investors and
make publicly available in accordance with Rule 144(c) such information as is required for the
Investors to sell the Securities under Rule 144. Without limiting any of the Company’s obligations
under the Registration Rights Agreement, the Company further covenants during the Reporting Period
that it will use reasonable best efforts take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable such Person to sell the
Securities in compliance with Rule 144.

     4.5 Integration. The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act)
that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities to the Investors, or that
would be integrated with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market in a manner that would require stockholder approval of the sale
of the securities to the Investors.

     4.6 Securities Laws Disclosure; Publicity. By 5:30 p.m. (New York City time) on the
Trading Day following the execution of this Agreement, and by 5:30 p.m. (New York City time) on the
Trading Day following the Closing Date (unless the Closing Date occurs on the same date as the
execution of this Agreement, in which case only one press release will be required), the

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Company
shall issue press releases disclosing the transactions contemplated hereby (and the material terms
hereof) and the Closing. On the Trading Day following the execution of this Agreement, the Company
will file a Current Report on Form 8-K disclosing the material terms of the Transaction Documents
(and attach as exhibits thereto the Transaction Documents), and on the Trading Day following the
Closing Date the Company will file an additional Current Report on Form 8-K to disclose the Closing
(unless the Closing Date occurs on the same date as the execution of this Agreement, in which case
only one Form 8-K will be required).

     4.7 Indemnification of Investors. In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold each Investor and its directors,
officers, stockholders, partners, employees, members and direct or indirect investors and any of
the foregoing Persons’ agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement) (each, an “Investor
Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages,
costs, expenses, actions, causes of action, suits, penalties and fees, including all judgments,
amounts paid in settlements, court costs and reasonable out-of-pocket attorneys’ fees and costs of
investigation (collectively, “Losses”) that any such Investor Party may suffer or incur as a result
of, arising out of or relating to (a) any misrepresentation, breach or inaccuracy of any
representation, warranty, covenant, obligation or agreement made by the Company in any Transaction
Document or (b) any cause of action, suit or claim brought or made against any Investor Party by a
third party (including for these purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of
such Investor Party or holder of the Securities as an investor in the Company pursuant to the
transactions contemplated by the Transaction
Documents; provided, that an Investor Party shall not be entitled to indemnification to the
extent any of the foregoing is caused by such Investor Party’s gross negligence, material violation
of law or regulation or willful misconduct. In addition to the indemnity contained herein, the
Company will reimburse each Investor Party for its reasonable out-of-pocket legal and other
expenses (including the reasonable out-of-pocket cost of any investigation, preparation and travel
in connection therewith) as incurred in connection therewith, as promptly as practicable after such
expenses are incurred and invoiced.

     4.8 Non-Public Information. The Company covenants and agrees that neither it nor any
of its subsidiaries, or other Person acting on its or their behalf will provide the Investor or its
agents or counsel with any material, non-public information regarding the Company or its
subsidiaries without the prior express consent of the Investor; provided, that no such consent
shall be required prior to disclosing any such material, non-public information to (a) a director
designated by the Investor under the Board Rights Agreement (but only when made to such director in
his or her capacity as a director) or (b) the Investor when such disclosure is required by the
express terms of this Agreement or the Registration Rights Agreement. The Company understands that
the Investor shall be relying on the foregoing covenant in effecting transactions in securities of
the Company.

