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Nephrotic Syndrome (NS): Acthar is indicated “to induce a diuresis or a remission of proteinuria in the nephrotic syndrome without uremia of the idiopathic type or that due to lupus erythematosus.” According to the National Kidney Foundation, nephrotic syndrome can result from several idiopathic type kidney disorders, including idiopathic membranous nephropathy, focal segmental glomerulosclerosis, IgA nephropathy and minimal change disease. Nephrotic syndrome can also occur due to lupus erythematosus. In this Form 10-K, the terms “nephrotic syndrome” and “NS” refer only to the proteinuria in nephrotic syndrome conditions that are covered by the Acthar label of approved indications.

•	Multiple Sclerosis (MS): Acthar is indicated “for the treatment of acute exacerbations of multiple sclerosis in adults. Controlled clinical trials have shown H.P. Acthar Gel to be effective in speeding the resolution of acute exacerbations of multiple sclerosis. However, there is no evidence that it affects the ultimate outcome or natural history of the disease.”

•

Infantile Spasms (IS): Acthar is indicated “as monotherapy for the treatment of infantile spasms in infants and children under 2 years of age.” We continue to support this vulnerable patient population. We believe that a significant percentage of the $262 million in free drug we have provided through the National Organization of Rare Disorders, from September 2007 through December 31, 2012, has been used to treat IS. We support the IS community through other initiatives. In February 2012, we were awarded the first-ever Corporate Citizenship Award presented by the Child Neurology Foundation. This award honors our long-term commitment to support the child neurology community as well as our specific efforts to fund education and research related to IS.

•

Rheumatology Related Conditions: Acthar is approved for the following rheumatology related conditions: (i) Collagen Diseases: Acthar is indicated "during an exacerbation or as maintenance therapy in selected cases of systemic lupus erythematosus, systemic dermatomyositis (polymyositis)" and (ii) Rheumatic Disorders: Acthar is indicated as "adjunctive therapy for short-term administration (to tide the patient over an acute episode or exacerbation) in: Psoriatic arthritis, Rheumatoid arthritis, including juvenile rheumatoid arthritis (selected cases may require low-dose maintenance therapy), and Ankylosing spondylitis."

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•	On-Label Development. We continue to explore additional markets for other on-label indications. Our on-label, in-house clinical development efforts include the following:

•	Nephrotic Syndrome (NS). We are the sponsor of a Phase 4 clinical trial evaluating Acthar for the treatment of proteinuria associated with treatment-resistant idiopathic membranous nephropathy (IMN), which commenced patient dosing in the fourth quarter of 2011.

•	Systemic Lupus Erythematosus (SLE). We are conducting Phase 4 clinical trials evaluating Acthar for the treatment of SLE and randomized our first patient in January 2013.

•

Other Indications, Not On-Label. We are exploring the possibility of pursuing FDA approval for indications not currently on the Acthar label involving other serious, difficult-to-treat autoimmune and inflammatory disorders with high unmet medical need. Our in-house research and development efforts with respect to the use of Acthar to treat conditions that are not on the label of approved indications for Acthar include the following:

•	Diabetic Nephropathy (DN). We reached agreement with the FDA with respect to our investigational new drug application, or IND, for a small Company-sponsored study to evaluate the safety and efficacy of Acthar in treating DN.

•	Amyotrophic Lateral Sclerosis (ALS). We are evaluating the potential clinical benefit that Acthar may provide for the treatment of ALS (commonly referred to as Lou Gehrig's disease). We expect to file an IND and initiate a proof-of-concept trial of Acthar in ALS in the first half of 2013.

•	Pharmacology. We are conducting in-house non-clinical and clinical pharmacology studies:

•	We seek to expand our understanding of the mechanism(s) of action of Acthar as well as the pharmacology of Acthar across and within each indication. We are also conducting studies to expand our understanding of why Acthar acts differently than steroids and potentially other melanocortin peptides.

•	On-Label Development. On-label, third-party clinical development efforts include the following:

•

Nephrotic Syndrome (NS). We are supporting clinical nephrology investigator-initiated studies evaluating: (i) the safety and efficacy of Acthar in IMN; (ii) the safety and efficacy of Acthar in proteinuria in nephrotic syndrome due to focal segmental glomerular sclerosis (FSGS); and (iii) the safety and efficacy of Acthar in treating proteinuria in treatment-resistant nephrotic syndrome (including IMN, FSGS, IgA nephropathy and minimal change disease).

•	Infantile Spasms (IS). We are supporting an investigator-initiated study aimed at establishing quality of care indicators for IS.

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•	Other Indications, Not On-Label. We are supporting third-party research and development efforts with respect to the use of Acthar to treat conditions that are not on the label of approved indications for Acthar which include the following:

•	Multiple Sclerosis - Pulse Therapy. We are supporting a clinical investigator-initiated study, examining pulse administration of Acthar in multiple sclerosis in conjunction with disease-modifying therapy to evaluate the possible disease modifying effects of Acthar.

•	Cognitive Protection/Autism. We are supporting a preclinical investigator-initiated study, to determine whether Acthar has protective effects in an animal model of epilepsy with concomitant autism-related cognitive dysfunction.

•	Traumatic Brain Injury (TBI): We are supporting a preclinical investigator-initiated study, to determine whether Acthar has protective effects in an animal model of TBI.

•	Pharmacology. We are supporting third-party non-clinical and clinical pharmacology studies:

•	Multiple Sclerosis. We are supporting an investigator-initiated study, evaluating the immune modulating effects of Acthar applied to serum from multiple sclerosis patients and an investigator-initiated study evaluating neuroprotective properties of adrenocorticotropic hormone that are relevant to multiple sclerosis.

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•	Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, our proxy statements on Schedule 14A, and amendments to these reports and statements;

•	Our policies related to corporate governance, including our Code of Ethics and Conduct which apply to our directors, officers and employees (including our principal executive officer and principal financial and accounting officer) that we have adopted to meet the requirements set forth in the rules and regulations of the SEC and its corporate governance principles; and

•	The charters of the Audit, Compensation, Nomination & Corporate Governance and Compliance Committees of our Board of Directors.

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•	the price of Acthar relative to other therapies for the same or similar treatments;

•	limited published data of the efficacy of Acthar for such additional therapeutic uses;

•	the perception by patients, physicians and other members of the health care community of the safety and efficacy of Acthar for their prescribed treatments;

•	the availability of third-party reimbursement for Acthar; and

•	the effectiveness of our sales and marketing efforts.

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•	the results from early pre-clinical or clinical trials may not be statistically significant or predictive of results that will be obtained from expanded, advanced clinical trials;

•	there may be delay or failure in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

•	we may experience delay or failure in recruiting and enrolling suitable patients to participate in a trial;

•	clinical sites and investigators may deviate from trial protocol or fail to conduct the trial in accordance with regulatory requirements, or drop out of a trial;

•	feedback from FDA, the Institutional Review Board, or data safety monitoring boards, or results from earlier stage or concurrent pre-clinical and clinical studies, may require modification to the study protocol;

•	a proposed new use for Acthar may not exhibit the expected therapeutic results in humans, may cause harmful side effects or have other unexpected characteristics that may delay or preclude regulatory approval or limit commercial use even if approved;

•	we, institutional review boards, or regulators, including the FDA, may hold, suspend or terminate our pre-clinical or clinical research or the pre-clinical or clinical trials of Acthar for various reasons, including noncompliance with regulatory requirements or if, in their opinion, the participating subjects are being exposed to unacceptable health risks;

•	the cost of our pre-clinical or clinical trials may be greater than we currently anticipate; and

•	the difficulties and risks associated with pre-clinical and clinical trials may result in the failure to receive regulatory approval to continue to test or to sell Acthar in new therapeutic uses or the inability to commercialize Acthar for any of these therapeutic uses.

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•	failure to demonstrate to FDA's satisfaction that Acthar is safe and effective for its proposed indications;

•	failure of clinical trials to meet the level of statistical significance required for approval;

•	failure to demonstrate that clinical and other benefits outweigh its safety risks;

•	disagreement with our interpretation of data from preclinical studies or clinical trials;

•	the data collected from clinical trials may be insufficient to support the submission and filing of an New Drug Application, or NDA, or supplement or to obtain regulatory approval; and

•	changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.

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•	Effective March 23, 2010, drug rebates are due on the utilization of Medicaid managed care organizations. This expanded eligibility affected our rebate liability for that utilization.

•

Effective January 1, 2011, pharmaceutical companies, including Questcor, must provide a 50% discount on branded prescription drugs dispensed to beneficiaries within the Medicare Part D coverage gap or “donut hole,” which is a funding gap that currently exists in the Medicare Part D prescription drug program. We estimate that approximately 30% of our sales for both MS and NS are to Medicare insureds.

•

Effective January 1, 2011, the U.S. Federal government must allocate an annual branded prescription drug fee among pharmaceutical manufacturers of branded prescription drugs based on the dollar value of their branded prescription drug sales to certain federal health care programs identified in the law. The Healthcare Reform Acts determine an individual manufacturer's market share as the ratio of its aggregate sales of branded prescription drugs during the preceding calendar year as a percentage of the aggregate branded prescription drug sales for all covered manufacturers. We believe the amount due in 2012 for the annual fee is immaterial.

•

Changes made by the Healthcare Reform Acts are expected to result in the coverage of 32 million uninsured individuals through an expansion of the Medicaid program, and private sector coverage either through their employer or the new state-based Health Insurance Exchanges effective in 2014. In 2012, the Supreme Court of the United States heard challenges to the constitutionality of the individual mandate and the viability of certain provisions of the Healthcare Reform Acts. The Supreme Court's decision upheld most of the Healthcare Reform Acts and determined that requiring individuals to maintain “minimum essential” health insurance coverage or pay a penalty to the Internal Revenue Service was within Congress's constitutional taxing authority. However, the Supreme Court struck down a provision in the Healthcare Reform Act that penalized states that chose not to expand their Medicaid programs through an increase in the Medicaid

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On February 8, 2013, Centers for Medicare and Medicaid Services, or CMS, issued a final rule to implement Section 6002 of the Healthcare Reform Acts, which requires pharmaceutical and medical device companies to compile and disclose payments and other transfers of value to physicians and other covered recipients. Failure to comply with the disclosure requirements could result in substantial fines and penalties.

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•	the difficulties of overseeing manufacturing operations in a foreign country where we have no or limited direct prior experience;

•	failure to successfully manage relationships with suppliers and customers;

•	difficulties in integrating and harmonizing business systems;

•	the loss of key employees; and

•	failure to properly protect against foreign currency exchange rate fluctuations.

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•	protect our trade secrets;

•	operate without infringing upon the proprietary rights of others; and

•	prevent others from infringing on our proprietary rights.

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•	public concern as to the safety of drugs developed by us or others;

•	availability of Acthar;

•	patient safety concerns;

•	announced inquiries by governmental agencies or updates regarding previously announced inquiries;

•	unfavorable outcomes related to the government investigations or lawsuits brought against us or our directors and officers, including those currently in process;

•	departure of key managers;

•	negative opinions regarding company actions from proxy advisory firms;

•	activities of certain investors who elect to short sell our stock;

•	the announcement and timing of new product introductions by us or others;

•	the timing of our regulatory submissions or approvals, or the failure to receive regulatory approvals;

•	prescription trends and the level of orders from CuraScript SD within a given quarter and preceding quarters;

•	availability and level of third party reimbursement;

•	political developments or proposed legislation in the pharmaceutical or healthcare industry;

•	economic or other external factors, disaster or crisis;

•	changes in government regulations or policies or patent decisions;

•	unforeseen financial or operational issues related to BioVectra;

•	failure to meet market expectations or changes in opinions of analysts who follow our stock; or

•	general market conditions.

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•	We lease 30,000 square feet of laboratory and office space in Hayward, California under a master lease that expires in May 2018. This facility is occupied by our Commercial Development, Sales and Marketing, Medical Affairs, Contract Manufacturing, Quality Control and Quality Assurance departments.

•	We lease 15,600 square feet of office space in Ellicott City, Maryland under a lease agreement that expires in October 2017. This facility is occupied by our Product Development and Regulatory Affairs departments.

•	We lease 7,900 square feet of office space in Anaheim, California under a lease agreement that expires in October 2014. This facility is occupied by our Executive, Finance and Administration departments, and serves as our corporate headquarters.

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•

Nephrotic Syndrome (NS): Acthar is indicated “to induce a diuresis or a remission of proteinuria in the nephrotic syndrome without uremia of the idiopathic type or that due to lupus erythematosus.” According to the National Kidney Foundation, nephrotic syndrome can result from several idiopathic type kidney disorders, including idiopathic membranous nephropathy, focal segmental glomerulosclerosis, IgA nephropathy and minimal change disease. Nephrotic syndrome can also occur due to lupus erythematosus. In this Form 10-K, the terms “nephrotic syndrome” and “NS” refer only to the proteinuria in nephrotic syndrome conditions that are covered by the Acthar label of approved indications.

•	Multiple Sclerosis (MS): Acthar is indicated “for the treatment of acute exacerbations of multiple sclerosis in adults. Controlled clinical trials have shown Acthar to be effective in speeding the resolution of acute exacerbations of multiple sclerosis. However, there is no evidence that it affects the ultimate outcome or natural history of the disease.”

•

Infantile Spasms (IS): Acthar is indicated “as monotherapy for the treatment of infantile spasms in infants and children under 2 years of age.” We continue to support this vulnerable patient population. We believe that a significant percentage of the $262 million in free drug we have provided through the National Organization of Rare Disorders, from September 2007 through December 31, 2012, has been used to treat IS. We support the IS community through other initiatives. In February 2012, we were awarded the first-ever Corporate Citizenship Award presented by the Child Neurology Foundation. This award honors our long-term commitment to support the child neurology community as well as our specific efforts to fund education and research related to IS.

•

Rheumatology Related Conditions: Acthar is approved for the following rheumatology related conditions: (i) Collagen Diseases: Acthar is indicated "during an exacerbation or as maintenance therapy in selected cases of systemic lupus erythematosus, systemic dermatomyositis (polymyositis)" and (ii) Rheumatic Disorders: Acthar is indicated as "adjunctive therapy for short-term administration (to tide the patient over an acute episode or exacerbation) in: Psoriatic arthritis, Rheumatoid arthritis, including juvenile rheumatoid arthritis (selected cases may require low-dose maintenance therapy), and Ankylosing spondylitis."

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•	Medical Affairs Costs - Medical affairs costs, which include activities related to medical information in support of Acthar and its related indications.

•	Regulatory Costs - Regulatory costs, which include compliance and all FDA interactions.

•	Product Development Costs - Product development costs, which include contract research organization costs and study monitoring costs.

•	Manufacturing Costs - Manufacturing costs, which include costs related to production scale-up and validation, raw material qualification and stability studies.

