Common use of Operational Effectiveness Clause in Contracts

Operational Effectiveness. In 2014, the Board of Directors of Flamel approved the sale of all of the Group’s intellectual property to Flamel Ireland Limited, Flamel’s wholly-owned operational subsidiary, which is now a 100% subsidiary of Avadel by virtue of the Domestic Merger. Given the attractive nature of the business environment in Ireland and given that the Group’s IP and related functions are located in Ireland, the Group’s management believes that this supports the Group’s business case to complete the Merger as it will allow for synergies within the Group and improve the efficiency of its management and supporting services. These centralised functions will help to unify the Group wide decision-making process, thereby helping to ensure its customers receive safe and effective products.