Portions of this exhibit marked [*] are omitted and

are requested to be treated confidentially.

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this Agreement), is entered into as of June 30, 2004, by and among KING PHARMACEUTICALS, INC., a Tennessee corporation (King), MONARCH PHARMACEUTICALS, INC., a Tennessee corporation (Monarch), PARKEDALE PHARMACEUTICALS, INC., a Michigan corporation (Parkedale and together with King and Monarch, Seller), SALIX PHARMACEUTICALS, INC., a California corporation (Salix Sub), and SALIX PHARMACEUTICALS, LTD., a Delaware corporation (Salix Parent and together with Salix Sub, Buyer).

WHEREAS, Seller wishes to sell or license to Buyer, and Buyer wishes to acquire from Seller, certain rights of Seller in the pharmaceutical products known as Anusol-HC and Proctocort, and, in connection therewith, Buyer shall assume from Seller certain liabilities related to such products.

NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements contained in this Agreement, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, Seller and Buyer hereby agree as follows:

ARTICLE 1

DEFINITIONS AND REFERENCES

As used in this Agreement, the following capitalized terms have the meanings specified below:

Accounts Receivable means all accounts receivable, trade accounts, notes receivable and other miscellaneous receivables, including those that are not evidenced by instruments or invoices, arising out of sales of the Products by or on behalf of Seller or its Affiliates on or prior to 11:59 p.m. EST on the Closing Date.

Acquired Assets has the meaning set forth in Section 2.1.

Advertising and Promotional Materials means all existing advertising and promotional materials, including flyers, brochures, pamphlets and

video cassettes, or any similar materials or items, which pertain exclusively to the Products and are in the possession of Seller on the Closing Date.

Affiliates means, with respect to any Person, any Persons directly or indirectly controlling, controlled by, or under common control with, such Person. For purposes hereof, the term controlled (including the terms controlling, controlled by and under common control with), as used with respect to any Person, shall mean the direct or indirect ability or power to direct or cause the direction of management policies of such Person or otherwise direct the affairs of such Person, whether through ownership of voting securities or otherwise.

Allocation Schedule has the meaning set forth in Section 4.4.

Anusol ANDA means the abbreviated new drug application requesting permission to place Anusol-HC 2.5% (Hydrocortisone Cream, USP) on the market in accordance with section 505(j) of the FDCA (21 U.S.C. 355(j)) and 21 C.F.R. 314, Part 314 Subpart C, and all supplements thereto filed pursuant to the requirements of the FDA.

Anusol Consent Agreement means, with respect to the Anusol Trademark License, that certain License Assignment and Consent Agreement dated as of the date hereof by and among Warner-Lambert Company LLC, Parke, Davis & Company LLC, King, Parkedale and Buyer.

Anusol Trademark means the registered trademark listed on Appendix A-1.

Anusol Trademark License Agreement means that certain License Agreement dated February 27, 1998 by and among Warner-Lambert Company, Parke, Davis & Company and Parkedale.

API means active pharmaceutical ingredient.

Assigned Partial License has the meaning set forth in the Anusol Consent Agreement.

Assigned Trademarks means the registered trademarks listed on Appendix A-2, including any goodwill associated therewith.

Assignment of Trademarks means that certain Assignment of Trademarks, dated as of the Closing Date and executed by Monarch and Parkedale, substantially in the form attached hereto as Exhibit A.

Assumed Liabilities has the meaning set forth in Section 3.1.

-2-

Assumption Agreement means that certain Assumption Agreement, dated as of the Closing Date and executed by Seller and Buyer, substantially in the form attached hereto as Exhibit B.

Bill of Sale means that certain Bill of Sale and Assignment of Assets, dated as of the Closing Date and executed by Seller, substantially in the form attached hereto as Exhibit C.

Business means the manufacturing, marketing, promotion and sale of the Products as conducted by Seller in Sellers ordinary course of business in the Territory prior to the Closing Date.

C.F.R. means the United States Code of Federal Regulations.

Cap has the meaning set forth in Section 9.5(a).

Closing means the consummation of the purchase and sale of the Acquired Assets and the assumption of the Assumed Liabilities, all as contemplated by this Agreement.

Closing Date has the meaning set forth in Section 7.1.

Confidentiality Agreement has the meaning set forth in Section 6.7.

Damages means any and all costs, losses, damages, claims, liabilities, fines, penalties and expenses, court costs, and reasonable fees and disbursements of counsel, consultants and expert witnesses incurred by a party hereto; provided that Damages shall not include any indirect, incidental, consequential, exemplary or punitive damages or other special damages, lost profits, damage to goodwill or loss of business.