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     4.9 Listing of Securities. The Company shall promptly secure the listing of all of the
Registrable Securities upon each national securities exchange and automated quotation system, if
any, upon which the Common Stock is then listed (subject to official notice of issuance) and shall
maintain such listing of all Registrable Securities from time to time issuable under the terms of
the Transaction Documents on such exchange or automated quotation system or another Trading Market.
The Company shall use reasonable best efforts to maintain the Common Stock’s authorization for
quotation on the Principal Market. If Stockholder Approval is not obtained by the Stockholder
Approval Deadline, the Company will use reasonable best efforts to have the Company’s Preferred
Stock authorized for quotation on the Principal Market at the request of any Investor. The Company
agrees, (i) if the Company applies to have the Common Stock traded on any other Trading Market, it
will include in such application the Company Shares, the Conversion Shares, the Warrant Shares, and
the Exchange Warrant Shares, and will take such other action as is necessary or desirable to cause
the Company Shares, the Conversion Shares, the Warrant Shares, and the Exchange Warrant Shares to
be listed on such other Trading Market as promptly as possible, and (ii) it will use reasonable
best efforts to take all action that it believes is reasonably necessary to continue the listing
and trading of its Preferred Stock and Common Stock on a Trading Market and to comply in all
material respects with the Company’s reporting, filing and other obligations under the bylaws or
rules of the applicable Trading Market; provided that no such action need be taken with respect to
the Company’s Preferred Stock if Stockholder Approval has been obtained by the Stockholder Approval
Deadline. Neither the Company nor any of its subsidiaries shall take any action which it believes
could be reasonably expected to result in the delisting or suspension of the Common Stock (and if
required to be listed by this Section 4.9, the Preferred Stock) on any Trading Market. The Company
shall pay all fees and expenses in connection with satisfying its obligations under this Section
4.9.

     4.10 Use of Proceeds. The Company will use the net proceeds from the sale of the Units
hereunder for working capital purposes and not for the satisfaction of any portion of the Company’s
debt (other than payment of trade payables and accrued expenses in the ordinary course of the
Company’s business and consistent with prior practices), or to redeem any Common Stock or
Equivalents or any other debt or equity securities of the Company or any of its subsidiaries.

     4.11 Additional Issuances of Securities.

          (a) The Company agrees that, except for the Follow-On Shareholder Financing, if any, for the
period commencing on the date hereof and ending ninety (90) days after the Closing, neither the
Company nor any of its subsidiaries shall directly or indirectly issue, offer, sell, grant any
option to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant or any
option to purchase or other disposition of) any of their respective equity or equity equivalent
securities, including, without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time and under any circumstances convertible into or exchangeable
for, or otherwise entitles the holder thereof to receive, capital stock and other securities of the
Company (including, without limitation, Common Stock Equivalents) (collectively with such capital
stock or other securities of the Company, “Equivalents”) (any such issuance, offer, sale, grant,
disposition or announcement being referred to as a “Subsequent Placement”).

26

 

          (b) Except for the Follow-On Shareholder Financing, if any, the Company agrees that it shall
not engage in any Subsequent Placement after the ninety (90) day period set forth in Section
4.11(a) has expired without the prior written consent of Co-Investment Fund, if such Subsequent
Placement seeks to raise less than $15 million.

          (c) Notwithstanding the foregoing, this Section 4.11 shall not apply in respect of the
issuance of (A) Common Stock or standard options to purchase Common Stock issued to directors,
officers, employees or consultants of the Company in connection with their service as directors or
officers of the Company, their employment by the Company or their retention as consultants by the
Company pursuant to an equity compensation program or other contract or arrangement approved by the
Board of Directors of the Company (or the compensation committee of the Board of Directors of the
Company), provided that all such issuances after the date hereof pursuant to this clause (A) do
not, in the aggregate, exceed more than 10% of the Common Stock issued and outstanding immediately
prior to the date hereof, (B) Common Stock or standard warrants (including so-called penny
warrants) to purchase Common Stock in connection with strategic alliances, acquisitions, mergers,
strategic partnerships, joint ventures, vendor and supplier arrangements and as equity kickers in
lease and financing transactions, the primary purpose of which is not to raise capital, and which
are approved in good faith by the Company’s Board of Directors, provided that all such issuances
after the date hereof pursuant to this clause (B) do not, in the aggregate, exceed more than 10% of
the Common Stock issued and outstanding immediately prior to the date hereof, (C) shares issued
upon the conversion or exercise of Equivalents issued prior to the date hereof, provided that such
Equivalents have not been amended since the date of this Agreement to increase the number of shares
issuable thereunder or to lower the exercise or conversion price thereof or otherwise materially
change
the terms or conditions thereof in any manner that adversely affects any of the Investors, (D)
shares issued or issuable by reason of a dividend, stock split or other distribution on Common
Stock, (E) the Conversion Shares, or (F) the Warrant Shares (each of the foregoing in clauses (A)
through (F), collectively the “Excluded Securities”).

