Document:

bond_agreement-dec2008.htm

    
 

     

    ARTESIAN
      WATER COMPANY, INC.

     

    

     

     

    

     

    BOND
      PURCHASE AGREEMENT

     

    

     

     

    

     

    Dated
      as
      of December 1, 2008

     

    

     

     

    

     

    RE:  $15,000,000
      FIRST MORTGAGE BONDS, Series S

     

    Due
      December 31, 2033

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

    ARTESIAN
      WATER COMPANY, INC.

    664
      Churchmans Road

    Newark,
      Delaware 19702

     

    BOND
      PURCHASE AGREEMENT

     

     

    Re:
      $15,000,000 First Mortgage Bonds, Series S

    Due
      December 31, 2033

    
 

    Dated
      as
      of

    December
      1, 2008

    

    CoBank,
      ACB

    5500
      S.
      Quebec Street

    Greenwood
      Village, CO  80111

    Attn:
      Communications and Energy Banking Group

     

    Ladies
      and Gentlemen:

     

    ARTESIAN
      WATER COMPANY, INC., a Delaware corporation (the “Company”) and CoBank, ACB
      (“CoBank” or the “Purchaser”)
      hereby agree as
      follows:

     

    SECTION
      1. 
      DESCRIPTION OF BONDS.

     

    Section
      1.1. Series
      S
      Bonds.

     

      The
      Company proposes to issue $15,000,000 aggregate principal amount of the Series
      S
      Bonds, to be dated the date of their authentication, to mature and be subject
      to
      redemption in a principal amount equal to $150,000 per calendar quarter, payable
      on the first business day of January, April, July and October in each year,
      beginning with the first Business Day of January, 2009, with all outstanding
      principal remaining due and payable on December 31, 2033 (the “Maturity Date”), to bear
      interest from their date of authentication (except as otherwise provided in
      the
“Indenture” (as
      hereinafter defined)) at 6.73% per annum, through and including, March 1, 2016,
      and thereafter at such rate(s) and for such period(s) as provided in the
      Twentieth Supplemental Indenture (as hereinafter defined), such interest payable
      on the first business day of January, April, July and October in each year
      and
      on the Maturity Date, beginning the first business day of January, 2009, and
      to
      be issued as fully registered bonds without coupons under an Indenture of
      Mortgage (the “Original
      Indenture”) dated as of July 1, 1961, between the Company (successor to
      Artesian Resources Corporation, formerly named “Artesian Water Company”) and
      Wilmington Trust Company (the “Trustee”), as Trustee, as
      heretofore supplemented, and as further supplemented by a Twentieth Supplemental
      Indenture (the “Twentieth
      Supplemental Indenture”) dated as of December 1, 2008, between the
      Company and the Trustee, providing for the creation and issuance of the Series
      S
      Bonds.  The Twentieth Supplemental Indenture shall be substantially in
      the form of the draft attached hereto as Exhibit A.  The Original
      Indenture as heretofore supplemented and as further supplemented by the
      Twentieth Supplemental Indenture is hereinafter referred to as the “Indenture.”

     

    Section
      1.2. Definitions.

     

      Capitalized
      terms used and not otherwise defined herein have the respective meanings given
      to such terms in the Indenture.  Except as otherwise specified or as
      the context may otherwise require “Bond Documents” shall mean
      this Agreement, the Indenture and the Bonds, and the “Bonds” shall mean the Series
      S
      Bonds.

     

    SECTION
      2. 
      SALE OF
      BONDS.

     

    Subject
      to the terms and conditions herein set forth, including, without limitation,
      the
      conditions set forth in Section 5 of this Agreement, the Company agrees to
      sell
      to the Purchaser, and the Purchaser agrees to purchase from the Company, not
      more than $15,000,000 principal amount of Bonds at a price of 100% of the
      principal amount thereof.  Notwithstanding any provision of this
      Agreement to the contrary, the Purchaser shall have no obligation to purchase
      any Bond after December 31, 2008.

     

    SECTION
      3. 
      CLOSING.

     

    Section
      3.1. Location.

     

      Delivery
      of, and payment for, the Bonds being purchased by the Purchaser shall be made
      at
      one closing (the “Closing”) to be held at the
      offices of Morris, Nichols, Arsht & Tunnell, LLP, 1201 North Market Street,
      Wilmington, Delaware 19801, on such date, or at such other location, as shall
      be
      mutually agreed upon by the Purchaser and the Company.

     

    Section
      3.2. Payment.

     

      Payment
      shall be made by the Purchaser on the date of the Closing by the wire transfer
      of Federal or other U.S. funds immediately available in the amount of the
      applicable purchase price to such account or accounts as directed by the Company
      or in accordance with other wiring instructions furnished to you in writing
      by
      the Company no less than five (5) days prior to the applicable Closing.

     

    Section
      3.3. Denominations
      and
      Registration.

     

      Delivery
      of the Bonds shall be made to the Purchaser in the form of one or more fully
      registered definitive Bonds in the aggregate principal amount not to exceed
      $15,000,000, each registered in the Purchaser’s name, in such authorized
      denominations as the Purchaser may have specified to the Company at least five
      (5) days prior to the Closing.

     

    SECTION
      4. 
      REPRESENTATIONS.

     

    The
      Company represents and warrants that:

     

    Section
      4.1. Corporate
      Organization and
      Authority.

     

      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Delaware, with corporate power and
      authority to own and operate its properties and to carry on its business as
      now
      conducted, which consists of the gathering, purification, transportation,
      storage and distribution of water solely in the State of
      Delaware.  The Company is a wholly-owned subsidiary of Artesian
      Resources Corporation, a corporation duly incorporated and validly existing
      in
      good standing under the laws of the State of Delaware (the “Corporation”), which as part
      of a corporate restructuring in 1984 changed its name to Artesian Resources
      Corporation and transferred substantially all of the “Mortgaged Property” (as
      defined in the Indenture) subject to the lien of the Indenture to the Company
      which assumed all of the Corporation’s obligations under the Indenture from
      which the Corporation has been released and discharged.  The Company
      has duly and lawfully obtained and maintains all licenses, certificates,
      permits, authorizations, approvals, and the like that are necessary to the
      conduct of its business, or which may be otherwise required by law.

     

    Section
      4.2. Subsidiaries.

     

      The
      Company has no subsidiaries.

     

    Section
      4.3. Financial
      Statements.

     

                (a)  The
      consolidated
      balance sheets of the Company and any subsidiary for the year ended December
      31
      in each of the years 2005, 2006 and 2007 and the related consolidated statements
      of income, retained earnings and cash flows for the years ended on said dates,
      copies of all of which have been furnished to the Purchaser, accompanied by
      a
      report thereon containing an opinion unqualified as to scope limitations imposed
      by the Company and otherwise without qualification except as therein noted,
      by
      BDO Seidman, LLP, have been prepared in accordance with generally accepted
      accounting principles consistently applied and the applicable provisions of
      the
      regulatory authorities having jurisdiction in the premises except as therein
      noted, are correct and complete and present fully and fairly the financial
      position of the Company and any subsidiaries as of such dates and the results
      of
      their operations and changes in their financial position for such
      periods.

     

    (b) Since
      December 31, 2007, there has been no change in the condition, financial or
      otherwise, of the Company as shown on the consolidated balance sheet as of
      such
      date except increases, if any, in its current indebtedness to banks incurred
      for
      working capital and except changes in the ordinary course of business, none
      of
      which individually or in the aggregate has had a material adverse effect upon
      the condition (financial or otherwise), operations, properties or business
      of
      the Company.

     

    (c) All
      budgets, projections, feasibility studies, and other similar documentation
      submitted by the Company to the Purchaser in connection with the transactions
      contemplated by this Agreement were based upon assumptions that were reasonable
      and, as of the date hereof, no fact has come to light, and no event has
      occurred, that would cause any such assumption not to be
      reasonable.

     

    Section
      4.4. Litigation.

     

      There
      are no actions, suits or proceedings pending or to the best of the knowledge
      of
      the Company threatened against or affecting the Company at law or in equity
      or
      before or by any federal, state, municipal or other governmental commission,
      board, bureau, agency or instrumentality, domestic or foreign, that would
      reasonably be expected to involve the possibility of any material judgment
      or
      liability against the Company, or may result in any material, adverse change
      in
      the business or assets or in the condition, financial or otherwise, of the
      Company.  The Company is not in default with respect to any order of
      any court or governmental commission, board, bureau, agency or instrumentality,
      domestic or foreign.

     

    Section
      4.5. Taxes.

     

      The
      Company has filed prior to delinquency all required tax returns and paid all
      applicable federal, state and local taxes, other than taxes not yet due or
      that
      may hereafter be paid without penalty, and the Company has no knowledge of
      any
      material deficiency or additional assessment in connection therewith not
      provided for on the books of the Company.

     

    Section
      4.6. Liens.

     

      The
      Indenture
      constitutes a valid and perfected first priority lien as to the Mortgaged
      Property, subject only to “Permitted Encumbrances” (as
      defined in the Indenture), enforceable against the Company and third parties
      and
      secures the obligations of the Company issued pursuant to the Indenture,
      including the Bonds, and all filings, recordations, and other actions necessary
      to establish and protect such lien as a first priority lien, subject only to
      Permitted Encumbrances, on the Mortgaged Property have been duly taken.

     

    Section
      4.7. Title
      to
      Properties.

     

      The
      Company has good and marketable title in fee simple to all real estate and
      fixed
      property specifically described in the Indenture, subject to the lien of the
      Indenture and Permitted Encumbrances, and the Company has good title to all
      its
      other property and assets reflected on the balance sheet of the Company as
      of
      December 31, 2007 (other than property or assets subsequently disposed of in
      the
      normal and ordinary course of business), except liens for current taxes not
      yet
      due and payable, subject only to liens or other encumbrances either not material
      in the aggregate or described in the financial statements (or notes or schedules
      thereto) of the Company referred to in Section 4.3 of this
      Agreement.  The real estate specifically described in the Indenture
      constitutes substantially all the real estate owned by the
      Company.  None of the real estate or fixed property subject to the
      lien of the Indenture is located outside of New Castle, Kent and Sussex Counties,
      Delaware.  No real property or interests in real property of the
      Company necessary for utility purposes is subject to title defects (other than
      Permitted Encumbrances) that the Company does not have the right to cure by
      condemnation proceedings and that impair the use of such property by the
      Company.  The Permitted Encumbrances to which the Mortgaged Property
      is subject do not in the aggregate materially impair the use of the Mortgaged
      Property taken as a whole for the purposes for which it is to be used by the
      Company and do not materially affect adversely the value of the Mortgaged
      Property.

     

    Section
      4.8. 
      [Reserved]. 

     

    Section
      4.9. Calamities,
      Strikes,
      etc.

     

      Since
      December 31, 2007, the business, properties and assets of the Company have
      not
      been adversely affected in any substantial way as the result of any fire,
      explosion, accident, windstorm, strike, labor disturbance, lockout, combination
      of workmen, requisition or taking of property by the United States or any agency
      thereof or by the State of Delaware or any municipality or other agency thereof,
      flood, drought, embargo, riot, war or act of God or the public enemy.

     

    Section
      4.10. Restrictions
      on the
      Company.

     

      The
      Company is not a party to or bound by any contract, indenture, agreement or
      instrument, or any law, rule or regulation, any judgment or order of any court
      or governmental agency that restricts or limits the right or ability of the
      Company to issue the Bonds or comply with and perform this Agreement; and no
      approval, authorization, consent or withholding of objection on the part of
      any
      governmental authority or regulatory body is necessary in connection with the
      issuance of the Bonds or the entering into this Agreement by the Company, except
      the approval of the Delaware Public Service Commission which has been obtained
      and remains in full force and effect.  No action on the part of any
      shareholder of the Company is necessary in connection with the execution and
      delivery by the Company of and the performance by the Company of its obligations
      under the Bond Documents.

     

    Section
      4.11. No
      Conflicts.

     

      The
      execution and delivery of this Agreement and the consummation of the
      transactions herein contemplated, and the compliance with this Agreement by
      the
      Company, will not conflict with or result in a breach of any of the terms,
      conditions or provisions of, or constitute a default under, or, except as
      contemplated by the Indenture, result in the creation or imposition of any
      lien,
      charge or encumbrance upon any of the property or assets of the Company pursuant
      to the terms of, the charter or by-laws of the Company, or any indenture,
      mortgage, deed of trust or other agreement or instrument to which the Company
      or
      the Corporation is a party, or by which the property or assets of either may
      be
      bound or affected.

     

    Section
      4.12. No
      Defaults.

     

      The
      Company is not
      in default under the Indenture or under any other agreement or instrument under
      which any indebtedness has been issued to the Company, and no event has occurred
      that, but for the giving of notice or lapse of time, would constitute an event
      of default thereunder.

     

    Section
      4.13. Compliance
      with
      Laws.

     

                (a)  The
      Company is not (i) in default with respect to any order, writ, injunction or
      decree of any court or (ii) in default in any material respect under any law,
      ordinance, order, regulation, license or demand (including ERISA, the
      Occupational Safety and Health Act of 1970 and laws and regulations establishing
      quality criteria and standards for air, water, land and toxic waste) of any
      federal, state, municipal or other governmental agency, default under which
      would have consequences that would materially and adversely affect the condition
      (financial or otherwise), operations, properties or business of the Company
      or
      of the Company and its subsidiary on a consolidated basis.

     

    (b) The
      Company is not in violation of any applicable Federal, state or local laws,
      statutes, rules, regulations, ordinances, permit, licenses or authorizations
      relating to public health, safety or the environment, including, without
      limitation, relating to releases, discharges, emissions or disposals to air,
      water, land or ground water, to the withdrawal or use of ground water, to the
      use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or
      urea
      formaldehyde, to the treatment, storage, disposal or management of hazardous
      substances (including, without limitation, petroleum, crude oil or any fraction
      thereof or other hydrocarbons), pollutants or contaminants, to exposure to
      toxic, hazardous or other controlled, prohibited or regulated substances which
      violation could have a material adverse effect on the business, prospects,
      profits, properties or condition (financial or otherwise) of the
      Company.  The Company does not know of any liability or class of
      liability of the Company under the Comprehensive Environmental Response,
      Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601
etseq.),
      or the
      Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section
      6901 etseq.).

     

    Section
      4.14. Validity.

     

      The
      Bonds, when executed, delivered, issued and authenticated and the purchase
      price
      therefor paid, all as contemplated by this Agreement, will be validly
      authorized, issued and outstanding under the Indenture, will constitute legally
      binding obligations of the Company, enforceable in accordance with their terms
      and will be entitled to the benefits of the Indenture, equally and ratably
      with
      all other bonds issued and outstanding thereunder in accordance with the terms
      thereof (subject to any applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws or equitable principles affecting the enforcement
      of
      the rights of creditors).  This Agreement, when duly executed and
      delivered, will be a valid and legally binding instrument in accordance with
      its
      terms.

     

    Section
      4.15. Full
      Disclosure.

     

      The
      financial statements referred to in Section 4.3 of this Agreement do not, nor
      does any other written statement furnished to the Purchaser by the Company
      in
      connection with the negotiation of the sale of the Bonds, contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make
      the statements contained therein or herein not misleading.  There is
      no fact peculiar to the Company that the Company has not disclosed to the
      Purchaser in writing that materially affects adversely nor, so far as the
      Company now can reasonably foresee, will materially affect adversely the
      properties, business, prospects, profits or condition (financial or otherwise)
      of the Company.

