EXHIBIT 2.1
[Certain information has been omitted from this document pursuant to a request
for confidential treatment submitted to the Securities and Exchange Commission
and the omitted information has been separately submitted to the Securities and
Exchange Commission.]
ASSIGNMENT, TRANSFER AND ASSUMPTION AGREEMENT
This ASSIGNMENT, TRANSFER AND ASSUMPTION AGREEMENT (the "Agreement") is
entered into as of February 18, 2002 (the "Effective Date"), by and between
NEOSAN PHARMACEUTICALS INC. ("NeoSan"), a corporation organized and existing
under the laws of the State of Delaware with offices located at 0000 Xxxxxxxxxx
Xxxx Xxxxx, Xxxxxxxxxx, XX 00000, and XXX XXXXX AND COMPANY ("Lilly"), a
corporation organized and existing under the laws of the State of Indiana with
offices located at Lilly Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000. NeoSan
and Lilly are sometimes referred to herein individually as a "Party" and
collectively as "Parties".
RECITALS
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Lilly and NeoSan desire to enter into an agreement pursuant to which:
(i) Lilly will sell or license to NeoSan, and NeoSan will purchase or license
from Lilly, certain promotional materials, new drug applications, copyrights,
trade dress, technology and trademarks owned by Lilly or its Affiliates, as set
forth below, (ii) NeoSan will license to Lilly (or Lilly will reserve) certain
rights under the new drug applications, technology, copyrights, trade dress,
trademarks and other assets purchased by or licensed to NeoSan to be used by
Lilly to manufacture Product for NeoSan under the Manufacturing Agreement, and
(iii) NeoSan will assume certain liabilities associated with the rights
transferred herein, each in accordance with the terms and conditions set forth
herein; and
WHEREAS, Lilly and NeoSan desire to enter into a separate manufacturing
agreement of even date herewith (the "Manufacturing Agreement") whereby Lilly
will manufacture certain presentations of Product on behalf of NeoSan.
NOW, THEREFORE, in consideration of the foregoing, the covenants and
promises contained in this Agreement, and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, Lilly and NeoSan
agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms will have the
meanings set forth below:
1.1 "ACTION OR PROCEEDING" means any action, suit, proceeding, arbitration,
inquiry, hearing, assessment with respect to fines or penalties, or
litigation (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental or Regulatory Authority.
1.2 "ACTIVITIES" means the manufacturing, packaging, marketing,
distribution, promoting, co-marketing, co-promoting and selling of the
Product as conducted by Lilly in the United States on or before the
Closing Date.
1.3 "AFFILIATES" means, with respect to a Party, any Persons directly or
indirectly controlling, controlled by, or under common control with,
such Party. For purposes of this definition, a Person has control of
another Person if it has the direct or indirect ability or power to
direct or cause the direction of management policies of such other
Person or otherwise direct the affairs of such other Person, whether
through ownership of at least fifty percent (50%) of the voting
securities of such other Person, by contract or otherwise.
1.4 "APPLICABLE LAWS" means all applicable laws, ordinances, rules,
regulations, writs, judgments, decrees, injunctions (whether
preliminary or final), orders and other requirements of any kind
whatsoever of any Governmental or Regulatory Authority, including all
laws, ordinances, rules and regulations promulgated by the World Health
Organization and the FDA, including cGMP (as defined in the
Manufacturing Agreement).
1.5 "ASSIGNED TRADE DRESS" means any unique appearance, look, shape, size
or color of the Product marketed by Lilly or its Affiliates as of the
Effective Date other than the Licensed Trademark and Trade Dress.
1.6 "ASSIGNED TRADEMARKS" means the trademarks listed in SCHEDULE 1.6
attached hereto, and all amendments thereto. For avoidance of doubt,
the Assigned Trademarks do not include the Assigned Trade Dress or
Licensed Trademarks and Trade Dress.
1.7 "ASSUMED LIABILITIES" will have the meaning set forth in Article 10.
1.8 "BASE YEAR'S AVERAGE QUARTERLY NET SALES" means fifteen million eight
hundred thousand US dollars ($15,800,000). For any partial Calendar
Quarter in which a NeoSan New Product
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is sold, the Base Year's Average Quarterly Net Sales for such Calendar
Quarter with respect to such NeoSan New Product means the product of
(a) fifteen million eight hundred thousand U.S. dollars ($15,800,000)
multiplied by (b) the quotient of the number of days in such partial
Calendar Quarter divided by ninety (90) days.
1.9 "B OF A" will have the meaning set forth in Section 6.25.
1.10 "BOND OFFERING" will have the meaning set forth in Section 6.25.
1.11 "BOND FINANCING HIGHLY-CONFIDENT LETTER" will have the meaning set
forth in Section 6.25.
1.12 "BOOKS AND RECORDS" means all files, documents, instruments, papers,
books and records (including scientific, regulatory and financial)
owned by Lilly or an Affiliate of Lilly to the extent, and only to the
extent, they are significantly related to the Purchased Assets
(including the Products or the manufacture, marketing, promotion, sale
or distribution thereof), including any sales records, pricing lists,
customer lists (to the extent owned by Lilly or its Affiliates), vendor
lists, financial data, regulatory information or files (including
adverse event reports and annual regulatory reports), litigation files,
patent prosecution files, adverse claims or demands, investigation
information or files, trademark registration certificates, trademark
renewal certificates.
1.13 "CALENDAR QUARTER" means the three month period ending on March 31,
June 30, September 30, or December 31. The initial Calendar Quarter
will be deemed to begin on the Closing Date and end on the first to
occur of March 31, June 30, September 30 or December 31.
1.14 "CALENDAR YEAR" means the twelve (12) month period ending on December
31st. The initial Calendar Year will be deemed to begin on the Closing
Date and end on December 31, 2002.
1.15 "CLOSING DATE" will have the meaning set forth in Section 7.3(a).
1.16 "COMBINATION PATENTS" will have the meaning set forth in Section 3.7.
1.17 "COMMON LAW LICENSED TRADE DRESS" means the rights to the appearance,
look, shape or size (but not color) of the parabaloidal capsule as it
relates to the Product in the United States.
1.18 "CONFIDENTIAL INFORMATION" means information received (whether
disclosed in writing, machine readable form, orally or by observation)
by one Party (the "Receiving Party") from the other Party (the
"Disclosing Party") that the Receiving Party has a reasonable basis to
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believe is confidential to the Disclosing Party or is treated by the
Disclosing Party as confidential, unless such information:
(a) was known to the Receiving Party or its Affiliates
prior to receipt from the Disclosing Party, as documented in written
records or publications, that lawfully are in the possession of the
Receiving Party or its Affiliates;
(b) was lawfully available to the trade or to the public
prior to receipt from the Disclosing Party;
(c) becomes lawfully available to the trade or to the
public after receipt from the Disclosing Party through no act on the
part of the Receiving Party or its Affiliates;
(d) is obtained by the Receiving Party or its Affiliates
from any Third Person without an obligation of confidentiality; or
(e) is independently developed by an employee, contractor
or agent of the Receiving Party or its Affiliates, subsequent to and
without access or reference to the information received from the
Disclosing Party, as demonstrated by contemporaneous written records.
Notwithstanding the foregoing, (i) where a Disclosing Party
discloses Confidential Information relating to an asset of such
Disclosing Party to the Receiving Party, and the Receiving Party is or
later becomes the owner of the asset, the Confidential Information then
will be deemed to be Confidential Information of the Receiving Party,
and the Disclosing Party may disclose and use such Confidential
Information only in accordance with Article 8, below, provided,
however, that where such Confidential Information was originally owned
by Xxxxx, Xxxxx may use such Confidential Information for, and disclose
such Confidential Information in connection with, the Permitted Uses
without the prior written consent of NeoSan, and (ii) with respect to
Confidential Information related to the Licensed Technology and
Licensed Trademark and Trade Dress, NeoSan may use and disclose such
Confidential Information without the prior written consent of Lilly.
1.19 "CONTRACT" means any and all legally binding commitments, contracts,
purchase orders, leases, or other agreements, whether written or oral.
1.20 "COPYRIGHTS" means all of Lilly's copyright rights listed in SCHEDULE
1.20 attached hereto, and any and all package inserts (excluding any
Lilly-owned trademarks, logos or designs or trademarks, logos or
designs licensed by Lilly other than those trademarks, logos or designs
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expressly assigned or licensed to NeoSan pursuant to the terms hereof),
which are or were used or exercised by Lilly or its Affiliates in
connection with the Activities or the Product.
1.21 "DAMAGES" means any and all costs, losses, claims, demands for payment,
threatened government enforcement actions, liabilities, fines,
penalties, expenses, court costs, and reasonable fees and disbursements
of counsel, consultants and expert witnesses incurred by a Party hereto
or its Affiliates (including interest which may be imposed in
connection therewith).
1.22 "DEA" means the United States Drug Enforcement Agency, and any
successor agency or entity thereto that may be established hereafter.
1.23 "DEDUCTIBLE AMOUNT" will have the meaning set forth in Section 11.4.
1.24 "EFFECTIVE DATE" will have the meaning set forth in the first paragraph
of this Agreement.
1.25 "ENCUMBRANCE" means any mortgage, pledge, assessment, security
interest, deed of trust, lease, lien, adverse claim, levy, charge or
other encumbrance, third-party right or retained right of any kind, or
any conditional sale or title retention agreement or other agreement to
give any of the foregoing in the future.
1.26 "EXCLUDED LIABILITIES" means all Obligations of Lilly and its
Affiliates other than Assumed Liabilities, including:
(a) any Obligations arising out of any claims by the FDA,
DEA or any other government entity or regulatory body that Lilly has
failed to fulfill Lilly's regulatory obligations in connection with the
NDAs prior to the Closing Date (except to the extent that such Damages
arise out of any action or inaction on the part of NeoSan);
(b) any Obligations arising out of the manufacture,
marketing or sale of the Product prior to the Closing Date; and
(c) any Obligations that Lilly expressly covenants and
agrees to perform pursuant to the provisions of this Agreement or the
Manufacturing Agreement.
1.27 "EXPIRED TRADEMARKS" will have the meaning set forth in Section 4.1.
1.28 "FDA" means the United States Food and Drug Administration, and any
successor agency or entity thereto that may be established hereafter.
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1.29 "GOVERNMENTAL OR REGULATORY AUTHORITY" means any United States federal,
state or local governmental or regulatory authority, agency,
commission, court or instrumentality, including the FDA.
1.30 "HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, Section 7A of the Xxxxxxx Act, 15 U.S.C.ss.18a, as amended.
1.31 "IMPLEMENTATION TEAM" will have the meaning set forth in Section 6.1.
1.32 "INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" will have the meanings set
forth in Section 11.3.
1.33 "INTELLECTUAL PROPERTY" will have the meaning set forth in Section 4.1.
1.34 "KNOW-HOW" means all of the following to the extent pertaining to
Product as of the Closing Date and any pending or terminated analogs,
derivatives, improvements or variations thereon as of the Closing Date
and the manufacture, promotion, marketing, sale, use or importation of
the foregoing (except to the extent specifically and exclusively
related to the Combination Patents) as of the Closing Date:
specifications; tangible or intangible manufacturing, physical
chemistry and formulation know-how; analytical testing methods and
validations; technical knowledge; expertise; skill; practices and
procedures; formulae; tangible or intangible trade secrets; inventions
(whether or not patentable); ideas; conceptions;
reductions-to-practice; confidential and/or proprietary information;
analytical methodology; processes (including any portion, step and
component of such processes); methods; preclinical, clinical, stability
and other data and results; chemical samples or substances; market
studies; and all other experience and know-how, whether or not
patentable, provided that nothing in this Agreement will require Lilly
to locate or review the files or records specifically pertaining to the
Combination Patents or the combination products covered thereby for
potential Know-How and provided further that, subject to the
limitations set forth in Section 3.2, the foregoing exclusion with
respect to the Combination Patents will not preclude NeoSan or its
Affiliates or permitted sublicensees or assignees from utilizing the
Know-How licensed or transferred hereunder with respect to their own
combination pharmaceutical products that do not infringe the
Combination Patents.
1.35 "LICENSED TECHNOLOGY" means all Know-How which have been issued, filed,
developed, created, made, used or acquired on or before the Closing
Date by Lilly or its Affiliates, to the extent such Know-How are used
by Lilly in connection with the development, manufacture, use or sale
of the Products in the United States as of the Closing Date; provided
that "Licensed Technology" does not include the Combination Patents.
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1.36 "LICENSED TRADEMARK AND TRADE DRESS" means (i) the United States
Pulvules(R) Trademark, (ii) the Common Law Licensed Trade Dress, and
(iii) the United States Parabaloidal Capsule Trade Dress.
1.37 "LOAN FACILITY" will have the meaning set forth in Section 6.25.
1.38 "LOAN FACILITY HIGHLY-CONFIDENT LETTER" will have the meaning set forth
in Section 6.25.
1.39 "MANUFACTURING AGREEMENT" will have the meaning set forth in the second
WHEREAS clause of this Agreement.
1.40 "MARKETING MATERIALS" means (i) all market research, marketing plans,
media plans, advertising, marketing-related clinical study results,
form letters and medical queries, sales training materials, customer
information solely with respect to sales of Products in the United
States (including doctors, general purchasing organizations (GPOs) and
pharmacists), promotional and marketing books and records owned by
Lilly and its Affiliates solely pertaining to the marketing and
promotion of the Products in the United States; and (ii) the
Promotional Materials, provided that "Marketing Materials" will exclude
the labeling of the Products, which will be deemed part of the
Regulatory Approvals.
1.41 "MATERIAL ADVERSE EFFECT" means an effect or condition that
individually or in the aggregate is materially adverse to (i) the
Purchased Assets taken as a whole; (ii) any material Product or its
Regulatory Approval in the United States, each taken individually; or
(iii) the business of manufacturing, marketing or selling Products,
taken as a whole, as conducted by Lilly and its Affiliates in the
ordinary course of business in the United States prior to the Closing
Date.
1.42 "MYLAN" means Mylan Pharmaceuticals, Inc.
1.43 "MYLAN AGREEMENT" means the propoxyphene Supply Agreement between Lilly
and Mylan entered into as of the 18th of April 1994, as thereafter
amended.
1.44 "NDAS" mean the United States New Drug Applications and Investigational
New Drug applications ("IND") listed in SCHEDULE 1.44 attached hereto
and all other submissions, supplements or amendments pertaining
thereto, and the official and working regulatory and clinical files and
data pertaining to any of the foregoing in the possession or control of
Lilly or its Affiliates as of the Closing Date. For avoidance of doubt,
the NDAs do not include any marketing authorizations in any
jurisdiction outside of the United States or any other submissions,
supplements or amendments pertaining thereto filed outside of the
United States.
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1.45 "NEOSAN IMPROVEMENTS" means any inventions, ideas, conceptions, or
reductions-to-practice, patentable or not, information, works, and/or
data pertaining to Products or analogs, derivatives, improvements or
variations thereof that are generated, identified, discovered, created
and/or made by NeoSan, its Affiliates, or its or its Affiliates'
employees or a Third Person contracted by or otherwise controlled by
NeoSan based on the use or practice of the Licensed Technology.
1.46 "NEOSAN NEW PRODUCT" means (i) any pharmaceutical product that is an
analog, derivative, improvement or variation of a Product arising out
of NeoSan Improvements, (ii) any pharmaceutical product which includes
propoxyphene or any analog, derivative, improvement, or variation of
propoxyphene as an active ingredient arising out of an invention
related to the Product conceived and reduced to practice by a NeoSan or
a NeoSan Affiliate employee(s) or a Third Person contracted by or
otherwise controlled by NeoSan, (iii) any other pharmaceutical product
developed by NeoSan and/or a Third Person contracted by or otherwise
controlled by NeoSan which includes propoxyphene or any analog,
derivative, improvement, or variation of propoxyphene as an intended
active ingredient, or (iv) any pharmaceutical product marketed under a
name which includes "Darvon," "Darvocet," "Distalgesic," "Digesic" or
"Doloxene." Notwithstanding the foregoing, a pharmaceutical product
which includes propoxyphene or any analog, derivative, improvement or
variation thereof will not constitute an NeoSan New Product to the
extent such product is acquired by NeoSan or its Affiliates as a result
of any (a)(i) merger or (ii) acquisition by NeoSan or its Affiliates of
substantially all of the assets of a Third Person (each, an "NeoSan
Relationship"), in which the other party or parties involved in such
NeoSan Relationship at that time already conducts or engages in the
manufacturing, marketing, selling, promoting, distributing,
co-marketing, co-promoting, importing, exporting or active developing
of a pharmaceutical product which includes propoxyphene or any analog,
derivative, improvement or variation thereof, or (b) acquisition by
NeoSan or its Affiliates of any pharmaceutical product (whether or not
containing propoxyphene as an active ingredient), either before or
after the acquisitions contemplated by this Agreement, and any analogs,
derivatives, improvements or variations of or for such acquired
pharmaceutical product, that are not marketed under a name which
includes "Darvon," "Darvocet," "Distalgesic," "Digesic" or "Doloxene".
1.47 "NET SALES" means, with respect to the Product or any NeoSan New
Product, as the context requires, the gross amount invoiced by Lilly or
a Permitted Seller of the Product or such NeoSan New Product, as the
context requires, for sales of the Product or such NeoSan New Product,
as the context requires, to Third Persons (other than Permitted
Sellers), less
(a) trade, quantity and/or cash discounts actually
allowed;
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(b) discounts, refunds, rebates, chargebacks, retroactive
price adjustments and any other allowances, credits or payments which
effectively reduce the net selling price;
(c) actual Product or NeoSan New Product returns and
allowances, as the context requires; and
(d) any costs of insurance, freight or sales Tax or
governmental levies, and import duties, provided that they are included
in such gross invoice amount and are itemized or readily identifiable
on such invoice or other readily accessible documentation.
Such amounts will be determined from books and records maintained in
accordance with U.S. Generally Accepted Accounting Principles ("GAAP").
No deductions will be made for commissions.
1.48 "NET SALES VOLUME ADJUSTMENT" will have the meaning set forth in
Section 2.2.
1.49 "OBLIGATIONS" will have the meaning set forth in Article 10.
1.50 "PATENTS" means U.S. patents, patent applications, and statutory
invention registrations (which, for the purpose of this Agreement, will
be deemed to include provisional applications and invention
disclosures), including reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof, all
inventions disclosed therein, all rights provided by international
treaties and conventions, and all rights to obtain and file for patents
and registrations thereto.
1.51 "PERMITTED ENCUMBRANCE" means (i) any Encumbrance for Taxes,
assessments and other governmental charges not yet due and payable or
that may thereafter be paid without penalty, or that are being
contested in good faith by appropriate proceedings for which adequate
reserves have been established, (ii) any imperfection of title or other
Encumbrance that, individually or in the aggregate with other such
imperfections and Encumbrances, would not have a material adverse
effect on any material Purchased Asset, and (iii) any rights expressly
reserved or retained by Lilly pursuant to the terms of this Agreement.
1.52 "PERMITTED SELLER" means NeoSan and its Affiliates and any assignee,
licensee or sublicensee having the right to sell Product or a NeoSan
New Product.
1.53 "PERMITTED USES" means, with respect to Lilly or its Affiliates, (a)
manufacturing the Product, or having the Product manufactured, for
NeoSan under the Manufacturing Agreement and otherwise fulfilling its
obligations thereunder, (b) making or having the Product made in the
United States for purposes of Lilly or its Affiliates distributing,
using, selling,
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offering to sell, importing (except importing into the United States),
exporting (except exporting to the United States), marketing,
promoting, co-marketing and co-promoting the Product outside the United
States, or (c) making, having made, distributing, using, selling,
offering to sell, importing (except importing into the United States),
exporting (except exporting to the United States), marketing,
promoting, co-marketing and co-promoting the Product outside of the
United States.
1.54 "PERSON" means a natural person, a corporation, a partnership, a trust,
a joint venture, a limited liability company, any Governmental or
Regulatory Authority or any other organization or entity.
1.55 "PRODUCT" means propoxyphene or propoxyphene-based pharmaceutical
products (including such products wherein propoxyphene is at least one
of the active ingredients) in all forms marketed or marketable in the
United States under the NDAs, as existing as of the Closing Date, under
whatever name sold. Notwithstanding the foregoing, "Product" will not
mean or include any new formulations (including any NeoSan New
Product).
1.56 "PRODUCT INTELLECTUAL PROPERTY" means (a) the Copyrights, (b) Assigned
Trade Dress, and (c) the Assigned Trademarks. NeoSan acknowledges and
agrees that "Product Intellectual Property" does not include the
Combination Patents or any rights thereto.
1.57 "PROMOTIONAL MATERIALS" means all existing advertising and promotional
materials, including flyers, brochures, pamphlets, video cassettes,
computer disks, CD-ROMs, non-licensed software, tradeshow materials and
booths, literature, journal articles or reprints, or any similar
materials or items, which are owned by Lilly and are readily available
and pertain solely to the promotion of the Product in the United States
or the Activities.
1.58 "PURCHASED ASSETS" means: (i) all rights, title and interest in and to
the Products; (ii) all rights, title and interest in and to the
Regulatory Approvals; (iii) the Product Intellectual Property; (iv),
the Marketing Materials; or (v) the Books and Records. The Purchased
Assets do not include any fixed assets or inventory.
1.59 "QUALITY AGREEMENT" will have the meaning set forth in the
Manufacturing Agreement.
1.60 "REGULATORY APPROVALS" means the NDAs.
1.61 "REMEDIES" will have the meaning set forth in Section 6.17.
1.62 "REQUIRED LILLY THIRD PARTY CONSENTS" has the meaning set forth in
Section 4.14.
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1.63 "REPRESENTATIVES" of a Party means that Party's agents, contractors,
employees, officers, directors, consultants, and advisors; its
Affiliates; and the agents, contractors, employees, officers,
directors, consultants and advisors of its Affiliates, agents,
contractors, consultants and advisors.
1.64 "SUBSEQUENT EXCHANGE OFFER" will have the meaning set forth in Section
8.2(g).
1.65 "TAX" means all of the following tax by any Governmental or Regulatory
Authority in connection with the operations of either Party or its
Affiliates or the transactions contemplated hereby: (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, excise,
severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or
other like assessment; (ii) any Obligation for the payment of any
amounts of the type described in (i) above as a result of being a
member of any affiliated, consolidated, combined, unitary or other
group for any taxable period; and (iii) any Obligation for the payment
of any amounts of the type described in (i) or (ii) above as a result
of any express or implied obligation to indemnify any other person.
1.66 "THIRD PERSON" means a Person that is not a Party to this Agreement or
an Affiliate of a Party to this Agreement.
1.67 "TRANSACTION FINANCING" will have the meaning set forth in Section
6.25.
1.68 "UNITED STATES" or "U.S." means the fifty (50) states and the District
of Columbia constituting the United States of America and any territory
or commonwealth owned or controlled by the United States of America,
including Puerto Rico.
1.69 "UNITED STATES PARABOLOIDAL CAPSULE TRADEMARK" means the United States
registered trademark design for a paraboloidal capsule, registration
number 732,292, registration date 06/05/1962.
1.70 "UNITED STATES PULVULES(R)TRADEMARK" means the United States registered
trademark Pulvules(R), registration number 144210, registration date
06/28/1921.