     4.12 Conduct of Business. The business of the Company and its Subsidiaries shall not
be conducted in violation of any law, ordinance or regulation of any governmental entity, except
where such violations would not result, either individually or in the aggregate, in a Material
Adverse Effect.

     4.13 Variable Rate Transaction. From the date hereof until 12 months after the
Closing, the Company shall be prohibited from effecting or entering into an agreement to effect any
Subsequent Placement involving a “Variable Rate Transaction.” The term “Variable Rate Transaction”
shall mean a transaction in which the Company (i) issues or sells any Equivalents either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after the initial
issuance of such Equivalents, or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such Equivalents or upon

27

 

the
occurrence of specified or contingent events directly or indirectly related to the business of the
Company or the market for the Common Stock, other than pursuant to a customary “weighted average”
or “full ratchet” anti-dilution provision or (ii) enters into any agreement (including, but not
limited to, an equity line of credit) whereby the Company may sell securities at a future
determined price (other than customary “pre-emptive” or “participation” rights). Each Investor
shall be entitled to obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.

     4.14 Trading Restrictions. Each Investor represents and warrants to, and covenants
with, the Company that it will not (and its Affiliates acting on its behalf or pursuant to any
understanding with it will not) engage in or effect, directly or indirectly, any transactions in
any securities of the Company (including, without limitation, any Short Sales, “locking-up” borrow
or hedging activities involving the Company’s securities) during the period commencing on the date
hereof and ending on the date that is fifteen (15) months following the Closing Date. In
furtherance (and without limitation) of the foregoing, during such restricted period, neither such
Investor nor any of such Affiliates, (a) will directly or indirectly, sell, agree to sell, grant
any call option or purchase any put option with respect to, pledge, borrow or otherwise dispose of
any securities of the Company, or (b) will establish or increase any “put equivalent position” or
liquidate or decrease any “call equivalent position” with respect to any such securities (in each
case within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder), or otherwise enter into any swap, derivative or other transaction or arrangement that
transfers to another, in whole or in part, any economic consequence of ownership of any such
securities, whether or not such transaction is to be settled by delivery of any such securities,
other securities, cash or other consideration. Notwithstanding the foregoing, it is understood and
agreed that nothing contained in this Section 4.14 shall prohibit such Investor (or such
Affiliates) from (1) purchasing or agreeing to purchase unrestricted securities of the Company or
securities which are covered by an effective registration statement and the prospectus included
therein is available for use on the date of such purchase (including through
block trades or privately negotiated transactions), (2) purchasing or agreeing to purchase
securities of the Company pursuant to Section 4.15 or otherwise from the Company, (3) exercising
any or all Warrants to acquire Warrant Shares or otherwise acting under or enforcing, or receiving
any right or benefit or adjustment under, the Warrants, (4) selling or agreeing to sell “long”
securities of the Company (because such Investor or such Affiliate is “deemed to own such
securities” pursuant to paragraph (b) of Rule 200 under Regulation SHO), including, without
limitation, (I) any Company Shares, Conversion Shares, Warrants, Warrant Shares, Exchange Warrants,
or Exchange Warrant Shares acquired hereunder or pursuant to the transactions contemplated hereby
or any of the Transaction Documents, (II) any shares of Common Stock or warrants to purchase shares
of Common Stock held on the date hereof, (III) any shares of Common Stock acquired after the date
hereof pursuant to the exercise of warrants to purchase Common Stock held on the date hereof, or
(IV) securities acquired after the date hereof in accordance with this paragraph, (5) pledging or
hypothecating any securities of the Company in connection with leverage arrangements engaged in by
such Investor (or such Affiliates) without the purpose of transferring economic risk relating to
such securities or (6) from transferring any of the Securities to any Affiliate who agrees in
writing to be bound by this Section 4.14, in each case, provided such sale is in compliance with
all applicable securities laws and following the public announcement of the transaction
contemplated hereby pursuant to Section 4.6.