     

    Section
      4.16. Use
      of
      Proceeds.

     

      The
      proceeds from the sale of the Bonds will be used to repay short-term indebtedness of the
      Company and finance the expansion of the Company’s headquarters.  None
      of the transactions contemplated in the Agreement (including, without
      limitation, the use of proceeds from the issuance of the Bonds) will violate
      or
      result in a violation of Section 7 of the Securities Exchange Act of 1934,
      as
      amended, or any regulation issued pursuant thereto, including, without
      limitation, Regulations G, T and X of the Board of Governors of the Federal
      Reserve System, 12 C.F.R., Chapter II.  The Company does not intend to
      purchase, with the proceeds from the sale of the Bonds, any “margin stock”
within the meaning of said Regulation G.  None of the proceeds from
      the sale of the Bonds will be used to purchase, or refinance any borrowing
      the
      proceeds of which were used to purchase, any “security” within the meaning of
      the Securities Exchange Act of 1934, as amended.

     

    Section
      4.17. ERISA.

     

    The
      consummation of the transactions provided for in the Agreement and compliance
      by
      the Company with the provisions thereof will not involve any prohibited
      transaction within the meaning of the Employee Retirement Income Security Act
      of
      1974, as amended (“ERISA”) or Section 4975 of the Internal Revenue Code of 1986,
      as amended.  Each “Plan” (as hereinafter defined) complies in all
      material respects with all applicable statutes and governmental rules and
      regulations, and (i) no “Reportable Event” (as hereinafter defined) has occurred
      and is continuing with respect to any Plan, (ii) the Company has not withdrawn
      from any Plan or instituted steps to do so, and (iii) no steps have been
      instituted to terminate any Plan.  No condition exists or event or
      transaction has occurred in connection with any Plan that could result in the
      incurrence by the Company of any material liability, fine or
      penalty.  No Plan maintained by the Company, nor any trust created
      thereunder, have incurred any “accumulated funding deficiency” as defined in
      Section 302 of ERISA nor does the present value of all benefits vested under
      all
      Plans exceed, as of the last annual valuation date, the value of the assets
      of
      the Plans allocable to such vested benefits.  The Company does not
      have any contingent liability with respect to any post-retirement “welfare
      benefit plans” (as such term is defined in ERISA) except as has been disclosed
      to the Purchaser.  As used herein, the following terms shall have the
      meanings set forth:  “Plan” shall mean a “pension
      plan,” as such term is defined in ERISA, established or maintained by the
      Company or as to which the Company contributed or is a member or otherwise
      may
      have any liability; and “Reportable Event” shall have
      the meaning given to such term in ERISA.

     

    Section
      4.18. Principal
      Place of Business;
      Records.

     

      The
      principal place of business and chief executive office of the Company and the
      place where the records of the Company are kept is at the address of the Company
      shown in Section 20 of this Agreement.

     

    Section
      4.19. Rate
      Matters.

     

      The
      Company’s current rates for the provision of water services have been approved
      by all necessary governmental authorities, including, without limitation, the
      Delaware Public Service Commission.  There are no pending, nor to the
      Company’s knowledge, any threatened, proceedings before any governmental
      authority the objective or result of which is or could be to materially reduce
      or otherwise materially change adversely any of the Company’s rates for the
      provision of water services or otherwise have a material adverse effect on
      the
      condition, financial or otherwise, operations, properties or business of the
      Company.  

     

    Section
      4.20. System
      Condition; Water
      Rights.

     

      The
      Company’s utility facilities reasonably meet present demand in all material
      respects, are constructed in a good and workmanlike manner, are in good working
      order and condition, and comply in all material respects with all applicable
      laws.  The Company has water rights with such quantities, priorities
      and qualities as are necessary adequately to service the present and reasonably
      anticipated needs of its customers.  The Company controls, owns, or
      has access to all such water rights free and clear of the interest of any third
      party which would individually or in the aggregate materially adversely affect
      the Company’s intended use thereof and has not suffered or permitted any
      transfer or encumbrance of such water rights, has not abandoned such water
      rights, or any of them, and has not done any act or thing which would materially
      impair or cause a material loss of any such water rights.

     

    Section
      4.21. Condemnation
      Powers.

     

      The
      Company has the right under Delaware law to exercise the power of eminent
      domain; in any proceeding pursuant to which the Company exercises its power
      of
      eminent domain, the compensation to be paid by the Company would be based only
      on the value of the property actually taken and would not include compensation
      for the value of improvements made by the Company to the property
      condemned.

     

    Section
      4.22. Investment
      Company
      Act.

     

      The
      Company is not an “investment company” as that term is defined in, or otherwise
      subject to regulation under, the Investment Company Act of 1940, as
      amended.

     

    SECTION
      5. CLOSING
      CONDITIONS.

     

    The
      Purchaser’s obligation to purchase the Bonds shall be subject to the
      satisfaction of the following conditions on or prior to the date of the
      applicable Closing:

     

    Section
      5.1. Legal
      Opinions.

     

      The
      Purchaser shall have received opinions of counsel for the Company and the
      Corporation (who shall be acceptable to the Purchaser) in form and content
      acceptable to the Purchaser, as to such matters related to the transactions
      contemplated hereby as the Purchaser may reasonably request, including, without
      limitation, the following:

     

    (a) From
      Morris, Nichols, Arsht & Tunnell, LLP, counsel for the Company, an opinion,
      in form and substance reasonably satisfactory to the Purchaser and the
      Purchaser’s special counsel, as to such matters as the Purchaser may reasonably
      require, including, without limitation, the following:

     

    (i) The
      Twentieth Supplemental Indenture has been duly authorized, executed and
      delivered by the Company and constitutes a legally valid and binding obligation
      of the Company, enforceable against the Company in accordance with its terms,
      subject to any applicable bankruptcy, insolvency, reorganization, receivership,
      fraudulent conveyance, moratorium or other laws or equitable principles
      affecting the enforcement of creditors’ rights and remedies, as from time to
      time in effect (regardless of whether such enforceability is considered in
      a
      proceeding in equity or at law).

     

    (ii) The
      Bonds
      have been duly authorized, executed, authenticated and delivered in accordance
      with the terms of the Indenture, and are legally valid and binding obligations
      of the Company enforceable in accordance with their terms, and are entitled
      to
      the benefits and security of the Indenture equally and ratably with all other
      bonds issued thereunder in accordance with its terms, subject to any applicable
      bankruptcy, insolvency, reorganization, receivership, fraudulent conveyance,
      moratorium or other laws or equitable principles affecting the enforcement
      of
      creditors’ rights and remedies, as from time to time in effect (regardless of
      whether such enforceability is considered in a proceeding in equity or at law).
      Without limiting the generality of the preceding sentence, the Bonds are subject
      to redemption in accordance with the terms of this Agreement.

     

    (iii) This
      Agreement has been duly authorized, executed and delivered by the Company and
      constitutes a legally valid and binding obligation of the Company enforceable
      against the Company in accordance with its terms subject to any applicable
      bankruptcy, insolvency, reorganization, receivership, fraudulent conveyance,
      moratorium or other laws or equitable principles affecting the enforcement
      of
      creditors’ rights and remedies, as from time to time in effect (regardless of
      whether such enforceability is considered in a proceeding in equity or at
      law).

     

    (iv) It
      is not
      necessary in connection with the sale of the Bonds to the Purchaser under the
      circumstances contemplated by this Agreement that such Bonds be registered
      under
      the Securities Act of 1933, as now in effect, or that the Indenture be qualified
      under the Trust Indenture Act of 1939, as now in effect.

     

    (v) The
      Company is a duly organized and validly existing corporation in good standing
      under the laws of the State of Delaware and the Company has full corporate
      power
      and authority to carry on its business as now conducted and to enter into and
      perform the transactions contemplated by this Agreement.

     

    (vi) The
      Company has filed with the Delaware Public Service Commission all information
      and documents required by law in connection with the issuance and sale of the
      Bonds by the Company and all necessary approvals of such commission in
      connection therewith have been obtained.  No other approval of, or
      filing with, any public body is required in connection with such issuance and
      sale, except for a report to said commission following issuance of the
      Bonds.  The order entered by said commission authorizing the issuance
      and sale of the Bonds is not subject to any suspension, modification, or appeal
      that would affect the terms or the validity of such Bonds.

     

    (vii) The
      authorization, execution, delivery and performance of this Agreement, the
      Twentieth Supplemental Indenture and the Bonds will not violate or constitute
      a
      default under any law, requirement or restriction imposed on the Company by
      any
      judicial or governmental instrumentality, the charter or bylaws of the Company
      or, to the best of the knowledge of such counsel after due inquiry, any
      agreement or instrument to which the Company is a party or by which it or its
      property and assets may be bound or affected.

     

    (b) From
      Whittington & Aulgur, counsel for the Company, an opinion, in form and
      substance reasonably satisfactory to the Purchaser and the Purchaser’s special
      counsel, as to such matters as the Purchaser may reasonably require, including,
      without limitation, the following:

     

    (i) The
      Original Indenture and the first through eighteenth supplemental indentures
      have
      been duly authorized, executed and delivered by the Corporation or the Company,
      as applicable, and each constitutes a legally valid and binding obligation
      of
      the Company, enforceable against the Company in accordance with its terms,
      subject to any applicable bankruptcy, insolvency, reorganization, receivership,
      fraudulent conveyance, moratorium or other laws or equitable principles
      affecting the enforcement of creditors’ rights and remedies, as from time to
      time in effect (regardless of whether such enforceability is considered in
      a
      proceeding in equity or at law).

     

    (ii) The
      Company has good and marketable title in fee simple to all real estate
      specifically described in the Indenture, except property released from the
      lien
      of the Indenture in accordance with the terms thereof, subject to no lien other
      than the lien of the Indenture and Permitted Encumbrances, and the Indenture
      by
      its terms subjects to the lien thereof substantially all real estate and fixed
      property owned by the Company at the time of any delivery of the
      Bonds.

     

    (iii) The
      Company possesses, with minor exceptions or qualifications, such valid
      franchises, water rights, licenses or permits, free from unduly burdensome
      restrictions, as are necessary for the adequate conduct of the business of
      the
      Company as now conducted.

     

    (iv) The
      Indenture and all necessary Uniform Commercial Code financing statements have
      been duly filed for recordation in such manner and in such places as are
      required by law in order to establish, preserve and protect the lien of the
      Indenture on all real estate and fixed property of the Company described in
      the
      Indenture as subject to the lien thereof.

     

    (v) The
      Indenture creates a valid, binding and direct, first lien on all real estate
      and
      fixed property of the Company described therein as subject to the lien thereof
      and owned by the Company at the time of the issuance of the Bonds, subject
      to no
      liens or encumbrances other than Permitted Encumbrances.

     

    Section
      5.2. Representations
      and
      Warranties.

     

      The
      representations and warranties of the Company contained in Sections 4 and 6
      of
      this Agreement shall be true at and as of the date of the Closing with the
      same
      effect as if made at and as of said date.

     

    Section
      5.3. Fee
      and
      Expenses.

     

      Concurrently
      with consummation of the Closing hereunder, the Company shall pay to the
      Purchaser an origination fee of Fifty Thousand Dollars ($50,000), and shall
      pay
      the expenses required to be paid by the Company pursuant to Section 7 of this
      Agreement.

     

    Section
      5.4. PSC
      Approval.

     

      The
      Delaware Public Service Commission shall have approved (subject to no condition
      or conditions deemed by the Company or the Purchaser to be unduly burdensome
      to
      the Company) the issuance and sale of the Bonds and the order entered by said
      Commission authorizing the issuance and sale of such Bonds shall be in effect
      on
      the date of the Closing and shall not be subject to any suspension, modification
      or appeal that would adversely affect the terms or the validity of such
      Bonds.

     

    Section
      5.5. Bond
      Documents.

     

      The
      Purchaser shall have received duly executed originals of this Agreement, the
      Twentieth Supplemental Indenture and the Bonds.

     

    Section
      5.6. Authorization.

     

      The
      Purchaser shall have received copies of all corporate documents and proceedings
      of the Company authorizing the execution, delivery and performance of the Bond
      Documents.

     

    Section
      5.7. Approvals.

     

      The
      Purchaser shall have received evidence reasonably satisfactory to the Purchaser
      that all federal and state consents and approvals that are necessary for the
      execution and delivery of, or required as a condition of the validity and
      enforceability of, the Bond Documents or the creation or perfection of the
      liens
      and security interests identified therein have been obtained and are in full
      force and effect.

     

    Section
      5.8. Environmental
      Matters.

     

      The
      Purchaser shall have received from the Company such information regarding
      environmental compliance and conditions associated with the Company’s assets as
      the Purchaser shall reasonably require, all such information to be reasonably
      satisfactory to the Purchaser.

     

    Section
      5.9. No
      Material Adverse
      Change.

     

      From
      December 31, 2007, to the date of the Closing, there shall not have occurred
      any
      event that has had or could have a material adverse effect on the condition,
      financial or otherwise, operations, properties or business of the
      Company.

     

    Section
      5.10. No
      Injunction.

     

      No
      court or other government body or public authority shall have issued an order
      that shall then be in effect restraining or prohibiting the completion of the
      transactions contemplated hereby.

     

    Section
      5.11. Event
      of
      Redemption.

     

      No
      Event of Redemption (as that term is defined in Section 11 of this Agreement)
      shall have occurred or exist, and there shall have occurred no event that with
      the passage of time or the giving of notice, or both, could become an Event
      of
      Redemption.

     

    Section
      5.12. Officer’s
      Certificate.

     

      The
      Purchaser shall have received a certificate, in form and substance reasonably
      satisfactory to the Purchaser, signed by an officer of the Company certifying
      as
      to the continuing truth and accuracy of the representations and warranties
      of
      the Company under the Bond Documents, the satisfaction of each of the conditions
      to the Closing and such other matters as Purchaser shall reasonably
      require.

     

    Section
      5.13. Repayment
      of Certain
      Indebtedness.

     

      The
      Purchaser shall have received evidence, in form and substance reasonably
      satisfactory to the Purchaser, that, after payment of the fees and expenses
      pursuant to Section 5.3 and Section 7, a portion of the proceeds of the Series
      S
      Bonds have been used to repay indebtedness and other obligations of the Company
      under certain non-CoBank line(s) of credit.

     

    Section
      5.14. Other
      Information;
      Etc.

     

      All
      instruments incident to the authorization, issue and sale of the Bonds and
      all
      proceedings taken in connection with the transactions contemplated by this
      Agreement shall be reasonably satisfactory in form and substance to the
      Purchaser and the Purchaser’s special counsel, and the Purchaser shall have
      received such other information regarding the condition, financial or otherwise,
      and operations of the Company as the Purchaser shall reasonably request and
      such
      other opinions, certificates or documents as the Purchaser shall reasonably
      request.

     

    SECTION
      6. 
      PRIVATE
      PLACEMENT EXEMPTION.

     

    Section
      6.1. Company
      Representation.

     

      The
      Company represents and warrants that it has not, directly or indirectly, sold
      or
      offered, or attempted to offer or dispose of, any of the Bonds to or solicited
      any offers to buy any of the Bonds from, or otherwise approached or negotiated
      in respect thereof with, any person or persons other than the Purchaser.

     

    Section
      6.2. Purchaser
      Representations
      and Agreement.

