Exhibit 10-Y
CONFIDENTIAL TREATMENT REQUESTED
ROYALTY INTEREST AGREEMENT
Dated as of January 17, 2006
between
A.P. PHARMA, INC.
and
[***][an affiliate of Xxxx Royalty Fund II, L.P.,
a Delaware limited partnership]
TABLE OF CONTENTS
Page
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Article I DEFINITIONS 1
Section 1.01 Definitions. 1
Article II PURCHASE AND SALE OF ROYALTY INTEREST 9
Section 2.01 Purchase and Sale. 9
Section 2.02 Transfers and Payments in Respect of
the Royalty Interest. 9
Section 2.03 Purchase Price. 9
Section 2.04 No Assumed Obligations. 10
Article III REPRESENTATIONS AND WARRANTIES
OF THE COMPANY 10
Section 3.01 Organization. 10
Section 3.02 Corporate Authorization. 10
Section 3.03 Governmental Authorization. 11
Section 3.04 Ownership. 11
Section 3.05 Public Filings. 11
Section 3.06 No Undisclosed Liabilities. 12
Section 3.07 Solvency. 12
Section 3.08 Litigation. 12
Section 3.09 Compliance with Laws. 12
Section 3.10 Conflicts. 12
Section 3.11 Material Contracts. 13
Section 3.12 Intellectual Property. 13
Section 3.13 Regulatory Approval. 16
Section 3.14 Subordination. 17
Section 3.15 Place of Business. 17
Section 3.16 Broker's Fees. 17
Section 3.17 Other Information. 17
Section 3.18 License Agreements. 18
Section 3.19 Related Agreements. 19
Section 3.20 Insurance. 20
Section 3.21 Applicable Royalty Rates and Duration
of Royalty Rates. 21
Section 3.22 Set-off. 21
Article IV REPRESENTATIONS AND WARRANTIES OF PRF 21
Section 4.01 Organization. 21
Section 4.02 Authorization. 21
Section 4.03 Broker's Fees. 21
Section 4.04 Conflicts. 22
Article V COVENANTS 22
Section 5.01 Consents and Waivers. 22
Section 5.02 Access; Information. 22
Section 5.03 Material Contracts. 23
Section 5.04 Public Announcement. 23
Section 5.05 Security Agreement. 23
Section 5.06 Reasonable Commercial Efforts;
Further Assurance. 24
Section 5.07 Remittance to PRF's Account. 24
Section 5.08 License Agreements. 25
Section 5.09 Insurance. 27
Section 5.10 Audits. 27
Section 5.11 Notice. 29
Section 5.12 Chain of Title. 29
Section 5.13 Treatment of Sale of Royalty
Interest 29
Article VI THE CLOSING; CONDITIONS TO CLOSING AND
FUNDING 29
Section 6.01 Closing. 29
Section 6.02 Conditions Applicable to PRF. 30
Section 6.03 Conditions Applicable to the Company. 31
Article VII TERMINATION 32
Section 7.01 Termination Date. 32
Section 7.02 Effect of Termination. 32
Article VIII MISCELLANEOUS 32
Section 8.01 Survival. 32
Section 8.02 Specific Performance. 33
Section 8.03 Notices. 33
Section 8.04 Successors and Assigns. 34
Section 8.05 Indemnification. 34
Section 8.06 Independent Nature of Relationship. 36
Section 8.07 Tax Treatment. 36
Section 8.08 Entire Agreement. 36
Section 8.09 Amendments; No Waivers. 37
Section 8.10 Interpretation. 37
Section 8.11 Headings and Captions. 37
Section 8.12 Counterparts; Effectiveness. 37
Section 8.13 Severability. 37
Section 8.14 Governing Law; Jurisdiction. 37
Section 8.15 Waiver of Jury Trial. 38
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
ROYALTY INTEREST AGREEMENT
This ROYALTY INTEREST AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement") is made
and entered into as of January 17, 2006 by and between A.P.
Pharma, Inc., a Delaware corporation (the "Company", as further
defined below), and [***][an affiliate of Xxxx Royalty Fund II,
L.P., a Delaware limited partnership].
WHEREAS, the Company has the right to all royalties and
payments under the License Agreements, Patent Rights and other
Intellectual Property necessary to commercialize, market and sell
the Products; and
WHEREAS, the Company wishes to sell, assign, convey and
transfer to PRF, and PRF wishes to purchase from the Company, the
Royalty Interest, upon and subject to the terms and conditions
hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual covenants,
agreements representations and warranties set forth herein, the
parties hereto agree as follows:
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
The following terms, as used herein, shall have the
following meanings:
"Affiliate" shall mean any Person that controls, is
controlled by, or is under common control with another Person.
For purposes of this definition, "control" shall mean (i) in the
case of corporate entities, direct or indirect ownership of at
least fifty percent (50%) of the stock or shares having the right
to vote for the election of directors, and (ii) in the case of
non-corporate entities, direct or indirect ownership of at least
fifty percent (50%) of the equity interest with the power to
direct the management and policies of such non-corporate
entities.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Amcol" shall mean Amcol International Inc. and its
Affiliates, successors and assigns.
"Amcol Supply Agreement" shall mean the supply agreement
entered into between RPS and Amcol in 2003. Representations and
warranties made by the Company herein with respect to the Amcol
Supply Agreement shall be based on the draft copy provided as
Exhibit J.
"Audit Costs" shall mean, with respect to any audit
described hereunder with respect to amounts payable or paid under
this Agreement or any License Party Audit, the cost of such
audit, including all fees, costs and expenses incurred in
connection therewith.
"Aventis" shall mean sanofi-aventis U.S. LLC, formerly
Xxxxx-Xxxxxxx Xxxxx, Inc. and its Affiliates, including Dermik
Laboratories, Inc., successors and assigns.
"Aventis License Agreement" shall mean the Development and
License Agreement between Xxxxx-Xxxxxxx Xxxxx, Inc. (a
predecessor of Aventis) and Advanced Polymer Systems, Inc. (a
predecessor of the Company) effective March 19, 1992, as amended
(including the amendments dated March 16, 1998, December 22, 1999
and September 23, 2003), superseded, replaced, succeeded, or
substituted from time to time.
"Bankruptcy Event" shall mean the occurrence of any of the
following:
(i) the Company shall commence any case, proceeding or
other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, relief of
debtors or the like, seeking to have an order for
relief entered with respect to it, or seeking to
adjudicate it bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief
with respect to it or its respective debts, or (B)
seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any
portion of its assets, or the Company shall make a
general assignment for the benefit of its respective
creditors; or
(ii) there shall be commenced against the Company any case,
proceeding or other action of a nature referred to in
clause (i) above which remains undismissed,
undischarged or unbonded for a period of ninety (90)
calendar days; or
(iii) there shall be commenced against the Company any case,
proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar
process against (A) all or any substantial portion of
its assets and/or (B) the Products or any substantial
portion of the Intellectual Property related to the
Products, which results in the entry of an order for
any such relief which shall not have been vacated,
discharged, stayed, satisfied or bonded pending appeal
within forty-five (45) calendar days from the entry
thereof; or
(iv) the Company shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii) or
(iii) above; or
(v) the Company shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its
respective debts as they become due; or
(vi) the Company shall be in a financial condition such that
the sum of its debts is greater than the fair market
value of its property, when taken together on a
consolidated basis.
"Xxxx of Sale" shall mean the Xxxx of Sale pursuant to which
the Company shall assign to PRF all of its rights and interests
in and to the Royalty Interest purchased hereunder, which Xxxx of
Sale shall be substantially in the form of Exhibit A.
"Business Day" shall mean any day other than a Saturday, a
Sunday, any day which is a legal holiday under the laws of the
State of New York, or any day on which banking institutions
located in the State of New York are required by law or other
governmental action to close.
"Business Report" shall mean a report in a format agreed
between the parties providing information on current business
activities, if any, relating to the licensing of Intellectual
Property and sale or supply of Products.
"Carac(R)" shall mean the Particles based 5-fluorouracil
product for the treatment of actinic keratoses currently sold by
Aventis in the United States of America under NDA No. 020985.
"Closing" shall have the meaning set forth in Section 6.01.
"Closing Date" shall mean the date of this Agreement.
"Company" shall mean A.P. Pharma, Inc., a Delaware
corporation, and its Affiliates, successors and assigns.
"Company Indemnified Party" shall have the meaning set forth
in Section 8.05(b).
"Company SEC Documents" shall have the meaning set forth in
Section 3.05.
"Company Supply Agreement" shall mean the Supply Agreement
entered into as of July 25, 2000 between the Company and RPS.
"Collateral" shall mean the property included in the
definition of "Collateral" in the Security Agreement.
"Contract Party" shall mean any party to a License Agreement
or a Related Agreement and includes the Company, Aventis, Ortho,
RPS and Amcol.
"Discrepancy Notice" shall have the meaning set forth in
Section 5.10(b).
"Dispute" shall have the meaning set forth in Section
3.12(i).
"EMEA" shall mean the European Medicines Agency.
"Excluded Liabilities and Obligations" shall have the
meaning set forth in Section 2.04.
"FDA" shall mean the United States Food and Drug
Administration.
"FDA Approval Date" shall mean the date of approval by the
FDA of a NDA and satisfaction of any related FDA requirements (if
any) for the Products.
"Financial Statements" shall mean the consolidated balance
sheets of the Company and its Subsidiaries at December 31, 2002,
December 31, 2003, December 31, 2004, and September 30, 2005 and
the related consolidated statements of operations, cash flows and
changes in stockholders' equity of the Company and its
Subsidiaries audited for the years ended December 31, 2002,
December 31, 2003, and December 31, 2004, and the quarter ended
September 30, 2005 and the accompanying footnotes thereto,
contained in the Company's Form 10-K for the year ended December
31, 2004 and Form 10-Q for the quarter ended September 30, 2005,
respectively.
"Future Agreement" shall mean any distribution, licensing or
similar agreement entered into by the Company or any of its
Affiliates with any other Person after the date hereof relating
to the manufacturing, marketing and/or sale of the Products, or
otherwise relating to the licensing of the Patent Rights, as the
same may be amended, supplemented or otherwise modified from time
to time.
"GAAP" shall mean generally accepted accounting principles
in the United States in effect from time to time.
"Governmental Authority" shall mean any government, court,
regulatory or administrative agency or commission, or other
governmental authority, agency or instrumentality, whether
foreign, federal, state or local (domestic or foreign), including
each Patent Office, the FDA, the United States National Institute
of Health, the EMEA, or any other government authority in any
country.
"Gross Products Payments" shall mean, including without
offset for withholding or any other tax, except to the extent
specifically provided for in the Aventis License Agreement, the
Ortho License Agreement or any Future Agreement, all Royalties
arising from or payable with respect to sales of the Products
under the Ortho License Agreement, Aventis License Agreement or
any successor Future Agreement and, subject to Section 5.08(i),
under any other License Agreement; and any collections,
recoveries, payments or other compensation made in lieu thereof
and any amounts paid or payable to the Company in respect of the
Ortho License Agreement, the Aventis License Agreement or any
other License Agreement pursuant to Section 365(n) of the United
States Bankruptcy Code.