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     4.15 Participation Right. From the date hereof until 24 months after the Closing, the
Company shall not effect any Subsequent Placement unless the Company shall have first complied with
this Section 4.15. The Company acknowledges and agrees that the right set forth in this Section
4.15 is a right granted by the Company to Co-Investment Fund, for so long as it or any of its
affiliates in the aggregate holds at least one percent of the Common Stock Deemed Outstanding (as
defined in the Warrants) (the “Designated Investor”).

          (a) The Company shall deliver to the Designated Investor a written notice (the ”Offer Notice”)
of any proposed or intended issuance or sale or exchange (the ”Offer”) of the securities being
offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall (w) identify
and describe the Offered Securities, (x) describe the price and other terms upon which they are to
be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold
or exchanged, (y) identify the Persons (if known) to which or with which the Offered Securities are
to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with the
Designated Investor in accordance with the terms of the Offer the Designated Investor’s pro rata
portion of the Offered Securities, calculated by dividing (i) the number of shares of Common Stock
Deemed Outstanding (as defined in the Warrants) owned by the Designated Investor as of immediately
prior to the Offer, by (ii) the Common Stock Deemed Outstanding (as defined in the Warrants) (such
pro rata portion, the “Basic Amount”).

          (b) To accept an Offer, in whole or in part, the Designated Investor must deliver a written
notice to the Company prior to the end of the third (3rd) Business Day after such
Designated Investor’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion
of the Designated Investor’s Basic Amount that such Designated Investor elects to purchase (the
“Notice of Acceptance”).

          (c) The Company shall have twenty (20) Business Days from the expiration of the Offer Period
above to offer, issue, sell or exchange all or any part of such Offered Securities as to which a
Notice of Acceptance has not been given by the Designated Investor (the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the
offerees described in the Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not materially more
favorable (when viewed on an aggregate basis) to the acquiring Person or Persons or materially less
favorable (when viewed on an aggregate basis) to the Company than those set forth in the Offer
Notice.

          (d) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Designated Investor shall acquire from the Company, subject to the terms and
conditions specified in the Offer Notice, and the Company shall issue to the Designated Investor,
the number or amount of Offered Securities specified in the Notices of Acceptance, subject to the
terms and conditions specified in the Offer Notice. The purchase by the Designated

29

 

Investor of any
Offered Securities is subject in all cases to the preparation, execution and delivery by the
Company and the Designated Investor of a separate purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Designated Investor and its counsel
and the Company and its counsel.

          (e) The Company and the Designated Investor agree that if the Designated Investor elects to
participate in the Offer, neither the Subsequent Placement Agreement with respect to such Offer nor
any other transaction documents related thereto (collectively, the “Subsequent Placement
Documents”) shall include any term or provisions whereby such Designated Investor shall be required
to agree to any restrictions on trading as to any securities of the Company owned by such
Designated Investor prior to such Subsequent Placement more restrictive in any material respect
than the restrictions contained in the Transaction Documents.

          (f) Notwithstanding anything to the contrary in this Section 4.15 and unless otherwise agreed
to by such Designated Investor, the Company shall either confirm in writing to such Designated
Investor that the transaction with respect to the Subsequent Placement has been abandoned or shall
publicly disclose its intention to issue the Offered Securities, in either case in such a manner
such that such Designated Investor will not be in possession of any material, non-public
information, by the thirtieth (30th) Business Day following delivery of the Offer Notice
(or any later follow-up Offer Notice or offer terms provided pursuant to the terms of this Section
4.15(b) (the “Public Notice Date”). If by the Public Notice Date, no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice regarding the
abandonment of such transaction has been received by such Designated Investor, such transaction
shall be deemed to have been abandoned.