Deductible has the meaning set forth in Section 9.5(a).

Disclosure Schedules has the meaning set forth in Section 5.1.

Encumbrances means any pledges, liens, claims, licenses (other than the Assigned Partial License), security interests, restrictions, defects in title, encumbrances or charges.

Equivalent Product has the meaning set forth in Section 6.2.

Excluded Assets has the meaning set forth in Section 2.2.

Excluded Liabilities has the meaning set forth in Section 3.2.

-3-

FDA means the United States Food and Drug Administration and any successor agency or entity that may be established hereafter.

FDA Transfer of Ownership Letter means the letter submitted by each of the parties and the application form submitted by Buyer to the FDA notifying the agency of the change in ownership of the Anusol ANDA in accordance with 21 C.F.R. 314.72.

FDCA means the federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder.

FSS has the meaning set forth in Section 6.4(d)(ii).

Governmental Authority means any governmental agency, board or commission or other governmental authority or other instrumentality of the United States, any state, county, city or other political subdivision within the United States or any other jurisdiction within the Territory (including the FDA).

Government Rebates has the meaning set forth in Section 6.4(b)(i).

Indemnified Party has the meaning set forth in Section 9.4.

Indemnifying Party has the meaning set forth in Section 9.4.

Interim Period Date has the meaning set forth in Section 6.4(b)(i).

Inventory means all rights of Seller in the finished goods inventory of the Products that are owned by Seller as of the Closing Date (a) that are packaged, tested, released and ready for sale to the ultimate consumer as of the Closing Date, and (b) that have expiration dates of at least twelve (12) months after the Closing Date. The Inventory is listed on Appendix A-3 hereto by Product, including lot numbers and expiration dates.

Labeling means any and all written, printed, or graphic matter on or affixed to an existing Product or its Packaging Materials, or accompanying the existing Product.

Liabilities means, as to any Person, all debts, adverse claims, liabilities and obligations, direct, indirect, absolute or contingent of such Person, whether accrued, vested or otherwise, whether in contract, tort, strict liability or otherwise and whether or not actually reflected, or required by generally accepted accounting principles to be reflected, in such Persons balance sheets or other financial books and records.

License has the meaning set forth in Section 2.5.

-4-

Licensed Technology means any know-how, secrets, manufacturing methods or processes and technical data owned or in the possession of Seller, or that is discovered by or comes into the possession of Seller during the term of the Supply Agreement, in any case that is reasonably necessary and used by Seller in the manufacture or packaging of the Products and that Seller has the right to provide to Buyer.

Material Adverse Effect means (a) a material adverse effect on the Acquired Assets, taken as a whole or (b) a material impairment of the ability of Seller to fulfill Sellers obligations under this Agreement; provided, that the term Material Adverse Effect shall specifically exclude any material adverse effect caused by, arising out of or related to (i) factors affecting the pharmaceutical products market generally or the markets in which the Products compete, (ii) general, national, regional or local economic or financial conditions, (iii) changes in laws, rules and regulations, or (iv) the failure to achieve any financial or operational targets, projections or milestones set forth in any business plan or budget.

Maximum Returns Credit Amount has the meaning set forth in Section 6.4(a)(iii).

NDC means National Drug Code.

Packaging Materials means any and all containers or wrappings in which an existing pharmaceutical product is enclosed for use in the delivery or display of the existing pharmaceutical product.

Person means a natural person, a corporation, a partnership, a trust, a joint venture, a limited liability company, any Governmental Authority or any other entity or organization.

Proctocort Cream means Proctocort Cream (Hydrocortisone Cream USP) 1%.

Product Labeling and Packaging Materials means all existing Labeling and Packaging Materials owned or developed by Seller, solely to the extent such Labeling and Packaging Materials pertain exclusively to the Products and are in the possession of Seller on the Closing Date, provided that Product Labeling and Packaging Materials shall not include any Packaging Materials that may be used or useful in the delivery or display of any pharmaceutical products other than the Products or that do not bear printed matter pertaining exclusively to the Products.

Products means Anusol-HC 2.5% (Hydrocortisone Cream, USP); Anusol-HC 25-mg Suppository (Hydrocortisone Acetate); Proctocort Cream

-5-

(Hydrocortisone Cream USP) 1%; and Proctocort Suppositories (Hydrocortisone Acetate Rectal Suppositories, 30 mg). Product means any of the foregoing individually.

Purchase Price has the meaning set forth in Section 4.1.

Required Consents means all consents, authorizations and approvals from third parties listed on Appendix B which are necessary for the valid assignment and transfer to Buyer of the Acquired Assets.

