ASSET PURCHASE AGREEMENT

Exhibit 10.3

 

 

 

ASSET PURCHASE AGREEMENT

and

JDS PHARMACEUTICALS, LLC

relating to

Purchase Of PEXEVA ^® Product Line

Dated October 17, 2005

 

 

TABLE OF CONTENTS

								Page
1.		Definitions							1
2.		Purchase and Sale of Purchased Assets							6
			2.1.			Purchase and Sale			6
			2.2.			Inventory			6
			2.3.			Retained Assets			7
			2.4.			Delivery of Know-How			7
			2.5.			Contracts and NDA			7
			2.6.			Patent License			7
			2.7.			Right to Use Equipment and Machinery			7
3.		Purchase Price							8
			3.1.			Payments of Purchase Price			8
			3.2.			Purchase Price Adjustment for Inventory			8
			3.3.			Purchase Price Adjustment for Distribution Channel Inventory			8
			3.4.			Additional Fee			9
4.		Representations and Warranties of Synthon							11
			4.1.			Organization; Standing			11
			4.2.			Authorization; Binding Effect			11
			4.3.			No Conflict; Consents			11
			4.4.			Title to Purchased Assets; Liens and Encumbrances			11
			4.5.			Claims; Litigation			11
			4.6.			Product Intellectual Property			11
			4.7.			Contracts			13
			4.8.			Legal and Regulatory Compliance; Specifications			13
			4.9.			Financial and Other Information			14
			4.10.			Inventory			14
			4.11.			Environmental Representation			14
			4.12.			Employment Matters			15
			4.13.			Full Disclosure			15
5.		Representations and Warranties of JDS							15
			5.1.			Organization; Standing			15
			5.2.			Authorization; Binding Effect			16
			5.3.			No Conflict; Consents			16
			5.4.			No Violation; Litigation or Regulatory Action			16
			5.5.			Availability of Financing			16
			5.6.			Disclosure			16
			5.7.			Hart-Scott-Rodino Compliance			16

								Page
6.		Covenants of Synthon and JDS							16
			6.1.			Access			16
			6.2.			Notice by Synthon; Statements by Synthon Representatives			17
			6.3.			Chargebacks, Rebates and Returns			17
			6.4.			Manufacturing Agreements			19
			6.5.			Stability Programs; Complaints			19
			6.6.			Safety Data			20
			6.7.			Transition Services			20
			6.8.			Regulatory Matters			20
			6.9.			Offers of Employment			21
			6.10.			Conduct Pending Closing			21
			6.11.			Financial Statements			21
			6.12.			Insurance			22
			6.13.			Synthon Covenant Regarding the Trademarks			22
			6.14.			Retained Asset Dispositions			22
			6.15.			Prohibition on Assignment			22
7.		Closing							22
			7.1.			Time and Place			22
			7.2.			Conditions Precedent to JDS’s Obligations			22
			7.3.			Conditions Precedent to Synthon’s Obligations			23
			7.4.			Deliveries at Closing			24
8.		Confidentiality and Cooperation; Non-Competition							25
			8.1.			Confidential Information			25
			8.2.			Confidentiality Obligation			25
			8.3.			Cooperation			25
			8.4.			Non-Competition			26
9.		Further Assurances							26
10.		Indemnification; Insurance							26
			10.1.			Indemnification Obligations of the Parties			26
			10.2.			Limitations on Indemnification Liability			27
			10.3.			Procedure for Indemnification			27
			10.4.			Representation			28
11.		Survival of Indemnification Obligations and Covenants							28
12.		Dispute Resolution							28
			12.1.			Negotiation			28
			12.2.			Arbitration			28
			12.3.			Interim Relief			28

								Page
13.		Termination							28
			13.1.			Termination			28
			13.2.			Survival			29
14.		Specific Performance							29
15.		Assignment							29
16.		Choice of Law							29
17.		Notices							29
18.		Miscellaneous							30
			18.1.			Entire Agreement			30
			18.2.			Amendment and Modification			30
			18.3.			Severability			30
			18.4.			Non-Disclosure			30
			18.5.			Brokerage Indemnity			30
			18.6.			Execution; Facsimile Signatures			30

Schedule 1A & 1B		—		Licensed Patents
Schedule 1C		—		Patents
Schedule 1D		—		Manufacturing Agreements
Schedule 1E		—		Inventory Costs
Schedule 1F		—		Equipment and Machinery
Schedule 3.3(a)		—		Intentionally Deleted
Schedule 3.3(c)		—		Intentionally Deleted
Schedule 4		—		Exceptions
Schedule 4.6(a)		—		Product Intellectual Property
Schedule 4.7		—		Contracts
Schedule 4.10		—		Inventory As of September 30, 2005
Schedule 4.12		—		Employment Matters
Schedule 6.3(f)		—		Synthon Returned Goods Policy
Schedule 7.2(f)		—		Synthon Consents and Approvals
Schedule 7.3(e)		—		JDS Consents and Approvals
Exhibit A		—		Form of Transition Services Agreement
Exhibit B		—		Form of Pledge and Security Agreement
Exhibit C		—		Form of License
Exhibit D		—		Form of Supply Agreement
Exhibit E		—		Form of Guaranty

ASSET PURCHASE AGREEMENT

      ASSET PURCHASE AGREEMENT (“ Agreement ”) dated this 17 ^th day of October, 2005 by and between SYNTHON PHARMACEUTICALS, INC. , a North Carolina corporation having its principal offices at 9000 Development Drive, Research Triangle Park, North Carolina 27709 (“ Synthon ”) and JDS PHARMACEUTICALS, LLC , a Delaware limited liability company having its principal offices at 122 East 42 ^nd Street, 41 ^st Floor, New York, New York 10168 (“ JDS ”).

