Document:

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Exhibit 10.5

INDEMNIFICATION AGREEMENT

     THIS AGREEMENT is made as of November ___, 2004, by and among Prestwick Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”) and ___(the “Indemnitee”), a director of
the Company.

RECITALS

     WHEREAS, although the Certificate of Incorporation and the By-laws of the Company provide for
indemnification of the officers and directors of the Company and the Indemnitee may also be
entitled to indemnification pursuant to the Delaware General Corporation Law (“DGCL”), the DGCL
expressly contemplates that contracts may be entered into between the Company and members of the
Board of Directors of the Company (the “Board”) with respect to indemnification of directors; and

     WHEREAS, the Indemnitee’s continued service to the Company substantially benefits the Company;
and

     WHEREAS, the Board has determined that it is in the best interest of the Company and that it
is reasonably prudent and necessary for the Company contractually to obligate itself to indemnify,
and to advance expenses on behalf of, the Indemnitee to the fullest extent permitted by applicable
law in order to induce him to serve or continue to serve the Company free from
undue concern that he will not be so indemnified or that any indemnification obligation will
not be met; and

     WHEREAS, this Agreement is a supplement to and in furtherance of (a) the Certificate and
Bylaws of the Company, and (b) the certificate and bylaws or partnership agreement, as the case may
be, of any Enterprise (as defined below) and any resolutions adopted pursuant thereto, and shall
not be deemed a substitute therefor, nor to diminish or abrogate any rights of the Indemnitee
thereunder; and

     WHEREAS, the Indemnitee does not regard the protection available under the Company’s or any
other Enterprise’s certificate, bylaws and insurance as adequate in the present circumstances, and
may not be willing to serve as a director of the Company without adequate protection, and the
Company desires the Indemnitee to serve in such capacity. The Indemnitee is willing to serve,
continue to serve and to take on additional service for or on behalf of the Company and certain
other Enterprises on the condition that he be so indemnified;

     NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:

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     1. Services to the Company and Certain Other Enterprises. The Indemnitee will serve
or continue to serve as a director of the Company for so long as the Indemnitee is duly elected or
appointed or until the Indemnitee tenders his resignation.

     2. Definitions. As used in this Agreement:

     “Affiliated Investor” shall mean a stockholder in the Company who has the right to
designate a member of the Board of Directors of the Company and who has exercised such right.

     “Corporate Status” describes the status of a person who is or was a director, trustee,
general partner, managing member, officer, employee, agent or fiduciary of the Company or of any
other Enterprise.

     “Disinterested Director” shall mean a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by the Indemnitee.

     “Enterprise” shall mean (i) the Company and (ii) any other corporation, partnership,
limited liability company, joint venture, trust, employee benefit plan or other enterprise which is
an affiliate or wholly or partially owned subsidiary of the Company and of which the Indemnitee is
or was serving as a director, trustee, general partner, managing member, officer, employee, agent
or fiduciary; and (iii) any other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at
the request of the Company.

     “Expenses” shall include attorneys’ fees, retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in, or otherwise participating in, a
Proceeding. Expenses shall include such fees and expenses, and costs incurred in connection with
any appeal resulting from any Proceeding, including without limitation the premium, security for,
and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its
equivalent. Expenses, however, shall not include amounts paid in settlement by the Indemnitee or
the amount of judgments or fines against the Indemnitee.

     “Fines” shall mean any excise tax assessed with respect to any employee benefit plan;
references to “serving at the request of the Company” shall include any service as a director,
trustee, general partner, managing member, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, trustee, general partner, managing
member, officer, employee, agent or fiduciary with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably
believed to be in the best interests of the participants and beneficiaries of

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an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company”
as referred to in this Agreement.

     “Indemnitee” is defined in the preamble to this Agreement.

     “Proceeding” shall include any threatened, pending or completed action, suit,
arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding, whether brought in
the right of the Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, including without limitation any such proceeding pending as of the date of
this Agreement, in which the Indemnitee was, is or will be involved as a party or otherwise by
reason of the fact that the Indemnitee is or was a director of the Company, by reason of any action
taken by him or of any action on his part while acting as director of the Company, or by reason of
the fact that he is or was serving as a director, trustee, general partner, managing member,
officer, employee, agent or fiduciary of any other Enterprise, in each case whether or not serving
in such capacity at the time any Expense, judgment, fine or amount paid in settlement is incurred
for which indemnification, reimbursement, or advancement of Expenses can be provided under this
Agreement.

     “Independent Counsel” means, at any time, any law firm, or a member of a law firm,
that (a) is experienced in matters of corporation law and (b) is not, at such time, or has not been
in the five years prior to such time, retained to represent: (i) the Company or the Indemnitee in
any matter material to either such party (other than with respect to matters concerning the
Indemnitee under this Agreement, or of other indemnities under similar indemnification agreements),
or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person
who, under the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or the Indemnitee in an action to determine
the Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and
expenses of the Independent Counsel referred to above and to fully indemnify such counsel against
any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement
or its engagement pursuant hereto and to be jointly and severally liable therefor.

     3. Indemnity in Third-Party Proceedings. The Company shall be liable to indemnify
the Indemnitee in accordance with the provisions of this Section 3 if the Indemnitee is, or is
threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding,
other than a Proceeding by or in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3, the Indemnitee shall be indemnified against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee or on his
behalf in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee
acted in good faith and in a manner he reasonably believed to be in or not opposed to

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the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to
believe that his conduct was unlawful.

     4. Indemnity in Proceedings by or in the Right of the Company. The Company shall be
liable to indemnify the Indemnitee in accordance with the provisions of this Section 4 if the
Indemnitee is, or is threatened to be made, a party to or a participant (as a witness or otherwise)
in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant
to this Section 4, the Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection with such Proceeding (or any claim, issue or matter
therein) if the Indemnitee acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company. No indemnification for Expenses shall be made
under this Section 4 in respect of any claim, issue or matter as to which the Indemnitee shall have
been finally adjudged by a court of competent jurisdiction to be liable to the Company, unless and
only to the extent that any court in which the Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the circumstances of the
case, the Indemnitee is fairly and reasonably entitled to indemnification.

     5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the extent that the Indemnitee is a
party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or
in defense of any claim, issue or matter therein, in whole or in part, the Company shall be liable
to indemnify the Indemnitee against all Expenses actually and reasonably incurred by him in
connection therewith. If the Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall be liable to indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in such
Proceeding, the Company also shall be liable to indemnify the Indemnitee against all Expenses
reasonably incurred in connection with any claim, issue or matter that is related to any claim,
issue, or matter on which the Indemnitee was successful. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with
or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

     6. Indemnification For Other Fees and Expenses.

          (a) Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee
is, by reason of his Corporate Status, a witness in any Proceeding to which the Indemnitee is not a
party, the Company shall be liable to indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.

          (b) Notwithstanding any other provision of this Agreement, the Company shall be liable to
indemnify Indemnitee against all Expenses actually and reasonably incurred by

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or on behalf of the
Indemnitee in taking any action to enforce any provision of this Agreement, including all Expenses
incurred in bringing a claim, counterclaim or cross claim in a legal proceeding, arbitration or
otherwise to enforce this Agreement or any provision of this Agreement.

     7. Additional Indemnification

          (a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall be liable to
indemnify the Indemnitee to the fullest extent permitted by law if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the
Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding. No
indemnity shall be made under this Section 7(a) on account of the Indemnitee’s conduct which has
been adjudicated to constitute a breach of the Indemnitee’s duty of loyalty to the Company or its
shareholders or to constitute an act or omission not in good faith or involving intentional
misconduct or a knowing violation of the law.

          (b) Notwithstanding any limitation in Sections 3, 4, 5 or 7(a), the Company shall be liable to
indemnify Indemnitee to the fullest extent permitted by law if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the
Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding.

          (c) For purposes of Sections 7(a) and 7(b), the meaning of the phrase “to the fullest extent
permitted by law” shall include, but not be limited to:

               (1) to the fullest extent permitted by the provision of the DGCL that authorizes or
contemplates additional indemnification by agreement, or the corresponding provision of any
amendment to or replacement of the DGCL; and

               (2) to the fullest extent authorized or permitted by any amendments to or replacements of the
DGCL adopted after the date of this Agreement that increase the extent to which a corporation may
indemnify its officers and directors.

     8. Affiliated Investor Indemnity. Any Affiliated Investor of the Indemnitee shall be
indemnified hereunder by the Company, with the same rights as the Indemnitee, against all Expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred by the Affiliated
Investor arising out of or relating to any claim that the intellectual property incorporated into
any product or service of the Company infringes the intellectual property rights of any third
party, and for which the Affiliated Investor is named a party or required to participate in any
such Proceeding in connection with the Affiliated Investor’s position as a significant stockholder
in the Company and/or its affiliation with the Indemnitee.

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     9. Exclusions. Notwithstanding any provision in this Agreement, the Company shall
not be obligated under this Agreement to make any indemnity payment in connection with any claim
made against the Indemnitee:

          (a) for which payment has actually been received by or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess beyond the amount
actually received under any insurance policy or other indemnity provision; or

          (b) for an accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities
Exchange Act of 1934 or similar provisions of state statutory law or common law; provided
however, that notwithstanding any limitation on the Company’s obligation to provide
indemnification set forth in this Section 8(b) or elsewhere, Indemnitee shall be entitled to
receive advancement of Expenses hereunder with respect to any such Claim unless and until a court
having jurisdiction over the Claim shall have made a final judicial determination (as to which all
rights of appeal therefrom have been exhausted or lapsed) that Indemnitee has violated said
statute.

     10. Advancement of Expenses; Defense of Claim.

          (a) Notwithstanding any provision of this Agreement to the contrary, the Company shall be
obligated to advance any and all Expenses incurred by the Indemnitee in connection with any
Proceeding within 30 days after the receipt by the Company of a statement or statements requesting
such advances from time to time, whether prior to or after final disposition of any Proceeding.
Such advances (i) shall be unsecured and interest free; (ii) shall be made without regard to the
Indemnitee’s ability to repay the advances and without regard to the Indemnitee’s ultimate
entitlement to indemnification under the other provisions of this
Agreement; and (iii) shall include any and all reasonable Expenses incurred pursuing an action
to enforce this right of advancement, including Expenses incurred preparing and forwarding
statements to the Company to support the advances claimed. The Indemnitee shall qualify for
advancement of Expenses solely upon the execution and delivery to the Company of undertaking
providing that the Indemnitee undertakes to repay the advance to the extent and only to the extent
that it is ultimately determined that the Indemnitee is not entitled to be indemnified by the
Company.

          (b) The Company will be entitled to participate reasonably in the Proceeding at its own
expense.

     11. Procedure for Notification and Request for Indemnification.

          (a) To obtain advancement and/or indemnification under this Agreement, the Indemnitee shall,
not later than sixty (60) days after receipt by the Indemnitee of notice of the commencement of any
Proceeding, except for Proceedings pending as of the date of this Agreement, submit to the Company
written notification of the Proceeding; with regard to Proceedings as of the date of this

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Agreement, Indemnitee shall submit to the Company written notification not later than sixty (60)
days after the date of this Agreement. The omission to notify the Company will relieve the Company
of its indemnification obligations under this Agreement only to the extent the Company can
establish that such omission to notify resulted in actual prejudice to it, and the omission to
notify the Company will, in any event, not relieve the Company from any liability which it may have
to indemnify the Indemnitee otherwise than under this Agreement. The Secretary of the Company
shall, promptly upon receipt of notification from the Indemnitee pursuant to this Section 10(a),
advise the Board in writing that the Indemnitee has provided such notification.

          (b) In order to obtain indemnification under this Agreement, the Indemnitee shall, anytime
following notification by the Indemnitee of the commencement of any Proceeding pursuant to Section
10(a) of this Agreement and consistent with the time period for the duration of this Agreement as
set forth in Section 15 of this Agreement, submit to the Company a written request for
indemnification pursuant to this Section 10(b), including therein or therewith such documentation
and information as is reasonably available to the Indemnitee and is reasonably necessary to
determine whether and to what extent the Indemnitee is entitled to indemnification. No
determination of the Indemnitee’s entitlement to indemnification shall be made until such written
request for a determination is submitted to the Company pursuant to this Section 10(b). The
failure to submit a written request to the Company will relieve the Company of its indemnification
obligations under this Agreement only to the extent the Company can establish that such failure to
make a written request resulted in actual prejudice to it, and the failure to make a written
request will not relieve the Company from any liability which it may have to indemnify the
Indemnitee otherwise than under this Agreement. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has
requested indemnification. Upon submission of a written request for
indemnification by the Indemnitee pursuant to this Section 10(b), the Indemnitee’s entitlement
to indemnification shall be determined according to Section 11 of this Agreement.

     12. Procedure Upon Application for Indemnification.

          (a) Upon receipt of the Indemnitee’s written request for indemnification pursuant to Section
10(b), a determination with respect thereto shall be made in the specific case: (i) by the
Disinterested Directors, even though less than a quorum, so long as the Indemnitee does not request
that such determination be made by Independent Counsel; or (ii) if so requested by the Indemnitee,
in his sole discretion, by Independent Counsel in a written opinion to the Board, a copy of which
shall be delivered to the Indemnitee; and if it is so determined that the Indemnitee is entitled to
indemnification, payment to the Indemnitee shall be made within ten (10) days after such
determination. The Indemnitee shall reasonably cooperate with the person, persons or entity making
such determination with respect to the Indemnitee’s entitlement to indemnification, including
providing to such person, persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from

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disclosure and which is reasonably
available to the Indemnitee and reasonably necessary to such determination. Any costs or expenses
(including attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating with the
Disinterested Directors or Independent Counsel, as the case may be, making such determination shall
be advanced and borne by the Company (irrespective of the determination as to the Indemnitee’s
entitlement to indemnification) and the Company is liable to indemnify and hold the Indemnitee
harmless therefrom.

          (b) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as
provided in this Section 11(b). The Independent Counsel shall be selected by the Indemnitee
(unless the Indemnitee shall request that such selection by made by the Board, in which event the
Board shall make such selection on behalf of the Company, subject to the remaining provisions of
this Section 11(b)), and the Indemnitee or the Company, as the case may be, shall give written
notice to the other, advising it or him of the identity of the Independent Counsel so selected.
The Company or the Indemnitee, as the case may be, may, within 10 days after such written notice of
selection shall have been received, deliver to the Indemnitee or the Company, as the case may be, a
written objection to such selection; provided, however, that such objection may be asserted
only on the ground that the Independent Counsel so selected does not meet the requirements of
“Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth
with particularity the factual basis of such assertion. Absent a proper and timely objection, the
person so selected shall act as Independent Counsel. If a written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court of competent jurisdiction has determined that such
objection is without merit. If, within 20 days after submission by the Indemnitee of a written
request for indemnification pursuant to Section 10(b) hereof, no Independent Counsel shall have
been selected and not objected to, either the Company or the Indemnitee may petition a court of
competent jurisdiction for resolution of any objection which shall have been made by the Company or
the Indemnitee to the other’s selection of
Independent Counsel and/or for the appointment as Independent Counsel of a person selected by
the Court or by such other person as the Court shall designate, and the person with respect to whom
all objections are so resolved or the person so appointed shall act as Independent Counsel under
Section 11(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant
to Section 13(a) of this Agreement, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of professional
conduct then prevailing).