     

      The
      Purchaser represents, acknowledges and agrees as follows:

     

    (a) The
      Purchaser is an “accredited investor” as defined in Rule 501(a) of the
      Securities Act of 1933.

     

    (b) This
      Agreement is made with the Purchaser in reliance upon the Purchaser’s
      representation to the Company, which by the Purchaser’s acceptance hereof and by
      the Purchaser’s purchase of the Bonds hereunder the Purchaser confirms, that the
      Purchaser is purchasing the Bonds for the Purchaser’s own account, for
      investment and with no present intention of distributing the Bonds or any part
      thereof, but without prejudice, however, to the Purchaser’s right at all times
      to sell or otherwise dispose of all or any part of the Bonds under a
      registration under the Securities Act of 1933, as amended, or under an exemption
      from such registration available under such Act.  It is understood
      that the disposition of the Purchaser’s property shall at all times be and
      remain within the Purchaser’s control.  The Purchaser further
      represents that either:  (i) no part of the funds to be used by the
      Purchaser to purchase the Bonds constitutes assets allocated to any separate
      account maintained by the Purchaser; or (ii) no part of the funds to be used
      by
      the Purchaser to purchase the Bonds constitutes assets allocated to any separate
      account maintained by the Purchaser such that the application of such funds
      constitutes a prohibited transaction under Section 406 of ERISA; or (iii) all
      or
      a part of such funds constitute assets of one or more separate accounts
      maintained by the Purchaser, and the Purchaser has disclosed to the Company
      the
      names of such employee benefit plans whose assets in such separate account
      or
      accounts exceed 10% of the total assets of such separate account as of the
      date
      of such purchase and the Company has advised the Purchaser in writing (and
      in
      making the representations set forth in this clause (iii) the Purchaser is
      relying on such advice) that the Company is not a party-in-interest nor are
      the
      Bonds employer securities with respect to the particular employee benefit plan
      disclosed to the Company by the Purchaser as aforesaid (for the purpose of
      this
      clause (iii), all employee benefit plans maintained by the same employer or
      employee organizations are deemed to be a single plan).  As used in
      this Section 6.2, the terms “separate account,” “party-in-interest,” “employer
      securities” and “employee benefit plan” shall have the respective meanings
      assigned to them in ERISA.  The Company’s obligation to sell the Bonds
      to the Purchaser hereunder is subject to the condition that at that Closing
      the
      Purchaser confirms, by accepting delivery of the Bonds, the aforesaid
      representations as if made at such time.

     

    (c) The
      Purchaser acknowledges that the Purchaser has been informed that the Bonds
      will
      not be registered under the Securities Act of 1933, as amended, by reason of
      their issuance in a transaction exempt from the registration requirements of
      said Act pursuant to Section 4(2) thereof, and accordingly, must be held
      indefinitely unless (i) such Bonds are registered under said Act and the
      Indenture is qualified under the Trust Indenture Act (neither of which the
      Company has any obligation to do), or (ii) such Bonds are sold or transferred
      in
      a transaction that qualifies as an exempt transaction under the Act and any
      other applicable securities laws and all rules and regulations promulgated
      thereunder and, to the extent requested by the Company, the Purchaser provides
      an opinion of counsel reasonably satisfactory to the Company to such
      effect.

     

    (d) The
      Purchaser agrees that the instrument or instruments representing the Bonds
      and
      issued to the Purchaser pursuant hereto may bear the following
      legend:

     

    THIS
      BOND
      HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
      NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO
      THE
      PROVISIONS OF SAID SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
      IS AVAILABLE.

     

    SECTION
      7. 
      PAYMENT
      OF EXPENSES; BROKERAGE FEES.

     

    Whether
      or not the transaction herein contemplated is consummated, the Company agrees
      to
      pay (i) all expenses in connection with the printing, issuance and delivery
      of
      the Bonds, (ii) the reasonable fees and out-of-pocket disbursements of
      Sutherland Asbill & Brennan LLP, the Purchaser’s special counsel in
      connection with the preparation, execution and delivery of this Agreement,
      (iii)
      the Purchaser’s reasonable out-of-pocket expenses incident to the preparation,
      execution and delivery of this Agreement, and so long as the Purchaser holds
      any
      of the Bonds, all such expenses relating to any amendment, waivers or consents
      to this Agreement or the Indenture, whether the same are actually executed
      and
      delivered, (iv) the cost of obtaining a private placement number, and (v) all
      expenses incurred by the Purchaser in connection with proceedings brought to
      enforce compliance by the Company with respect to any of its obligations under
      this Agreement or the Bonds.  The Company also agrees to pay the cost
      of delivering to the Purchaser’s home office or to the office of the custodian
      of the Purchaser’s securities, insured to the Purchaser’s satisfaction, the
      Bonds purchased by the Purchaser.  The Company agrees to protect and
      indemnify the Purchaser against any liability for any and all brokerage fees
      and
      commissions payable or claimed to be payable in connection with the transactions
      contemplated by this Agreement.  The Purchaser represents that the
      Purchaser has not engaged any broker or securities dealer in connection with
      the
      Purchaser’s purchase of the Bonds.

     

    SECTION
      8. 
      FAILURE
      OF CONDITIONS.

     

    In
      the
      event that the sale of the Bonds herein contemplated is not carried out by
      reason of the inability of either party to fulfill any of the conditions
      specified in Section 5 of this Agreement, neither party shall be responsible
      to
      the other for damages, or the expenses of the other party, or otherwise by
      reason of such inability except as otherwise provided in Section 7 of this
      Agreement and the portion, if any, of the commitment fee previously paid by
      the
      Company to the Purchaser.

     

    SECTION
      9. 
      FURNISHING FINANCIAL AND OTHER INFORMATION.

     

    The
      Company agrees so long as the Purchaser, or any institutional holder (that
      is an
“accredited investor” as defined in Rule 501(a) of the Securities Act of 1933)
      or other holder, hold any of the Bonds then outstanding, as follows:

     

    (a) Annual
      Financial Statements
      of the Company.  As soon as available and in any event within
      one hundred twenty (120) days after the close of each fiscal year of the
      Company, the Company will deliver to the Purchaser (and any such institutional
      or other holder), copies in duplicate of:

     

    (i)  consolidated
      balance sheets of the Company and its subsidiaries as of the close of such
      fiscal year, and

     

    (ii)  consolidated
      statements of income, retained earnings and cash flow of the Company and its
      subsidiaries for such fiscal year,

     

    in
      each
      case setting forth in comparative form the consolidated figures for the
      preceding fiscal year, all in reasonable detail and accompanied by an opinion
      thereon of a firm of independent public accountants of recognized national
      standing selected by the Company to the effect that the consolidated financial
      statements have been prepared in conformity with generally accepted accounting
      principles consistently applied and present fairly the financial condition
      of
      the Company and its subsidiaries as of the end of such fiscal year and the
      results of their operations for the fiscal year then ended and a written
      statement from such accountants that their examination in connection with such
      financial statements has been made in accordance with generally accepted
      auditing standards and auditing procedures as were considered necessary in
      the
      circumstances, and, to the extent applicable, disclosing all defaults by the
      Company in the performance of any obligation or under its certificate of
      incorporation of which they have obtained knowledge in making the examination
      necessary to their opinion.

     

    (b) Financial
      Statements of the
      Corporation.

     

    (i) Quarterly
      Statements.  As soon as available and in any event within forty
      five (45) days after the end of each quarterly fiscal period (except the last)
      of each fiscal year, the Company will deliver to the Purchaser (and any such
      institutional or other holder) copies of:

     

    (A)  consolidated
      balance sheets of the Corporation and its subsidiaries as of the close of such
      quarterly period, and

     

    (B)  consolidated
      statements of income, retained earnings and cash flows of the Corporation and
      its subsidiaries, for such quarterly period and for the portion of the fiscal
      year ending with such period,

     

    in
      each
      case setting forth in comparative form the figures for the corresponding period
      of the preceding fiscal year, all in reasonable detail and certified as
      presenting fairly the financial condition of the Corporation and its
      subsidiaries as of the end of such period and the results of their operations
      for such period, subject to changes resulting from year-end adjustments, by
      the
      chief financial officer of the Corporation.

     

    (ii) Annual
      Statements.  As soon as available and in any event within one
      hundred twenty (120) days after the close of each fiscal year of the
      Corporation, the Company will deliver to the Purchaser (and any such
      institutional or other holder), copies in duplicate of:

     

    (A)  consolidated
      balance sheets of the Corporation and its subsidiaries as of the close of such
      fiscal year, and

     

    (B)  consolidated
      statements of income, retained earnings and cash flow of the Corporation and
      its
      subsidiaries for such fiscal year,

     

    in
      each
      case setting forth in comparative form the consolidated figures for the
      preceding fiscal year, all in reasonable detail and accompanied by an opinion
      thereon of a firm of independent public accountants of recognized national
      standing selected by the Corporation to the effect that the consolidated
      financial statements have been prepared in conformity with generally accepted
      accounting principles consistently applied and present fairly the financial
      condition of the Corporation and its subsidiaries as of the end of such fiscal
      year and the results of their operations for the fiscal year then ended and
      a
      written statement from such accountants that their examination in connection
      with such financial statements has been made in accordance with generally
      accepted auditing standards and auditing procedures as were considered necessary
      in the circumstances, and, to the extent applicable, disclosing all defaults
      by
      the Corporation in the performance of any obligation or under its certificate
      of
      incorporation of which they have obtained knowledge in making the examination
      necessary to their opinion.

     

    (c) SEC
      and Other Related
      Reports.  The Company will deliver to the Purchaser (and any
      such institutional holder), promptly upon their becoming available, copies
      of
      all registration and proxy statements and reports that the Company or the
      Corporation shall file with the Securities and Exchange Commission or any
      successor and corresponding governmental agency, and copies of such financial
      statements, reports, proxy statements and returns as it, or the Corporation,
      shall send to its or their stockholders or to the Trustee or file with any
      securities exchange.

     

    (d) Requested
      Information.  The Company with reasonable promptness shall
      furnish the Purchaser (and any such institutional holder) such other data and
      information as may reasonably be requested.

     

    (e) Officer’s
      Annual
      Certificate.  Concurrently with delivery of the financial
      statements referred to in clause (a) of this Section 9, the Company will deliver
      to the Purchaser (and any such institutional or other holder) a certificate
      of
      its President or its Treasurer or Controller stating that after a review of
      the
      Company’s affairs to the best of his or her knowledge after due inquiry the
      Company is not in default under this Agreement or any covenant of the Indenture
      nor is there any “Event of
      Default” (as defined in the Indenture) or any Event of Redemption
      hereunder, or other event or condition that with the passage of time or the
      giving of notice would result in such an Event of Default or Event of
      Redemption.

     

    (f) Inspection.  The
      Company will permit the Purchaser (and any such institutional holder), or such
      person or persons as the Purchaser (or such institutional holder) may designate
      in writing, to visit and inspect any of the properties of the Company and to
      examine its books of account and discuss its affairs, finances and accounts
      with
      its officers and independent public accountants (and by this provision the
      Company authorizes said accountants to discuss with the Purchaser the finances
      and affairs of the Company), all at such reasonable times and as often as the
      Purchaser (or such institutional holder) may desire; provided that the
      Purchaser (or such institutional holder) shall bear the cost of any such
      inspection.

     

    (g) Notice
      of
      Default.  Promptly after becoming aware thereof, the Company
      will deliver to the Purchaser notice of (i) the occurrence of any (a) Event
      of
      Redemption or (b) any event that with the passage of time or the giving of
      notice, or both, could become an Event of Redemption, (c) any Event of Default,
      or (d) any event that with the passage of time or the giving of notice, or
      both,
      could become an Event of Default, or (ii) the occurrence of any material breach,
      default, event of default, or event that with the giving of notice or lapse
      of
      time, or both, could become a breach, default, or event of default under any
      agreement, indenture, mortgage, or other instrument (other than the Bond
      Documents) to which the Company is a party or by which it or any of its property
      is bound or affected if the effect of such breach, default, event of default
      or
      event is to accelerate, or to permit the acceleration of, the maturity of any
      indebtedness in excess of Five Hundred Thousand Dollars ($500,000) under such
      agreement, indenture, mortgage, or other instrument provided, however,
      that the
      failure to give such notice shall not affect the Purchaser’s rights and power to
      exercise any and all of the remedies specified herein.

     

    (h) Notice
      of Non-Environmental
      Litigation.  Promptly after the commencement thereof, the
      Company will deliver to the Purchaser notice of the commencement of all actions,
      suits, or proceedings before any court, arbitrator, or governmental department,
      commission, board, bureau, agency, or instrumentality affecting it that, if
      adversely determined, could have a material adverse effect on the business
      or
      assets or on the condition, financial or otherwise, of the Company.

     

    (i) Notice
      of Environmental
      Matters.  Without limiting the provisions of clause (h)
      above, promptly after receipt thereof, the Company will deliver to the Purchaser
      notice of its receipt of all pleadings, orders, complaints, indictments, or
      other written communications alleging a condition that would reasonably be
      expected to require the Company to undertake or to contribute to a cleanup
      or
      other response under any environmental law, or that seeks material penalties,
      damages, injunctive relief, or criminal sanctions related to alleged violations
      of any environmental law, or that makes any material claim for personal injury
      or property damage as a result of environmental factors or conditions or that,
      if adversely determined, could otherwise have a material adverse effect on
      the
      Company.

     

    (j) ERISA
      Reportable
      Events.  Within 10 days after the Company becomes aware of the
      occurrence of any Reportable Event (as defined in Section 4043 of ERISA) with
      respect to the Company, a statement describing such Reportable Event and the
      actions proposed to be taken in response to such Reportable Event.

     

    SECTION
      10. 
      COVENANTS.

     

    The
      Company covenants and agrees that on and after the date hereof, so long as
      any
      Bond shall be outstanding and shall be held by the Purchaser, without the
      Purchaser’s prior written consent:

     

    Section
      10.1. Compliance
      With Laws and
      Agreements.

     

      The
      Company will, and will cause each of its subsidiaries to, comply with (i) all
      applicable statutes, rules, regulations, orders and restrictions of all
      governmental authorities and of any court, arbitrator or grand jury, in respect
      of the conduct of their respective businesses and the ownership of their
      respective properties (including, without limitation, applicable statutes,
      rules, regulations, orders and restrictions relating to equal employment
      opportunities or environmental laws), the violation of which could reasonably
      be
      expected to have a material adverse effect on the business or assets or the
      condition, financial or otherwise, of the Company; and (ii) all agreements,
      indentures, mortgages and other instruments to which it is a party or by which
      it or any of its property is bound, the violation of which could reasonably
      be
      expected to have a material adverse effect on the business or assets or the
      condition, financial or otherwise, of the Company.

     

    Section
      10.2. Capitalization.

     

      The
      Company agrees to purchase such equity in the Purchaser as the Purchaser may
      from time to time require in accordance with its Bylaws and Capital Plan (as
      each may be amended from time to time), except that the maximum amount of equity
      that the Company may be required to purchase in the Purchaser in connection
      with
      the Series S Bonds may not exceed the maximum amount permitted by the Bylaws
      at
      the time this Agreement is entered into.  The rights and obligations
      of the parties with respect to such equity and any distributions made on account
      thereof or on account of Borrower’s patronage with CoBank shall be governed by
      the Purchaser’s Bylaws and Capital Plan (as each may be amended from time to
      time).  The Company hereby consents and agrees that the amount of any
      distributions with respect to its patronage with the Purchaser that are made
      in
      qualified written notices of allocation (as defined in 26 U.S.C. § 1388)
      and that are received by the Company from the Purchaser, will be taken into
      account by the Company at the stated dollar amounts whether the distribution
      is
      evidenced by a Participation Certificate or other form of written notice that
      such distribution has been made and recorded in the name of the Company on
      the
      records of the Purchaser.  All such investments and all other equities
      that the Company may now own or hereafter acquire or be allocated in the
      Purchaser shall be subject to a statutory first lien in favor of the
      Purchaser.  The Purchaser shall not be obligated to set off or
      otherwise apply such equities to the Company’s obligations to the
      Purchaser.