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(1)

In February 2008, our Board of Directors approved a stock repurchase plan that provides for the repurchase of up to 7 million shares of our common stock. Stock repurchases under this program may be made through either open market or privately negotiated transactions in accordance with all applicable laws, rules and regulations. On May 29, 2009, our Board of Directors increased the stock repurchase program authorization by an additional 6.5 million shares; on May 9, 2012, our Board of Directors increased the stock repurchase program authorization by an additional 5 million shares; and on September 28, 2012, our Board of Directors increased the stock repurchase program authorization to 7 million shares, including the 3.2 million shares that were remaining under the prior authorization.

•	Our reported net income, adjusted for non-cash items, including share-based compensation expense, deferred income taxes, amortization of investments, depreciation and amortization, loss on disposal and impairment of property, equipment and intangibles was $217.3 million, $84.6 million and $39.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.

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•

Net cash inflow due to changes in operating assets and liabilities was $1.7 million for the year ended December 31, 2012, which primarily relates to the following: (1) an increase in our sales-related reserves of $3.3 million, which relates to an increase in Acthar gross sales, (2) an increase in accrued compensation of $9.7 million, due to an increase in headcount and overall financial performance affecting the bonus accrual, (3) an increase in income taxes payable of $7.4 million, (4) an increase in accounts payable and other accrued liabilities of $14.3 million, offset by an increase in accounts receivable of $33.6 million, which also relates to an increase in Acthar gross sales.

•	Net cash inflow was $1.0 million for the year ended December 31, 2011, which primarily relates to an increase in accounts payable of $1.6 million, an increase in accrued compensation $7.4 million and an increase in sales related reserves of $12.6 million, which relates to an increase in Acthar gross sales, offset by an increase in accounts receivable of $16.7 million.

•	Net cash outflow was $2.4 million for the year ended December 31, 2010, which primarily relates to an decrease in accounts payable of $9.1 million, offset by an increase in sale-related reserves of $6.6 million, which relates to an increase in Acthar gross sales.

•	Purchases of property and equipment of $1.1 million for the year ended December 31, 2012, $1.8 million for the year ended December 31, 2011 and $0.7 million for the year ended December 31, 2010; and

•	Purchases of short-term investments of $145.4 million for the year ended December 31, 2012, $162.3 million for the year ended December 31, 2011 and $106.6 million for the year ended December 31, 2010; offset by

•	Maturities of short-term investments of $191.1 million for the year ended December 31, 2012, $112.6 million for the year ended December 31, 2011 and $62.6 million for the year ended December 31, 2010.

•	The income tax benefit realized on our share-based compensation plans of $7.5 million for the year ended December 31, 2012, $17.7 million for the year ended December 31, 2011 and $1.3 million for the year ended December 31, 2010; and

•	The issuance of common stock related to both our Employee Stock Purchase Plan and the exercise of stock options for $6.3 million for the year ended December 31, 2012, $6.6 million for the year ended December 31, 2011 and $1.9 million for the year ended December 31, 2010; offset by

•	The repurchase of shares of our common stock of $261.8 million to repurchase 6,759,861 shares of our common stock under our stock repurchase plan for the year ended December 31, 2012 and $11.5 million to repurchase 884,300 shares of our common stock under our stock repurchase plan for the year ended December 31, 2011. No shares of our common stock were repurchased during 2010; and

•	Dividends paid during the year ended December 31, 2012 of $23.5 million. No dividends were paid during the years ended December 31, 2011 and 2010.

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(1)	As of December 31, 2012 we leased space in three buildings with lease terms expiring in 2014, 2017 and 2018. We have also entered into various office equipment leases and automobile leases, the terms of which are typically three years. Annual rent expense for all of our facilities, equipment and automobile leases for the year ended December 31, 2012 was approximately $3.2 million.

•	We lease 30,000 square feet of laboratory and office space in Hayward, California under a master lease that expires in May 2018. This facility is occupied by our Commercial Development, Sales and Marketing, Medical Affairs, Contract Manufacturing, Quality Control and Quality Assurance departments.

•	We lease 15,600 square feet of office space in Ellicott City, Maryland under a lease agreement that expires in October 2017. This facility is occupied by our Product Development and Regulatory Affairs departments.

•	We lease 7,900 square feet of office space in Anaheim, California under a lease agreement that expires in October 2014. This facility is occupied by our Executive, Finance and Administration departments, and serves as our corporate headquarters.

(2)

During the year ended December 31, 2011, we entered into an agreement with CSL Behring LLC, or CSL Behring, to provide potency and toxicity testing on Acthar prior to releasing the product for commercial distribution. Beginning on January 1, 2012, the agreement provides for a maximum number of tests to be performed each year. Tests performed in excess of the maximum are to be paid on a per test basis. We have been in compliance with the terms of our agreement with CSL Behring.

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•	Medicaid rebates;

•	TRICARE retail program rebates;

•	Medicare Part D Coverage Gap Discount Program rebates;

•	Chargebacks due to other government programs;

•	Questcor-sponsored co-pay assistance programs;

•	Returns, which have historically been immaterial; and

•	Other deductions such as payment discounts.

•

Using a predictive model, we review national Medicaid statistics as well as internal information received from our Acthar reimbursement support center and from CuraScript SP for the most recent completed quarter to develop an estimate of future Medicaid rebate invoices that we expect to receive. This includes an estimate for future Medicaid Fee for Service and Medicaid Managed Care Organization rebate invoices.

•

We review the Medicaid rebate invoices received during the last 90 days and compare those invoices to the reserve that we had previously set at the end of the prior quarter. Based on this comparison and using the predictive model and other available information, which is updated quarterly, we estimate the remaining liability that we believe is still outstanding for periods prior to the most recently completed quarter.

•	Based on estimated end-of-quarter inventory held at CuraScript SD, all specialty pharmacies and hospitals, we calculate the expected future rebate liability for that portion of the estimated distribution channel inventory which will eventually be used to fill prescriptions for Medicaid patients.

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(a)	Evaluation of Disclosure Controls and Procedures

(b)	Changes in Internal Control over Financial Reporting and Remediation Plans

(c)	Management’s Report on Internal Control over Financial Reporting

•	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

•	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and

•	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on the financial statements.

(d)	Report of Independent Registered Public Accounting Firm

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(1)	Shares granted as part of 2012 incentive compensation consist of time-based vesting and vest one-year following the grant date.

(1)	2013 base salaries represent 4% increases over 2012 base salaries.

(1)	Targets are expressed as a percentage of the officer’s 2013 base salary. Percentages for Mr. Bailey, Mr. Cartt, Mr. Medeiros and Dr. Young unchanged from prior year.

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1.	85,250 shares of Mr. Bailey's grant consist of time-based vesting and 85,250 shares of Mr. Bailey's grant vest upon the achievement of certain performance goals and targets.

2.	31,000 shares of Mr. Cartt's grant consist of time-based vesting and 31,000 shares of Mr. Cartt's grant vest upon the achievement of certain performance goals and targets.

3.	18,250 shares of Mr. Medeiros' grant consist of time-based vesting and 18,250 shares of Mr. Medeiros' grant vest upon the achievement of certain performance goals and targets.

4.	18,250 shares of Mr. Mulroy's grant consist of time-based vesting and 18,250 shares of Mr. Mulroy's grant vest upon the achievement of certain performance goals and targets.

5.	25,000 shares of Dr. Young's grant consist of time-based vesting and 25,000 shares of Dr. Young's grant vest upon the achievement of certain performance goals and targets.

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Nephrotic Syndrome (NS): Acthar is indicated “to induce a diuresis or a remission of proteinuria in the nephrotic syndrome without uremia of the idiopathic type or that due to lupus erythematosus.” According to the National Kidney Foundation, nephrotic syndrome can result from several idiopathic type kidney disorders, including idiopathic membranous nephropathy, focal segmental glomerulosclerosis, IgA nephropathy and minimal change disease. Nephrotic syndrome can also occur due to lupus erythematosus. In this Form 10-K, the terms “nephrotic syndrome” and “NS” refer only to the proteinuria in nephrotic syndrome conditions that are covered by the Acthar label of approved indications.

•	Multiple Sclerosis (MS): Acthar is indicated “for the treatment of acute exacerbations of multiple sclerosis in adults. Controlled clinical trials have shown H.P. Acthar Gel to be effective in speeding the resolution of acute exacerbations of multiple sclerosis. However, there is no evidence that it affects the ultimate outcome or natural history of the disease.”

•

Infantile Spasms (IS): Acthar is indicated “as monotherapy for the treatment of infantile spasms in infants and children under 2 years of age.” We continue to support this vulnerable patient population. We believe that a significant percentage of the $262 million in free drug we have provided through the National Organization of Rare Disorders, from September 2007 through December 31, 2012, has been used to treat IS. We support the IS community through other initiatives. In February 2012, we were awarded the first-ever Corporate Citizenship Award presented by the Child Neurology Foundation. This award honors our long-term commitment to support the child neurology community as well as our specific efforts to fund education and research related to IS.

•

Rheumatology Related Conditions: Acthar is approved for the following rheumatology related conditions: (i) Collagen Diseases: Acthar is indicated "during an exacerbation or as maintenance therapy in selected cases of systemic lupus erythematosus, systemic dermatomyositis (polymyositis)" and (ii) Rheumatic Disorders: Acthar is indicated as "adjunctive therapy for short-term administration (to tide the patient over an acute episode or exacerbation) in: Psoriatic arthritis, Rheumatoid arthritis, including juvenile rheumatoid arthritis (selected cases may require low-dose maintenance therapy), and Ankylosing spondylitis."

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•	Medicaid rebates;

•	TRICARE retail program rebates;

•	Medicare Part D Coverage Gap Discount Program rebates;

•	Chargebacks due to other government programs;

•	Questcor-sponsored co-pay assistance programs;

•	Returns, which have historically been immaterial; and

•	Other deductions such as payment discounts.

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•

Using a predictive model, we review national Medicaid statistics as well as internal information received from our Acthar reimbursement support center and from CuraScript SP for the most recent completed quarter to develop an estimate of future Medicaid rebate invoices that we expect to receive. This includes an estimate for future Medicaid Fee for Service and Medicaid Managed Care Organization rebate invoices.

•

We review the Medicaid rebate invoices received during the last 90 days and compare those invoices to the reserve that we had previously set at the end of the prior quarter. Based on this comparison and using the predictive model and other available information, which is updated quarterly, we estimate the remaining liability that we believe is still outstanding for periods prior to the most recently completed quarter.

•	Based on estimated end-of-quarter inventory held at CuraScript SD, all specialty pharmacies and hospitals, we calculate the expected future rebate liability for that portion of the estimated distribution channel inventory that will eventually be used to fill prescriptions for Medicaid patients.

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•	Level 1 – Quoted prices in active markets for identical assets or liabilities.

•	Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

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•	Volatility is based on the historical volatility of our common stock;

•	Interest rate is based on the U.S. Treasury yield;

•	Expected term represents the life of the option element; and

•	Expected dividend yield is based on anticipated future dividends.

•	2006 Equity Incentive Award Plan that provides for the grant of equity incentives to employees, members of our board of directors, and consultants;

•	1992 Employee Stock Option Plan that provided for the grant of stock options to employees, members of our board of directors, and consultants; and

•	2004 Non-Employee Directors’ Equity Incentive Plan that provides for the grant of equity incentives to non-employee members of our board of directors.

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Volatility is based on the historical volatility of our common stock. During 2010, we reviewed our methodology for calculating volatility and, in doing so we shortened the look-back period to represent the time period following the implementation of our Acthar-centric pricing strategy in late 2007. This resulted in a lower volatility that, we believe, is a better representation of our current market condition.

•	Interest rate is based on the U.S. Treasury yield.

•	Expected term was based on the historical experience of similar awards, giving consideration to the contractual terms of the share-based awards, vesting schedules and the expectations of future employee behavior.

•	Expected dividend yield is based on future anticipated dividend rates.

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•	As of December 31, 2012 we leased space in three buildings with lease terms expiring in 2014, 2017 and 2018. We have also entered into various office equipment leases and automobile leases, the terms of which are typically three years. Annual rent expense for all of our facilities, equipment and automobile leases for the year ended December 31, 2012 was approximately $3.2 million.

•	We lease 30,000 square feet of laboratory and office space in Hayward, California under a master lease that expires in May 2018. This facility is occupied by our Commercial Development, Sales and Marketing, Medical Affairs, Contract Manufacturing, Quality Control and Quality Assurance departments.

•	We lease 15,600 square feet of office space in Ellicott City, Maryland under a lease agreement that expires in October 2017. This facility is occupied by our Product Development and Regulatory Affairs departments.

•	We lease 7,900 square feet of office space in Anaheim, California under a lease agreement that expires in October 2014. This facility is occupied by our Executive, Finance and Administration departments, and serves as our corporate headquarters.

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A.	The Vendors own and control all of the issued and outstanding shares of the Company.

B.	The Vendors have agreed to sell to the Purchaser and the Purchaser has agreed to purchase from the Vendors all of the issued and outstanding shares of the Company, on the terms and conditions of this Agreement.

1.1	Definitions

(a)	the sale or transfer by Questcor or any of its Affiliates or the issuance of new shares of the Company or any other transaction resulting in the direct or indirect ownership by Questcor and its Affiliates of less than 50% of the voting rights in the Company; or

(b)	the sale or disposition of all or substantially all of the Company’s assets.

(a)	the amount payable to the Vendors pursuant to Section 3.3(a), or if no amount is payable pursuant to that Section, zero;

(b)	the amount payable to the Vendors pursuant to Section 3.3(b), or if no amount is payable pursuant to that Section, zero; and

(c)	the amount payable to (or less any amount owed by) the Vendors pursuant to Section 3.3(c)(ii).

(a)	having or purporting to have jurisdiction on behalf of any nation, province, territory or state or any other geographic or political subdivision of any of them; or

(b)	exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power.

(a)	inventions, pending patent applications (including divisionals, reissues, renewals, re-examinations, continuations, continuations-in-part and extensions) and issued patents, including those inventions, pending patent applications and issued patents listed and described in Section 4.26(a) of the Disclosure Letter;

(b)	trade-marks, trade dress, trade-names, business names and other indicia of origin, including those listed and described in Section 4.26(a) of the Disclosure Letter;

(c)	trade secrets or other confidential information listed and described in Section 4.26(a) of the Disclosure Letter;

(d)	copyrights, including the copyright registrations and applications listed and described in Section 4.26(a) of the Disclosure Letter;

(e)	industrial designs and similar rights, including those registrations and applications listed and described in Section 4.26(a) of the Disclosure Letter;

(f)	domain name and web address registrations listed and described in Section 4.26(a) of the Disclosure Letter; and

(g)	any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

(a)	all Contracts involving aggregate payments to or by the Company or any of the Subsidiaries in excess of $250,000;

(b)	all Contracts that are outside the ordinary course of business;

(c)	all Contracts that restrict in any way the business or activities of the Company or any of the Subsidiaries and which the Company would violate their restrictive covenants upon the consummation of the transactions contemplated by this Agreement;

(d)	all Contracts that, if terminated without the consent of the Company or any of the Subsidiaries, would have a Material Adverse Effect;

(e)	all Contracts and agreements with major customers (other than ordinary course purchase and sale orders);

(f)	all partnership, joint venture or limited liability company contract arrangements or agreements;

(g)	all Contracts or other documents of the Company or any of the Subsidiaries in respect of borrowed money, including financial instruments of indenture or security instruments (whether or not interest-bearing) such as notes, mortgages, loans and lines of credit;

(h)	all Contracts that grant any right of first refusal or right of first offer or similar right to third parties or that, other than for sales of product in the ordinary course of business, limit or purports to limit the ability of the Company or any of the Subsidiaries in any material respect to pledge, sell, transfer or otherwise dispose of any material amount of assets or business;

(i)	all Contracts providing for any payments that are conditioned, in whole or in part, on a change of control with respect to the Company or any of the Subsidiaries;

(j)	all agency, broker, sales representative, marketing or similar Contracts with respect to which the annual sales exceed $250,000;

(k)	all Contracts relating to any merger or business combination concerning the Company or the acquisition or disposition of any assets or any Person during the last five years or pursuant to which the Company or any of the Subsidiaries has any remaining rights or obligations;

(l)	all Contracts with any director, officer, Employee or Affiliate of the Company or of any of the Subsidiaries;

(m)	all Contracts pursuant to which the Company or any of the Subsidiaries agrees to indemnify any other party other than in the ordinary course of business;

(n)	all Contracts with any Governmental Authority; and

(o)	all Contracts or other agreements with any current or former officer, director, Employee, consultant, agent or other representative or any agreement or understanding pursuant to which the Company or any of the Subsidiaries is liable for any severance or termination pay.

(a)	trade secrets, confidential information and other proprietary know-how;

(b)	public information and non-proprietary know-how;

(c)	information of a scientific, technical, financial or business nature regardless of its form;

(d)	uniform resource locators, domain names, telephone, telecopy, internet protocol and email addresses, and UPC consumer packaging codes; and

(e)

documented research, forecasts, studies, marketing plans, budgets, market data, developmental, demonstration or engineering work, information that can be used to define a design or process or procure, produce, support or operate material and equipment, methods of production and procedures, all formulas and designs and drawings, blueprints, patterns, plans, flow charts, parts lists, manuals and records, specifications, and test data.

1.2	Certain Rules of Interpretation

(a)	Consent – Whenever a provision of this Agreement requires an approval or consent and such approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the Party whose consent or approval is required is conclusively deemed to have withheld its approval or consent.

(b)	Currency – Unless otherwise specified, all references to money amounts are to lawful currency of Canada.

(c)	Governing Law – This Agreement is a contract made under and is governed by and is to be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in the Province of Ontario.

(d)	Headings – Headings of Articles and Sections are inserted for convenience of reference only and do not affect the construction or interpretation of this Agreement.

(e)	Including – Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.

(f)	No Strict Construction – The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction is to be applied against any Party.

(g)	Number and Gender – Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

(h)

Severability – If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, such provision is, as to such jurisdiction, ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances.

(i)	Statutory references – A reference to a statute includes all regulations and rules made pursuant to such statute and, unless otherwise specified, the provisions of any statute, regulation or rule that amends, supplements or supersedes any such statute, regulation or rule.

(j)	Time – Time is of the essence in the performance of the Parties’ respective obligations.

(k)	Time Periods – Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done is calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day.

1.3	Accounting Terms

1.4	Knowledge

1.5	Entire Agreement

1.6	Vendors' Representative

(a)

Each of the Vendors hereby appoints Ron Keefe as its representative and agent and true and lawful attorney-in-fact (the “Vendors' Representative”) with the powers and authority set out in this Agreement, and the Vendors' Representative hereby accepts such appointment. The Vendors' Representative shall be the agent for and on behalf of all of the Vendors in respect of all matters relating to this Agreement, including settling matters relating to the Earn-out Amounts and indemnification claims, by having the authority to (1) give and receive notices and communications to or from the Purchaser or Questcor (on behalf of itself or any other Purchaser Indemnified Parties); (2) authorize deliveries to the Purchaser of cash or other property from the Earn-out Amounts and legally bind each Vendor to pay cash directly to the Purchaser in satisfaction of claims asserted by the Purchaser (on behalf of itself or any other Purchaser Indemnified Parties, including by not objecting to such claims); (3) consent or agree to, negotiate, enter into settlements and compromises of claims, and comply with Orders with respect to such claims; and (4) take all actions necessary or appropriate in the judgment of the Vendors' Representative for the accomplishment of the foregoing, in each case without having to seek or obtain the consent of any Person under any circumstance. The Purchaser and Questcor may rely on any communication made by the Vendors’ Representative to the Purchaser or Questcor, as the case may be, on behalf of the Vendors as applying to all Vendors, and each such communication is binding on all Vendors.

(b)	None of the Vendors shall have any right to act on its own behalf with respect to any such matters, other than with respect to any claim against or dispute with the Vendors' Representative.

(c)

This appointment of agency and this power of attorney is coupled with an interest and will be irrevocable and will not be terminated by any Vendor or by operation of Law, whether by the incapacity of any Vendor or the occurrence of any other event, and any action taken by the Vendors' Representative will be as valid as if such incapacity or other event had not occurred, regardless of whether or not any Vendor or the Vendors' Representative will have received any notice thereof.

(d)

Except as otherwise set forth in this Section 1.6(d), any notice or communication given or received by, and any decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction of, the Vendors' Representative that is within the scope of the Vendors' Representative’s authority under 1.6(a) shall constitute a notice or communication to or by, or a decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction of all the Vendors and shall be final, binding and conclusive upon each of them. Each of the Purchaser and Questcor shall be entitled to rely upon any such notice, communication, decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction as being a notice or communication to or by, or a decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction of, each and every Vendor. The Purchaser and Questcor are each unconditionally and irrevocably relieved from any liability to any Person for any acts done by it in accordance with any such notice, communication, decision, action, failure to act within a designated period of time, agreement, consent or instruction of the Vendors' Representative.

(e)

The scope of the powers of the Vendors' Representative as agent for the Vendors may be changed by a majority vote or consent of Vendors upon not less than 30 days’ prior written notice to the Purchaser, Questcor and the Vendors' Representative. If Ron Keefe refuses or is no longer capable of serving as the Vendors' Representative hereunder, then the successor Vendors’ Representative will thereafter be Gordon Rogers, who shall serve as the Vendors' Representative until such successor is duly appointed and qualified to act hereunder. If Gordon Rogers refuses or is no longer capable of serving as the Vendors' Representative hereunder, then the successor Vendors’ Representative will thereafter be Dale Zajicek, who shall serve as the Vendors' Representative until such successor is duly appointed and qualified to act hereunder. If Dale Zajicek refuses or is no longer capable of serving as the Vendors' Representative hereunder, then the Vendors representing a majority in number of the common shares of the Company held prior to the completion of this transaction, will promptly appoint a successor Vendors' Representative who will thereafter be a successor Vendors' Representative hereunder, and the Vendors' Representative will serve until such successor is duly appointed and qualified to act hereunder. In the event of a vacancy in the position of the Vendors' Representative, or refusal or incapability of the Vendors' Representative to serve, which continues for more than 90 days, the Purchaser may appoint a successor Vendors' Representative who will thereafter be a successor Vendors' Representative hereunder. If there is not a Vendors' Representative at any time, any obligation to provide notice to the Vendors' Representative will be deemed satisfied if such notice is delivered to each of the Vendors at their addresses last known to the Purchaser.

(f)

Absent a finding of fraud or wilful breach by the Vendors' Representative of this Agreement by a court of competent jurisdiction, the Vendors' Representative shall not be liable to any of the Vendors for any act done or omitted hereunder as the Vendors' Representative and any act done or omitted in accordance with the advice of counsel or other expert shall be conclusive evidence of the absence of such fraud or willful breach. The Vendors shall jointly and severally indemnify the Vendors' Representative and hold him harmless against any loss, liability, damage, Claim, suit, penalty, cost or expense (including fees and expenses of counsel and any costs and expense incurred by the Vendors' Representative to defend himself against any claim or suit by any Vendor) incurred other than as a result of fraud or willful breach by the Vendors' Representative of this Agreement as determined by a court of competent jurisdiction and arising out of or in connection with the acceptance or administration of its duties hereunder.

(g)	By his signature to this Agreement, the Vendors' Representative hereby accepts the appointment contained in this Agreement, as confirmed and extended by this Agreement, and agrees to act as the Vendors' Representative and to discharge the duties and responsibilities of the Vendors' Representative pursuant to the terms of this Agreement.

1.7	Schedules

Schedule 7.6	Form of Non-Competition, Non-Solicitation & Confidentiality Agreement

2.1	Action by Vendors and Purchaser

(l)	Purchase and Sale of Purchased Shares – the Vendors will sell and the Purchaser will purchase the Purchased Shares;

(m)	Payment of Purchase Price – the Purchaser will pay the amount of the Purchase Price payable at the Closing to the Vendors in accordance with Section 3.2(a);

(n)

Transfer and Delivery of the Purchased Shares – concurrent with the execution of this Agreement, the Vendors will transfer and deliver to Stewart McKelvey, to be held in escrow, share certificates representing the Purchased Shares duly endorsed in blank for transfer, or accompanied by irrevocable security transfer powers of attorney duly executed in blank, in either case by the holders of record as of the date of this Agreement. At Closing, the Vendors' Representative will direct Stewart McKelvey to transfer and deliver to the Purchaser the share certificates representing the Purchased Shares duly endorsed in blank for transfer, or accompanied by irrevocable security transfer powers of attorney duly executed in blank and will take such steps as are necessary to cause the Company to enter the Purchaser or its nominees(s) upon the books of the Company as the holder of the Purchased Shares as of the Closing Date and to issue one or more share certificates to the Purchaser or its nominee(s) representing the Purchased Shares at Closing; and

(o)	Other Documents – the Vendors, the Purchaser and the Company will deliver such other documents as may be necessary to complete the transactions provided for in this Agreement, including the deliveries set forth in Article 7 and Article 8.

2.2	Place of Closing

2.3	Assignment of Restricted Rights

(a)	If at Closing there are any Restricted Rights in respect of which consents, approvals, waivers or reasonable modifications have not been obtained, then, following Closing, the Vendors will continue their efforts to obtain any necessary consents, approvals, waivers or reasonable modifications.

(b)	To the extent there are any consents, approvals, waivers or reasonable modifications outstanding at Closing, the Vendors will:

(i)	apply for and use all reasonable efforts to obtain all consents, approvals, waivers or reasonable modifications acceptable to the Purchaser acting reasonably. Nothing in this Section 2.3 will require the Company to make any payment to any other party in order to obtain such consents, approvals, waivers or reasonable modifications, and any such payments will be for the Vendors’ account; and

(ii)	take all such actions and do, or cause to be done, all such things at the request of the Purchaser as are reasonably necessary in order that the value and benefits of the applicable Restricted Rights are preserved and enure to the benefit of the Purchaser.

3.1	Purchase Price

(a)	$50 million; minus

(b)	any out-of-pocket expenses of the Company in excess of $50,000 related to this Agreement or the transactions contemplated hereby other than to the extent paid by the Vendors in accordance with Section 12.3; plus

(c)	the Earn-Out Amounts, if any, and

3.2	Satisfaction of Purchase Price

(c)	by paying to Stewart McKelvey, in trust, on behalf of the Vendors at the Closing Time $50 million (minus any expenses referred to in Section 3.1(b)); and

(d)	by paying the Earn-Out Amounts to the Vendors, if applicable, in accordance with Section 3.3.

3.3	Earn-out

(a)	2013 Earn-out Payment. If the Operating Earnings for the 12-month period ending December 31, 2013 equals or exceeds the Base Operating Earnings, the Purchaser will pay an Earn-Out Amount of $5,000,000 to the Vendors.

(b)	2014 Earn-out Payment. If the Operating Earnings for the 12-month period ending December 31, 2014 equals or exceeds the Base Operating Earnings, the Purchaser will pay an Earn-Out Amount of $5,000,000 to the Vendors.

(c)	2015 Earn-Out Amount.

(i)	“2015 Earn-Out Amount” means an amount calculated as:

(A)	[***] multiplied by a fraction:

(1)	the numerator of which is the Operating Earnings for the [***] period ending December 31, 2015, annualized (by multiplying such amount by [***]); and

(2)	the denominator of which is the Base Operating Earnings;

(B)	the amounts, if any, paid pursuant to Sections 3.3(a) and 3.3(b).

(ii)	If:

(A)	the 2015 Earn-Out Amount is a positive number, the Purchaser will pay to the Vendors an Earn-Out Amount equal to the lesser of:

(1)	the 2015 Earn-Out Amount; or

(2)	$50,000,000 minus the amounts, if any, paid pursuant to Sections 3.3(a) and 3.3(b); or

(B)	the 2015 Earn-Out Amount is a negative number, the Vendors will refund to the Purchaser the lesser of (i) the absolute value of the 2015 Earn-Out Amount (i.e. disregarding the negative) and (ii) the sum of the Earn-Out Amounts paid, if any, pursuant to Sections 3.3(a) and 3.3(b).

(d)

Questcor and the Company shall each cause the audit of the Company’s financial statements to occur for the four months ending December 31, 2012 and for each of the years ending December 31, 2013, 2014 and 2015 and shall use commercially reasonable efforts to have such audited statements completed within 45 days of the end of each of such fiscal years or as otherwise agreed to by Questcor and the Company acting reasonably. Within 15 days following the completion of the audit of the Company’s financial statements for the years ending December 31, 2012, 2013 and 2014, the Purchaser will provide to the Vendors' Representative a copy of the relevant financial statement of the Company together with a good faith calculation of a statement of the Operating Earnings in respect of the applicable year and in the case of the year ended December 31, 2012, the Operating Earnings for the 4-month period ending December 31, 2012 and the calculations used to determine whether amounts are payable pursuant to Sections 3.3(a) or 3.3(b) and within 15 days following the completion of the audit of the Company’s financial statements for the year ending December 31, 2015, the Purchaser will provide to the Vendors' Representative a copy of the relevant audited financial statement of the Company together with a good faith calculation of a statement of the Operating Earnings for the [***] period ending December 31, 2015 and the calculations used to determine the 2015 Earn-Out Amount (each, an “Earn-Out Calculation Statement”). The Earn-Out Calculation Statement shall set forth the Operating Earnings for the applicable period and shall be prepared in accordance with the provisions of this Agreement. Within 5 Business Days of any request by the Vendors’ Representative, the Purchaser will give the Vendors’ Representative and his accountants sufficient access to the books and records and working papers that the Company, the Purchaser and their accountants used in the preparation of the Earn-Out Calculation Statement that support each Earn-Out Calculation Statement; such information shall be provided to the Vendors’ Representative to enable him to evaluate the relevant Earn-Out Calculation Statements.

(e)

Subject to Section 3.3(f), within 30 days after delivery of an Earn-Out Calculation Statement referred to in Section 3.3(d) in respect of a particular period, the Purchaser or the Vendors, as applicable, will make any payment required by Sections 3.3(a), 3.3(b) or 3.3(c), as applicable. Any payment to be made to the Vendors shall be made in accordance with the payment instructions set forth in Section 3.2, unless the Vendors’ Representative provides alternative payment instructions in writing to the Purchaser within 15 days prior to the date the payment is due.

(f)

If the Vendors' Representative objects in good faith to any item of an Earn-Out Calculation Statement, the Vendors' Representative must so advise the Purchaser by delivering to the Purchaser a written notice (the “Earn-Out Objection Notice”) within 30 days after the Vendors' Representative has received the Earn-Out Calculation Statement, provided that the Purchaser has complied with any request by the Vendors’ Representative made pursuant to Section 3.3(d), failing which, absent fraud or intentional misrepresentation on the part of the Purchaser in connection with such Earn-Out Calculation Statement, the Vendors’ Representative shall lose its right to object to, and be deemed to have accepted, the Earn-Out Calculation Statement. The Earn-Out Objection Notice must set out the reasons for the Vendors’ Representative's objection as well as the amount in dispute and reasonable details of the calculation of such amount. The Vendors' Representative and the Purchaser will attempt to resolve through negotiations, which negotiations may be with or without prejudice at the election of Parties, all of the issues in dispute set out in any Earn-Out Objection Notice within 30 days of receipt of the Earn-Out Objection Notice by the Purchaser. Any issues in dispute not resolved within such 30 day period will be referred as soon as possible thereafter by the Vendors' Representative and the Purchaser to the Independent Auditor. The Independent Auditor will act as expert and not as arbitrator and will be required to determine the issues in dispute that have been referred to it as soon as reasonably practicable but in any event not later than 30 days after the date of referral of the dispute to it. In making its determination, the Independent Auditor will only consider the issues in dispute placed before it. The Vendors' Representative and the Purchaser will provide or make available all documents and information as are reasonably required by the Independent Auditor to make its determination. The determination of the Independent Auditor is final and binding on the Parties, and the Earn-Out Calculation Statement will be (or not be) adjusted in accordance with such determination. The fees and expenses of the Independent Auditor in acting in accordance with this Section 3.3(f) will be shared equally by the Purchaser and the Vendors, unless the Independent Auditor determines otherwise.

(g)

The Parties hereby agree that each Earn-Out Amount paid to the Vendors under this Section 3.3 will be treated as a deferred portion of the Purchase Price. The Parties agree to take this position on all Tax Returns and exercise their respective good faith efforts to argue for this result; but nothing contained in this Agreement is considered a guaranty or indemnity by any Party of this or any tax treatment with respect to the Earn-Out Amount.

(h)	In no event will the total Earn-Out Amounts exceed, in the aggregate, $50 million.

(i)

During the period covering the earn-out period contemplated by this Agreement: (i) each of Questcor and the Purchaser agrees that it will operate in good faith with respect to the Earn-Out Amounts and will not take and not cause the Company to take any action with the intent to reduce the Earn-Out Amount realizable by the Vendors; (ii) each of the Vendors agrees that, to the extent they are a part of Company's management, they will not operate the Company with the intent to maximize the Operating Earnings during the earn-out period contemplated by this Agreement in any manner that would be inconsistent with their fiduciary obligation to act in the best interest of the Company; (iii) Questcor and the Purchaser shall make good faith efforts to allow the Company to operate as a free-standing business consistent with the manner set out in the governance and management relationship letter between the Company and Questcor, dated as of the Closing (the “Governance Document”); and (iv) Questcor shall not (and shall cause its Affiliates not to) enter into any agreements or arrangements with the Company following the Closing Date providing for the Company to sell or supply the Questcor or its Affiliates with services or products at less than fair commercial rates. Furthermore, it is the intent of the parties that the Earn-Out Amounts will be based solely on the operations of the Company as it exists today and not include any operations of Company that are subsequently acquired from third parties, whether by merger, amalgamation or consolidation or acquisition, unless Questcor and the Vendors’ Representative mutually agree otherwise. Any disputes shall be resolved in accordance with sub-section (m) of this Section 3.3.

(j)

In the event Questcor (or any of its subsidiaries), in its sole discretion and without the approval by the Vendors’ Representative materially changes, proposes to materially change, or causes a material change to, the executive management, the business, accounting policies or methods, or operations (other than changes necessary in maintaining compliance, or bringing the Company into compliance, with applicable Law) of the Company from those in effect immediately prior to the Closing Date (any such material change or proposed material change, a “Change”), Questcor shall notify Vendors’ Representative in writing and if Vendors' Representative reasonably believes that any such Change is likely to decrease the amount of the Earn-Out Amount that the Vendors would have earned absent such Change, Vendors' Representative may give written notice (the “Change Notice”) to Questcor of such belief. In such event, Vendors' Representative and Questcor’s Chief Financial Officer shall meet within thirty (30) days following the receipt by Questcor of such Change Notice to discuss in good faith (which discussions may be with or without prejudice at the election of Parties): (i) whether the Change was in accordance with the principles as set out in the Governance Document, (ii) whether the Change is likely to decrease the amount of the Earn-Out Amount paid to Vendors and (iii) whether any adjustments to the calculations used to determine the Earn-Out Amount are necessary in order to restore the Vendors' ability to earn a comparable Earn-Out Amount that would have been earned by the Vendors absent such Change. If the Purchaser and Vendors' Representative disagree if or to the extent any adjustments are necessary, or the nature of such adjustments, the dispute shall be resolved in accordance with sub-section (m) of this Section 3.3.

(k)

In the event Questcor believes the management of the Company operated the Company with the intent to maximize the Operating Earnings during the earn-out period contemplated by this Agreement but failed to act in the best interest of the Company, Questcor shall notify Vendors' Representative in writing and Vendors' Representative and Questcor’s Chief Financial Officer shall meet to discuss in good faith (which discussions may be with or without prejudice at the election of Parties): whether (i) management of the Company operated the Company with the intent to maximize the Operating Earnings during the earn-out period contemplated by this Agreement but failed to act in the best interest of the Company, (ii) the failure is likely to increase the amount of the Earn-Out Amount paid to Vendors and (iii) any adjustments to the calculations used to determine the Earn-Out Amounts are necessary in order to reduce the Earn-Out Amount to an amount that would have been earned by Vendors absent such failure. If the parties disagree if or to the extent any adjustments are necessary, or the nature of such adjustments, the dispute shall be resolved in accordance with sub-section (m) of this Section 3.3.

(l)	Until the 2015 Earn-Out Amount, if any, has been paid, the Purchaser shall not amalgamate with the Company and no Change of Control shall occur without the consent of the Vendors’ Representative, acting on behalf of the Vendors, which consent shall not be unreasonably withheld, delayed or conditioned.

(m)

In the event of any controversy or dispute between the Parties hereto arising out of or relating to sub-sections (j) or (k) of this Section 3.3, if no resolution is reached within 30 days following the date on which one Party first notifies the other of his or its request that such a meeting be held, then, and in that event, the controversy or dispute shall be referred to and determined by final and binding arbitration before a single arbitrator pursuant to the International Commercial Arbitration Act, R.S.O. 1990 (Ontario) and the procedures set out in Schedule 3.3(m) to this Agreement. The seat of the arbitration shall be Ontario and the hearing shall be conducted in the City of Toronto.

(n)	Within 30 days of Closing, the Purchaser shall cause the Company to change its fiscal year end to December 31 and shall ensure that the Company’s fiscal year remains December 31 until at least January 1, 2016, unless the consent of the Vendors’ Representative is obtained to change to a different fiscal year, which consent shall not be unreasonably withheld, delayed or conditioned.

3.4	Purchase Price Adjustments

3.5	Payments

3.6	Tax Election

4.1	Incorporation and Corporate Power of the Company and its Subsidiaries

4.2	Registration

4.3	Residence of the Vendors

4.4	Subsidiaries

4.5	Status of the Vendors and Right to Sell

(a)	The Vendors are, together, the sole registered owners and, other than the beneficiaries under the 2012 BV Employee Share Ownership Trust, the sole beneficial owners of the Purchased Shares free and clear of all Encumbrances.

(b)

Each Vendor has the exclusive right to dispose of the Purchased Shares as provided in this Agreement and such disposition will not violate, contravene, breach or offend against or result in any default under any Contract, charter, share term provision, by-law provision, trust document, Order, judgment, decree, licence, permit or Law, to which the Vendors are a party or subject or by which the Vendors are bound or affected.

(c)	The Purchased Shares are not subject to the terms of any shareholder agreement, other than those disclosed in Section 4.5 of the Disclosure Letter.

4.6	Capitalization

4.7	Due Authorization and Enforceability of Obligations

4.8	Absence of Conflicts

(a)	Contract;

(b)	charter, by-law or share term provision; or

(c)	Laws or Governmental Authorizations,

4.9	Regulatory Approvals

(a)

No approval, Order, consent of or filing with any Governmental Authority is required other than consents from any Governmental Authorities as set out on Schedule 7.3 and other than notices to any Governmental Authorities as set out in Section 4.43 of the Disclosure Letter on the part of the Company or any of the Subsidiaries, in connection with the execution, delivery and performance of this Agreement or any other documents and agreements to be delivered under this Agreement or the performance of the Vendors’ obligations under this Agreement or any other documents and agreements to be delivered under this Agreement.

(b)	Neither the book value of the assets of the Company (including assets of entities controlled by the Company), nor the gross revenues from sales in or from Canada generated from such assets, exceed $77 million, in each case calculated in accordance with the Competition Act (Canada) and the regulations enacted thereunder.

4.10	Investment Canada Act (Canada)

4.11	Financial Statements

(a)	all of the assets, liabilities and financial position of the Company and its Subsidiaries on a consolidated basis as at August 31, 2012; and

(b)	the sales, earnings, results of operation and changes in financial position of the Company and its Subsidiaries on a consolidated basis for the 12-month period ended August 31, 2012.

4.12	Absence of Undisclosed and Contingent Liabilities

4.13	Absence of Changes and Unusual Transactions

(a)	there has not been any Material Adverse Effect;

(b)	there has not been any damage, destruction, loss, virus or denial of service attack, Information Technology failure, labour dispute, organizing drive, application for certification or other event, development or condition of any character (whether or not covered by insurance) that has a Material Adverse Effect;

(c)	there has not been any change in the level or value of Inventories outside the ordinary course of business of the Company or of any of the Subsidiaries;

(d)	neither the Company, nor any of the Subsidiaries have transferred, assigned, sold or otherwise disposed of any of the assets shown or reflected in the Balance Sheet or cancelled any debts or entitlements except, in each case, in the ordinary course of business;

(e)	neither the Company, nor any of the Subsidiaries have discharged or satisfied any Encumbrance, or paid any obligation or liability (fixed or contingent) other than liabilities included in the Balance Sheet and liabilities incurred since the date of the Balance Sheet in the ordinary course of business;

(f)	neither the Company, nor any of the Subsidiaries have suffered an operating loss or any unusual or extraordinary loss, waived or omitted to take any action in respect of any rights, or entered into any commitment or transaction not in the ordinary course of business where such loss, rights, commitment or transaction is or would be material in relation to the Company;

(g)

other than annual general salary increases made on or about November 1, 2012 and bonuses and profit sharing payments made on or about November 22, 2012, all as set out in Section 4.32(a) of the Disclosure Letter, neither the Company, nor any of the Subsidiaries have granted any bonuses, whether monetary or otherwise, or made any general wage or salary increases in respect of its Employees or changed the terms of employment for any Employee or entered into a written contract with any Employee;

(h)	neither the Company, nor any of the Subsidiaries have (i) made any material amendments to any Benefit Plan; (ii) established or promised to establish any additional benefit plans which would be considered to be a Benefit Plan once created; or (iii) changed or improved or promised to change or improve the benefits provided under any Benefit Plan;

(i)	neither the Company, nor any of the Subsidiaries have hired or dismissed any senior Employees or hired or dismissed more than 20 Employees;

(j)

except in the ordinary course of business or as set out in Section 4.13(j) of the Disclosure Letter, neither the Company, nor any of the Subsidiaries have, directly or indirectly, engaged in any transaction, made any loan or entered into any arrangement with any officer, director, partner, shareholder, Employee (whether current or former or retired), consultant, independent contractor or agent of the Company or any of the Subsidiaries;

(k)	neither the Company, nor any of the Subsidiaries have, except for Permitted Encumbrances, created or permitted to exist any Encumbrance affecting any of its assets or Real Property;

(l)	except in the ordinary course of business, neither the Company, nor any of the Subsidiaries have changed the manner of billing of, or the credit lines made available to, any of its customers;

(m)	other than monthly dividends paid to Lauren Holdings Inc., neither the Company, nor any of the Subsidiaries have, directly or indirectly, declared or paid any dividends or declared or made any other payments or distributions on or in respect of any of its shares and has not, directly or indirectly, purchased or otherwise acquired any of its shares; and

(n)	neither the Company, nor any of the Subsidiaries have authorized, agreed or otherwise become committed to do any of the foregoing.

4.14	Non-Arm’s Length Transactions

4.15	No Joint Venture Interests or Strategic Alliances

4.16	Major Suppliers and Customers

4.17	Sufficiency of Assets

4.18	Title to Certain Assets

4.19	Condition of Certain Assets

4.20	Location of the Assets

4.21	Inventories

(a)

All Inventories are valued on the books of the Company and the Subsidiaries in accordance with GAAP at the lower of average cost or net realizable value. Inventories of finished goods are saleable and all other Inventories are merchantable or usable and all Inventories are in quantities usable or saleable in the ordinary course of business prior to the date hereof, except as reserved for in the Balance Sheet. The Inventory levels have been maintained at the amounts required for the operations of the Company and the Subsidiaries as previously conducted and such Inventory levels are adequate for such operations. The Inventories of finished goods conform in all respects with their respective specifications and all published representations and warranties and have been, where required, tested, manufactured, processed, packaged, labelled, and stored in accordance with the requirements of applicable GMPs. The Company does not have knowledge of any supply issues, pending or threatened, that would prohibit the Company or any of the Subsidiaries from obtaining the Inventories necessary to carry on the business in the ordinary course.

(b)	All inventories owned by customers of the Company that are located or stored at the Real Property are stored and segregated properly and in accordance with the terms of any agreement between the Company and such customers, and the Company maintains policies of insurance that will cover any losses associated with such inventories.

4.22	Collectability of Accounts Receivable

4.23	Government Grants

4.24	Business in Compliance with Law

4.25	Governmental Authorizations

4.26	Intellectual Property

(a)	Section 4.26(a) of the Disclosure Letter sets forth a complete list and a brief description of all Intellectual Property that has been registered, or for which applications for registration have been filed, by or on behalf of the Company or any of the Subsidiaries.

(b)

The Company manufactures products using proprietary and customer processes. All Contracts relating to any of the Intellectual Property material to the business of the Company have been made available to the Purchaser and are in full force and effect and no default exists on the part of the Company or any of the Subsidiaries or, to the knowledge of the Company or any of the Subsidiaries, on the part of the other parties thereto.

(c)

Section 4.26(c) of the Disclosure Letter sets forth a complete list and brief description of the Intellectual Property of which the Company or any of the Subsidiaries licenses in and pays a royalty. The Company uses proprietary customer Intellectual Property provided to the Company by its customers to manufacture their products. The Company and the Subsidiaries are using or holding the Intellectual Property of which it is not the sole beneficial and registered owner with the consent of or a licence from the owner of such Intellectual Property, all of which such consents or licences have been made available to the Purchaser and are in full force and effect and no default exists on the part of the Company or any of the Subsidiaries or, to the knowledge of the Company, on the part of any of the parties thereto.

(d)	Except as disclosed in Section 4.26(d) of the Disclosure Letter:

(i)	all of the Intellectual Property owned by the Company is in full force and effect and has not been used or enforced or failed to be used or enforced in a manner that would result in its abandonment, cancellation or unenforceability;

(ii)	all Intellectual Property owned by the Company consisting of issued registrations, or in the case of inventions, issued patents, is valid and enforceable;

(iii)	there are no Claims by the Company or any of the Subsidiaries relating to breaches, violations, infringements or interferences with any of the Intellectual Property by any other Person and the Company has no knowledge of any facts upon which such a Claim could be based;

(iv)	to the Company’s knowledge no other Person is using any of the Intellectual Property so as to breach, violate, infringe or interfere with the rights of the Company or any of the Subsidiaries;

(v)	to the Company’s knowledge the carrying on of the Company’s and any of the Subsidiaries' business and the use, possession, reproduction, distribution, sale, licensing, sublicensing or other dealings involving any of the Intellectual Property does not breach, violate, infringe or interfere with any rights of any other Person; and

(vi)

the Intellectual Property does not include any Intellectual Property in respect of which any of the Company’s or any of the Subsidiaries' officers, Employees or consultants have any rights. All current and former officers, Employees and consultants have assigned in writing all of their rights in the Intellectual Property either to the Company or to any of the Subsidiaries and have waived in writing any moral rights that they may hold in any assets consisting of copyrighted works.

4.27	Equipment Contracts

4.28	Owned Real Property

(a)	Section 4.28(a) of the Disclosure Letter sets forth a complete list of the Owned Real Property in each case by reference to the owner, municipal address and legal description.

(b)	Except as disclosed in Section 4.28(b) of the Disclosure Letter:

(vii)	the Company or the named Subsidiary, as the case may be, is the legal and beneficial owner of the Owned Real Property in fee simple, with good and marketable title thereto, free and clear of all Encumbrances other than Permitted Encumbrances; and

(viii)	there are no Contracts that affect or relate to the title to, or ownership, operation or management of, the Owned Real Property.

(c)

The lands owned by the Company and the Subsidiaries and the buildings and other structures located thereon and the use, operation and maintenance thereof as now used, operated and maintained, comply with all applicable Laws. None of the buildings or other structures encroaches upon any lands not owned by the Company, and there is no encroachment onto such lands by buildings or other structures from any adjoining lands. There are no restrictive covenants, municipal by-laws or other laws or regulations that in any way, individually or in the aggregate, cause a Material Adverse Effect on the use of the lands, buildings or structures for the purposes for which they are currently being used, or that restrict the use of such lands, buildings or other structures so that they cannot lawfully be used for the purposes for which they are currently being used.

4.29	Leased Real Property

(a)

Section 4.29(a) of the Disclosure Letter sets forth a complete list of the Leased Real Property and details for each Leased Real Property including: (i) municipal address; (ii) legal description; (iii) area of premises; (iv) a description of all relevant documents (including amendments, extension notices, registered notices, non-disturbance agreements) including details of parties thereto and dates of documents; and (v) details of annual rent payable, applicable discounts or premiums associated therewith, current terms, renewal rights and security deposits or prepaid rent. The Company has heretofore delivered or made available to the Purchaser true, correct and complete fully executed copies of all written leases of the Leased Real Property, including all material modifications, amendments and supplements thereto and waivers thereunder.

(b)	Except as disclosed in Section 4.29(b) of the Disclosure Letter, the Real Property Leases have not been altered or amended and are in full force and effect. There are no Contracts between the landlord and tenant, or sublandlord and subtenant, or other relevant parties relating to the use and occupation of the Leased Real Property, other than as contained in the Real Property Leases.

(c)	There are no outstanding defaults (or events that would constitute a default with the passage of time or giving of notice or both) under the Real Property Leases on the part of the Company or any of the Subsidiaries or, to the knowledge of the Vendors, on the part of any other party to such Real Property Leases.

(d)	All interests held by the Company or any of the Subsidiaries as lessee or occupant under the Real Property Leases are free and clear of all Encumbrances other than Permitted Encumbrances.

(e)	Neither the Company nor any of the Subsidiaries have any option, right of first refusal or other right relating to the Leased Real Property, other than as set out in the Real Property Leases.

(f)	Neither the Company, nor any of the Subsidiaries have waived, or omitted to take any action in respect of any material rights under any of the Real Property Leases.

4.30	Real Property Generally

(a)

True and complete copies of: (i) deeds, any title insurance policies, any certificates of title, title opinions, any summaries or memoranda relating to title to the Real Property, (ii) any appraisals, valuations or other information evidencing the assessed value and/or market value of the Real Property, (iii) any surveys, real property reports, reference plans, aerial photographs, site plans, (iv) any reports or findings relating to building inspections, roof conditions, structural elements, services or other physical conditions of the Improvements and Real Property, (v) reports or summaries relating to the proposed 2013 capital expenditure budgets or programs, (vi) materials evidencing Encumbrances and Appurtenances, and (vii) materials relating to work orders, notices or violation or deficiency notices affecting the Real Property, in each case within the possession or control of the Company and/or its Subsidiaries, have been delivered or made available to the Purchaser.

(b)	The Improvements are in good condition, repair and proper working order, having regard to their use and age and such assets have been properly and regularly maintained.

(c)	Each Owned Real Property has direct legal access to a municipal right-of-way and the Company and the Subsidiaries otherwise have such rights of entry and exit to and from the Real Property as are reasonably necessary to carry on the business of the Company and the Subsidiaries upon the Real Property.

(d)	No Person has any right to purchase, option to purchase, right of first refusal or other rights with respect to any of the Real Property other than the Purchaser pursuant to this Agreement, and no Person other than the Company or a Subsidiary is using or has any right to use, or is in possession or occupancy of, any part of such Real Property.

(e)

Neither the Company, nor any of the Subsidiaries have entered into any agreement to sell, transfer, encumber, or otherwise dispose of or impair the right, title and interest of the Company or any of the Subsidiaries in and to the Real Property or the air, density and easement rights relating to the Real Property, except Permitted Encumbrances and as set out in Section 4.31 of the Disclosure Letter.

(f)	Neither the Company, nor any of the Subsidiaries have received any notification of and the Vendor has no knowledge of, any outstanding or incomplete work orders, deficiency notices or other current non-compliance with Laws relating to any of the Real Property.

(g)

The current uses of the Real Property are permitted under current zoning and land use regulations and Laws. None of the Company or any of the Subsidiaries has made application for any minor variance or amendments to zoning by-laws or official plans in respect of the Real Property and the Vendor has no knowledge of any proposed or pending changes to any zoning regulation or official plan affecting the Real Property.

(h)	No part of the Real Property is subject to any building or use restriction that restricts or would restrict or prevent the use and operation of the Real Property as it has been used or operated in the ordinary course in the past by the Company and the Subsidiaries or is located in a flood plain or is subject to flooding.

(i)	No Improvements encroach on real property not forming part of the Real Property and no buildings, structures or other improvements on adjoining lands encroach upon the Real Property.

(j)	The Vendor has no knowledge of any expropriation or condemnation or similar proceeding pending or threatened against the Real Property or any part of the Real Property.

(k)

Subject to statutory hold backs required by Law and except for the construction of Improvements now underway, all accounts for work and services performed or materials placed or furnished upon or in respect of the construction and completion of any Improvements have been fully paid and no one is entitled to claim a lien under applicable construction lien Laws or other similar legislation for such work performed by or on behalf of the Company or any of the Subsidiaries.

(l)

The Real Property is fully serviced (including water, storm and sanitary sewer and electrical service) to a level sufficient to permit the operation of the business of the Company and the Subsidiaries to be carried on after Closing as it has been carried on in the ordinary course by the Company and the Subsidiaries. Except as set out in Section 4.31(l) of the Disclosure Letter, all municipal levies, local improvements, imposts and permit fees due and payable prior to the Closing Date have been or shall be paid by the Company and the Subsidiaries as at the Closing Date.

(m)	There are no outstanding defaults (or events which would constitute a default with the passage of time or giving of notice or both) under the Permitted Encumbrances on the part of the Company or any of the Subsidiaries or on the part of any other party to such Permitted Encumbrances.

(n)	All Appurtenances necessary for the continued use and operation of the Real Property as it has been used by the Company or any of the Subsidiaries in the ordinary course in the past, are listed in Section 4.30 of the Disclosure Letter and none of the Contracts creating or governing such Appurtenances require the consent of any other party to the transactions contemplated by this Agreement.

(o)

There are no matters affecting the right, title and interest of the Company or any of the Subsidiaries in and to the Real Property which, in the aggregate, would materially and adversely affect the ability of the Company or any of the Subsidiaries after the Closing Date to carry on the business upon the Real Property as it has been carried on in the ordinary course by the Company and the Subsidiaries.

4.31	Environmental Matters

(a)

All Environmental Approvals have been obtained, are valid and in full force and effect, have been and are being complied with, and there have been and are no applications made or proceedings commenced or threatened to revoke, suspend, amend or alter any Environmental Approval. Section 4.31 of the Disclosure Letter sets forth a complete list of such Environmental Approvals and true and complete copies of all such approvals have been delivered or made available to the Purchaser. Where required by Law, true and complete copies of all such approvals are located at the operating site to which the approval relates. Neither the Company nor any of the Subsidiaries have received any notice of any intention to revoke, suspend, amend or alter any Environmental Approval and there are no circumstances that exist that could result in the revocation, suspension, amendment or alteration of any Environmental Approval.

(b)

All operations of the Company and the Subsidiaries have been and are now in compliance with all Environmental Laws and any future Environmental Laws that, to the knowledge of the Vendors, are presently planned or proposed by any Governmental Authority and that could reasonably be expected to have a Material Adverse Effect. Neither the Company, nor any of the Subsidiaries have received any notice of any alleged violation of such Laws. Any Release by the Company or any of the Subsidiaries of any Hazardous Substance into the Environment complied and complies with all Environmental Laws. The Company and the Subsidiaries have developed and implemented corporate policies and procedures designed to provide for compliance in all material respects with applicable Environmental Laws and have complied with such policies and procedures in all material respects. There are no, and there have not during the last five years been any, adverse or negative past performance evaluations or ratings by any Governmental Authority in relation to Environmental Laws relating to the business or products of the Company or any of the Subsidiaries that have been communicated to the Company or any of the Subsidiaries.

(c)

None of the Company, the Subsidiaries or any of their respective operations or any Real Property has been or is now the subject of any Environmental Order, nor do the Vendors have any knowledge of any investigation or evaluation commenced or threatened as to whether any such Environmental Order is necessary nor has any threat of any such Environmental Order been made. Neither the Company, nor any of the Subsidiaries has received any notice of any Environmental Order or any notice of intention to issue an Environmental Order nor are there any circumstances that could reasonably be expected to result in the issuance of any such Environmental Order.

(d)

Neither the Company nor any of the Subsidiaries is currently being prosecuted for and has been prosecuted for or convicted of any offence under any Environmental Law, nor has the Company or any of the Subsidiaries been found liable in any proceeding or been required by any Environmental Order to pay any fine, penalty, damages, costs, expenses, amount or judgment to any Person as a result of any Release or threatened Release or as a result of the breach or contravention of any Environmental Law, and there is no basis for any such proceeding or action. Neither the Company, nor any of the Subsidiaries has received any Claim, summons or charge or any notice of any violation or Claim under or alleging any contravention of any Environmental Law or any notice of any intention to issue any Claim, summons, charge or notice of violation or contravention of any Environmental Law.

(e)

No part of the Real Property or of any of the assets of the Company or any of the Subsidiaries or of any property currently or formerly owned, leased, used or occupied by or currently or formerly under the charge, management or control of the Company or any of the Subsidiaries has ever been used by the Company or any of the Subsidiaries as a landfill or for the disposal or deposit of waste. To the knowledge of the Vendors, no part of the Real Property or of any of the assets of the Company or any of the Subsidiaries or of any property currently or formerly owned, leased, used or occupied by or currently or formerly under the charge, management or control of the Company or any of the Subsidiaries has ever been used by any other Person as a landfill or for the disposal or deposit of waste.

(f)

To the knowledge of the Company, there are no rare or endangered species or any other species that is considered extinct, endangered, rare or at risk or any habitat of any such species present at the Real Property, any part of the Real Property or any other of the assets of the Company or the Subsidiaries or any property currently used or occupied by or under the charge, management or control of the Company or any of the Subsidiaries.

(g)	A list of all material environmental audits, data and studies (including any environmental site assessment or investigation) conducted in the last 3 years relating to the Company and the Subsidiaries have been delivered or made available to the Purchaser.

(h)	Any Hazardous Substances present at the Real Property are stored and used in compliance with all Environmental Laws applicable to the Company and the Real Property.

(i)

Except for the possibility that unintended or accidental discharges, spills or other releases of Hazardous Substances stored, used or handled at the Real Property may occur in the future, and except in circumstances where the Hazardous Substances are not handled in accordance with generally accepted industry standards (the Vendors hereby representing that they have no knowledge of any such circumstances) the Hazardous Substances that are present in, on, at or under any of the Real Property or any other assets of the Company or of any of the Subsidiaries or any property currently or previously owned, leased, used or occupied by or currently or formerly under the charge, management or control of the Company (including underlying soils and substrata, vegetation, surface water and groundwater): (i) could not reasonably be expected to result in or form the basis for the issuance of an Environmental Order or a Claim under Environmental Laws; (ii) do not exceed decommissioning or remediation standards under any applicable Environmental Laws or standards published or administered by the Governmental Authority responsible for establishing or applying such standards; (iii) could not reasonably be expected to adversely effect, either directly or indirectly, the natural, physical, chemical or biological quality of the environment; or (iv) could not reasonably be expected to be injurious to the health or safety of a person or be damaging to property or to plant or animal life.

(j)	No property currently or previously owned, leased, used or occupied by or currently or previously under the charge, management or control of the Company or any of the Subsidiaries has been registered as a contaminated site under Prince Edward Island’s Contaminated Site Registry.

(k)	No asbestos or asbestos containing materials or polychlorinated biphenyls (PCBs) or equipment, waste or other materials containing polychlorinated biphenyls (PCBs) are used, stored or otherwise present in, on or at any of the Real Property or any other assets of the Company or any of the Subsidiaries.

(l)	There is no restriction on the use of any Real Property or any part of the Real Property or on the operation or scope of the operations of the Company or any of the Subsidiaries (except as may be apparent in any Environmental Approval listed in Section 4.31 of the Disclosure Letter) imposed pursuant to any Environmental Law, including any Environmental Order.

(m)

There are no unused or abandoned underground or above ground storage tanks on, in, under or at the Real Property, and any above ground or underground storage tanks formerly on, in, under or at the Real Property have been removed and any affected soil, surface water or ground water has been remediated in compliance with all Laws, including Environmental Laws. All above ground and underground storage tanks currently on, in, under or at the Real Property have been inspected, repaired, maintained and, if required, replaced in compliance with all Laws, including Environmental Laws, and all generally accepted environmental management practices.

(n)	The Vendors have no knowledge of any Hazardous Substance originating from any neighbouring or adjoining properties that has migrated onto, into or under or is migrating towards any of the Real Property or any other assets of the Company or any of the Subsidiaries.

(o)

The Vendors have no knowledge of any Hazardous Substance originating from any of the property currently or formerly owned, leased, used or occupied by or any property currently or formerly under the charge, management or control of the Company or the Subsidiaries or any other current or former assets of the Company or of any of the Subsidiaries that has migrated onto, or is migrating towards any other property or that has been Released into the Environment in circumstances where it may move to any other property.

(p)

Neither the Company, nor any of the Subsidiaries has given or agreed to give, or is a party to or bound by, any Contract, agreement, financial assurance, guarantee, surety or indemnity in respect of Environmental Approvals, Environmental Orders or any other matter relating to the Environment, other than covenants in customer Contracts requiring the Company to be in compliance with Environmental Laws.

4.32	Employment Matters

(a)

Section 4.32(a) of the Disclosure Letter sets forth a complete and accurate list of the Employees, together with their titles, service dates and terms of employment, including current wages, salaries or hourly rate of pay, benefits, commissions and bonus (whether monetary or otherwise) or other material compensation paid since the beginning of the most recently completed fiscal year (including the date of payment) or payable to each such Employee and the date upon which each such term of employment became effective. Section 4.33(a) of the Disclosure Letter sets forth a description of the vacation entitlement policies of the Company. Section 4.32(a) of the Disclosure Letter also lists Employees on inactive status, including lay-off, short-term disability leave, long-term disability leave, pregnancy and parental leave or other extended absences, or receiving benefits pursuant to workers’ compensation legislation, and specifies the last date of active employment, the reason for the absence and the expected date of return of each such Employee.

(b)

A standard form of the Company’s employment contract is included in Section 4.32(b) of the Disclosure Letter. Each of the Employees has signed such standard form employment contract, or another employment contract that is substantially the same and not materially less favourable to the Company, other than as disclosed in Section 4.32(b) of the Disclosure Letter. Except for those Employment Contracts listed in Section 4.32(b) of the Disclosure Letter, there are no Employment Contracts that are not terminable on the giving of reasonable notice in accordance with applicable Law, nor are there any Employment Contracts providing for cash, other compensation, benefits or contingent rights on Closing. To the knowledge of the Vendors, no executive employed by the Company or any of the Subsidiaries has any plans to terminate his or her employment in the next 3 years.

(c)	Standard form confidentiality agreements of the Company are included in Section 4.32(c) of the Disclosure Letter. Each of the Employee’s has signed one of such standard form confidentiality agreements, or another confidentiality agreement that is substantially the same and not materially less favourable to the Company, other than as disclosed in Section of 4.32(c) the Disclosure Letter.

(d)

There are no Claims, pending Claims nor, to the knowledge of the Vendors, threatened Claims pursuant to any Laws relating to the Employees or former employees, including employment standards, human rights, labour relations, occupational health and safety, workers’ compensation, or pay equity. To the knowledge of the Vendors, nothing has occurred that might lead to a Claim under any such Laws. There are no outstanding decisions, Orders or settlements or pending settlements relating to the Employees that place any obligation upon the Company or any of the Subsidiaries to do or refrain from doing any act.

(e)

All current assessments under workers’ compensation legislation in relation to the Company and the Subsidiaries and all of its contractors and subcontractors have been paid or accrued. Neither the Company nor any of the Subsidiaries has been or is subject to any additional or penalty assessment under such legislation that has not been paid or has been given notice of any audit. The Company’s and the Subsidiaries' accident cost experience is such that there are no pending nor, to the knowledge of the Company, potential assessments, experience rating changes or Claims that could adversely affect the Company’s or any of the Subsidiaries' premium payments or accident cost experience or result in any additional payments in connection with the Company or any of the Subsidiaries.

(f)

The Company has made available to the Purchaser for review all inspection reports, workplace audits or written equivalent, made under any occupational health and safety legislation that relate to the Company and the Subsidiaries for the last 3 years. There are no outstanding inspection Orders or written equivalent made under any occupational health and safety legislation that relate to the Company and the Subsidiaries. There have been no fatal or critical accidents in the last three years. To the knowledge of the Vendors, there are no materials present in the assets owned or used by the Company or any of the Subsidiaries, or conditions present in the businesses conducted by the Company or any of the Subsidiaries, exposure to which could result in a disease caused by employment or peculiar to or characteristic of such materials or conditions or characteristic of a particular industrial process, trade or occupation, including all occupational diseases, other than those materials used in the ordinary course of business for which monitoring controls and appropriate standard operating procedures apply. The Company and the Subsidiaries have complied in all respects with any Orders issued under any occupational health and safety legislation. There are no appeals of any Orders under any occupational health and safety legislation against the Company or any of the Subsidiaries that are currently outstanding.

4.33	Collective Agreements

4.34	Pension and Other Benefit Plans

(a)	Section 4.34 of the Disclosure Letter sets forth a complete list of the Benefit Plans. No Benefit Plans are Multi-Employer Plans.

(b)

Current and complete copies of all written Benefit Plans as amended to date or, where oral, written summaries of the terms thereof, and all booklets and communications concerning the Benefit Plans that have been provided to persons entitled to benefits under the Benefit Plans have been delivered or made available to the Purchaser together with copies of all material documents relating to the Benefit Plans, including all trust agreements, insurance policies, actuarial valuations, financial statements and all annual information returns or other returns filed with, and significant correspondence with, any Governmental Authority within the last three years in respect of the Benefit Plans.

(c)

Each Benefit Plan is, and has been, established, registered, amended, funded, administered and invested in compliance with the terms of such Benefit Plan (including the terms of any documents in respect of such Benefit Plan), and all Laws, as applicable. Neither the Company, nor any of the Subsidiaries has received, in the last three years, any notice from any Person questioning or challenging such compliance, and the Vendors have no knowledge of any such notice beyond the last three years. There is no investigation by a Governmental Authority or Claim (other than routine claims for payment of benefits) pending or, to the knowledge of the Vendors, threatened involving any Benefit Plan or their assets, and no facts exist that could reasonably be expected to give rise to any such investigation or Claim (other than routine claims for payment of benefits).

(d)	Except as disclosed in Section 4.34 of the Disclosure Letter, neither the Company, nor any of the Subsidiaries have any formal plan or has made any promise or commitment, whether legally binding or not, to create any additional Benefit Plan or to improve or change the benefits provided under any Benefit Plan.

(e)	None of the Benefit Plans provide for benefit increases or the acceleration of, or an increase in, securing or funding obligations that are contingent upon or will be triggered by the entering into of this Agreement or the completion of the transactions contemplated in this Agreement.

(f)	All employer and employee payments, contributions and premiums required to be remitted, paid to or in respect of each Benefit Plan have been paid or remitted in a timely fashion in accordance with its terms and all Laws.

(g)

No event has occurred respecting any Pension Plan that would entitle any Person (without the consent of the Company) to wind up or terminate any Pension Plan, in whole or in part, or would cause any Governmental Authority to revoke the registration of any Pension Plan. Where any Pension Plan has been partially or fully wound up or terminated, all assets, including any surplus, attributable to such partial or full wind-up or termination have been fully distributed in accordance with all Laws or where such distribution of assets is pending, the amount of the surplus attributable to such partial or full wind-up or termination together with the date as of which such amount is determined is disclosed in Section 4.34 of the Disclosure Letter.

(h)	Except for a deficiency set out in Section 4.34 of the Disclosure Letter, there is no Pension Plan Unfunded Liability.

(i)	There are no entities other than the Company and the Subsidiaries participating in any Benefit Plan. No Benefit Plan provides benefits to Legacy Benefit Plan Members, and the Company has no liability, contingent liability or obligation to provide employee benefits or benefits beyond retirement or other termination of service to Legacy Benefit Plan Members.

(j)	All data necessary to administer each Benefit Plan is in the possession of the Company and the Subsidiaries or its agent and is in a form that is sufficient for the proper administration of the Benefit Plan in accordance with its terms and all Laws, and such data is complete and correct.

(k)

Except as disclosed in Section 4.34 of the Disclosure Letter, none of the Benefit Plans, other than the Pension Plans, provide benefits beyond retirement or other termination of service to Employees or former employees or to the beneficiaries or dependants of such employees and where there are such Benefit Plans disclosed in Section 4.34 of the Disclosure Letter, each such Benefit Plan may be amended or terminated at any time without incurring any liability thereunder other than in respect of Claims incurred prior to such amendment or termination.

(l)	None of the Benefit Plans, or any insurance Contract relating thereto, require or permit a retroactive increase in premiums or payments, or require additional premiums or payments on termination of the Benefit Plan or any insurance Contract relating thereto.

4.35	Personal Information

(a)	the Company and each of the Subsidiaries, to the extent required by Law, has a written privacy policy that governs the collection, use and disclosure of Personal Information, and the Company is in compliance with such privacy policy; and

(b)	to the extent required by Law, all required consents to the collection, use or disclosure of Personal Information in connection with the conduct of the Company’s and Subsidiaries' businesses (including disclosure to Affiliates of the Company or any of the Subsidiaries) have been obtained.

4.36	Insurance

4.37	Material Contracts

4.38	Litigation

(a)	have a Material Adverse Effect;

(b)	enjoin, restrict or prohibit the transfer of all or any part of the Purchased Shares as contemplated by this Agreement; or

(c)	delay, restrict or prevent the Vendors or the Company or any of the Subsidiaries from fulfilling any of their obligations set out in this Agreement or arising from this Agreement,

4.39	Tax Matters

(a)

During the last 7 years, each of the Company and the Subsidiaries has duly and timely made or prepared all Tax Returns required to be made or prepared by it, has duly and timely filed all Tax Returns required to be filed by it with the appropriate Governmental Authority and has duly, completely and correctly reported all income and all other amounts and information required to be reported thereon.

(b)

Each of the Company and the Subsidiaries has duly and timely paid all Taxes, including all instalments on account of Taxes for the current year, that are due and payable by it whether or not assessed by the appropriate Governmental Authority. Provision has been made on the Balance Sheet for amounts at least equal to the amount of all Taxes owing by the Company that were not yet due and payable by the date of the Balance Sheet and that relate to periods ending on or prior to the date of the Balance Sheet.

(c)

Neither the Company, nor any of the Subsidiaries has requested, offered to enter into or entered into any agreement or other arrangement, or executed any waiver, providing for any extension of time within which (i) to file any Tax Return covering any Taxes for which the Company is or may be liable; (ii) to file any elections, designations or similar filings relating to Taxes for which the Company or any of the Subsidiaries is or may be liable; (iii) the Company or any of the Subsidiaries is required to pay or remit any Taxes or amounts on account of Taxes; or (iv) any Governmental Authority may assess or collect Taxes for which the Company or any of the Subsidiaries is or may be liable.

(d)	Other than those agreements and arrangements described in Section 4.39 of the Disclosure Letter, the Company has not made, prepared or filed any elections, designations or similar filings relating to Taxes or entered into any agreement or other arrangement in respect of Taxes or Tax Returns that has effect for any period ending after the Closing Date.

(e)

Except for a research and development tax credit claim for the fiscal year ending on August 31, 2011, which is not yet due, all income, sales (including goods and services, harmonized sales and provincial or territorial sales) and capital tax liabilities of the Company have been assessed by the relevant Governmental Authorities, and notices of assessment have been issued to the Company and the Subsidiaries by the relevant Governmental Authorities for all taxation years or periods ending prior to and including the taxation year or period ended August 31, 2011.

(f)	There are no proceedings, investigations, audits or Claims now pending or threatened against the Company or any of the Subsidiaries in respect of any Taxes, and there are no matters under discussion, audit or appeal with any Governmental Authority relating to Taxes.

(g)

Each of the Company and the Subsidiaries has duly and timely withheld all Taxes and other amounts required by Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to or for the account or benefit of any Person, including any Employee, officer or director and any non-resident Person), and has duly and timely remitted to the appropriate Governmental Authority such Taxes and other amounts required by Law to be remitted by it.

(h)	Each of the Company and the Subsidiaries has duly and timely collected all amounts on account of any sales or transfer taxes, including goods and services, harmonized sales and provincial or territorial sales taxes, required by Law to be collected by it and has duly and timely remitted to the appropriate Governmental Authority any such amounts required by Law to be remitted by it.

(i)	Except pursuant to this Agreement, as specifically disclosed in writing to the Purchaser, or as described in Section 4.39 of the Disclosure Letter, for purposes of the Income Tax Act (Canada) or any other applicable Tax statute, no Person or group of Persons has ever acquired or had the right to acquire control of the Company or any of the Subsidiaries.

(j)	None of sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the Income Tax Act (Canada), or any equivalent provision of the Tax legislation of any province or any other jurisdiction, have applied or will apply to the Company or any of the Subsidiaries at any time in the last six years up to and including the Closing Date.

(k)	Neither the Company, nor any of the Subsidiaries has acquired property from a non-arm’s length Person, within the meaning of the Income Tax Act (Canada), for consideration, the value of which is less than the fair market value of the property acquired in circumstances that could subject it to a liability under section 160 of the Income Tax Act (Canada).

(l)

Except as set out in Section 4.39(l) of the Disclosure Letter, for all transactions between the Company or any of the Subsidiaries, and any non-resident Person with whom the Company or any of the Subsidiaries was not dealing at arm’s length during a taxation year commencing after 2005 and ending on or before the Closing Date, the Company and the Subsidiaries have made or obtained records or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Income Tax Act (Canada).

(m)	The Company is duly registered under subdivision (d) of Division V of Part IX of the Excise Tax Act (Canada) with respect to the goods and services tax and harmonized sales tax.

(n)	The only reserves under the Income Tax Act (Canada) or any equivalent provincial or territorial statute to be claimed by the Company for the taxation year ended immediately prior to the acquisition of control by the Purchaser are disclosed in Section 4.39 of the Disclosure Letter.

(o)	The Purchaser has been provided with copies of all Tax Returns filed in the last 7 years relating to the Taxes of the Company or any of the Subsidiaries.

(p)

More than fifty percent (50%) of the fair market value of the Shares is not derived, and at no time during the sixty (60) month period preceding the Closing Date was more than fifty percent (50%) of the fair market value of the Shares derived, directly or indirectly from one or any combination of: (i) real or immovable property situated in Canada; (ii) Canadian resource properties (within the meaning of the Income Tax Act (Canada); (iii) timber resource properties (within the meaning of the Income Tax Act (Canada)); or (iv) options in respect of, or interests in, or for civil law rights in, property described in (i), (ii) or (iii) above, whether or not the property exists. The Purchased Shares have not been deemed to be taxable Canadian property (within the meaning of the Income Tax Act (Canada)) under a provision of the Income Tax Act (Canada).

(q)	Neither the Company, nor any of the Subsidiaries has made an excessive eligible dividend election, as that term is defined in the Income Tax Act (Canada), except as described in Section 4.39 of the Disclosure Letter.

4.40	Books and Records

4.41	Corporate Records

(a)	The letters patent and by-laws of the Company and the Subsidiaries, including any and all amendments, have been delivered or made available to the Purchaser and such letters patent and by-laws as so amended are in full force and effect and no amendments are being made or are contemplated to be made to them.

(b)

The corporate records and minute books of the Company and the Subsidiaries have been delivered or made available to the Purchaser. The minute books include complete and accurate minutes of all meetings of the directors or shareholders of the Company and the Subsidiaries held to date or resolutions passed by the directors or shareholders on consent, since the date of its incorporation. The share certificate book, register of shareholders, register of transfers and register of directors for the Company and the Subsidiaries are complete and accurate and have been made available to the Purchaser.

4.42	Trade Allowances

4.43	Third Party Consents

4.44	Powers of Attorney

4.45	No Broker

4.46	Third Party Tangible Personal Property

4.47	Full Disclosure

5.1	Status of the Purchaser

5.2	Status of Questcor

5.3	Due Authorization and Enforceability of Obligations

5.4	Absence of Conflicts

(d)	indenture, mortgage, lease, agreement, obligation or instrument;

(e)	charter or by-law provision; or

(f)	Laws or Governmental Authorizations,

5.5	Regulatory Approvals

5.6	Investment Canada

5.7	Litigation

(d)	prevent the Purchaser from paying the Purchase Price to the Vendors or prevent Questcor from complying with its guarantee set out in Section 9.9;

(e)	enjoin, restrict or prohibit the transfer of all or any part of the Purchased Shares as contemplated by this Agreement; or

(f)	delay, restrict or prevent the Purchaser or Questcor from fulfilling any of its obligations set out in this Agreement or arising from this Agreement,

5.8	Financing

5.9	No Broker

6.1	Non-Waiver

6.2	Nature and Survival

(a)	the Closing; and

(b)	the payment of the consideration for the Purchased Shares,

7.1	Truth and Accuracy of Representations

7.2	Performance of Obligations

7.3	Approvals

7.4	Encumbrances

7.5	No Proceedings

7.6	Non-Competition

7.7	Key Employees

7.8	Conduct of Business After Closing

7.9	Opinion of Counsel for Vendors

7.10	Opinion of Counsel for Lauren Holdings Inc.

7.11	Receipt of Closing Documentation

8.1	Truth and Accuracy of Representations of the Purchaser and Questcor at Closing Time

8.2	Performance of Obligations

8.3	Key Employees

8.4	Conduct of Business After Closing

8.5	Opinion of Counsel for Purchaser

8.6	Approvals

8.7	No Proceedings

8.8	Receipt of Closing Documentation

9.1	Interim Activities

(a)

(i) except for immaterial compensation and benefit increases in the ordinary course of business consistent with past practice, increase the compensation or benefits payable or provided by the Company or any of the Subsidiaries to any individual; or (ii) except in the ordinary course of business, enter into or commit itself to any new employment, management, severance or consulting Contract with any Person, other than Contracts that can be terminated without additional payment in less than 30 days;

(b)	issue any communication to Employees (including general communications relating to benefits and compensation) without the prior written approval of the Purchaser (which will not be unreasonably delayed or withheld), except for communications that are in the ordinary course of business and do not relate to the transactions contemplated in this Agreement;

(c)	create any additional benefit plans which would be considered to be a Benefit Plan once created or to improve or change the benefits provided under any Benefit Plan;

(d)	permit or allow any assets or properties of the Company or any of the Subsidiaries to be subject to any material Encumbrance, other than a Permitted Encumbrance;

(e)

(i) except for any Improvements under construction or projects previously disclosed to the Purchaser, make any capital expenditure or any commitment to make any capital expenditure, except for such expenditures or commitments made in the ordinary course of business, (ii) acquire any securities of another Person, (iii) acquire any assets of another Person incident to the acquisition of a business, or (iv) organize any subsidiary or acquire any interest in another Person, whether by merger, consolidation, joint venture, or acquisition of securities or assets or similar transactions, other than purchases of assets in the ordinary course of business consistent with past practices;

(f)	except in the ordinary course of business, enter into any Material Contract or any other Contract with a non-cancellable term in excess of twelve months;

(g)	sell, lease, license, transfer or otherwise dispose of, or acquire or agree to acquire, any material assets, except in the ordinary course of business;

(h)	incur any indebtedness, other than normal fluctuations in the Company’s operating credit in the ordinary course of business, unless such indebtedness will be paid off prior to the Closing, or assume, guarantee, endorse or otherwise become responsible for obligations of any other Person, or make any loans or advances to any Person;

(i)	change in any material respect any accounting or tax principles, methods or policies or change or modify its credit, collection or payment policies, procedures or practices;

(j)	settle any material Claim or waive any material rights or Claims;

(k)	issue or commit to issue any shares of capital stock or options of the Company or any of the Subsidiaries, or grant any stock appreciation rights or grant any Person any right to acquire any shares of capital stock or options of the Company or any of the Subsidiaries;

(l)	amend its charter or bylaws or comparable organizational documents;

(m)	merge or amalgamate with any other Person or permit any other Person to merge into it, consolidate with any other Person, or adopt a plan of arrangement, liquidation or dissolution;

(n)

take any action that is intended or may reasonably be expected to result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time prior to the Closing Date, or in any of the conditions set forth in Article 7 and Article 8 not being satisfied in any material respect or in a material violation of any provision of this Agreement, except, in each case, as may be required by Law;

(o)

change any annual tax accounting period, adopt or change any method of tax accounting, make or change any election, file any amended Tax Return, enter into any closing agreement, settle any tax Claim or assessment of or relating to the Company or any of the Subsidiaries, surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any tax Claim or assessment upon or relating to the Company, unless required by applicable Law;

(p)	engage in any transaction not at arm's length, or make any payment or distribution to any Affiliate (other than payments for services to an officer, director, manager or Employee of the Company or any of the Subsidiaries pursuant to existing arrangements); or

(q)	authorize, commit or agree to take any of the foregoing actions.

9.2	Access for Investigation

(a)

The Company and the Vendors shall permit the Purchaser and its representatives, between the date of this Agreement and the Closing Time, to have access during normal business hours to (i) the Real Property; (ii) all the Books and Records; and (iii) the properties and assets used by the Employees, the Company and the Subsidiaries. The Company and the Vendors shall furnish to the Purchaser copies of Books and Records as the Purchaser shall from time to time reasonably request to enable confirmation of the matters warranted in Article 4. Without limiting the generality of the foregoing, the accounting representatives of the Purchaser shall be afforded ample opportunity to make a full investigation of all aspects of the financial affairs of the Vendor in connection with the affairs of the Company or any of the Subsidiaries. The Purchaser shall have the right to have the Real Property, the Tangible Personal Property and the Information Technology inspected and tested by the Purchaser’s representatives. The Vendors shall cooperate and assist, to the extent reasonably requested by the Purchaser, with the Purchaser’s investigation of the property, assets, undertaking and financial condition of the Company or any of the Subsidiaries. The Purchaser’s rights of access shall be exercised in a manner that does not unreasonably interfere with the operations of the Company or the Subsidiaries.

(b)

Notwithstanding Section 9.2(a), the Company, the Subsidiaries and the Vendors shall not be required to disclose any information, records, files or other data to the Purchaser where prohibited by any Laws. If any consent of any Person or Governmental Authority is required to permit the Vendor to release any information to the Purchaser, the Vendors shall promptly inform the Purchaser thereof and shall make all reasonable efforts to obtain such consent as soon as possible.

(c)

The Company and the Vendors shall forthwith, upon request by the Purchaser or Purchaser’s counsel, execute and deliver to the Purchaser all necessary consents to permit the Purchaser to have inspections made and have existing records released to the Purchaser by the municipal building and zoning department, fire department, public works, environmental agencies, the elevator inspections branch of the provincial or territorial department of labour and other appropriate authorities as the Purchaser may consider advisable between the date of this Agreement and Closing. Such consents shall authorize and direct the release of information to the Purchaser.

9.3	Actions to Satisfy Closing Conditions

9.4	Notice of Untrue Representation or Warranty

9.5	Stub Period Returns

9.6	Exclusive Dealing

9.7	Submission to Jurisdiction

(a)	Each Party submits to the exclusive jurisdiction of any Ontario courts sitting in Toronto in any action, application, reference or other proceeding arising out of or relating to this Agreement, or the agreements contemplated within this Agreement and consents to all claims in respect of any such action, application, reference or other proceeding being heard and determined in such Ontario courts.

(b)	The Parties will not raise any objection to the venue of any action, application, reference or other proceeding arising out of or relating to this Agreement in the Ontario Courts sitting in Toronto, including the objection that the proceedings have been brought in an inconvenient forum.

(c)

Each of the Purchaser and Questcor irrevocably appoints Osler, Hoskin & Harcourt LLP (the “Purchaser Process Agent”), with an office as of the date of this Agreement at 340 Albert Street, Suite 1900, Ottawa, Ontario, for the attention of Craig Wright, as its agent to receive on behalf of it and its property, service of any documents by which any action, application, reference or other proceeding arising out of or relating to this Agreement is commenced. Such service may be made by delivering a copy of such documents to the Purchaser or Questcor in care of the Purchaser Process Agent at the Purchaser Process Agent’s above address, and each of the Purchaser and Questcor irrevocably authorizes and directs the Purchaser Process Agent to accept such service on its behalf.

(d)

Each of the Vendors and the Vendors' Representative irrevocably appoint Stewart McKelvey (the “Vendor Process Agent”), with an office as of the date of this Agreement at 65 Grafton Street, Charlottetown, Prince Edward Island, for the attention of Paul Kiley, as its agent to receive on behalf of each of them and their respective property, service of any documents by which any action, application, reference or other proceeding arising out of or relating to this Agreement is commenced. Such service may be made by delivering a copy of such documents to the Vendors or the Vendors' Representative in care of the Vendor Process Agent at the Vendor Process Agent’s above address, and the Vendors and the Vendors' Representative irrevocably authorize and direct the Vendor Process Agent to accept such service on its behalf.

(e)	A final judgment in any such action, application or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner specified by law.

9.8	Shareholder Agreements

9.9	Questcor Guarantee

(a)

Questcor, hereby unconditionally and irrevocably guarantees to the Vendors payment and performance by the Purchaser of its obligations in respect of the Purchase Price (including without limitation any payment owing pursuant to Section 3.3) (the “Guaranteed Obligations”). The liability of Questcor by reason of this Section 9.9 is primary, and the Vendors shall not be required to make any demand on the Purchaser for performance of any of its obligations under this Agreement, nor to exhaust any legal, contractual or equitable remedies against the Purchaser, prior to proceeding against Questcor.

(b)	Questcor shall indemnify and save the Vendors harmless from and against any losses which may arise by virtue of any of the Guaranteed Obligations being or becoming for any reason whatsoever in whole or in part:

(i)	void, voidable, ultra vires, illegal, invalid, ineffective or otherwise unenforceable by the Vendors in accordance with its terms; or

(ii)	released or discharged by operation of Law.

(c)	The Purchaser and Questcor acknowledge that the benefit of the guarantee contained in this Section is for the exclusive benefit of the Vendors and the Vendors, in their sole and absolute discretion, may claim under this guarantee or decline to claim under this guarantee with respect to any Guaranteed Obligation.

(d)	Questcor shall cause any successor to execute any and all documents such that any such successor would be bound hereunder.

(e)	The liability of Questcor hereunder shall be absolute and unconditional irrespective of:

(i)	any change or amendment to this Agreement or a change in the name or objects of the Purchaser, provided that if this Agreement is amended in any manner, this guarantee shall only apply to this Agreement, as amended;

(ii)	any change in the time, manner or place of payment of, amount or amounts owing by the Purchaser hereunder, or in any other term of, or any other amendment or waiver of or any consent to departure from this Agreement; or

(iii)	to the extent permitted by applicable law, any other circumstances which might otherwise constitute a defence available to, or a discharge of, Questcor in respect of the Guaranteed Obligations, or of Questcor in respect of this Agreement.

10.1	Termination

(d)	This Agreement may, by notice in writing given by the Vendors or the Purchaser at or prior to the Closing, be terminated:

(i)	by mutual agreement of the Vendors and the Purchaser;

(ii)

by either the Vendors or the Purchaser if the Closing has not occurred by the end of the date that is 60 days after execution of this Agreement, provided that the Vendors or the Purchaser may not terminate this Agreement under this Section 10.1(ii). if it has failed to perform any one or more of its material obligations or covenants under this Agreement required to be performed at or prior to the Closing and the Closing has not occurred because of such failure;

(iii)	by either the Vendors or the Purchaser if there has been a material breach of any provision of this Agreement by the other Party and such breach has not been waived by the non-breaching Party or, provided such breach is reasonably capable of being cured, such breach has not been cured within 15 days following notice of such breach by the non-breaching Party; or

(iv)	by the Purchaser if there is an occurrence of any event which has a Material Adverse Effect on the assets, business, operations or prospects of the Company and the Subsidiaries taken as a whole.