     13. Presumptions and Effect of Certain Proceedings.

          (a) In making a determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that the Indemnitee is entitled
to indemnification under this Agreement if the Indemnitee has submitted a notice and a request for
indemnification in accordance with Section 10 of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with

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the making by any person, persons
or entity of any determination contrary to that presumption. Neither the failure of the Company
(including by the Board) or of Independent Counsel to have made a determination prior to the
commencement of any judicial proceeding or arbitration pursuant to this Agreement that
indemnification is proper in the circumstances because the Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including by the Board) or by
Independent Counsel that the Indemnitee has not met such applicable standard of conduct, shall be
admissible in evidence against the Indemnitee or otherwise referred to in any such judicial
proceeding or arbitration for any purpose (including without limitation to rebut the presumption in
favor of indemnification) or create a presumption that the Indemnitee has not met the applicable
standard of conduct.

          (b) If the person, persons or entity empowered or selected under Section 11 of this Agreement
to determine whether the Indemnitee is entitled to indemnification shall not have made a
determination within sixty (60) days after receipt by the Company of the Indemnitee’s written
request for indemnification pursuant to Section 10(b) of this Agreement, the requisite
determination of entitlement to indemnification shall be deemed to have been made and the
Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by the Indemnitee
of a material fact, or an omission of a material fact necessary to make the Indemnitee’s statement
not materially misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law; provided, however, that such
60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days,
if the Independent Counsel making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of documentation and/or
information relating thereto.

          (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely affect the right of
the Indemnitee to indemnification or create a presumption that the Indemnitee did not act
in good faith and in a manner which he reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal Proceeding, that the Indemnitee had
reasonable cause to believe that his conduct was unlawful.

          (d) Reliance as Safe Harbor. For purposes of any determination of good faith, the
Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s action or failure to act
is based on the records or books of account of the Enterprise, including financial statements, or
on information supplied to the Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information or records given or
reports made to the Enterprise by an independent certified public accountant or by an appraiser or
other expert selected by the Enterprise. The provisions of this Section 12(d) shall not be deemed
to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be
deemed or found to have met the applicable standard of conduct set forth in this Agreement.

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          (e) Actions of Others. The knowledge and/or actions, or failure to act, of any other
director, partner, managing member, officer, agent, employee or trustee of the Enterprise shall not
be imputed to the Indemnitee for purposes of determining his right to indemnification under this
Agreement.

     14. Remedies of the Indemnitee.

          (a) In the event that (i) a determination is made pursuant to Section 11 of this Agreement
that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of
Expenses is not timely made pursuant to Section 9 of this Agreement, (iii) payment of
indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of Section 11(a) of
this Agreement within ten (10) days after receipt by the Company of a written request therefor, or
(iv) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten
(10) days after a determination has been made that the Indemnitee is entitled to indemnification,
or (v) the Indemnitee determines in its sole discretion that such action is appropriate or
desirable, the Indemnitee shall be entitled to seek an adjudication by a court of competent
jurisdiction as to his entitlement to such indemnification or advancement of Expenses.
Alternatively, the Indemnitee, at his option, may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. The Company shall not oppose the Indemnitee’s right to seek any such adjudication or
award in arbitration.

          (b) In the event that a determination shall have been made pursuant to Section 11(a) of this
Agreement that the Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration, commenced pursuant to this Section 13, shall be conducted in all respects as a de novo
trial, or arbitration, on the merits, and the Indemnitee shall not be prejudiced by reason of that
adverse determination. In any judicial proceeding or arbitration commenced pursuant to this
Section 13, the Company shall have the burden of proving the Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be, and the Company may not refer to or
introduce into evidence any determination pursuant to
Section 11(a) adverse to the Indemnitee for purposes of satisfying the Company’s burden of
proof or for any other purpose. In any judicial proceeding or arbitration commenced pursuant to
this Section 13, in the event that the person, persons or entity empowered or selected under
Section 11 of this Agreement to determine whether the Indemnitee is entitled to indemnification has
not made such a determination within the time period provided for under Section 12(b) of this
Agreement, the Company shall stipulate and may not contest that the Indemnitee acted in good faith
and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or Proceeding, had no reasonable cause to
believe his conduct was unlawful.

          (c) If a determination shall have been made pursuant to Section 11(a) of this Agreement that
the Indemnitee is entitled to indemnification, the Company shall be bound by such determination in
any judicial proceeding or arbitration commenced pursuant to this

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Section 13, absent (i) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to
make the Indemnitee’s statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable law.

          (d) In the event that the Indemnitee is a party to a judicial proceeding or arbitration
pursuant to this Section 13 concerning his rights under, or to recover damages for breach of, this
Agreement, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified
by the Company against, any and all Expenses actually and reasonably incurred by him in such
judicial adjudication or arbitration. If it shall be determined in said judicial adjudication or
arbitration that the Indemnitee is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Indemnitee shall be entitled to recover from the Company (who
shall be liable therefor), and shall be indemnified by the Company against, any and all Expenses
reasonably incurred by the Indemnitee in connection with such judicial adjudication or arbitration.

          (e) The Company shall be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are
not valid, binding and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement. The Company shall be
liable to indemnify the Indemnitee against any and all Expenses and, if requested by the
Indemnitee, shall (within ten (10) days after receipt by the Company of a written request
therefore) advance such Expenses to the Indemnitee that are incurred by Indemnitee in connection
with any judicial adjudication or arbitration involving the Indemnitee for indemnification or
advancement of Expenses from the Company under this Agreement or under any directors’ and officers’
liability insurance policies maintained by the Company, regardless of whether the Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of Expenses or
insurance recovery, as the case may be.

     15. Non-exclusivity; Survival of Rights; Insurance.

          (a) The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time
be entitled under applicable law, the Company’s or any other Enterprise’s Articles of
Incorporation, the Company’s or any other Enterprise’s Bylaws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of
this Agreement or of any provision hereof shall limit or restrict any right of the Indemnitee under
this Agreement in respect to any action taken or omitted by such Indemnitee in his Corporate Status
prior to such amendment, alteration or repeal. To the extent that a change in Delaware law,
whether by statute or judicial decision, permits greater indemnification or advancement of Expenses
than would be afforded currently under the Company’s or any other Enterprise’s Bylaws and this
Agreement, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such

-11-

 

change. No right or remedy herein conferred is intended
to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

          (b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, partners, managing members, officers, employees, agents or
trustees of the Company or of any other Enterprise, the Indemnitee shall be covered by such policy
or policies in accordance with its or their terms to the maximum extent of the coverage available
for any such director, partner, managing member, officer, employee, agent or trustee under such
policy or policies. If, at the time of the receipt of a notice of a claim pursuant to Section
10(a) hereof, the Company has director and officer liability insurance in effect, the Company shall
give prompt notice of the commencement of such Proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter take all necessary
or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable
as a result of such Proceeding in accordance with the terms of such policies.

          (c) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and only to
the extent that the Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

          (d) The Company’s obligation hereunder to indemnify, or advance Expenses to, the Indemnitee
who was, is or will be serving as a director, partner, managing member, officer, employee, agent or
trustee of any other Enterprise shall be reduced by any amount the Indemnitee has actually received
as indemnification or advancement of Expenses from such other Enterprise.

     16. Duration of Agreement. This Agreement shall continue until and terminate upon the
later of: (a) 10 years after the date that the Indemnitee shall have ceased to serve as a director
of the Company or as a director, partner, managing member, officer, employee, agent or trustee of
any other Enterprise; or (b) 1 year after the final termination (i) of any Proceeding (including
any rights of appeal) then pending in respect of which the Indemnitee requests indemnification or
advancement of Expenses hereunder and (ii) of any judicial proceeding or arbitration pursuant to
Section 13 of this Agreement (including any rights of appeal) involving the Indemnitee. This
Agreement shall be binding upon the Company and its successors and assigns and shall inure to the
benefit of the Indemnitee and his heirs, executors and administrators.

     17. Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal

-12-

 

or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law;
(b) such provision or provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the
fullest extent possible, the provisions of this Agreement (including, without limitation, each
portion of any section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.

     18. Enforcement.

          (a) The Company expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce the Indemnitee to continue to serve
as a director of the Company, and the Company acknowledges that the Indemnitee is relying upon this
Agreement in serving as a director of the Company.

          (b) This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject hereof and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof.

     19. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a wavier of any other
provisions of this Agreement nor shall any waiver constitute a continuing waiver.

     20. Notice by the Indemnitee. The Indemnitee agrees promptly to notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder. The failure of the Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise.

     21. Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered by hand
and receipted for by the party to whom said notice or other communication shall have been directed,
or (b) mailed by certified or registered mail with postage prepaid, on the third business day after
the date on which it is so mailed:

          (a) If to the Indemnitee, at the address indicated on the signature page of this Agreement, or
such other address as the Indemnitee shall provide in writing to the Company,

          (b) If to the Company to: Prestwick Pharmaceuticals, Inc.

	 	 
	

	 	1825 K Street, N.W., Suite 1475

-13-

 

	 	 
	

	 	Washington, DC 20006

	 	 
	with a copy to:

	 	Aaron J. Velli, Esq.

Cooley Godward LLP

One Freedom Square

11951 Freedom Drive

Reston, VA 20190

or to any other address as may have been furnished to the Indemnitee in writing by the Company.

     22. Contribution. To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to the Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying the Indemnitee, shall contribute to the amount
incurred by the Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or
to be paid in settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion in order to reflect (i) the relative
benefits received by the Company and the Indemnitee as a result of the event(s) and/or
transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and
its directors, officer, employees and agents) and the Indemnitee in connection with such
event(s) and/or transaction(s).

     23. Applicable Law and Consent to Jurisdiction. This Agreement and the legal
relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules. Except with
respect to any arbitration commenced by the Indemnitee pursuant to Section 13(a) of this Agreement,
the Company and the Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement shall be brought only in the
Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or
federal court in the United States of America or any court in any other country (ii) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not
a resident of the State of Delaware, irrevocably RL&F Service Corp., One Rodney Square, 10th Floor,
10th and King Streets, Wilmington, Delaware 19801 as its agent in the State of Delaware as such
party’s agent for acceptance of legal process in connection with any such action or proceeding
against such party with the same legal force and validity as if served upon such party personally
within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or
proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that
any such action or proceeding brought in the Delaware Court has been brought in an improper or
inconvenient forum.

     24. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which

-14-

 

together shall constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.

     25. Miscellaneous. Use of the masculine pronoun shall been deemed to include usage of
the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this Agreement or to
affect the construction thereof.

-15-

 

     IN WITNESS WHEREOF, the parties have caused this Indemnification Agreement to be signed
as of the day and year first above written.

	 	 	 
	THE COMPANY

	 	THE INDEMNITEE
	 
	 	 
	PRESTWICK PHARMACEUTICALS, INC.

	 	                                                                                
	 
	 	 
	By                                                             

	 	Address                                         
	Title                                                             

	 	                                                       
	Dateexv10w6

 

Exhibit 10.6

ASSET PURCHASE AND SUBSCRIPTION AGREEMENT

     This Asset Purchase and Subscription Agreement (this “Agreement”) is entered into as
of December 13, 2002, by and among Prestwick Scientific Capital, Inc., a Delaware
corporation (“Assignor”), Prestwick Companies, Inc., a Delaware corporation (“PCI”), and
KCS Pharmaceuticals, Inc., a Delaware corporation (“Assignee”).

Recitals

     A.      Effective as of the Closing Date (as defined in Section 4(a) below), Assignor wishes to
sell, transfer, assign and convey the assets set forth on Exhibit A attached hereto (collectively,
the “Transferred Assets”) to Assignee as a contribution to Assignee’s capital, and Assignee wishes
to accept, purchase, acquire and assume the Transferred Assets and certain of Assignor’s
liabilities related to such Transferred Assets in accordance with the terms of this Agreement.

     B.      In consideration for the sale and transfer of the Transferred Assets by Assignor, Assignee
wishes to issue certain shares of its common stock, par value $0.001 per share (the “Common Stock”)
to Assignor, as set forth in this Agreement.

Agreement

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained in this
Agreement, the parties hereto agree as follows.

     1.      Sale and Transfer of Assets.

              (a)      Assignor does hereby sell, transfer, assign and convey to Assignee and its successors and
assigns, to have and hold forever, all of Assignor’s rights, title and interest in and to, on a
worldwide basis, the Transferred Assets, including all goodwill associated with such Transferred
Assets.

              (b)      Assignee hereby accepts the sale, transfer, assignment and conveyance to it of the
Transferred Assets, and assumes and agrees to perform (or cause to be performed) only the Assumed
Liabilities (as defined in Section 3(a) below) and no other obligations or liabilities of Assignor.

     2.      Issuance and Distribution of Stock. As consideration for the sale, assignment, transfer
and conveyance of the Transferred Assets by Assignor, Assignee hereby agrees to issue to Assignor
Six Million (6,000,000) shares of Assignee’s Common Stock (the “Stock”). Upon Assignor’s receipt
of the Stock, Assignor will promptly distribute to PCI, Assignor’s sole stockholder, the Stock as a
dividend as permitted under the Delaware General Corporation Law (“DGCL”) and pursuant to the terms
and conditions of Assignor’s Certificate of Incorporation, including all Certificates of
Designation thereto, as amended. Upon PCI’s receipt of the Stock, PCI will promptly distribute the
Stock to its stockholders as a dividend, in such proportions as

 

 

prescribed by the Board of
Directors of PCI, as permitted under the DGCL and pursuant to the
terms and conditions of PCI’s Certificate of Incorporation, including all Certificates of
Designation thereto, as amended.

     3.      Assumption of Certain Liabilities.

              (a)      Assignee hereby agrees to assume the obligations of Assignor under the contracts
identified on Exhibit B hereto, but only to the extent such obligations (i) arise after the Closing
Date, (ii) do not arise from or relate to any breach by Assignor of any provision of any of such
contracts, and (iii) do not arise from or relate to any event, circumstance or condition occurring
or existing on or prior to the Closing Date that, with notice or lapse of time, would constitute or
result in a breach of any of such contracts (the “Assumed Liabilities”).

              (b)      Nothing in this Agreement will be deemed to deprive Assignee of any defenses, set-offs or
counterclaims that Assignor may have or may have had or which Assignor shall have against third
parties with respect to any of the Assumed Liabilities (the “Defenses and Claims”), so long as the
assertion of such Defenses and Claims does not result in Assignor being legally responsible to pay
any of the Assumed Liabilities. Assignor hereby transfers, conveys and assigns to Assignee all
Defenses and Claims and agrees to cooperate with Assignee to maintain, secure, perfect and enforce
the Defenses and Claims, including the signing of any documents, the giving of any testimony or the
taking of any such other action as is reasonably requested by Assignee in connection with the
Defenses and Claims.

     4.      Closing.

              (a)      Closing Date. The closing of the purchase, sale, transfer and conveyance of the
Transferred Assets and Assumed Liabilities, and the issuance of the Stock (the “Closing”) shall
take place on December 13, 2002 or such other date mutually agreed by Assignor and Assignee (the
"Closing Date”). The Closing will commence on the Closing Date at 10:00 a.m. at the offices of
Cooley Godward LLP at 11951 Freedom Drive, Reston, Virginia 20190, or such other place as Assignor
and Assignee may agree in writing. By mutual agreement of the parties, the Closing may take place
by conference call and facsimile with exchange of original signatures by overnight mail.

              (b)      Closing Deliverables. At the Closing:

                          (i)      The parties hereto shall execute and deliver this Agreement;

                          (ii)      Assignor shall deliver to Assignee all documents representing its ownership of the
Transferred Assets;

                          (iii)      Assignor shall execute and deliver to Assignee that certain Bill of Sale in
substantially the form attached hereto as Exhibit E and that certain Assignment and Assumption
Agreement in substantially the form attached hereto as Exhibit F;

2

 

                          (iv)      Assignee shall deliver to Assignor a duly executed stock certificate representing the
Stock;

                          (v) Assignor shall deliver to Assignee a certificate executed by Assignor’s Chief Executive
Officer (the “Assignor Closing Certificate”) setting forth the representation and warranty of
Assignor that each of the representations and warranties made by Assignor in this Agreement was
accurate in all material respects as of the date of this Agreement, and attaching: (A) Assignor’s
Certificate of Incorporation as in effect at the time of the Closing, (B) Assignor’s Bylaws as in
effect at the time of the Closing, (C) resolutions approved by the Board of Directors of Assignor
authorizing the transactions contemplated hereby and the distribution of the Stock in the form of a
dividend to PCI promptly after the Closing Date, and (D) good standing certificates with respect to
Assignor from the applicable authorities in Delaware and any other jurisdiction in which Assignor
is qualified to do business, dated a recent date before the Closing Date;

                          (vi) PCI shall deliver to Assignee a certificate executed by PCI’s Chief Executive Officer
(the “PCI Closing Certificate”) setting forth the representation and warranty of PCI that each of
the representations and warranties made by PCI in this Agreement was accurate in all material
respects as of the date of this Agreement, and attaching: (A) PCI’s Certificate of Incorporation
as in effect at the time of the Closing, (B) PCI’s Bylaws as in effect at the time of the Closing,
(C) resolutions approved by the Board of Directors of PCI authorizing the transactions contemplated
hereby and the distribution of the Stock in the form of a dividend to the stockholders of PCI
promptly after the Closing Date, and (D) good standing certificates with respect to PCI from the
applicable authorities in Delaware and any other jurisdiction in which PCI is qualified to do
business, dated a recent date before the Closing Date;

                          (vii) Assignee shall deliver to Assignor a certificate executed by Assignee’s President (the
“Assignee Closing Certificate”) setting forth the representation and warranty of Assignee that each
of the representations and warranties made by Assignee in this Agreement was accurate in all
material respects as of the date of this Agreement, and attaching: (A) Assignee’s Certificate of
Incorporation as in effect at the time of the Closing, (B) Assignee’s Bylaws as in effect at the
time of the Closing, (C) resolutions approved by the Board of Directors of Assignee authorizing the
transactions contemplated hereby and the issuance of the Stock, and (D) good standing certificates
with respect to Assignee from the applicable authorities in Delaware and any other jurisdiction in
which Assignee is qualified to do business, dated a recent date before the Closing Date; and

                          (viii) Each of Assignee, Assignor and PCI, as applicable, shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummating the transactions
contemplated by this Agreement.

     5.      Taxes. Assignee shall bear and pay any sales taxes, use taxes, transfer taxes, documentary
charges, recording fees or similar taxes, charges, fees or expenses that may become payable in
connection with the transfer of the Transferred Assets from Assignor to Assignee.

3

 

     6.      Representations and Warranties of Assignor and PCI.

              (a)      Due Organization; Qualification. Assignor is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own its properties and assets and to carry
on its business as now conducted and as presently proposed to be conducted. PCI is a corporation,
duly incorporated, validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own its properties and assets and to carry
on its business as now conducted and as presently proposed to be conducted.

              (b)      Authority; Binding Nature of Agreement. All corporate action on the part of each of
Assignor and PCI, and each of their respective officers, directors and stockholders necessary for
the authorization, execution, delivery of, and the performance of all obligations of each such
party under this Agreement has been taken, and this Agreement constitutes the valid and legally
binding obligation of each such party, enforceable in accordance with its terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors’ rights generally and (ii) the
effect of rules of law governing the availability of equitable remedies. The execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby will not
result in violation or breach of, or constitute a default under the terms, conditions or provisions
of any note or other instrument, obligation, or agreement to which either Assignor or PCI is a
party. Neither Assignor or PCI is required to make any filing with or give notice to, or to obtain
any consent from, any entity or person in connection with the execution and delivery of this
Agreement or the consummation or performance of the transactions contemplated herein.

              (c)      Title to Assets. Assignor has good and absolute title to the Transferred Assets, free and
clear of any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equity,
trust, equitable interest, claim, preference, right of possession, lease, right of first refusal,
preemptive right, community property interest, defect, impediment, reservation, limitation,
impairment, imperfection of title, condition or restriction of any nature, and no other entity,
entities, person, or persons has any right to purchase, or other interest whatsoever, in the
Transferred Assets.

              (d)      Intellectual Property Matters. To the best of its knowledge and except as disclosed on
Schedule 1 hereto, Assignor owns or possesses sufficient legal rights to those patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary
rights and processes listed on Exhibit A hereto, without any known infringement of the rights of
others (collectively, the “Intellectual Property”). Except as disclosed on Schedule 1 hereto,
there are no outstanding options, licenses or agreements of any kind relating to the foregoing
Intellectual Property rights. Except as disclosed on Schedule 1 hereto, Assignor has not received
any communications alleging that any of the Intellectual Property has violated any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. Except as disclosed on Schedule 1 hereto, no former or current
consultant or employee of Assignor has any ownership rights with respect to the Intellectual
Property that have not been validly assigned or transferred

4

 

to Assignor. Assignor does not believe
it is or will be necessary to utilize any inventions, trade secrets or proprietary information
pertaining to the Intellectual Property and belonging to any of its consultants or employees made
prior to their employment by Assignor, except for inventions, trade secrets or proprietary
information that have been assigned to Assignor.

              (e)      Tax Matters. To the knowledge of Assignor, (i) all sales taxes required to be paid by
Assignor on its previous purchase or acquisition of any of the Transferred Assets and all sales
taxes required to be collected by Assignor and paid to the appropriate taxing authority on any
monies received by Assignor have been paid, collected and remitted, as the case may be, and (ii)
each of Assignor and PCI has filed all tax returns required by law and paid all taxes required by
all governments, federal, state or local, when due, except for such taxes the nonpayment of which
would not be reasonably likely to result in a material adverse change in the Transferred Assets.

              (f)      Assignor Litigation. There is no action, suit, proceeding or investigation pending or, to
Assignor’s knowledge, currently threatened in writing against Assignor that questions the validity
of this Agreement or the right of Assignor to enter into this Agreement, or to consummate the
transactions contemplated hereby, or which would result, either individually or in the aggregate,
in any material adverse change in the Transferred Assets, nor is Assignor aware that there is any
basis for any of the foregoing. The foregoing includes, without limitation, actions pending or, to
Assignor’s knowledge, threatened in writing involving the prior employment of any of Assignor’s
employees, their use in connection with Assignor’s business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations under any agreements
with prior employers, in any case relating to the Transferred Assets. Except as disclosed on
Schedule 1 hereto, Assignor is not a party or to its knowledge subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or instrumentality.
There is no action, suit, proceeding or investigation by Assignor currently pending or which
Assignor intends to initiate, in any case relating to the Transferred Assets.

              (g)      PCI Litigation. There is no action, suit, proceeding or investigation pending or, to
PCI’s knowledge, currently threatened in writing against PCI that questions the validity of this
Agreement or the right of PCI to enter into this Agreement, or to consummate the transactions
contemplated hereby, nor is PCI aware that there is any basis for any of the foregoing. Except as
disclosed on Schedule 1 hereto, PCI is not a party nor to its knowledge subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government agency or
instrumentality.

              (h)      Assignor Capitalization. Immediately prior to the Closing Date, the authorized capital
stock of Assignor consists of (i) 1,000,000 shares of common stock, par value $0.01 per share, of
which 10,000 shares are issued and outstanding, and (ii) 325,000 shares of preferred stock, par
value $0.01 per share, of which 1,289 shares are issued and outstanding. There are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights of first refusal),
proxy or stockholder agreements, or agreements of any kind for the

5

 

purchase or acquisition from
Assignor of any of its securities, except for options to purchase an aggregate of 626 shares of
common stock.

              (i)      PCI Capitalization. Immediately prior to the Closing Date, the authorized capital stock
of PCI consists of (i) 20,000,000 shares of common stock, par value $0.001 per share, of which
4,486,265 are issued and outstanding, and (ii) 1,000,000 shares of preferred stock, par value
$0.001 per share, all of which are designated Series A Preferred Stock
and 522,382.7 of which are issued and outstanding. There are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or acquisition from PCI of any
of its securities, except for (x) warrants to purchase an aggregate of 64,111 shares of common
stock, (y) options to purchase an aggregate of 211,458 shares of common stock, and (z) the
Stockholders Agreement, dated December 31, 2001, by and among PCI and its common and preferred
stockholders.

              (j)      Compliance with Laws; Permits. To its knowledge, neither Assignor nor PCI is in violation
of any applicable statute, rule, regulation, order or restriction of any domestic or foreign
government or any instrumentality or agency thereof in respect of the conduct of its respective
business or the ownership of its respective properties, which violation would be reasonably likely
to materially and adversely affect the Transferred Assets or the ability of Assignor or PCI to
execute and deliver this Agreement and perform its respective obligations hereunder. No United
States domestic governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be filed in connection
with the execution and delivery of this Agreement, except such as have been duly and validly
obtained or filed prior to the Closing Date. Each of Assignor and PCI has obtained all franchises,
permits, licenses and any similar authority necessary for the conduct of its respective business as
now being conducted by it, the lack of which would be reasonably likely to materially and adversely
affect the Transferred Assets or the ability of Assignor or PCI to execute and deliver this
Agreement and perform its respective obligations hereunder.

              (k)      Non-Contravention. There are no agreements, contracts or restrictions of any nature in
regard to either Assignor or PCI that would be reasonably likely to have a material effect on the
use to which Assignee is expected by Assignor to put the Transferred Assets.

              (l)      Investment Representations. Each of Assignor and PCI understands that the Stock has not
been registered under the Securities Act of 1933, as amended (the “Securities Act”). Each of
Assignor and PCI also understands that the Stock is being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon representations of Assignor
and PCI contained in this Agreement. Each of Assignor and PCI represents and warrants that it may
be deemed to be an “underwriter” under the Securities Act in connection with its receipt and
subsequent distribution of the Stock to its respective stockholders in accordance with Section 2
above. In addition, PCI represents that all of its stockholders have executed and delivered to PCI
that certain Stockholder Certification in the form attached hereto as Exhibit C. Furthermore, PCI
represents that it has no reason to believe that such Stockholder Certifications (i) contain any
inaccuracies, (ii) contain any untrue statements of material fact or

6

 

(iii) omit to state any fact
necessary to make any of the representations, warrants, or other statements or information
contained therein not misleading.

              (m)      Full Disclosure. This Agreement does not contain any untrue statement of fact; and does
not omit to state any fact necessary to make any of the representations, warranties or other
statements or information contained herein not misleading. All of the information regarding
Assignor and PCI and its respective business, condition, assets, liabilities, operations, financial
performance, net income and prospects that has been furnished to Assignee
by Assignor, PCI, or any representative of Assignor or PCI, is accurate and complete in all
material respects.

     7.      Representations and Warranties of Assignee.

              (a)      Due Organization; Qualification. Assignee is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and assets and to carry on its business as now
conducted and as presently proposed to be conducted.

              (b)      Authorization; Binding Nature of Agreement. All corporate action on the part of Assignee,
its officers, directors and stockholders necessary for the authorization, execution, delivery of,
and the performance of all obligations of such party under this Agreement and this Agreement
constitutes the valid and legally binding obligation of such party, enforceable in accordance with
its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or
others laws of general application relating to or affecting the enforcement of creditors’ rights
generally and (ii) the effect of rules of law governing the availability of equitable remedies.
Assignee is not required to make any filing with or give notice to, or to obtain any consent from,
any entity or person in connection with the execution and delivery of this Agreement or the
consummation or performance of the transactions contemplated herein. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will not result in
violation or breach of, or constitute a default under the terms, conditions or provisions of any
note or other instrument, obligation, or agreement to which Assignee is a party.

              (c)      Capitalization. Immediately prior to the execution of this Agreement, the authorized
capital stock of Assignee consists of Thirty Million (30,000,000) shares of Common Stock, none of
which are issued and outstanding. There are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or
agreements of any kind for the purchase or acquisition from Assignee of any of its securities. The
6,000,000 shares of Stock to be issued to Assignor pursuant to this Agreement will have been duly
authorized and, when issued and delivered pursuant to this Agreement, will be legally and validly
issued, will be fully paid and nonassessable, will have full voting rights, and no stockholder of
Assignee will have any preemptive right of subscription or purchase in respect of such 6,000,000
shares of Stock. All such shares of Stock, upon issuance to Assignor, will be free and clear of
any pledge, claim, liability, mortgage, lien, charge, encumbrance, restriction on transfer, or
security interest of any kind or nature whatsoever.

7

 

              (d)      Brokers. Assignee has not become obligated to pay, and has not taken any action that
might result in any person claiming to be entitled to receive, any brokerage commission, finder’s
fee or similar commission or fee in connection with this Agreement or the transactions contemplated
herein.

              (e)      Compliance with Laws; Permits. To its knowledge, Assignee is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or foreign government or
any instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties, which violation would be reasonably likely to materially and
adversely affect the ability of Assignee to execute and deliver this Agreement and perform its
obligations hereunder. No United States domestic governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or declarations are
required to be filed in connection with the execution and delivery of this Agreement, except such
as have been duly and validly obtained or filed prior to the Closing Date. Assignee has obtained
all franchises, permits, licenses and any similar authority necessary for the conduct of its
business as now being conducted by it, the lack of which would be reasonably likely to materially
and adversely affect the ability of Assignee to execute and deliver this Agreement and perform its
obligations hereunder.