     

    Section
      10.3. Licenses,
      Etc.

     

      The
      Company will duly and lawfully obtain and maintain in full force and effect
      all
      licenses, certificates, permits, authorizations, approvals and the like that
      are
      material to the conduct of its business or that otherwise may be required by
      laws, to the extent the failure to do so could have a material adverse effect
      on
      its business, assets or condition, financial or otherwise.

     

    Section
      10.4. Water
      Rights.

     

      The
      Company will maintain and procure water rights with such quantities, priorities
      and qualities as are necessary adequately to serve the present and reasonably
      anticipated needs of its customers.  The Company will continue to
      control, own or have access to all such water rights free and clear of the
      interest of any third party, will not suffer or permit any transfer or
      encumbrance of such water rights, will not abandon such water rights, or any
      of
      them, and will not do any act or thing which would impair or cause the loss
      of
      such water rights.

     

    Section
      10.5. Loans
      and
      Investments.

     

      The
      Company will not, after the date hereof, make any loan or advance to, invest
      in,
      purchase or make any commitment to purchase any commercial paper, stock, bonds,
      notes, or other securities of any person or entity (each, whether made directly
      or indirectly, (an “Investment”), other than:

     

    (a) commercial
      paper maturing not in excess of one year from the date of acquisition and rated
      “P1” by Moody’s Investors Service, Inc., or “A1” by Standard & Poor’s
      Corporation on the date of acquisition;

     

    (b) certificates
      of deposit in North American commercial banks rated “C” or better by Keefe,
      Bruyette & Woods, Inc., or “3” or better by Cates Consulting Analysts,
      maturing not in excess of one year from the date of acquisition;

     

    (c) securities
      or deposits issued, guaranteed, or fully insured as to payment by the United
      States government or any agency thereof, and Class C Stock or other securities
      of the Purchaser;

     

    (d) repurchase
      agreements of any bank or trust company incorporated under the laws of the
      United States of America or any state thereof and fully secured by a pledge
      of
      obligations issued or fully and unconditionally guaranteed by the United States
      government;

     

    (e) stocks
      and other voting securities that are not included within the scope of clauses
      (a) through (d) above and are issued by corporations or other entities not
      engaged in any business other than the water or wastewater utility business
      and
      that are incorporated or organized under the laws of the United State of America
      or any state thereof; provided that prior to or as a result of such investment
      the Company holds not less than seventy five percent (75%) of the voting
      securities of such corporation or entity; and

     

    (f) commercial
      paper, bonds, stocks or other securities that are not included within the scope
      of clauses (a) through (e) above and are issued by corporations or other
      entities incorporated or organized under the laws of the United State of America
      or any state thereof (collectively, “Other Investments”); provided
      that the aggregate amount (calculated based on cost) of all such Other
      Investments shall not at any time exceed One Million Dollars
      ($1,000,000).

     

    Section
      10.6. Guarantees.

     

      The
      Company will not guarantee, assume or otherwise become obligated or liable
      with
      respect to the indebtedness or other obligations of any person or entity, other
      than in the ordinary course of its business.

     

    Section
      10.7. Mergers;
      Acquisitions;
      Etc.

     

      The
      Company will not merge or consolidate with any other entity unless the Company
      shall be the continuing and surviving corporation and, after such merger or
      consolidation, there shall exist no Event of Redemption or event that, with
      the
      passage of time or giving of notice, or both, would constitute an Event of
      Redemption, or commence operations under any other name, organization or entity,
      including any joint venture.

     

    Section
      10.8. Transfer
      of
      Assets.

     

      The
      Company will not sell, transfer, lease, enter into any contract for the sale,
      transfer or lease of, or otherwise dispose of, any of its assets, except in
      the
      ordinary course of its business.

     

    Section
      10.9. Change
      in
      Business.

     

      The
      Company will not engage in any business activity or operation different from
      or
      unrelated to its current business activities or operations.

     

    Section
      10.10. Distributions.

     

      The
      Company will not make, declare or pay, directly or indirectly, any dividend
      or
      other distribution of assets to shareholders of the Company, or retire, redeem,
      purchase or otherwise acquire for value any shares of stock of the Company,
      if
      such dividend, distribution, retirement, redemption, purchase or acquisition
      would cause the Company’s consolidated capital to be less than Seventy Five
      Million Dollars ($75,000,000).

     

    SECTION
      11. 
      REDEMPTION.

     

    Section
      11.1. Events
      of Redemption
      Defined.

     

      The
      following events are herein called “Events of Redemption”:

     

    (a) Representations
      and
      Warranties.  Any representation or warranty made by the Company
      herein shall prove to have been false or misleading in any material respect
      on
      or as of the date made; or

     

    (b) Certain
      Covenants.  The failure by the Company to perform or comply
      with any covenant set forth in Section 9 (excluding Sections 9(g), (h) and
      (i)),
      Section 10, Section 16, Section 17, or Section 18 of this Agreement, and such
      failure continues for thirty (30) days after written notice thereof shall have
      been delivered by the Purchaser to the Company; or

     

    (c) Other
      Covenants.  The failure by the Company to perform or comply
      with any other covenant or agreement set forth in Section 9(g), 9(h) or 9(i)
      of
      this Agreement; or

     

    (d) Cross-Default.  The
      occurrence of any Event of Default under, or lapse of or failure on the part
      of
      the Company to observe, keep, or perform any covenant or agreement contained
      in
      any other agreement (other than the Bond Documents) between the Company and
      the
      Purchaser, including, without limitation, any guaranty, loan agreement, security
      agreement, pledge agreement, indenture, mortgage or other agreement;
      or

     

    (e) Other
      Indebtedness.  Default under any bond, debenture, note or other
      evidence of indebtedness for any money borrowed by the Company in excess of
      Five
      Hundred Thousand Dollars ($500,000) or under any mortgage, indenture or
      instrument under which there may be issued or by which there may be secured
      or
      evidenced any indebtedness of the Company  in excess of Five Hundred
      Thousand Dollars ($500,000), whether such indebtedness exists or shall hereafter
      be created, which default has not been waived and shall constitute a failure
      to
      pay any portion of the interest accruing on or the principal of such
      indebtedness when due and payable after the expiration of any applicable grace
      period with respect thereto or shall have resulted in such indebtedness becoming
      or being declared due and payable prior to the date on which it would otherwise
      have become due and payable, without such indebtedness having been discharged,
      or such acceleration having been rescinded or annulled; or

     

    (f) Judgment.  The
      rendering against the Company of a judgment for the payment of moneys in excess
      of Five Hundred Thousand Dollars ($500,000) and the continuance of such judgment
      unsatisfied and without stay of execution thereon for a period
      of  forty-five (45) days after the entry of such judgment, or the
      continuance of such judgment unsatisfied for a period of forty-five (45) days
      after the termination of any stay of execution thereon entered within such
      first
      mentioned forty-five (45) days; or

     

    Section
      11.2. Redemption.

     

      In
      the event that any Event of Redemption shall have occurred and be continuing,
      the Purchaser shall have the right to require the Company, and the Company
      shall
      be obligated, to redeem all Bonds then held by the Purchaser.  Any
      such redemption shall be made by the Company on the “Mandatory Redemption Date” (as
      hereinafter defined), as specified in the “Notice of Redemption” (as
      hereinafter defined).  Notice of Redemption shall mean written notice
      (i) signed by the President or any Vice President of the Purchaser, (ii) sent
      to
      the Company and the Trustee, (iii) dated the date it is sent to the Company
      and
      the Trustee, (iv) specifying the Mandatory Redemption Date, which shall be
      no
      less than thirty (30) days from the date of such notice, and (v) specifying
      the
      Event of Redemption or Events of Redemption requiring such redemption under
      this
      Section 11.  The Notice of Redemption shall be sent to the Company and
      the Trustee by express mail or overnight courier service.  The Bonds
      shall be redeemed at a purchase price equal to the redemption price for such
      Bonds specified in the Twentieth Supplemental Indenture.

     

    Section
      11.3. Suits
      for
      Enforcement.

     

      If
      any Event of Redemption shall have occurred and be continuing, in addition
      to
      its rights under Section 11.2 of this Agreement, the Purchaser may proceed
      to
      protect and enforce its rights, either by suit in equity or by action at law,
      or
      both, whether for the specific performance of any covenant or agreement
      contained in this Agreement or in aid of the exercise of any power granted
      in
      this Agreement, or the Purchaser may proceed to enforce the payment of all
      sums
      due upon any Bond held by the Purchaser or to enforce any other legal or
      equitable right of the Purchaser.

     

    The
      Company covenants that, if it shall default in the making of any payment due
      under any Bond or in the performance or observance of any agreement contained
      in
      this Agreement and other Bond Documents, it will pay to the Purchaser such
      further amounts, to the extent lawful, as shall be sufficient to pay the
      reasonable costs and expenses of collection or of otherwise enforcing the
      Purchaser’s rights, including reasonable counsel fees.

     

    Section
      11.4. Remedies
      Cumulative.

     

      No
      remedy herein conferred upon the Purchaser (including, without limitation,
      the
      rights under this Section 11) is intended to be exclusive of any other remedy
      and each and every such remedy shall be cumulative and shall be in addition
      to
      every other remedy given hereunder or under any other Bond Document or now
      or
      hereafter existing at law or in equity or by statute or otherwise.

     

    Section
      11.5. Remedies
      Not
      Waived.

     

      No
      course of dealing between the Company and the Purchaser and no delay or failure
      in exercising any right hereunder or under any Bond and other Bond Document
      in
      respect thereof shall operate as a waiver of any of the rights of the
      Purchaser.

     

    SECTION
      12. 
      SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES, ETC.

     

    All
      covenants, agreements and representations made by the Company or by the
      Purchaser herein or in any certificate delivered pursuant hereto shall be deemed
      to have been relied upon by the party hereto for whose benefit such covenant,
      agreement or representation was made and shall survive delivery of and payment
      for the Bonds.  The Purchaser’s obligation to purchase the Bonds
      shall, however, remain subject to the accuracy of the Company’s representations
      contained herein without modification unless and until the Purchaser shall
      have
      so accepted such modification.  It is understood that in entering into
      this Agreement the Purchaser has not relied on any oral representation or
      warranty or information made or given to the Purchaser orally by anyone acting
      on behalf of the Company.

     

    SECTION
      13. 
      LOST
      BONDS.

     

    If
      the
      Purchaser (or any institutional holder that is an “accredited investor” as
      defined in Rule 501(a) under the Securities Act of 1933) is the registered
      owner of any Bond, then an affidavit of the Purchaser’s (or such institutional
      holder’s) authorized officer setting forth the fact of loss, theft or
      destruction and of the Purchaser’s (or such institutional holder’s) ownership of
      any such Bond at the time of such loss, theft or destruction shall be accepted
      as satisfactory evidence thereof and no indemnity, other than the Purchaser’s
      (or such institutional holder’s) written agreement to indemnify the Company and
      the Trustee, shall be required as a condition to the issuance of a new Bond
      or
      the making of any payment under Section 2.12 of the Original
      Indenture.  At the Closing, the Company will deliver to you the signed
      consent of the Trustee to the provision of this Section 13.

     

    SECTION
      14. 
      PAYMENTS.

     

    All
      payments of principal, interest and premium, if any, upon any Bond registered
      in
      the Purchaser’s name or in the name of any nominee designated by you shall be
      made by wire transfer of immediately available funds for advice to and credit
      of
      CoBank to ABA No. 3070-8875-4, reference:  CoBank for the benefit of
      Artesian Water Company, Inc. (or to such other account as the Purchaser may
      direct by notice).  Funds received by wire before 3:00 p.m. Eastern
      time shall be credited on the day received and funds received by wire after
      3:00
      p.m. Eastern time shall be credited on the next business day.  The
      Purchaser or the Purchaser’s nominee shall not be required to present or
      surrender any of the Bonds for notation of partial payments or redemptions
      in
      order to receive payment of any monies then due thereon.  All other
      notices to the Purchaser shall be given in accordance with the provisions of
      Section 20.2(b) hereof.  The Company will make payments or cause them
      to be made by the Trustee in accordance with the foregoing without requiring
      such prior presentation or surrender of such Bonds.  The Purchaser
      agrees that neither the Purchaser nor any nominee designated by the Purchaser
      will dispose of any such Bond without having first noted thereon the amounts
      of
      any payment made thereon other than interest; the Purchaser will also notify
      the
      Company and the Trustee of the name and address of any transferee of such
      Bond.  The Purchaser agrees to reimburse the Company and/or the
      Trustee for any loss suffered by either of them by reason of payments so made
      without requiring prior presentation or surrender of any such
      Bond.  At each applicable Closing, the Company will deliver to the
      Purchaser the signed consent of the Trustee pursuant to the provisions of this
      Section 14.

     

    SECTION
      15. 
      DELIVERY
      EXPENSE.

     

    If
      the
      Purchaser surrenders any Bond to the Company or a transfer agent of the Company
      for exchange for Bonds of other denominations or for registration in another
      name or names, the Company will pay the reasonable cost of insurance and
      delivery to such place as the Purchaser may designate from the Company or its
      transfer agent of the Bond or Bonds issued in substitution or replacement for
      the surrendered Bond.

     

    SECTION
      16. 
      USE OF
      PROCEEDS COVENANT.

     

    The
      Company hereby covenants and agrees that the Company will apply the proceeds
      of
      the sale of the Bonds to (i) repay short-term indebtedness,
      and (ii) finance the expansion of the Company’s headquarters building.

     

    SECTION
      17. 
      TAXES.

     

    The
      Company will pay all taxes (including interest and penalties) that may be
      payable in respect of the execution and delivery of this Agreement or the
      Indenture or of the execution and delivery (but not the transfer) of any of
      the
      Bonds or of any amendment of, or waiver or consent under or with respect to,
      this Agreement, the Indenture or any of the Bonds and will hold the Purchaser
      harmless against any loss or liability resulting from nonpayment or delay in
      payment of any such tax.  The obligations of the Company under this
      Section 17 shall survive the payment of the Bonds.

     

    SECTION
      18. 
      INDEMNIFICATION.