11.1	Indemnification by the Vendors

(g)

The Vendors will jointly and severally indemnify and save harmless the Purchaser, Questcor, and each of their directors and officers (collectively referred to as the “Purchaser Indemnified Parties”) from and against all Claims, whether or not arising due to third party Claims, that may be made or brought against the Purchaser Indemnified Parties, or that they may suffer or incur, directly or indirectly, as a result of or in connection with or relating to:

(i)	any non-fulfilment or breach of any covenant or agreement on the part of the Vendors or the Company contained in this Agreement or in any certificate or other document furnished by or on behalf of the Vendors pursuant to this Agreement;

(ii)

any misrepresentation or any incorrectness in or breach of any representation or warranty of the Vendors or the Company contained in this Agreement or in any certificate or other document furnished by or on behalf of the Vendors or the Company pursuant to this Agreement disregarding for the purpose of this Section 11.1(a)(ii) any materiality or Material Adverse Effect qualification contained in any such representation or warranty;

(iii)

liability to third Persons respecting products manufactured or sold, or services provided, by the Company or any of the Subsidiaries prior to the Closing Date, provided that in respect of liability for products manufactured or sold prior to the Closing Date, other than Claims relating to the return of products based on product or manufacturing warranties, the Company has maintained product liability insurance that is commercially reasonable in the circumstances;

(iv)	any liability of the Company under the asset purchase agreement between the Company and Genzyme Corporation dated November 2, 2007;

(v)	any liability for Taxes in respect of any taxation year or other period ended prior to the Closing Date, or any portion of a taxation year or other period up to and including the Closing Date, for which no adequate reserve has been provided and disclosed in the Balance Sheet; or

(vi)

the failure by the party identified in Schedule 11.1 (“Construction Party”) to reimburse the Company in relation to the construction of the facility (the “Facility”) as set out in the supply agreement dated July 9, 2010 between the Construction Party and the Company and the agreement on payment of construction costs between the Construction Party and the Company dated July 10, 2012 (together, the “Construction Agreements”), subject to the Purchaser first making reasonable efforts to enforce the Company’s rights to collect such reimbursement from the Construction Party. The Vendors acknowledge and agree that the Purchase Price assumes that the Construction Party will reimburse the Company in full for the construction of the Facility.

(h)	The Vendors’ obligations under Section 11.1(a) are subject to the following limitations:

(iii)	subject to Sections 11.1(b)(ii) and 11.1(b)(iii), the obligations of the Vendors under Sections 11.1(a) (ii) terminate on the second anniversary of the Closing Date except with respect to bona fide Claims by a Purchaser Indemnified Party set forth in written notices given by a Purchaser Indemnified Party to the Vendors' Representative prior to such date;

(iv)

except with respect to bona fide Claims by a Purchaser Indemnified Party set forth in written notices given by a Purchaser Indemnified Party to the Vendors' Representative prior to the date described below, the obligations of the Vendors under Section 11.1(a)(ii) in respect of any Claim relating to or affected by Tax matters, including any Claim arising out of Section 4.39, for that particular period, or under Section 11.1(a)(v) terminate on the date that is 90 days after the relevant Governmental Authorities are no longer entitled to assess or reassess liability for Taxes against the Company or any of the Subsidiaries for that particular period, having regard, without limitation, to any waivers given by the Company or any of the Subsidiaries in respect of any taxation year;

(v)	the obligations of the Vendors under Section 11.1(a) with respect to:

(A)	any Claims under Section 11.1(a)(i) or (a)(iv);

(B)	any Claims under Section 11.1(a)(iii) that relate to liability for products manufactured or sold prior to the Closing Date, other than Claims relating to the return of products based on product or manufacturing warranties;

(C)	any Claims based on any incorrectness in or breach of the representations and warranties set out in Sections 4.1, 4.3, 4.4, 4.5, 4.6, 4.7, 4.18, or 4.30;

(D)	any Claims based on the absence of, or deficiency in, the title of the Vendors to the Purchased Shares or the title of the Company or any of the Subsidiaries to its assets;

(E)	any Claims based on intentional misrepresentation or fraud by the Vendors or any Person acting for or on behalf of the Vendors,

(vi)

the obligations of the Vendors under both Section 11.1(a)(iii) relating to the return of products based on product or manufacturing warranties or services provided prior to the Closing Date and Section 11.1(a)(vi) will terminate on December 31, 2015 except with respect to bona fide Claims by a Purchaser Indemnified Party set forth in written notices given by a Purchaser Indemnified Party to the Vendors' Representative prior to such date;

(vii)

for Claims made under Section 11.1(a)(ii),(iii), (iv), (v) or (vi) or Claims made by the Purchaser or Questcor based on or with respect to the inaccuracy or breach of any representation or warranty made by the Vendors or the Company contained in this Agreement or contained in any document or certificate given to carry out the transactions contemplated thereby the Vendors shall not be required to pay any amount until the aggregate of all Claims exceeds $100,000 and upon the aggregate of all Claims exceeding $100,000 the Vendors shall be required to pay the amount owing in respect of all of such Claims including the $100,000, except that the foregoing limitation shall not apply to wilful breaches or fraud.

(i)	Any Claim made under Section 11.1 is to first be satisfied by setting off the amount of such Claim against any unpaid Earn-Out Amounts. To the extent that the amount of the Claim exceeds the amount of any unpaid Earn-Out Amounts, the Vendors will pay such amount to the Purchaser in cash.

11.2	Indemnification by the Purchaser and Questcor

(c)	The Purchaser and Questcor agree to indemnify and save harmless the Vendors from and against all Claims, whether or not arising due to third party Claims, that may be made or brought against any of the Vendors, or that they may suffer or incur directly or indirectly, as a result of or in connection with or relating to:

(i)	any non-fulfillment or breach of any covenant or agreement on the part of the Purchaser or Questcor contained in this Agreement or in any certificate or other document furnished by or on behalf of the Purchaser or Questcor pursuant to this Agreement; or

(ii)	any misrepresentation or any incorrectness in or breach of any representation or warranty of the Purchaser or Questcor contained in this Agreement or in any certificate or other document furnished by or on behalf of the Purchaser or Questcor pursuant to this Agreement.

(d)	The Purchaser’s obligations under Section 11.2(a) are subject to the following limitations:

(i)	the obligations of the Purchaser and Questcor under Section 11.2(a)(ii) terminate on the second anniversary of the Closing Date except with respect to bona fide Claims by Vendors set forth in written notices given by the Vendors to the Purchaser prior to such date;

(ii)

for Claims made under Section 11.2(a)(ii) or Claims made by the Vendors based on or with respect to the inaccuracy or breach of any representation or warranty made by Questcor or the Purchaser contained in this Agreement or contained in any document or certificate given to carry out the transactions contemplated thereby, the Purchaser and Questcor shall not be required to pay any amount until the aggregate of all Claims exceeds $100,000 and upon the aggregate of all Claims exceeding $100,000 the Purchaser and Questcor shall be required to pay the amount owing in respect of all of such Claims including the $100,000.

(e)	Any obligation of the Purchaser to indemnify the Vendors as set forth in this Article 11 is limited to the amount of $25,000,000 plus 50% of the Earn-Out Amounts, excluding any such Claims based on fraud or wilful misconduct of the Purchaser.

11.3	Indemnification Procedures for Third Party Claims

(a)

In the case of Claims made by a third party with respect to which indemnification is sought, the party entitled to indemnification under this Agreement (the “Indemnified Party”) will give prompt notice, and in any event within 10 days, to the other party (the “Indemnifying Party”), which in the case of notice to the Vendors shall be to the Vendors' Representative, of any such Claims made upon it. If the Indemnified Party fails to give such notice, such failure does not preclude the Indemnified Party from obtaining such indemnification, but its right to indemnification may be reduced to the extent that such delay prejudiced the defence of the Claim or increased the amount of liability or cost of defense.

(b)

The Indemnifying Party may, by notice to the Indemnified Party given not later than 30 days after receipt of the notice described in Section 11.3(a), assume the control of the defence, compromise or settlement of the Claim, but only if such assumption is, by its terms, without cost to the Indemnified Party and if the Indemnifying Party acknowledges in writing the obligation of the Indemnifying Party to indemnify the Indemnified Party in accordance with the terms contained in this Section in respect of that Claim. Without limiting the generality of the foregoing, the Vendors' Representative shall not have the right to assume the control of any defence, compromise, or settlement of any Claim if:

(iii)	the Purchaser determines in good faith that the Claim could have a Material Adverse Effect; or

(iv)	the Claim involves Acthar or any proprietary products of Questcor or its Affiliates in any respect.

(c)

Upon the assumption of control of any Claim by the Indemnifying Party as set out in Section 11.3(b), the Indemnifying Party will diligently proceed with the defence, compromise or settlement of the Claim at its sole expense, including if necessary, employment of counsel and experts reasonably satisfactory to the Indemnified Party and, in connection therewith, the Indemnified Party will cooperate fully, but at the expense of the Indemnifying Party with respect to any out-of-pocket expenses incurred, to make available to the Indemnifying Party all pertinent information and witnesses under the Indemnified Party’s control, make such assignments and take such other steps as in the opinion of counsel for the Indemnifying Party are reasonably necessary to enable the Indemnifying Party to conduct such defence. The Indemnified Party will also have the right to participate in the negotiation, settlement or defence of any Claim at its own expense. The Indemnifying Party will not settle any Claim without the prior written consent of the Indemnified Party, such consent not to be unreasonably withheld.

(d)	The final determination of any Claim pursuant to this Section, including all related costs and expenses, is binding and conclusive upon all of the Parties as to the validity or invalidity, as the case may be, of such Claim against the Indemnifying Party.

(e)	If the Indemnifying Party does not assume control of a Claim, the Indemnified Party may make such settlement of the Claim as it determines, acting reasonably and in good faith, and such settlement or any other final determination of the Claim is binding upon the Indemnifying Party.

11.4	Remedies

11.5	Limitation on Liability

(f)	The amount of any damages which may be claimed by the Purchaser or Questcor or any Purchaser Indemnified Party pursuant to a Claim made under this Agreement or any agreement, certificate or other document given to carry out the transactions contemplated hereby shall be calculated to be the cost or loss to the Purchaser or Questcor or any Purchaser Indemnified Party after giving effect to:

(i)	any insurance proceeds actually received by the Company from the Company’s insurance policies (and for greater certainty, not taking into account any insurance policies of the Purchaser or Questcor) in relation to the matter which is the subject of the Claim;

(ii)	the net present value of any related, determinable tax benefits realized, or which will (with reasonable certainty) be realized within a five year period following the date of incurring such cost or loss, by the Company or the Purchaser or Questcor or any Purchaser Indemnified Party in relation to the matter which is the subject of the Claim;

(iii)	the amount of any reduction in the Earn-Out Amounts that would otherwise have been payable to the Vendors but for the Purchaser’s or Questcor’s or any Purchaser Indemnified Party’s Claim hereunder arising from a cost or loss by the Company or any of its Subsidiaries; and

(iv)	with respect to any Claim under Section 11.1(a)(vi), the greater of (i) the net present value of net cash flow expected with reasonable certainty to be derived from the Facility for alternative uses that would not otherwise be available but for the breach of the Construction Agreements and (ii) the salvage value of the Facility.

(g)

Notwithstanding any other provisions of this Agreement or of any agreement, certificate or other document made in order to carry out the transactions contemplated hereby, the aggregate collective liability of the Vendors to the Purchaser or Questcor or any Purchaser Indemnified Party pursuant to this Agreement or of any agreement, certificate or other document provided by or on behalf of the Vendors pursuant to this Agreement, including the obligations of the Vendors to indemnify the Purchaser or Questcor or any Purchaser Indemnified Party as set forth in this Article 11, is limited to the amount of $25,000,000 plus 50% of the Earn-Out Amounts except as follows:

(iv)	any such Claims based on fraud or willful misconduct of the Vendors;

(v)	the aggregate liability of each Vendor is limited to the proportionate amount of the Purchase Price received by such Vendor, but such limit does not otherwise detract from the joint and several obligations of the Vendors under Section 11.1.

11.6	Trustee and Agent

11.7	Release

(f)

Each Vendor hereby irrevocably releases and forever discharges the Company and the Subsidiaries and their respective divisions, predecessors, directors, officers, members, managers, partners (general or limited), agents, and employees and the successors, heirs, assigns, executors and administrators to the foregoing (the “Released Parties”) of and from any and all manner or causes of actions, Claims, suits, rights, debs, sums of money, covenants, Contracts, damages and judgments, whatsoever, in Law or equity, which such Vendor ever had, now has, or which he hereafter can, shall or may have, against the Released Parties, whether known or unknown, suspected or unsuspected, matured or unmatured, fixed or contingent, for, upon reason of any matter relating to the Company or any of the Subsidiaries, and arising at any time on or prior to the Closing Date, whether in such Vendor's capacity as an equity holder, director, officer, holder of indebtedness or otherwise, and the Released Parties shall not have liability with respect thereto; provided, however, that such release shall not cover Claims or liabilities for amounts owed pursuant to, or other rights set forth in, or other Claims arising in connection with this Agreement or any agreement ancillary to this Agreement, nor shall such release cover: (i) Claims or liabilities for amounts owed to any Vendor at the Closing and payable to such Vendor after the Closing in respect of accrued salary and benefits payable by the Company in the ordinary course of the Company’s business; or (ii) subject to Section 11.7(c), any right to indemnification under the by-laws of the Company.

(g)	Each Vendor acknowledges and agrees that the release set forth in this Section 11.7 applies to all Claims or liabilities of any nature whatsoever, whether at Law or in equity, whether known or unknown, fixed or contingent, suspected or unsuspected, foreseen or unforeseen that it may have against the Company with respect to the matters being released hereunder.

(h)

Questcor, the Purchaser and the Company agree that the indemnification provisions in favour of the Company’s directors and officers currently set out in the by-laws of the Company shall not be terminated or modified in such a manner as to adversely affect any director or officer to whom this section applies for a period of six years following the Closing. However, each of the Vendors hereby waives any rights to indemnification under the Company by-laws in respect of any Claim that Questcor or the Purchaser have against such Vendor under this Agreement, in respect of which a Vendor has a right to indemnification under the Company’s by-laws, but without prejudice to the Vendors’ right to indemnification under the Company by-laws on any other matter in the future.

12.1	Public Notices, Press Releases and Announcements

12.2	Expenses

(f)	the Purchaser and Questcor will pay all costs and expenses (including the fees and disbursements of legal counsel and other advisers) they incur in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated by this Agreement; and

(g)	the Vendors will pay all costs and expenses (including the fees and disbursements of legal counsel and other advisers) incurred by the Vendors or the Company in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated by this Agreement.

12.3	Notices

12.4	Assignment

12.5	Enurement

12.6	Amendment

12.7	Further Assurances

12.8	Execution and Delivery

1.	BioVectra, Inc., a corporation governed by the laws of Prince Edward Island, Canada.