     8.      Affirmative Covenants.

              (a)      Further Actions. From and after the Closing Date, Assignor and its representatives shall
cooperate with Assignee and Assignee’s affiliates and representatives, and shall execute and
deliver such documents and take such other actions as Assignee may reasonably request, for the
purpose of putting Assignee in possession and control of all of the Transferred Assets and as
Assignee may deem necessary or desirable to procure, maintain, perfect, and enforce the full
benefits, enjoyment, rights, title and interest, on a worldwide basis of the Transferred Assets
assigned hereunder. Without limiting the generality of the foregoing, from and after the Closing
Date, Assignor shall promptly remit to Assignee any funds that are received by Assignor and that
are included in, or that represent payment of receivables included in, the Transferred Assets. In
addition, from and after the Closing Date, Assignee shall promptly remit to Assignor any funds that
are received by Assignee and that are included in, or that represent payment of receivables
included in, any assets of Assignor other than the Transferred Assets. Assignor: (i) hereby
irrevocably authorizes Assignee, at all times on and after the Closing Date, to endorse in the name
of Assignor any check or other instrument that is made payable to Assignor and that represents
funds included in, or that represents the payment of any receivable included in, the Transferred
Assets; and (ii) hereby irrevocably nominates, constitutes and appoints Assignee as the true and
lawful attorney-in-fact of Assignor (with full power of substitution) effective as of the Closing
Date, and hereby authorizes Assignee, in the name of and on behalf of Assignor, to execute,
deliver, acknowledge, certify, file and record any document, to institute and prosecute any
proceeding and to take any other action (on or at any time after the Closing Date) that Assignee
may deem appropriate for the purpose of (i) collecting, asserting, enforcing or perfecting any
claim, right or interest of any kind that is included in or relates to any of the Transferred
Assets, (ii) defending or compromising any claim or proceeding relating to any of the Transferred
Assets, (iii) making application for and obtaining original, divisional, renewal,

8

 

or reissued
utility and design patents, copyrights, mask works, trademarks, trade secrets, and all other
technology and intellectual property rights throughout the world related to any of the Transferred
Assets, in Assignee’s name and for its benefit, or (iv) otherwise carrying out or facilitating the
transactions contemplated herein. The power of attorney referred to in the immediately preceding
sentence is and shall be coupled with an interest and (from and after the Closing) shall be
irrevocable, and shall survive the dissolution or insolvency of Assignor. Assignor hereby waives
and quitclaims to Assignee any and all claims, of any nature whatsoever, which Assignor now or may
hereafter have for infringement of any of the Transferred Assets assigned hereunder.

              (b)      Confidentiality. Each of Assignor and PCI shall ensure that, on and at all times after
the Closing Date: (i) it shall keep the terms of this Agreement strictly confidential; and (ii) it
shall keep strictly confidential, and neither Assignor, PCI nor any representative of Assignor or
PCI shall use or disclose to any other person, any non-public document or other information that
relates directly or indirectly to the business of Assignee; provided, however, that if Assignor or
PCI is required by law to make a certain disclosure, then Assignor or PCI, as the case may be, may
make such required disclosure so long as it advises Assignee, at least five business days (or fewer
days if necessary to comply with applicable law) before making such disclosure, of the nature and
content of the intended disclosure. Assignee shall ensure that, on and at all times after the
Closing Date: (i) it shall keep the terms of this Agreement strictly confidential; and (ii) it
shall keep strictly confidential, and neither Assignee nor any representative of Assignee shall use
or disclose to any other person, any non-public document or other information that relates directly
or indirectly to the business of PCI or Assignor; provided, however, that if Assignee is required
by law to make a certain disclosure, then it may make such required disclosure so long as it
advises Assignor or PCI, as applicable, at least five business days (or fewer days if necessary to
comply with applicable law) before making such disclosure, of the nature and content of the
intended disclosure.

              (c)      Change Of Name. As soon as is reasonably practicable after the Closing Date, PCI shall
cause its wholly-owned subsidiary Prestwick Pharmaceutical, Inc. to change its name to “Prestwick
Discovery, Inc.” or such other name reasonably acceptable to Assignee, so that Assignee may
thereafter change its name from KCS Pharmaceuticals, Inc. to “Prestwick Pharmaceuticals, Inc.”

              (d)      Notice of Claims. Each of Assignor and PCI agrees to promptly inform Assignee of any
claim, action, suit, proceeding or investigation arising or threatened in the future with respect
to any of the Transferred Assets.

              (e)      Waiver of Enforcement of Confidentiality Agreements. Assignor hereby agrees that it will
not enforce, nor seek to enforce, any “Applicable Terms” (as defined below) contained in that
certain confidentiality agreement entered into by and among Assignor and certain of Assignor’s
employees in the form attached hereto as Exhibit D. “Applicable Terms” means all terms that relate
to the confidentiality of the Transferred Assets, the assignment to Assignor of all or any portion
of the Transferred Assets or any obligation of any

9

 

employee of Assignor to return all or any
portion of the Transferred Assets to Assignor upon the termination of such employee’s employment by
Assignor.

     9.      Indemnification.

              (a)      From the Closing Date and for up to a maximum period of two (2) years thereafter, Assignor
and PCI shall jointly and severally indemnify, defend, protect and hold harmless Assignee, and its
officers, directors, employees, agents and affiliates from and against all losses, liabilities,
obligations, damages, costs and expenses (including reasonable attorneys’ fees) (“Losses”), up to a
maximum aggregate of $15,000,000, which result from or arise in connection with: (i) any breach of
any representation or warranty made by Assignor or PCI in this Agreement or in any certificate or
other instrument delivered by or on behalf of Assignor or
PCI pursuant thereto in connection with the Closing; (ii) any breach of any covenant set forth
in this Agreement to be performed by Assignor or PCI; or (iii) all obligations and liabilities
(other than the Assumed Liabilities) retained by Assignor and PCI. The parties acknowledge that a
claim for indemnification may be made under more than one of the foregoing subsections (i) through
(iii); in any such case, each such clause and sub-clause shall be independently effective to
provide Assignee with a right to indemnification.

              (b)      From the Closing Date and for up to a maximum period of two (2) years thereafter, Assignee
shall indemnify, defend, protect and hold harmless Assignor and PCI, and their respective officers,
directors, employees, agents and affiliates from and against all Losses, up to a maximum aggregate
of $15,000,000, which result from, or arise in connection with: (i) any breach of any
representation or warranty made by Assignee in this Agreement or in any certificate or other
instrument delivered by or on behalf of Assignee pursuant thereto in connection with the Closing;
(ii) any breach of any covenant set forth in this Agreement to be performed by Assignee; or (iii)
the Assumed Liabilities (as defined in Section 3(a) above). The parties acknowledge that a claim
for indemnification may be made under more than one of the foregoing subsections (i) through (iii);
in any such case, each such clause and sub-clause shall be independently effective to provide
Assignor or PCI, as the case may be, with a right to indemnification.

              (c)      Whenever any claim shall arise for indemnification hereunder, the party entitled to such

indemnification (the “Indemnitee”) shall notify the party from whom indemnification is sought (the
“Indemnitor”) of such claim in writing promptly and in no case later than thirty (30) after such
Indemnitee has received actual written notice of the facts constituting the basis for such claim;
each Indemnitee shall also so notify the Indemnitor promptly and in no case later than ten (10)
days after the commencement of any legal proceedings with respect to any such claim. The failure
to notify the Indemnitor will not relieve the Indemnitor from any liability which it may have to
any Indemnitee to the extent the Indemnitor is not prejudiced as a proximate result of such
failure. Such notice shall specify, in reasonable detail, the facts known to such Indemnitee
giving rise to the indemnification sought. Such notice shall also include photocopies of all
relevant communications received from third party claimants and their attorneys.

10

 

              (d)      If the facts giving rise to any indemnification provided for herein shall involve any
actual or threatened claim or demand by any person other than a party to this Agreement or its
successors or permitted assigns (a “Third Party”) against any Indemnitee or any possible claim by
an Indemnitee against any Third Party, the Indemnitor shall be entitled, upon its election, by
written notice given to the Indemnitee as soon as reasonably practicable and in any case within
thirty (30) days after the date on which notice of the claim or demand is given to the Indemnitor
(without prejudice to the right of such Indemnitee to participate at its expense through counsel of
its own choosing), to assume the defense or prosecution of such claim and any litigation resulting
therefrom at its expense and through counsel of its own choosing. If the Indemnitor assumes the
defense or prosecution of any such claim or litigation, it shall take all steps reasonably
necessary in the defense, prosecution or settlement of such claim or litigation. In any such suit,
action or proceeding, the Indemnitee shall have the right to control its own defense or prosecution
through its own counsel, but the fees and expenses of such counsel shall
be at its own expense unless (i) the parties shall have mutually agreed in writing to the
retention of such counsel or (ii) the named parties to such suit, action or proceeding (including
any impleaded parties) shall include an Indemnitee and an Indemnitor and the representation of both
parties by the same counsel would present a conflict of interest as reasonably determined by
counsel to the Indemnitee, in which event the Indemnitor shall pay such counsel’s fees and
expenses. If the Indemnitor has timely assumed defense or prosecution, the Indemnitor shall not be
liable for any settlement effected without its consent, which consent shall not be unreasonably
withheld or delayed. The Indemnitor may settle any claim without the consent of any Indemnitee,
but only if the sole relief awarded is money damages that are paid in full by the Indemnitor and
either (x) the consent to the entry of any judgment or settlement includes as an unconditional term
thereof the giving to the Indemnitee of a release from all liability in respect to such claim or
litigation or (y) the litigation against the Indemnitee is dismissed with prejudice; otherwise, the
Indemnitor may not settle any claim against an Indemnitee without the consent of the Indemnitee,
which consent shall not unreasonably withheld or delayed. The parties shall cooperate in good
faith in the defense or prosecution of any such claim or litigation. If the Indemnitor does not
timely assume the defense or prosecution of any such claim or litigation, the Indemnitee may defend
against or prosecute such claim or litigation in such manner as it may deem appropriate and may
settle such claim or litigation, after giving written notice thereof to the Indemnitor, on such
terms as such Indemnitee may deem appropriate; and the Indemnitor will promptly reimburse such
Indemnitee for the Losses incurred as a result of any such settlement. During the pendency of such
defense or prosecution, the Indemnitee will keep the Indemnitor reasonably informed as to the
progress and status thereof. If no settlement of such claim or litigation is made, the Indemnitor
shall promptly reimburse such Indemnitee for the amount of any judgment rendered with respect to
such claim or such litigation and for all expenses, legal and other, incurred by such Indemnitee in
connection with any such judgment for which the Indemnitee has been so reimbursed pursuant hereto;
provided, however, that if such judgment is appealable and such Indemnitee notifies the Indemnitor
of its intention not to appeal, the Indemnitor may prosecute such appeal, at its sole cost and
expense and subject to the obligations set forth herein.

11

 

              (e)      Each amount determined to be payable by an Indemnitor to an Indemnitee under the terms
hereof (“Indemnity”) shall be paid to the Indemnitee within thirty (30) days after the date on
which the Indemnitor is notified in writing of the amount of such Indemnity, as finally determined
in accordance with the terms hereof. Each such notice shall contain an itemization of the damages,
expenses, costs and liabilities comprising the Indemnity, certified to be true and correct by the
Indemnitee or its legal representative.

              (f)      In the event a notice of a claim is given within two years after the Closing Date, the
right to indemnification with respect thereto shall survive the applicable survival period until
such claim is finally resolved and any obligations thereto are fully satisfied. Any investigation
by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any
representation, warranty, covenant or agreement contained herein.

     10.      General.

              (a)      Benefit; Assignment. This Agreement shall be binding upon: Assignor and its successors
and assigns (if any); PCI and its successors and assigns (if any); and Assignee and its successors
and assigns (if any). Assignee may freely assign any or all of its rights under this Agreement
(including its indemnification rights under Section 9), in whole or in part, to any other person
without obtaining the consent or approval of any other party hereto. Neither Assignor nor PCI
shall be permitted to assign any of its rights or delegate any of its obligations under this
Agreement without Assignee’s prior written consent.

              (b)      Attorneys’ Fees. If any action is necessary to enforce the terms of this Agreement, the
substantially prevailing party will be entitled to reasonable attorneys’ fees, costs and expenses
incurred in the action, in addition to any other relief to which such prevailing party may be
entitled.

              (c)      Governing Law; Venue. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflicts of laws provisions
thereunder. The parties agree that any action brought by either party to interpret or enforce any
provision of this Agreement shall be brought in, and each party agrees to, and does hereby, submit
to the jurisdiction and venue of, the appropriate state or federal court located in New Castle
County, Delaware.

              (d)      Severability. If one or more provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good faith. In the event
that the parties cannot reach a mutually agreeable and enforceable replacement for such provision,
then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement
shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement
shall be enforceable in accordance with its terms.

              (e)      Notices. Subject to this Section 10(e), all notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile if sent during normal

12

 

business hours of
the recipient, and if not during normal business hours of the recipient, then on the next business
day, (iii) five (5) calendar days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one (1) business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the other party hereto at such party’s address hereinafter set
forth on the signature page hereof, or at such other address as such party may designate by ten
(10) days advance written notice to the other party hereto. All notices required or otherwise
provided under Section 9 shall be given by the method described in clause (iv) of this Section
10(e).

              (f)      Counterparts. This Certification may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.

              (g)      Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes and
merges all prior agreements or understandings, whether written or oral. This Agreement may
not be amended, modified or revoked, in whole or in part, except by an agreement in writing signed
by each of the parties hereto.

[Signature Page Follows]

13

 

     IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase and Subscription
Agreement as of the date first above written.

	 	 	 	 	 
	 	 	Prestwick Scientific Capital, Inc.

a Delaware corporation
	 
	 	 	 	 
	 	 	By: _______________________________
	

	 	 	 	Stephen X. Graham

Chief Executive Officer
	 
	 	 	 	 
	 	 	Address:
	 	 	1825 K Street, N.W.
	 	 	Suite 1475
	 	 	Washington, DC 20036
	 
	 	 	 	 
	 	 	Prestwick Companies, Inc.

a Delaware corporation
	 
	 	 	 	 
	 	 	By: _______________________________
	

	 	 	 	Stephen X. Graham

Chief Executive Officer
	 
	 	 	 	 
	 	 	Address:
	 	 	1825 K Street, N.W.
	 	 	Suite 1475
	 	 	Washington, DC 20036
	 
	 	 	 	 
	 	 	KCS Pharmaceuticals, Inc.

a Delaware corporation
	 
	 	 	 	 
	 	 	By: _______________________________
	

	 	 	 	Kathleen Clarence-Smith

President
	 
	 	 	 	 
	 	 	Address:
	 	 	1825 K Street, N.W.
	 	 	Suite 1475
	 	 	Washington, DC 20036

14

 

Exhibit A

Transferred Assets

All of Assignor’s rights, title and interest in and to all property (tangible and intangible)
related to its central nervous system drugs, central nervous system drug candidates and
technologies related to the foregoing, including, without limitation (and effective as of the
Closing Date) the following:

1.      PL-047 (tetrabenazine);

2.      PSC-00410 (schizophrenia);

3.      PSC-03306 (sleep apnea);

4.      **PL-039 (Parkinson’s disease);

5.      The Autism drug discovery and
development program; and

6.      **The pre-clinical Alzheimer’s
program.

[** — The referenced asset has not yet been “licensed in” to Assignor and is subject to continuing
negotiations.]