     

    The
      Company hereby agrees to indemnify, exonerate and hold the Purchaser and each
      of
      the Purchaser’s officers, directors, employees and agents (collectively herein
      called the “Indemnitees”
and individually called
      an “Indemnitee”) free and harmless
      from and against any and all actions, causes of action, suits, citations,
      losses, liabilities, damages and expenses, including, without limitation,
      reasonable attorney’s fees and disbursements (collectively herein called the
“Indemnified Liabilities”) incurred, suffered, sustained or required to be paid
      by the Indemnitees or any of them as a result of, or arising out of, or relating
      to (a) the issuance or sale hereunder of the Bonds (including any requirements
      to register or qualify the Bonds under any applicable securities Law), (b)
      transactions financed in whole or in part directly or indirectly with proceeds
      of any of the Bonds, (c) the exercise, protection or enforcement of your rights,
      remedies, powers or privileges under this Agreement, or (d) the
      failure of the Company to comply with the provisions of this Agreement or the
      presence of hazardous materials on, or the escape, seepage, leakage, spillage,
      discharge, emission or release of hazardous materials from, any of the
      properties of the Company or any site, facility or location to which any
      material, products, wastes or other substances from or attributable to the
      business or operations of the Company have been transported for treatment,
      disposal, storage or deposit or the applicability of any environmental law
      relating to hazardous materials to any such property, site, facility or
      location, except for any such Indemnified Liabilities arising on account of
      such
      Indemnitee’s negligence or willful misconduct, and if and to the extent that the
      foregoing undertaking may be unenforceable for any reason, the Company hereby
      agrees to make the maximum contribution to the payment and satisfaction of
      each
      of the Indemnified Liabilities that is permissible under applicable
      law.  The obligations of the Company under this Section 18 shall
      survive the payment of the Bonds.

     

    SECTION
      19. 
      CONFIDENTIALITY.

     

    The
      Purchaser (and any such institutional or other holder) shall keep the
      information obtained pursuant to Section 4 (to the extent not otherwise publicly
      disclosed) confidential and shall not disclose the same, except:

     

    (i) as
      may be
      appropriate in connection with enforcing compliance with the terms and
      conditions of this Agreement,

     

    (ii) as
      may be
      required or appropriate in any report, statement or testimony submitted to
      or
      required by any municipal, state, or Federal regulatory body, agency, authority
      or commission having or claiming to have jurisdiction over you or such
      institutional or other holder, or

     

    (iii) as
      may be
      necessary in connection with any sale of or participation in the Bonds to or
      by
      any prospective bona fide purchaser or participant;

     

    and
      at
      the Purchaser’s request the Company will furnish duplicate copies of any of such
      financial statements, information or reports.

     

    SECTION
      20. 
      MISCELLANEOUS.

     

    Section
      20.1. Successors
      and Assigns;
      Legend.

     

      The
      Company may not transfer or assign any of its rights or obligations hereunder
      without the Purchaser’s prior written consent, which consent shall not be
      unreasonably withheld.  From time to time, the Purchaser may sell to
      one or more banks, financial institutions or other lenders a participation
      in
      one or more of the loans or other extensions of credit made pursuant to this
      Agreement.  However, no such participation shall relieve the Purchaser
      of any commitment made to the Company hereunder.  In connection with
      the foregoing, the Purchaser may disclose information concerning the Company
      and
      its subsidiaries, if any, to any participant or prospective participant,
      provided that such participant or prospective participant agrees to keep such
      information confidential.  A sale of a participation interest may
      include certain voting rights of the participants regarding the loans hereunder
      (including without limitation the administration, servicing and enforcement
      thereof).  The Purchaser agrees to give written notification to the
      Company of any sale of a participation interest.  All agreements
      herein by or on behalf of the Purchaser shall bind and inure to the benefit
      of
      the Purchaser’s successors, transferees and assigns (including, but not limited
      to, any purchaser or transferee of the Bonds) and the Purchaser agrees that
      the
      instrument or instruments representing the Bonds issued to the Purchaser
      pursuant hereto may bear the following legend:

     

    THIS
      BOND
      HAS BEEN ISSUED PURSUANT TO AND IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
      BOND PURCHASE AGREEMENT DATED AS OF DECEMBER 1, 2008 BETWEEN THE COMPANY AND
      COBANK, ACB, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
      COMPANY.

     

    Section
      20.2. Notices.

     

      All
      communications provided for hereunder shall be in writing, and

     

    (a) if
      to the
      Company, mailed
      by “Express Mail” or certified mail to:

     

    Artesian
      Water Company, Inc.

    664
      Churchmans Road

    Newark,
      Delaware 19702

     

    in
      either
      case to the attention of its Secretary and Chief Financial Officer, or at such
      other address as shall be set forth in a notice given in the same manner.

     

    (b) if
      to the
      Purchaser, similarly mailed or delivered to the Purchaser as set forth in Schedule I hereto,
      or
      at such other address as shall be set forth in a notice given in the same
      manner.

     

    Section
      20.3. Governing
      Law.

     

      This
      Agreement, the Indenture and the Bonds shall be governed by the laws of the
      State of Delaware.

     

    Section
      20.4. Counterparts.

     

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

     

    Section
      20.5. Amendments.

     

      This
      Agreement may not be amended except by an instrument in writing signed by the
      parties hereto, and the respective rights and obligations set forth in this
      Agreement shall be binding on and inure to the benefit of the parties hereto
      and
      their respective successors and assigns.

     

    Section
      20.6. Severability.

     

      Should
      any part of this Agreement for any reason be declared invalid by a court of
      competent jurisdiction, such decision shall not affect the validity of any
      remaining portion, which remaining portion shall remain in force and effect
      as
      if this Agreement had been executed with the invalid portion thereof
      eliminated.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    If
      the
      foregoing is in accordance with the Purchaser’s understanding of our agreement,
      please sign and return to the Company the enclosed copy hereof, whereupon this
      Agreement shall become a binding agreement between us.

     

    

    Very
      truly yours,

    

    ARTESIAN
      WATER COMPANY, INC.

    

    

    By:                                                                           
      

          David
      B. Spacht

          Its
      Chief Financial Officer and Treasurer

    

    

    

    Attest:                                                                           
      

               Its
      Executive Vice President and Secretary

    

    

    

    (Signatures
      Continued On Next Page)

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

     

    (Signatures
      Continued From Previous Page)

    

    

    

    
      	
              ACKNOWLEDGED
                AND

              AGREED
                TO THIS 1st DAY

              OF
                DECEMBER, 2008.

            	
              COBANK,
                ACB

              
              

              
              

              
              

              By:                                                      
                

                    David
                Dornbirer

                    Vice
                President

            
	 	 

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
 

    SCHEDULE
      I

     

    (to
      Bond
      Purchase Agreement)

     

    

    
      	
              NAME
                AND ADDRESS OF PURCHASER

            	
              PRINCIPAL
                AMOUNT OF BONDS TO BE PURCHASED

            
	 	 
	
              COBANK,
                ACB

              5500
                S. Quebec Street

              Greenwood
                Village, CO  80111

              Attention:  Communications
                and Energy

                Banking
                Group

              Telefacsimile:  (303)
                224-2556

              Confirmation:  (303)
                740-4310

            	
              $15,000,000
                (Series S)

            

    

    

    

    

    

    All
      notices concerning payment on or in respect of the Bonds, to:

    

    CoBank,
      ACB

    5500
      S.
      Quebec Street

    Greenwood
      Village, CO  80111

    Attention:  Communications
      and Energy Banking Group

    

    

    All
      notices and communications other than those in respect

    to
      payments to be addressed as first provided above.

    

    Name
      of
      Nominee in which Bonds are to be issued:  None

    

    Taxpayer
      ID # 84-1286705

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      I

    (to
      Bond
      Purchase Agreement)exv10w22

EXHIBIT 10.22

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

JOINT DEVELOPMENT AGREEMENT

     THIS JOINT DEVELOPMENT AGREEMENT (this “Agreement”) dated as of November 26, 2008 (the
“Effective Date”) is entered into between Medicis Pharmaceutical Corporation, a Delaware
corporation with offices located at 7720 North Dobson Road, Scottsdale, Arizona 85256 on behalf of
itself and its Affiliates (collectively, “Medicis”), and Impax Laboratories, Inc., a Delaware
corporation with offices located at 30831 Huntwood Avenue, Hayward, California 94544 on behalf of
itself and its Affiliates (collectively, “Impax”).

     WHEREAS, Medicis is the owner or otherwise has rights to certain patents, formulations and
know-how related to its minocycline products marketed as of the Effective Date under the trademark
Solodyn® (the “Original Products”);

     WHEREAS, Impax has the expertise and know-how to conduct a joint development program with
Medicis to create a next generation derivative of the Original Products and to research, develop
and commercialize certain generic drugs, and Impax has certain proprietary intellectual property
that will be useful to Medicis with respect to such next generation derivative of the Original
Products; and

     WHEREAS, Medicis desires to collaborate with Impax regarding the research and development of
(a) the next generation derivative of the Original Products, and (b) certain generic drugs in
exchange for a share of the Gross Profit (as defined below), all on the terms and conditions of
this Agreement.

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

     1. DEFINITIONS.

          1.1 “XXXXX NDA” means the following NDA, which was approved prior to the Effective Date: NDA
#XXXXX.

          1.2 “XXXXX NDC” means the following NDCs: XXXXX.

          1.3 “XXXXX Products” means one or more products that are generic equivalents of the products
that are (a) marketed under the trademark XXXXX and (b) approved pursuant the XXXXX NDA or a
supplement thereto and/or sold under an XXXXX NDC, in each case at any strength, dosage or form;
provided that with respect to any obligations on Impax under Section 5.1.1 or Medicis’ milestone
payment obligations under Sections 6.2(e) or (f), “XXXXX Product” shall mean only the XXXXX mg
strength.

 

 

          1.4 “Affiliate” means, with respect to any entity, any other entity that directly or
indirectly controls, is controlled by, or is under common control with, such entity. An entity
shall be regarded as in control of another entity if it owns, or directly or indirectly controls,
at least fifty percent (50%) of the voting stock or other ownership interest of the other entity,
or if it directly or indirectly possesses the power to direct or cause the direction of the
management and policies of the other entity by any means whatsoever.

          1.5 “ANDA” means an Abbreviated New Drug Application and any supplements thereto.

          1.6 “ANDA Product” means each of the following products (including any future packaging
changes or pack sizes): (a) the XXXXX Products; (b) the XXXXX Products; (c) the XXXXX Products;
and (d) the XXXXX Products.

          1.7 “Authorized Product” means any product that is in the same form as a New Product approved
under a NDA held by Medicis or its sublicensee but is relabeled and marketed as a generic product.

          1.8 “Confidential Information” means all non-public materials, information and data concerning
the disclosing party and its operations that is disclosed the disclosing party to the receiving
party pursuant to the Confidentiality Agreement, this Agreement, the License Agreement or the
Distribution Agreement (as defined in the License Agreement), orally or in written, electronic or
tangible form, or otherwise obtained by the receiving party through observation or examination of
the disclosing party’s operations. Confidential Information includes, but is not limited to,
information about the disclosing party’s financial condition and projections; business, marketing
or strategic plans; sales information, customer lists; price lists; databases; trade secrets;
product prototypes and designs; techniques, formulae, algorithms and other non-public process
information. Notwithstanding the foregoing, Confidential Information of a party shall not include
that portion of such materials, information and data that, and only to the extent, the recipient
can establish by written documentation: (a) is known to the recipient as evidenced by its written
records before receipt thereof from the disclosing party, (b) is disclosed to the recipient free of
confidentiality obligations by a Third Party who has the right to make such disclosure without
obligations of confidentiality, (c) is or becomes part of the public domain through no fault of the
recipient, or (d) the recipient can reasonably establish is independently developed by persons on
behalf of recipient without the use of the information disclosed by the disclosing party.

          1.9 “Confidentiality Agreement” means the letter agreement dated February 24, 2008 from David
Greenbaum, counsel for Medicis Pharmaceutical Corporation, to Roger Chin, counsel for Impax
Laboratories, Inc.

          1.10 “Control” means with respect to any material, information, or intellectual property
right, that a party (a) owns such material, information, or intellectual property right, or (b) has
a license or right to use such material, information, or intellectual property right, in each case
with the ability to grant to the other party access, a right to use, a license, or a sublicense (as
applicable) to such material, information, or intellectual property right on the terms and

2

 

conditions set forth herein, without violating the terms of any agreement or other arrangement
with any Third Party.

          1.11 “Cost of Sales” means, on a per ANDA Product basis and for a given calendar quarter, the
sum of the Manufacturing Costs, Distribution and Sales Costs, and Third Party IP Costs for such
ANDA Product sold during such calendar quarter.

          1.12 “Development Plan” means the plan for the research and development of the New Product,
which plan shall be consistent with Section 2.1, prepared by the parties and periodically updated
upon mutual written agreement of the parties.

          1.13 “Development Program” means the development program described in Section 2.1.

          1.14 “Diligent Efforts” means with respect to the research, development or commercialization
of a product, as applicable, efforts and resources commonly used in the pharmaceutical industry for
a product at a similar stage of research, development or commercialization, and having similar
market potential. Diligent Efforts shall be determined by taking into account the characteristics
of the product, the technical risk and stage of research, development, or commercialization of the
product, the cost-effectiveness of efforts or resources applied towards such product, the
competitiveness of alternative Third Party products that are or are expected to be in the relevant
marketplace, the regulatory and business environment, the likelihood of achieving the goal of such
research or of obtaining regulatory approval and product reimbursement (as applicable), the
profitability of the product (without taking into account any payments to be made to other party
pursuant to this Agreement) and the relative potential for product liability exposure. Diligent
Efforts shall be determined on a product and market basis, and it is anticipated that the level of
efforts and resources will change over time reflecting changes in the status of the product or the
market involved.

          1.15 “Distribution and Sales Costs” means, on a per ANDA Product basis and for a given
calendar quarter, (a) an amount equal to XXXXX% of Net Sales of such ANDA Product during such
quarter, which amount shall serve as an estimate of the costs for the distribution of such ANDA
Product by Impax for use or sale in the Territory, including freight, insurance and other costs of
shipping such ANDA Product, (b) an amount equal to XXXXX% of Net Sales of such ANDA Product in the
Territory during such quarter, which amount shall serve as an estimate of the costs of marketing,
selling and promoting such ANDA Product, and (c) the actual direct cost incurred with respect to
XXXXX.

          1.16 “XXXXX NDA” means the following NDA, which was approved prior to the Effective Date: NDA
#XXXXX.

          1.17 “XXXXX NDC” means the following NDCs: XXXXX.

          1.18 “XXXXX Products” means one or more products that are generic equivalents of the products
that are (a) marketed under the trademark XXXXX and (b) approved pursuant the XXXXX NDA or a
supplement thereto and/or sold under a XXXXX NDC, in each case at any strength, dosage or form;
provided that with respect to any obligations on Impax

3

 

under Section 5.1.1, “XXXXX Product” shall mean only the XXXXX strengths and further provided
that Impax’s obligations under Section 5.1.2 and XXXXX Product, as defined below.

          1.19 “XXXXX Product” means the XXXXX Product.

          1.20 “Exclusion Lists” mean: (a) the HHS/OIG List of Excluded Individuals/Entities (available
through the Internet at http://www.oig.hhs.gov); and (b) the General Services
Administration’s List of Parties Excluded from Federal Programs (available through the Internet at
http://www.epls.gov).

          1.21 “FDA” means the United States Food and Drug Administration or any successor entity
thereto.

          1.22 “FD&C Act” means the United States Federal Food, Drug and Cosmetic Act, as may be amended
from time to time.

          1.23 “Gross Profit” means, on a per ANDA Product basis and for a given calendar quarter, the
remainder, if any, that results from Net Sales of such ANDA Product in the Territory minus the Cost
of Sales of such ANDA Product. XXXXX.

          1.24 “Impax Know-How Rights” means all trade secret and other know-how rights in and to all
data, information, compositions and other technology (including, but not limited to, formulae,
procedures, protocols, techniques and results of experimentation and testing) which are necessary
or useful to make, use, develop or sell the New Product and which Impax Controls as of the
Effective Date or during the term of this Agreement; provided, however, that the foregoing shall
not apply to any trade secret or other know-how rights in and to all data, information,
compositions or other technology that that (a) is Controlled by an entity that becomes an Affiliate
of Impax as a result of such entity’s or its Affiliate’s acquisition of Impax and (b) was
Controlled by such entity prior to such acquisition.

          1.25 “Impax IP Rights” means the Impax Patent Rights and Impax Know-How Rights.

          1.26 “Impax Patent Rights” means all patents and patent applications (including utility, model
and design patents and certificates of invention) in any country of the world that claim or cover
the New Product or the manufacture or use thereof and that Impax (but not including any entity that
first becomes an Affiliate of Impax after the Effective Date) Controls as of the Effective Date or
during the term of this Agreement; provided, however, that the foregoing shall not apply to any
patent or patent application that (a) is Controlled by an entity that becomes an Affiliate of Impax
as a result of such entity’s or its Affiliate’s acquisition of Impax and (b) was Controlled by such
entity prior to such acquisition.

          1.27 “Ineligible Person” means a person who: (a) is currently excluded, debarred, suspended,
or otherwise ineligible to participate in the Federal health care programs or in Federal
procurement or non-procurement programs; or (b) has been convicted of a criminal offense that falls
within the ambit of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, suspended, or
otherwise declared ineligible.

4

 

          1.28 “License Agreement” means the License and Settlement Agreement between Medicis and Impax
dated as of the Effective Date.

          1.29 “Manufacturing Costs” means (a) the delivered cost to Impax of an ANDA Product for use or
sale in the Territory if a Third Party is the manufacturer of such ANDA Product, or (b) where Impax
is itself the manufacturer, the sum of Materials Costs, labor costs, Overhead and Freight And Taxes
incurred by Impax to produce such ANDA Product for use or sale in the Territory, including the
costs of rejected or failed batches of such ANDA Product. As used herein, “Materials Cost” means
Impax’s procurement costs for (i) raw materials (both active and inactive ingredients), and (ii)
packaging, labeling and storing materials, incurred in connection with the manufacture, testing,
labeling, purchasing and distribution of such ANDA Product; “Overhead” means all indirect costs of
manufacturing such ANDA Product including, without limitation, insurance, inspection, testing,
quality control and quality assurance, depreciation, maintenance and repair costs, all as
determined in accordance with the U.S. GAAP, and “Freight And Taxes” means all insurance, freight
and shipping charges, import taxes and duties and similar taxes and duties levied by the United
States or other government entity with jurisdiction, and port and loading charges, all to the
extent not already deducted under Distribution and Sales Costs.

          1.30 “NDA” means a New Drug Application as defined in the FD&C Act or FDA Regulations (21
CFR).

          1.31 “Net Sales” means, with respect to a given ANDA Product or New Product, the aggregate
gross price of such ANDA Product or New Product received, in the case of an ANDA Product, by Impax
or its sublicensees or, in the case of a New Product, by Medicis or its sublicensees (except with
respect to a sublicensee’s sales of Authorized Products), in each case from unaffiliated retailers,
distributors or other customers, less the sum of the following items, all of which must directly
relate to the sale and distribution of such ANDA Product or New Product and be determined in
accordance with GAAP applied in a manner consistent with past practices of the applicable party:
(a) returns, credits, rebates, discounts, allowances, promotional payments, free goods, chargebacks
and other price reduction programs customary to the trade or required by law, (b) actual packaging,
freight and insurance costs incurred in transporting such New Product in final form to customers
(this clause (b) shall not apply to ANDA Products, for which an allowance has already been
incorporated into Distribution and Sales Costs), (c) sales, valued-added and other taxes, (d)
customs duties, surcharges and other governmental charges, (e) administrative fees, marketing fees
and other similar fees, payments or credits paid to unaffiliated third parties customary to the
trade or required by law, and (f) commercially reasonable write-offs for doubtful accounts. Sales
between or among a party and its Affiliates shall not be included in Net Sales unless such party or
its Affiliates are the end user of such ANDA Product or New Product, as applicable.

          1.32 “New Product” means (a) a product that (i) contains XXXXX and (ii) is to be developed by
the parties under this Agreement with the goal of achieving the Target Product Profile, or (b) any
other product agreed to in writing by the parties to serve as a substitute for the product
described in subsection (a) above (in which case the product descried in subsection (a) shall cease
to be a “New Product”), in each case including any XXXXX.

5

 

          1.33 “New Product Technology” means all discoveries, inventions, improvements and other
technology that is developed by Impax, Medicis or both in the conduct of the Development Program.

          1.34 “Non-Specific Technology” means any of the New Product Technology (including without
limitation manufacturing processes) that is not specific to the New Product.

          1.35 “XXXXX NDA” means the following NDA, which was approved prior to the Effective Date: NDA
#XXXXX.

          1.36 “XXXXX NDC” means the following NDCs: XXXXX.

          1.37 “XXXXX Products” means one or more products that are generic equivalents of the products
that are (a) marketed under the trademark XXXXX and (b) approved pursuant the XXXXX NDA or a
supplement thereto and/or sold under an XXXXX NDC, in each case at any strength, dosage or form;
provided that with respect to any obligations on Impax under Sections 5.1.1 and 5.1.2 and XXXXX
strength.

          1.38 “XXXXX Field” means XXXXX.

          1.39 “Regulatory Approval” means, with respect to a particular regulatory jurisdiction, the
approval of a NDA or its equivalent in such regulatory jurisdiction by the applicable regulatory
authority in such regulatory jurisdiction and such other regulatory approvals as are required in
order to market the New Product in such regulatory jurisdiction.

          1.40 “XXXXX NDA” means the following NDA, which was approved prior to the Effective Date: NDA
#XXXXX.

          1.41 “XXXXX NDC” means the following NDCs: XXXXX.

          1.42 “XXXXX Products” means one or more products that are generic equivalents to the products
that are (a) marketed under the trademark XXXXX and (b) approved pursuant the XXXXX NDA or a
supplement thereto and/or sold under a XXXXX NDC, in each case at any strength, dosage or form;
provided that with respect to any obligations on Impax under Section 5.1.1 and XXXXX strength.

          1.43 “Steering Committee” means the committee composed of representatives of Impax and Medicis
described in Section 2.3 below.

          1.44 “Target Product Profile” means the product criteria set forth in Exhibit A.

          1.45 “Territory” means the United States of America including its territories and possessions.

          1.46 “Third Party” means any person or entity other than Medicis or Impax.

6

 

          1.47 “Third Party IP Costs” means, on a per ANDA Product basis and for a given calendar
quarter, the royalties and other payments (including upfront fees and milestone payments) paid by
Impax to a Third Party in consideration for a license or other rights to intellectual property
necessary or useful for the manufacture, development, commercialization, use, or sale of such ANDA
Product in the Territory.

          1.48 “Valid Claim” means a claim in an issued patent, whether such patent issues before, on or
after the Effective Date, in the Impax Patent Rights or any issued patent owned by Medicis pursuant
to Section 3.3, in each case that has not: (a) expired or been canceled; (b) been declared invalid
by a decision of a court or other appropriate body of competent jurisdiction from which no appeal
has been timely taken or may be taken (e.g., as a result of denial of a petition for writ of
certiorari); (c) been admitted to be invalid or unenforceable through reissue or disclaimer,
provided that actions taken during reexamination shall not, prior to the issuance of a final
certificate of reexamination, be construed as admissions of invalidity or unenforceability of the
claims contained in such patent prior to the initiation of such reexamination; or (d) been
abandoned.

     2. DEVELOPMENT PROGRAM; STEERING COMMITTEE.

          2.1 Overview. The goal of the Development Program is to develop the New Product.
Each party’s obligations under the Development Program shall be as set forth in this Section 2.1 or
as agreed in writing by the parties after the Effective Date. Each party shall use commercially
reasonable efforts to timely conduct its obligations under the Development Programs in accordance
with the Development Plan. Subject to Medicis’ payment of the amount set forth in Section 6.1,
each party shall bear its own costs to conduct its obligations under the Development Program.
Impax shall use commercially reasonable efforts to use its proprietary technology in existence as
of the Effective Date to formulate a product that meets or approaches the Target Product Profile
and to perform standard in vitro analytic testing upon such resulting New Product to determine
whether it meets the Target Product Profile criteria. Without limiting the generality of the
foregoing, Impax shall perform XXXXX. Impax shall also provide a reasonable amount of technical
advice to Medicis with respect to pre-clinical manufacturing scale up work for the New Product.
For clarity, Impax shall not have any obligation to (i) XXXXX, (ii) perform any manufacturing
scale up work for the New Product, (iii) manufacture the New Product for clinical XXXXX or
commercial use, (iv) make any filings with the FDA or any other regulatory agency with respect to
the New Product, (v) conduct any clinical trials for the New Product XXXXX or (vi) conduct any
commercialization-related activities with respect to the New Product. Impax shall not incorporate
any know-how, patented technology or other intellectual property Controlled by Impax into the New
Product, the New Product Technology or the manufacturing process therefor without notifying Medicis
in writing. If Medicis notifies Impax in writing, within thirty (30) days of Impax’s notice, that
Medicis, based on its freedom to operate analysis, has a good faith concern that the use of such
know-how, technology or intellectual property with respect to the New Product may infringe the
intellectual property of a Third Party, then the parties will discuss such matter and, if such
discussion does not reasonably resolve Medicis’ concern, then Medicis will notify Impax in writing
within thirty (30) days of such discussion and Impax, following receipt of such notice, will not
incorporate such know-how, technology or intellectual property into the New Product.

7

 

          2.2 Amendment of Development Plan. The Development Plan may be amended from time to
time by mutual written agreement of the parties or by the Steering Committee pursuant to Section
2.3.1.

          2.3 Steering Committee.

               2.3.1 Composition of the Steering Committee. The Steering Committee shall foster the
collaborative relationship between the parties and shall in particular monitor the progress of the
Development Program and Impax’s progress with respect to the ANDA Products. The Steering Committee
shall be comprised of two (2) named representatives of Impax and two (2) named representatives of
Medicis. Each party shall appoint its respective representatives to the Steering Committee from
time to time, and may substitute one or more of its representatives, in its sole discretion,
effective upon notice to the other party of such change but shall use commercially reasonable
efforts to maintain stability of Steering Committee representation. The Steering Committee shall
not have the power to amend the terms of this Agreement but shall have the power to change the
Development Plan upon agreement of at least one (1) representative of the Steering Committee from
each party.

               2.3.2 Meetings. The Steering Committee shall meet not less than four (4) times each
calendar year, on such dates and at such times and places as agreed to by Impax and Medicis,
alternating between Scottsdale, Arizona and Hayward, California or such other locations as the
parties shall agree, including without limitation via teleconference. At such meetings, the
Steering Committee shall discuss the progress of the Development Program and set priorities
therefor.

               2.3.3 Committee Actions. Any approval, determination or other action agreed to by all
of the members of the Steering Committee present at the relevant Steering Committee meeting shall
be the approval, determination or other action of the Steering Committee; provided, however, that
at least one (1) representative of each party is present at such meeting, and that such approval,
determination or other action is documented in (a) a writing signed by a representative of each
party at such meeting or (b) the approved minutes for such meeting. The Steering Committee also
may act by unanimous written consent without a meeting or between meetings.

               2.3.4 Steering Committee Minutes and Reports. One representative of each party shall
be designated to take minutes of each Steering Committee meeting. Within fifteen (15) days
following each Steering Committee meeting during the term of the Agreement, the Steering Committee
shall prepare and provide to each party a reasonably detailed written report which shall summarize
the outcome of the meeting.

               2.3.5 Term. The term of the Steering Committee shall commence on the Effective Date
and continue until Impax has completed its obligations under the Development Plan.

          2.4 Records. Impax shall maintain complete and accurate records of all work it
conducts under the Development Program and all results, data and developments made in connection
therewith. Such records shall be complete and accurate and shall fully and properly

8

 

reflect all work done and results achieved in the performance of the Development Program in
sufficient detail and in good scientific manner appropriate for patent and regulatory purposes.
Medicis shall have the right to review and copy such records (including raw data and scientific
notebooks) at reasonable times to the extent necessary for Medicis to exercise its rights under
this Agreement with respect to New Product Technology and the development and commercialization of
the New Product.

          2.5 Reports. Within thirty (30) days following the end of each calendar quarter
during the term of the Development Program, Impax shall prepare and deliver to Medicis a written
summary report which shall describe the research performed to date under the Development Program
and all results, analysis and conclusions thereof.

     3. INTELLECTUAL PROPERTY.

          3.1 Research License. During the term of the Development Program, Medicis hereby
grants to Impax a fully paid, non-exclusive, non-transferable (except as permitted in Section 11.6)
license (without the right to grant sublicenses), under all patents, know-how and other
intellectual property rights Controlled by Medicis, for the sole purpose of conducting the
Development Program. Prior to engaging any subcontractors to perform work under the Development
Program, Impax shall notify Medicis in writing of the names and addresses of the subcontractors so
that Medicis may screen such subcontractors against the Exclusion Lists and any other legal
requirements. If, within fourteen (14) days following submission of the list to Medicis, Medicis
does not object to the use of such subcontractors on the basis that such subcontractors fail to
comply with the foregoing requirements or the representations under Section 9.2, Impax may proceed
with use of such subcontractors. The foregoing shall not relieve Impax of its requirements under
Section 9.2.

          3.2 License Grants.

               3.2.1 Subject to the terms and conditions of this Agreement, Impax hereby grants to Medicis an
exclusive, royalty-bearing, irrevocable, non-transferable (except as permitted in Section 11.6),
worldwide license (with the right to grant sublicenses through multiple tiers) under the Impax IP
Rights, to make, have made, use, offer for sale, sell and import the New Product.

               3.2.2 Subject to the terms and conditions of this Agreement, Medicis hereby grants to Impax a
perpetual, royalty-free, fully paid, irrevocable, non-transferable (except as permitted in Section
11.6), worldwide exclusive license (with the right to grant sublicenses through multiple tiers)
under the patent and other intellectual property rights owned by Medicis pursuant to Section 3.3,
to make, have made, use, offer for sale and import the Non-Specific Technology for XXXXX Field.

          3.3 New Product Technology. Impax shall promptly disclose to Medicis all New Product
Technology. Medicis shall solely own all right, title and interest in and to the New Product
Technology and all patent and other intellectual property rights therein. Impax hereby assigns to
Medicis all of its right, title and interest in and to the New Product Technology and all patent
and other intellectual property rights therein. Impax shall perform, during and after the

9

 

term of this Agreement, all acts that Medicis reasonably deems necessary or desirable to
permit and assist Medicis, at Medicis’ expense, in obtaining, perfecting and enforcing the full
benefits, enjoyment, rights and title throughout the world in the New Product Technology and all
patent and other intellectual property rights therein. If Medicis is unable for any reason, after
commercially reasonable efforts, to secure Impax’s signature to any document required to file,
prosecute, register or memorialize the assignment of any rights to the New Product Technology as
provided under this Agreement, Impax hereby irrevocably designates and appoints Medicis and
Medicis’ duly authorized officers and agents as Impax’s agents and attorneys-in-fact to act for and
on Impax’s behalf and instead of Impax to take all lawfully permitted acts to further the filing,
prosecution, registration, memorialization of assignment, issuance and enforcement of such rights,
all with the same legal force and effect as if executed by Impax. The foregoing is deemed a power
coupled with an interest and is irrevocable. Medicis shall have the world-wide right to control
the drafting, filing, prosecution, maintenance and enforcement of patents covering the New Product
Technology.