"IND" shall mean an investigational new drug application and
all amendments and supplements thereto for regulatory approval by
the FDA, as defined in 21 C.F.R. Section 312 et seq. as such act
or regulations may be amended, supplemented or replaced from time
to time, filed with the FDA in the United States or an equivalent
application filed with a Regulatory Agency in any country outside
of the United States.
"Independent Accountants" shall have the meaning set forth
in Section 5.10(b).
"Intellectual Property" shall mean all Patent Rights; Know-
How; inventions (whether patentable or unpatentable and whether
or not reduced to practice) and all improvements thereto; all
registered or unregistered trademarks, trade names, service
marks, including all goodwill associated therewith; all domain
names and websites; and all registered and unregistered
copyrights and all applications, in each case that are owned,
controlled by, issued to, licensed to, licensed by or hereafter
acquired by or licensed by the Company or any of its
Subsidiaries, in each case relating to or involving the Products.
"Know-How" shall mean, relating to the Products, all trade
secrets, confidential information, materials, discoveries, data,
processes, methods of manufacture, devices, techniques,
algorithms, flow charts, computer software programs or
applications (in both source code and object code form),
schematics, compositions, formulations, formula, specifications,
uses, patterns, compilations and other information, including,
but not limited to (i) medical, chemical, pharmacological and
other scientific or clinical data or materials, and (ii)
methodology and information used in the manufacture, packaging,
labeling, development, testing or analysis of the Products, in
each case that is now owned, controlled by, licensed to, licensed
by or hereafter acquired by or licensed by the Company or any of
its Subsidiaries during the term of this Agreement.
"Knowledge" shall mean, with respect to the Company, (i) the
actual knowledge of an officer, employee or representative of the
Company relating to a particular matter, and (ii) the knowledge
or awareness which such a person would have obtained in the
conduct of his business after making a reasonably diligent
inquiry with respect to the particular matter in question.
"License Agreements" shall mean any existing or future
license, co-promotion, collaboration, distribution,
manufacturing, marketing or partnering agreements entered into by
the Company or any of its Affiliates relating to the Products
and/or the Intellectual Property, including the Aventis License
Agreement, Ortho License Agreement and any Future Agreements.
"License Party Audit" shall have the meaning set forth in
Section 5.10(a).
"Lien" shall mean any lien, hypothecation, charge,
instrument, license, preference, priority, security agreement,
security interest, interest, mortgage, option, privilege, pledge,
liability, covenant, order, tax, right of recovery, trust or
deemed trust (whether contractual, statutory or otherwise
arising) or any encumbrance, right or claim of any other Person
of any kind whatsoever whether xxxxxx or inchoate, filed or
unfiled, noticed or unnoticed, recorded or unrecorded, contingent
or non-contingent, material or non-material, known or unknown.
"Losses" shall mean collectively, any and all claims,
damages, losses, judgments, liabilities, costs and expenses
(including reasonable expenses of investigation and, in the
context of third party claims, reasonable attorneys' fees and
expenses in connection with any action, suit or proceeding).
"Material Adverse Effect" shall mean (i) a material adverse
effect on the validity or enforceability of any of the
Transaction Documents, (ii) a material adverse effect on the
ability of the Company to perform any of its obligations under
any of the Transaction Documents, (iii) a material adverse effect
on the rights or remedies of PRF under any of the Transaction
Documents, (iv) an adverse effect on the right of the Company to
receive any payments payable under any License Agreement or any
other material rights and remedies of the Company under any
License Agreement, (v) an adverse effect on the right of PRF to
receive the Royalty Interest or any payment due to PRF hereunder
or (vi) an adverse effect on the Royalty Interest, including any
material adverse effect on the Company's right to Intellectual
Property covering the Products, or on the ability of any Person
to manufacture, purchase, distribute, market and/or sell the
Products.
"Material Contract" shall mean any contract, agreement or
other arrangement to which either the Company or any of its
Subsidiaries is a party or any of the Company's or its
Subsidiaries' respective assets or properties are bound or
committed (other than the Transaction Documents) for which
breach, nonperformance, cancellation or failure to renew could
reasonably be expected to result in a Material Adverse Effect.
"NDA" shall mean a new drug application and all amendments
and supplements thereto for regulatory approval by the FDA, as
defined in 21 C.F.R. Section 314 et seq. as such act or
regulations may be amended, supplemented or replaced from time to
time, filed with the FDA in the United States or an equivalent
application filed with a Regulatory Agency in any country outside
the United States.
"Obligations" shall mean any and all obligations of the
Company under the Transaction Documents.
"Ortho" shall mean Ortho-XxXxxx Pharmaceutical, Inc.
formerly the Ortho Pharmaceutical Corporation and its Affiliates,
successors, and assigns.
"Ortho License Agreement" shall mean the Development and
License Agreement between Advanced Polymer Systems, Inc. (a
predecessor of the Company) and Ortho Pharmaceutical Corporation
(a predecessor of Ortho) effective April 14, 1992, as amended
(including the amendment dated May 1, 1992), superseded,
replaced, succeeded or substituted from time to time and
including any direct agreements with Ortho Affiliates pursuant to
the Development and License Agreement, attached hereto as Exhibit
G.
"Ortho Supply Agreement" shall mean the Supply Agreement
between the Company and Ortho Pharmaceutical Corporation
effective January 1, 1996 and subsequently assigned by the
Company to RPS.
"Particles" means any microsponge, microsphere, solid
particle, porous particle or porous microparticle.
"Patent Office" shall mean the respective patent office,
including the U.S. Patent and Trademark Office and any comparable
foreign patent office, for any Patent Rights.
"Patent Rights" shall mean all current and future patents,
patent applications and patent disclosures, together with all
reissuances, divisions, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, composition of
matter, formulation, or methods of manufacture or use thereof
that are issued or filed, including those identified on Schedule
3.12(b), that, in each case, are owned, controlled by, issued to,
licensed to, licensed by or hereafter acquired by or licensed by
the Company or any of its Subsidiaries, in each case relating to
the Products and/or the Intellectual Property.
"Person" shall mean an individual, corporation, partnership,
limited liability company, association, trust or other entity or
organization, but not including a government or political
subdivision or any agency or instrumentality of such government
or political subdivision.
"PRF" shall have the meaning set forth in the first
paragraph hereof.
"PRF Indemnified Party" shall have the meaning set forth in
Section 8.05(a).
"PRF's Account" shall mean an account maintained by PRF at
any financial institution and designated in writing by PRF to the
Company, as PRF may so designate from time to time.
"Products" shall mean (i) Retin A Micro(R) and any other
FDA-approved product or foreign equivalent utilizing Particles or
impregnated Particles containing retinoic acid in any
jurisdiction, (ii) Carac(R) and any other FDA-approved product or
foreign equivalent utilizing Particles or impregnated Particles
containing and in combination with 5-fluorouracil in any
jurisdiction, and (iii) any other FDA-approved product or foreign
equivalent to which Aventis or Ortho, respectively, currently has
rights to commercialize under the Aventis License Agreement or
the Ortho License Agreement and the equivalent thereof in any
jurisdiction.
"Purchase Price" shall have the meaning set forth in Section
2.03.
"Quarterly Report" shall mean, with respect to the relevant
calendar quarter of the Company, (i) a report showing all
payments made by the Company to PRF under this Agreement during
such quarter and showing in detail the basis for the calculation
of such payments, (ii) a reconciliation of such report referred
to in clause (i) above to all information and data deliverable to
the Company, PRF or their Affiliates by the parties to any of the
License Agreements, together with relevant supporting
documentation, (iii) a report showing the amount of gross end-
user sales of the Products and all deductions (if any)
supporting the Company's calculations of Gross Products Payments,
and (iv) such additional information as PRF may reasonably
request.
"Regulatory Agency" shall mean a Governmental Authority with
responsibility for the approval of the marketing and sale of
pharmaceuticals in any country or other regulation of
pharmaceuticals or biohazardous substances or materials.
"Regulatory Approvals" shall mean, collectively, all INDs,
NDAs and other regulatory approvals, registrations, certificates,
authorizations, permits and associated materials (including the
product dossier) relating to the Products, issued by the
appropriate Regulatory Agency as to the Products and all reports,
correspondence and other submissions related thereto and the
regulatory and clinical files and data pertaining thereto, and
all information, data, formulations, assays, or Intellectual
Property contained in such INDs and the NDAs, relating to the
Products together with all amendments, supplements and updates
thereto, and all comparable regulatory approvals, registrations
and associated materials throughout the world.
"Related Agreements" shall mean the RPS Agreements, the
Ortho Supply Agreement and the Amcol Supply Agreement.
"Retin A Micro(R)" shall mean the Particle based retinoic
acid product for the treatment of acne vulgaris currently sold by
Ortho under NDA No. 020475.
"Royalties" shall mean the gross amount of all royalties,
minimum royalty payments, profit payments, license fees,
settlement payments, judgments, payments, securities,
consideration or any other remuneration of any kind payable or
received under any License Agreement.
"Royalty Interest" shall mean an undivided interest in the
accounts (as such term is defined in the UCC) of the Company
consisting of one hundred percent (100%) of the Gross Products
Payments earned from October 1, 2005 until the expiration of the
Patent Rights.
"RPS" shall mean X.X. Xxxxxxx South, Inc. and its
Affiliates, successors and assigns.
"RPS Agreements" shall mean the Asset Purchase Agreement
between Advanced Polymer Systems, Inc. (a predecessor of the
Company) and RPS dated June 21, 2000 and all agreements entered
into thereto including the TTA and the Company Supply Agreement.
"SEC" shall have the meaning set forth in Section 3.05.
"Security Agreement" shall mean the Security Agreement of
even date herewith by and between the Company and PRF providing
for, among other things, the grant by the Company in favor of PRF
of a valid continuing, perfected lien on and security interest in
the Collateral.
"Set-off" shall have the meaning set forth in Section 3.22.
"Subsidiary" or "Subsidiaries" shall mean with respect to
any Person (i) any corporation of which the outstanding capital
stock having at least a majority of votes entitled to be cast in
the election of directors under ordinary circumstances shall at
the time owned, directly or indirectly, by such Person or (ii)
any other Person of which at least a majority voting interest
under ordinary circumstances is at the time, directly or
indirectly, owned by such Person.
"Term" shall mean the term of this Agreement, which shall
commence on the date hereof and terminate on December 31, 2021.
"Term Sheet" shall mean the letter dated November 30, 2005
between Xxxx Capital Advisors, LLC and the Company as the same
may be amended prior to the date hereof.
"Transaction Documents" shall mean, collectively, this
Agreement, the Xxxx of Sale, and the Security Agreement.
"Transfer" or "Transferred" shall mean any sale, conveyance,
assignment, disposition, license, sublicense, co-promotion
agreement, or other form of transfer.