All of Assignor’s rights and obligations under the following agreements, effective as of the
Closing Date:

1.      Agreement with Cambridge Laboratories Limited for PL-047, dated September 26,
2002 (tetrabenazine);

2.      License Agreement with The General Hospital Corporation for PSC-00410, dated
October 6, 2000 (schizophrenia); and

3.      License Agreement with Dr. Maurice W. Gittos for PSC-03306, dated June 30, 2001
(sleep apnea).

All of Assignor’s rights, title and interest in and to the following patent applications:

1.      Derives de l’acide R(+)-2-amino-3-hydroxypropanoique a action glycinergique,
filed in France on August 14, 2002

2.      Novel Piperidin-2,6,-dinoe salts and their use for the treatment of
stress-related affective disorders, filed in the United Kingdom on August 22, 2002

All trademarks, trade names and trade dress associated with “Prestwick Pharmaceutical, Inc.”

 1.

 

effective as of the Closing Date.

All goodwill associated with all assets described above, effective as of the Closing Date.

 2.

 

Exhibit B

Assumed Liabilities under the Following Contracts:

	1.  	Agreement with Cambridge Laboratories Limited for PL-047, dated September 26, 2002
(tetrabenazine);
	 
	2.  	License Agreement with The General Hospital Corporation for PSC-00410, dated October 6, 2000
(schizophrenia); and
	 
	3.  	License Agreement with Dr. Maurice W. Gittos for PSC-03306, dated June 30, 2001 (sleep
apnea).

 3.

 

Exhibit C

Form of Stockholder Certification

 4.

 

STOCKHOLDER CERTIFICATION AND AGREEMENT

     This Stockholder Certification and Agreement (“Certification”) is being executed and
delivered effective as of the 13th day of December, 2002 (the “Effective Date”), by the
undersigned stockholders (the “Stockholders”) of Prestwick Companies, Inc., a Delaware corporation
(“PCI”), to and in favor of, and for the benefit of, KCS Pharmaceuticals, Inc., a Delaware
corporation (“KCS”).

RECITALS

     A.      Pursuant to the terms of a proposed Contribution and Assignment Agreement, dated as of the
Effective Date (the “Contribution Agreement”), to be entered into by and among PCI, Prestwick
Scientific Capital, Inc., a Delaware corporation and wholly-owned subsidiary of PCI (“Scientific”)
and KCS, Scientific intends to transfer to KCS certain assets, including without limitation certain
intellectual property rights and its rights and obligations under certain license agreements (the
"Assets”). In exchange for the transfer of such Assets, KCS intends to issue to Scientific Six
Million (6,000,000) shares of its Common Stock, par value $0.001 per share (the “KCS Stock”),
subject to the Stockholders executing and delivering this Certification to the sole satisfaction of
KCS (the “Contribution Transaction”).

     B.      Upon Scientific’s receipt of the KCS Stock, Scientific intends to distribute to PCI,
Scientific’s sole stockholder, the KCS Stock as a dividend as permitted under the Delaware General
Corporation Law (“DGCL”) and pursuant to the terms and conditions of Scientific’s Certificate of
Incorporation, including all Certificates of Designation thereto, as amended.

     C.      Upon PCI’s receipt of the KCS Stock, PCI intends to distribute the KCS Stock to the
Stockholders as a dividend, in such proportions as prescribed by the Board of Directors of PCI, as
permitted under the DGCL and pursuant to the terms and conditions of PCI’s Certificate of
Incorporation, including all Certificates of Designation thereto, as amended.

     D.      It is a requirement and a condition to the consummation of the Contribution Transaction
that the parties hereto execute and deliver this Certification.

     E.      As the ultimate recipients of the KCS Stock, the Stockholders will receive direct benefit
from the Contribution Transaction.

CERTIFICATION

     1.      Representations, Warranties and Certification of the Stockholders. Each of the
undersigned (each, a “Stockholder”) represents, warrants and certifies to KCS as follows:

              (a)      The Stockholder is the holder and beneficial owner of the number of shares of PCI Common
Stock or PCI Series A Preferred Stock set forth below the Stockholder’s signature at the end of
this Certification (the “Shares”), and has good and valid title to the Shares

 5.

 

free and clear of any
encumbrances. The Shares are the only outstanding shares of the capital
stock of PCI beneficially owned by the Stockholder. The Stockholder has the sole power to
vote all of the Shares at any meeting of the stockholders of PCI and the sole power to act by
written consent with respect to the Shares in lieu of any such meeting. The Stockholder has not
appointed or granted any proxy or entered into any agreement, contract, commitment or understanding
that is now in force with respect to any of the Shares.

              (b)      The Stockholder is acquiring the KCS Stock for investment for the Stockholder’s own
account only and not with a view to, or for resale in connection with, any “distribution” thereof
within the meaning of the Securities Act of 1933, as amended (the “Act”).

              (c)      The Stockholder has been given the opportunity: (i) to ask questions of, and to receive
answers from, persons acting on behalf of PCI, Scientific and KCS concerning the terms and
conditions of the Contribution Transaction and the contemplated issuance of KCS Stock, and the
business, properties, prospects and financial condition of PCI, Scientific and KCS; and (ii) to
obtain any additional information (to the extent PCI, Scientific or KCS possesses such information
or is able to acquire it without unreasonable effort or expense) that is necessary to verify the
accuracy of the information set forth in the documents provided or made available to the
Stockholder.

              (d)      The Stockholder understands that the KCS Stock has not been registered under the Act by
reason of a specific exemption therefrom, which exemption depends upon, among other things, the
Stockholder’s representations and the bona fide nature of the Stockholder’s investment intent, all
as expressed herein.

              (e)      The Stockholder further acknowledges and understands that the KCS Stock must be held
indefinitely unless the KCS Stock is subsequently registered under the Act or an exemption from
such registration is available. The Stockholder further acknowledges and understands that KCS is
under no obligation to register the KCS Stock. The Stockholder understands that the certificate
evidencing the KCS Stock will be imprinted with a legend which prohibits the transfer of the KCS
Stock unless the KCS Stock is registered or such registration is not required in the opinion of
counsel for KCS.

              (f)      The Stockholder is familiar with the provisions of Rule 144 under the Act, as in effect
from time to time, which, in substance, permit limited public resale of “restricted securities”
acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in
a non-public offering subject to the satisfaction of certain conditions. The KCS Stock may be
resold by the Stockholder in certain limited circumstances subject to the provisions of Rule 144,
which requires, among other things: (i) the availability of certain public information about KCS
and (ii) the resale occurring following the required holding period under Rule 144 after the
Stockholder has purchased, and made full payment for (within the meaning of Rule 144), the
securities to be sold.

              (g)      The Stockholder further understands that at the time the Stockholder wishes to sell the
KCS Stock there may be no public market upon which to make such a sale, and that, even if such a
public market then exists, KCS may not be satisfying the current public

 6.

 

information requirements of
Rule 144, and that, in such event, the Stockholder would be
precluded from selling the Stock under Rule 144 even if the minimum holding period requirement
had been satisfied.

              (h)      The Stockholder further warrants and represents that the Stockholder has either (i)
preexisting personal or business relationships with KCS or any of its officers, directors or
controlling persons, or (ii) the capacity to protect its own interests in connection with the
acquisition of the KCS Stock by virtue of the Stockholder’s business or financial expertise or the
business or financial expertise of professional advisors to the Stockholder who are unaffiliated
with and who are not compensated by KCS or any of its affiliates, directly or indirectly.

              (i)      The Stockholder has received and carefully examined the stockholder letter dated November
27, 2002 (which included a description of the Contribution Transaction in general).

              (j)      The Stockholder further warrants and represents that the Stockholder either is or is not
an “accredited investor,” as indicated by the Stockholder on the signature page hereto and as that
term is defined in Rule 501 under the Act (please see the “accredited investor” requirements
described on Exhibit A hereto).

              (k)      The Stockholder understands that promptly upon the issuance of the KCS Stock, any
Stockholder who individually owns less than One Million (1,000,000) shares of the KCS Stock shall
be required to enter into that certain Voting Trust Agreement in the form attached hereto as
Exhibit B (the “Voting Trust Agreement”).

              (l)      The Stockholder understands that the KCS Stock is subject to certain restrictions on
transferability set forth in the Voting Trust Agreement and in Article XIV of the Bylaws of KCS,
which Article XIV of the Bylaws is attached hereto as Exhibit C (the “Bylaws”). The Stockholder
understands that KCS will not be required (i) to transfer on its books any shares of KCS Stock
which have been transferred in violation of any provisions set forth in this Agreement, the Voting
Trust Agreement or the Bylaws or (ii) to treat as owner of such shares or to accord the right to
vote as such owner or to pay dividends to any transferee to whom such shares shall have been so
transferred.

              (m)      The Stockholder understands that there will be placed on the certificate or certificates
representing the KCS Stock a legend identical or similar in effect to the following legend
(together with any other legend or legends required by applicable state securities laws, the Voting
Trust, the Bylaws or otherwise):

	 	   	THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE
ACT OR

 7.

 

UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE.

     1.      Market Stand-Off Agreement. The Stockholder acknowledges and agrees that the
Stockholder shall not sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same economic effect as a
sale, any Common Stock of KCS held by the Stockholder, including the KCS Stock (the “Restricted
Securities”), for a period of time specified by the managing underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of a registration statement of KCS filed
under the Act. The Stockholder agrees to execute and deliver such other agreements as may be
reasonably requested by KCS and/or the managing underwriter(s) which are consistent with the
foregoing or which are necessary to give further effect thereto. In order to enforce the foregoing
covenant, KCS may impose stop-transfer instructions with respect to the Stockholder’s Restricted
Securities until the end of such period. The underwriters of the stock of KCS are intended third
party beneficiaries of this Section 2 and shall have the right, power and authority to enforce the
provisions hereof as though they were a party hereto.

     2.      Reliance. The Stockholder acknowledges that PCI, Scientific and KCS will rely on
the Stockholder’s representations, warranties and certification set forth in Section 1 above for
purposes of determining the Stockholder’s suitability as an investor in KCS Stock and for purposes
of confirming the availability of an exemption from the registration requirements of the Act for
the issuance of shares of KCS Stock in the Contribution Transaction. The Stockholder acknowledges
that PCI, Scientific and KCS will rely on the Stockholder’s representations, warranties, agreements
and certifications set forth in this Certification for purposes of determining the benefits of
executing the Contribution Agreement and consummating the Contribution Transaction.

     3.      Miscellaneous.

              (a)      Notices. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by
confirmed telex or facsimile if sent during normal business hours of the recipient, and if not
during normal business hours of the recipient, then on the next business day, (iii) five (5)
calendar days after having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) one (1) business day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All communications
shall be sent to the other party hereto at such party’s address hereinafter set forth on the
signature page hereof, or at such other address as such party may designate by ten (10) days
advance written notice to the other party hereto.

              (b)      Successors and Assigns. This Agreement shall inure to the benefit of the successors and
assigns of KCS and, subject to the restrictions on transfer herein set forth, be binding upon the
Stockholder and the Stockholder’s successors and assigns.

              (c)      Attorneys’ Fees; Specific Performance. The Stockholder shall reimburse KCS for all costs
incurred by KCS in enforcing the performance of, or protecting its

 8.

 

rights under, any part of this Certification, including reasonable costs of investigation and
attorneys’ fees.

              (d)      Governing Law; Venue. This Certification shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflicts of laws provisions
thereunder. The parties agree that any action brought by either party to interpret or enforce any
provision of this Certification shall be brought in, and each party agrees to, and does hereby,
submit to the jurisdiction and venue of, the appropriate state or federal court located in New
Castle County, Delaware.

              (e)      Further Execution. The parties agree to take all such further action(s) as may reasonably
be necessary to carry out and consummate the Contribution Transaction as soon as practicable, and
to take whatever steps may be necessary to obtain any governmental approval in connection with or
otherwise qualify the issuance of the securities that are the subject of this Certification.

              (f)      Independent Counsel. The Stockholder acknowledges that this Certification has been
prepared on behalf of KCS by Cooley Godward LLP, counsel to KCS, and that Cooley Godward LLP does
not represent, and is not acting on behalf of, PCI, Scientific or the Stockholder. The Stockholder
has been provided with an opportunity to consult with the Stockholder’s own counsel with respect to
this Certification.

              (g)      Entire Agreement; Amendment. This Certification constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes and merges all prior
agreements or understandings, whether written or oral. This Certification may not be amended,
modified or revoked, in whole or in part, except by an agreement in writing signed by each of the
parties hereto.

              (h)      Severability. If one or more provisions of this Certification are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Certification, (ii) the balance
of the Certification shall be interpreted as if such provision were so excluded and (iii) the
balance of the Certification shall be enforceable in accordance with its terms.

              (i)      Counterparts. This Certification may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.

[Signature page follows]

 9.

 

     The Stockholder has executed and delivered this Certification as of the date set
forth below and the Stockholder further agrees that this Certification shall be effective between
and among the parties hereto as of the Effective Date.

	 	 	 
	Stockholder:

	 	Stockholder:
	 
	 	 
	If an Individual:

	 	If an Entity:
	 
	 	 
	                                                                                

	 	                                                                                
	(Signature)

	 	(Please Print Name of Entity)
	 
	 	 
	Name:                                                             

	 	Name:                                                             
	 
	 	 
	

	 	Title:                                                             
	 
	 	 
	Number of PCI Common Stock Shares:                     

	 	Number of PCI Common Stock Shares:                     
	 
	 	 
	Number of
              PCI Series A Preferred Stock Shares:                     
	 	Number of PCI Series A Preferred
            Stock Shares:                     
	 
	 	 
	                                                                                

	 	                                                                                
	 
	 	 
	Address:                                                             

	 	Address:                                                             
	 
	 	 
	                                                                                

	 	                                                                                
	 
	 	 
	

Date:                                                             

	 	Date:                                                             
	 
	 	 
	 
	The Stockholder hereby warrants and represents that he, she or it

(please check appropriate box):
	 
	 	 
	                    o is an “Accredited investor”
	 	 
	 
	 	 
	                                        or
	 	 
	 
	 	 
	                    o is not an “Accredited investor”
	 	 
	 
	 	 
	based on the requirements described in Exhibit A hereto.

Acknowledged, Agreed and Accepted:

KCS Pharmaceuticals, Inc.

                                                                                

By:

Name:

Title:

Address:

1825 K Street, N.W., Suite 1475

Washington, DC 20036

 

 

Exhibit A

Rule 501. Definitions and Terms used in Regulation D.

     As used in Regulation D, the following terms shall have the meaning indicated:

     (a) Accredited investor. “Accredited investor” shall mean any person who comes within any of
the following categories, or who the issuer reasonably believes comes within any of the following
categories, at the time of the sale of the securities to that person:

     (1) Any bank as defined in Section 3(a)(2) of the Act or any savings and loan association or
other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in Section 2(13) of the Act; any investment company
registered under the Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;
any plan established and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made
by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;

     (2) Any private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;

     (3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of $5,000,000;

     (4) Any director, executive officer, or general partner of the issuer of the securities being
offered or sold, or any director, executive officer, or general partner of a general partner of
that issuer;

     (5) Any natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of his purchase exceeds $1,000,000;

     (6) Any natural person who had an individual income in excess of $200,000 in each of the two
most recent years or joint income with that person’s spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the current year;

A- 1.

 

     (7) Any trust with total assets of $5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed by a sophisticated person as described
in Rule 506(b)(2)(ii); and

     (8) Any entity in which all of the equity owners are accredited investors.

A- 2.

 

Exhibit B

Voting Trust

 

 

VOTING TRUST AGREEMENT

     This Voting Trust Agreement (this “Agreement”) is made and entered into effective as
of the 13th day of December, 2002 (the “Effective Date”), by and among certain stockholders of KCS
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), listed on Exhibit A hereto and the
signature page hereof (hereinafter individually referred to as a “Stockholder” and collectively as
the “Stockholders”) and Nancy Keegan (hereinafter referred to as the “Voting Trustee”).

Recitals

     A.      Whereas, it is the desire of the Stockholders and the Company that any stockholder
of the Company who individually owns fewer than One Million (1,000,000) shares of the Company’s
Common Stock, par value $0.001 per share (the “Common Stock”), enter into this Agreement;

     B.      Whereas, the Stockholders acknowledge that they are the owners (including shares
held both beneficially and of record) of those shares of Common Stock of the Company set forth next
to their respective names on Exhibit A hereto (such Common Stock, together with any shares of
Common Stock acquired by such Stockholders after the date hereof, the “Shares”);

     C.      Whereas, the Stockholders listed on Exhibit A represent all of the Company’s
stockholders who individually own fewer than One Million (1,000,000) shares of the Company’s Common
Stock; and

     D.      Whereas, in order to ensure continuous and cohesive representation of the minority
interests represented by the Shares, the parties hereto desire to establish the voting trust
described herein, all upon the following terms and conditions.

Agreement

     Now, Therefore, in consideration of the mutual covenants and agreements herein
contained, the parties hereto mutually agree and covenant as follows:

     1.      Establishment Of Trust. Nancy Keegan is hereby appointed Voting Trustee under the voting
trust created by this Agreement. During the term of this Agreement, which shall be effective as of
the Effective Date, the Voting Trustee shall act as voting trustee in respect of all Shares
deposited hereunder with all the powers, rights, privileges and subject to all the conditions and
covenants hereinafter set forth.

     2.      Deposit Of Shares.

              (a)      The Stockholders shall, upon execution hereof, deliver or cause to be delivered to the
Voting Trustee certificates evidencing ownership of the Shares, which

4

 

certificates shall be in the name of the Voting Trustee and shall bear the notation that said
Shares are subject to the terms and provisions of this Agreement. In the event any Stockholder
shall acquire any other shares of Common Stock of the Company at any time after the Effective Date
hereof, said shares of Common Stock shall be subject to the terms of this Agreement and such
Stockholder shall immediately deliver or cause to be delivered to the Voting Trustee certificates
representing all such newly acquired Shares.

              (b)      All Shares now or hereafter delivered to the Voting Trustee shall be deemed to be held by
the Voting Trustee in trust, subject to the terms and conditions of this Agreement.

     3.      Voting Trust Certificate.

              (a)      Within ten (10) days of the Effective Date hereof, the Voting Trustee shall issue in the
name of each of the Stockholders a Voting Trust Certificate in respect of the Shares delivered by
each Stockholder to the Voting Trustee pursuant to the terms hereof, which Voting Trust Certificate
shall be in the form of Exhibit B attached hereto.

              (b)      Each Voting Trust Certificate shall have the following legend stamped, typed or otherwise
legibly placed on the face or reverse side thereof:

	 	   	“SALE, PLEDGE OR OTHER DISPOSITION OR TRANSFER OF THIS VOTING TRUST CERTIFICATE AND
THE SHARES OF STOCK OF KCS PHARMACEUTICALS, INC. (OR ANY SUCCESSOR CORPORATION)
REPRESENTED HEREBY IS RESTRICTED BY THE TERMS OF A VOTING TRUST AGREEMENT, DATED AS
OF DECEMBER ___, 2002, WHICH MAY BE EXAMINED AT THE CORPORATE OFFICE OF KCS
PHARMACEUTICALS, INC. (OR ANY SUCCESSOR CORPORATION).”

              (c)      The Voting Trustee shall maintain a register of all holders of outstanding Voting Trust
Certificates. The Voting Trust Certificates shall be transferable only in accordance with a valid
transfer of the Shares pursuant to the terms of the Company’s Bylaws and any other agreement
applicable to the Shares. Any such transfer of Voting Trust Certificates or of the Shares which
complies with all restrictions thereon shall be recorded in said register and shall vest in the
transferee all rights of the transferor and shall subject the transferee to the same limitations as
those imposed upon the transferor by the terms of the Voting Trust Certificate so transferred and
this Agreement. The Voting Trustee is authorized and empowered to cause any further transfers of
the Shares to be made which may become necessary through the occurrence of any change of persons
holding the office of the Voting Trustee. Each of the Stockholders hereby irrevocably authorizes
the Trustee to cause the Company to endorse such certificates, and any other certificates for
Shares issued to the Voting Trustee, with a legend to the effect that the certificates and the
shares represented thereby are issued pursuant to this Agreement and to place a similar notation in
the appropriate place in the transfer books of the Company.

              (d)      In case any Voting Trust Certificate shall become mutilated or be

5

 

destroyed, lost or stolen, the registered holder thereof shall immediately notify the Voting
Trustee, who, subject to the following sentence, shall issue and deliver to such holder a new
Voting Trust Certificate of like tenor and denomination in exchange for and upon cancellation of
the Voting Trust Certificate so mutilated, or in substitution for the Voting Trust Certificate so
destroyed, lost or stolen. The applicant for such substituted Voting Trust Certificate shall
furnish proof reasonably satisfactory to the Voting Trustee of such destruction loss or theft, and
upon request shall furnish indemnity reasonably satisfactory to the Voting Trustee and shall comply
with such other reasonable requirements as the Voting Trustee may prescribe.

     4.      Dividends On Shares. The registered holder of any Voting Trust Certificate shall be
entitled, until termination of this Agreement as hereinafter provided, to receive from time to time
payments equal to the amount of cash dividends, if any, collected or received by the Voting Trustee
or the Voting Trustee’s successors upon the number of Shares in respect of which such Voting Trust
Certificates were issued, less deductions or withholdings for any taxes, assessments, or other
charges that may be required by any present or future law, to be deducted or withheld from said
dividends. As soon as is reasonably practicable, but in any event within ten (10) business days
after the receipt of the dividends described above, the Voting Trustee shall pay to each registered
holder of the Voting Trust Certificates that portion of such dividends (less the deductions,
withholdings and charges described above) to which he or she is legally entitled. In the event any
dividend with respect to the Shares is paid other than in cash, the dividend shall be delivered in
kind to the registered holder of the Voting Trust Certificates, as provided for herein; provided,
however, that if any such dividend shall be paid in fully paid shares of Common Stock or other
securities of the Company, the Voting Trustee shall hold, subject to the terms of this Agreement,
the certificates for such Shares or other securities which shall be received by them or him on
account of such dividend, and the Voting Trustee shall immediately issue to each registered holder
of each Voting Trust Certificate one or more additional Voting Trust Certificates issued under this
Agreement for the Shares or new stock certificates representing the other securities, as the case
may be, in the amount or number received by or for the Voting Trustee.

     5.      Subscription to New Shares Or Securities. In the event the Company offers any of its
Shares or other securities to its stockholders for subscription, then upon receiving from the
registered holder of any Voting Trust Certificate, prior to the time limited by the Company for
subscription and payment, a request to subscribe in such holder’s behalf and the money required to
pay for a stated amount of such Shares or other securities (not in excess of the ratable amount
subscribable in respect to the Shares represented by said Voting Trust Certificate), the Voting
Trustee will make such subscription and payment on such holder’s behalf (and as such holder’s
agent), and, upon receiving from the Company the share certificates or other securities so
subscribed will, if shares of Common Stock, issue Voting Trust Certificates in respect thereof to
the registered holder of the Voting Trust Certificates who shall have made such request and
payment, and, if other securities (other than Shares of Common Stock), will deliver such new stock
certificates representing the other securities to the registered holder of the Voting Trust
Certificates who shall have made such request and payment.

     6.      Trustee.

6

 

              (a)      Rights And Powers Of Trustee. So long as the Voting Trustee shall be deemed to hold the
Shares in trust in accordance with the terms hereof, the Voting Trustee shall possess, and in the
Voting Trustee’s discretion shall be entitled to exercise in person or by nominees, agents,
attorneys-in-fact, or proxies, as absolute owner and holder of the Shares all rights and powers
attendant thereto, including the right to vote, assent, or consent with respect thereto, to take
part in and consent to any corporate or stockholder action of any kind whatsoever, and to receive
dividends and distributions on the Shares, in each case subject to the terms of this Agreement.
The rights of the Voting Trustee herein to vote, assent or consent shall include, without
limitation, the right to vote at any election of the Directors and in favor of or in opposition to
any resolution for a proposed dissolution and liquidation, merger, or consolidation of the Company,
or a sale of all or substantially all of its assets, or the issuance or creation of additional
classes of its securities, or any action which may properly be presented at any stockholders’
meeting or which requires the consent of the stockholders of the Company. It is expressly
acknowledged by the parties hereto that no voting rights shall pass to the Stockholders by or under
the Voting Trust Certificates or to any transferee or registered holder thereof.

              (b)      Correspondence from Company. Each of the Stockholders covenants and agrees that so long
as this Agreement is in effect, such Stockholder irrevocably authorizes the Voting Trustee, on
behalf of the Stockholder, to receive from the Company copies of all correspondence from the
Company to its Stockholders which would otherwise be sent directly to the Stockholders, including
all notices, consents, waivers, minutes of the meetings of the stockholders and such other
correspondence as the Company distributes to its stockholders from time to time or as the Voting
Trustee shall legally and reasonably request. In addition, the Voting Trustee hereby agrees to
furnish each Stockholder with copies of such Company correspondence within a reasonable time (or as
soon as possible if the nature of such correspondence requires the prompt attention of or prompt
action by the intended recipient) after the Voting Trustee has received such correspondence. Each
Stockholder hereby agrees that the Company is an intended third-party beneficiary of the first
sentence of this Section 6(b).

              (c)      Liability Of Voting Trustee. In exercising the rights and powers of the Voting Trustee,
the Voting Trustee will exercise the Voting Trustee’s best judgment in its capacity as a fiduciary
of the stockholders; provided, however, the Voting Trustee shall not be liable for any action taken
by such Voting Trustee or the Voting Trustee’s agent, except for liability arising from the Voting
Trustee’s bad faith, willful misconduct or gross negligence. The Voting Trustee shall not be
required to give any bond or other security for the discharge of the Voting Trustee’s duties.

              (d)      Compensation. The Voting Trustee shall receive no compensation for the Voting Trustee’s
services as a Voting Trustee hereunder.

              (e)      Resignation Of And Successor Voting Trustee. The Voting Trustee may at any time resign
the Voting Trustee’s position as Voting Trustee by delivering a resignation in writing to the
Company to become effective 30 days after the date of such delivery, but the Voting Trustee shall
nominate a successor Voting Trustee reasonably acceptable to the

7

 

Company and the Stockholders holding at least fifty percent (50%) of the then-outstanding Shares
(the “Majority Stockholders”), who shall have all rights, powers and obligations of the resigning
Voting Trustee as set forth in this Agreement, and all rights, powers and obligations of the
resigning Voting Trustee hereunder shall immediately terminate upon the acceptance by the successor
Voting Trustee of such nomination and the execution of this Agreement by the successor Voting
Trustee as “Voting Trustee” hereunder. Subject to the immediately preceding sentence, the fact
that any Voting Trustee has resigned such Voting Trustee’s position as a Voting Trustee shall not
act, or be construed to act, as a release of any Shares from the terms and provisions of this
Agreement.

              (f)      Removal. The Voting Trustee may not be removed by the holders of Voting Trust
Certificates, except upon the finding of a court of competent jurisdiction that the Voting Trustee
has acted in bad faith or with willful misconduct or gross negligence in the performance (or
failure to perform) its duties, obligations, covenants or agreements under this Agreement or in its
capacity as trustee to and for the Stockholders. In case of the Voting Trustee’s removal under
this Section 6(f), the Majority Stockholders and the Company shall, in good faith and full
cooperation, select, nominate, and appoint a successor Voting Trustee as quickly as is reasonably
possible. After the removal of the Voting Trustee and before the appointment of a successor Voting
Trustee, the Majority Stockholders may appoint an interim Voting Trustee reasonably acceptable to
the Company, who shall serve in such capacity and in accordance with the terms of this Agreement,
until the successor Voting Trustee is nominated and appointed and duly executes this Agreement as
“Voting Trustee” hereunder.

     7.      Expenses, etc. The Company shall promptly pay to the Voting Trustee and any agent of the
Voting Trustee all reasonable expenses, including counsel fees, and discharge all liabilities
incurred by such Voting Trustee in connection with the proper exercise of all powers and the
performance of the Voting Trustee’s duties under this Agreement.

     8.      Indemnification. The Company shall indemnify and hold the Voting Trustee and such Voting
Trustee’s agents harmless from and against any and all liabilities, obligations, losses, damages,
penalties, taxes, claims, actions, suits, costs, expenses or disbursements (including legal fees
and expenses) of any kind and nature whatsoever which may be imposed, incurred or asserted against
the Voting Trustee in connection with or growing out of the administration of the voting trust
created by this Agreement or the exercise of any powers or the performance of any duties by the
Voting Trustee as herein provided or contemplated, including, without limitation, any action taken
or omitted to be taken, except such as shall arise from the willful misconduct or gross negligence
of the Voting Trustee.

     9.      No Duty to Investigate. Subject to this Agreement, the Voting Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order or other paper
or document.

     10.      Voting Trustee’s Duty to Act. The Voting Trustee shall be required to act only in
accordance with the provisions of this Agreement.

8

 

     11.      Monies Need Not Be Segregated. No monies received by the Voting Trustee need be
segregated in any manner except to the extent required by law, and the Voting Trustee shall not be
liable for any interest thereon.

     12.      Voting Trustee May Rely. The Voting Trustee may rely and shall be protected in acting
upon any signature, instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by the Voting Trustee to be genuine and believed
by the Voting Trustee to be signed by the proper party or parties. The Voting Trustee may accept a
copy of a resolution of the board of directors of any corporate party, certified by the secretary,
an assistant secretary, or any other officer of said party, as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been adopted by said board and is in full
force and effect. As to any fact or matter, the manner of ascertainment of which is not
specifically described herein, the Voting Trustee may for all purposes hereof rely on a
certificate, signed by or on behalf of the Stockholders or any other person who the Voting Trustee
reasonably believes to be knowledgeable as to such fact or matter, and such certificate shall
constitute full protection of the Voting Trustee for any action taken or omitted to be taken by him
in good faith in reliance thereon. In the administration of the trust created hereby, the Voting
Trustee may perform the Voting Trustee’s powers and duties hereunder directly or through other
agents or attorneys and may seek advice of counsel, accountants and other skilled persons to be
selected and employed by the Voting Trustee, and, subject to Section 6(c) above, the Voting Trustee
shall not be liable for anything done, suffered or omitted in good faith by the Voting Trustee in
accordance with the advice or opinion of any such counsel, agents, accountants or other skilled
persons. No provision of this Voting Trust Agreement shall be deemed to impose any duty on the
Voting Trustee to take any action if the Voting Trustee shall have been advised by counsel that
such action would expose the Voting Trustee to criminal liability or is contrary to the terms
hereof or is contrary to applicable law.

     13.      Holders Of Voting Trust Certificates Bound; Waiver Of Claims Against Voting
Trustees; the Company a Beneficiary. Every registered holder of a Voting Trust Certificate and
every bearer of a Voting Trust Certificate properly endorsed in blank or properly assigned, by the
acceptance or holding thereof, (a) shall be deemed conclusively for all purposes to have assented
to this Agreement and to all of its terms, conditions and provisions and shall be bound hereby with
the same force and effect as if such holder or bearer had executed this Agreement, (b) severally
agrees to waive and by such act does waive any and all claims of every kind and nature which
hereafter each such holder or bearer may have against the Voting Trustee, and agrees to release and
by such act does release the Voting Trustee, its successors and assigns, from any liability
whatsoever arising out of or in connection with the exercise of its powers or the performance of
its duties hereunder, except liability for the bad faith, gross negligence or willful misconduct of
the Voting Trustee, and (c) severally agrees and acknowledges that each Stockholder, individually
or together with the other Stockholders subject to the voting trust created by this Agreement, are
not the sole beneficiaries of the voting trust created by this Agreement, and each Stockholder
expressly manifests and intends, by entering into this Agreement, that the Company is an intended
third-party beneficiary of this Agreement.

9

 

     14.      Termination; Amendment.

              (a)      This Agreement shall terminate and be of no further force or effect on the earlier of (i)
the consummation of the Company’s sale of its Common Stock or other securities pursuant to an
effective registration statement under the Securities Act of 1933, as amended, (ii) the acquisition
of the Company by another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of the Company (other than
any transaction or series of transactions principally for bona fide equity financing purposes in
which cash is received by the Company and/or indebtedness of the Company is cancelled or converted)
or a sale of all or substantially all of the assets of the Company, (iii) ten (10) years from the
Effective Date, (iv) the dissolution or liquidation (whichever comes first) of the Company, (v)
upon the written consent of all of the Majority Stockholders, if (A) the Company has not received
at least Seven Million Dollars ($7,000,000) in cash in exchange for the sale of the Company’s
preferred stock to equity investors in a bona fide preferred stock financing on or before January
31, 2003, or (B) the Company consummates a bona fide third-party preferred stock financing in which
the execution of this Agreement is not a requirement thereof, or (vi) the written consent of the
Voting Trustee, the Company and the Majority Stockholders.

              (b)      At any time within two (2) years prior to the time of expiration of this Agreement
pursuant to Section 14(a) above, the parties may, by written agreement of the Majority Stockholders
and the Voting Trustee, extend the duration of this Agreement for an additional period not
exceeding ten (10) years from the expiration date of the Trust as originally fixed or as last
extended as provided in this paragraph. Except as otherwise provided herein, the trust created by
this Agreement is hereby expressly declared to be irrevocable.

              (c)      Upon termination of the voting trust pursuant to this Section 14, the Voting Trustee, in
exchange for and upon surrender of any Voting Trust Certificates then outstanding, shall promptly
deliver to the Company the number of Shares held by the Voting Trustee represented by such Voting
Trust Certificates and shall cause the Company promptly to cancel such certificates and issue and
deliver to the holders of Voting Trust Certificates, new certificates representing the same number
of Shares as are represented by such Voting Trust Certificates and thereupon all liability of the
Voting Trustee for delivery of such certificates shall terminate.

              (d)      Subject to Sections 14(a) and 14(b) above, any term hereof may be amended and the
observance of any term hereof may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the Voting Trustee, the
Company and the Majority Stockholders. Any amendment or waiver so effected shall be binding upon
all parties hereto. The failure of any party at any time to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall not affect the
rights of the party thereafter to enforce the provisions of this Agreement in accordance with its
terms. The addition of counterpart signature pages to this Agreement, or the revision of Exhibit A
to this Agreement, shall not be deemed an amendment to this Agreement requiring the consent of such
parties.

10

 

     15.      Filing Of Duplicate; Reliance By Company.

                (a)      A duplicate of this Agreement and any extension and amendment hereof shall be filed with
the Secretary of the Company in the corporate office of the Company and in the registered office of
the Company in the State of Delaware, and this Agreement and shall be open to inspection by any
stockholder of the Company, any registered holder of a Voting Trust Certificate, or the agent of
either upon the same terms as the record of stockholders of the Company is open to inspection.

                (b)      The Company or any of its officers or directors may conclusively presume the validity of
any act or activity by the Voting Trustee in connection with the Shares in either of the following
events:

                           (i)      If at any regular or special meeting (or by means of any written consent taken in lieu of
any regular or special meeting) of the stockholders of the Company, the Voting Trustee is present
or the Voting Trustee votes, assents or consents in writing to any stockholder action taken at such
meeting or by means of such written consent; or

                           (ii)      If at any regular or special meeting of stockholders of the Company, there has been
presented at such meeting to the Secretary, or in the Secretary’s absence, to any officer of the
Company present, a written certificate executed, under penalty of perjury, by the Voting Trustee,
and the certificate sets forth any action agreed to be taken or other authorization given by the
Voting Trustee signing such certificate.

                (c)      The Voting Trustee and Stockholders shall be estopped to deny the validity of any action
taken pursuant to subsections (b)(i) or (b)(ii) above.

                (d)      Notwithstanding the above, no corporate officer, director or employee who, in good faith,
relies upon any act or activity of the Voting Trustee, taken in connection with the Shares, shall
be held liable to any person or entity for any cause whatsoever arising as a result of such
reliance.

                (e)      The Voting Trustee may act through a proxy in accordance with the Company’s Bylaws.

     16.      Notices. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed telex or facsimile if sent during normal business hours of the recipient, and if not
during normal business hours of the recipient, then on the next business day, (c) five (5) calendar
days after having been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications shall be
sent to the other party hereto at such party’s address hereinafter set forth on Exhibit A hereof,
or at such other address as such party may designate by ten (10) days advance written notice to the

11

 

other party hereto.

     17.      Severability. If one or more provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good faith. In the event
that the parties cannot reach a mutually agreeable and enforceable replacement for such provision,
then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement
shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement
shall be enforceable in accordance with its terms.

     18.      Governing Law. This Agreement shall be governed by the laws of the State of Delaware,
without regard to the conflict of laws principles thereunder.

     19.      Inurement. This Agreement shall be binding on and shall inure to the benefit of each of
the parties hereto, and their respective heirs, executors, administrators, successors and assigns.

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

     21.      Entire Agreement. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes and merges all prior agreements or
understandings, whether written or oral.

     22.      Remedies; Attorney Fees. Each of the parties hereto acknowledge that a breach or default
by any party hereto of the terms and provisions hereof shall cause the non-defaulting parties to
suffer such damage as cannot be adequately remedied by an award of monetary damages; and, in this
regard, the parties hereto agree that, upon a breach or default of any of the terms or provisions
hereof, the non-defaulting party shall be entitled to seek equitable remedies for such default
including, without limitation, specific performance. In the event any action or proceeding is
brought as a result of any alleged breach, default or dispute under the terms or provisions hereof
or for the purpose of enforcing or interpreting any of the terms or provisions hereof, the
prevailing party in any such an action or proceeding shall be entitled to recover from the other,
in addition to such other relief as the prevailing party may be entitled, the prevailing party’s
reasonable attorney fees and reasonable legal costs incurred in that action or proceeding.

[Signature Page Follows]

12

 

     In Witness Whereof, the parties hereto have executed this Voting Trust Agreement on
the date set forth below, to be effective on the Effective Date.

Voting Trustee:

	 	 	 
	

By: Nancy Keegan

	 	 
	Date:
	 	 
	 
	 	 
	Stockholders:
	 	 
	 
	 	 
	

	 	 
	By: Stephen X. Graham
	 	 
	Date:
	 	 
	 
	 	 
	

	 	 
	By: Alana R. Davidson
	 	 
	Date:
	 	 
	 
	 	 
	

	 	 
	By: Nancy Keegan
	 	 
	Date:
	 	 
	 
	 	 
	By: Stuart Yarbrough
	 	 
	Date:
	 	 
	 
	 	 
	

	 	 
	By: D. Andrew Hamilton
	 	 
	Date:
	 	 
	 
	 	 
	

	 	 
	By: Jean-Luc Béjot
	 	 
	Date:
	 	 

13

 

Exhibit A

List of Stockholders

	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Name	 	 	Address	Number of Shares	 
	 	Stephen
            X. Graham 
	 	 	4900 Sedgwick Drive, N.W.

Washington, DC 20015
	 	 	 	547,871	 	 
	 	Alana R. Davidson

	 	 	3705 Ingomar Street, N.W.

Washington, DC 20015
	 	 	 	494,145	 	 
	 	Nancy Keegan

	 	 	2197 Sheringham Lane

Los Angeles, CA 90077
	 	 	 	161,825	 	 
	 	Stuart
            Yarbrough 
	 	 	2200 Belle Haven Road

          Suite 1475
Alexandria, VA 22307 	 	 	 	440,420	 	 
	 	D. Andrew Hamilton

	 	 	4712 Drummond Avenue

Chevy Chase, MD 20815
	 	 	 	494,145	 	 
	 	Jean-Luc Béjot

	 	 	16A, parc de Montchoisy

69300 Caluire

France
	 	 	 	6,895	 	 
	 	Total

	 	 	 	 	 	 	2,145,301	 	 
	 

B- 1.

 

 

Exhibit B

Form of Voting Trust Certificate

2

 

KCS Pharmaceuticals, Inc.

VOTING TRUST CERTIFICATE

    	 	 	                    Shares

          

	 No.
	                          	 Common Stock,
            par value $0.001 per share

  

     This certifies that                                          has deposited                                          shares of Common Stock of
KCS Pharmaceuticals, Inc., a Delaware corporation (the “Company”), as represented by the
Company’s Common Stock Certificate Number                      with the undersigned Voting Trustee (the “Voting
Trustee”), under a Voting Trust Agreement dated as of December 13, 2002, a copy of which is
attached hereto and incorporated herein by reference, between the Trustee and certain stockholders
of said Company. This certificate and the interests represented hereby are transferable on the
books of the Company only by the Voting Trustee, upon presentation and surrender hereof. The
holder of this certificate takes the same subject to all the terms and conditions of the aforesaid
Voting Trust Agreement and, by accepting this certificate, ratifies and adopts such Voting Trust
Agreement and becomes a party thereto, entitled to the benefits and bound by the provisions
thereof.

SALE, PLEDGE OR OTHER DISPOSITION OR TRANSFER OF THIS VOTING TRUST CERTIFICATE AND THE SHARES OF
STOCK OF KCS PHARMACEUTICALS, INC. (OR ANY SUCCESSOR CORPORATION) REPRESENTED HEREBY IS RESTRICTED
BY THE TERMS OF A VOTING TRUST AGREEMENT, DATED AS OF DECEMBER 13, 2002 WHICH MAY BE EXAMINED AT
THE CORPORATE OFFICE OF KCS PHARMACEUTICALS, INC. (OR ANY SUCCESSOR CORPORATION).

     IN WITNESS WHEREOF, the Voting Trustee has caused this certificate to be signed this 13th
day of December, 2002.

	 	 	 
	

	 	VOTING TRUSTEE:
	 
	 	 
	

	 	By:                                                                                 

3

 

Exhibit C

Bylaws

Article XIV—Right of First Refusal

Section 46. Right of First Refusal. No stockholder shall sell, assign, pledge, or in any manner
transfer any of the shares of common stock, of the corporation or any right or interest therein,
whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which
meets the requirements hereinafter set forth in this bylaw:

                          (i)      If the stockholder desires to sell or otherwise transfer any of his shares of common
stock, then the stockholder shall first give written notice thereof to the corporation. The notice
shall name the proposed transferee and state the number of shares to be transferred, the proposed
consideration, and all other terms and conditions of the proposed transfer.

                          (ii)      For thirty (30) days following receipt of such notice, the corporation shall have the
option to purchase all (but not less than all) of the shares specified in the notice at the price
and upon the terms set forth in such notice; provided, however, that, with the consent of the
stockholder, the corporation shall have the option to purchase a lesser portion of the shares
specified in said notice at the price and upon the terms set forth therein. In the event of a
gift, property settlement or other transfer in which the proposed transferee is not paying the full
price for the shares, and that is not otherwise exempted from the provisions of this Section 46,
the price shall be deemed to be the fair market value of the stock at such time as determined in
good faith by the Board of Directors. In the event the corporation elects to purchase all of the
shares or, with consent of the stockholder, a lesser portion of the shares, it shall give written
notice to the transferring stockholder of its election and settlement for said shares shall be made
as provided below in paragraph (d).

                          (iii)      The corporation may assign its rights hereunder.

                          (iv)      In the event the corporation and/or its assignee(s) elects to acquire any of the shares
of the transferring stockholder as specified in said transferring stockholder’s notice, the
Secretary of the corporation shall so notify the transferring stockholder and settlement thereof
shall be made in cash within thirty (30) days after the Secretary of the corporation receives said
transferring stockholder’s notice; provided that if the terms of payment set forth in said
transferring stockholder’s notice were other than cash against delivery, the corporation and/or its
assignee(s) shall pay for said shares on the same terms and conditions set forth in said
transferring stockholder’s notice.

                          (v)      In the event the corporation and/or its assignees(s) do not elect to acquire all of the
shares specified in the transferring stockholder’s notice, said transferring stockholder may,
within the sixty-day period following the expiration of the option rights granted to the
corporation and/or its assignees(s) herein, transfer the shares specified in said transferring

4

 

stockholder’s notice which were not acquired by the corporation and/or its assignees(s) as
specified in said transferring stockholder’s notice. All shares so sold by said transferring
stockholder shall continue to be subject to the provisions of this bylaw in the same manner as
before said transfer.

                          (vi)      Anything to the contrary contained herein notwithstanding, the following transactions
shall be exempt from the provisions of this bylaw:

                                   a. A stockholder’s transfer of any or all shares held either during such stockholder’s
lifetime or on death by will or intestacy to such stockholder’s immediate family or to any
custodian, executor, administrator, or personal representative for the account of such stockholder
or such stockholder’s immediate family or to any limited partnership of which the stockholder,
members of such stockholder’s immediate family or any trust for the account of such stockholder or
such stockholder’s immediate family will be the general of limited partner(s) of such partnership.
“Immediate family” as used herein shall mean spouse, lineal descendant, father, mother, brother, or
sister of the stockholder making such transfer; or any trust, family limited partnership, or
limited liability company established for estate planning purposes, in any case for the benefit of
the spouse, parents, children, grandchildren, siblings, mother- and father-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law of such natural person.

                                   b. A stockholder’s bona fide pledge or mortgage of any shares with a commercial lending
institution, provided that any subsequent transfer of said shares by said institution shall be
conducted in the manner set forth in this bylaw.

                                   c. A stockholder’s transfer of any or all of such stockholder’s shares to the corporation or
to any other stockholder of the corporation.