Restricted Territory has the meaning set forth in Section 6.2.

Returns Termination Date has the meaning set forth at Section 6.4(a)(iii).

Sales Data has the meaning set forth in Section 5.1.10.

Seller Intellectual Property has the meaning set forth in Section 5.1.4.

Seller Packaging Material has the meaning set forth in Section 2.3(d).

Supply Agreement has the meaning set forth in Section 2.6.

Territory means the fifty (50) states of the United States of America, the District of Columbia, the Commonwealth of Puerto Rico and all territories or possessions of the United States.

Threshold has the meaning set forth in Section 9.5(a).

Transferred Documentation means the following filings and submissions by Seller with the FDA, in each case to the extent related solely and exclusively to the Products and in Sellers possession as of the Closing Date, all as listed on Appendix C hereto: (a) field alerts and other filings related to a product complaint, adverse event reports, medical inquiry filings, blank/sample batch records and analytical procedures, (b) the Anusol ANDA and (c) other filings and submissions by Seller with the FDA during the three (3) year period prior to the Closing Date.

WAC has the meaning set forth in Section 6.4(g).

Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural

-6-

number also include the plural or singular number, respectively; (c) the terms hereof, herein, hereby and derivative or similar words refer to this entire Agreement; (d) all references herein to Articles or Sections are to Articles or Sections of this Agreement; (e) the term or has, except as otherwise indicated, the inclusive meaning represented by the phrase and/or; and (f) the words include, includes and including shall be deemed to be followed by the phrase without limitation.

ARTICLE 2

PURCHASE AND SALE OF ASSETS

On the Closing Date, and subject to the terms and conditions of this Agreement, Seller shall sell, assign, convey, transfer and deliver to Buyer, and Buyer shall purchase, assume and accept from Seller, all of Sellers right, title and interest in and to the following (collectively, the Acquired Assets), free and clear of Encumbrances:

(a) the Advertising and Promotional Materials;

(b) the Anusol ANDA;

(c) the Assigned Partial License;

(d) the Assigned Trademarks;

(e) the Product Labeling and Packaging Materials; and

(f) the Transferred Documentation.

Notwithstanding anything herein to the contrary, Seller does not and shall not sell, assign, convey, transfer or deliver, and Buyer does not and shall not purchase, assume or accept, any assets or rights not specifically listed and identified in Section 2.1 (the Excluded Assets), including:

(a) the trademarks KING, KING PHARMACEUTICALS, KINGPHARM, MONARCH, MONARCH PHARMACEUTICALS, PARKEDALE, PARKEDALE PHARMACEUTICALS and any variation thereof or derivation therefrom, and any other rights in or to such names or the names of any other Affiliates of Seller;

(b) internet or website addresses and domain names of Seller or its Affiliates and any applications and registrations therefor;

-7-

(c) the Accounts Receivable;

(d) any formulations, specifications, rights, uses, indications, technology, data, intellectual property and other assets related to or used in connection with other products of Seller or its Affiliates;

(e) all contracts of insurance and all insurance plans related to the Products and the assets of such insurance plans;

(f) any and all claims of Seller with respect to any tax refunds, credits, or similar benefits;

(g) any and all claims of Seller with respect to any other refund or rebate related to the Products;

(h) all rights and claims relating to any Excluded Assets or any Excluded Liabilities, including all guarantees, warranties, indemnities and similar rights in favor of Seller with respect to any Excluded Assets or any Excluded Liabilities;

(i) any Packaging Materials that may be used or useful in the delivery or display of any pharmaceutical product other than the Products or that do not bear printed matter pertaining exclusively to the Products;

(j) all of (i) Sellers organizational documents and other corporate records, and originals of account books of entry, (ii) any books, records, accounts, checks, payment records, tax records (including payroll, unemployment, real estate and other tax records) and other similar books, records and information of Seller relating to the Business and the Products, (iii) all records prepared by, for or on behalf of Seller in connection with the sale of the Products, and (iv) any and all records and documents to the extent relating to any Excluded Assets; and

(k) all of the rights of Seller under or pursuant to this Agreement or any other rights in favor of Seller pursuant to any other agreement contemplated hereby or thereby.

Buyer further acknowledges and agrees that notwithstanding anything to the contrary in this Agreement, (i) Seller shall retain exclusively all know-how and rights necessary for Seller to manufacture, market, sell, and distribute all pharmaceutical products other than the Products, and (ii) Buyer shall acquire no right, title, or interest whatsoever in or to any property or assets of Seller or any of Sellers Affiliates except as expressly set forth in this Agreement.

-8-

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC