Document:

exv10w19

Exhibit 10.19

ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (this “Agreement”) is made and entered into as of July 20, 2004,
by and between Cornerstone Pharmaceuticals Ltd., an Anguilla company with offices located at 8000
Regency parkway, Suite 430, Cary, North Carolina 27511 (“Cornerstone”) and Vintage Pharmaceuticals,
LLC, a Delaware limited liability company with offices located at 130 Vintage Drive, Huntsville,
Alabama 35811 (“Vintage”).

RECITALS

     Vintage has received FDA approval for two (2) products, one containing Propoxyphene
Napsylate/Acetaminophen 100/325mg Tab, ANDA #76-743, and one containing Propoxyphene
Napsylate/Acetaminophen 100/500mg Tab ANDA #76-750 (the “Product(s)” as defined below).

     Subject to the terms and conditions of this Agreement, Vintage desires to sell to Cornerstone,
and Cornerstone desires to purchase from Vintage, the Purchased Assets (as defined below).

AGREEMENT

     Now, therefore, in consideration of the premises and the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01 Defined Terms.

     As used in this Agreement, the following defined terms have the meanings described below:

     “Cornerstone’s Transfer Letter to the FDA” means the letter attached hereto as Exhibit A-l and
incorporated herein by reference notifying the FDA of the change in ownership of the Product(s)
ANDA(S), which shall be sent to the FDA upon Cornerstone’s payment in full of the Deferred Purchase
Price (as defined below).

     “Action or Proceeding” means any action, suit, proceeding, arbitration, inquiry, hearing,
assessment with respect to fines or penalties, or litigation (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental or Regulatory Authority.

 

[***] Confidential portions of the exhibit have been omitted and filed separately with the
Securities and Exchange Commission.

 

 

     “Affiliate” means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under common control with such
Person. “Control” and, with correlative meanings, the terms “controlled by” and “under common
control with,” means the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract, resolution, regulation or
otherwise.

     “ANDA(S)” means Abbreviated New Drug Application for the Products.

     “Bill of Sale and Assignment” means a Bill of Sale and Assignment in the form attached hereto
as Exhibit B.

     “Books and Records” means all files, documents, papers, and records in the possession of
Vintage and/or Cornerstone pertaining to the Product(s), the Product(s) Intellectual Property
and/or the Marketing Materials.

     “Calendar Quarter” means the three month periods beginning on each January 1, April 1, July 1
and October 1.

     “Contract” means any and all legally binding commitments, contracts, leases, indentures,
purchase orders, leases, or other agreements, whether written or oral, including all amendments
thereto.

     “DEA” means the United States Drug Enforcement Agency, and any successor agency or entity
thereto that may be established hereafter.

     “Encumbrance” means any mortgage, pledge, security interest, deed of trust, lease, lien,
Liability, adverse claim, levy, charge, easement, right of way, covenant, restriction, or other
encumbrance, third-party right or retained right of any kind whatsoever, or any conditional sale
agreement.

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

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

     “Know-How” means all Product(s) specifications; manufacturing, physical chemistry and
formulation know-how; analytical testing methods and validations; technical knowledge; practices
and procedures; formulae; confidential information; analytical methodology; processes; methods;
preclinical, clinical, stability and other data and results; market studies; and all other
experience and know-how, in each case in tangible form, whether or not patentable, with respect to
the Product(s).

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     “Law” means any federal, state or local law, statute or ordinance or any rule, regulation, or
published guidelines promulgated by any Governmental or Regulatory Authority, including all
regulations and guidances of the FDA or the DEA.

     “Liability” means any obligations, debts or liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, matured or
unmatured, determinable or undeterminable, and due or to become due).

     “Manufacturing Agreement” means the Manufacturing Agreement attached hereto as Exhibit C
between the Parties containing terms mutually acceptable to both Parties involving the exclusive
right of Vintage to manufacture and supply the Product(s) to Cornerstone for a five (5) year
period.

     “Marketing Materials” means all marketing and promotional materials useable with respect to
the marketing and sale of the Product(s) to the extent such materials are within the possession of
Vintage.

     “Net Sales of the Product(s)” means the gross amount invoiced by Cornerstone or its Affiliates
for sales of the Product(s) to third persons (not including an Affiliate of Cornerstone), less (i)
trade, quantity and/or cash discounts actually allowed; (ii) discounts, refunds, rebates,
chargebacks, retroactive price adjustments and any other allowances, credits or payments which
effectively reduce the net selling price; (iii) accruals for Product(s) returns and allowances, up
to an annual maximum of [***] percent ([***]%); and (iv) the Product Price, as defined in the
Manufacturing Agreement. Inter-company accruals will not be considered in the calculation of “Net
Sales.” With respect to accruals for Product(s) returns and allowances, within sixty (60) after the
end of each calendar year, the parties shall reconcile such actual Product returns and allowances
with the estimated accruals. In the event such accruals are greater than the actual returns and
allowances, Cornerstone shall pay such additional Royalty Payments as may be due Vintage pursuant
to Section 3.03. All such amounts and calculations will be determined from books and records
maintained in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).

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

     “Party” means each of Cornerstone and Vintage and “Parties” mean Cornerstone and Vintage
collectively.

     “Patents” means all U.S. patents, patent applications, and statutory invention registrations
(including any provisional applications and invention disclosures) with respect to the Product(s).

     “Person” means any natural person, corporation, general partnership, limited partnership,
limited liability company, joint venture, proprietorship, other business organization, trust,
association, or other entity, or any Governmental or Regulatory Authority.

 

[***] Confidential portions of the exhibit have been omitted and filed separately with the
Securities and Exchange Commission.

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     “Product(s)” means Propoxyphene Napsylate and APAP 100/325mg Tablets and Propoxyphene
Napsylate and APAP 100/500mg Tablets, and Product(s) means either of them.

     “Product(s) Intellectual Property” means any and all of the following, intellectual property
rights owned or licensed by Vintage that are used or useful in the manufacture, sale, use,
promotion, marketing and/or distribution of the Product(s): (i) Patents; (ii) Know-How; (iii)
copyrights in any copyrightable Marketing Material; (iv) the Product(s) Trademarks; and (v) any
trade dress related to the Product(s).

     “Purchased Assets” means the following: (i) all rights, title and interest in and to the
Product(s), including all rights to the promotion, marketing, sale, distribution and manufacturing
thereof; (ii) the Product(s) Intellectual Property, (iii) the Marketing Materials; and (iv) the
Books and Records. For purposes of clarification, the Purchased Assets do not include equipment.

     “Trademarks” means all United States trademarks, trade names, brand names, logotypes, symbols,
service marks, designs, and trade names related to the Product(s).

     “Vintage’s Transfer Letter to the FDA” means the letter attached hereto as Exhibit A-2 and
incorporated herein by reference notifying the FDA of the change in ownership of the Product(s)
ANDA(S), which shall be sent to the FDA upon Cornerstone’s payment in full of the Deferred Purchase
Price.

     Section 1.02 Construction of Certain Terms and Phrases.

     Unless the context of this Agreement otherwise requires, when used in this Agreement: (a)
words of any gender include each other gender; (b) the terms “hereof,” “herein,” “hereto,” “hereby”
and derivative or similar words refer to this entire Agreement; (c) the term “including,” “include”
or “includes” shall be deemed to be followed by “without limitation”; and (d) references to
currency means U.S. Dollars. Whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless business days are specified. This Agreement shall be deemed to be
drafted jointly by all the Parties and shall not be specifically construed against any Party hereto
based on any claim that such Party or its counsel drafted this Agreement.

ARTICLE II

PURCHASE AND SALE OF PURCHASED ASSETS

     Section 2.01 Purchase and Sale of Purchased Assets.

     Subject to the terms and conditions of this Agreement, at the Closing, Vintage shall sell,
transfer, convey, assign and deliver to Cornerstone, free and clear from all Encumbrances (except
with respect to Vintage), and Cornerstone shall purchase, acquire and accept from Vintage, all
right, title and interest, as of the Closing, in and to the Purchased Assets in existence as of the
Closing Date.

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ARTICLE III

CONSIDERATION

     Section 3.01 Purchase Price.

     Subject to the provisions of 3.02 below, the purchase price payable by Cornerstone to Vintage
for the Purchased Assets shall be the total sum of Eight Million Dollars ($8,000,000.00) (the
“Purchase Price”).

     Section 3.02 Payment of Purchase Price.

     Cornerstone shall pay Vintage the Purchase Price as follows:

          (i) Cornerstone shall pay Vintage $5,000,000.00 (U.S.) at the Closing in immediately available
funds by wire transfer into a bank account designated by Vintage (the “Closing Payment”), (ii)
$1,500,000.00 (U.S.) shall be payable by Cornerstone to Vintage on or before January 15, 2005, and
(iii) $1,500,000 (U.S.) shall be payable by Cornerstone to Vintage on or before July 15, 2005
(subsections (ii) and (iii) collectively, the “Deferred Purchase Price”), also payable in
immediately available funds by wire transfer into a bank account designated by Vintage. At the
Closing, Cornerstone shall execute and deliver to Vintage an executed promissory note evidencing
its obligation to pay Vintage the Deferred Purchase Price, which promissory note shall be
substantially in the form and content attached hereto as Exhibit D (the “Secured Promissory Note”).
The Secured Promissory Note shall be guaranteed by Cornerstone Pharmaceuticals Holdings, Ltd. as
provided in the Guaranty Agreement attached hereto as Exhibit E. In addition, Cornerstone’s
obligations under the Secured Promissory Note shall be secured by a first priority security lien on
the Purchased Assets in favor of Vintage.

     Section 3.03 Royalty Payments.

     (a) Cornerstone shall accrue and owe a royalty to Vintage equal to [***] percent ([***]%) of
Net Sales of Product(s) in each Calendar Quarter by Cornerstone or its Affiliate[s] (collectively
referred to as the “Royalty Payment”).

     (b) Cornerstone shall pay to Vintage the Royalty Payment attributable to Net Sales of
Product(s) made during a Calendar Quarter within sixty (60) days of the end of such Calendar
Quarter. For purposes of this Agreement, a Net Sale of Product(s) will be deemed to have been made
as of the recorded sale date according to GAAP. Within sixty (60) days of the end of such Calendar
Quarter, Cornerstone shall provide Vintage with a written report detailing the Net Sales of
Product(s) made during the previous Calendar Quarter (each, a “Royalty Statement”).
Cornerstone will pay Royalty Payments (i) in immediately available funds by wire transfer into a
bank account designated by Vintage or (ii) by check no later than two (2) business days prior to

 

[***] Confidential portions of the exhibit have been omitted and filed separately with the
Securities and Exchange Commission.

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the due date for such Royalty Payment. In the event that the actual Net Sale of Product(s) cannot
be determined by the date a Royalty Payment is due (for example because final rebate or chargeback
numbers have not been confirmed), Cornerstone shall in good faith estimate such Net Sale, with any
true up (either by credit or additional payment, as applicable) based on the actual Net Sale amount
being made in the Royalty Payment immediately following such determination. The quarterly report
described above shall detail any such true up described in the preceding sentence.

     Section 3.04 Audit.

     (a) Cornerstone shall maintain appropriate books of account and records, in accordance with
GAAP, which shall include inventory records, and shall make accurate entries concerning all
transactions relevant to this Agreement.

     (b) Vintage shall have the right for two (2) years after any Royalty Payment (or, in the event
of a dispute involving in any way those books of account and records with respect to a Royalty
Payment, for two (2) years after the dispute is resolved), on reasonable notice to Cornerstone, to
inspect and examine Cornerstone’s books of account and records and other documents (including,
without limitation, vouchers, records, purchase orders, sales orders and re-orders) relating to the
Net Sales of Products to the extent necessary to verify the accuracy of the Royalty Payments made
under this Agreement.

     (c) Cornerstone shall keep the books of account and records referenced in Section 3.03(a)
available during the period of Vintage’s inspection rights set forth in Section 3.03(b).

     (d) If, upon inspection of the books of account and records of Cornerstone, Vintage discovers
that it did not receive the correct Royalty Payment, Vintage shall notify Cornerstone in writing of
such discovery. In the event Cornerstone disagrees with such discovery, the Parties shall negotiate
in good faith to resolve such dispute. Within thirty (30) days of receipt of Vintage’s notice or,
in the case of dispute, within thirty (30) days of resolution of such dispute, Cornerstone shall
pay to Vintage the difference between what was paid and what should have been paid. If the
difference of the underpayment exceeds five per cent (5%) of the Royalty Payment owed, then
Cornerstone shall bear Vintage’s reasonable costs in connection with such inspection, including all
reasonable legal and auditors fees. If Vintage’s inspection of the books of account and records
reveals that Cornerstone overpaid a Royalty Payment, Vintage shall pay to Cornerstone such
overpayment within thirty (30) days of the discovery of such overpayment.

     Section 3.05 Authorized Generic.

     (a) The parties agree Vintage (or one of its affiliates) has the exclusive right to manufacture and
market an authorized generic version of the Product(s) from time to time after a competing product
with identical active ingredients and concentrations has been approved by FDA and has been
commercially offered and/or marketed by a competing company. Vintage (or its affiliate) may market
an authorized generic sooner if mutually agreed upon in writing. If and when Vintage manufactures
and markets an authorized generic version of the Product(s),

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Vintage and Cornerstone agree to divide the net profits derived from such marketing efforts [***]%
due Vintage and [***]% due Cornerstone (the “Profit Split”). Net profits shall be defined
as the number of pieces invoiced (and shipped), multiplied by the net dollar amount for which each
piece was sold, which shall equal gross dollars, from which shall be deducted: cash discounts,
contractual rebates, CMS rebates, returns, chargebacks, and the Product Price (as defined in the
Manufacturing Agreement).

     (b) Cornerstone shall have the right for two (2) years after any payment from the Profit Split
resulting from the genericization of products (or, in the event of a dispute involving in any way
those books of account and records with respect to a Profit Split, for two (2) years after the
dispute is resolved), on reasonable notice to Vintage, to inspect and examine the appropriate
Vintage affiliate’s books of account and records and other documents (including, without
limitation, vouchers, records, purchase orders, sales orders and re-orders) relating to the Net
Profit Payments to the extent necessary to verify the accuracy of the Profit Split made under this
Agreement.

ARTICLE IV

CLOSING

     Section 4.01 Time and Place.

     The closing of the transactions contemplated by this Agreement (the “Closing”) shall take
place on the third (3rd) business day after the satisfaction of the conditions set forth
in Section 4.02 hereof, (the “Closing Date”) but no later than July 20, 2004.

     Section 4.02 Conditions Precedent.

     (a) Conditions Precedent to Cornerstone’s Obligations. All obligations of Cornerstone to close
the transactions contemplated under this Agreement are subject to the fulfillment or satisfaction
of each of the following conditions precedent:

     (i) Representations and Warranties True as of the Closing Date. The
representations and warranties of Vintage contained in this Agreement, the Manufacturing
Agreement and in any schedule, certificate or document delivered by Vintage to Cornerstone
pursuant to the provisions hereof or thereof will have been true on the date hereof and will
be true on the Closing Date with the same effect as though such representations and
warranties were made as of the Closing Date.

     (ii) Compliance with this Agreement. Vintage will have performed and complied
with all agreements and conditions required by this Agreement to be performed or complied
with by it prior to or by the Closing Date.

     (iii) Manufacturing Agreement. The Parties will have entered into the
Manufacturing Agreement.

 

[***] Confidential portions of the exhibit have been omitted and filed separately with the
Securities and Exchange Commission.

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     (b) Conditions Precedent to Vintage’s Obligations. All obligations of Vintage to close the
transactions contemplated under this Agreement are subject to the fulfillment or satisfaction of
each of the following conditions precedent:

     (i) Representations and Warranties True as of the Closing Date. The
representations and warranties of Cornerstone contained in this Agreement, the Manufacturing
Agreement, and in any schedule, certificate or document delivered by Cornerstone to Vintage
pursuant to the provisions hereof will have been true on the date hereof and will be true on
the Closing Date with the same effect as though such representations and warranties were
made as of the Closing Date.

     (ii) Compliance with this Agreement. Cornerstone will have performed and
complied with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or by the Closing Date.

     (iii) Manufacturing Agreement. The Parties will have entered into the
Manufacturing Agreement.

     Section 4.03 Closing Date.

     Each Party hereby agrees to use commercially reasonable efforts to consummate the transactions
contemplated herein as soon as practicable but in no event later than July 15, 2004. Termination of
this Agreement shall not relieve the Parties of any obligation accruing prior to such termination
or any breach of any term of this Agreement prior to such termination. The rights and obligations
of the Parties under Sections 7.05 and this 4.03 and Articles V, VI and VIII of this Agreement
shall survive the expiration or termination of this Agreement.

     Section 4.04 Deliveries at Closing.

     (a) Closing Deliveries by Vintage. At or as part of the Closing, Vintage shall
deliver or cause to be delivered to Cornerstone:

     (i) To the extent not previously delivered to Cornerstone, physical possession (or
implement arrangements satisfactory to Cornerstone of transfer and delivery of physical
possession) of all tangible personal property included in the Purchased Assets;

     (ii) The Manufacturing Agreement duly executed by an authorized representative of
Vintage;

     (iii) a Bill of Sale and Assignment duly executed by an authorized representative of
Vintage with respect to the Purchased Assets in existence as of the Closing;

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     (iv) a certificate executed by an officer of Vintage, certifying in such detail as
Cornerstone may reasonably request that the conditions specified in Sections 4.02(b)(i) and
(ii), above, have been fulfilled; and

     (v) such other documents, instruments and certificates as Cornerstone and Vintage may
mutually agree upon.

     (b) Closing Deliveries by Cornerstone. At the Closing, Cornerstone shall deliver or
cause to be delivered to Vintage:

     (i) the Closing Payment;

     (ii) the Secured Promissory Note and Security Agreement, duly executed by an authorized
representative of Cornerstone;

     (iii) the Guaranty Agreement duly executed by an authorized representative of
Cornerstone Pharmaceutical Holdings, Ltd.;

     (iv) the Loan Documents (as defined in the Secured Promissory Note) duly executed by an
authorized representative of Cornerstone;

     (v) the Manufacturing Agreement duly executed by an authorized representative of
Cornerstone;

     (vi) a certificate executed by an officer of Cornerstone, certifying in such detail as
Vintage may reasonably request that the conditions specified in Sections 4.02(a)(i) and (v),
above, have been fulfilled;

     (vii) such UCC filings as may be necessary for Vintage to hold a valid, first priority
security interest in and to the Purchased Assets as collateral for Cornerstone’s obligation
to pay the Deferred Purchase Price; and

     (viii) such other documents, instruments and certificates as Cornerstone and Vintage
may mutually agree upon.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF VINTAGE

     Vintage represents and warrants to Cornerstone, as follows:

     Section 5.01 Organization.

     Vintage is a limited liability company duly organized, validly existing and in good standing
under the laws of the state of its organization and has all requisite power and authority to own
the Purchased Assets. Vintage is duly qualified to conduct its business and is in good standing in
each jurisdiction where the nature of such business requires such qualification, except

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for any jurisdiction where failure to so qualify would not have a material adverse effect or
materially impair or delay Vintage’s ability to perform its obligations hereunder.

     Section 5.02 Authority of Vintage.

     Vintage has all necessary power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby. Vintage has taken all action required by Law, its certificate
of organization, operating agreement or otherwise to be taken by it to authorize the execution and
delivery of this Agreement by Vintage and the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Vintage and, when duly
authorized, executed and delivered by Cornerstone, will constitute a legal, valid and binding
obligation of Vintage enforceable against it in accordance with its terms except as limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally.

     Section 5.03 Consents and Approvals.

     Except for Vintage’s Transfer Letter to the FDA, no consents, waivers, approvals, Orders or
authorizations of, or registrations, declarations or filings with, any Governmental or Regulatory
Authority, or by any customer, supplier or other third party, are required by or with respect to
Vintage in connection with the execution and delivery of this Agreement by Vintage or the
performance of its obligations hereunder, except for such consents, waivers, approvals, Orders or
authorizations the failure to obtain which, and such registrations, declarations or filings the
failure to make which, would not have a material adverse effect or materially impair or delay
Vintage’s ability to perform its obligations hereunder.

     Section 5.04 Non-Contravention.

     The execution and delivery by Vintage of this Agreement does not, and the performance by it of
its obligations under this Agreement and the consummation of the transactions contemplated hereby
will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of the certificate of organization, operating agreement, or other organizational
documents of Vintage; or (b) conflict with or result in a violation or breach of any term or
provision of any Law applicable to Vintage, the Product(s) or the Purchased Assets.

     Section 5.05 Material Contracts.

     Except as set forth on Schedule 5.05, Vintage is not a party to any Contracts that relate to
(i) the manufacture, marketing, sale or distribution of the Product(s); (ii) the sale, licensing
out, or assignment of the Purchased Assets; or (iii) sales of Product(s) to any Governmental or
Regulatory Authority.

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     Section 5.06 Intellectual Property Rights.

     Neither the Product(s) Intellectual Property, the use of Product(s) Intellectual Property nor
the Product(s), infringe or misappropriate the intellectual property rights of any third party, and
Vintage has not received any written notice from any Person of any claims of infringement or
misappropriation with respect thereto. In addition, all Trademarks included in the Produces)
Intellectual Property, if any, are the subject of current registrations. There are no third-party
rights in Vintage’s current registrations relating to the Product(s) Trademarks. There is not any
prior use, infringement, piracy or counterfeiting of such Product(s) Trademarks, any superior
rights by any third party in such Product(s) Trademarks, or any adverse claims pertaining to such
Product(s) Trademarks.

     Section 5.07 Litigation.

     There are no Actions or Proceedings pending, threatened or reasonably anticipated against
Vintage that relate to (a) the Purchased Assets; (b) this Agreement; (c) the transactions
contemplated by this Agreement; or (d) the Product(s). Vintage is not subject to any Order that
could reasonably be expected to materially impair or delay the ability of Vintage to perform its
obligations hereunder.

     Section 5.08 Compliance with Law.

     Vintage has been in compliance with all applicable Laws with respect to the Product(s), and
Vintage has not received any written notice alleging any violation of such Laws with respect to the
Product(s).

     Section 5.09 Purchased Assets.

     Vintage is the sole and exclusive legal, and equitable owner of the Purchased Assets and has
good and marketable title to the Purchased Assets free and clear of any Encumbrances. Vintage has
the legal right and ability to transfer the Purchased Assets to Cornerstone, and, upon the Closing,
shall transfer to good and marketable title to the Purchased Assets free and clear of any
Encumbrances.

     Section 5.10 Regulatory Matters.

     The Product(s) ANDA(S) contains no material error or omission. Vintage has made available to
Cornerstone complete and correct copies of the Product(s) ANDA(S). Except as set forth in Schedule
5.10, Vintage has not received or been subject to: (i) any FDA Form 483s relating to the
Product(s); (ii) any FDA Notices of Adverse Findings relating to the Product(s); or (iii) any
warning letters or other written correspondence from the FDA or any other Governmental or
Regulatory Authority concerning the Product(s). Furthermore, Vintage represents that its
manufacturing facilities used to manufacture the Product(s) will be considered in substantial
compliance with FDA GMP’s at time of Closing. Vintage will manage and maintain the ANDA(S) up until
the transfer letter is sent to the FDA. Following the actual

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transfer of the ANDA(S), Cornerstone and Vintage may agree to have the ANDA(S) managed and
maintained by Vintage at such terms and price as mutually agreed to by the parties.

     Section 5.11 Brokers.

     Vintage has not retained any broker in connection with the transactions contemplated
hereunder.

     Section 5.12 No Non-Competition Agreements or Preferential Obligations.

     The Purchased Assets are not subject to any non-competition agreements with, or other
agreements granting preferential rights to purchase or license the Purchased Assets to, any third
Persons.

     Section 5.13 Exclusive Representations and Warranties.

     EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE MANUFACTURING AGREEMENT, VINTAGE MAKES
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY
STATUTE OR OTHERWISE, AND VINTAGE SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY
WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE AND WARRANTY OF NON-INFRINGEMENT.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF CORNERSTONE

     Cornerstone represents and warrants to Vintage as follows:

     Section 6.01 Corporate Organization.

     Cornerstone is a corporation duly organized, validly existing and in good standing, under the
laws of the jurisdiction of its incorporation and has all requisite power and authority to own its
assets and carry on its business as currently conducted by it. Cornerstone is duly qualified to
conduct its business and is in good standing in each jurisdiction where the nature of the business
conducted by it requires such qualification, except where failure to so qualify could not
reasonably be expected, individually or in the aggregate, to have a material adverse effect on or
materially impair or delay Cornerstone’s ability to perform its obligations hereunder.

     Section 6.02 Authority of Cornerstone.

     Cornerstone has all necessary power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby. Cornerstone has taken all action required by Law, its
by-laws, or otherwise to be taken by it to authorize the execution and delivery of this Agreement
by Cornerstone and the consummation of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Cornerstone and, when duly

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authorized, executed and delivered by Vintage, will constitute a legal, valid and binding
obligation of Cornerstone enforceable against it in accordance with its terms except as limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally.

     Section 6.03 Consents and Approvals.

     Except for Cornerstone’s Transfer Letter to the FDA, no consents, waivers, approvals, Orders
or authorizations of, or registrations, declarations or filings with, any Governmental or
Regulatory Authority are required by Cornerstone in connection with the execution and delivery of
this Agreement by Cornerstone or the performance of its obligations hereunder.

     Section 6.04 Non-Contravention.

     The execution and delivery by Cornerstone of this Agreement does not, and the performance by
it of its obligations under this Agreement and the consummation of the transactions contemplated
hereby will not: (a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of organization, operating agreement or other
organizational documents of Cornerstone; (b) conflict with or result in a violation or breach of
any terra or provision of any Law applicable to Cornerstone; or (c) conflict with or result in a
breach or default (or an event which, with notice or lapse of time or both, would constitute a
breach or default) under, or result in the termination or cancellation of, or accelerate the
performance required by, or result in the creation or imposition of any security interest, lien or
any other Encumbrance upon any Contract to which Cornerstone is a party or by which Cornerstone or
any of its assets is bound.

     Section 6.05 Litigation.

     There are no Actions or Proceedings pending or, to the knowledge of Cornerstone threatened or
reasonably anticipated against Cornerstone which if adversely determined would delay the ability of
Cornerstone to perform its obligations hereunder.

     Section 6.06 Brokers.

     Cornerstone has not retained any broker in connection with the transactions contemplated
hereunder.

     Section 6.07 Exclusive Representations and Warranties.

     EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE MANUFACTURING AGREEMENT, CORNERSTONE
MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY
STATUTE OR OTHERWISE, AND CORNERSTONE SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY
WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A
PARTICULAR. PURPOSE AND WARRANTY OF NON-INFRINGEMENT.

13

 

ARTICLE VII

COVENANTS OF THE PARTIES

     Section 7.01 Cooperation.

     Each Party shall reasonably cooperate with the other in preparing and filing all notices,
applications, submissions, reports and other instruments and documents that are necessary, proper
or advisable under applicable Laws to consummate and make effective the transactions contemplated
by this Agreement, including Vintage’s reasonable cooperation in the efforts of Cornerstone to
obtain any consents and approvals of any Governmental or Regulatory Authority required for
Cornerstone to be able to sell the Product(s).

     Section 7.02 Bulk Sales.

     Cornerstone and Vintage waive compliance with all bulk sales Law applicable to the
transactions contemplated by this Agreement.

     Section 7.03 Regulatory Matters.

     From and after the transfer by Vintage to Cornerstone of the Product(s) ANDA(S) pursuant to
the terms hereof, Cornerstone, at its cost, shall be solely responsible for (i) taking all actions,
paying all fees (except to the extent such fee accrued prior to the Closing Date) and conducting
all communication with the appropriate Governmental or Regulatory Authority in respect of the
Product(s) ANDA(S) and the Product(s), including preparing and filing all reports (including
adverse drug experience reports) with the appropriate Governmental or Regulatory Authority; (ii)
taking all actions and conducting all communication with third parties in respect of Product(s)
sold pursuant to the Product(s) ANDA(S), including responding to all complaints and medical
inquiries in respect thereof, including complaints related to tampering or contamination; (iii)
investigating all complaints and adverse drag experiences in respect of Product(s) sold pursuant to
the Product(s) ANDA(S); and (iv) filing all annual reports, field alerts, and any and all other
reports as may be required from time to time by the FDA. Without limiting the foregoing, prior to
the Closing Date, Vintage shall regularly consult with Cornerstone about all regulatory matters
and decisions related to the Product(s) and the Product(s) ANDA(S).

     Vintage will manufacture the Product(s) according to the approved formulations and
specifications in accordance with the terms of the Manufacturing Agreement. Any changes to the
formulations and/or specifications submitted and/or approved by FDA will be communicated by
Cornerstone to Vintage in writing. Furthermore, Cornerstone will not request any supplemental
changes to the approved ANDAs without first consulting with Vintage, and obtaining approval from
Vintage, which will not be unreasonably withheld.

     Section 7.04 Further Assurances.

     On and after the Closing, Vintage shall from time to time, at the request of Cornerstone,
execute and deliver, or cause to be executed and delivered, such other instruments of conveyance

14

 

and transfer and take such other actions as Cornerstone may reasonably request, in order to
more effectively consummate the transactions contemplated hereby and to vest in Cornerstone good
and marketable title to the Purchased Assets (including assistance in the collection or reduction
to possession of any of the Purchased Assets).

     Section 7.05 Indemnification.

     (a) By Vintage. Vintage shall indemnify, reimburse, and hold harmless Cornerstone, its
Affiliates, and their respective employees, agents, and contractors from and against any and all
costs, losses, Liabilities, damages, pending, threatened or concluded lawsuits, deficiencies,
claims and expenses (including reasonable fees and disbursements of attorneys) (collectively, the
“Damages”) to the extent such Damages are incurred in connection with or arise out of (i)
any material breach of any representation, warranty, covenant or agreement of Vintage herein; (ii)
the gross negligence or willful misconduct of Vintage, its employees, agents or contractors; and
(iii) liabilities related to the Product(s)s or Purchased Assets incurred prior to the Closing
Date.

     (b) By Cornerstone. Cornerstone shall indemnify, reimburse, and hold harmless Vintage,
its Affiliates and their respective employees, agents, and contractors from and against any and all
Damages to the extent such Damages are incurred in connection with or arise out of (i) any material
breach of any representation, warranty, covenant or agreement of Cornerstone herein; (ii) the gross
negligence or willful misconduct of Cornerstone, its employees, agents or contractors (other than
Vintage); and (iii) Cornerstone’s manufacturing, storage, marketing, promotion, sale or
distribution of the Product(s) after the Closing Date.

     (c) Damages Net of Insurance; Limitations on Liability. The amount of any Damages for
which indemnification is provided under this Article VII shall be net of any amounts recovered by
the Person receiving such indemnification under insurance policies with respect to such Damages
except to the extent such recovered amounts are from indemnified Person’s or its Affiliates’ self
insurance programs. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), NO MATTER HOW SUCH DAMAGES
OR LOST PROFITS ARE INCURRED INCLUDING A PARTY’S, OR ITS EMPLOYEES’, AGENTS’ OR CONTRACTORS’
NEGLIGENCE.

     Section 7.06 Manufacturing Agreement

     The Parties shall enter into the Manufacturing Agreement on or before the Closing Date.

     Section 7.07 Governmental Filings.

     Each Party will prepare and file whatever filings, requests or applications that are required
to be filed with any Governmental or Regulatory Authority in connection with the consummation of
the transactions contemplated by this Agreement.

15

 

     Section 7.08 Marketing of the Products.

     Cornerstone agrees to use commercially reasonable efforts to market, promote and sell the
Products. “Commercially reasonable efforts” shall include but not be limited to Cornerstone’s
continued employment of a minimum of fifty (50) detail field representatives dedicated to the sale,
promotion and marketing of the Products, Cornerstone’s use of the Marketing Materials and
development and distribution of other promotional materials, and such other marketing and sales
methods commonly utilized in the industry to actively market, promote and sell pharmaceutical
products similar to the Products. Cornerstone shall have until, but no later than, January 1, 2005
to have a sales force in place.

     Section 7.09 Transfer Letters.

     Provided that no Event of Default (as defined in the Secured Promissory Note) has occurred or
is occurring, upon Cornerstone’s payment in full of the Deferred Purchase Price to Vintage,
Cornerstone shall be entitled to send Cornerstone’s Transfer Letter to the FDA and Vintage shall
send Vintage’s Transfer Letter to the FDA. Cornerstone shall not send Cornerstone’s Transfer Letter
to the FDA unless and until (a) no Event of Default is occurring under the Secured Promissory Note,
and (b) the Deferred Purchase Price has been paid in full by Cornerstone to Vintage.

ARTICLE VIII

MISCELLANEOUS

     Section 8.01 Notices.

     All notices, requests and other communications hereunder must be in writing and will be deemed
to have been duly given only if delivered personally against written receipt or by facsimile
transmission with answer back confirmation or mailed (postage prepaid by certified or registered
mail, return receipt requested) or by nationally recognized overnight courier that maintains
records of delivery to the Parties at the following addresses or facsimile numbers:

If to Cornerstone to:

Cornerstone Pharmaceuticals, Ltd.

8000 Regency Parkway, Suite 430

Cary, North Carolina 27511

Attn: Craig Collard

Telephone: (919) 462-0565

Facsimile: (919)462-0566

16

 

With a copy to:

Pesin & Associates, P.C.

27368 Via Industria, Suite 113

Temecula, CA 92590

Attn.: Philip Pesin

Telephone: 951-719-1104

Facsimile: 951-719-1139

If to Vintage to:

Vintage Pharmaceuticals, LLC

130 Vintage Drive

Huntsville, Alabama 35811

Attn: William S. Propst, Jr.

Telephone: (256) 859-4011

Facsimile: (256) 859-2903

With a copy to:

Seyfarth Shaw LLP

55 E. Monroe Street

Suite 4200

Chicago, IL 60603

Attn: Michel J. Feldman

Telephone: (312) 781-8613

Facsimile: (312) 269-8869

All such notices, requests and other communications will (a) if delivered personally to the address
as provided in this Section, be deemed given upon receipt, (b) if delivered by facsimile to the
facsimile number as provided in this Section, be deemed given upon receipt by the sender of the
answer back confirmation and (c) if delivered by mail in the manner described above or by overnight
courier to the address as provided in this Section, be deemed given upon receipt. Any Party from
time to time may change its address, facsimile number or other information for the purpose of
notices to that Party by giving notice specifying such change to the other Party hereto in
accordance with the terms of this Section.

     Section 8.02 Entire Agreement.

     This Agreement and the Manufacturing Agreement supersede all prior discussions and agreement
both written and oral, among the Parties with respect to the subject matter hereof and contain the
sole and entire agreement among the Parties with respect to the subject matter hereof.

17

 

     Section 8.03 Waiver.

     Any term or condition of this Agreement may be waived at any time by the Party that is
entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the Party waiving such term or condition. No
waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall
be deemed to be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise
afforded, will be cumulative and not alternative.

     Section 8.04 Amendment

     This Agreement may be amended, supplemented or modified only by a written instrument duly
executed by each Party.

     Section 8.05 Third Party Beneficiaries.

     Except as expressly set forth in this Agreement, the terms and provisions of this Agreement
(and all Exhibits and Schedules attached hereto and all other documents delivered in connection
herewith) are intended solely for the benefit of each Party and their respective successors or
permitted assigns and it is not the intention of the Parties to confer third-party beneficiary
rights or remedies hereunder or thereunder upon any other Person.

     Section 8.06 Assignment; Binding Effect.

     Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any
Party without the prior written consent of the other Party, which consent shall not be unreasonably
withheld or delayed.

     Section 8.07 Headings.

     The headings used in this Agreement have been inserted for convenience of reference only and
do not define or limit the provisions hereof.

     Section 8.08 Severability.

     If any provision of this Agreement is held to be illegal, invalid, or unenforceable under
present or future laws effective while this Agreement remains in effect, the legality, validity and
enforceability of the remaining provisions will not be affected thereby.

     Section 8.09 Governing Law.

     This Agreement shall be governed by and construed in accordance with the laws of the State of
Alabama applicable to contracts executed and performed in such state, without giving effect to the
conflicts of laws principles.

18

 

     Section 8.10 Expenses.

     Except as otherwise provided in this Agreement, each Party shall pay its own expenses and
costs incidental to the preparation of this Agreement and to the consummation of the transactions
contemplated hereby.

     Section 8.11 Counterparts.

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

     Section 8.12 Publicity.

     Neither Party shall issue a press release or make any public announcement with respect to this
Agreement and the transactions contemplated hereby without the other Party’s prior written consent.

[Signature Page Follows]

19

 

     IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto all as of the date
first above written,

	 	 	 	 	 
	 	VINTAGE PHARMACEUTICALS, LLC

 	 
	 	By:  	/s/ William S. Propst, Jr.
 	 
	 	 	Name:  	William S. Propst, Jr. 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	CORNERSTONE PHARMACEUTICALS, LTD.

 	 
	 	By:  	/s/ Craig Collard
 	 
	 	 	Name:  	Craig Collard 	 
	 	 	Title:  	President and CEO 	 
	 

[Signature Page to Asset Purchase Agreement]

20

 

Exhibit A-l

[CORNERSTONE LETTERHEAD]

[Date]

Mr. Gary J. Buehler, Director

Office of Generic Drugs

Center for Drug Evaluation and Research

Food and Drug Administration

Metro Park North II, Room 150

7500 Standish Place

Rockville, Maryland 20855

			
	Re:	 	ANDA 76-743, Propoxyphene napsylate and acetaminophen (100mg/325mg); ANDA 76-750,
Propoxyphene napsylate and acetaminophen (100mg/500mg); Transfer of Ownership of ANDAs

Dear Mr. Buehler:

Reference is made to the Vintage Pharmaceuticals, LLC (“Vintage”) letter dated                     , 200_,
which transferred ownership of ANDA 76-743 and ANDA 76-750 to Cornerstone Pharmaceuticals, Ltd.,
8000 Regency Parkway, Suite 430, Cary, North Carolina 27511
effective                     , 200_. A copy of
that letter is included herein as reference. In accordance with the provisions of 21 CFR §314.72,
notification of a change in ownership of the above-identified Abbreviated New Drug Application is
hereby given. The transfer of ownership of the approved application from Vintage Pharmaceuticals,
LLC (“Vintage”) to Cornerstone Pharmaceuticals, Ltd. is
effective                     , 200_.

Accompanying this letter is a completed Form FDA 356h for these ANDAs. As further required by the
regulations as codified under 21 CFR §314.72, Cornerstone Pharmaceuticals, Ltd. wishes to inform
the Agency that it fully intends to abide by all agreements, promises, and conditions made by the
former owners, Vintage, as stated in the application. Vintage will be providing a complete copy of
the application, supplements and associated records as required under 21 CFR §314.81, to
Cornerstone Pharmaceuticals, Ltd. No imminent changes to the application are anticipated; however,
should changes to the application become appropriate, Cornerstone Pharmaceuticals, Ltd. agrees to
notify the Agency of said changes in accordance with the regulations set forth in 21 CFR §314.70.