          (g) The restrictions contained in this Section 4.15 shall not apply in connection with the
issuance of any Excluded Securities (as defined herein or as defined in the Warrants).

     4.16 Prohibited Actions. The Company shall not without the prior consent of the
Co-Investment Fund knowingly enter into any transaction or take any other action which would create
any liability under Section 16(b) of the Exchange Act, or the rules promulgated thereunder
by the Commission, on the part the Co-Investment Fund as a consequence of having purchased the
Securities under this Agreement (including, without limitation, the conversion of the Company
Shares), having exercised any Warrants for Warrant Shares, having exchanged warrants for the
Exchange Warrants, or having exercised Exchange Warrants for Exchange Warrant Shares.

     4.17 Other Securities Purchase Agreements. In the event that any term or condition
under any of the Other Securities Purchase Agreements is more favorable to the investor thereunder
than the relevant term or condition under this Agreement or in the event that any Other Securities
Purchase Agreement contains a term or condition benefiting the investor thereunder which is not
contained in this Agreement, then at the election of the Investor, such more favorable or
additional term or condition shall be available for the benefit of the Investor and the Company
shall enter into an amendment to this Agreement to incorporate such more favorable or additional
term or condition.

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     4.18 Amendment of Certificate; Stockholder Approval. The Company shall, no later than
75 days after the Closing Date (or 90 days, in the event of SEC review of the Proxy Statement (as
hereinafter defined) (the “Stockholder Approval Deadline”)) and subject to Stockholder Approval (as
hereinafter defined), amend its Certificate of Incorporation to increase the Company’s authorized
shares of Common Stock to an amount equal to at least 100% of the amount that would allow the
issuance of all of the Conversion Shares issuable pursuant to the terms of the Company Shares, the
issuance of Common Stock Warrant Shares, the issuance of Exchange Warrant Shares in the form of
Common Stock, and the issuance of all shares of Common Stock issuable upon the exercise or
conversion of convertible securities, warrants, options, and other derivative securities, after
giving effect to the issuance of the Company Shares, Warrants, and Exchange Warrants. Without
limiting the generality of the foregoing, the Company shall as soon as practicable hold a meeting
of its stockholders (the “Special Meeting”) for the approval of the necessary increase in the
authorized number of shares of Common Stock in accordance with applicable law (the “Stockholder
Proposal” and such affirmative approval being referred to herein as the “Stockholder Approval”),
provide each stockholder a proxy statement, substantially in the form which has been previously
reviewed by the Designated Investor and its counsel (the “Proxy Statement”), use its best efforts
to solicit the Stockholder Approval, and to cause its Board of Directors to recommend to the
stockholders that they provide the Stockholder Approval. In the event that Stockholder Approval is
not obtained by the Stockholder Approval Deadline:

          (a) the Company will take such action reasonably requested by the Designated Investor to
provide the holders of the Prior Warrants then outstanding with the future ability to recognize the
same full value of the Prior Warrants as if the Stockholder Approval had been obtained (such
actions may include, but not be limited to, the amendment of the Prior Warrants to provide for the
future payment by the Company of cash in lieu of shares Common Stock which cannot be issued at the
time of exercise of the Prior Warrants or an exchange of Preferred Stock Exchange Warrants for
Prior Warrants); and

          (b) the Company will not enter into any Fundamental Transaction unless the terms of the
Fundamental Transaction provide the holders of the Prior Warrants with the full
economic benefit they could obtain if shares of Common Stock were available for issuance upon
exercise of the Prior Warrants in connection with such Fundamental Transaction.