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ARTICLE 2
CONSIDERATION
In consideration of (i) Lilly's sale of Purchased Assets to NeoSan as
set forth in this Agreement and (ii) the licenses granted by Lilly to NeoSan
under the Licensed Technology and Licensed Trademark and Trade Dress, as set
forth in this Agreement, NeoSan will pay the following amounts, as set forth in
Sections 2.1 and 2.4:
2.1 NEOSAN'S PAYMENT UPON THE CLOSING DATE. On the Closing Date, NeoSan
will pay to Lilly the sum of Two Hundred Eleven Million Four Hundred
Thousand United States Dollars (US$211,400,000) by Federal Reserve
electronic wire transfer in immediately available funds to an account
designated by Lilly.
2.2 NET SALES VOLUME ADJUSTMENT. In the event that, during any consecutive
twelve (12) calendar month period occurring between (and including)
January 1, 2002 and the last day of the calendar month that contains
the first year anniversary of the Closing Date, the aggregate of the
(i) Net Sales of Product by Lilly and (ii) the Net Sales of Product by
NeoSan or other Permitted Sellers equals or exceeds fifty million
United States dollars ($50,000,000), Lilly will not owe NeoSan any
purchase price adjustment ("Net Sales Volume Adjustment") pursuant to
this Section 2.2; otherwise, Lilly will pay to NeoSan a Net Sales
Volume Adjustment calculated as set forth in SCHEDULE 2.2 attached
hereto. For purposes of this Agreement, a Net Sale of Product will be
deemed to have been made by Lilly, NeoSan or a Permitted Seller, as
applicable, as of the recorded sale date according to GAAP, without
regard to whether its customer has actually paid Lilly, NeoSan or a
Permitted Seller, as applicable. NeoSan will deliver to Lilly within
fifteen (15) days of the end of each calendar month, a report detailing
the Net Sales made by NeoSan or another Permitted Seller during the
previous Calendar Month. Lilly will pay any Net Sales Volume Adjustment
owed by Lilly pursuant to this Section 2.2 within thirty days after the
last day of the calendar month that contains the one (1) year
anniversary of the Closing Date.
2.3 PURCHASE PRICE ADJUSTMENT. For any Net Sales of Product by Lilly during
the period beginning February 1, 2002 and ending the day before the
Closing Date in excess of the sum of (i) four million one hundred
sixty-seven thousand United States dollars ($4,167,000) for each full
calendar month during such period, plus (ii) the product of four
million one hundred sixty-seven thousand United States dollars
($4,167,000) multiplied by the quotient of the number of days prior to
the Closing Date in the calendar month that
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the Closing Date occurs divided by thirty (30) (the "Excess Net
Sales"), Lilly will pay to NeoSan within thirty (30) days after the
Closing Date a purchase price adjustment equal to ninety percent (90%)
of such Excess Net Sales.
2.4 ROYALTY PAYMENT.
(a) NeoSan will accrue and owe a royalty to Lilly equal
to [Information omitted pursuant to a request for confidential
treatment submitted to the Securities and Exchange Commission, and the
omitted information has been separately submitted to the Securities and
Exchange Commission.] percent ([Information omitted pursuant to a
request for confidential treatment submitted to the Securities and
Exchange Commission, and the omitted information has been separately
submitted to the Securities and Exchange Commission.]%) of Net Sales
of a NeoSan New Product in a Calendar Quarter in the United States by a
Permitted Seller (collectively referred to as the "Royalty Payment"),
to the extent, and only to the extent, that such Net Sales of all
NeoSan New Products plus all Net Sales of Products by Permitted Sellers
in such Calendar Quarter in the United States exceed, in the aggregate,
the Base Year's Average Quarterly Net Sales. For any partial Calendar
Quarter in which a NeoSan New Product is sold in the United States, for
purposes of determining if and to what extent a Royalty Payment is due
and owing with respect to such NeoSan New Product, the Net Sales of all
NeoSan New Products in the United States plus all Net Sales of Products
by Permitted Sellers in the United States in such Calendar Quarter will
be deemed to be equal to the product of (a) the total of such Net Sales
multiplied by (b) the quotient of the number of days in such partial
Calendar Quarter divided by ninety (90) days. For purposes of clarity
and not in limitation thereof, no royalties will be owed by NeoSan or
its Affiliates with respect to any Net Sales of Products or any
pharmaceutical product not coming within the definition of "NeoSan New
Product". This Section 2.4(a) will be in force with respect to each
NeoSan New Product in the United States until ten (10) years from the
commercial launch of such NeoSan New Product in the United States.
(b) NeoSan will pay to Lilly the Royalty Payment
attributable to Net Sales of NeoSan New Products made during a Calendar
Quarter within sixty (60) days of the end of such Calendar Quarter,
without regard to whether the Permitted Seller's customer has actually
paid NeoSan. For purposes of this Agreement, a Net Sale of a NeoSan New
Product will be deemed to have been made as of the recorded sale date
according to GAAP, without regard to whether its customer has actually
paid NeoSan. Within sixty (60) days of the end of such Calendar
Quarter, NeoSan will provide Lilly with a written report detailing the
Net Sales of NeoSan New Products made during the previous Calendar
Quarter. All payments to Lilly pursuant to this Section 2.4 will be
made by NeoSan by wire transfer on its due date to an account
designated by Lilly no less than two business days prior to the date of
payment, unless otherwise instructed by Lilly.
2.5 AUDITS. NeoSan will keep full and accurate books and records relating
to the performance required of it of its Royalty Payment obligations
under this Agreement and its Net Sales of Product. For any period in
which NeoSan is obligated to pay a Royalty Payment with respect
13
to Net Sales of NeoSan New Products, plus two (2) years thereafter, and
the period beginning on the Closing Date and ending the last day of the
calendar month that contains the one (1) year anniversary of the
Closing Date with respect to Net Sales of Product, plus two (2) years
thereafter, Lilly will have the right, during regular business hours
and upon reasonable advance notice, to have such books and records of
NeoSan audited no more frequently than once per Calendar Year so as to
verify the accuracy of the information previously reported to Lilly.
Lilly will, for purposes of such audit, utilize only the services of an
independent CPA firm selected by Lilly and approved by NeoSan, such
approval not to be unreasonably withheld.
Such audit may cover the two (2) Calendar Years preceding the
date of the request for such audit. Notwithstanding the foregoing, no
audit of NeoSan pursuant to this Section 2.5 will cover any period of
time preceding the Closing Date. As a condition for their access to
conduct such audit, such accountants will agree with NeoSan to keep
confidential any information obtained during such audit and will report
to Lilly only their conclusions, with a copy or full summary of their
oral or written reports being provided to NeoSan. The cost of such
audit will be borne by Lilly; however, in the event such audit reveals
that the Royalty Payments or Net Sales of Product previously reported
to Lilly are less than the properly calculated amount of Royalty
Payments hereunder or Net Sales of Product, as applicable, by five
percent (5%) or more, the cost of the audit will be borne by NeoSan.
NeoSan will include in all sublicenses granted in accordance herewith,
and any other agreements enabling a Third Person to be a Permitted
Seller, an audit provision substantially similar to the foregoing
requiring such Permitted Seller to keep full and accurate books and
records relating to sales of Products and NeoSan New Products thereby
and granting Lilly the right to have an independent public accounting
firm audit the accuracy of the information reported by the sublicensee
in connection therewith.
2.6 LATE PAYMENTS. Any amounts not paid by either Party when due under this
Agreement or the Manufacturing Agreement will be subject to interest
from and including the date payment is due through and including the
date upon which the other Party has collected the funds in accordance
herewith at a rate equal to the lesser of (i) the sum of three percent
(3%) plus the prime rate of interest quoted in the Money Rates section
of the Wall Street Journal, calculated daily on the basis of a three
hundred sixty-five (365) day year, or (ii) the maximum interest rate
allowed by law.
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ARTICLE 3
ASSIGNMENT AND LICENSE OF RIGHTS; CLOSING
3.1 ASSIGNMENT OF PURCHASED ASSETS TO NEOSAN. Subject to the terms and
conditions set forth herein and in the xxxx of sale, a form of which is
attached hereto as Exhibit A ("Xxxxx Xxxx of Sale"), on the Closing
Date, Lilly agrees to assign, sell, convey, transfer and deliver to
NeoSan and to cause its Affiliates to assign, sell, convey, transfer
and deliver to NeoSan, and NeoSan agrees to buy and accept, Lilly's and
its Affiliates' entire right, title and interest in and to the
Purchased Assets, free and clear from all Encumbrances other than
Permitted Encumbrances. NeoSan hereby acknowledges receipt of copies of
certain Books and Records during the due diligence process. Lilly will
deliver to NeoSan any additional Books and Records requested by NeoSan
on or after the Closing Date within a commercially reasonable time
after such request. Notwithstanding the foregoing, Lilly will be
entitled to retain a copy of all or any portion of the Books and
Records for archive purposes. In the event, following the Closing Date,
that Lilly or NeoSan discover that any of the Purchased Assets were
held at the time of Closing by any Affiliate of Lilly and not
transferred to NeoSan at the Closing, Lilly will cause the transfer
thereof to NeoSan or NeoSan's designee as soon as is commercially
practicable after such discovery. Notwithstanding the foregoing, Lilly
and its Affiliates' assignment, sale, conveyance, transfer and delivery
of the Assigned Trade Dress is restricted to the use of such trade
dress with the Product and any NeoSan New Product, and neither this
Section 3.1 nor any other part of this Agreement will be construed to
restrict Lilly, its Affiliates or its licensees, assignees or
successors from utilizing the Assigned Trade Dress in connection with
any product or use other than the Product and any NeoSan New Product.
3.2 GRANT OF LICENSE TO NEOSAN UNDER LICENSED TECHNOLOGY. Subject to the
terms and conditions set forth herein, as of the Closing Date, Lilly
hereby grants to NeoSan, on behalf of Lilly and its Affiliates, and
NeoSan accepts, under the Licensed Technology, an irrevocable (subject
to suspension to the extent expressly set forth herein), fully-paid,
royalty-free, exclusive license, with a right to sublicense or assign
such license rights in accordance with the terms of this Agreement,
solely to make, have made, distribute, use, sell, offer to sell, have
sold, market, co-market, import, export, promote and co-promote the
Products, any analogs, derivatives, improvements or variations thereon,
the NeoSan Improvements, NeoSan New Products, or other pharmaceutical
products which utilize propoxyphene as an active ingredient thereof, in
the United States (and to make or have made any of the foregoing
outside the United States solely for importation into, and
distribution, use, sale, market, co-market, promote and co-promote any
of the foregoing in, the United States); provided,
15
however, that the foregoing license with respect to making or having
made any of the foregoing outside the United States will be
non-exclusive; provided further, however, that the foregoing license
will not be deemed to be a representation, warranty or covenant by
Lilly that NeoSan will be able to practice the Licensed Technology to
make and have made anywhere in the world any pharmaceutical product
other than the Product or to make or have made the Product or any other
pharmaceutical product outside of the United States. Notwithstanding
anything in this Section 3.2 to the contrary, the license under the
Licensed Technology granted to NeoSan pursuant to this Section 3.2 will
not preclude Lilly from utilizing the Licensed Technology for any
Permitted Uses during the term thereof. Further notwithstanding
anything in this Agreement to the contrary, nothing in this Agreement
will be deemed to preclude Lilly from granting a license under the
Licensed Technology to a Third Person solely for purposes of making or
having made the Product in the United States for distribution,
exportation (outside of the United States), use, sale, marketing,
co-marketing, promoting and co-promoting the Product outside of the
United States, and Lilly will have no liability for granting such
license. The licenses granted to NeoSan pursuant to this Section 3.2
will be subject to the rights reserved by Lilly in the preceding two
sentences.
3.3 GRANT OF LICENSE TO LICENSED TRADEMARK AND TRADE DRESS TO NEOSAN.
(a) Subject to the terms and conditions set forth herein,
as of the Closing Date, Lilly hereby grants to NeoSan, and NeoSan
accepts, under the Common Law Licensed Trade Dress, a fully paid,
royalty-free, exclusive license solely to make, have made, distribute,
use, sell, offer to sell, have sold, market, co-market, promote and
co-promote the Product or NeoSan New Product in the United States.
(b) Subject to the terms and conditions set forth herein,
as of the Closing Date, Lilly hereby grants to NeoSan, and NeoSan
accepts, under the United States Pulvules(R) Trademark and United
States Paraboloidal Capsule Trademark, a fully-paid, royalty-free,
exclusive license solely to make, have made, distribute, use, sell,
offer to sell, have sold, market, co-market, promote and co-promote the
Product or NeoSan New Products in the United States.
(c) All uses by NeoSan of the Licensed Trademark and
Trade Dress will be in an appropriate manner, without jeopardizing the
significance, distinctiveness or validity of the Licensed Trademark and
Trade Dress; will use the designation "R" with the Licensed Trademark
and Trade Dress which are registered trademarks and trade dress; will
indicate that Pulvules(R) and the appearance of the paraboloidal
capsule are registered trademarks of Lilly; and will only be in such
form and manner as approved in writing by Lilly. All trademark and
trade dress rights from NeoSan's use of the Licensed Trademark and
Trade Dress
16
will inure to the benefit of Lilly. NeoSan will not contest or
challenge the validity of, or Lilly's ownership of, the Licensed
Trademark and Trade Dress.
(d) All Product featuring any of the Licensed Trademark
and Trade Dress must be manufactured, labeled, sold, distributed and
advertised in accordance with the Specifications (as defined in the
Manufacturing Agreement) and all Applicable Laws, including cGMP and
FDCA (as those terms are defined in the Manufacturing Agreement). Once
each Calendar Year, in order that Lilly can assure itself of the
maintenance of the above-described quality standards, NeoSan will: (i)
provide to Lilly free of charge two (2) then-current production samples
of each Product and NeoSan New Product featuring any of the Licensed
Trademark and Trade Dress (with then-current packaging) not
manufactured by Lilly, and (ii) permit Lilly to inspect the
manufacturing process for each Product and NeoSan New Product not
manufactured by Lilly featuring any of the Licensed Trademark and Trade
Dress upon five (5) days prior notice.
(e) Notwithstanding anything in this Section 3.3 to the
contrary, the licenses under the Licensed Trademark and Trade Dress
granted to NeoSan pursuant to this Section 3.3 will not preclude Lilly
or its Affiliates from carrying out activities within the scope of the
Permitted Uses. Further notwithstanding anything in this Agreement to
the contrary, nothing in this Agreement will be deemed to preclude
Lilly from granting a license under the Licensed Trademark and Trade
Dress to a Third Person solely for purposes of making or having made
the Product in the United States for distribution, exportation (outside
of the United States), use, sale, marketing, co-marketing, promoting
and co-promoting the Product outside of the United States, and Lilly
will have no liability hereunder for granting such license. The
licenses granted to NeoSan pursuant to this Section 3.3 will be subject
to the rights reserved by Lilly in the preceding two sentences.
(f) Notwithstanding anything in this Section 3.3 to the
contrary, any license granted to NeoSan under a Licensed Trademark and
Trade Dress will terminate in the United States upon the date that
NeoSan ceases to make, have made, sell, have sold, use, market,
promote, co-market and co-promote all Products and NeoSan New Products
that use such Licensed Trademark and Trade Dress in the United States.
3.4 SUBLICENSES. The licenses granted herein by Lilly to NeoSan pursuant to
Sections 3.2 and 3.3 may be freely sublicensed by NeoSan after payment
of the $211,400,000 pursuant to Section 2.1, subject to the
sublicensee's compliance with the relevant obligations hereof with
respect to such licensed rights, without any consent by Lilly, provided
that (a) NeoSan provides written notice of such sublicense or
assignment to Lilly prior to granting such sublicense, (b) NeoSan and
aaiPharma Inc. ("aaiPharma") will guarantee the performance of any
sublicensee
17
permitted pursuant to this Section 3.4 in a form comparable to
aaiPharma's guaranty appended hereto with respect to NeoSan's
obligations hereunder, and (c) NeoSan will remain liable for Royalty
Payments as a result of Net Sales made by a Third Person pursuant to a
sublicense or license permitted pursuant to this Section 3.4. The
licenses granted herein by Lilly to NeoSan pursuant to Sections 3.2 and
3.3 may be sublicensed by NeoSan without continuing liability or
guaranty to Lilly therefore only with the prior written consent of
Lilly, which will not unreasonably be withheld.
3.5 GRANT OF LICENSE TO LILLY.
(a) Subject to the terms and conditions set forth herein,
as of the Closing Date, NeoSan hereby grants to Lilly and its
Affiliates, for no additional consideration, and Lilly and its
Affiliates accept, a royalty-free, non-exclusive license, with a right
to sublicense, except as limited below, in the United States under the
Product Intellectual Property, the NDAs and the Marketing Materials
solely to manufacture, or to have manufactured, the Products for NeoSan
under the Manufacturing Agreement and otherwise fulfill its obligations
thereunder; provided, however, that the non-exclusive license granted
by NeoSan above will terminate effective upon the termination of the
Manufacturing Agreement.
(b) Subject to the terms and conditions set forth herein,
as of the Closing Date, NeoSan hereby grants to Lilly and its
Affiliates, for no additional consideration, and Lilly and its
Affiliates accept, an exclusive, royalty-free license, with the right
to sublicense, under the Marketing Materials, Copyrights and Assigned
Trade Dress to sell, distribute, use, offer to sell, import, market and
promote the Product outside the United States or to make or have made
the Product inside the United States for selling, distributing, using,
offering to sell, importing, marketing and promoting the Product
outside of the United States. The license granted pursuant to this
Section 3.5(b) will terminate with respect to the Copyrights, the
Marketing Materials or the Assigned Trade Dress on NeoSan's receipt of
written notification from Lilly that it is abandoning its license with
respect to the Copyrights, the Marketing Materials and the Assigned
Trade Dress.
3.6 RETAINED RIGHTS. Notwithstanding anything in this Agreement to the
contrary, the rights granted to NeoSan pursuant to this Agreement will
not be deemed to preclude Lilly or its Affiliates from (i) delivering
any remaining Product to Mylan that Lilly is required to deliver
pursuant to the Mylan Agreement, and (ii) manufacturing in the United
States and supplying propoxyphene to Lilly's or its Affiliates'
customers outside the United States within the scope of Permitted Uses
or otherwise conducting the Permitted Uses. The assets assigned or
licensed to NeoSan pursuant to this Agreement are subject to the rights
and obligations of Lilly, its Affiliates and Third Persons under the
foregoing sentence.
18
3.7 EXCLUDED ASSETS. Anything herein to the contrary notwithstanding,
except as set forth in the Manufacturing Agreement, NeoSan will have no
right, title or interest in or to: (i) the trademarks "XXX XXXXX AND
COMPANY" and "LILLY" and any variation thereof, and any other rights in
or to such names; and (ii) the patents and patent applications listed
in SCHEDULE 3.7 attached hereto (the "Combination Patents"); and (iii)
the Mylan Agreement.
3.8 LILLY EMPLOYEE HEALTH SERVICES. Lilly reserves the right, and the
rights granted or licensed to NeoSan are subject to Lilly's right, to
utilize all supplies of finished Product held by Lilly's employee
health services on the Closing Date for purpose of dispensing Product
to its employees and relatives of employees until such supply is
exhausted.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF LILLY
4.1 INTELLECTUAL PROPERTY. Lilly represents and warrants that the Product
Intellectual Property (other than the Assigned Trade Dress), Marketing
Materials, the Licensed Trademark and Trade Dress (other than the
Common Law Licensed Trade Dress), and the Licensed Technology
(collectively, the "Intellectual Property") and the Assigned Trade
Dress and Common Law Licensed Trade Dress contain all the Patents,
Know-How, technology, trade secrets, trademarks, and trade dress
necessary to conduct the Activities or to make, have made, distribute,
use, sell, offer to sell, have sold, market, co-market, import (into
the United States), promote and co-promote Products in the United
States. However, should Lilly or NeoSan after the Closing Date discover
or learn that Lilly has inadvertently omitted any Intellectual Property
or any Patents (other than the Combination Patents) that contain claims
that directly relate to the manufacture, use or sale of Product and are
used by Lilly to conduct the Activities, the Parties will discuss in
good faith how to amend this Agreement to include (whether by
assignment or license) such inadvertently omitted intellectual property
or Patents, such omission will not be deemed to be a breach of this
Agreement by Lilly, and Lilly will have no liability whatsoever with
respect to such omission. Lilly makes no representation or warranty
that NeoSan will be able to conduct the Activities after the Closing
Date without acquiring the consents, approvals and permits and taking
other procedural or substantive steps that are required by Applicable
Law. For avoidance of doubt, "Intellectual Property does not mean or
include the Assigned Trade Dress or Common Law Licensed Trade Dress.
Notwithstanding the foregoing, NeoSan acknowledges and agrees that
Lilly is not and will not be assigning or licensing to NeoSan the
expired trademarks listed in SCHEDULE 4.1 attached hereto or any other
expired trademarks directly and exclusively related to Lilly's
propoxyphene
19
business (collectively referred to herein as the "Expired Trademarks"),
and Lilly will have no liability for failing to do so. Lilly
acknowledges and agrees that NeoSan will have no liability to Lilly in
the event that NeoSan, following the Closing Date, acts to register or
otherwise obtain new trademarks substantially similar to, or the same
as, the Expired Trademarks or uses such new trademarks on its products.
The Expired Trademarks do not include any of the trademarks listed on
Schedule 1.6 hereto.
4.2 OWNERSHIP OF INTELLECTUAL PROPERTY. Lilly represents and warrants that:
(i) either Lilly or an Affiliate of Lilly is the owner of the
Intellectual Property, and (ii) Lilly or its Affiliates can, and have
the right to, assign or license, as applicable, the Intellectual
Property to NeoSan without the consent of any Third Person. However,
should Lilly or NeoSan after the Closing Date discover or learn that
the consent of additional Third Persons is necessary with respect to
the Intellectual Property, if the omitted consent does not result in
material harm to a material Product being sold, or to be sold, by
NeoSan in the United States, then such inadvertent omission will not be
deemed to be a breach of this Agreement by Lilly and Lilly will have no
liability whatsoever with respect to such omission; provided, however,
that Lilly diligently pursues such consent from such Third Persons.
4.3 CLAIMS RELATED TO USE OF INTELLECTUAL PROPERTY. Lilly represents and
warrants that there are no pending, or to Lilly's knowledge as of the
Effective Date, threatened claims against Lilly or its Affiliates
asserting that any of the Intellectual Property infringes or violates
the rights of Third Persons or that NeoSan, by practicing under the
Intellectual Property in conducting the Activities in the United States
as of the Closing Date, would violate any of the intellectual property
rights of any Third Person.
4.4 NOTICE TO THIRD PERSONS. Lilly represents and warrants that Lilly has
not given any notice within the two (2) years prior to the Effective
Date to any Third Persons, asserting infringement by such Third Persons
upon any of the Intellectual Property.
4.5 VALIDITY OF TRADEMARKS, TRADE DRESS, COPYRIGHTS AND TECHNOLOGY. Lilly
represents and warrants that, to its knowledge as of the Effective
Date, the Product Intellectual Property (other than the Assigned Trade
Dress) and the Licensed Trademark and Trade Dress (other than the
Common Law Licensed Trade Dress), are valid and enforceable, and, to
Lilly's knowledge as of the Effective Date, the Licensed Trademark and
Trade Dress (other than the Common Law Licensed Trade Dress) are free
of all Encumbrances except Permitted Encumbrances. Notwithstanding the
foregoing, NeoSan acknowledges that the status of the Assigned
Trademarks will change in the ordinary course of business prior to the
Closing Date. Lilly will not be in breach of this representation or
warranty with respect to, and NeoSan will have no right to refuse to
close the transactions contemplated by this Agreement because of,
20
changes in the status of the Assigned Trademarks so long as Lilly
maintains the Assigned Trademarks in the ordinary course of business
prior to the Closing Date. Lilly is assigning, selling, conveying,
transferring and delivering the Assigned Trade Dress to NeoSan "AS IS",
and is licensing the Common Law Licensed Trade Dress to NeoSan "AS IS."
4.6 RIGHTS GRANTED TO THIRD PERSONS. Except with respect to the remaining
deliveries required pursuant to the Mylan Agreement, rights granted to
its Affiliates that, following the Closing Date, will not extend past
the Permitted Uses, rights granted to its wholesalers and government
purchasers, Lilly represents and warrants that Lilly and its Affiliates
have not executed or granted to any Third Person, directly or
indirectly, or entered into any agreement for, or retained, any license
or other right to develop, manufacture, market, distribute, sell or
offer for sale the Product or generic substitutes therefor in the
United States or to import the Product or any other rights in or with
respect to the Products, generic substitutes therefor, or other
propoxyphene-based pharmaceutical products into the United States.
4.7 MAINTENANCE. Lilly represents and warrants that, as of the Closing
Date, all necessary papers and fees concerning the Assigned Trademarks
(which are registered as of the Closing Date and are unexpired), and
the Licensed Trademark and Trade Dress (other than the Common Law
Licensed Trade Dress) have been timely paid and filed with the
appropriate governmental agencies or authority.
4.8 NDAS; REGULATORY MATTERS. Lilly represents and warrants that Lilly has
furnished NeoSan with access to a complete copy of the NDAs, including
all amendments and supplements thereto and that Lilly has no new drug
applications or INDs pertaining to propoxyphene-based pharmaceutical
products, whether issued, pending, abandoned, withdrawn, or in draft
form, other than those pertaining to the NDAs. Although the NDAs are
not "state of the art" (which NeoSan hereby acknowledges), Lilly
further represents and warrants that (i) Lilly has complied in all
material respects with all Applicable Laws in connection with the
preparation and submission to the FDA of each of the NDAs, (ii) each of
the NDAs has been approved by FDA, and, except with respect to those of
the NDAs listed in SCHEDULE 4.8 attached hereto, nothing has come to
the attention of Lilly which has led Lilly to believe that any of the
NDAs are not in good standing with the FDA, and (iii) Lilly has filed
with the FDA all required notices, supplemental applications and annual
or other reports, including adverse experience reports, with respect to
each NDA which are material to the ability of Lilly to conduct the
Activities. All of the Regulatory Approvals are owned exclusively by
Lilly or its Affiliates. All Products being sold by Lilly in the United
States are covered by a Regulatory Approval therein that permits such
sale in the United States. There is no Action or Proceeding by any
Governmental or Regulatory Authority pending or, to the knowledge of
Lilly as of
21
the Effective Date, threatened seeking the revocation or suspension of
any Regulatory Approval. Except as set forth in SCHEDULE 4.8 attached
hereto, during the three years prior to the date of this Agreement,
Lilly and its Affiliates have not received or been subject to: (i) any
FDA Form 483's directly relating to any Product or directly relating to
any facility in which such Product is manufactured; (ii) any FDA
Notices of Adverse Findings directly relating to any Product or
directly relating to any facility in which such Product is
manufactured; or (iii) any warning letters or other written
correspondence from the FDA or any other Governmental or Regulatory
Authority directly relating to the Product or directly relating to any
facility in which such Product is manufactured, in which the FDA or
such other Governmental or Regulatory Authority asserted that the
operations of Seller were not in compliance with Applicable Law with
respect to any Product or the facilities in which any Product is
manufactured, tested or stored. Except for the representation and
warranty contained in this Section 4.8, NeoSan has had full and
adequate opportunity to review and evaluate the NDAs, NeoSan is relying
upon its own judgment and experience in connection with the NDAs, and
Lilly is assigning, selling, conveying, transferring and delivering the
NDAs to NeoSan "AS IS."
4.9 ORGANIZATION AND STANDING. Lilly represents and warrants that Lilly is
a corporation duly organized, validly existing, and in good standing
under the laws of the State of Indiana. Lilly and its relevant
Affiliates hereunder are duly qualified to conduct its business and is
in good standing in the United States wherein the nature of such
business requires such qualification, except for any failure to be so
qualified could not reasonably be expected to have a Material Adverse
Effect or materially impair or delay Lilly's ability to perform its
obligations hereunder.
4.10 POWER AND AUTHORITY. Lilly represents and warrants that (i) Lilly has
all requisite corporate power and authority to execute, deliver, and
perform this Agreement and the other agreements and instruments to be
executed and delivered by it pursuant hereto and thereto and to
consummate the transactions contemplated herein and therein; and (ii)
the execution, delivery and performance of this Agreement by Lilly does
not, and the consummation of the transactions contemplated hereby will
not, violate any provisions of Lilly's organizational documents,
bylaws, or any Applicable Law applicable to Lilly, or any agreement,
mortgage, lease, instrument, order, judgment, or decree to which Lilly
is a party or by which Lilly or any of the Purchased Assets is bound.
4.11 CORPORATE ACTION; BINDING EFFECT. Lilly represents and warrants that
(i) Lilly has duly and properly taken all action required by law, its
organizational documents, or otherwise, to authorize the execution,
delivery, and performance of this Agreement and the other instruments
to be executed and delivered by it pursuant hereto and thereto and the
consummation of the
22
transactions contemplated hereby and thereby; and (ii) this Agreement
has been duly executed and delivered by Lilly and constitutes, and the
other instruments contemplated hereby when duly executed and delivered
by Lilly will constitute, legal, valid, and binding obligations of
Lilly enforceable against it in accordance with its respective terms,
except as enforcement may be affected by bankruptcy, insolvency, or
other similar laws.
4.12 REGULATORY STATUS OF NDAS. Except as set forth in SCHEDULE 4.12, Lilly
represents and warrants that, to Lilly's knowledge, there have been no
recalls, withdrawals, or market replacements of the Product in the
United States in the past two (2) years and that, to Lilly's knowledge
as of the Effective Date, there exists no set of facts or circumstances
that would cause Lilly to believe or suspect that a recall, withdrawal
or market replacement for the Product in the United States is pending,
likely or necessary.
4.13 LAWS AND REGULATIONS. Lilly represents and warrants that it and its
Affiliates have conducted all the Activities in material compliance
with Applicable Laws.
4.14 CONSENTS AND APPROVALS. Lilly represents and warrants that no consent,
approval, waiver, order or authorization of, or registration,
declaration or filing with, any Governmental or Regulatory Authority or
any other Third Person is required in connection with the execution,
delivery and performance of this Agreement, or any agreement or
instrument contemplated by this Agreement, by Lilly or the performance
by Lilly of its obligations contemplated hereby and thereby other than
(a) the filings required of both Parties pursuant to the HSR Act, (b)
the information submissions required of a former owner of the NDAs
pursuant to 21 C.F.R. ss. 314.72, (c) any filings reasonably requested
by NeoSan as may be necessary to change the records of ownership in the
U.S. Trademark or Copyright Office, and (d) as set forth in SCHEDULE
4.14 attached hereto. SCHEDULE 4.14 sets forth a complete and accurate
list of all consents, waivers, approvals, or authorizations of, or
notices to, any third party (other than a Governmental or Regulatory
Authority) that are required by or with respect to Lilly or its
Affiliates in connection with the execution and delivery of this
Agreement by Lilly as it relates to the United States or the
performance of its obligations hereunder as it relates to the United
States, except for such consents, waivers, approvals, or authorizations
the failure to obtain which, and such notices the failure to give
which, would not have a Material Adverse Effect or materially impair or
delay Lilly's ability to perform its obligations hereunder (the
"Required Lilly Third Party Consents").
4.15 BROKERAGE. Lilly represents and warrants that no broker, finder or
similar agent has been employed by or on behalf of Lilly, and no Person
with which Lilly has had any dealings or communications of any kind is
entitled to any brokerage commission, finder's fee or any
23
similar compensation, in connection with this Agreement or the
transactions contemplated hereby.
4.16 NOT DEBARRED. Lilly represents and warrants that Lilly is not debarred
and has not and will not use in any capacity the services of any Person
debarred under subsections 306(a) or (b) of the Generic Drug
Enforcement Act of 1992. If at any time this representation and
warranty is no longer accurate, Lilly will immediately notify NeoSan of
such fact.
4.17 LITIGATION. Lilly represents and warrants that there are no pending or,
to Lilly's knowledge as of the Effective Date, threatened judicial,
administrative or arbitral Actions or Proceedings pending as of the
date hereof against Lilly or its Affiliates in the United States which,
either individually or together with any other, will have a material
adverse effect on the ability of Lilly to perform its obligations under
this Agreement or any agreement or instrument contemplated hereby or
otherwise have a Material Adverse Effect.
4.18 MATERIAL CONTRACTS. SCHEDULE 4.18 sets forth a complete and correct
list of each Contract (other than wholesaler agreements) to be
performed in the United States to which Lilly or any of its Affiliates
is a party with a value in excess of $50,000 and that relates to (i)
the manufacture, marketing, sale or distribution of any of the Products
in the United States; (ii) the acquisition, sale, licensing in or out,
or assignment of Product Intellectual Property; or (iii) sales of
Products to any Governmental or Regulatory Authority (collectively, the
"Material Contracts"). Lilly has made available to NeoSan complete and
correct copies of Material Contracts. The Material Contracts are the
only Contracts material to the Activities in the United States other
than wholesaler agreements. Each of the Material Contracts is in effect
and constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, of Lilly; and Lilly has performed all of its
required material obligations under, and is not in material violation
or breach of or default under, any such Material Contract; and no other
party to the Material Contracts is in material violation or breach of
or default under any such Contract.
4.19 TITLE TO PURCHASED ASSETS. Lilly, on the Closing Date, will have good
and marketable title to the Purchased Assets, free and clear of any
Encumbrances other than Permitted Encumbrances, and will have the legal
right and ability to transfer the Purchased Assets to NeoSan.
4.20 SURVIVAL PERIOD. The representations and warranties contained in this
Article 4 and any indemnification obligation of Lilly set forth in
Article 11 associated with such representations and warranties will
terminate on the one (1) year anniversary date of the date of
expiration or termination of the Manufacturing Agreement, provided that
any claims with respect thereto
24
that are timely brought prior to such termination will survive and
continue until their final resolution.
4.21 IMPLIED WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 4 AND
ARTICLE 6 OF THE MANUFACTURING AGREEMENT, LILLY MAKES NO REPRESENTATION
OR WARRANTY AS TO THE PRODUCT, COPYRIGHTS, THE LICENSED TECHNOLOGY, THE
ASSIGNED TRADEMARKS, ASSIGNED TRADE DRESS, THE MARKETING MATERIALS, THE
EXPIRED TRADEMARKS, BOOKS AND RECORDS, THE LICENSED TRADEMARKS AND
TRADE DRESS, NDAs OR THE ACTIVITIES, EXPRESS OR IMPLIED, EITHER IN FACT
OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND LILLY SPECIFICALLY
DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE AND WARRANTY OF NON-INFRINGEMENT. Without limiting
the foregoing, NeoSan acknowledges that it has not and is not relying
upon any implied warranty of merchantability, fitness for a particular
purpose, noninfringement, or upon any representation or warranty
whatsoever as to the future prospects (financial, regulatory or
otherwise), or the likelihood of commercial success of the Activities
after the date of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF NEOSAN
5.1 ORGANIZATION AND STANDING. NeoSan represents and warrants that NeoSan
is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
5.2 POWER AND AUTHORITY. NeoSan represents and warrants that (i) NeoSan has
all requisite corporate power and authority to execute, deliver, and
perform this Agreement and the other agreements and instruments to be
executed and delivered by it pursuant hereto and thereto and to
consummate the transactions contemplated herein and therein; (ii) the
execution, delivery, and performance of this Agreement by NeoSan does
not, and the consummation of the transactions contemplated hereby will
not, violate any provisions of NeoSan's organizational documents,
bylaws, any Applicable Law applicable to NeoSan, or any agreement,
mortgage, lease, instrument, order, judgment, or decree to which NeoSan
is a party or by which NeoSan is bound.
25
5.3 CORPORATE ACTION; BINDING EFFECT. NeoSan represents and warrants that
(i) NeoSan has duly and properly taken all action required by law, its
organizational documents, or otherwise, to authorize the execution,
delivery, and performance of this Agreement and the other instruments
to be executed and delivered by it pursuant hereto and thereto and the
consummation of the transactions contemplated hereby and thereby; and
(ii) this Agreement has been duly executed and delivered by NeoSan and
constitutes, and the other instruments contemplated hereby when duly
executed and delivered by NeoSan will constitute legal, valid, and
binding obligations of NeoSan enforceable against it in accordance with
its respective terms, except as enforcement may be affected by
bankruptcy, insolvency, or other similar laws.
5.4 GOVERNMENTAL APPROVAL. NeoSan represents and warrants that no consent,
approval, waiver, order or authorization of, or registration,
declaration or filing with, any Governmental or Regulatory Authority or
any other Third Person is required in connection with the execution,
delivery and performance of this Agreement, or any agreement or
instrument contemplated by this Agreement, by NeoSan or the performance
by NeoSan of its obligations contemplated hereby and thereby other than
(a) the filings required of both Parties pursuant to the HSR Act, and
(b) the information submissions required by the FDA with respect to the
NDAs.
5.5 BROKERAGE. NeoSan represents and warrants that no broker, finder or
similar agent has been employed by or on behalf of NeoSan, and no
Person with which NeoSan has had any dealings or communications of any
kind is entitled to any brokerage commission, finder's fee or any
similar compensation, in connection with this Agreement or the
transactions contemplated hereby.
5.6 NOT DEBARRED. NeoSan represents and warrants that NeoSan is not
debarred and has not and will not use in any capacity the services of
any Person debarred under subsections 306(a) or (b) of the Generic Drug
Enforcement Act of 1992. If at any time this representation and
warranty is no longer accurate, NeoSan will immediately notify Lilly of
such fact.
5.7 LITIGATION. NeoSan represents and warrants that there are no pending
or, to NeoSan`s knowledge as of the Effective Date, threatened
judicial, administrative or arbitral Actions or Proceedings pending as
of the date hereof against NeoSan which, either individually or
together with any other, will have a material adverse effect on the
ability of NeoSan to perform its obligations under this Agreement or
any agreement or instrument contemplated hereby.
5.8 NO OTHER OR IMPLIED WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN THIS
ARTICLE 5 AND ARTICLE 7 OF THE MANUFACTURING AGREEMENT, NEOSAN MAKES NO
OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
26
EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND
NEOSAN SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY
WARRANTIES.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
OF THE PARTIES
6.1 IMPLEMENTATION TEAM. The Parties will form a team (the "Implementation
Team") to oversee the activities contemplated by this Agreement. The
Implementation Team will be comprised of three (3) members from each
Party. Each Party will appoint a member representing each of
manufacturing, marketing/sales and regulatory. Either Party may change
its representative(s) on the Implementation Team at any time by
providing prior written notice to the other Party. Unless otherwise
agreed to by the Parties, after the Closing Date, the Implementation
Team will meet (in person or by telephone or video conference) at least
one (1) time each Calendar Quarter upon no less than thirty (30) days
prior written notice from one Party to the other to discuss any matters
arising out of a Party's performance (or non-performance) of its
obligations under this Agreement. The Implementation Team will
initially be responsible for creating detailed operational plans for
the transition contemplated by this Agreement; provided, however, that
the activities contemplated by the foregoing will not take place until
after the Closing Date to the extent doing so would be in violation of
Applicable Law. The detailed operational plans will include a time line
and clear understanding of roles and responsibilities contemplated by
this Agreement. The Implementation Team will also have responsibility
for coordinating effective communication of progress and issues that
arise between the Parties. Special meetings of the Implementation Team
may be called by either Party upon no less than thirty (30) days' prior
written notice to the other Party, which notice must be accompanied by
a written agenda of items to be discussed at such special meeting.
6.2 GOVERNMENTAL FILINGS. Lilly and NeoSan each agree to prepare and file
whatever filings, requests or applications are required to be filed
with any Governmental or Regulatory Authority in connection with the
transfer of rights in Article 3 of this Agreement and to cooperate with
one another as reasonably necessary to accomplish the foregoing,
including (i) the filings required of both Parties pursuant to the HSR
Act, (ii) the information submissions to the FDA provided for pursuant
to 21 C.F.R. ss. 314.72, and (iii) any necessary submissions to the DEA
that will facilitate the transfer of manufacturing capabilities from
Lilly to NeoSan or a contract manufacturer of NeoSan during the term of
the Manufacturing Agreement.
27
NeoSan will deliver to Lilly the information submission described in
(ii), above, on the Closing Date.
6.3 COMPLIANCE WITH LAW. NeoSan agrees and acknowledges that as owner of
the NDAs, it will have sole responsibility for, among other things,
adverse event reporting, product quality complaints, label maintenance,
other regulatory reporting obligations, payment of any and all product
establishment fees, and medical and technical inquiries. Lilly and
NeoSan each will keep all records and reports required to be kept by
Applicable Laws, and each will make its facilities available at
reasonable times during regular business hours for inspection by
representatives of governmental agencies. Lilly and NeoSan each will
notify the other within twenty-four (24) hours of receipt of any notice
or any other indication whatsoever of any FDA, DEA or other
governmental agency inspection, investigation or other inquiry, or
other notice or communication of any type from a governmental agency,
involving the manufacturing, selling, marketing, promoting,
co-promoting and co-marketing of the Product in the United States.
NeoSan and Lilly will cooperate with each other during any such
inspection, investigation or other inquiry including allowing upon
reasonable request a representative of the other to be present during
the applicable portions of any such inspection, investigation or other
inquiry and providing copies of all relevant documents. NeoSan and
Lilly will discuss any response to observations or notifications
received in connection with any such inspection, investigation or other
inquiry and each will give the other an opportunity to comment upon any
proposed response before it is made. In the event of disagreement
concerning the form or content of such response, however, Lilly will be
responsible for deciding the appropriate form and content of any
response with respect to any of its cited activities and NeoSan will be
responsible for deciding the appropriate form and content of any
response with respect to any of its cited activities.
6.4 EXPENSES. Lilly and NeoSan will each bear their own direct and indirect
expenses incurred in connection with the negotiation and preparation of
this Agreement and, except as set forth in this Agreement, the
performance of the obligations contemplated hereby.
6.5 REASONABLE EFFORTS. Lilly and NeoSan each hereby agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things reasonably necessary or proper to
make effective the transactions contemplated by this Agreement,
including such actions as may be reasonably necessary to obtain
approvals and consents of Governmental or Regulatory Authorities and
other Persons (including all applicable drug listing and NDA
notifications to the FDA and DEA identifying NeoSan as a distributor of
the Product); provided, however, that no Party will be required to (i)
pay money (other than as expressly required pursuant to this Agreement
or as implicitly required in order for a Party to
28
carry out its obligations hereunder), or (ii) assume any other material
obligation not otherwise required to be assumed by this Agreement.
6.6 PUBLICITY. The Parties agree that no publicity release or announcement
concerning the transactions contemplated hereby and under the
Manufacturing Agreement or, with respect to a NeoSan publicity release
or announcement, that includes the name of Lilly with respect to such
transaction, will be issued without the advance written consent of the
other, which will not be unreasonably withheld, except to the extent
such publicity release or announcement is after the later of the date
of (i) the last to be delivered to Lilly of the Loan Facility
Highly-Confident Letter and the Bond Financing Highly-Confident Letter
executed by B of A or (ii) the date that both Parties have made the
filings required by both Parties pursuant to the HSR Act, and is
substantially similar to, or whose relevant statements are consistent
with the statements in, the press release set forth in SCHEDULES 6.6
attached hereto. Notwithstanding the above, upon the later of the date
of (i) the last to be delivered to Lilly of the Loan Facility
Highly-Confident Letter and the Bond Financing Highly-Confident Letter
executed by B of A or (ii) the date that both Parties have made the
filings required by both Parties pursuant to the HSR Act (or such later
date as agreed to by the Parties), NeoSan may issue the press release
set forth at SCHEDULE 6.6. Notwithstanding anything in this Section 6.6
and Article 8 to the contrary, each Party may make filings or
disclosures that are required by Applicable Laws (as determined to be
so required by outside counsel for the disclosing Party) including
filings or disclosures required by or to the Securities and Exchange
Commission (and any other applicable securities exchanges) that discuss
the subject matter of this Agreement or the Manufacturing Agreement or
otherwise make reference to the other Party in any way whatsoever;
provided, however, that such Party provides the other Party with no
less than three (3) business days to review and comment on such
filings, or the relevant portions thereof, pertaining to the
transactions contemplated hereby or by the Manufacturing Agreement, and
such Party does not unreasonably reject the incorporation of such
comments into such filings; provided further, however, that such Party
will redact any Confidential Information of the other Party that, in
the opinion of such disclosing Party's outside counsel, is not required
by Applicable Laws from such filings or disclosures; provided further,
however, that, such Party will use commercially reasonable efforts to
obtain confidential treatment by such security exchanges with respect
thereto.
6.7 COOPERATION. If either Party becomes engaged in or participates in any
investigation, claim, litigation or other proceeding with any Third
Person, including the FDA and DEA, relating in any way to the
manufacturing, selling, marketing, promoting, co-marketing or
co-promoting the Product in the United States, the other Party will
cooperate in all reasonable respects with such Party in connection
therewith, including using its reasonable efforts to make available to
29
the other such employees who may be helpful with respect to such
investigation, claim, litigation or other proceeding, provided that,
for purposes of this provision, reasonable efforts to make available
any employee will be deemed to mean providing a Party with reasonable
access to any such employee at no cost for a period of time not to
exceed twenty-four (24) hours (e.g., three (3) eight (8) -hour business
days), and provided further that neither Party is required to disclose
any legally privileged documents or information to the other Party.
Thereafter, any such employee will be made available for such time and
upon such terms and conditions (including compensation) as the Parties
may mutually agree.
6.8 CONFLICTING RIGHTS. Neither Party will grant any right to any Third
Person which would violate the terms of or conflict with the rights
granted by such Party to the other Party pursuant to this Agreement.
6.9 DEEMED BREACH OF COVENANT. Neither Lilly nor NeoSan will be deemed to
be in breach of this Agreement to the extent such Party's breach is the
result of any action or inaction on the part of the other Party.
6.10 CUSTOMER ORDERS. Lilly will take such steps as may be reasonably
required to insure that all customer orders for Product received after
the Closing Date from customers in the United States are forwarded to
NeoSan in writing within forty-eight (48) hours after receipt by Lilly.
Lilly agrees that any customer in the United States ordering or
requesting any information with respect to the Product after the
Closing Date will be informed that NeoSan is now supplying the Product.
6.11 EXISTING CONTRACTS. NeoSan will fulfill all contractual pricing offered
by Lilly on Product only for a period of time sufficient to ensure that
Lilly is in compliance with its contractual obligation to a Third
Person for sale of Products in the United States ("Customer
Contracts"). Other than complying with these preexisting contractual
obligations, NeoSan will be free in its sole and absolute discretion
and without consultation with Lilly, to set its prices on Product
offered by NeoSan. Lilly and NeoSan agree to prorate as of the Closing
Date any amounts under the Customer Contracts in favor of Lilly with
respect to amounts which become due and payable after the Closing Date
to the extent the benefit is attributable to the period prior to the
Closing Date, and any amounts under the Customer Contracts in favor of
NeoSan with respect to amounts which are paid prior to the Closing Date
to the extent the benefit is attributable to the period subsequent to
the Closing Date.
6.12 NO ASSIGNMENT OR LICENSES OUTSIDE THE UNITED STATES. Notwithstanding
anything in this Agreement to the contrary, NeoSan acknowledges and
agrees that Lilly is not assigning or licensing to NeoSan the rights to
make, have made, distribute, use, sell, offer to sell, have
30
sold, import, market, co-market, promote or co-promote the Product
outside the United States, except for the non-exclusive rights to make
or have made Product outside of the United States solely for
importation and sale in the United States. The rights granted to NeoSan
in the United States will in no way limit Lilly's rights outside the
United States.
6.13 NEOSAN NEW PRODUCTS. During the three-year period beginning on the date
of receipt by Lilly of written notice from NeoSan that NeoSan has
initiated development activities related to NeoSan New Products (which
NeoSan must do within a reasonable time after initiating such
development activities), NeoSan will, at its sole cost and expense,
work diligently and using commercially reasonable efforts, consistent
with prudent business judgment and a balancing of important priorities
of NeoSan, based upon the existing business situation, to develop at
least two NeoSan New Products where in NeoSan's good faith opinion,
such development is technically feasible and commercially justifiable
("Commercially Attractive NeoSan New Products"), devoting the same
degree of attention and diligence to such efforts that it devotes to
such activities for its other products at a comparable stage in
development and of comparable commercial and development potential,
with the objective of developing such Commercially Attractive NeoSan
New Products for the United States as soon as commercially practicable,
provided that NeoSan may terminate such development activities at any
time in the event that it determines in good faith that such candidates
are unlikely to succeed in becoming Commercially Attractive NeoSan New
Products.
6.14 MEDICAID AND OTHER REBATES. The Parties will administer and pay all
rebates, chargebacks and other similar programs as follows:
(a) Lilly Sales Prior to Closing Date. Lilly will process
and be responsible for the administration and payment of all federal,
state and local managed care and other rebate programs, including
Medicaid/Medicare rebates and Obligations, as well as chargebacks for
the Product, in each case, related to Product that was sold by Lilly
prior to the Closing Date;
(b) Sales After the Closing Date. NeoSan will process and
be responsible for the administration and payment of all federal, state
and local managed care and other rebate programs in the United States,
including Medicaid/Medicare rebates and Obligations, as well as
chargebacks for the Product and NeoSan New Products, in each case,
related to Product and NeoSan New Product that is sold by NeoSan on or
after the Closing Date. If the Parties are unable to determine whether
a Product was sold by Lilly prior to the Closing Date or by NeoSan on
or after the Closing Date, then Lilly will be responsible for any and
all such rebates and chargebacks received during the sixty (60) day
period following the Closing Date, and NeoSan will be responsible
thereafter.
31
(c) Product Returns. NeoSan will be responsible for all
returns of Product sold on or after the Closing Date in the United
States, and Lilly will be responsible for returns of Product sold
before the Closing Date. If the Parties are unable to determine whether
a Product was sold by Lilly prior to the Closing Date or by NeoSan on
or after the Closing Date, in each case in the United States, then
Lilly will be responsible for all returns of such Product received
during the sixty (60) day period following the Closing Date, and NeoSan
will be responsible thereafter with respect to the United States.
6.15 RESPONSIBILITY FOR THE NDAS. On the Closing Date, Lilly will transfer
the NDAs to NeoSan. Following the Closing Date, NeoSan will be
responsible for and will fulfill all regulatory requirements with
respect to the Product that are imposed upon NeoSan as the owner of the
NDAs under Applicable Laws. NeoSan will provide Lilly with all
assistance that is reasonably necessary to effectuate such transfers.
Notwithstanding the sale and transfer of the NDAs, Lilly will complete
the assay validations and supplement the NDAs with respect to the
change of equipment in Lilly's Puerto Rico facility, all as further
described in SCHEDULE 6.15 attached hereto; provided, however, that if
Lilly subsequently determines in its reasonable discretion that
regulatory submissions identified in SCHEDULE 6.15 are not needed in
order to continue manufacturing the Product and the FDA does not
require such regulatory submissions, Lilly will have no obligation to
complete the activities described in this sentence or supplement the
NDA as described in SCHEDULE 6.15. Nothing in this Section 6.15 will be
construed as requiring Lilly to update or upgrade the NDAs to "state of
the art" conditions, or requiring Lilly to otherwise update the NDA.
Upon the Closing Date, NeoSan hereby grants to Lilly the right to
reference the NDAs for purposes of obtaining and/or maintaining
marketing authorizations outside of the United States.
6.16 INTELLECTUAL PROPERTY MAINTENANCE. Following the Closing, NeoSan will
have the sole right to file, prosecute and maintain, at its sole cost
and expense, (i) the Product Intellectual Property and (ii) any patent
applications or Patents that cover a NeoSan New Product(s) developed by
NeoSan or its Affiliates. Lilly will be responsible for and promptly
pay when due all fees necessary to and will otherwise maintain the
Licensed Trademark and Trade Dress (other than the Common Law Licensed
Trade Dress).
6.17 ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS.
(a) Right to Seek Relief. NeoSan will promptly notify
Lilly of any infringement or suspected infringement which may come to
its notice of any Licensed Technology or the Licensed Trademark and
Trade Dress, and will provide Lilly with any information with respect
thereto. Lilly will promptly notify NeoSan of any infringement or
suspected infringement which may come to its notice of any intellectual
property rights relating to the Product, including
32
the Product Intellectual Property, Licensed Technology, or the Licensed
Trademark and Trade Dress, and will provide NeoSan with any information
with respect thereto. In the event of any past, present or future
infringement by a Third Person of any intellectual property rights
relating to Copyrights, Assigned Trade Dress (only as it relates to an
infringement in the United States) or Assigned Trademarks, NeoSan will
have the sole right (but no obligation) to pursue any and all
injunctive relief, and any or all compensatory and other remedies and
relief (collectively, "Remedies") against such Third Person.
In the event of any infringement by a Third Person of any
intellectual property rights relating solely to Assigned Trade Dress
(as it relates to infringement outside the United States), Licensed
Technology or Licensed Trademark and Trade Dress, Lilly will have the
first right (but not the obligation) to pursue any and all Remedies
against such Third Person. Should Lilly determine not to pursue
Remedies with respect to any such intellectual property within thirty
(30) days after notice from NeoSan requesting Lilly to do so, then
NeoSan will have the right (but not the obligation) to pursue Remedies
against such Third Person inside the United States.
In the event of any infringement by a Third Person in the
United States of any intellectual property related to the Product or
NeoSan New Products other than that described in the preceding
sentences, NeoSan will have the first right (but not the obligation) to
pursue any and all Remedies against such Third Person. Should NeoSan
determine not to pursue Remedies with respect to any such intellectual
property within thirty (30) days after notice from Lilly requesting
NeoSan to do so, then Lilly will have the right (but not the
obligation) to pursue Remedies against such Third Person.
(b) Assistance and Cooperation. In the event that a Party
will pursue Remedies hereunder, the other Party will use all reasonable
efforts to assist and cooperate with the Party pursuing such Remedies.
Each Party will bear its own costs and expenses relating to such
pursuit. Any damages or other amounts collected will be distributed,
first, to the Party that pursued Remedies to cover its costs and
expenses and, second, to the other Party to cover its costs and
expenses, if any, relating to the pursuit of such Remedies; any
remaining amount will be distributed to the Party that pursued the
Remedies.
6.18 INFRINGEMENT OF THIRD PERSON RIGHTS. In the event that a Third Person
institutes a patent, trade secret, trademark or other infringement
suit, or a misappropriation or unfair competition suit in the United
States (including any suit claiming confusion, deception or dilution of
a trademark by the Assigned Trademarks, Assigned Trade Dress or
Licensed Trademark and Trade Dress or interference with any patent
claim (pending or issued)) against NeoSan or another Permitted Seller
during the term of this Agreement, alleging that the manufacture,
33
marketing, sale or use of the Product infringes one or more Patent,
trademark or other intellectual property rights held by such Third
Person or constitutes misappropriation or unfair competition, then
NeoSan will have the first right (but not the obligation), at its sole
expense, to assume direction and control of the defense of such claims
except to the extent such suit relates to the Assigned Trade Dress (as
it relates to an infringement outside of the United States), the
Licensed Technology, or the Licensed Trademark and Trade Dress, as to
which Lilly will have the first right (but not the obligation), at its
sole expense, to assume direction and control of the defense of such
claims. Should NeoSan or Lilly, as applicable, determine not to pursue
the defense of a particular claim within thirty (30) days after notice
from the other Party requesting NeoSan or Lilly, as applicable, to do
so, then the other Party will have the right (but not the obligation),
at its sole expense, to assume direction and control of such claims.
NeoSan will not have the right to settle or otherwise dispose of any
such claim with respect to the Assigned Trade Dress (as it relates to
an infringement outside of the United States), the Licensed Technology
or the Licensed Trademark and Trade Dress without the consent of Lilly,
which consent will not be unreasonably withheld.
6.19 SALES TRAINING. Lilly will have no obligation to provide sales training
to NeoSan.
6.20 NO LIENS. NeoSan will keep the Licensed Technology and Licensed
Trademark and Trade Dress free from all Encumbrances other than
Permitted Encumbrances.
6.21 MAINTENANCE OF ACTIVITIES PRIOR TO CLOSING. Except as otherwise set
forth in Section 6.25, from the date of this Agreement to the Closing
Date, Lilly will conduct the Activities in the ordinary course of
business and not enter into any new Contracts including the Product or
other Purchased Assets (a) giving any third Persons any rights, title
or interests in the Purchased Assets (other than sales of Products in
the ordinary course of business), or (b) creating any Encumbrances on
the foregoing other than Permitted Encumbrances. Lilly agrees that
after the date hereof, without NeoSan's prior written consent, which
will not be unreasonably withheld, it will not take any action with
respect to any Material Contract that would (x) extend the term of such
Material Contract with respect to any Product, (y) create or agree to
any additional obligations with respect to any Product other than price
adjustments in the normal course of business, or (z) otherwise
materially adversely affect NeoSan (other than to terminate any such
Material Contract in the ordinary course of business).
6.22 UNAVAILABLE CONSENTS.
(a) Notwithstanding anything to the contrary contained in
this Agreement, if the sale, assignment, transfer, conveyance or
delivery or attempted sale, assignment, transfer, conveyance or
delivery to NeoSan of any asset that would be a Purchased Asset is (i)
prohibited
34
by any Applicable Law or (ii) would require any authorizations,
approvals, consents or waivers from a Third Person or Governmental or
Regulatory Authority and such authorizations, approvals, consents or
waivers will not have been obtained prior to the Closing Date, then in
either case the Closing may proceed without the sale, assignment,
transfer, conveyance or delivery of such affected asset and this
Agreement will not constitute a sale, assignment, transfer, conveyance
or delivery of such asset; provided that nothing in this Section 6.22
will be deemed to waive the rights of NeoSan not to consummate the
transactions contemplated by this Agreement if the conditions to its
obligations set forth in Article 7 have not been satisfied or waived.