 

 

All future communication and correspondence related to the subject ANDAs should be directed to the
attention of:

	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Sincerely,	 	 
	 
	 	 	 	 
	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Enclosure
	 	 	 	 

2

 

Exhibit A-2

[VINTAGE LETTER]

[Date]

Mr. Gary J. Buehler, Director

Office of Generic Drugs

Center for Drug Evaluation and Research

Food and Drug Administration

Metro Park North II, Room 150

7500 Standish Place

Rockville, Maryland 20855

			
	Re:	 	ANDA 76-743, Propoxyphene napsylate and acetaminophen (100mg/325mg);
ANDA 76-750, Propoxyphene napsylate and acetaminophen (100mg/500mg)
Transfer of Ownership of ANDAs

Dear Mr. Buehler:

As required by 21 CFR §314.72(a)(l), Vintage Pharmaceuticals, LLC is providing notification that
all rights to the above-referenced ANDA were transferred to:

Cornerstone Pharmaceuticals, Ltd.

8000 Regency Parkway, Suite 430

Cary, North Carolina 27511

The change in ownership of the application is effective                     , 200_.

Vintage Pharmaceuticals, LLC will deliver to Cornerstone Pharmaceuticals, Ltd. a complete copy of
the application, including supplements and records that are required to be kept under 21 CFR
§413.81.

We have been advised by Cornerstone Pharmaceuticals, Ltd. That they will send the necessary
correspondence to FDA as required in 21 CFR §314.72(a)(2) and 314.72(b).

 

 

Further questions, comments, or correspondence may be directed to:

Craig
A.
Collard                                             

Cornerstone Pharmaceuticals, Ltd.

8000 Regency Parkway, Suite 430

Cary, North Carolina 27511

	 	 	 
	 

	 	Sincerely,
	 
	 	 
	 

	 	William S. Propst
	 

	 	President, Vintage Pharmaceuticals, LLC

Cc: Craig Collard

2

 

Exhibit B

Vintage Bill of Sale

BILL OF SALE

     KNOW ALL BY THESE PRESENTS, that for good and valuable consideration described in the Asset
Purchase Agreement (hereafter defined), the receipt and sufficiency of which are hereby
acknowledged, Vintage Pharmaceuticals, LLC, a Delaware limited liability company with offices
located at 130 Vintage Drive, Huntsville, Alabama (“Vintage”), does hereby assign, sell, convey,
transfer and deliver to Cornerstone Pharmaceuticals, Ltd., a corporation organized and existing
under the laws of Anguilla with offices located at 8000 Regency Parkway, Suite 430, Cary, NC 27511
(“Cornerstone”), free and clear of Encumbrances other than Permitted Encumbrances, all of Vintage’s
right, title and interest in and to the Purchased Assets.

     This Bill of Sale is being delivered to Cornerstone pursuant to that certain Asset Purchase
Agreement between Vintage and Cornerstone dated the 20th day of July, 2004 (the “Asset
Purchase Agreement”), and nothing herein shall be construed as modifying or superseding the terms
of the Asset Purchase Agreement or the Manufacturing Agreement between Vintage and Cornerstone
dated the 20th day of July, 2004, or any document or agreement contemplated by the Asset
Purchase Agreement or Manufacturing Agreement. Capitalized terms not otherwise defined herein will
have the meaning given to them in the Assignment Agreement.

     IN WITNESS WHEREOF, the undersigned duly authorized representative of Vintage has executed
this Bill of Sale effective as of this 20th day of July, 2004.

	 	 	 	 	 	 	 
	 	 	VINTAGE PHARMACEUTICALS, LLC
	 
	 	 	 	 	 	 
	 
	 	By:	/s/ William S. Propst, Jr. 
	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	Printed Name:	 	William S. Propst, Jr.
	 
	 	 	 	 	 	 
	 
	 	Title:	 	President

 

 

Exhibit C

Manufacturing Agreement

 

 

Exhibit D

SECURED PROMISSORY NOTE

			
	 	 	 
	$3,000,000.00 (U.S.)
	 	July 15, 2004

     FOR VALUE RECEIVED, the undersigned, CORNERSTONE PHARMACEUTICALS LTD., an Anguilla Company
company (hereinafter “Borrower”), promises to pay to the order of VINTAGE PHARMACEUTICALS, LLC, a
limited liability company (hereinafter, “Lender”), at its main office located at 130 Vintage Drive,
Huntsville, Alabama 35811, or at such other address as the holder of this Note may from time to
time designate in writing, the principal sum of THREE MILLION AND NO/100 DOLLARS (U.S.)
($3,000,000.00), together with interest thereon and other agreed charges as provided herein.

     1. Defined Terms. As used herein, the following terms shall have the meanings
thereafter ascribed:

     “Asset Purchase Agreement” shall mean that certain Asset Purchase Agreement
between Borrower and Lender dated July 15, 2004.

     “Collateral” shall mean the “Purchased Assets,” as defined in the Asset
Purchase Agreement.

     “Deferred Purchase Price” shall have the meaning ascribed to such term in the
Asset Purchase Agreement.

     “Default” shall mean the occurrence of any event which would constitute an
Event of Default but for the giving of any required notice by Borrower or Lender or the
expiration of any stated grace or cure period with respect to such event.

     “Default Rate” shall mean a variable per annum rate of interest equal to the
lesser of (i) two percent (2%) in excess of the Interest Rate, or (ii) the maximum rate
allowed by applicable law.

     “Event of Default” shall have the meaning set forth in Section 7 hereof. An
Event of Default shall “exist” if an Event of Default shall have occurred and is continuing.

     “Guaranty” shall mean each Guaranty Agreement delivered by a Guarantor in favor
of Lender of even date herewith.

     “Guarantor” shall mean each of Cornerstone Pharmaceuticals Holdings, Ltd., an
Anquilla limited company, and Carolina Pharmaceuticals Holdings, Ltd., a Bermuda limited
company.

     “Interest Rate” shall mean a fixed per annum rate of interest equal to two and
50/100 percent (2.5%)

 

 

     “Loan” shall mean the loan from Lender to Borrower evidenced by this Note in
the principal amount of $3,000,000.00 (U.S.).

     “Loan Documents” shall mean this Note, the Security Agreement, the Guaranty and
any other documents now or hereafter executed by the Borrower or others evidencing,
securing, or relating to the Loan including, without limitation, the Asset Purchase
Agreement.

     “Maturity Date” shall mean with respect to $1,500,000, January 15, 2005, and
with respect to all remaining amounts due, July 15, 2005.

     “Obligations” shall collectively mean the aggregate of all principal and
interest owing from time to time under this Note and all expenses, fees, charges, and other
amounts from time to time owing under this Note or the other Loan Documents, and all
covenants, agreements, and other obligations from time to time owing to, or for the benefit
of, Lender pursuant to the Loan Documents.

     “Security Agreement” shall mean that certain Security Agreement of even date
herewith by Borrower in favor of Lender, which provides Lender a first priority security
interest in the Collateral.

     2. Interest Rate.

     (a) Except for any period during which the Default Rate is in effect, the outstanding
principal balance hereof will bear interest at the Interest Rate until paid in full.

     (b) All interest on the outstanding principal amount hereunder, whether accruing at the
Interest Rate or the Default Rate, shall be calculated on a simple interest basis for a 360-day
year by multiplying the outstanding principal amount by the applicable per annum rate, multiplying
the product thereof by the actual number of days elapsed, and dividing the product so obtained by
360.

     3. Payments. On the Maturity Date, Borrower shall pay to Lender without notice or
demand, the sum of (i) the entire outstanding principal balance hereof, plus (ii) all accrued and
unpaid interest.

     4. Prepayment. The Loan will be prepayable in whole or in part without premium.
Prepayments will be applied to installments coming due in their inverse order of maturity. Amounts
prepaid may not be reborrowed.

     5. Default Interest; Collection Costs.

     (a) If an Event of Default shall exist hereunder, Borrower agrees to pay interest to Lender at
the Default Rate on the aggregate outstanding Obligations (excluding accrued interest) until such
Obligations are paid in full.

     (b) Lender shall be entitled to recover from Borrower all costs of collecting, securing or
attempting to collect or secure the Obligations, including, without limitation, court costs and

2

 

reasonable attorneys’ fees, including attorneys’ fees for preparation of litigation and in any
appellate or bankruptcy proceedings provided Borrower is in default of this Agreement.

     6. Security. All Obligations of Borrower are secured and guaranteed by the Loan
Documents and by all collateral described therein.

     7. Events of Default.

     (a) The principal sum evidenced by this Note, together with all accrued but unpaid interest
thereon, shall become immediately due and payable at the option of Lender upon the occurrence of
any of the following events, each of which shall constitute an “Event of Default” hereunder:

     (1) Nonpayment of Indebtedness. Failure by Borrower to make any scheduled
payment hereunder when due, time being of the essence.

     (2) Voluntary Insolvency Proceedings. The filing by Borrower or Guarantor of a
voluntary petition in bankruptcy or such Borrower’s or Guarantor’s adjudication as a
bankrupt or insolvent, or the filing by Borrower or Guarantor of any petition or answer
seeking or acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or other relief
for debtors, or such Borrower’s or Guarantor’s seeking or consenting to or acquiescence in
the appointment of any trustee, receiver or liquidator of Borrower or Guarantor, or the
making of any general assignment for the benefit of creditors, or the admission in writing
of any inability to pay its debts generally as they become due.

     (3) Involuntary Insolvency Proceedings. The entry by a court of competent
jurisdiction of an order, judgment, or decree approving a petition filed against Borrower or
Guarantor seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency, or other relief for debtors, which
order, judgment or decree remains unvacated and unstayed for an aggregate of sixty (60) days
(whether or not consecutive) from the date of entry thereof, or the appointment of any
trustee, receiver or liquidator of Borrower or Guarantor, or of a substantial part of its
property, or of any or all of the rents, revenues, issues, earnings, profits or income
thereof, without the consent or acquiescence of Borrower or Guarantor, which appointment
shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not
consecutive).

     (4) Misrepresentation. If any certificate, statement, representation, warranty
or audit heretofore or hereafter furnished by or on behalf of Borrower or Guarantor pursuant
to or in connection with the Loan Documents or the Asset Purchase Agreement (including,
without limitation, representations and warranties contained therein), or as an inducement
to Lender to extend any credit to Borrower or Guarantor or to enter into this or any other
agreement with Borrower or Guarantor, proves to have been false in any material respect at
the time as of which the facts therein set forth were stated or certified,

3

 

or if on the date of execution of this Note there shall have been any materially
adverse change in any of the facts previously disclosed by any such certificate, statement,
representation, warranty or audit, which change shall not have been disclosed to Lender at
or prior to the time of such execution.

     (5) Transfer. Except as otherwise contemplated by the Loan Documents, any
sale, conveyance or other transfer by Borrower of any portion of or interest in the
Collateral, which consent may be granted or refused by Lender in its sole discretion.

     (6) Liens. The creation of or suffering to exist by Borrower of any lien or
encumbrance upon any of the Collateral, other than the lien of the Loan Documents and other
permitted encumbrances thereunder, without the prior written consent of Lender, which
consent may be granted or refused by Lender in its sole discretion.

     (7) Cross-Default. The occurrence of any “Event of Default” as defined in any
other Loan Document or any breach of the Asset Purchase Agreement by Borrower.

     (b) Notwithstanding the foregoing, no notice of default shall be required if Lender is
prevented from giving notice by bankruptcy or other applicable law, and the cure period, if any,
specified with respect to such default shall commence on the date thereof rather than from the date
of notice. Nothing herein shall require any notice to Borrower except as expressly set forth above
or in the other Loan Documents referred to herein.

     8. Usury. In no event shall the amount of interest due or payable hereunder (including
interest calculated at the Default Rate) exceed the maximum rate of interest allowed by applicable
law, and in the event any such payment is inadvertently paid by Borrower or inadvertently received
by Lender, then such excess sum shall be credited as a payment of principal, unless Lender elects
to have such excess sum refunded to Borrower forthwith, which refund Borrower hereby agrees to
accept. It is the express intent hereof that Borrower not pay and Lender not receive, directly or
indirectly, interest in excess of that which may be legally paid by Borrower under applicable law.

     9. Relationship of Parties. Borrower and Lender agree that the relationship between
them shall be solely that of debtor and creditor. Nothing contained in this Note or in any other
Loan Document shall be deemed to create a partnership, tenancy-in-common, joint tenancy, joint
venture or co-ownership by or between Borrower and Lender. Lender shall not be in any way
responsible or liable for debts, losses, obligations or duties of Borrower with respect to the Loan
or otherwise. Borrower, at all times consistent with the terms and provisions of this Note and the
Loan Documents, shall be free to determine and follow their own policies and practices in the
conduct of their business.

     10. Notices. Any notice required herein or by applicable law shall be given in the
manner set forth in the Asset Purchase Agreement.

     11. Miscellaneous.

     (a) All amounts due hereunder shall be payable in lawful money of the United States of
America.

4

 

     (b) With respect to the amounts due under this Note, Borrower waives the following to the
fullest extent permitted by law:

     (1) All rights of exemption of property from levy or sale under execution or other
process for the collection of debts under the Constitution or laws of the United States or
any state thereof;

     (2) Demand, presentment, protest, notice of dishonor, notice of non-payment, diligence
in collection, and all other requirements necessary to charge or hold the Borrower liable on
any obligations hereunder; and

     (3) Any further receipt for or acknowledgment of any collateral now or hereafter
deposited as security for the obligations hereunder.

     (c) Lender shall not by any act, delay, omission, or otherwise be deemed to have waived any of
its rights or remedies under the Loan Documents, and no waiver of any kind shall be valid unless in
writing and signed by Lender. All rights and remedies of Lender under the terms of this Note and
the other Loan Documents and applicable statutes or rules of law shall be cumulative and may be
exercised successively or concurrently. Any provision in this Note which may be unenforceable or
invalid under any law shall be ineffective to the extent of such unenforceability or invalidity
without affecting the enforceability or validity of any other provision hereof.

     (d) Borrower agrees that as of the date hereof there are no defenses, equities, or setoffs
with respect to the Obligations.

     (e) This Note and the Obligations of Borrower hereunder shall be binding upon and enforceable
against Borrower and its successors and assigns, and shall inure to the benefit of Lender and its
successors and assigns, including any subsequent holder of this Note.

     (f) Section headings are inserted for convenience of reference only and shall be disregarded
in the interpretation of this Note. The provisions of this Note shall be construed without regard
to the party responsible for the drafting and preparation hereof.

     (g) Time is of the essence of this Note and the performance of each of the covenants and
agreements contained herein.

     12. Jurisdiction; Waiver of Jury Trial.

     (a) The validity, interpretation, enforcement and effect of this Note shall be governed by,
and construed according to the laws of, the State of Alabama.

     (b) THE VALIDITY, INTERPRETATION, ENFORCEMENT AND EFFECT OF THIS NOTE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ALABAMA. LENDER’S PRINCIPAL PLACE OF
BUSINESS IS LOCATED IN MADISON COUNTY IN THE STATE OF ALABAMA, AND THE BORROWER AGREES THAT THIS
NOTE SHALL BE DELIVERED TO AND HELD BY LENDER AT SUCH PRINCIPAL PLACE OF BUSINESS, AND THE HOLDING
OF

5

 

THIS NOTE BY LENDER THEREAT SHALL CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF BORROWER WITH
MADISON COUNTY AND THE STATE OF ALABAMA FOR THE PURPOSE OF CONFERRING JURISDICTION UPON THE FEDERAL
AND STATE COURTS PRESIDING IN SUCH COUNTY AND STATE. BORROWER CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING ARISING HEREUNDER MAY BE BROUGHT IN THE CIRCUIT COURT OF THE STATE OF ALABAMA, MADISON
COUNTY, ALABAMA OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA AND
ASSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY SUCH COURT IN ANY ACTION OR PROCEEDING
INVOLVING THIS INSTRUMENT. NOTHING HEREIN SHALL LIMIT THE JURISDICTION OF ANY OTHER COURT.

     (c) BORROWER WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM,
SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATING
TO THIS NOTE, ANY OTHER LOAN DOCUMENT, OR ANY OTHER INSTRUMENT DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR
RELATING TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS NOTE, ANY
OTHER LOAN DOCUMENT, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR IN CONNECTION WITH ANY TRANSACTIONS RELATED THERETO OR
CONTEMPLATED THEREBY OR THE EXERCISE OF EITHER PARTY’S RIGHTS AND REMEDIES THEREUNDER, IN ALL OF
THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE. BORROWER AGREES THAT LENDER MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS
WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT OF BORROWER IRREVOCABLY TO WAIVE
TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN BORROWER AND LENDER SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

[The remainder of this page intentionally left blank]

6

 

     IN WITNESS WHEREOF, Borrower has caused this instrument to be properly executed and delivered
as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	CORNERSTONE PHARMACEUTICALS,	 	 
	 	 	LTD., an Anguilla company	 	 
	 
	 	 	 	 	 	 
	 

	 	By.
	 	/s/ Craig A. Collard
 

	 	 
	 	 	Craig Collard	 	 
	 	 	President and CEO	 	 

7

 

Exhibit E

GUARANTY AGREEMENT

     THIS GUARANTY AGREEMENT (this “Guaranty”) is made as of the 15th day of July, 2004, by
CORNERSTONE PHARMACEUTICALS HOLDINGS, LTD., an Anguilla limited company (the “Guarantor”), in
favor of VINTAGE PHARMACEUTICALS, LLC, a limited liability company (the “Lender”).

R E C I T A L S:

     CORNERSTONE PHARMACEUTICALS LTD., an Anguilla company (the “Borrower”), and Guarantor have
requested that Lender make a loan to Borrower in the principal sum of THREE MILLION AND NO/100
DOLLARS (U.S.) ($3,000,000.00) (the “Loan”) which will be evidenced by a Secured Promissory Note of
even date herewith (as the same may hereafter be extended, renewed, modified or amended, the
“Note”) payable by Borrower to Lender, and such other documents and instruments as are more
particularly set forth in the Note. As a condition to making the Loan, Lender has required that
Guarantor guarantee payment of all amounts due under the Loan and any other obligations of Borrower
to Lender, whether now existing or hereafter incurred, pursuant to the Note, the other “Loan
Documents,” or the “Asset Purchase Agreement” (as such terms are defined in the Note), as any of
the same may hereafter be amended. Guarantor will directly and indirectly benefit from Lender
making the Loan to Borrower; consequently, it has agreed to guarantee the Loan on the terms and
conditions stated herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals, as an inducement to Lender to make
the Loan, and as security for the payment of the Loan and all obligations in connection therewith,
including, but not limited to, (a) the payment of the principal, interest and other charges
pursuant to the Note, (b) the payment of all expenses, charges and other amounts from time to time
owing to Lender pursuant to the Note and the other Loan Documents, and (c) the performance of all
covenants, agreements and other obligations from time to time owing to, or for the benefit of,
Lender pursuant to the Loan Documents or the Asset Purchase Agreement (the Loan, interest thereon
and all indemnities, obligations, charges, expenses and other indebtedness and liabilities secured
hereby being hereinafter called the “Obligations”), Guarantor agrees and covenants with Lender, and
represents and warrants to Lender, as follows:

     1. Guarantee of Obligations. Guarantor hereby unconditionally guarantees to Lender (a)
the due, regular, and punctual payment and performance of the Obligations, including, but not
limited to, the indemnity obligations of Borrower to Lender set forth in the Loan Documents (which
guaranty shall survive concurrently with survival of such indemnities); (b) upon the failure of the
Borrower timely to pay or perform any of the Obligations, the payment of all costs and expenses
incurred by Lender in paying or performing such Obligations (but Lender shall not be required to
pay or perform such Obligations); and (c) the payment of all costs, reasonable attorneys’ fees, and
expenses that may be incurred by Lender by reason of an Event of Default

 

 

pursuant to the Loan Documents or the failure of the Borrower to pay or perform any of the
Obligations, including fees and expenses in any appellate or bankruptcy proceedings.

     Upon any Event of Default pursuant to any of the Loan Documents, Guarantor unconditionally
promises to pay to Lender such amounts as are necessary to cure the Event of Default, or at the
option of Lender, Guarantor agrees to pay the outstanding Obligations in full.

     This Guaranty is unconditional except as expressly set forth herein, and Guarantor agrees that
Lender, upon the occurrence of an Event of Default pursuant to any of the Loan Documents or the
failure of the Borrower to pay or perform any of the Obligations, shall not be required to assert
any claim or cause of action against the Borrower before asserting any claim or cause of action
against Guarantor under this Guaranty. Guarantor further agrees that Lender shall not be required
to pursue or foreclose on any collateral that it may receive from the Borrower, Guarantor, or
others as security for any of the Obligations before making a claim or asserting a cause of action
against Guarantor under this Guaranty.

     The failure of Lender to perfect its security interest in any of the collateral as set forth
in any of the Loan Documents or any other collateral now or hereafter securing all or any part of
the Obligations shall not release Guarantor from its liabilities and obligations hereunder.

     Notice of acceptance of this Guaranty and of any default or Event of Default is hereby waived
by Guarantor, except for copies of notices sent to Borrower as otherwise set form herein or in the
Note or Loan Documents. Presentment, protest, demand, and notice of protest and demand, and notice
of receipt of any and all collateral, and of the exercise of possessory remedies or foreclosure on
any and all collateral received by Lender from the Borrower or Guarantor are hereby waived. All
settlements, compromises, compositions, accounts stated, and agreed balances in good faith between
any primary or secondary obligors on any accounts received as collateral shall be binding upon
Guarantor.

     This Guaranty shall not be affected, modified, or impaired by the voluntary or involuntary
liquidation, dissolution, sale, or other disposition of all or substantially all of the assets,
marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangements, composition with creditors or readjustment of,
or other similar proceedings affecting, the Borrower or Guarantor, or any of the assets belonging
to either of them, nor shall this Guaranty be affected, modified, or impaired by the invalidity of
any of the Note or any of the other Loan Documents.

     Without notice to Guarantor, without the consent of Guarantor, and without affecting or
limiting Guarantor’s liability hereunder, Lender may:

     (a) grant the Borrower extensions of time for payment of the Obligations or any part
hereof;

     (b) renew any of the Obligations;

     (c) grant the Borrower extensions of time for performance of agreements or other
indulgences;

2

 

     (d) at any time release any or all of the collateral that now or hereafter secures any
of the Obligations;

     (e) compromise, settle, release, or terminate any or all of the obligations, covenants,
or agreements of the Borrower under, the Note, other Loan Documents, or the Stock Redemption
Agreement;

     (f) with the Borrower’s written consent, modify or amend any obligation, covenant, or
agreement of Borrower as set forth in the Note, any of the other Loan Documents, or the
Stock Redemption Agreement (and such amendments shall nevertheless be binding upon
Guarantor) so long as the Obligations are not increased thereby.

     This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any
time any whole or partial payment or performance of any Obligations is or is sought to be rescinded
or must otherwise be restored or returned by Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Borrower or Guarantor upon or as a result of the appointment of a
receiver, intervenor, or conservator of, or trustee or similar officer for, Borrower or Guarantor
of, or for, any substantial part of its property, or otherwise, all as though such payments and
performance had not been made. This Guaranty shall not be affected in any way by the transfer or
other disposition of any of the collateral described in and granted to Lender pursuant to the Loan
Documents, whether by deed, operation of law, or otherwise.

     2. Representations and Warranties of Guarantor. To induce Lender to make the Loan to
Borrower, Guarantor represents and warrants to Lender as follows:

     (a) Existence, Power and Qualification. Guarantor is a corporation organized under the
laws of the country of its formation as set forth in the heading of this Agreement, has the
power to own its properties and to carry on its business as is now being conducted, and is
duly qualified to do business, and is in good standing in every jurisdiction in which the
character of the properties owned by it or in which the transaction of its business makes
its qualification necessary.

     (b) Power to Incur Obligations. Guarantor has full power and unrestricted right to
enter into this Guaranty and to incur the obligations provided for herein, all of which have
been authorized by all requisite corporate action.

     (c) Conflicts. This Guaranty does not violate, conflict with, or constitute any default
under any decree, judgment, or any other agreement or instrument binding upon any Guarantor
and does not violate or conflict with Guarantor’s organizational documents.

     (d) No Defaults or Restrictions. There is no default under any agreement or instrument
that causes or would cause a material adverse effect on the business, properties, or
financial operations or condition of Guarantor.

     (e) Disclosure. Neither this Guaranty nor any other document, financial statement,
credit information, certificate or statement required herein to be furnished to

3

 

Lender by Guarantor in connection with this Guaranty contains any untrue, incorrect or
misleading statement of material fact. All representations and warranties made herein or in
any certificate or other document delivered to Lender by or on behalf of Guarantor pursuant
to or in connection with this Guaranty shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf,
and shall survive the making of the Loan.

     3. Affirmative Covenants of Guarantor. Guarantor covenants and agrees that so long as
any of the Obligations are outstanding, Guarantor shall:

     (a) Payment of Loan/Performance of Obligations. Following the occurrence of an Event of
Default with respect to the Obligations and upon Lender’s demand thereof, duly and
punctually pay or cause to be paid the principal and interest then due pursuant to the Note
and duly and punctually pay or perform or cause to be paid or performed all other
Obligations then due.

     (b) Reporting Requirements. From time to time upon request, furnish to Lender such
information regarding the business affairs, finances, and conditions of Guarantor and its
properties and related companies in such detail as Lender may reasonably request

     (c) Payment of Indebtedness. Pay duly and punctually or cause to be paid all principal
and interest of any indebtedness of Guarantor to its creditors, and comply with and perform
all conditions, terms, and obligations of the notes or other instruments evidencing such
indebtedness and any security agreements, and other instruments evidencing security for such
indebtedness.

     (d) Maintenance of Existence. Maintain its existence as a corporation.

     4. Events of Default. If Guarantor violates any covenant set forth in the immediately
preceding Section, or if Guarantor fails to properly and timely perform or observe any covenant or
condition set forth in this Guaranty (other than those in the immediately preceding Section) which
is not cured with any applicable cure period as set forth herein or, if no cure period is specified
therefor, is not cured within thirty (30) days of Lender’s notice to Guarantor of such default, or
if any representation or warranty herein or in any financial statement, certificate or other
information heretofore or hereafter provided by Guarantor to Lender proves to be false or
materially misleading, the same shall constitute an “Event of Default” hereunder and under each of
the Loan Documents. The foregoing provision or any other provision requiring or providing for
notice or demand from Lender is deemed eliminated if Lender is prevented from giving such notice or
demand by bankruptcy or other applicable law, and the Event of Default shall occur on the
occurrence of such event or condition if not cured within any applicable period measured from the
occurrence of such event or condition rather than from notice or demand.

     5. Subordination. Guarantor subordinates its right to payments of any indebtedness
owing from Borrower to Guarantor, whether now existing or arising at any time in the future
(including, but not limited to, rights to payment arising by virtue of any subrogation or

4

 

indemnification upon payment by Guarantor of amounts due from Borrower to Lender), to the
prior right of Lender to receive or require payment in full of the Obligations, until such time as
the Obligations are fully paid (and including interest accruing on the Note after any petition
under the Bankruptcy Code, which post-petition interest Guarantor agrees shall remain a claim that
is prior and superior to any claim of Guarantor notwithstanding any contrary practice, custom or
ruling in proceedings under the Bankruptcy Code generally) and such payments are final and not
subject to refund or recision under bankruptcy or other applicable law. Furthermore, upon the
occurrence of an Event of Default under the Loan Documents, Guarantor agrees not to accept any
payment or satisfaction of any kind of indebtedness of Borrower to Guarantor or any security for
such indebtedness. If Guarantor should receive any such payment, satisfaction or security for any
indebtedness of Borrower to Guarantor, Guarantor agrees to deliver the same promptly to Lender in
the form received, endorsed, or assigned as may be appropriate for application on account of, or as
security for, the Obligations and until so delivered, agrees to hold the same in trust for Lender.

     6. Successors and Assigns. This Guaranty shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns.

     7. Severability. In the event that any provision hereof is deemed to be invalid by
reason of the operation of any law or by reason of the interpretation placed thereon by any court,
this Guaranty shall be construed as not containing such provisions, and the invalidity of such
provisions shall not affect other provisions hereof which are otherwise lawful and valid and shall
remain in full force and effect.

     8. Notices. Any notice required herein or by applicable law shall be deemed properly
given (a) when personally delivered (to the person or department if one is designated below), (b)
three (3) days following the date sent by United States Mail, certified or registered, postage
prepaid, return receipt requested, or (c) one (1) day after the date sent by Federal Express or
overnight United States Mail or other national overnight carrier, and addressed in each such case
to the parties at their respective addresses set forth below or such other single address as either
party may designate in a written notice given as herein provided (except that a change of address
notice shall not be effective until actual receipt).

If to Guarantor, then to:

Cornerstone Pharmaceuticals Holdings, LTD

8000 Regency Parkway, Suite 430

Cary, NC 27511

Fax: 919-462-0566

Attn: Craig Collard

With a copy to:

Pesin & Associates, P.C.

27368 Via Industrial, Suite 113

Temecula, CA 92590

Fax: 951-719-1139

5

 

Attention: Philip Pesin

If to Lender, then to:

Vintage Pharmaceuticals, LLC

Attention: William S. Propst, Jr., President

422 McClung Avenue, S.E.

Huntsville, Alabama 35801

Fax: 256-859-2903

With a copy to:

Seyfarth Shaw

55 East Monroe Street

Suite 4200

Chicago, Illinois

Attention: Mike Feldman

Fax: 312-269-8869

     9. Waivers. The failure by Lender at any time or times hereafter to require strict
performance by Guarantor of any of the provisions, warranties, terms, and conditions contained
herein or in any other agreement, document, or instrument now or hereafter executed by Guarantor
and delivered to Lender shall not waive, affect, or diminish any right of Lender hereafter to
demand strict compliance or performance therewith and with respect to any other provisions,
warranties, terms, and conditions contained in such agreements, documents, and instruments, and any
waiver of any default or Event of Default shall not waive or affect any other default or Event of
Default, whether prior or subsequent thereto and whether of the same or a different type. None of
the warranties, conditions, provisions, and terms contained in this Guaranty or in any agreement,
document, or instrument now or hereafter executed by Guarantor and delivered to Lender shall be
deemed to have been waived by any act or knowledge of Lender, its agents, officers, or employees,
but only by an instrument in writing, signed by an officer of Lender, and directed to Guarantor
specifying such waiver.

     10. Expenses. If, at any time or times hereafter, Guarantor is in material breach of
this or other related agreements, and Lender is reasonable required to employ counsel to advise or
provide other representation with respect to this Guaranty or any other agreement, document, or
instrument heretofore, now, or hereafter executed by Guarantor and delivered to Lender with respect
to the Borrower or the Obligations, or to commence, defend, or intervene, file a petition,
complaint, answer, motion, or any other pleading or to take any other action in or with respect to
any suit or proceeding relating to this Guaranty or any other agreement, instrument, or document
heretofore, now, or hereafter executed by Guarantor and delivered to Lender with respect to the
Borrower or the Obligations, or to represent Lender in any litigation with respect to the affairs
of Guarantor or to enforce any rights of Lender or obligations of Guarantor or any other person,
firm, or corporation that may be obligated to Lender by virtue of this Guaranty, or any other
agreement, document, or instrument heretofore or hereafter delivered to Lender by or for the
benefit of Guarantor with respect to the Borrower or the Obligations, then in any such events, all
of the reasonable attorneys’ fees actually incurred arising from such services, including fees in

6

 

any appellate or bankruptcy proceedings, and any other expenses, costs, and charges relating
to this Guaranty, the Borrower or the Obligations, shall constitute additional obligations of
Guarantor payable on demand.

     11. Singular and Plural. Singular terms shall include the plural forms, and vice
versa.

     12. Entire Agreement. This Guaranty constitutes the entire agreement and supersedes
all prior agreements and understandings both oral and written, between the parties with respect to
the subject matter hereof. This Agreement may be executed in counterparts, each of which may be
deemed an original, but such counterparts together shall constitute one and the same instrument.

     13. THE VALIDITY, INTERPRETATION, ENFORCEMENT AND EFFECT OF THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ALABAMA. LENDER’S PRINCIPAL PLACE OF
BUSINESS IS LOCATED IN MADISON COUNTY IN THE STATE OF ALABAMA, AND THE GUARANTOR AGREES THAT THIS
GUARANTY SHALL BE DELIVERED TO AND HELD BY LENDER AT SUCH PRINCIPAL PLACE OF BUSINESS, AND THE
HOLDING OF THIS GUARANTY BY LENDER THEREAT SHALL CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF
GUARANTOR WITH MADISON COUNTY AND THE STATE OF ALABAMA FOR THE PURPOSE OF CONFERRING JURISDICTION
UPON THE FEDERAL AND STATE COURTS PRESIDING IN SUCH COUNTY AND STATE. GUARANTOR CONSENTS THAT ANY
LEGAL ACTION OR PROCEEDING ARISING HEREUNDER MAY BE BROUGHT IN THE CIRCUIT COURT OF THE STATE OF
ALABAMA, MADISON COUNTY, ALABAMA OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ALABAMA AND ASSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY SUCH COURT IN ANY ACTION OR
PROCEEDING INVOLVING THIS INSTRUMENT. NOTHING HEREIN SHALL LIMIT THE JURISDICTION OF ANY OTHER
COURT.

     14. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAM, COUNTERCLAIM, SETOFF,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATING TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT, OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO
OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS GUARANTY OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR IN CONNECTION
WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED THEREBY OR THE EXERCISE OF ANY PARTY’S RIGHTS
AND REMEDIES THEREUNDER, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. GUARANTOR AGREES THAT LENDER MAY FILE A COPY
OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED
AGREEMENT OF GUARANTOR IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY
WHATSOEVER BETWEEN GUARANTOR AND LENDER SHALL

7

 

INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

     15. Termination of Rights. All rights granted to Lender herein shall automatically and
immediately terminate upon payment of deferred purchase price as contemplated in the Asset Purchase
Agreement related hereto.

     IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	CORNERSTONE PHARMACEUTICALS	 	 
	 	 	HOLDINGS, LTD.; an Anguilla limited company	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name
	 	/s/ Craig A. Collard
 

Craig Collard
	 	 
	 

	 	Title
	 	President and CEO	 	 

8

 

CORNERSTONE BIOPHARMA, INC.

2000 Regency Parkway

Cary, North Carolina 27511

MARCH 23,2006

Vintage Pharmaceuticals, LLC

130 Vintage Drive

Huntsville, Alabama 35811

Attn: William S. Propst, Jr.

Dear Mr. Propst:

          As you may know, the Cornerstone family of companies formed Cornerstone BioPharma, Ltd., an
Anguilla international business company (“Cornerstone Anguilla”), with the intent that it would
hold certain intellectual property related to Cornerstone’s pharmaceutical business. After the
formation of Cornerstone Anguilla, we determined that the intellectual property should instead be
held by Cornerstone BioPharma, Inc., a Nevada corporation (“Cornerstone Nevada”). At all relevant
times, we have conducted our business on the basis that Cornerstone Nevada, rather than Cornerstone
Anguilla, is the owner of the intellectual property. Cornerstone Anguilla has been a shell company
with no operations.

          Unfortunately, certain documents have not accurately reflected our intent that the
intellectual property be owned by Cornerstone Nevada. Instead, Cornerstone Anguilla has been
identified as the owner of this intellectual property and, as a result, has been listed as a party
to various contracts including the following contracts with you:

	 	•	 	Asset Purchase Agreement, dated July 20, 2004, as amended
	 
	 	•	 	Secured Promissory Note in the original principal amount of $3,000,000, dated July
20, 2004
	 
	 	•	 	Security Agreement, dated July 20, 2004
	 
	 	•	 	Consent to Sublicense Agreement, dated February 4, 2005

          Please sign this notice to confirm that you agree that all references in the listed contracts
and any related documents to Cornerstone Anguilla will be replaced with Cornerstone Nevada. As a
result, Cornerstone Nevada, not Cornerstone Anguilla, shall have all of the relevant rights and
obligations under the Contracts. Please sign and return this notice to me at your earliest
convenience.

Sincerely,

/s/ Craig A. Collard

Craig A. Collard

President and Chief Executive Officer

Cornerstone BioPharma, Ltd.

Cornerstone BioPharma, Inc.

	 	 	 	 	 
	ACCEPTED AND AGREED:	 	 
	 
	 	 	 	 
	VINTAGE PHARMACEUTICALS, LLC	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ William S. Propst, Jr.
 

William S. Propst, Jr.
	 	 
	Title:

	 	Presidentexv10w20

Exhibit 10.20

FIRST AMENDMENT TO

ASSET PURCHASE AGREEMENT

     THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Amendment”) is entered into as of May
20th, 2005, by and between CORNERSTONE PHARMACEUTICALS LTD., an Anguilla company
(“Cornerstone”), and VINTAGE PHARMACEUTICALS, LLC, a Delaware limited liability company
(“Vintage”).

RECITALS:

     A. Cornerstone and Vintage are parties to that certain Asset Purchase Agreement, dated as of
July 20, 2004 (the “Agreement”);

     B. The parties desire to amend certain provisions of the Agreement.

     NOW, THEREFORE, in consideration of the premises and mutual agreements herein contained, the
parties hereby agree as follows:

     SECTION 1. DEFINED TERMS. Capitalized terms used in this Amendment, unless otherwise
defined herein, shall have the meanings given such terms in the Agreement.

     SECTION 2. RECITALS. The recitals set forth above are incorporated herein by
reference, as if fully restated herein.

     SECTION 3. STATUS OF AGREEMENT. The Agreement, as amended, hereby remains in full
force and effect, and, except to the extent expressly set forth in this Amendment, shall not be
deemed waived, modified, superseded or otherwise affected in any respect.

     SECTION 4. AMENDMENTS TO AGREEMENT. Section 3.02(ii) is amended by replacing “January
15, 2005” with “August 1, 2005,” and Section 3.02(iii) is amended by replacing “July 15, 2005,”
with “November 1, 2005.”

     SECTION 5. COUNTERPARTS. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of date first above
written.

	 	 	 	 	 	 	 	 	 
	CORNERSTONE PHARMACEUTICALS
LTD.	 	 	 	VINTAGE PHARMACEUTICALS, LLC
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Craig A. Collard
	 	 	 	By:
	 	/s/ William S. Propst, Jr.
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Craig A. Collard
	 	 	 	Name:
	 	William S. Propst, Jr.
	Its:

	 	CEO
	 	 	 	Its:
	 	President

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