     4.19 Stockholder Approval Voting. Each Investor hereby agrees that it will vote all
of the shares of outstanding Common Stock and Preferred Stock beneficially owned by it in favor of
the Stockholder Proposal at the Special Meeting.

     4.20 Follow-On Shareholder Financing. The Company will in good faith consider means of
providing the shareholders of the Company other than the Investors with an opportunity to purchase
securities of the Company on substantially the same or comparable terms as the terms as set forth
in this Agreement, taking into account the cost involved, the existing management resources of the
Company, the likelihood of shareholder interest, and other factors deemed relevant by the Company
(the “Follow-On Shareholder Financing”).

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ARTICLE V.

CONDITIONS PRECEDENT TO CLOSINGS

     5.1 Conditions Precedent to the Obligations of the Investors to Purchase Securities.
The obligation of each Investor to acquire the Securities at the Closing are subject to the
satisfaction, or waiver by such Investor, at or before each the Closing, of each of the following
conditions:

          (a) Representations and Warranties. Each and every representation and warranty of the
Company contained herein shall be true and correct in all respects as of the date when made and in
all material respects as of the Closing Date as though originally made on and as of such date
(except for representations and warranties qualified by materiality or Material Adverse Effect,
which shall be true and correct in all respects). Such Investor shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by such Investor;

          (b) Performance. The Company shall have performed, satisfied and complied in all
respects with all covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing. Such Investor shall have
received a certificate, executed by the Chief Executive Officer of the Company, dated as of the
Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested
by such Investor;

          (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;

          (d) Adverse Changes. Since the date of execution of this Agreement, no event or
series of events shall have occurred that reasonably would have or result in a Material Adverse
Effect;

          (e) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock
shall not have been suspended (or threatened to be suspended) by the Commission or any Trading
Market (except for any suspensions of trading of not more than one Trading Day solely to permit
dissemination of material information regarding the Company) at any time since the date of
execution of this Agreement, and the Common Stock shall have been at all times since such date
listed for trading on a Trading Market. The Common Stock shall be designated for quotation or
listed on the Principal Market and any required approval of the Principal Market to list the
Company Shares and the Warrant Shares shall have been obtained by the Company;

          (f) Company Deliverables. The Company shall have delivered the Company Deliverables
in accordance with Section 2.2(a);

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          (g) Consents and Approvals. The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale of the Securities,
including without limitation, any of those required by the Principal Market;

          (h) Warrant Exchange. The investors in the March 31, 2008 Common Stock and warrant
financing shall have been provided with the opportunity to exchange each warrant they received in
that financing (the “Prior Warrants”) for an Exchange Warrant and Exchange Warrants shall have been
issued to those investors who have elected to make that exchange.

          (i) Certificate of Designation. The Certificate of Designation shall have been filed
with the Secretary of State of the State of Delaware and shall have become effective.

     5.2 Conditions Precedent to the Obligations of the Company to sell Securities. The
obligation of the Company to sell the Units at the Closing is subject to the satisfaction, or
waiver by the Company, at or before the Closing, of each of the following conditions:

          (a) Representations and Warranties. The representations and warranties of each
Investor contained herein shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made on and as of such date;

          (b) Performance. Each Investor shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing;

          (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents; and

          (d) Investor Deliverables. Each Investor shall have delivered its Investor
Deliverables in accordance with Section 2.2(b).

ARTICLE VI.

MISCELLANEOUS

     6.1 Fees and Expenses. Except as specified in Section 6.2 of the Disclosure
Letter, each party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of the Transaction Documents. Notwithstanding the
foregoing, the Company shall pay the reasonable legal and closing expenses of Co-Investment Fund,
up to a maximum amount of $40,000, promptly upon receipt of an invoice reflecting such amount.

33

 

     6.2 Entire Agreement. The Transaction Documents, together with the exhibits,
schedules and the Disclosure Letter thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements, understandings,
discussions and representations, oral or written, with respect to such subject matter, which the
parties acknowledge have been merged into such documents, exhibits and schedules. The Company
confirms that, except for the investment in the Securities as set forth in this Agreement, no
Investor has made any commitment or promise or has any other obligation to provide any financing to
the Company or otherwise.

     6.3 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section 6.3 prior to 6:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number specified in this
Section 6.3 on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any
Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service (with next day delivery specified), or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such notices and
communications shall be as follows:

	 	 	 
	If to the Company:

	 	Health Benefits Direct Corporation
	 

	 	150 N. Radnor-Chester Road, Radnor, PA 19087
	 

	 	Facsimile: (484) 654-2223
	 

	 	Attn: Chief Financial Officer
	 
	 	 
	With copies to:

	 	Health Benefits Direct Corporation
	 

	 	150 N. Radnor-Chester Road, Radnor, PA 19087
	 

	 	Facsimile: (484) 654-2223
	 

	 	Attn: Vice President and General Counsel
	 
	 	 
	 

	 	Morgan, Lewis & Bockius LLP
	 

	 	1701 Market Street, Philadelphia, PA 19103
	 

	 	Facsimile: (215) 963-5001
	 

	 	Attn: James W. McKenzie, Jr., Esq.
	 
	 	 
	If to an Investor:

	 	To the address set forth under such Investor’s name
on the signature pages hereof;

or such other address as may be designated in writing hereafter, in the same manner, by such
Person.

     6.4 Amendments; Waivers; No Additional Consideration. No provision of any Transaction
Document may be waived or amended except in a written instrument signed by the Company and the
Investors holding a majority of the Securities (or, with respect to Section 4.15

34

 

hereof, in lieu
thereof the consent of the Designated Investor), provided that any party shall have the right to
provide a waiver with regards to itself. No waiver of any default with respect to any provision,
condition or requirement of any Transaction Document shall be deemed to be a continuing waiver in
the future or a waiver of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right. No consideration shall be offered or paid to
any Investor to amend or consent to a waiver or modification of any provision of any Transaction
Document unless the same consideration is also offered to all Investors who then hold the
Securities; provided that with respect to Section 4.15 hereof, such consideration may be offered or
paid solely to the Designated Investor and not any other Investors. No such amendment or waiver
(unless given pursuant to the foregoing provisos) shall be effective to the extent that it applies
to less than all of the holders of the Securities then outstanding.

     6.5 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
This Agreement shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement or any of the Transaction Documents.

     6.6 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Investors. Any Investor may assign any or all of its rights under this Agreement and the other
Transaction Documents to any Person to whom such Investor assigns or transfers any Securities,
(other than any rights under Section 4.15 hereof, which are not assignable or transferable except
by the Designated Investor to any affiliate of the Designated Investor) provided such assignee or
transferee agrees in writing to be bound, with respect to the assigned or transferred Securities,
by the provisions hereof that apply to the “Investors,” in which event such assignee or transferee
shall be deemed to be an Investor hereunder with respect to such assigned rights.

     6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in
Section 4.7 (as to each Investor Party).

     6.8 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the principles of conflicts of
law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective Affiliates, employees or agents) shall be
commenced exclusively in the Delaware Courts. Each party hereto hereby

35

 

irrevocably submits to the
exclusive jurisdiction of the Delaware Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such Delaware Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable out-of-pocket attorneys’ fees and other reasonable
out-of-pocket costs and expenses incurred with the investigation, preparation and prosecution of
such Proceeding.

     6.9 Survival. The representations, warranties, agreements and covenants contained
herein shall survive the Closing and the delivery of the Securities. Each Investor shall be
responsible only for its own representations, warranties, agreements and covenants hereunder.

     6.10 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the same force and effect
as if such facsimile signature page were an original thereof.

     6.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties
will attempt to agree upon a valid and enforceable provision that is a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

     6.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction Documents, whenever
any Investor exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then
such Investor may rescind or withdraw, in its sole discretion from time to time upon written notice
to the Company, any relevant notice, demand or election in whole or in part without prejudice to
its future actions and rights.