     A. Synthon owns the proprietary rights to a pharmaceutical product manufactured, marketed and sold by or on behalf of Synthon under the trademark “PEXEVA ^® ” (as more fully defined herein).

     B. JDS desires to purchase certain assets relating to the Product (as more fully defined in Section 1, the “ Purchased Assets ”) from Synthon for purposes of marketing and selling the Product in the Territory (as defined herein), and Synthon has agreed to sell the Purchased Assets to JDS, all in accordance with, and subject to, the terms and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions hereinafter set forth, and good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1.  Definitions . As used herein, the following terms shall have the respective meanings set forth below:

          “ Additional Fee ” shall have the meaning set forth in Section 3.4 (a) .

          “ Additional Fee Aggregate Minimum ” shall have the meaning set forth in Section 3.4 (d) .

          “ Additional Fee Credit ” shall have the meaning set forth in Section 3.4 (f) .

          “ Additional Fee Expiration Date ” shall mean the last date on which U.S. Patent No. 5,874,447 or any divisional thereof (provided such divisional is listed in the FDA publication entitled “Food and Drug Administration Center for Drug Evaluation and Research Approved Drug Products with Therapeutic Equivalent Evaluations” with respect to the Product (the “Orange Book”)) expires (including any patent term extension).

          “ Additional Fee Period ” shall mean the period commencing on the Closing Date and ending on Additional Fee Expiration Date or such earlier date as there has been a judicial finding of invalidity of U.S. Patent No. 5,874,447 and all divisionals thereof (provided such divisionals are listed in the Orange Book with respect to the Product) as to which no appeal has or can be taken.

          “ Affiliate ” shall mean any person or legal entity controlling, controlled by or under common control with the person with respect to whom such status is at issue and shall include, without limitation, any corporation 50% or more of the voting power of which (or other comparable ownership interest for an entity other than a corporation) is owned, directly or indirectly, by a party hereto or any corporation, person or entity which owns 50% or more of such voting power of a party hereto. With respect to Synthon, the term “Affiliate” shall include, but not be limited to, Synthon Holding BV, Synthon BV, Synthon BCT Technologies, LLC and Synthon IP Inc.

          “ API ” shall mean the compound generally referred to as paroxetine mesylate.

          “ Average Selling Price ” shall mean ***.

          “ Average Wholesaler Inventory ” shall have the meaning specified in Section 3.3(a) .

          “ Chargebacks ” shall mean discounts or rebates provided in the form of chargeback and similar payments to wholesalers or other distributors in connection with the Product.

          “ Closing ” shall have the meaning set forth in Section 7.1 .

          “ Closing Date ” shall have the meaning set forth in Section 7.1 .

          “ Closing Wholesaler Inventory ” shall have the meaning specified in Section 3.3(b) .

          “ Confidential Information ” shall have the meaning set forth in Section 8.1 .

          “ Contracts ” shall mean all contracts, agreements, arrangements or understandings, to the extent directly related to the Purchased Assets or the Product in the Territory or related to the synthesis or manufacture of the Product or any component thereof anywhere in the world to the extent exclusively related to the marketing, sale, offer for sale, distribution, or use of the Product in the Territory as set forth on Schedule 4.7 . Contracts shall include, without limitation, contracts or arrangements relating to the sale, use or marketing of the Product in the Territory (including agreements with managed care organizations and hospitals to the extent specifically related to the Product in the Territory) and shall include the Manufacturing Agreements and shall include contracts, agreements, arrangements or understandings relating to the synthesis or manufacture of the Product or any component thereof executed or to be performed outside of the Territory which relate to the marketing, sale, offer for sale, distribution or use of the Product in the Territory.

           “Credits ” shall mean credits, utilization based rebates (other than Medicaid rebates), reimbursements, and similar payments to buying groups, managed care organizations and benefit managers, insurers and other institutions in connection with the Product.

          “ Damages ” shall have the meaning set forth in Section 10.1 .

          “ Dollars ” or “ $ ” shall mean U.S. dollars.

          “ Encumbrance ” shall mean any mortgage, pledge, security interest, deed of trust, lease, lien, adverse claim (including any claim of adverse ownership), levy, charge, easement, right of way, covenant, restriction, or other encumbrance, third-party right or retained right of any kind whatsoever, or any conditional sale or title retention agreement or other agreement to give any of the foregoing in the future.

          “ Environmental Law ” shall have the meaning set forth in Section 4.11 .

          “ ERISA ” and “ ERISA Plans ” shall have the respective meanings assigned to those terms in Section 4.12 .

          “ FDA ” shall mean the United States Food and Drug Administration or any successor agency having a similar jurisdiction and the corresponding regulatory agency in Canada.

          “ Federal Program ” shall have the meaning set forth in Section 6.3(d) .

          “ Financial Data ” shall have the meaning set forth in Section 4.9 .

          “ Indemnifying Party ” shall have the meaning set forth in Section 10.1(c) .

          “ Indemnitee ” shall have the meaning set forth in Section 10.1(c) .

          “ Inventory ” shall mean all saleable inventory of Product with at least twelve (12) months of remaining shelf-life as of the Closing in finished form (and whether in bulk tablet or final packaged form) and inventory of finished samples which comply with the NDA on hand at Synthon as of the Closing.

          “ Inventory Cost ” with respect to a unit of Inventory shall mean Synthon’s inventory cost determined in accordance with US GAAP. Schedule 1E sets forth a schedule of Inventory Cost for units of Inventory.

          “ JDS Know-How ” shall have the meaning set forth in the last sentence of the definition of “Know-How” below.

          “ Know-How ” shall mean all methods, processes, techniques, compositions, technology, information, data, results of tests, studies, statistical and other analyses and expertise, whether patented or unpatented to the extent related to the Product in the Territory or to the extent related to the synthesis or manufacture of the Product or any component thereof anywhere in the world to the extent exclusively related to the marketing, selling, offering for sale, distributing or using the Product in the Territory, now in possession of Synthon or an Affiliate of Synthon, which are at the time of the Closing used in development, formulation, manufacture of the Product. Know-How shall include, without limitation, pharmacology, toxicology, drug stability, manufacturing and formulation methodologies and techniques, clinical and non clinical safety and efficacy studies, marketing studies and absorption, excretion, metabolism studies, quality control and quality assurance, and all tangible manifestations thereof, subject to Synthon’s rights to retain a copy of documents set forth in the definition of “Purchased Assets” below. To the extent any of such information, technology or know-how has applicability to products other than the Product in the Territory or other than to the synthesis or manufacture of the Product or any component thereof anywhere in the world to the extent exclusively related to the marketing, selling, offering for sale, distribution or use of the Product in the Territory, the assignment of Know-How hereunder shall be limited to the grant of a fully paid, exclusive (with respect to the Territory), perpetual license to use such information, technology or know-how only to the extent related to the Product. “ JDS Know-How ” shall mean any such Know-How now or hereafter possessed by JDS which would be defined in this Section if possessed or developed by Synthon.

          “ Law ” shall mean all applicable laws (including, without limitation, the Federal Food, Drug and Cosmetic Act, as amended, corresponding Canadian law and other national, state, provincial and local laws) governing the manufacture, marketing, advertising, distribution and sale of the Product or any other obligations of the parties thereunder, including regulations promulgated thereunder.

           “Licensed Patents” shall mean

          (a) each claim of each patent of Synthon or any Affiliate listed on Schedule 1A and Schedule 1B ;

          (b) each claim of each patent issuing from or on each patent application listed on Schedule 1A and Schedule 1B ; and

          (c) each claim of each application for letters patent which has been filed by or assigned to Synthon, or any of its Affiliates, as the case may be, and each claim of each patent issuing from or on any such application, claiming the Product or methods for making or using the Product and in each case (including subsections (a) and (b) above) including extensions, continuations, continuations-in-part, reissues and divisions thereof, and any other patents or patent applications relating to any form or derivative of paroxetine, including, but not limited to, salts, esters, chelates, enantiomers, diastereoisomers, prodrugs and metabolites.

          For purposes of this definition only, the term “Product” shall be deemed to include any form or derivative of paroxetine, including but not limited to, salts, esters, chelates, enantiomers, diastereoisomers, prodrugs and metabolites. From and after the date hereof, from time to time as appropriate, Synthon shall update Schedules 1A and 1B to reflect any additional patents and patent applications which fall within the scope of subsection (c) above.

          “ Manufacturing Agreements ” shall mean the contracts and agreements identified on Schedule 1D relating to the formulation, manufacture, packaging, testing, validation, storage or shipment of the Product or any component thereof.

          “ Marketing Authorization ” shall mean the approval by a Regulatory Authority permitting the marketing, sale and distribution (and, if applicable, pricing and reimbursement) of the Product within the Territory, including, without limitation, the NDA.

          “ Marketing Information ” shall have the meaning set forth in Section 4.9 .

          “ Marketing Materials and Data ” shall mean all physician lists, customer lists, marketing studies, market research materials, advertising and promotional materials, other similar information and data, including without limitation, records of sales and cost data for the immediate three (3) years preceding the Closing, to the extent pertaining to the marketing or distribution of the Product in the Territory which items are in the possession or control of Synthon or any of its Affiliates, promotional booths and displays, and all equipment and other materials used in connection with the sale or promotion of the Product whether or not located at Synthon’s offices.

          “ NDA ” shall mean a New Drug Application including amendments and supplements thereto approved by the FDA in respect of the marketing of the Product in the United States and all corresponding applications and approvals in Canada.