          3.4 No Implied Licenses. Except as explicitly set forth in this Agreement, neither
party grants to the other party any license, express or implied, under its patents or other
intellectual property.

     4. DEVELOPMENT AND COMMERCIALIZATION OF NEW PRODUCT

          4.1 Marketing of the New Product. Medicis shall have the sole right to make, use,
sell, distribute, market, exploit or otherwise commercialize the New Product. Medicis shall use
Diligent Efforts to obtain Regulatory Approval for the New Product in the Territory. Medicis’
efforts with respect to the commercialization of the New Product shall be in the sole discretion of
Medicis. Impax acknowledges and agrees that it shall have no right under this Agreement to make,
have made, use, sell, distribute, market, exploit or otherwise commercialize the New Product except
in the course of performing its obligations under the Development Program.

          4.2 Exclusive Relationship. The parties acknowledge and agree that Impax will obtain
access to Confidential Information of Medicis with respect to the Original Products and any
development work relating to the New Product, all of which may provide Impax with a competitive
advantage. Accordingly, during the term of this Agreement and for XXXXX thereafter
(unless this Agreement is terminated on account of Medicis’ uncured material breach of its payment
obligations under this Agreement), Impax shall not, and nor shall Impax directly or indirectly
encourage or assist any Third Party to, develop and/or commercialize any product that contains
XXXXX; provided, however, that such restriction shall not apply to XXXXX.

     5. DEVELOPMENT AND COMMERCIALIZATION OF ANDA PRODUCTS

          5.1 Development.

               5.1.1 General Obligation. Impax shall use Diligent Efforts to obtain Regulatory
Approval in the Territory for each ANDA Product.

10

 

               5.1.2 Specific Obligations. In addition to the obligations set forth in Section
5.1.1, Impax shall have the obligations set forth in this Section 5.1.2 solely with respect to the
XXXXX Product and the XXXXX Product. XXXXX.

          5.2 Commercialization. Following the FDA’s approval of Impax’s ANDA for an ANDA
Product, Impax shall use Diligent Efforts to commercialize such ANDA Product in the Territory;
provided, however, that Impax shall not have any obligation to launch or continue commercialization
in the Territory of any ANDA Product at any time when XXXXX. Impax shall comply with all
applicable laws and regulations in connection with its research, development and commercialization
activities for each ANDA Product in the Territory.

          5.3 Reports. Within thirty (30) days following the end of each calendar quarter
during the term of this Agreement, Impax shall prepare and deliver to Medicis a written summary
report which shall describe its regulatory and commercialization efforts with respect to the ANDA
Products.

          5.4 Right of Negotiation. If Impax decides to develop a product that is a generic
equivalent of a product that is marketed under the XXXXX, XXXXX, XXXXX or XXXXX trademark but is
not an XXXXX Product, XXXXX Product, XXXXX Product or XXXXX Product, then Impax shall promptly
notify Medicis in writing. If Medicis is interested in co-developing such product with Impax, then
Medicis shall provide Impax, within thirty (30) days after Impax’s notice, with a written proposal
of the terms under which the parties would co-develop such product. Impax shall notify Medicis
within thirty (30) days of receipt of Medicis’ proposal whether, based on such proposal, it is
interested in engaging in negotiations with Medicis regarding the terms under which the parties
would co-develop such product. Medicis’ right of negotiation pursuant to this Section 5.4 shall
expire with respect to a particular product at the earliest of: (1) thirty (30) days after Impax’s
first notice pursuant to this Section 5.4, if Medicis has already not provided Impax with the
proposal specified above; (2) Medicis’ receipt of notice from Impax that it is not interested in
engaging in negotiations with Medicis regarding the terms under which the parties would co-develop
such product; (3) sixty (60) days after Medicis’ receipt of notice from Impax that it is interested
in engaging in negotiations with Medicis regarding the terms under which the parties would
co-develop such product, if the parties have not entered into a written agreement for such
co-development (such agreement, a “Co-Development Agreement”) and (4) the date of the parties’
entry into a Co-Development Agreement.

     6. FINANCIAL CONSIDERATIONS.

          6.1 Upfront Payment. Within five (5) business days after the Effective Date, Medicis
shall pay to Impax a non-creditable, non-refundable payment of Forty Million United States Dollars
($40,000,000 USD).

          6.2 Milestone Payments. Medicis shall pay to Impax the following non-creditable,
non-refundable milestone payments set forth in the following table after the first achievement of
the corresponding milestone:

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	Milestone Event	 	Milestone Payment
	(a) XXXXX

	 	XXXXX
	 
	 	 
	(b) XXXXX

	 	XXXXX
	 
	 	 
	(c) XXXXX

	 	XXXXX
	 
	 	 
	(d) XXXXX

	 	XXXXX
	 
	 	 
	(e) XXXXX

	 	XXXXX
	 
	 	 
	(f) XXXXX

	 	XXXXX

Each such milestone payment shall be payable only once pursuant to this Section 6.2. Such payment
shall be made within thirty (30) days after the initial achievement of such milestone; provided,
however, that Medicis shall not be obligated to make the milestone payment described in subsection
(c) above before XXXXX, Medicis shall not be obligated to make the milestone payment described in
subsection (d) above before XXXXX, and Medicis shall not be obligated to make either of the
milestone payments described in subsections (e) and (f) above before XXXXX.

          6.3 Revenue Sharing for ANDA Products. Subject to the terms and conditions of this
Agreement, within sixty (60) days following the end of each calendar quarter, Impax shall pay to
Medicis fifty percent (50%) of all Gross Profit accrued during such calendar quarter. Medicis’
right to receive a share of the Gross Profit under this Section 6.3 with respect to an ANDA Product
shall expire, on an ANDA Product-by-ANDA Product basis, ten (10) years after the first commercial
sale by Impax of such ANDA Product in the Territory after the applicable ANDA has been approved by
the FDA. Each payment made under this Section 6.3 shall be accompanied by a written report stating
the number and description of all ANDA Products sold in the Territory during the relevant calendar
quarter; a detailed breakdown of the Cost of Sales associated therewith; the gross sales associated
therewith; the calculation of Net Sales thereon, including without limitation the amount of any
deduction provided for in the definition of Net Sales; and the calculation of Gross Profits
therefrom.

          6.4 Royalty Payments for New Product. Subject to the terms and conditions of this
Agreement, Medicis shall pay to Impax (a) XXXXX, and (b) XXXXX. Impax’s right to receive royalties
under this Section 6.4 shall expire, on a New Product-by-New Product basis, XXXXX after
the first commercial sale of such New Product in the Territory. All royalties due under this
Section 6.4 shall be paid quarterly within sixty (60) days after the end of the relevant calendar
quarter for which royalties are due. Each royalty payment shall be accompanied by a written report
stating the number and description of all New Products sold during the relevant calendar quarter;
the gross sales associated therewith; and the calculation of Net Sales thereon, including without
limitation the amount of any deduction provided for in the definition of Net Sales.
Notwithstanding the foregoing, any sales of New Product by Medicis to a distributor or sublicensee
for the purpose of creating an Authorized Product and sold by Medicis shall not be subject to the
foregoing royalty, but any revenues Medicis receives from the sale of such Authorized Product by
such distributor or sublicensee shall be subject to the revenue share in Section 6.5 below.

12

 

          6.5 Revenue Sharing for Authorized Products. Subject to the terms and conditions of
this Agreement, Medicis shall pay to Impax XXXXX percent (XXXXX%) of all amounts received by
Medicis on account of the sale of Authorized Products. Impax’s right to receive a share of such
amounts shall expire, on an Authorized Product-by-Authorized Product basis, eight (8) years after
the first commercial sale of such Authorized Product in the Territory. All payments due under this
Section 6.5 shall be paid quarterly within sixty (60) days after the end of the relevant calendar
quarter for which royalties are due. Each royalty payment shall be accompanied by a written report
stating the number and description of all Authorized Products sold during the relevant calendar
quarter; the gross sales associated therewith; and the amounts received by Medicis on account of
such gross sales.

          6.6 Taxes. A party responsible for a payment under Sections 6.1, 6.2, 6.3, 6.4 or 6.5
(the “Payor”) shall be responsible for and may withhold from payments made to the other party (the
"Payee”) under this Agreement any taxes required to be withheld by the Payor under applicable law.
Accordingly, if any such taxes are levied on such payments due hereunder (“Withholding Taxes”), the
Payor shall (i) deduct the Withholding Taxes from the payment amount, (ii) pay all applicable
Withholding Taxes to the proper taxing authority, and (iii) send evidence of the obligation
together with proof of tax payment to the Payee within sixty (60) days following that tax payment.

          6.7 Audit Rights. On no less than five (5) business days notice from the Payee, the
Payor shall make all such records, books of account, information and data concerning the applicable
payments owing under Section 6.3, 6.4 or 6.5 (which in the case of payments made pursuant to
Section 6.3 shall include records of Impax’s manufacture of ANDA Products or to the extent in
Impax’s possession, the manufacture of ANDA Products on behalf of Impax by its Third Party contract
manufacturer), available for inspection during normal business hours, by an independent auditor
selected by the Payee and reasonably acceptable to the Payer, for the purpose of an audit to
determine the accuracy of the reports delivered and amounts paid by the Payor pursuant to Section
6.3, 6.4 or 6.5; provided that the Payee may not request such inspection more than once in any
calendar year unless a discrepancy has been identified by the Payee and such audit shall be limited
to records, books of account, information and data pertaining to payments made pursuant to Section
6.3, 6.4 or 6.5 during the preceding three calendar years. Upon reasonable belief of discrepancy
or dispute, the Payee’s external auditors shall be entitled to take copies or extracts from such
records, books of account, information and data (but only to the extent related to the contractual
obligations set out in this Agreement) during any review or audit. Prior to the initiation of any
audit pursuant to this Section 6.7, the external auditor shall sign a confidentiality agreement
with the Payor providing that, as between the external auditor and the Payor, such records, books
of account, information and data shall be treated as Confidential Information of the Payor but may
be disclosed to the Payee solely to the extent necessary to document a discrepancy in any reports
delivered and amounts paid by the Payor pursuant to Section 6.3, 6.4 or 6.5. The Payee shall be
solely responsible for its costs in making any such audit, unless the Payee identifies a
discrepancy in favor of the Payor in the calculation of the share of Gross Profit or royalty or
other payment owed, as applicable, under this Agreement in any calendar year from those properly
payable for that calendar year of five percent (5%) or greater, in which event the Payor shall be
solely responsible for the reasonable cost of such audit and pay the Payee any underpayment. All
information disclosed by the Payor pursuant to this Section shall be deemed Confidential
Information of the Payor.

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     7. TERM AND TERMINATION.

          7.1 Term. Subject to Section 7.2 below, this Agreement shall expire on the latest of
(a) expiration of Medicis’ obligation to pay royalties to Impax under Section 6.4, (b) expiration
of Medicis’ obligation to pay make Authorized Product-based payments to Impax under Section 6.5,
and (c) expiration of Impax’s obligation to pay royalties to Medicis under Section 6.3. The
license grants under Section 3.2 shall survive any such expiration in accordance with the terms of
Section 3.2.

          7.2 Termination for Cause. Either party may terminate this Agreement upon or after
the material breach of any material provision of this Agreement by the other party if the other
party has not cured such breach within thirty (30) days after receipt of express written notice
thereof by the non-breaching party.

          7.3 Effect of Expiration or Termination.

               7.3.1 Expiration or termination of this Agreement shall not relieve the parties of any
obligation accruing prior to such expiration or termination.

               7.3.2 The provisions of Sections 3.2, 3.3, 4.2 (for the term described therein), 6.7 (for
three years after expiration), 7.3.1, 7.3.2, 8, 10 and 11 shall survive the expiration of this
Agreement.

               7.3.3 The provisions of Sections 3.2, 3.3, 4.2 (for the term described therein), 6.2, 6.3 (for
the term described therein), 6.4 (for the term described therein), 6.5 (for the term described
therein), 6.6 (for the term of the payment obligations pursuant to Sections 6.1 through 6.5), 6.7
(for three years after termination), 7.3.1, 7.3.3, 8, 10 and 11 shall survive the termination of
this Agreement for any reason.

     8. CONFIDENTIALITY.

          8.1 Confidentiality. Until the last to expire of this Agreement, the License
Agreement or the Distribution Agreement (as defined in the License Agreement), and for a period of
five (5) years following the expiration or earlier termination hereof or thereof, except with
respect to any Confidential Information constituting a trade secret in which case the receiving
party’s obligation continues in perpetuity, provided such receiving party has been informed as to
the status of such Confidential Information as a trade secret, each party shall maintain in
confidence all Confidential Information disclosed by the other party, and shall not use, grant the
use of or disclose to any Third Party the Confidential Information of the other party other than as
expressly permitted hereby. Each party shall notify the other promptly upon discovery of any
unauthorized use or disclosure of the other party’s Confidential Information.

          8.2 Permitted Disclosures. Either party may disclose Confidential Information of the
disclosing party (a) on a need-to-know basis, to such party’s directors, officers and employees to
the extent such disclosure is reasonably necessary in connection with such party’s activities as
expressly authorized by this Agreement, and (b) to those agents and consultants, permitted
subcontractors and contract manufacturers who need to know such information to accomplish the
purposes of this Agreement (collectively, “Permitted

14

 

Recipients”); provided such Permitted Recipients are bound to maintain such Confidential
Information in confidence at least to the same extent as set forth in Section 8.1.

          8.3 Litigation and Governmental Disclosure. Each party may disclose Confidential
Information of the other party to the extent such disclosure is reasonably necessary (a) for
prosecuting or defending litigation or complying with a court order, or applicable law,
governmental regulations or investigation, and (b) in the case of Medicis as the receiving party to
conduct pre-clinical or clinical trials of the New Product, provided that if a party is required by
court order, law or regulation to make any such disclosure of the other party’s Confidential
Information it will give reasonable advance notice to the other party of such disclosure
requirement and will use good faith efforts to assist such other party to secure a protective order
or confidential treatment of such Confidential Information required to be disclosed.

          8.4 Limitation of Disclosure. The parties agree that, except as otherwise may be
required by applicable laws, regulations, rules or orders, including without limitation the rules
and regulations promulgated by the United States Securities and Exchange Commission, or any
regulations of any national securities exchange, and except as may be authorized in Section 8.5, no
information concerning this Agreement and the transactions contemplated herein shall be made public
by either party without the prior written consent of the other.

          8.5 Publicity. Neither party shall make any publicity releases, interviews or other
non-confidential dissemination of information concerning this Agreement or its terms, or either
party’s performance hereunder, to communication media, financial analysts or others without the
prior written approval of the other party, which approval shall not be unreasonably withheld,
delayed or conditioned. Notwithstanding anything to the contrary in this Agreement, the parties
understand and agree that either party, may, if so required, disclose some or all of the
information included in this Agreement or other Confidential Information of the other party (a) in
order to comply with its obligations under the law, including the United States Securities Act of
1933 and the United States Securities Exchange Act of 1934; (b) in order to comply with the listing
standards or agreements of any national or international securities exchange or the NASDAQ Stock
Market or New York Stock Exchange or other similar laws of a governmental authority; (c) to respond
to an inquiry of a governmental authority or regulatory authority as required by law; or (d) in a
judicial, administrative or arbitration proceeding. In any such event the party making such
disclosure shall (i) provide the other party with as much advance notice as reasonably practicable
of the required disclosure, (ii) cooperate with the other party in any attempt to prevent or limit
the disclosure, and (iii) limit any disclosure to the specific purpose at issue. In connection
with any filing of a copy of this Agreement with the Securities and Exchange Commission, the filing
party shall endeavor to obtain confidential treatment of economic and trade secret information, and
shall keep the other party informed as the planned filing (including, but not limited to providing
the other party with the proposed filing reasonably in advance of making the planned filing) and
consider the requests of the other party regarding such confidential treatment.

     9. REPRESENTATIONS AND WARRANTIES.

          9.1 Mutual Representations. Each party hereby represents and warrants to the other
party that:

15

 

               (a) the person executing this Agreement is authorized to execute this Agreement;

               (b) this Agreement is legal and valid and the obligations binding upon such party are
enforceable by their terms; and

               (c) the execution, delivery and performance of this Agreement does not conflict with any
agreement, instrument or understanding, oral or written, to which such party may be bound, nor
violate any law or regulation of any court, governmental body or administrative or other agency
having jurisdiction over it.

          9.2 Compliance. Impax hereby represents, warrants and covenants to Medicis that:

               (a) neither it nor its subcontractors, nor any of its or its subcontractors’ personnel have
been nor are disqualified or debarred under Section 306 of the Federal Food, Drug and Cosmetic Act
(as amended by the Generic Drug Enforcement Act of 1992), 21 U.S.C. § 336;

               (b) neither it nor its subcontractors shall use in any capacity the services of any person
debarred, disqualified or under investigation under the provisions of the Section 306 of the
Federal Food, Drug and Cosmetic Act (as amended by the Generic Drug Enforcement Act of 1992), 21
U.S.C. § 336, and will notify Medicis immediately in the event Impax is made aware of any
investigation or proceeding for debarment;

               (c) neither its nor its subcontractors’ personnel within five (5) years preceding the
Effective Date have been convicted of any offense required to be listed under FDA regulations;

               (d) it and its subcontractors shall comply with all applicable laws and regulations in the
performance of its obligations under the Agreement;

               (e) neither it nor its subcontractors shall use any Ineligible Person or a person on an
Exclusion List in connection with the performance of any of its obligations or activities under the
Agreement; and

               (f) it has filed with the FDA the ANDA listed on Exhibit B.

          9.3 Disclaimer of Warranties. Except for those warranties set forth in Sections 9.1
and 9.2, neither party makes any warranty, written, oral, express or implied, with respect to
Development Program, the New Product, the ANDA Products or the Authorized Products. ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT HEREBY ARE DISCLAIMED BY
BOTH PARTIES.

          9.4 Limitation of Liability. WITH THE EXCEPTION OF DAMAGES RESULTING FROM A PARTY’S
BREACH OF ITS CONFIDENTIALITY OBLIGATIONS

16

 

UNDER THE AGREEMENT OR A PARTY’S OBLIGATIONS UNDER SECTION 10 (INDEMNIFICATION) OR A BREACH BY
IMPAX OF SECTION 4.2, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE FOR LOSS OF USE OR
PROFITS OR OTHER COLLATERAL, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES IN CONNECTION
WITH THIS AGREEMENT, WHETHER SUCH CLAIMS ARE FOUNDED IN TORT OR CONTRACT.

          9.5 Equitable Relief.

               9.5.1 Each party acknowledges and agrees that the covenants contained in this Agreement
regarding the confidentiality and use of the Confidential Information of the disclosing party are
reasonable and necessary to protect the legitimate interests of the disclosing party, that the
disclosing party would not have entered into this Agreement in the absence of such covenants, and
that the receiving party’s breach or threatened breach of such covenants shall cause the disclosing
party significant and irreparable harm, the amount of which shall be extremely difficult to
estimate and ascertain, and for which money damages shall not be adequate. Each party further
acknowledges and agrees that the disclosing party shall have the right to apply to any court of
competent jurisdiction for an injunction order restraining any breach or threatened breach of the
covenants contained in this Agreement regarding confidentiality and use of the Confidential
Information and specifically enforcing such covenants, without the necessity of posting any bond or
security or giving the receiving party an opportunity to cure, in addition to seeking any other
remedy available to the disclosing party in law or equity. Each party agrees that it shall not
challenge any of the foregoing acknowledgements and agreements concerning injunctive relief in any
proceeding brought by a disclosing party.

               9.5.2 Impax acknowledges and agrees that the obligations and undertakings of Impax pursuant to
Section 4.2 of this Agreement are reasonable and necessary to protect the legitimate interests of
Medicis, that Medicis would not have entered into this Agreement in the absence of such provision,
and that Impax’s breach or threatened breach or failure to comply with Section 4.2 of this
Agreement shall cause Medicis significant and irreparable harm, the amount of which shall be
extremely difficult to estimate and ascertain, and for which money damages shall not be adequate.
Impax further acknowledges and agrees that Medicis shall have the right to apply to any court of
competent jurisdiction for an injunction order restraining any breach or threatened breach of
Section 4.2 of this Agreement and specifically enforcing the terms and provisions of such Sections
of this Agreement, without the necessity of posting any bond or security or giving Impax an
opportunity to cure, in addition to seeking any other remedy available to Medicis in law or equity.
Impax agrees that it shall not challenge any of the foregoing acknowledgements and agreements
concerning injunctive relief in any proceeding brought by Medicis.

     10. INDEMNIFICATION. 

          10.1 Medicis Indemnification. Medicis shall indemnify, defend and hold harmless Impax
and its directors, managers, members, officers, employees, authorized subcontractors and agents
(collectively the “Impax Parties”) from and against any and all liabilities, obligations,
penalties, judgments, disbursements of any kind and nature, losses,

17

 

damages, costs and expenses (including, without limitation, reasonable attorney’s fees and
costs) (collectively, “Losses”) incurred as a result of any claims, demands, actions or other
proceedings by Third Parties against any of the Impax Parties to the extent arising out of (a) a
breach by Medicis of any representation, warranty or covenant under this Agreement, (b) any failure
of Medicis to comply with applicable laws and regulations in the performance of its obligations
under this Agreement, or (c) the research, development, regulatory approval or commercialization of
the New Product by or on behalf of Medicis, except to the extent that such Losses arise out of
Impax’s breach of any representation, warranty or covenant under this Agreement.

          10.2 Impax Indemnification. Impax shall indemnify, defend and hold harmless Medicis
and its directors, managers, members, officers, employees, authorized subcontractors and agents
(collectively the “Medicis Parties”) from and against any and all Losses incurred as a result of
any claims, demands, actions or other proceedings by Third Parties against any of the Medicis
Parties to the extent arising out of (a) a breach by Impax of any representation, warranty or
covenant under this Agreement, (b) any failure of Impax to comply with applicable laws and
regulations in the performance of its obligations under this Agreement, or (b) the research,
development, regulatory approval or commercialization of the ANDA Products by or on behalf of
Impax, except to the extent that such Losses arise out of Medicis’ breach of any representation,
warranty or covenant under this Agreement.

          10.3 Obligations. A party which intends to claim indemnification under this Section
10 (the “Indemnified Party”) shall promptly notify the other party (the “Indemnifying Party”) in
writing of any claim, demand, action, or other proceeding in respect of which the Indemnified Party
intends to claim such indemnification; provided, however, that failure to provide such notice
within a reasonable period of time shall not relieve the Indemnifying Party of any of its
obligations hereunder except to the extent the Indemnifying Party is prejudiced by such failure.
The Indemnified Party shall permit the Indemnifying Party, at its discretion, to settle any such
action, claim or other matter. Notwithstanding the foregoing, the Indemnifying Party shall not
enter into any settlement that would adversely affect the Indemnified Party’s rights hereunder, or
impose any obligations on the Indemnified Party in addition to those set forth herein, in order for
it to exercise such rights, without the Indemnified Party’s prior written consent, which shall not
be unreasonably withheld or delayed. No such action, claim or other matter shall be settled
without the prior written consent of the Indemnifying Party, which shall not be unreasonably
withheld or delayed. The Indemnified Party shall reasonably cooperate with the Indemnifying Party
and its legal representatives in the investigation and defense of any claim, demand, action, or
other proceeding covered by the indemnification obligations of this Section 10. The Indemnified
Party shall have the right, but not the obligation, to be represented in such defense by counsel of
its own selection and at its own expense.

          10.4 Responsible Party. With respect to the prosecution or defense of any litigation
or proceeding asserted by or against Impax with respect to any of the ANDA Products, Impax shall be
solely responsible for all costs, expenses, damages and other liabilities with respect to such
litigation or proceeding, except to the extent subject to Section 10.1. With respect to the
prosecution or defense of any litigation or proceeding asserted by or against Medicis with respect
to the New Product, Medicis shall be solely responsible for all costs,

18

 

expenses, damages and other liabilities with respect to such litigation or proceeding, except
to the extent subject to Section 10.2.

     11. GENERAL PROVISIONS.

          11.1 Notices. All notices hereunder shall be delivered by facsimile (confirmed by
overnight delivery), or by overnight delivery with a reputable overnight delivery service, to the
following address of the respective parties:

	 	 	 	 	 
	 

	 	If to Medicis:
	 	Medicis Pharmaceutical Corporation
	 

	 	 	 	7720 North Dobson Road
	 

	 	 	 	Scottsdale, Arizona 85256
	 

	 	 	 	Attn: Chief Executive Officer
	 

	 	 	 	Facsimile: 480-291-5163
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Medicis Pharmaceutical Corporation

7720 North Dobson Road

Scottsdale, Arizona 85256

Attn: General Counsel
	 

	 	 	 	Facsimile: 480-291-5163
	 
	 	 	 	 
	 

	 	If to Impax:
	 	Impax Laboratories, Inc.
	 

	 	 	 	30831 Huntwood Avenue
	 

	 	 	 	Hayward, California 94544
	 

	 	 	 	Attn: President, Generics Division
	 

	 	 	 	Facsimile: 510-471-1595
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Impax Laboratories, Inc.
	 

	 	 	 	30831 Huntwood Avenue
	 

	 	 	 	Hayward, California 94544
	 

	 	 	 	Attn: Legal Department
	 

	 	 	 	Facsimile: 510-476-2092

     Notices shall be effective on the day of receipt. A party may change its address listed above
by notice to the other party given in accordance with this Section 11.1.

          11.2 Entire Agreement. The parties hereto acknowledge that this Agreement sets forth
the entire agreement and understanding of the parties and supersedes all prior written or oral
agreements or understandings with respect to the subject matter hereof. No modification of any of
the terms of this Agreement, or any amendments thereto, shall be deemed to be valid unless in
writing and signed by an authorized agent or representative of both parties hereto. No course of
dealing or usage of trade shall be used to modify the terms and conditions herein. This Agreement
shall be binding on each of Impax and Medicis and their respective permitted successors and
assigns.

          11.3 Bankruptcy. All rights granted under this Agreement by Impax to Medicis are and
shall be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,

19

 

licenses of rights to “intellectual property” as defined under Section 101(52) of the US.
Bankruptcy Code. The parties agree that Medicis, as a licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections under the U.S.
Bankruptcy Code, subject to performance by Medicis of its pre-existing obligations under this
Agreement. The parties further agree that, if a bankruptcy proceeding is commenced by or against
Impax, Medicis shall be entitled to a complete duplicate of (or complete access to, as appropriate)
any such intellectual property and all embodiments of such intellectual property, and the same, if
not already in Medicis’ possession, shall be promptly delivered to Medicis (a) after any such
commencement of a bankruptcy proceeding upon request of Medicis, unless Impax elects to continue to
perform all of its obligations under this Agreement, or (b) if not delivered under subsection (a)
above, upon the rejection of this Agreement by or on behalf of Impax upon written request therefore
by Medicis.

          11.4 Waiver. None of the provisions of this Agreement (including the Exhibits hereto)
shall be considered waived by any party hereto unless such waiver is agreed to, in writing, by
authorized agents of such party. The failure of a party to insist upon strict conformance to any
of the terms and conditions hereof, or failure or delay to exercise any rights provided herein or
by law shall not be deemed a waiver of any rights of any party hereto.

          11.5 Obligations to Third Parties. Each party warrants and represents that this
Agreement does not conflict with any contractual obligations, expressed or implied, undertaken with
any Third Party.

          11.6 Assignment. Neither party shall assign this Agreement or any part hereof or any
interest herein (whether by operation of law or otherwise) to any Third Party without the written
approval of the other party; provided, however, that either party may assign this Agreement without
such consent (i) to any Affiliate; and (ii) in the case of a merger, consolidation, change in
control or sale of all or substantially all of the assets of the Relevant Business Unit of the
party seeking such assignment or transfer and such transaction relates to the business or assets
covered by this Agreement and the resulting entity assumes all of the obligations under this
Agreement. For the purposes of this Section 11.6, the “Relevant Business Unit” shall mean, with
respect to Impax, the generics division of Impax, and with respect to Medicis, the medical
dermatology division of Medicis. No assignment shall be valid unless the permitted assignee(s)
assumes all obligations of its assignor under this Agreement. No assignment shall relieve any
party of responsibility for the performance of its obligations hereunder. Any purported assignment
in violation of this Section 11.6 shall be void.

          11.7 Independent Contractor. Impax and Medicis are acting under this Agreement as
independent contractors and neither shall be considered an agent of, or joint venturer with, the
other. Unless otherwise provided herein to the contrary, each party shall furnish all expertise,
labor, supervision, machining and equipment necessary for the performance of its obligations
hereunder and shall obtain and maintain all building and other permits and licenses required by
public authorities.

          11.8 Governing Law. In any action brought regarding the validity, construction and
enforcement of this Agreement, it shall be governed in all respects by the laws of the State of
Arizona, without regard to the principles of conflicts of laws. The federal and state courts in
the

20

 

State of Arizona shall have jurisdiction over the parties hereto in all matters arising
hereunder and the parties hereto agree that the venue will be a state or federal court in the State
of Arizona.

          11.9 Severability. If any term or provision of this Agreement shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other term or provision hereof, and this Agreement shall be
interpreted and construed as if such term or provision, to the extent the same shall have been held
to be invalid, illegal or unenforceable, had never been contained herein.

          11.10 Headings, Interpretation; Construction. The headings used in this Agreement are
for convenience only and are not part of this Agreement. In the event that Medicis makes a claim
for damages based on rescission or breach of this Agreement, nothing in this Agreement shall be
construed as precluding Medicis from seeking recovery of those amounts paid by Medicis under this
Agreement to the extent such amounts are recoverable under applicable law and Impax’s liability is
not limited by Section 9.4.

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

[Remainder of this page intentionally blank]

21

 

IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their
duly-authorized representatives effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 
	IMPAX LABORATORIES, INC. 	 	MEDICIS PHARMACEUTICAL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Arthur A. Koch, Jr.
	 	By:
	 	/s/ Mark Prygocki
	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Arthur A. Koch, Jr.
	 	Name:
	 	Mark Prygocki	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	SVP — CFO
	 	Title:
	 	COO	 	 
	 

	 	 
	 	 	 	 	 	 

22

 

EXHIBIT A

Target Product Profile

XXXXX.

23

 

EXHIBIT B

ANDA

ANDA No. XXXXX; for XXXXX

24

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