36

 

     6.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities. If a replacement certificate or instrument evidencing any Securities is
requested due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a replacement.

     6.14 Remedies. In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, each of the parties hereto will be entitled to
specific performance under the Transaction Documents. The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of obligations described
in the foregoing sentence and hereby agrees to waive in any action for specific performance of any
such obligation the defense that a remedy at law would be adequate. The Company therefore agrees
that the Investors shall be entitled to specific performance and temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and without posting a bond
or any other type of security.

     6.15 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Investor pursuant to any Transaction Document or an Investor enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

     6.16 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under the Transaction Documents are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under any Transaction Document. The decision of each
Investor to purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any other Transaction
Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or any other kind of
group or entity, or create a presumption that the Investors are in any way acting in concert or as
a group or entity with respect to such obligations or the transactions contemplated by the
Transaction Documents or any other matters, and the Company acknowledges that, to its knowledge,
the Investors are not acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Investor acknowledges

37

 

that no other
Investor has acted as agent for such Investor in connection with such Investor making its
investment hereunder and that no other Investor or counsel or advisor for such other Investor will
be acting as agent of such Investor in connection with monitoring such Investor’s investment in the
Securities or enforcing its rights under the Transaction Documents. The Company and each Investor
confirms that each Investor has independently participated with the Company in the negotiation of
the transaction contemplated hereby with the advice of its own counsel and advisors. Each Investor
shall be entitled to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement or out of any other Transaction Documents, and it shall
not be necessary for any other Investor to be joined as an additional party in any proceeding for
such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities
contemplated hereby was solely in the control of the Company, not the action or decision of any
Investor, and was done solely for the convenience of the Company and not because it was required or
requested to do so by any Investor. It is expressly understood and agreed that each provision
contained in this Agreement and in each other Transaction Document is between the Company and an
Investor, solely, and not between the Company and the Investors collectively and not between and
among Investors.

     6.17 Delivery of Securities. Notwithstanding anything contained in this Agreement or
any other Transaction Document to the contrary, unless otherwise directed in writing by the
applicable Investor, the Company shall, and shall cause its agents and representatives to, deliver
all of such Investor’s Securities purchased pursuant to this Agreement (and all securities which
are issuable to the Investor pursuant to the terms of this Agreement or any other Transaction
Document) to the address for delivery of Securities set forth on such Investor’s signature page to
this Agreement, and copies of the certificates representing such securities shall be sent to such
Investor to the address of such Investor as set forth on such Investor’s signature page to this
Agreement.

     6.18 Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOLLOW]

38

 

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

	 	 	 	 	 
	 	 	Health Benefits Direct Corporation
	 
	 	 	 	 
	 	 	/S/ ANTHONY R. VERDI
	 	 	 
	 

	 	Name:
	 	Anthony R. Verdi
	 

	 	Title:
	 	Chief Financial Officer

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR INVESTORS FOLLOW]

 

 

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

	 	 	 	 	 
	 	 	THE CO-INVESTMENT FUND II, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	Co-Invest Management II, L.P., its General Partner
	 
	 

	 	By:
	 	Co-Invest II Capital Partners, Inc., its General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/S/ FREDERICK C. TECCE
	 

	 	 	 	 
	 

	 	 	 	Name: Frederick C. Tecce
	 

	 	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	Investment Amount: $4,000,000
	 
	 	 	 	 
	 	 	Tax ID No.: 20-3863585
	 
	 	 	 	 
	 	 	ADDRESS FOR NOTICE
	 
	 	 	 	 
	 	 	c/o Cross Atlantic Capital Partners
	 	 	Five Radnor Corporate Center, Suite 555
	 	 	Radnor, PA 19087
	 	 	Facsimile No.: 610-971-2062
	 	 	*E-mail: ftecce@xacp.com
	 	 	Attn: Frederick C. Tecce

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