"TTA" shall mean the Technology Transfer Agreement entered
into as of July 25, 2000 between Advanced Polymer Systems, Inc.
(a predecessor of the Company) and RPS.
"UCC" shall mean the Uniform Commercial Code (or any similar
or equivalent legislation) as in effect in any applicable
jurisdiction.
ARTICLE II
PURCHASE AND SALE OF ROYALTY INTEREST
Section 2.01 Purchase and Sale.
Upon the terms and subject to the conditions set forth in
this Agreement, on the Closing Date, the Company agrees to sell,
assign, transfer and convey to PRF, and PRF agrees to purchase
from the Company, free and clear of all Liens (except those Liens
created in favor of PRF pursuant to the Security Agreement and
any other Transaction Document), all of the Company's right,
title and interest in and to the Royalty Interest. It is the
intention of the parties that such transaction be treated as a
"true sale". The security interest granted pursuant to Section
5.05 is granted as a precaution against the possibility, contrary
to the parties' intentions, that the transaction be characterized
as other than a "true sale".
Section 2.02 Transfers and Payments in Respect of the
Royalty Interest.
PRF shall be entitled to receive, in respect of the Royalty
Interest, cash to be paid to PRF in respect of the Gross Products
Payments that are received from time to time in PRF's Account or
otherwise paid to PRF pursuant to Section 5.07.
Section 2.03 Purchase Price.
In full consideration for the sale of the Royalty Interest,
and subject to the terms and conditions set forth herein, PRF
shall pay to the Company, or its designee, the following (the
"Purchase Price"):
(a) Twenty-five million dollars ($25,000,000) on the Closing
Date;
(b) Two million five hundred thousand dollars ($2,500,000)
[***];
(c) One million five hundred thousand dollars ($1,500,000)
[***]; and
(d) One million dollars ($1,000,000)[***].
Section 2.04 No Assumed Obligations.
Notwithstanding any provision in this Agreement or any other
writing to the contrary, PRF is acquiring only the Royalty
Interest and is not assuming any liability or obligation of the
Company or any of its Affiliates of whatever nature, whether
presently in existence or arising or asserted hereafter, whether
under any of the License Agreements, Related Agreements or any
Transaction Document or otherwise. All such liabilities and
obligations shall be retained by and remain obligations and
liabilities of the Company or its Affiliates (the "Excluded
Liabilities and Obligations").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The company hereby respresents and warrants to PRF the
following:
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Section 3.01 Organization.
The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware, and has all corporate powers and all licenses,
authorizations, consents and approvals required to carry on its
business as now conducted and as proposed to be conducted in
connection with the transactions contemplated by the Transaction
Documents. The Company is duly qualified to do business as a
foreign corporation and is in good standing in every jurisdiction
in which the failure to do so could reasonably be expected to
result in a Material Adverse Effect.
Section 3.02 Corporate Authorization.
The Company has all necessary power and authority to enter
into, execute and deliver the Transaction Documents and to
perform all of the obligations to be performed by it hereunder
and thereunder and to consummate the transactions contemplated
hereunder and thereunder. The Transaction Documents have been
duly authorized, executed and delivered by the Company and each
Transaction Document constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance
with its respective terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally or general
equitable principles.
Section 3.03 Governmental Authorization.
The execution and delivery by the Company of the Transaction
Documents, and the performance by the Company of its obligations
hereunder and thereunder, does not require any notice to, action
or consent by, or in respect of, or filing with, any Government
Authority, except for the filing of proper financing statements
(including Form UCC-1s) under the UCC and filings with the U.S.
Patent and Trademark Office.
Section 3.04 Ownership.
The Company owns all right, title and interest in and to the
Collateral, including the Intellectual Property with respect to
the Products, free and clear of all Liens, and no license or
covenant not to xxx under any Intellectual Property has been
granted to any third party, except as set forth on Schedule 3.04.
The Company has not (i) sold or transferred ownership of any
portion of the Royalty Interest nor (ii) granted any exclusive
license of or exclusive right to use any of the Intellectual
Property to any other Person, except as set forth on Schedule
3.04.
Section 3.05 Public Filings.
The Company has made available (including via filings with
XXXXX) to PRF a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by
the Company with the Securities and Exchange Commission (the
"SEC") since January 1, 2002 and prior to or on the date hereof
(the "Company SEC Documents"). As of their respective filing
dates, (i) the Company SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, as
the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Documents and (ii) none
of the Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statement therein, in
light of the circumstances under which they were made, not
misleading, except to the extent such statements have been
modified or superseded by later Company SEC Documents filed and
publicly available prior to the date of this Agreement. The
Financial Statements complied as to form in all material respects
with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto, or, in the case of the unaudited
statements, as permitted by Rule 10-01 of Regulations S-X of the
SEC) and fairly presented in all material respects, in accordance
with applicable requirements of GAAP (subject, in the case of the
unaudited statements, to normal, recurring adjustments, none of
which are material), the consolidated financial position of the
Company and its Subsidiaries, taken as a whole, as of their
respective dates and the consolidated statements of operations
and the consolidated statements of cash flows of the Company and
its Subsidiaries for the periods presented therein.
Section 3.06 No Undisclosed Liabilities.
Except for those liabilities (i) specifically identified on
the face of the Financial Statements, (ii) incurred by the
Company or any of its Subsidiaries in the ordinary course of
business since September 30, 2005, or (iii) incurred in
connection with the Obligations under the Transaction Documents,
there are no material liabilities of the Company or any of its
Subsidiaries taken as a whole, of any kind whatsoever, whether
accrued, contingent, absolute, determined or determinable.
Section 3.07 Solvency.
The Company is not insolvent as defined in any statute of
the United States Bankruptcy Code or in the fraudulent conveyance
or fraudulent transfer statutes of the States of Delaware, New
York or California. Assuming consummation of the transactions
contemplated by the Transaction Documents, (i) the present fair
saleable value of the Company's assets is greater than the amount
required to pay its debts as they become due, (ii) the Company
does not have unreasonably small capital with which to engage in
its business, and (iii) the Company has not incurred, nor does it
have present plans to or intend to incur, debts or liabilities
beyond its ability to pay such debts or liabilities as they
become absolute and matured.
Section 3.08 Litigation.
There is no (i) action, suit, arbitration proceeding, claim,
investigation or other proceeding pending or, to the Knowledge of
the Company, threatened against the Company or (ii) any
governmental inquiry pending or, to the Knowledge of the Company,
threatened against the Company, in each case with respect to
clauses (i) and (ii) above, which, if adversely determined, would
question the validity of, or could adversely affect the
transactions contemplated by any of the Transaction Documents or
could reasonably be expected to result in a Material Adverse
Effect. There is no action, suit, claim, proceeding or
investigation pending or, to the Knowledge of the Company,
threatened against the Company or any other Person relating to
the Products, the Intellectual Property, the Regulatory Approvals
or the Royalty Interest.
Section 3.09 Compliance with Laws.
The Company (i) is not in violation of, has not violated, or
to the Knowledge of the Company, is not under investigation with
respect to, and (ii) has not been threatened to be charged with
or been given notice of any violation of any law, rule, ordinance
or regulation of, or any judgment, order, writ decree, permit or
license entered by any Government Authority applicable to the
Company or the Royalty Interest, which could reasonably be
expected to result in a Material Adverse Effect.
Section 3.10 Conflicts.
(a) Neither the execution and delivery of any of the
Transaction Documents nor the performance or consummation of the
transactions contemplated hereby and thereby will: (i)
contravene, conflict with, result in a breach or violation of,
constitute a default under, give rise to any additional rights,
including rights of first refusal, or accelerate the performance
provided by, in any material respects any provisions of: (A) any
law, rule, ordinance or regulation of any Government Authority,
or any judgment, order, writ, decree, permit or license of any
Government Authority, to which the Company or any of its
Subsidiaries or any of their respective assets or properties may
be subject or bound; or (B) any contract, agreement, commitment
or instrument to which the Company or any of its Subsidiaries is
a party, including any and all License Agreements, or any of the
Related Agreements, or by which the Company or any of its
Subsidiaries or any of their respective assets or properties is
bound or committed; (ii) contravene, conflict with, result in a
breach or violation of, constitute a default under, or accelerate
the performance provided by, any provisions of the certificate of
incorporation or by-laws (or other organizational or
constitutional documents) of the Company or any of its
Subsidiaries; (iii) except for the filing of the proper financing
statements (including Form UCC-1s) under the UCC required
hereunder and filings with any Patent Office, require any
notification to, filing with, or consent of, any Person or
Government Authority; (iv) give rise to any right of termination,
cancellation or acceleration of any right or obligation of the
Company or any of its Subsidiaries or any other Person or to a
loss of any benefit relating to the Royalty Interest; or (v)
result in the creation or imposition of any Lien on (A) the
assets or properties of the Company or any of its Subsidiaries or
(B) the Royalty Interest or any other Collateral, other than,
with respect to clause (v) above, pursuant to the Security
Agreement.
(b) The Company has not granted, nor does there exist, any
Lien on any License Agreement, the Royalty Interest or any other
Collateral other than pursuant to the Security Agreement.
Section 3.11 Material Contracts.
Neither the Company nor any of its Subsidiaries is in
breach of or in default under any Material Contract, including
this Agreement, any License Agreement or any Related Agreement.
To the Knowledge of the Company, nothing has occurred and no
condition exists that would permit any other party thereto to
terminate any Material Contract. Neither the Company nor any of
its Subsidiaries has received any notice or, to the Knowledge of
the Company, any threat of termination of any such Material
Contract. To the Knowledge of the Company, no other party to a
Material Contract is in breach of or in default under such
Material Contract. All Material Contracts are valid and binding
on the Company and its Subsidiaries and, to the Knowledge of the
Company, on each other party thereto, and are in full force and
effect.
Section 3.12 Intellectual Property.
(a) The Company has provided PRF all material information in
its possession, or otherwise known to it with respect to the
Intellectual Property.
(b) Schedule 3.12(b) sets forth an accurate and complete
list of all Intellectual Property (including all Intellectual
Property not owned by the Company), including all (i) patents,
(ii) applications for patent with the applicable Patent Office
worldwide, (iii) registrations with the applicable trademark or
copyright offices worldwide (including, if applicable, each
Patent Office) of trade names, trademarks and copyrights and (iv)
all material unregistered trademarks and copyrights, if any, in
each case that relate to the development, manufacture,
commercialization, marketing or other use of the Products. For
each item of the Intellectual Property listed on Schedule
3.12(b), the Company has indicated (A) the countries in each case
in which such item is patented, registered or in which an
application for patent or registration is pending, (B) the
application numbers, (C) the registration or patent numbers (D)
the scheduled expiration date of the issued patents, and (E) the
owner of such item of Intellectual Property.
(c) The Intellectual Property is valid, enforceable and
subsisting. Each individual associated with the filing and
prosecution of the Patent Rights, including the named inventors
of the Patent Rights, has complied in all material respects with
all applicable duties of candor and good faith in dealing with
any Patent Office, including any duty to disclose to any Patent
Office all information known to be material to the patentability
of each of the Patent Rights, in those jurisdictions where such
duties exist. Except as disclosed on Schedule 3.12(c), the
Company owns all right, title and interest in and to the
Intellectual Property, free and clear of all Liens. Except as
disclosed on Schedule 3.12(c), the Intellectual Property owned by
the Company is all the intellectual property necessary to make,
use and sell the Products.
(d) U.S. Patent No. 5,955,109 contains claims that cover
Retin A Micro(R) and U.S. Patent Nos. 4,690,825 and 6,670,335
contain claims that cover Carac(R), and U.S. Patent No. 5,145,675
contains claims related to the preparation of both Retin A
Micro(R) and Carac(R). Schedule 3.12(d) sets forth an accurate
and complete list of all other U.S. and non-U.S. patents that
have issued with at least one claim covering the relevant
Products.
(e) The Company has not sold or otherwise transferred any
patents or patent applications that have issued or may issue with
at least one claim covering the relevant Products.
(f) Schedule 3.12(f) sets forth an accurate and complete
list of all agreements, including any and all license agreements
to which the Company is a party, whether oral or written, express
or implied, including licenses, options, franchise, distribution,
marketing and manufacturing agreements, sponsorships, agreements
not to enforce, consents, settlements, assignments, security
interests, liens and other encumbrances or mortgages, and any
amendment(s), renewal(s), novation(s) and termination(s)
pertaining thereto, pursuant to which the Company or any party
thereto exploit any of the Intellectual Property. For each
agreement specified on Schedule 3.12(f), the Company has
indicated (A) whether such agreement relates to inbound licenses
of Intellectual Property to the Company or outbound licenses of
Intellectual Property by the Company, and (B) the specific
Intellectual Property relating to such agreement, including the
countries in which such Intellectual Property is patented,
registered or in which an application for patent or registration
is pending and the application number, registration number or
patent number of such Intellectual Property. Each agreement
specified on Schedule 3.12(f) constitutes a valid and binding
obligation, enforceable in accordance with its terms, subject, as
to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally or general equitable principles. The Company is
not in breach of such agreements and, to the Knowledge of the
Company, no circumstances or grounds exist that would give rise
to a claim of breach or right of rescission, termination,
revision, or amendment of any of the agreements specified on
Schedule 3.12(f), including the signing of this Agreement.
(g) There are no unpaid maintenance or renewal fees payable
by the Company to any third party that are currently overdue for
any of the Patent Rights or other Intellectual Property. To the
Knowledge of the Company and no applications or registrations
therefor have lapsed or been abandoned, cancelled or expired.
(h) No payments by the Company or any Affiliate of the
Company, or to the Knowledge of the Company, no payments by any
other party are, or at any time in the future will become, due to
any other Person in respect of the Intellectual Property or the
Products, in each case that would diminish the Royalty Interest
in any way. There is no reduction in, or set-off against, the
Royalties payable thereunder to the Company as a result of
payments that Aventis or Ortho may be required to make to third
parties for the use of any intellectual property controlled by
the third party or for the manufacture, use or sale of the
Products, or any other set-off. The Company has not undertaken
and, to the Knowledge of the Company, neither Aventis, Ortho nor
RPS has undertaken or omitted to undertake any acts, and no
conduct, circumstances or grounds exist that would void,
invalidate, reduce or eliminate, in whole or in part, the
enforceability or scope of (i) any of the Intellectual Property,
and (ii) the Company's right to enjoy payments made pursuant to
any License Agreements. The manufacture, use and sale of the
Products does not infringe the intellectual property rights of
any third party.
(i) To the Knowledge of the Company there is, and has been,
no pending, decided or settled opposition, interference,
reexamination, injunction, claim, lawsuit, proceeding, hearing,
investigation, complaint, arbitration, mediation, demand,
International Trade Commission investigation, decree, or any
other dispute, disagreement, or claim (collectively referred to
hereinafter as "Disputes"), nor, to the Knowledge of the Company,
has any such Dispute been threatened, challenging the scope,
legality, validity, enforceability or ownership of any
Intellectual Property or which would give rise to a credit
against the payments due to the Company from the applicable
License Agreements for the use of the related licensed
Intellectual Property. To the Knowledge of the Company, there
are no Disputes by any third party against the Company, Aventis,
Ortho, RPS or Amcol relating to the Products. The Company has
not received, and to the Knowledge of the Company, neither
Aventis, Ortho, RPS nor Amcol has received, any written notice of
any such Dispute and, to the Knowledge of the Company, there
exist no circumstances or grounds upon which any such claim could
be asserted. The Company has not sent, and to the Knowledge of
the Company, neither Aventis, Ortho, RPS nor Amcol has sent, any
notice of any such Dispute and, to the Knowledge of the Company,
there exist no circumstances or grounds upon which the Company,
Aventis, Ortho, RPS or Amcol could assert any such claim. To the
Knowledge of the Company, the Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, charge, settlement or other disposition of any Dispute.
(j) To the Knowledge of the Company, there is no pending or
threatened action, suit, or proceeding, or any investigation or
claim by any Government Authority to which the Company or, to the
Knowledge of the Company, to which Aventis, Ortho, RPS or Amcol
is a party (i) that would be the subject of a claim for
indemnification, if any, by or against the Company, Aventis,
Ortho or RPS under the License Agreements or RPS Agreements, and
(ii) that the manufacture, marketing, sale or distribution of the
Products by Aventis or Ortho or by any licensee of Aventis or
Ortho pursuant to the related License Agreements or by RPS or
Amcol pursuant to the Related Agreements does or will infringe on
any patent or other intellectual property rights of any other
Person. To the Knowledge of the Company, there are no pending
U.S., international or foreign patent applications owned by any
other Person, which, if issued, would limit or prohibit, in any
material respect, the manufacture, use or sale of any of the
Products, or the use of any licensed Intellectual Property, in
each case by the applicable Contract Party.
(k) The Company has taken, and to the Knowledge of the
Company, Ortho, Aventis, RPS and Amcol have and will continue to
take, all commercially reasonable measures and precautions
necessary to protect and maintain (i) the confidentiality of all
the Intellectual Property and (ii) the value of all the
Intellectual Property.
Section 3.13 Regulatory Approval.
(a) The Company has made available to PRF all of the
following documents that the Company has received in any form
from any Contract Party to any License Agreement or Related
Agreement:
(i) all regulatory correspondence, written notes in
respect of telephone communications, electronic communications,
copies of all submissions to any active regulatory files
regarding preclinical, clinical, manufacturing, adverse events,
any notices and forms received by a Contract Party from
appropriate Regulatory Agencies relating to compliance,
developmental (including safety, efficacy and potency), marketing
promotion or manufacturing activities concerning the Intellectual
Property or the Products;
(ii) correspondence or reports from both internal
corporate employees and non-governmental consultants relating to
any of the regulatory and/or product liability exposures,
marketing and reimbursement strategies, manufacturing (i.e.,
annual audit reports), preclinical and clinical data issues
concerning the Products; and
(iii) any information or communication that would
indicate that any Regulatory Agency (A) is not likely to approve
any application with respect to the Products, (B) is likely to
revise or revoke any current approval granted by any Regulatory
Agency with respect to the Products, or (C) is likely to pursue
compliance actions against the Company or any Contract Party
relating to a License Agreement or Related Agreement.
(b) Either the Company or, to the Company's Knowledge,
Ortho, Aventis, RPS or Amcol respectively, possesses all
Regulatory Approvals issued or required by the appropriate
Regulatory Agencies necessary to conduct its current business
relating to the Products, and neither the Company nor, to the
Company's Knowledge, Aventis, Ortho, RPS or Amcol has received
any notice of proceedings relating to, and there are no facts or
circumstances to the Company's Knowledge that would reasonably be
expected to lead to, the revocation, suspension, termination or
modification of any such Regulatory Approvals.
(c) The Company is in material compliance with, and has
materially complied with, all applicable federal, state, local
and foreign laws, rules, regulations, standards, orders and
decrees governing its business, including all regulations
promulgated by each Regulatory Agency, the failure of compliance
with which could reasonably be expected to result in a Material
Adverse Effect; the Company has not received any notice citing
action or inaction by it that would constitute any material non-
compliance with any applicable federal, state, local and foreign
laws, rules, regulations, or standards, which could reasonably be
expected to result in a Material Adverse Effect; and, to the
Company's Knowledge, no prospective change in any applicable
federal, state, local or foreign laws, rules, regulations or
standards has been adopted which, when made effective, could
reasonably be expected to result in a Material Adverse Effect.
(d) The studies, tests and preclinical and clinical trials
conducted relating to the Products by or on behalf of the Company
or, to the Company's Knowledge, Aventis, Ortho, RPS or Amcol were
and, if still pending, are being conducted in all material
respects in accordance with experimental protocols, procedures
and controls pursuant to, where applicable, accepted professional
and scientific standards; the descriptions of the results of such
studies, tests and trials provided to PRF are accurate in all
material respects; and neither the Company nor, to the Company's
Knowledge, Aventis, Ortho, RPS nor Amcol has received any notices
or correspondence from any Regulatory Agency or any institutional
review board or comparable authority requiring the termination,
suspension, or material modification or clinical hold of any such
studies, tests or preclinical or clinical trials conducted by or
on behalf of the Company, Aventis, Ortho, RPS or Amcol, which
termination, suspension, material modification or clinical hold
could reasonably be expected to result in a Material Adverse
Effect.
Section 3.14 Subordination.
The claims and rights of PRF created by any Transaction
Document in and to the Royalty Interest are not and shall not be
subordinated to any creditor of the Company or any other Person.
Place of Business.
Section 3.15 Place of Business.
The Company's principal place of business and chief
executive office are set forth on Schedule 3.15.
Section 3.16 Broker's Fees.
The Company has not taken any action that would entitle any
Person to any commission or broker's fee in connection with the
transactions contemplated by the Transaction Documents.
Section 3.17 Other Information.
No written statement (including in electronic mail),
information, report or materials prepared by or on behalf of the
Company and furnished to PRF by or on behalf of the Company in
connection with any Transaction Document or any transaction
contemplated hereby or thereby, no written representation,
warranty or statement made by the Company in any Transaction
Document, and no Schedule or Exhibit hereto, in each case taken
in the aggregate, contains any untrue statement of a material
fact or omits any statement of material fact necessary in order
to make the statements made therein in light of the circumstances
under which they were made not misleading.
Section 3.18 License Agreements.
(a) Exhibit F attached hereto sets forth an accurate,
complete and updated copy of the Aventis License Agreement and
Exhibit G attached hereto sets forth an accurate, complete and
updated copy of the Ortho License Agreement. Except as otherwise
disclosed on Schedule 3.18(a), there are no (i) other agreements,
writings, understandings, commitments, arrangements, or
amendments related to or affecting either of the Aventis License
Agreement or the Ortho License Agreement or the manufacture,
supply or sale of the Products, or (ii) outstanding royalties or
other payment obligations of the Company currently due and
payable to Aventis under the Aventis License Agreement or to
Ortho under Ortho License Agreement that have not been paid.
(b) The License Agreements are in full force and effect and
there has been no correspondence, notice or other written
communication sent by or on behalf of the Company to, or received
by or on behalf of the Company from, any Contract Party, the
subject matter of which would result in a Material Adverse
Effect. The Company has provided to PRF copies of all written
correspondence to or from Ortho, Aventis, RPS, Amcol and Cardinal
Health PTS, LLC within the past two (2) years from the date
hereof. With respect to each existing License Agreement:
(i) Such License Agreement is in full force and
effect and has not been impaired, waived, altered or modified in
any respect, whether by way of any sublicense or consent or
otherwise. To the Knowledge of the Company, no Contract Party
has granted a sublicense under such License Agreement.
(ii) The Contract Party under such License Agreement
has not been released, in whole or in part, from any of its
obligations under such License Agreement.
(iii) The Company has not received (A) any notice of
any Contract Party's intention to terminate such License
Agreement in whole or in part or (B) any notice requesting any
amendment, alteration or modification of such License Agreement.
(iv) Nothing has occurred and no condition exists
that would adversely impact the right of the Company to receive
any payments payable under such License Agreement. None of the
Company, or to the Knowledge of the Company, any Contract Party
has taken any action or omitted to take any action, that would
adversely impact the right of PRF to receive the Royalty
Interest.
(v) All payments required to be made under such
License Agreement have been made. To the Knowledge of the
Company, no payment required to be made under such License
Agreement has been subject to any claim pursuant to any right of
rescission, set-off, counterclaim or defense. No prepayments of
Royalties have been made under any License Agreement. The
Company has not conducted any audits under any License Agreement.
(vi) Such License Agreement has not been satisfied in
full, discharged, canceled, terminated, subordinated or
rescinded, in whole or in part. Such License Agreement is the
entire agreement between the Company and the Contract Party
thereto relating to the subject matter thereof.
(vii) Such License Agreement is the legal, valid and
binding obligation of each of the Company and the Contract Party
thereto, enforceable against the Company and such Contract Party
in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general
equitable principles. The execution, delivery and performance of
such License Agreement was and is within the corporate powers of
the Company and, to the Knowledge of the Company, the Contract
Party thereto. Such License Agreement was duly authorized by all
necessary action on the part of, and validly executed and
delivered by, the Company and, to the Knowledge of the Company,
the Contract Party thereto. There is no breach or default, or
event which upon notice or the passage of time, or both, could
give rise to any breach or default, in the performance of such
License Agreement by the Company or, to the Knowledge of the
Company, the Contract Party thereto.
(viii) The representations and warranties made in such
License Agreement by the Company were as of the date made true
and correct in all material respects.
Section 3.19 Related Agreements.
(a) Exhibit H attached hereto sets forth an accurate,
complete and updated copy of the RPS Agreements, Exhibit I
attached hereto sets forth an accurate, complete and updated copy
of the Ortho Supply Agreement and Exhibit J sets forth, to the
Knowledge of the Company, an accurate, complete and updated draft
of the Amcol Supply Agreement. There are no (i) other
agreements, writings, understandings, commitments, arrangements,
or amendments related to or affecting the Related Agreements or
(ii) outstanding royalties or other payment obligations of the
Company currently due and payable under the Related Agreements
that have not been paid.
(b) The Related Agreements including the TTA are in full
force and effect and there has been no correspondence or other
written communication sent by or on behalf of the Company to, or
received by or on behalf of the Company from, any Contract Party,
the subject matter of which would result in a Material Adverse
Effect. With respect to each existing Related Agreement:
(i) Such Related Agreement is in full force and
effect and has not been impaired, waived, altered or modified in
any respect, whether by way of any sublicense or consent or
otherwise. To the Knowledge of the Company, no Contract Party
has granted a sublicense under such Related Agreement.
(ii) The Contract Party under such Related Agreement
has not been released, in whole or in part, from any of its
obligations under such Related Agreement.
(iii) The Company has not received (i) any notice of
any Contract Party's intention to terminate such Related
Agreement in whole or in part or (ii) any notice requesting any
amendment, alteration or modification of such Related Agreement.
(iv) None of the Company, or to the Knowledge of the
Company, any Contract Party has taken any action or omitted to
take any action, that would adversely impact the right of PRF to
receive the Royalty Interest.
(v) All payments required to be made under such
Related Agreement have been made. To the Knowledge of the
Company, no payment required to be made under such Related
Agreement has been subject to any claim pursuant to any right of
rescission, set-off, counterclaim or defense.
(vi) Such Related Agreement has not been satisfied in
full, discharged, canceled, terminated, subordinated or
rescinded, in whole or in part. Such Related Agreement is the
entire agreement between the Company and the Contract Party
thereto relating to the subject matter thereof.
(vii) Such Related Agreement is the legal, valid and
binding obligation of each of the Company and each Contract Party
thereto, enforceable against the Company and such Contract Party
in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general
equitable principles. The execution, delivery and performance of
such Related Agreement was and is within the corporate powers of
the Company and, to the Knowledge of the Company, the Contract
Party thereto. Such Related Agreement was duly authorized by all
necessary action on the part of, and validly executed and
delivered by, the Company and, to the Knowledge of the Company,
the Contract Party thereto. There is no breach or default, or
event which upon notice or the passage of time, or both, could
give rise to any breach or default, in the performance of such
License Agreement by the Company or, to the Knowledge of the
Company, the Contract Party thereto.
(viii) The representations and warranties made in such
Related Agreements by the Company were as of the date made true
and correct in all material respects.
Section 3.13 Insurance.
There is in full force and effect insurance policies
maintained by the Company with an insurance company rated not
less than "A-" by A.M. Best Company, Inc., with coverages and in
amounts customary for companies of comparable size and condition
similarly situated in the same industry as the Company, including
product liability insurance, directors and officers insurance and
insurance against litigation liability, subject only to such
exclusions and deductible items as are usual and customary in
insurance policies of such type. The Company has named PRF as an
additional insured party with respect to its general liability
and product liability insurance policies. A schedule of the
Company's insurance policy or insurance policies is attached
hereto as Schedule 3.20.
Section 3.21 Applicable Royalty Rates and Duration of
Royalty Rates.
During the Term, the royalty rates and the duration of such
royalty rates in each country under the Aventis License Agreement
and Ortho License Agreement are now as set forth on Schedule 3.21
and such rates will continue in effect in accordance with the
terms of the Aventis License Agreement and the Ortho License
Agreement.
Section 3.13 Set-off.
Neither Aventis nor Ortho has any right of set-off,
rescission, counterclaim, reduction, deduction or defense (each a
"Set-off") against Royalties or any other amounts payable to the
Company under the Aventis License Agreement or the Ortho License
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRF
PRF represents and warrants to the Company the following:
Section 4.01 Organization.
PRF is a private company with limited liability [***], duly
formed, validly existing and in good standing under the laws of
[***], and PRF has all limited liability company powers and all
licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
Section 4.02 Authorization.
PRF has all necessary power and authority to enter into,
execute and deliver the Transaction Documents and to perform all
of the obligations to be performed by it hereunder and thereunder
and to consummate the transactions contemplated hereunder and
thereunder. The Transaction Documents have been duly authorized,
executed and delivered by PRF and each Transaction Document
constitutes the valid and binding obligation of PRF, enforceable
against PRF in accordance with
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
its terms, subject, as to enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or general equitable principles.
Section 4.03 Broker's Fees.
PRF has not taken any action that would entitle any Person
to any commission or broker's fee in connection with the
transactions contemplated by the Transaction Documents.
Section 4.04 Conflicts.
Neither the execution and delivery of this Agreement or any other
Transaction Document nor the performance or consummation of the
transactions contemplated hereby or thereby will: (i)
contravene, conflict with, result in a breach or violation of,
constitute a default under, or accelerate the performance
provided by, in any material respects any provisions of: (A) any
law, rule or regulation of any Government Authority, or any
judgment, order, writ, decree, permit or license of any
Government Authority, to which PRF or any of its assets or
properties may be subject or bound; or (B) any contract,
agreement, commitment or instrument to which PRF is a party or by
which PRF or any of its assets or properties is bound or
committed; (ii) contravene, conflict with, result in a breach or
violation of, constitute a default under, or accelerate the
performance provided by, any provisions of organizational or
constitutional documents of PRF; or (iii) require any
notification to, filing with, or consent of, any Person or
Government Authority.
ARTICLE V
COVENANTS
During the Term, the following covenants shall apply:
Section 5.01 Consents and Waivers.
The Company shall obtain any required consents,
acknowledgements, certificates or waivers so that the
transactions contemplated by any Transaction Document may be
consummated and/or shall not result in any default or breach or
termination of any of the License Agreements or other Material
Contracts.
Section 5.02 Access; Information.
(a) Promptly after receipt by the Company of notice of any
action, claim, investigation or proceeding (commenced or
threatened) relating to the transactions contemplated by any
Transaction Document, License Agreement or Related Agreement, the
Company shall inform PRF of the receipt of such notice and the
substance of such action, claim, investigation or proceeding and,
if in writing, shall furnish PRF with a copy of such notice and
any related materials with respect to such action, claim,
investigation or proceeding.
(b) The Company shall keep and maintain, or cause to be kept
and maintained, at all times full and accurate books of account
and records adequate to reflect accurately all payments paid
and/or payable with respect to the License Agreements and any
Future Agreement with respect to the Royalty Interest and all
deposits made into PRF's Account.
(c) Promptly after receipt by the Company of any written
notice, certificate, offer, proposal, correspondence, report or
other written communication relating directly to any License
Agreement, Related Agreement, the Gross Products Payments, or the
Products, including from Ortho, Aventis, RPS and Amcol, the
Company shall inform PRF of such receipt and the substance
contained therein and, if in writing, shall furnish PRF with a
copy of such notice, certificate, offer, proposal,
correspondence, report or other communication.
(d) Promptly after receipt by the Company of the final and
executed copy of the Amcol Supply Agreement, the Company shall
furnish PRF with a copy of such Amcol Supply Agreement.
(e) The Company shall, promptly after the end of each fiscal
quarter of the Company (but in no event later than forty (40)
calendar days following the end of such quarter), produce and
deliver to PRF a Business Report and Quarterly Report for such
quarter, together with a certificate of the Chief Financial
Officer of the Company, certifying that to the Knowledge of such
officer (i) such Business Report and Quarterly Report are true
and complete copies and (ii) any statements and any data and
information therein prepared by the Company are true, correct and
accurate in all material respects. To the extent that PRF
reasonably believes that current activities as detailed in a
Business Report require reports more frequently than quarterly,
for example, during any negotiation relating to any License
Agreement or supply of any Product, PRF shall have the right to
request or require that the Company prepare Business Reports to
deliver to PRF on a more frequent basis.
Section 5.03 Material Contracts.
The Company shall comply with all material terms and
conditions of and fulfill all of its obligations under all the
Material Contracts, including any License Agreement. Without
limiting Sections 5.08 and 5.09, the Company shall not amend any
Material Contract or issue any consents or other approvals under
any Material Contract without the prior written consent of PRF.
Section 5.04 Public Announcement.
The Company and PRF shall agree upon the form and content of
any press release following the Closing by the Company or PRF
with respect to the transactions contemplated by this Agreement.
Either party may disclose this Agreement as required by law or
regulation, including as may be required in connection with any
filings made with the SEC or similar non-US. regulatory
authority, or by the disclosure policies of a major stock
exchange; provided, however, that, if reasonably possible, the
party making such disclosures shall inform the other party prior
to any such disclosures; and provided further that, the
disclosing party shall seek confidential treatment to the extent
available.
Section 5.05 Security Agreement.
The Company shall, at all times until the Obligations are
paid and performed in full, grant in favor of PRF a valid,
continuing, first perfected lien on and security interest in the
Royalty Interest, each of the Transaction Documents, and the
other Collateral described in the Security Agreement.
Section 5.06 Reasonable Commercial Efforts; Further
Assurance.
(a) Subject to the terms and conditions of this Agreement,
each party hereto will use its reasonable commercial efforts to
take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary under applicable laws and regulations
to consummate the transactions contemplated by any Transaction
Document. PRF and the Company agree to execute and deliver such
other documents, certificates, agreements and other writings
(including proper financing statement filings (including Form
UCC-1s) requested by PRF) and to take such other actions as may
be necessary in order to consummate or implement expeditiously
the transactions contemplated by any Transaction Document and to
vest in PRF good, valid and marketable rights and interests in
and to the Royalty Interest, free and clear of all Liens, except
those Liens created in favor of PRF pursuant to the Security
Agreement and any other Transaction Document.
(b) Each of the parties hereto shall execute and deliver
such additional documents, certificates and instruments, and
perform such additional acts, as may be reasonably requested and
necessary or appropriate to carry out and effectuate all of the
provisions of any Transaction Document and to consummate all of
the transactions contemplated by any Transaction Document.
(c) The Company and PRF shall cooperate and provide
assistance as reasonably requested by the other parties in
connection with any litigation, arbitration or other proceeding
(whether existing or initiated prior to, on or after the date
hereof) to which any party hereto or any of its officers,
directors, shareholders, members, managers, agents or employees
is or may become a party or is or may become otherwise directly
or indirectly affected or as to which any such Persons have a
direct or indirect interest, in each case relating to any
Transaction Document, the Royalty Interest or any other
Collateral, or the transactions described herein or therein but
in all cases excluding any litigation brought by the Company
against PRF or brought by PRF against the Company.
Section 5.07 Remittance to PRF's Account.
(a) Each Contract Party under each License Agreement shall
agree in writing that all payments in respect of sales of the
Products and in respect of Royalties payable by Contract Parties
shall be remitted directly by the applicable party into PRF's
Account and the Company shall cause such payments to be remitted
directly by the applicable party into PRF's Account. Without in
any way limiting the foregoing, any and all payments in respect
of Gross Products Payments received by the Company shall be held
in trust for the benefit of PRF and directed into PRF's Account
within two (2) Business Days of the Company's receipt thereof or
otherwise as directed in writing by PRF.
(b) Subject to Section 5.08(i) hereof, with respect to any
License Agreement or other sale agreement or invoice entered into
or issued by the Company from and after the date hereof, the
Company shall (i) at the time of the execution and delivery of
such License Agreement or other sale agreement or the issuance of
any invoice, instruct any party thereto or recipient thereof to
remit to PRF's Account when due all applicable payments in
respect of sales of the Products and in respect of Royalties that
are due and payable to the Company in respect of or derived from
such License Agreement or other sale agreement or invoice during
the Term and (ii) in the case of any License Agreement or other
sale agreement, deliver to PRF written evidence of such
instruction and of such applicable party's agreement thereto.
Section 5.08 License Agreements.
(a) In the event that the Company becomes aware that the
making, using or selling of any product licensed by the Company
to a Contract Party under any of the License Agreements infringes
or violates any third party intellectual property, if requested
by PRF, the Company shall promptly use its reasonable best
efforts to attempt to secure the right to use such intellectual
property on behalf of itself and the affected Contract Party and
shall pay all costs and amounts associated with obtaining any
such license, without any charge to the Contract Party or any
reduction in the Royalty Interest.
(b) The Company shall not (i) forgive, release or compromise
any amount owed to the Company and relating to the Royalty
Interest or the Products, (ii) waive, amend, cancel or terminate,
exercise or fail to exercise, any of its material rights
constituting or relating to the right to receive the Gross
Products Payments, or (iii) amend, modify, restate, cancel,
supplement, terminate or waive any provision of any License
Agreement, or grant any consent thereunder, or agree to do any of
the foregoing, including entering into any agreement with the
Contract Party under the provisions of such License Agreement.
(c) Promptly after (i) receiving written or oral notice from
a Contract Party, (A) terminating the related License Agreement,
(B) alleging any material breach of or default under such License
Agreement by the Company or (C) asserting the existence of any
facts, circumstances or events which alone or together with other
facts, circumstances or events could reasonably be expected (with
or without the giving of notice or passage of time or both) to
give rise to a material breach of or default under or right to
terminate such License Agreement or (ii) the Company otherwise
having Knowledge of any fact, circumstance or event which alone
or together with other facts, circumstances or events could
reasonably be expected (with or without the giving of notice or
passage of time or both) to give rise to a material breach of or
default under such License Agreement by the Company or a right to
terminate such License Agreement by such Contract Party, in each
case, the Company shall (x) give a written notice to PRF
describing in reasonable detail the relevant breach, default or
termination event, including a copy of any written notice
received from such Contract Party and, in the case of any breach
or default or alleged breach or default by the Company,
describing any corrective action the Company proposes to take and
(y) take all commercially reasonable efforts to cure promptly
such breach, default or termination event; provided, however, the
Company will not take any actions under the applicable License
Agreement without the prior written consent of PRF.
(d) Promptly after becoming aware of a material breach of or
default of a Contract Party under a License Agreement or of the
existence of any facts, circumstances or events which alone or
together with other facts, circumstances or events could
reasonably be expected (with or without the giving of notice or
passage of time or both) to give rise to a material breach of or
default by a Contract Party under or right of the Company to
terminate such License Agreement, including any failure of a
Contract Party to meet their diligence or other commercialization
requirements, then in each case, the Company shall (i) give a
written notice to PRF describing in reasonable detail the
relevant breach, default or termination event, including a copy
of any written notice that the Company proposes to send to the
applicable Contract Party and, in the case of any breach or
default or alleged breach or default by such Contract Party,
describing any action the Company proposes to take, and (ii) make
all commercially reasonable efforts to enforce all of its rights
and remedies thereunder; provided, however, the Company will not
take any actions under the applicable License Agreement without
the prior written consent of PRF.
(e) The Company shall, at its sole expense, either directly
or by causing the Contract Party to do so, take any and all
actions and prepare, execute, deliver and file any and all
agreements, documents or instruments which are necessary or
desirable to (i) maintain diligently the applicable Intellectual
Property and (ii) defend diligently such Intellectual Property
against infringement or interference by any other Persons, and
against any claims of invalidity or unenforceability, in any
jurisdiction (including by bringing any legal action for
infringement or defending any counterclaim of invalidity or
action of a third party for declaratory judgment of non-
infringement or non-interference); provided, however, the Company
will not take any actions under the applicable License Agreement,
or fail to take any actions resulting in those actions being
taken by the Contract Party, without the prior written consent of
PRF. The Company shall not, and shall use commercially
reasonable efforts to cause the applicable Contract Party not to,
disclaim or abandon, or fail to take any action necessary or
desirable to prevent the disclaimer or abandonment of, the
applicable Intellectual Property.
(f) Prior to taking any action under any License Agreement,
including the Ortho License Agreement or Aventis License
Agreement, or failing to take any action where a right to take
such action exists under such agreements, the Company shall
promptly seek direction from PRF and shall take only such action
(or fail to take such actions) as directed by or consented to PRF
in writing.
(g) The Company shall cause each Contract Party under any
License Agreement, as applicable, to provide promptly following
the end of each calendar quarter all information with respect to
net end-user sales (including all components of information
required to calculate Gross Products Payments) under each such
agreement for inclusion in the Quarterly Report for such quarter,
and the Company shall cause such obligation to be included in
every License Agreement it enters into following the Closing
Date.
(h) The Company shall use commercially reasonable efforts
consistent with industry practices to maintain the Ortho License
Agreement and Aventis License Agreement in full force and effect,
including maintaining sufficient commercial relationships with
Ortho and Aventis and, subject to Section 5.08(f), exercising its
rights thereunder. In the event of the termination of either of
the Ortho License Agreement or Aventis License Agreement, the
Company shall use commercially reasonable best efforts to enter
into a Future Agreement of the same scope as such terminated
License Agreement on advantageous economic terms and shall keep
PRF informed of the status of negotiations on an ongoing basis.
Entry into any such Future Agreement shall be subject to the
prior written consent of PRF, such consent not to be unreasonably
withheld. All Royalties arising under such successor Future
Agreement shall be included in the definition of Royalty Interest
hereunder.
(i) The Company shall use its commercially reasonable
efforts to actively market and promote the Intellectual Property
and Products and to seek out and exploit opportunities for
entering into Future Agreements for all indications in those
countries of the world that are outside the geographic scope of
the Ortho License Agreement or the Aventis License Agreement and,
for those countries of the world within the geographic scope of
the Ortho License Agreement or the Aventis License Agreement, for
those indications outside the scope of such License Agreement,
including, with respect to Products relating to 5-fluorouracil,
for the treatment of photodamaged skin, flat warts and psoriasis.
Entry into any such Future Agreement shall be subject to the
prior written consent of PRF, such consent not to be unreasonably
withheld. If the Company enters into any such Future Agreement,
then sixty-seven percent (67%) of the Royalties shall be included
in the definition of Royalty Interest hereunder and the remaining
thirty-three percent (33%) of such Royalties shall be retained by
the Company. At the time of entry into any such Future
Agreement, if requested by the Company, the parties shall
negotiate in good faith a lockbox agreement to establish and
maintain a lockbox account pursuant to which payments made in
respect of the Royalties relating to such Future Agreement are to
be remitted, and any and all corresponding amendments to the
Security Agreement shall be made to provide PRF with a security
interest in such lockbox account. Notwithstanding the foregoing,
in the event that the Company fails to enter into any Future
Agreements by January 1, 2010, then PRF may pursue opportunities
for Future Agreements on behalf of the Company, in which event
the Company shall have no right to receive any economic interest
relating to any such Future Agreement and one hundred percent
(100%) of the Royalties for any such Future Agreement entered
into after January 1, 2010 shall be included in the definition of
Royalty Interest hereunder.
(j) [***].
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Section 5.09 Insurance.
The Company shall (i) maintain insurance policies with insurance
companies rated not less than "A-" by A.M. Best Company, Inc.
with coverages and in amounts customary for companies of
comparable size and condition similarly situated in the same
industry as the Company, including product liability insurance
and directors and officers insurance and insurance against
litigation, liability, subject only to such exclusions and
deductible items as are usual and customary in insurance policies
of such type, and (ii) maintain PRF as an additional insured
party with respect to its general liability and product liability
insurance policies.
Section 5.10 Audits.
(a) To the extent the Company has the right to perform or
cause to be performed inspections or audits under any of the
License Agreements regarding payments payable and/or paid to the
Company thereunder (each, a "License Party Audit"), the Company
shall, at the direction and reasonable request of PRF, cause a
License Party Audit to be performed promptly. In conducting a
License Party Audit, the Company may engage its then retained
internationally recognized independent public accounting firm,
or, if the Company elects otherwise, such other internationally
recognized independent public accounting firm reasonably
acceptable to PRF. Promptly after completion of any License
Party Audit (whether or not requested by PRF), the Company shall
promptly deliver to PRF an Audit Report in respect of such
License Party Audit.
(b) To the extent that either PRF or the Company has
determined that there is a discrepancy as to the amounts paid to
PRF pursuant to Section 2.02 in any calendar year, then the party
hereto who has made such determination may notify the other party
hereto in writing of such discrepancy indicating in reasonable
detail its reasons for such determination (the "Discrepancy
Notice"). In the event that either PRF or the Company delivers
to the other party a Discrepancy Notice, PRF and the Company
shall meet within ten (10) Business Days (or such other time as
mutually agreed by the parties) after the receiving party has
received a Discrepancy Notice to resolve in good faith such
discrepancy. If the discrepancy has been resolved and, as a
result thereof, it is determined that a payment is owing by PRF
to the Company or by the Company to PRF, then the party owing
such payment shall promptly pay such payment to the other party.
If, within thirty (30) Business Days after receipt of the
Discrepancy Notice, the Company and PRF cannot resolve any such
discrepancies, then PRF and the Company shall promptly instruct
their respective firms of independent certified public
accountants to select, within five (5) Business Days thereafter,
a third nationally recognized accounting firm (the "Independent
Accountants"). After offering the Company and its
representatives and PRF and its representatives the opportunity
to present their positions as to the disputed amounts, which
opportunity shall not extend for more than ten (10) Business Days
after the Independent Accountants have been selected, the
Independent Accountants shall review the disputed matters and the
materials submitted by the Company and PRF and, as promptly as
practicable, deliver to the Company and PRF a statement in
writing setting forth its determination of the proper treatment
of the discrepancies as to which there was disagreement, and that
determination will be final and binding upon the parties hereto
without any further right of appeal.
(c) PRF and any of its representatives shall have the right,
from time to time, to visit the Company's offices and properties
where the Company keeps and maintains its books and records
relating or pertaining to the Royalty Interest for purposes of
conducting an audit of such books and records, and to inspect,
copy and audit such books and records, during normal business
hours, and, upon five (5) Business Days written notice given by
PRF to the Company, the Company will provide PRF and any of PRF's
representatives reasonable access to such books and records, and
shall permit PRF and any of PRF's representatives to discuss the
business, operations, properties and financial and other
condition of the Company or any of its Affiliates relating or
pertaining to the Royalty Interest with officers of such parties,
and with their independent certified public accountants. PRF's
visits to the Company's offices pursuant to this Section 5.10(c)
shall occur not more than once per calendar year; provided,
however, that PRF may so visit more frequently to the extent that
there has occurred an event, which could reasonably be expected
to result in a Material Adverse Effect, and PRF's visit or visits
to the Company's offices in connection therewith are for purposes
related to such event.
(d) All Audit Costs in respect of a License Party Audit or
an audit of the Company's books and records pursuant to Section
5.10(c) shall be borne by PRF, unless the results of such audit,
as the case may be, reveals that the amounts paid to PRF for the
period subject to such audit have been understated by more than
five percent (5%) of the amounts due to PRF pursuant to this
Agreement for the period subject to such audit, then the Audit
Costs in respect of such audit shall be borne by the Company.
Section 5.11 Notice.
The Company shall provide PRF with written notice as
promptly as practicable (and in any event within five (5)
Business Days) after becoming aware of any of the following:
(i) the occurrence of a Bankruptcy Event;
(ii) any material breach or default by the Company of any
covenant, agreement or other provision of this
Agreement or any other Transaction Document; or
(iii) any representation or warranty made or deemed made by
the Company in any of the Transaction Documents or in
any certificate delivered to PRF pursuant hereto
shall prove to be untrue, inaccurate or incomplete in
any material respect on the date as of which made or
deemed made.
Section 5.12 Chain of Title.
Within fifteen (15) days of the Closing, the Company shall
provide to PRF evidence of the filing of documentation at the
appropriate Patent Office in the United States and thereafter in
all jurisdictions to reflect the current legal owner of the
Patent Rights as the owner of such Patent Rights in the public
records.
Section 5.13 Treatment of Sale of Royalty Interest
The Company shall account for the sale of the Royalty
Interest to PRF herein as a sale rather than a financing pursuant
to GAAP.
ARTICLE VI
THE CLOSING; CONDITIONS TO CLOSING AND FUNDING
Section 6.01 Closing.
Subject to the closing conditions set forth in Sections 6.02
and 6.03, the closing of this Agreement (the "Closing") shall
take place at the offices of Xxxxxxxx & Xxxxx LLP, 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, XX 00000, on the Closing Date.
Section 6.02 Conditions Applicable to PRF.
The obligations of PRF to effect the Closing and comply with
the other terms of this Agreement, including payment of the
Purchase Price pursuant to Section 2.03, shall be subject to the
satisfaction of each of the following conditions, as of the
Closing Date, as applicable, any of which may be waived by PRF in
its sole discretion:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Company set forth in the
Transaction Documents shall be true, correct and complete in all
material respects.
(b) No Adverse Circumstances. There shall not have occurred
or be continuing any event or circumstance (including any
development with respect to the efficacy of the Products or the
Intellectual Property or the use or expected future use of the
same as opposed to competing products) that could reasonably be
expected to result in a Material Adverse Effect.
(c) Litigation. No action, suit, litigation, proceeding or
investigation shall have been instituted, be pending or
threatened (i) challenging or seeking to make illegal, to delay
or otherwise directly or indirectly to restrain or prohibit the
consummation of the transactions contemplated by this Agreement,
or seeking to obtain damages in connection with the transactions
contemplated by this Agreement, or (ii) seeking to restrain or
prohibit PRF's acquisition or future receipt of the Royalty
Interest.
(d) Officer's Certificate. PRF shall have received a
certificate of the Chief Financial Officer of the Company
pursuant to which such officer certifies that the conditions set
forth in Sections 6.02(a), (b), (c), and (i) have been satisfied
in all respects.
(e) Xxxx of Sale. A Xxxx of Sale in the form set forth in
Exhibit A shall have been executed and delivered by the Company
to PRF, and PRF shall have received the same.
(f) Security Agreement. The Security Agreement shall have
been duly executed and delivered by all the parties thereto and
shall be in form of Exhibit B hereto, together with proper
financing statements (including Form UCC-1s) for filing under the
UCC and/or any other applicable law, rule, statute or regulation
relating to the perfection of a security interest in filing
offices in the jurisdictions listed on Schedule 6.02(f), and such
agreement shall be in full force and effect.
(g) Legal Opinions.
(i) PRF shall have received an opinion of Xxxxxx
Xxxxxx LLP, transaction counsel to the Company, in form and
substance satisfactory to PRF and its counsel, to the effect set
forth in Exhibit C.
(ii) PRF shall have received an opinion of Xxxxxx
Xxxxxx LLP, transaction counsel to the Company, relating to the
characterization of the transaction as a "true sale" in form and
substance satisfactory to PRF and its counsel, to the effect set
forth in Exhibit D.
(iii) PRF shall have received an opinion of Xxxxxx
Xxxxxx LLP, patent counsel to the Company, in form and substance
satisfactory to PRF and its counsel, to the effect set forth in
Exhibit E.
(h) Corporate Documents of the Company. PRF shall have
received certificates of an executive officer of the Company (the
statements made in which shall be true and correct on and as of
the Closing Date): (i) attaching copies, certified by such
officer as true and complete, of the Company's certificate of
incorporation or other organizational documents (together with
any and all amendments thereto) certified by the appropriate
Government Authority as being true, correct and complete copies;
(ii) attaching copies, certified by such officer as true and
complete, of resolutions of the board of directors of the Company
authorizing and approving the execution, delivery and performance
by the Company of the Transaction Documents and the transactions
contemplated herein and therein; (iii) setting forth the
incumbency of the officer or officers of the Company who have
executed and delivered the Transaction Documents including
therein a signature specimen of each such officer or officers;
and (iv) attaching copies, certified by such officer as true and
complete, of a certificate of the appropriate Government
Authority of the Company's jurisdiction of incorporation, stating
that the Company is in good standing under the laws of the State
of Delaware.
(i) Covenants. The Company shall have complied in all
material respects with the covenants set forth in the Transaction
Documents.
(j) License Agreement and Other Consents. Consents and/or
amendments from Ortho, Aventis and RPS in the forms attached
hereto as Exhibits K-M.
Section 6.03 Conditions Applicable to the Company.
The obligations of the Company and to effect the Closing
shall be subject to the satisfaction of each of the following
conditions, any of which may be waived by the Company in its sole
discretion:
(a) Accuracy of Representations and Warranties. The
representations and warranties of PRF set forth in this Agreement
shall be true, correct and complete as of the Closing Date.
(b) Litigation. No action, suit, litigation, proceeding or
investigation shall have been instituted, be pending or
threatened (i) challenging or seeking to make illegal, to delay
or otherwise directly or indirectly to restrain or prohibit the
consummation of the transactions contemplated by this Agreement,
or seeking to obtain damages in connection with the transactions
contemplated by this Agreement, or (ii) seeking to restrain or
prohibit PRF's acquisition of the Royalty Interest.
(c) Officer's Certificate. The Company shall have received
at the Closing a certificate of an authorized representative of
PRF certifying that the conditions set forth in Sections 6.03(a)
and (b) have been satisfied in all respects as of the Closing
Date.
ARTICLE VII
TERMINATION
Section 7.01 Termination Date.
This Agreement shall terminate on the expiration of the
Term; provided, however, that if any Obligations under this
Agreement remain unpaid or any payments are required to be made
by one of the parties hereunder after that date, this Agreement
shall remain in full force and effect until any and all such
payments have been made in full, and solely for that purpose.
Section 7.02 Effect of Termination.
In the event of the termination of this Agreement pursuant
to Section 7.01, this Agreement shall forthwith become void and
have no effect without any liability on the part of any party
hereto or its Affiliates, directors, officers, stockholders,
managers or members other than the provisions of this Section
7.02 and Sections 5.04, 5.07(a), 5.10, 8.01, 8.04 and 8.05
hereof, which shall survive any termination as set forth in
Section 8.01. Nothing contained in this Section 7.02 shall
relieve any party from liability for any breach of this
Agreement.
ARTICLE VII
MISCELLANEOUS
Section 8.01 Survival.
(a) All representations and warranties made herein and in
any other Transaction Document, any certificates or in any other
writing delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Agreement and the
Closing and shall continue to survive indefinitely.
Notwithstanding anything in this Agreement or implied by law to
the contrary, all the agreements contained in Sections 5.04,
5.07(a), 5.10, 8.01, 8.04 and 8.05 shall survive indefinitely
following the execution and delivery of this Agreement and the
Closing and the termination of this Agreement.
(b) Any investigation or other examination that may have
been made or may be made at any time by or on behalf of the party
to whom representations and warranties are made shall not limit,
diminish or in any way affect the representations and warranties
in the Transaction Documents, and the parties may rely on the
representations and warranties in the Transaction Documents
irrespective of any information obtained by them by any
investigation, examination or otherwise.
Section 8.02 Specific Performance.
Each of the parties hereto acknowledges that the other party
will have no adequate remedy at law if it fails to perform any of
its obligations under any of the Transaction Documents. In such
event, each of the parties agrees that the other party shall have
the right, in addition to any other rights it may have (whether
at law or in equity), to specific performance of this Agreement.
Section 8.03 Notices.
All notices, consents, waivers and communications hereunder
given by any party to the other shall be in writing (including
email and facsimile transmission) and delivered personally, by
email or by facsimile, by a recognized overnight courier, or by
dispatching the same by certified or registered mail, return
receipt requested, with postage prepaid, in each case addressed:
If to PRF to:
[***][an affiliate of Xxxx Royalty Fund II, L.P., a
Delaware limited partnership]
c/o Xxxx Capital Advisors, LLC
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
email: xxxxxxx@xxxxxxx.xxx
xxxxxxxxxx@xxxxxxx.xxx
with a copy to:
[***][an affiliate of Xxxx Royalty Fund II, L.P., a
Delaware limited partnership]
c/o Xxxx Capital Advisors, LLC
Two Grand Central Tower
140th East 45th Street, 44th Floor
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
email: xxxxxx@xxxxxxx.xxx
and
Xxxxxxxx & Xxxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
email: xxxxxxxx@xxxxxxxx.xxx
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
If to the Company to:
A.P. Pharma, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Xxxx X'Xxxxxxx
Facsimile No.: (000) 000-0000
email: xxxxxxxxx@xxxxxxxx.xxx
with a copy to:
Xxxxxx Xxxxxx LLP
000 Xxxxxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Peers
Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
email: xxxxxxx.xxxxx@xxxxxxxxxxxx.xxx
xxxxxxx.xxxxxxx@xxxxxxxxxxxx.xxx
if or to such other address or addresses as PRF or the Company
may from time to time designate by notice as provided herein,
except that notices of changes of address shall be effective only
upon receipt. All such notices consents, waivers and
communications shall: (a) when posted by certified or registered
mail, postage prepaid, return receipt requested, be effective
three (3) Business Days after dispatch, unless such communication
is sent trans-Atlantic, in which case shall be deemed effective
five (5) Business Days after dispatch, (b) when emailed or
facsimiled, be effective upon receipt by the transmitting party
of confirmation of complete receipt by the addressees of such
email, or (c) when delivered by a recognized overnight courier or
in person, be effective upon receipt when hand delivered.
Section 8.04 Successors and Assigns.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns. The Company shall not be entitled to
assign any of its obligations and rights under the Transaction
Documents without the prior written consent of PRF. PRF may
assign any of its obligations and rights under the Transaction
Documents, without restriction and without the consent of the
Company.
Section 8.05 Indemnification.
(a) The Company hereby indemnifies and holds PRF and its
Affiliates and any of their respective partners, directors,
managers, members, officers, employees and agents (each an "PRF
Indemnified Party") harmless from and against any and all (i)
Losses incurred or suffered by any PRF Indemnified Party arising
out of any breach of any representation, warranty or
certification made by the Company in any of the Transaction
Documents or certificates given by the Company in writing
pursuant hereto or thereto or any breach of or default under any
covenant or agreement by the Company pursuant to any Transaction
Document, including any failure by the Company to satisfy any of
the Excluded Liabilities and Obligations, and (ii) any Losses in
connection with any product liability claims or claims of
infringement or misappropriation of any intellectual property
rights of any third parties or any Excluded Liabilities and
Obligations.
(b) PRF hereby indemnifies and holds the Company, its
Affiliates and any of their respective partners, directors,
managers, officers, employees and agents (each an "the Company
Indemnified Party") harmless from and against any and all Losses
incurred or suffered by an the Company Indemnified Party arising
out of any breach of any representation, warranty or
certification made by PRF in any of the Transaction Documents or
certificates given by PRF in writing pursuant hereto or thereto
or any breach of or default under any covenant or agreement by
PRF pursuant to any Transaction Document.
(c) If any claim, demand, action or proceeding (including
any investigation by any Government Authority) shall be brought
or alleged against an indemnified party in respect of which
indemnity is to be sought against an indemnifying party pursuant
to the preceding paragraphs, the indemnified party shall,
promptly after receipt of notice of the commencement of any such
claim, demand, action or proceeding, notify the indemnifying
party in writing of the commencement of such claim, demand,
action or proceeding, enclosing a copy of all papers served, if
any; provided, that, the omission to so notify such indemnifying
party will not relieve the indemnifying party from any liability
that it may have to any indemnified party under the foregoing
provisions of this Section 8.05 unless, and only to the extent
that, such omission results in the forfeiture of, or have a
material adverse effect on the exercise or prosecution of,
substantive rights or defenses by the indemnifying party. In
case any such action is brought against an indemnified party and
it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein
and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice
from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section
8.05 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof
other than reasonable costs of investigation. In any such
proceeding, an indemnified party shall have the right to retain
its own counsel, but the reasonable fees and expenses of such
counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel, (ii) the
indemnifying party has assumed the defense of such proceeding and
has failed within a reasonable time to retain counsel reasonably
satisfactory to such indemnified party or (iii) the named parties
to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interests
between them based on the advice of such counsel. It is agreed
that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees and expenses of more than one
separate law firm (in addition to local counsel where necessary)
for all such indemnified parties. The indemnifying party shall
not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of
such proceeding.
Section 8.06 Independent Nature of Relationship.
(a) The relationship between the Company and PRF is solely
that of seller and purchaser, and neither PRF nor the Company has
any fiduciary or other special relationship with the other or any
of their respective Affiliates. Nothing contained herein or in
any other Transaction Document shall be deemed to constitute the
Company and PRF as a partnership, an association, a joint venture
or other kind of entity or legal form.
(b) No officer or employee of PRF will be located at the
premises of the Company or any of its Affiliates, except in
connection with an audit performed pursuant to Section 5.10. No
officer, manager or employee of PRF shall engage in any
commercial activity with the Company or any of its Affiliates
other than as contemplated herein and in the other Transaction
Documents.
(c) The Company and/or any of its Affiliates shall not at
any time obligate PRF, or impose on PRF any obligation, in any
manner or respect to any Person not a party hereto.
Section 8.07 Tax Treatment.
Payments made hereunder shall not be subject to withholding.
If required, PRF shall provide to the Company a Form W-8 BEN.
Section 8.08 Entire Agreement.
This Agreement, together with the Exhibits and Schedules
hereto (which are incorporated herein by reference), and the
other Transaction Documents constitute the entire agreement
between the parties with respect to the subject matter hereof and
supersede all prior agreements (including the Term Sheet),
understandings and negotiations, both written and oral, between
the parties with respect to the subject matter of this Agreement.
No representation, inducement, promise, understanding, condition
or warranty not set forth herein (or in the Exhibits, Schedules
or other Transaction Documents) has been made or relied upon by
either party hereto. None of this Agreement, nor any provision
hereof, is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section 8.09 Amendments; No Waivers.
(a) This Agreement or any term or provision hereof may not
be amended, changed or modified except with the written consent
of the parties hereto. No waiver of any right hereunder shall be
effective unless such waiver is signed in writing by the party
against whom such waiver is sought to be enforced.
(b) No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 8.10 Interpretation.
When a reference is made in this Agreement to Articles,
Sections, Schedules or Exhibits, such reference shall be to an
Article, Section, Schedule or Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be
followed by the words "without limitation." Neither party hereto
shall be or be deemed to be the drafter of this Agreement for the
purposes of construing this Agreement against one party or the
other.
Section 8.11 Headings and Captions.
The headings and captions in this Agreement are for
convenience and reference purposes only and shall not be
considered a part of or affect the construction or interpretation
of any provision of this Agreement.
Section 8.12 Counterparts; Effectiveness.
This Agreement may be executed in two or more counterparts,
each of which shall be an original, but all of which together
shall constitute one and the same instrument. This Agreement
shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto. Any
counterpart may be executed by facsimile signature and such
facsimile signature shall be deemed an original.
Section 8.13 Severability.
If any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions shall nevertheless be
given full force and effect.
Section 8.14 Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with, the laws of the
state of New York, without giving effect to the principles of
conflicts of law thereof.
(b) Any legal action or proceeding with respect to this
agreement or any other transaction document may be brought in any
state or federal court of competent jurisdiction in the state,
county and city of New York. By execution and delivery of this
agreement, each party hereto hereby irrevocably consents to and
accepts, for itself and in respect of its property, generally and
unconditionally the non-exclusive jurisdiction of such courts.
Each party hereto hereby further irrevocably waives any
objection, including any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any action or proceeding in
such jurisdiction in respect of any Transaction Document.
(c) Each party hereto hereby irrevocably consents to the
service of process out of any of the courts referred to in
subsection (b) above of this Section 8.14(b) above in any such
suit, action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at its
address set forth in this agreement. Each party hereto hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in
any suit, action or proceeding commenced hereunder or under any
other transaction document that service of process was in any way
invalid or ineffective. Nothing herein shall affect the right of
a party to serve process on the other party in any other manner
permitted by law.
Section 8.15 Waiver of Jury Trial.
Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by
jury in any action, proceeding, claim or counterclaim arising out
of or relating to any Transaction Document or the transactions
contemplated under any Transaction Document. This waiver shall
apply to any subsequent amendments, renewals, supplements or
modifications to any Transaction Document.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the date first above written.
The Company: A.P. Pharma, Inc.
By: /S/ Xxxxxxx X'Xxxxxxx
----------------------
Name: Xxxxxxx X'Xxxxxxx
------------------
Title: President and Chief
Executive Officer
--------------------
PRF: [***][an affiliate of Xxxx Royalty Fund II,
L.P., a Delaware limited partnership]
By: Xxxxxx X. Xxxxx
----------------
Name: Xxxxxx X. Xxxxx
----------------
Title: Manager
--------
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