                                   d. A stockholder’s transfer of any or all of such stockholder’s shares to a person who, at the
time of such transfer, is an officer or director of the corporation.

                                   e. A corporate stockholder’s transfer of any or all of its shares pursuant to and in
accordance with the terms of any merger, consolidation, reclassification of shares or capital
reorganization of the corporate stockholder, or pursuant to a sale of all or substantially all of
the stock or assets of a corporate stockholder.

                                   f. A corporate stockholder’s transfer of any or all of its shares to any or all of its
stockholders.

                                   g. A transfer by a stockholder which is a limited or general partnership or limited liability
company to any or all of its partners or former partners or members (as applicable).

In any such case, the transferee, assignee, or other recipient shall receive and hold such stock
subject to the provisions of this bylaw, and there shall be no further transfer of such stock
except in accord with this bylaw.

5

 

                          (vii)      The provisions of this bylaw may be waived with respect to any transfer either by the
corporation, upon duly authorized action of its Board of Directors, or by the stockholders, upon
the express written consent of the owners of a majority of the voting power of the corporation
(excluding the votes represented by those shares to be transferred by the transferring
stockholder). This bylaw may be amended or repealed either by a duly authorized action of the
Board of Directors or by the stockholders, upon the express written consent of the owners of a
majority of the voting power of the corporation.

                          (viii)      Any sale or transfer, or purported sale or transfer, of securities of the corporation
shall be null and void unless the terms, conditions, and provisions of this bylaw are strictly
observed and followed.

                          (ix)      The foregoing right of first refusal shall terminate on either of the following dates,
whichever shall first occur:

                                   h. On November 15, 2012.

                                   i. Upon the date securities of the corporation are first offered to the public pursuant to a
registration statement filed with, and declared effective by, the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended.

                          (x)      The certificates representing shares of common stock of the corporation shall bear on
their face the following legend so long as the foregoing right of first refusal remains in effect:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT
OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION AND/OR ITS
ASSIGNEE(S), AS PROVIDED IN THE BYLAWS OF THE CORPORATION.”

6

 

Exhibit D

Form of Assignor Confidentiality Agreement

7

 

April 8, 2002

Dear

     This letter is to confirm our understanding with respect to your agreement to protect and
preserve information and property that is confidential and proprietary to Prestwick Scientific
Capital, Inc. (the “Company”; together with its affiliates, the “Companies”) and to assign to the
Company any and all rights to ideas, inventions, works of authorship and the like arising from your
employment by the Company.

1. Confidentiality. You shall at all times maintain in confidence and shall not, without
the prior written consent of the Company or except in the course of your employment by the Company,
use, disclose or give to others any fact or information which was disclosed to or developed by you
in furtherance of your employment by the Company and is not generally available to the public,
including, but not limited to, information and facts concerning business plans, customers,
prospective customers, suppliers, licensors, licensees, partners, investors, affiliates or others,
training methods and materials, financial information, sales prospects, client lists, Inventions
(as defined in Section 2), or any other scientific, technical trade or business secret or
confidential or proprietary work of the Companies or of any third party provided to you during the
term of your employment by the company (any and all such information and facts being “Confidential
Information”). In the event that you are questioned by anyone not authorized to receive any such
Confidential Information about any such Confidential Information you will promptly notify the
President of the Company. Your commitment to maintain the confidentiality of any and all such
Confidential Information shall remain in effect during and after any termination of this Agreement
by either you or the Company, with or without cause.

2. Ownership of Ideas, Copyrights and Patents. You agree that all ideas discoveries,
compositions of matter, creations, innovations, improvements, know-how, inventions, designs,
developments, apparatus, techniques, methods, formulae, software, manuscripts, memoranda, reports,
works of authorship and the like, that you have heretofore discovered, conceived, created,
authored, developed, reduced to practice or improved or that you hereafter discover, conceive,
create, author, develop, reduce to practice or improve, alone or in conjunction with one or more
other persons, whether at the request or upon the suggestion of any of the Companies or otherwise
in furtherance of your employment obligations to the Company, shall be the sole and exclusive
property of the Companies (all of the foregoing properties being hereinafter referred to as
“Inventions”). You further agree that you shall not publish or otherwise disclose to any third
party any of such Inventions without the prior written consent of the Company. You hereby assign
to the Company all of your right, title and interest in and to any and all such Inventions and
agree to execute any and all instruments evidencing such assignment and to fully cooperate with the
companies in perfecting the Companies’ right, title and interest in and to any and all such
Inventions.

3. Return of Property to Company. Upon termination of your employment by the Company, you

8

 

shall immediately deliver to the Company any and all manifestations of Confidential Information,
Inventions or other property of the Company which may then be in or may thereafter come into your
possession, including, without limitation, any and all documents, memoranda, notes, records,
reports, chemicals, and like materials, or copies of the same.

4.      No Conflicting Agreements. You hereby represent and warrant that you have no
commitments or obligations inconsistent with this Agreement and you hereby agree to indemnify and
hold the Companies harmless against loss, damage, liability or expense arising from any claim (a)
based upon circumstances alleged and proven to be inconsistent with such representation and
warranty and (b) caused by such inconsistency.

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	

	 	Alana R. Davidson
	

	 	Executive Vice President

4/10/02

9

 

Exhibit E

form of bill of sale

10

 

Exhibit E

BILL OF SALE

     This Bill of Sale (the “Bill of Sale”) is made as of December 13, 2002, by and
between Prestwick Scientific Capital, Inc., a Delaware corporation (the “Seller”) and
KCS PHarmaceuticals, Inc., a Delaware corporation (the “Purchaser”).

Recitals:

     A. Along with Prestwick Companies, Inc., a Delaware corporation, the Purchaser and the Seller
have entered into an Asset Purchase and Subscription Agreement of even date herewith (the
“Agreement”). Capitalized terms used herein but not otherwise defined shall have the meanings
ascribed thereto in the Agreement.

     B. Pursuant to the terms of the Agreement, the Seller is assigning, transferring, conveying
and delivering the Transferred Assets to Purchaser.

Agreements:

     Now, Therefore, for and in consideration of the issuance by the Purchaser to the
Seller of the Stock as consideration for the Transferred Assets pursuant to Section 2 of the
Agreement and in further consideration of the mutual promises and covenants set forth in the
Agreement, the receipt and sufficiency of which are hereby acknowledged, and pursuant to the terms
of the Agreement, the Seller does hereby assign, transfer, convey, sell and deliver to the
Purchaser all of the Seller’s rights, title and interest in, including goodwill appurtenant to, the
Transferred Assets.

     The Seller agrees with the Purchaser to sign, seal, execute and deliver, or cause to be
signed, sealed, executed and delivered, and to make or cause to be made, upon the reasonable
request of the Purchaser, any and all instruments, papers, acts or things, supplemental,
confirmatory or otherwise, as reasonably may be requested by the Purchaser for the purpose of, or
in connection with, perfecting and completing the sale, transfer and conveyance to the Purchaser of
the Transferred Assets assigned, transferred, conveyed and delivered hereby.

     Notwithstanding any other provision of this Bill of Sale to the contrary, nothing contained in
this Bill of Sale shall in any way supersede, modify, replace, amend, change, rescind, waive,
exceed, expand, enlarge or in any way affect the provisions set forth in the Agreement nor shall
this Bill of Sale reduce, expand or enlarge any remedies under the Agreement including without
limitation any rights to indemnification specified therein. In the event of any conflict between
the terms of this Bill of Sale and the Agreement, the terms of the Agreement shall govern. This
Bill of Sale is intended only to effect the transfer of the Transferred Assets sold and purchased
pursuant to the Agreement and shall be governed entirely in accordance with the terms and
conditions of the Agreement.

     The terms and provisions of this Bill of Sale shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.

11

 

     This Bill of Sale shall be construed in accordance with, and governed in all respects by, the
internal laws of the State of Delaware (without giving effect to principles of conflicts of laws).

     In Witness Whereof, the Seller has executed and delivered this Bill of Sale to the
Purchaser as of the day and year first above written.

	 	 	 	 	 
	 	 	Prestwick Scientific Capital, Inc.

a Delaware corporation
	 
	 	 	 	 
	 	 	By:                                                             
	

	 	 	 	Stephen X. Graham
	

	 	 	 	Chief Executive Officer

12

 

Exhibit f

form of assignment and assumption agreement

13

 

Exhibit F

ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (this “Assignment”) is made this
13th day of December, 2002, by and between Prestwick Scientific Capital, Inc.,
a Delaware corporation (the “Assignor”) and KCS Pharmaceuticals, Inc., a Delaware
corporation (the “Assignee”).

Recitals

     A.      Along with Prestwick Companies, Inc., a Delaware corporation, Assignor and Assignee have
entered into an Asset Purchase and Subscription Agreement, dated as of the date hereof (the
“Agreement”), whereby Assignee has agreed to purchase and Assignor has agreed to sell the
Transferred Assets. All capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Agreement.

     B.      Pursuant to the Agreement, Assignor wishes to assign to Assignee those certain contracts
listed on Exhibit A hereto (the “Assigned Contracts”), and Assignee wishes to accept such
assignment, on the terms and conditions set forth herein.

     C.      Pursuant to the Agreement, Assignee has agreed to assume the liabilities remaining to be
performed after the date hereof under such Assigned Contracts, on the terms and conditions set
forth herein.

Agreement

Now, Therefore, for and in consideration of the foregoing and of the mutual promises and
covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

	 	1.  	Assignment. Assignor hereby sells, assigns, transfers and sets over unto
Assignee, upon the terms and conditions set forth in the Agreement, the Assigned
Contracts. Assignee hereby accepts the foregoing assignment and transfer of the
Assigned Contracts upon the terms and conditions set forth in the Agreement.
	 
	 	2.  	Assumption. Assignee hereby assumes and agrees to observe, keep, carry out and
perform the obligations and liabilities of Assignor under the Assigned Contracts, on
the terms and subject to the conditions set forth in the Agreement.
	 
	 	3.  	Validity. Assignor hereby represents and warrants to Assignee that each of the
Assigned Contracts is in full force and effect as of the date hereof.
	 
	 	4.  	Further Assurances. Assignor agrees to execute and deliver, or cause to be
executed and delivered, any and all instruments, papers, acts or things, supplemental,

14

 

	 	   	confirmatory or otherwise, as reasonably may be required by Assignee for the purpose of
perfecting and completing the sale, transfer and conveyance to Assignee of the Assigned
Contracts sold, transferred and conveyed hereby. Assignee shall reimburse Assignor for
other than normal and customary expenses incurred in taking any such action.
	 
	 	5.  	Equitable Assignment. To the extent that any of the Assigned Contracts are not
capable of being sold, assigned, transferred or set over to Assignee without the waiver
or consent of any third person (including a government or governmental unit), or if
such sale, assignment, transfer or setover or attempted sale, assignment, transfer or
setover would constitute a breach thereof or a violation of any law or regulation, this
Assignment shall not constitute a sale, assignment, transfer, or setover or an
attempted sale, assignment, transfer or setover thereof. In those cases where
consents, assignments, releases and/or waivers have not been obtained at or prior to
the date of this Assignment to the transfer and assignment to Assignee of the Assigned
Contracts, this Assignment, to the extent permitted by law, shall constitute an
equitable assignment by Assignor to Assignee of all of Assignor’s rights, benefits,
title and interest in and to the Assigned Contracts, and where necessary or
appropriate, Assignee shall be deemed to be Assignor’s agent for the purpose of
completing, fulfilling and discharging all of Assignor’s rights and liabilities arising
after the date of this Assignment under such Assigned Contracts. Assignor shall use
its best efforts to provide Assignee with the benefits of such Assigned Contracts
(including, without limitation, permitting Assignee to enforce any rights of Assignor
arising under such Assigned Contracts), and Assignee shall, to the extent Assignee is
provided with the benefits of such Assigned Contracts, assume, perform and in due
course pay and discharge all debts, obligations and liabilities of Assignor under such
Assigned Contracts.
	 
	 	6.  	Successors and Assigns. This Assignment shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns.
	 
	 	7.  	Choice of Law. This Assignment shall be executed, performed and interpreted in
accordance with the laws of the State of Delaware (without reference to conflict of
laws principles thereunder).
	 
	 	8.  	Notices. All notices, demands or other communications given under this
Assignment shall be given in accordance with Section 10(e) of the Agreement.
	 
	 	9.  	Counterparts. This Assignment may be signed in one or more counterparts, each
of which shall be deemed an original and together which shall constitute one and the
same instrument.

[Signature Page Follows]

15

 

In Witness Whereof, the parties hereto have executed and delivered this Assignment and
Assumption Agreement as of the date first above written.

	 	 	 	 	 
	 	 	Assignor:
	 
	 	 	 	 
	 	 	Prestwick Scientific Capital, Inc.

a Delaware corporation
	 
	 	 	 	 
	 	 	By:                                                                                 
	

	 	 	 	Stephen X. Graham
	

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	Assignee:
	 
	 	 	 	 
	 	 	KCS Pharmaceuticals, Inc.

a Delaware corporation
	 
	 	 	 	 
	 	 	By:                                                                                 
	

	 	 	 	Kathleen Clarence-Smith
	

	 	 	 	President

16

 

Exhibit A

Assigned Contracts

1. Agreement with Cambridge Laboratories Limited for PL-047, dated September 26, 2002
(tetrabenazine);

2. License Agreement with The General Hospital Corporation for PSC-00410, dated October 6, 2000
(schizophrenia); and

3. License Agreement with Dr. Maurice W. Gittos for PSC-03306, dated June 30, 2001 (sleep apnea).

17

 

Schedule 1

U.S. Patent No. 6,228,875 B1 (the “Tsai patent” owned by Massachusetts General Hospital that is
part of the subject matter of the Company’s License Agreement for PSC-00410) is currently under
reexamination in the U.S. Patent and Trademark Office (USPTO). The reexamination was requested by
an undisclosed third party. In the first Office Action issued in the reexamination, some claims
were found patentable while others were rejected as anticipated or obvious over certain prior art
(including two patents issued to Javitt et al.). Two interviews were conducted with the USPTO
Examiner, who orally indicated that the remaining claims, in amended form, appear to be patentable
over the cited prior art. A response to the first Office Action was filed, and the applicants are
awaiting further action from the USPTO.

Massachusetts General Hospital recently became aware of two additional patents issued to Javitt et
al., U.S. Patent Nos. 6,162,827 and 6,355,681, and have reported these references to the USPTO in
the reexamination proceeding. 6,162,827 is a divisional patent of U.S. Patent No. 5,854,286
(Javitt et al.). It therefore presumably contains the same disclosure as 5,854,286, which was
cited in the reexamination Office Action and so is already of record. 6,355,681 is a
continuation-in-part of 6,162,827 and has a filing date later than the priority date of the Tsai
patent. Thus, any new material added when the continuation-in-part application was filed would not
be citable against the Tsai patent, while any material derived from the parent (6,162,827) is
presumably identical to disclosure already of record.

Assignor is not an owner of this “Tsai patent” and so is not a party to the aforementioned USPTO
office action, but is disclosing such USPTO office action to Assignee in this Agreement in any
event.

18

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