           “Net Sales” of the Product for a period following the Closing shall mean the gross proceeds from sales of the Product in the Territory by JDS and its Affiliates or permitted licensees to unaffiliated third parties, less (i) allowances for returns and discounts given to customers, including, without limitation, discounts made by means of rebates, Chargebacks or contract administration fees with customers that are directly related to sales of Product in the Territory (and including rebates or other payments required to be paid to governmental entities in connection with sales of Product in the Territory pursuant to the Omnibus Budget Reconciliation Act of 1990 and similar or other Federal or state legislation or programs) and (ii) any taxes or duties included in gross invoice amounts. For purposes of the definition of Net Sales, the term “Product” shall include all products marketed by JDS or a permitted licensee within the Territory which contain paroxetine mesylate. The Net Sales shall be calculated in accordance with US GAAP.

           “Patents” shall mean:

          (a) each claim of each patent of Synthon or any Affiliate listed on Schedule 1C ; and

          (b) each claim of each patent issuing from or on each patent application listed on Schedule 1C .

           “Product” shall mean any pharmaceutical product containing paroxetine mesylate in all dosage forms and formulations, including, without limitation, the pharmaceutical product known as Pexeva ^® paroxetine mesylate approved for marketing in the United States pursuant to NDA 21-299, whether sold under the “Pexeva ^® ” trademark, any other brand name or as a generic product.

          “ Product Intellectual Property ” shall mean any and all of the following intellectual property rights now owned or controlled (including, without limitation, by means of in-license) by Synthon or any Affiliate to the extent used in the development, manufacture, sale, use, marketing and distribution of the Product in the Territory or to the extent used in the synthesis or manufacture of the Product or any component anywhere in the world to the extent exclusively related to the marketing, sale, offer to sell, distribution or use of the Product in the Territory, or in obtaining Marketing Authorizations: (i) Patents (other than those listed in Schedules 1A and 1B which are addressed as “Licensed Patents” in Section 2.6); (ii) Know-How; (iii) copyrights in any copyrightable Marketing Material and Data; and (iv) Trademarks, proprietary rights to universal resource locators (URLs), websites and web pages to the extent exclusively related to the Product within the Territory.

          “ Purchase Price ” shall mean the consideration as further defined in Section 3.1 below paid by JDS to Synthon for the transfer of Synthon and it Affiliates’ entire right, title, and interest in the Product in the Territory and with respect to the synthesis and manufacture of the Product or any component thereof anywhere in the world to the extent exclusively related to the marketing, sale, offer for sale, distribution or use of the Product in the Territory.

          “ Purchased Assets ” shall mean the following: (i) the Product Intellectual Property; (ii) the license to the Licensed Patents referred to in Section 2.6 , (iii) all outstanding orders relating to the Product in the Territory and Contracts; (iv) the Inventory (but only to the extent JDS has elected to acquire Inventory at Closing pursuant to Section 2.2 ); (v) the Marketing Material and Data; (vi) the NDA; (vii) all rights or claims of Synthon or any Affiliate in respect to any of the foregoing against any third party including, without limitation, any prior owner of Product Intellectual Property but excluding any right of Synthon to receive payment for Product shipped prior to Closing; (viii) a nonexclusive right to use all Synthon equipment and machinery located at facilities where Product is manufactured (as set forth on Schedule 1F , which Schedule includes the location of such equipment and machinery) as long as JDS is manufacturing Product at such facility and in accordance with the further provisions set forth in Section 2.7 ; and (ix) all goodwill relating to any of the above. Synthon may retain a copy of all documents or materials included in the Purchased Assets for archival purposes, for purposes of fulfilling its obligations under this Agreement and under applicable Law and to the extent such documents or materials include or relate to Retained Assets (as hereinafter defined).

          “ Quarter ” shall mean the calendar quarterly periods ending March 31, June 30, September 30 and December 31.

          “ Regulatory Authority ” shall mean any governmental regulatory authority involved in the granting of approvals for the manufacture, sale, marketing, reimbursement or pricing of the Product (including, without limitation, the FDA) in the Territory.

          “ Retained Assets ” shall mean all assets of Synthon of any type, nature, status or description whatsoever, other than the Purchased Assets. For purposes of clarity and not of limitation, “Retained Assets” shall include (i) any Synthon intellectual property other than Product Intellectual Property and (ii) plant, equipment and fixed assets of Synthon other than as expressly included in the Purchased Assets.

           “Security Agreement” shall have the meaning set forth in Section 3.1(b) .

          “ Specifications ” shall have the meaning set forth in Section 4.8 .

           “Supply Agreement” shall mean that certain supply agreement to be entered into between Synthon and JDS on the Closing Date whereby Synthon has agreed to supply JDS with certain quantities of API and Inventory from time to time pursuant to the terms of such agreement in form and substance as annexed hereto as Exhibit D .

          “ Territory ” shall mean the United States and Canada.

          “ Threshold Loss Amount ” shall have the meaning set forth in Section 10.2(a) .

          “ Trademarks ” shall mean the trademarks set forth on Schedule 4.6(a) , including all goodwill associated therewith.

          “ Transition Period ” shall mean a period not to exceed ninety (90) days from the Closing during which time Synthon will assist JDS with certain defined services more fully set forth in the Transition Services Agreement.

          “ Transition Services ” shall mean the services provided by Synthon during the Transition Period under the Transition Services Agreement.

          “ Transition Services Agreement ” shall mean that certain transition services agreement entered into between Synthon and JDS on the Closing Date whereby Synthon will provide the Transition Services to JDS during the Transition Period in form and substance as annexed hereto as Exhibit A .

          “ United States ” shall mean the United States of America, and its territories and possessions, including Puerto Rico irrespective of its political status.

           “US GAAP” shall mean generally accepted accounting principles that are in effect in the United States.

     2.  Purchase and Sale of Purchased Assets .

          2.1. Purchase and Sale . Subject to the terms and conditions of this Agreement, at the Closing, Synthon shall sell, transfer, convey, assign and deliver, or cause to be sold, transferred, conveyed, assigned and delivered, to JDS, free and clear of all Encumbrances, and JDS, or any assignee or Affiliate of JDS, shall purchase, acquire and accept from Synthon (and, to the extent applicable, Affiliates of Synthon) all of Synthon’s (and, if applicable, its Affiliates’) right, title and interest in and to the Purchased Assets.

          2.2. Inventory . Prior to the Closing Date, the Parties shall cooperate to provide information to JDS as to Inventory (including lot numbers, dosage strengths and dating) which Synthon reasonably expects to have available as of the Closing Date. At least two (2) business days prior to the Closing Date, JDS will provide Synthon with a written notice of Inventory which JDS intends to purchase at closing (the “Inventory Notice). Promptly following receipt of the Inventory Notice, and in any event no later than, the business day prior to the Closing, Synthon shall provide JDS with written notice based

on the Inventory Notice indicating the number of lots of Inventory with at least 18 months left before expiration that it will have available at Closing, including specific dosage strengths and dating information (the “Closing Inventory”). JDS may elect, but shall not be obligated, to purchase some or all of the Closing Inventory at Inventory Cost. By notice to Synthon delivered at the Closing, JDS will indicate which lots of inventory are to be included in the Purchased Assets. Synthon shall deliver at Closing a Certificate stating that the Closing Inventory delivered to JDS as part of the Purchased Assets conforms to the description of the Closing Inventory (e.g., the number of lots, dosage strengths and dating) set forth on the JDS Inventory Notice. To the extent JDS has so elected to purchase Inventory at Closing, the cash portion of the Purchase Price payable pursuant to Section 3.1 will be increased as provided by Section 3.2 . Any remaining Inventory may be purchased by JDS from time to time pursuant to the Supply Agreement, provided, however, Inventory with less than twelve (12) months before expiration may be donated to accredited or recognized charitable organizations by Synthon outside of the Territory (subject to JDS prior written consent and provided the recipient agrees in writing not to export the Inventory to the Territory) or destroyed by Synthon. To the extent that Inventory purchased by JDS at Closing or pursuant to the Supply Agreement is not sold in the ordinary course, JDS may return to Synthon remaining Inventory with less than twelve (12) months left before expiration for a full refund, which JDS may obtain by offsetting the amount thereof against payments due to Synthon pursuant to 3.4 below, or to any other payments due to Synthon pursuant to this Agreement or the Supply Agreement.

          2.3. Retained Assets . Notwithstanding anything contained in this Agreement to the contrary, from and after the Closing, Synthon shall retain all of its right, title and interest in and to the Retained Assets. Notwithstanding the foregoing, except as expressly provided elsewhere in this Agreement, Synthon shall retain no interest, royalty or intellectual property rights relating to the Product in the Territory or relating to the synthesis or manufacture of the Product or any component thereof anywhere in the world to the extent exclusively related to the marketing, selling, offering for sale, distribution or use of the Product in the Territory.

          2.4. Delivery of Know-How . As described herein, Synthon shall disclose to JDS any Know-How in its possession on the Closing Date relating to the Product in the Territory or with respect to the synthesis or manufacture of the Product or any component thereof anywhere in the world to the extent exclusively related to the marketing, sale, offer for sale, distribution or use of the Product in the Territory and shall deliver to JDS at the Closing all tangible manifestations thereof, subject to the rights of Synthon to retain copies provided herein. From and after the Closing Date, Synthon shall continue to cooperate with JDS, as JDS may from time to time reasonably request, in order to more fully convey the Know-How to JDS.

          2.5. Contracts and NDA . Subject only to the provisions of the Transition Services Agreement and as set forth below, JDS will assume the obligations under the Contracts and the NDA to the extent arising from and after the Closing.

          2.6. Patent License . At the Closing, Synthon shall grant to JDS a fully paid-up, perpetual license in form and substance as set forth on Exhibit C .

          2.7. Right to Use Equipment and Machinery . In connection with and during the term of the grant by Synthon to JDS of the non-exclusive right to use the equipment and machinery listed on Schedule 1E included in the Purchased Assets, Synthon agrees that it shall not remove or relocate any of such equipment or machinery from its current location or use or authorize the use of any such equipment or machinery in any manner which would prevent or delay the use thereof by JDS for the manufacture of Product. To the extent Synthon uses or grants a licensee the use of any of the equipment or machinery for any purpose, any incremental costs incurred in connection with the use of such equipment or machinery for the manufacture of Product, including but not limited to costs associated with cleaning or validation of the equipment and machinery, shall be for Synthon’s account.

     3.  Purchase Price .

          3.1. Payments of Purchase Price . As full consideration for the Purchased Assets, JDS shall pay or cause to be paid to Synthon the following separate and distinct payments which together constitute the Purchase Price (the “ Purchase Price ”):

          (a) US $10,000,000, subject to adjustment as set forth in Sections 3.2 and 3.3 below, to be paid by wire transfer of immediately available funds on the Closing Date to an account designated by Synthon in writing;

          (b) US $2,000,000 on each of December 31, 2007 and December 31, 2008 plus (i) $1,000,000 if Net Sales during the calendar year ending on the date of such payment equal or exceed US $7,000,000 but are less than US $8,000,000 or (ii) $2,000,000 if Net Sales during the calendar year ending on the date of such payment equal or exceed US $8,000,000. Any additional payment pursuant to subclauses (i) or (ii) of this Section shall be paid by wire transfer on the last business day of the first calendar quarter of the year immediately following the calendar year in respect of which such payment became due. At the Closing, JDS and Synthon will execute and deliver a security agreement in substantially the form and substance as annexed hereto as Exhibit B (the “Security Agreement”) pursuant to which JDS will provide collateral security to Synthon for the payments contemplated by this subsection (b) in accordance with the terms and conditions therein set forth. JDS reserves the right to prepay all or any portion of the Purchase Price provided by this Section 3.1(b) at any time on or after the Closing. The parties agree that any such prepayment will be discounted at a rate of 9.75% per annum from the original due date of the payment to the date of payment prepaid based on the number of days in such period, determined in the inverse order of maturity. Notwithstanding the foregoing, any prepayment which does not include payment with respect to amounts which may become due pursuant to subclauses (i) or (ii) above will not discharge the obligation to make any such payments as they otherwise become due and payable;

          (c) US $1,250,000, payable with respect to each of the first two calendar years, if any, from 2007 through 2017, inclusive, as to which annual Net Sales equal or exceed US $10,000,000. Each such payment shall be paid by wire transfer on the last business day of the first calendar quarter of the year immediately following the calendar year in respect of which such payment became due. In the event one or both of the payments provided by this subsection does not accrue before January 1, 2009, any of such payments which subsequently become due shall be increased by a factor of 5% per annum commencing on January 1, 2009; and

          (d) US $5,000,000, payable with respect to the first calendar year, if any, from the Closing through and including 2017, as to which annual Net Sales equal or exceed US $30,000,000. Such payment shall be made by wire transfer on or before the last business day of the first calendar quarter of the year immediately following the calendar year in respect of which such payment became due.

          3.2. Purchase Price Adjustment for Inventory . To the extent JDS has elected to purchase Inventory as of the Closing Date, the Purchase Price payment pursuant to Section 3.1(a) shall be increased by an amount equal to the product of (i) the number and type of units of Inventory purchased multiplied by (ii) the Inventory Cost for each such Unit.

          3.3. Purchase Price Adjustment for Distribution Channel Inventory . In addition to the adjustment provided by Section 3.2 and whether or not JDS has elected to purchase Inventory at the

Closing, the Purchase Price payable pursuant to Section 3.1(a) shall be adjusted to reflect Inventory of Product sold by Synthon prior to the Closing and then held by wholesalers or other distributors in accordance with the following provisions of this Section:

          (a) Synthon and JDS agree that the average quantities of Product historically maintained by wholesalers in the Territory or to the extent exclusively maintained for sale, offer for sale, distribution or use in the Territory (the “Average Wholesaler Inventory”) is *** bottles.

          (b) Prior to the Closing, Synthon shall obtain and disclose to JDS inventory reports from McKesson, Amerisource Bergen, and Cardinal, which reports provide information as to wholesaler inventory and in-transit in-bound quantities of Product as of the most recent practicable date prior to the Closing Date (the “Closing Wholesaler Inventory”). The parties agree that the sum of the McKesson, Amerisource Bergen, and Cardinal inventory reports shall be deemed to constitute eighty-five percent (85%) of the Closing Wholesaler Inventory.

          (c) In the event the Closing Wholesaler Inventory exceeds the Average Wholesaler Inventory, the Purchase Price payable pursuant to Section 3.1 (as adjusted, to the extent required, by Section 3.2 ) shall be reduced by an amount equal to the product of (i) the number of bottles by which the Closing Wholesaler Inventory exceeds the Average Wholesaler Inventory and (ii) the Average Selling Price.

          3.4. Additional Fee .

          (a) As part of the Purchase Price delivered in consideration for the Purchased Assets, and in addition to the amounts set forth in Section 3.1 hereof, JDS shall pay Synthon $.075 for each tablet of the Product or any product containing paroxetine mesylate as an active ingredient that is sold for commercial distribution by JDS, its agents or Affiliates (the “Additional Fee”) during the Additional Fee Period. For purposes of clarification, no Additional Fee shall be attributed to the Product or any product containing paroxetine mesylate as an active ingredient distributed as samples or held in inventory by JDS, its agents or Affiliates. Additional Fee shall be payable Quarterly within 45 days of the end of the Quarter to which each payment relates. Each payment of Additional Fee shall be accompanied by a statement setting forth the number of tablets sold by JDS, its agent or Affiliate for the Quarter.

          (b) Subject to sections (c), (e) and (f) below, in the event the Additional Fee payments for a calendar year are less than $350,000, JDS shall pay Synthon the difference between the total Additional Fee paid with respect to such calendar year and $350,000, which amount shall be paid together with the Additional Fee payment for the first Quarter of the following calendar year.

          (c) In the event the Additional Fee payments for any calendar year are in excess of $350,000, the excess shall be applied to reduce the annual minimum Additional Fee obligation for the next (and subsequent) calendar years until such entire excess has been so applied.

          (d) JDS’s total payments of Additional Fees to Synthon with respect to sales of the Product or any product containing paroxetine mesylate as an active ingredient during the Additional Fee Period shall equal at least the Additional Fee Aggregate Minimum (as defined below). The Additional Fee Aggregate Minimum shall be equal to $10,000,000, provided however, if the Additional Fee Period ends prior to the Additional Fee Expiration Date, the Additional Fee Aggregate Minimum shall be adjusted to equal $10,000,000 multiplied by a fraction, the numerator of which is the number of months in the Additional Fee Period and the denominator of which shall be the number of months from the Closing Date until June 10, 2017. In the event payments of Additional Fee pursuant to this Section during the Additional Fee Period are less than the Additional Fee Aggregate Minimum, JDS shall pay the

difference between the total Additional Fee paid and the Additional Fee Aggregate Minimum within 45 days of the Additional Fee Period. JDS reserves the right to prepay the amount of any Additional Fee Aggregate Minimum remaining due (after taking into account all previous payments of Additional Fee) at any time on or after Closing. The parties agree that any such prepayment will be discounted at a rate of 9.75% per annum from June 10, 2017 to the date of payment prepaid based on the number of days in such period. The prepayment of the Additional Fee Aggregate Minimum shall constitute payment in full of all obligations pursuant to this Section 3.4 and no further payments of Additional Fee shall be due thereafter.

          (e) With respect to the partial calendar years at the beginning and the end of the Additional Fee Period, that is (i) the period from the Closing Date until the end of the first Calendar Year and (ii) the period from January 1 of the final year of the Additional Fee Period and the last day of the Additional Fee Period, (assuming the last day is prior to December 31 of the final year of the Additional Fee Period) the minimum threshold amount described in Section 3.4(b) shall be adjusted downward on a pro rata basis. For example, if there are only 292 days in a partial calendar year, the minimum Additional Fees for such period shall be $280,000.

          (f) To the extent that JDS has purchased Inventory, excluding samples, from Synthon as of the Closing Date pursuant to Section 3.2 above, a credit in the amount of $.075 times each Tablet included in the purchased Inventory, excluding samples, (the “Additional Fee Credit”) shall be applied (i) to reduce any Additional Fee payment required pursuant to Section 3.4 (a) as such Additional Fee becomes due and payable until the entire Additional Fee Credit has been so applied and (ii) to reduce the $350,000 Additional Fee minimum payable pursuant to Section 3.4(b) until the entire Additional Fee Credit has been so applied, provided, however, the Additional Fee Credit shall not be applied to reduce the $10,000,000 total Additional Fee Aggregate Minimum payable pursuant to Section 3.4(d) .

          (g) JDS shall maintain accurate books and records for a period of no less than three years from the periods covered reflecting commercial sales of Product during the Additional Fee Period, which books and records shall be available for audit and inspection by Synthon or an independent auditing firm to which JDS has no reasonable objection from time to time upon reasonable advance notice solely for purposes of verifying the amount of Additional Fees and other payments due under this Agreement. In the event any such audit discloses that Additional Fee payments or other payments were underpaid by 5% or more with respect to any consecutive six (6) month period, JDS shall reimburse Synthon for the reasonable cost of the audit and shall be liable for interest equivalent to 1% compounded monthly of the aggregate amount of the discrepancy from the date such payments were due.

          3.5. Adjustments upon Transfer . Unless otherwise waived by means of a written waiver by Synthon, JDS shall not assign, transfer or exclusively license (whether by means of a sale of substantially all of JDS’s business or assets, or by merger, stock sale or similar corporate reorganization) its rights to the Product to any third party other than an Affiliate unless, effective with closing of any such transaction, all Purchase Price provided by Section 3.1(b) (except to the extent of additional payments pursuant to subclause (i) or (ii) thereof not yet due, which will be treated in accordance with the further provisions of this Section) and the Additional Fee Aggregate Minimum provided by Section 3.4(d) and not yet payable as of such date, shall have been paid to Synthon, provided that each such payment shall be discounted at a rate of 9.75% per annum from the original due date of the payment to the date of payment prepaid based on the number of days in such period, determined in the inverse order of maturity. The prepayment of the Additional Fee Aggregate Minimum shall constitute payment in full of all obligations pursuant to Section 3.4 and no further payments of Additional Fee shall be due thereafter. In addition, JDS shall be required to cause the purchaser or transferee of JDS’s rights to the Product to assume in writing for the benefit of Synthon the obligation to make all other payments pursuant to Section 3.1 as and when such payments would otherwise become due and payable hereunder. In the event the purchaser or transferee of JDS’s rights to the Product defaults in any payment obligation pursuant to Section 3.1,

JDS shall remain liable for the full amount of such obligation until such time as the amount is paid in full and shall promptly, and in no event later than ninety (90) days, remit such payment to Synthon upon receipt of a notice of payment default on the part of such purchaser or transferee. JDS agrees to provide notice to Synthon of the pendency of any transaction referred to in this Section 3.5 as promptly as practicable in advance of the closing of any such transaction.

     4.  Representations and Warranties of Synthon . Except as otherwise disclosed on Schedule 4 (Exceptions) (which Schedule indicates the section to which each exception relates), Synthon hereby represents and warrants to JDS as follows:

          4.1. Organization; Standing . Synthon is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.

          4.2. Authorization; Binding Effect . The execution and delivery by Synthon of this Agreement, the performance by Synthon of its obligations hereunder and the consummation by Synthon of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Synthon. This Agreement has been duly executed and delivered by a duly authorized representative of Synthon and constitutes the valid and legally binding obligation of Synthon enforceable against Synthon in accordance with its terms.

          4.3. No Conflict; Consents . The execution, delivery and performance of this Agreement by Synthon do not (a) violate or result in the breach of, constitute a default under, or accelerate the performance required by, any term of any covenant, agreement or understanding to which Synthon or any Affiliate is a party, or any judgment, order, decree, law, rule or regulation to which Synthon or any Affiliate is subject or (b) require the consent or agreement of any third party (including governmental bodies).

          4.4. Title to Purchased Assets; Liens and Encumbrances . Synthon or an Affiliate has, and on the Closing Date will have, good title to the Purchased Assets, free and clear of all Encumbrances whatsoever. Synthon’s disclosure and delivery of the Product Intellectual Property, including Know-How, prior to, on or after the Closing Date to JDS in the manner contemplated hereby will not violate the rights of any third party.

          4.5. Claims; Litigation . There is no action, arbitration, or other legal or administrative proceeding, pending, or, to the knowledge of Synthon, threatened, against Synthon or any Affiliate pertaining to the Product or the Purchased Assets (including, without limitation, claims in the nature of product liability or patent or other intellectual property infringement), no claims by any individual named on Schedule 4.12 against Synthon, and, to the best of Synthon’s knowledge, no governmental investigation pertaining to any of the foregoing is pending or threatened, in each such case in any country. Synthon has in good faith made available to JDS all of its files and the files of each Affiliate relating to the Purchased Assets and has delivered true and complete copies thereof to JDS, all communications with regulatory authorities in the Territory with respect to the Product (except for purely ministerial, non-substantive communications).

          4.6. Product Intellectual Property .

          (a) Schedule 4.6(a) constitutes a true and correct list of all Product Intellectual Property (inclusive of such properties as are owned, or in-licensed by Synthon or any Affiliate or presently used by Synthon or its Affiliates). Synthon or an Affiliate owns all right, title and interest in

and to all of the Synthon or Affiliate owned properties, and the full right and interest in and to the in-licensed properties, and is legally entitled to transfer to JDS, all of the Product Intellectual Property. Such transfer to JDS is free and clear of all Encumbrances (for all properties) and free of license or royalty obligations to any third party whatsoever (other than those designated as in-licensed, in which case any royalty or other obligation of Synthon or any Affiliate to any third party is separately identified and disclosed on Schedule 4.6(a)) and free of all license or royalty obligations to any party other than the identified licensor and obligations for in-licensed properties identified on Schedule 4.6(a) . No third party (including, for this purpose, directors, officers, employees or other consultants to or agents for Synthon or any Affiliate) has any legal or beneficial interest in the Product Intellectual Property or any right to restrict, limit or terminate any of Synthon’s or its Affiliates’ rights to the Product Intellectual Property.

          (b) All necessary registration, maintenance and renewal fees due in connection with such Product Intellectual Property have been paid through the Closing Date and all necessary documents and certificates in connection with such Product Intellectual Property have been filed with the relevant patent, copyright or other governmental or Regulatory Authorities for the purposes of maintaining such Product Intellectual Property.

          (c) Synthon does not know of any reasonable basis for anyone to assert that the manufacture, importation, sale, marketing, promotion or use of the Product infringes or misappropriates the intellectual property rights of any third party in the Territory, or anywhere in the world with respect to Purchased Assets to the extent utilized by Synthon for purpose of making, using, selling, offering to sell, or distributing the Product in the Territory or synthesizing or making the Product anywhere in the world to the extent exclusively related to the marketing, sale, offer for sale, distribution or use of the Product in the Territory, and has not received any notice from any person of any claims of infringement or misappropriation with respect thereto. Other than the patent interference proceedings with GlaxoSmithKline described further on Schedule 4 that were resolved in Synthon’s favor, no claim of ownership, infringement or invalidity adverse to the ownership or use by Synthon or any Affiliate of any of the Product Intellectual Property (including without limitation, any such claim by any shareholder, officer, director, manager, employee, consultant or agent of Synthon or any Affiliate) has been asserted nor does Synthon know of any reasonable bas