(b) In the event that the Closing proceeds without the
sale, assignment, transfer, conveyance or delivery of any such affected
asset set forth in Section 6.22(a), then (i) following the Closing, the
Parties will use their commercially reasonable best efforts, and
cooperate with each other, to obtain promptly such authorizations,
approvals, consents or waivers, and (ii) pending such authorization,
approval, consent or waiver, the Parties will cooperate with each other
in any mutually agreeable, reasonable and lawful arrangements designed
to provide to NeoSan the benefits of use of such asset and to Lilly the
benefits, including any indemnities, that, in each case, it would have
obtained had the asset been conveyed to NeoSan on the Closing Date;
provided, however, that such arrangement does not cause either Party to
be in breach of any obligation owed to a Third Person.
(c) If authorization, approval, consent or waiver for the
sale, assignment, transfer, conveyance or delivery of any such asset
not sold, assigned, transferred, conveyed or delivered on the Closing
Date is subsequently obtained, Lilly will assign, transfer, convey and
deliver such asset to NeoSan at no additional cost to NeoSan; provided,
however, that NeoSan has paid the full purchase price described in
Section 2.1, above.
6.23 GUARANTY. NeoSan will cause aaiPharma to execute a Guaranty in the form
attached hereto as Exhibit B (the "Guaranty").
6.24 FINANCIAL STATEMENTS. Lilly will deliver to NeoSan, at NeoSan's
expense, audited financial statements with respect to the Products in
the United States for calendar years 1999, 2000 and 2001 which are
compliant with the rules and regulations of the United States
Securities and Exchange Commission and will specifically include Net
Sales and gross margin of the Products in the United States (the
"Financial Statements"). NeoSan will pay the cost of the Financial
Statements regardless of whether the transactions contemplated by this
Agreement close.
35
6.25 FINANCING. NeoSan (or aaiPharma on NeoSan's behalf) will use its
commercially reasonable best efforts to initiate an offering to raise,
on commercially reasonable terms (for a comparably-sized company and a
comparably-sized financing transaction, including interest rate and
duration), the funds necessary to pay the purchase price described in
Section 2.1 and, pursuant to such offering, to deliver Offering
Memoranda to potential investors no later than February 21, 2002 (with
respect to the Offering Memoranda pertaining to the loan syndication
portion of the Transaction Financing (the "Loan Facility")) and March
1, 2002 (with respect to the Offering Memoranda pertaining to the bond
offering portion of the Transaction Financing (the "Bond Offering")).
NeoSan (or aaiPharma on NeoSan's behalf) will utilize its commercially
reasonable best efforts to close the financings described in both
Offering Memoranda (the "Transaction Financing") no later than March
15, 2002. The Transaction Financing will take the form of a syndicated
loan or bond offering, or any combination thereof. Notwithstanding
anything in this Agreement to the contrary, Lilly will be free to
discuss transactions related to the Product with Third Persons (but not
sign any binding agreements) until NeoSan (or aaiPharma on NeoSan's
behalf) closes the Transaction Financing for the purpose of having a
back-up purchaser for the asset should the Transaction Financing fail.
A prerequisite for NeoSan's distribution of the Offering Memoranda
pertaining to the Loan Facility to banks and other financial
institutions will be (i) Lilly's prior written approval of such
Offering Memoranda, such approval not to be unreasonably withheld, and
(ii) Bank of America's ("B of A") providing to NeoSan and aaiPharma
(and NeoSan will have provided a copy thereof to Lilly) a duly executed
"highly confident" letter with respect to the successful funding of
such Loan Facility at the closing of the Transaction Financing in a
form substantially similar to Exhibit C attached hereto (the "Loan
Facility Highly-Confident Letter"). A prerequisite for NeoSan's
distribution of the Offering Memoranda pertaining to the Bond Offering
to potential investors will be (i) Lilly's prior written approval of
such Offering Memoranda, such approval not to be unreasonably withheld,
(ii) B of A's providing to NeoSan and aaiPharma (and NeoSan will have
provided a copy thereof to Lilly) a duly executed "highly confident"
letter with respect to the successful funding of the Bond Offering at
the closing of the Transaction Financing in a form substantially
similar to Exhibit D attached hereto (the "Bond Financing
Highly-Confident Letter"), and (iii) that NeoSan (or aaiPharma on
NeoSan's behalf) will have been and will continue to actively progress
with the closing of the Loan Facility in good faith. In the event that
B of A fails to provide NeoSan (and NeoSan fails to provide Lilly with
a copy) with the Loan Facility Highly-Confident Letter by February 21,
2002, fails to provide the Parties with the Bond Financing
Highly-Confident Letter by March 1, 2002, or is prohibited from issuing
the Offering Memorandum pertaining to the Bond Offering as of March 1,
2002 because of its (or aaiPharma's on NeoSan's behalf) failure to
actively progress with the closing of the Loan Facility in good faith,
Lilly will have the
36
right (but not the obligation) to terminate this Agreement by written
notice to NeoSan at any time prior to B of A's delivery to Lilly of
such Loan Facility Highly-Confident Letter or such Bond Financing
Highly-Confident Letter or NeoSan's or aaiPharma's active progression
with the closing of the Loan Facility in good faith, as the case may
be. Unless aaiPharma is advised by its outside SEC counsel that, in
such counsel's opinion, earlier public disclosure or filing with the
Securities and Exchange Commission or relevant securities exchange with
respect to the transactions covered by this Agreement is required by
applicable law or regulation, NeoSan will not, and will cause aaiPharma
not to, make any such public disclosure or filing until the Parties
have received the Bond Financing Highly-Confident Letter. Following the
receipt of such Bond Financing Highly-Confident Letter or such legal
advice of an earlier public disclosure or filing obligation, whichever
comes first, NeoSan and aaiPharma will be free to make such legally
required public disclosures or filings, provided that such public
disclosures or filings will be limited to that which aaiPharma's
outside SEC counsel advises aaiPharma is legally required, in such
counsel's opinion, or which is otherwise permitted under Section 6.6 or
Article 8 (other than 8.2(g)) hereof at the relevant time, unless Lilly
consents to additional disclosure. Notwithstanding the foregoing,
NeoSan's right to make such public disclosure or filing pursuant to
this Section 6.25 is subject to the conditions set forth in the three
provisos at the end of Section 6.6 pertaining to disclosures that are
required by Applicable Laws. NeoSan will cause B of A to have in place
Confidentiality Agreements no less restrictive than those
confidentiality obligations customarily used by B of A with Third
Persons in other loan syndication transactions, with Third Persons to
which B of A or its representatives discuss the Loan Facility portion
of the Transaction Financing.
ARTICLE 7
CONDITIONS PRECEDENT TO THE CLOSING; CLOSING DATE
7.1 CONDITIONS PRECEDENT TO NEOSAN'S OBLIGATIONS. Subject to waiver as set
forth in Section 12.3, below, all obligations of NeoSan to close the
transactions contemplated under this Agreement are subject to the
fulfillment or satisfaction of each of the following conditions
precedent:
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Lilly contained in this
Agreement, the Manufacturing Agreement and in any schedule, certificate
or document delivered by Lilly to NeoSan pursuant to the provisions
hereof will have been true on the date hereof and will be true on the
Closing Date with the same effect as though such representations and
warranties were made as of such date.
37
(b) Compliance with this Agreement. Lilly will have
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or by
the Closing Date.
(c) Closing Certificate. NeoSan will have received a
certificate from Lilly, executed by an officer of Lilly, certifying in
such detail as NeoSan may reasonably request that the conditions
specified in Sections 7.1(a) and 7.1(b), above, have been fulfilled and
certifying that Lilly has obtained all consents and approvals required
by Section 7.1(e), below.
(d) No Threatened or Pending Litigation. Except for
Actions or Proceedings, injunctions or final judgments solely
pertaining to contracts or other obligations between NeoSan and any
Third Person on the Effective Date, no Action or Proceeding, or
injunction or final judgment relating thereto, will be threatened or be
pending against Lilly or NeoSan or its Affiliates before any
Governmental or Regulatory Authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated
hereby, and no investigation that might result in any such suit, action
or proceeding will be pending or threatened.
(e) Consents and Approvals. Lilly will have either
received notice from the Federal Trade Commission or the U.S.
Department of Justice of early termination of the waiting period
provided by the HSR Act or such waiting period will have expired with
no further action required or sought by the Competition Authority on
the part of Lilly or NeoSan.
(f) Quality Agreement. Lilly will have entered into the
Quality Agreement.
(g) Receipt of Funds. NeoSan (or aaiPharma or any of its
Affiliates) will have received an amount equal to the payment set forth
in Section 2.1 hereof as described in Section 6.25 hereof.
(h) Financial Statements. NeoSan will have received the
Financial Statements.
7.2 CONDITIONS PRECEDENT TO LILLY'S OBLIGATIONS. Subject to waiver as set
forth in Section 12.3, below, all obligations of Lilly to close the
transactions contemplated under this Agreement are subject to the
fulfillment or satisfaction of each of the following conditions
precedent:
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of NeoSan contained in this
Agreement, the Manufacturing Agreement, and in any schedule,
certificate or document delivered by NeoSan to Lilly pursuant to the
provisions hereof will have been true on the date hereof and will be
true on the Closing Date
38
with the same effect as though such representations and warranties were
made as of such date.
(b) Compliance with this Agreement. NeoSan will have
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or by
the Closing Date.
(c) Closing Certificate. Lilly will have received a
certificate from NeoSan, executed by an officer of NeoSan, certifying
in such detail as Lilly may reasonably request that the conditions
specified in Sections 7.2(a) and 7.2(b), above, have been fulfilled and
certifying that NeoSan has obtained all consents and approvals required
by Section 7.2(e), below.
(d) No Threatened or Pending Litigation. On the Closing
Date, no Action or Proceeding, or injunction or final judgment relating
thereto, will be threatened or be pending against Lilly or NeoSan or
any of its Affiliates before any Governmental or Regulatory Authority
in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation that might
result in any such suit, action or proceeding will be pending or
threatened.
(e) Consents and Approvals. NeoSan will have either
received notice from the Federal Trade Commission or the U.S.
Department of Justice of early termination of the waiting period
provided by the HSR Act or such waiting period will have expired with
no further action required or sought by the Federal Trade Commission or
the U.S. Department of Justice on the part of NeoSan.
(f) Quality Agreement and Guaranty. NeoSan will have
entered into the Quality Agreement and aaiPharma will have entered into
the Guaranty.
7.3 CLOSING DATE.
(a) Subject to Section 7.3(b), below, the closing of the
transactions contemplated by this Agreement will take place at 10:00
a.m., Indianapolis time, on the third (3rd) Lilly business day
following the later of (i) the date on which the last required FTC
notice of the early termination of the waiting period provided by the
HSR Act or such applicable waiting periods have expired with no further
action required of either Party, (ii) the day on which the last of the
certificates required by Sections 7.1(c) and 7.2(c) has been delivered
by one Party to the other, unless receipt of such certificate has been
waived in writing by the necessary Party, and (iii) the day that the
last condition precedents set forth in Sections 7.1 and 7.2 above has
been satisfied or waived by the necessary party, or on such other date
as may be
39
mutually agreed upon in writing by the Parties (the "Closing Date") at
the offices of Xxx Xxxxx and Company, Lilly Corporate Center,
Indianapolis, Indiana. Each Party hereby agrees to use its commercially
reasonable best efforts to deliver the certificates described in
Sections 7.1(c) and 7.2(c) to the other in a timely manner.
(b) If the closing of the transactions contemplated
hereby will not have taken place on or before sixty (60) days after the
Effective Date, or such later date as will be mutually agreed to in
writing by Lilly and NeoSan, because the conditions described in
Sections 7.1 and/or 7.2, above, have not been satisfied or waived, then
Lilly and NeoSan agree to discuss in good faith which substantive terms
set forth in this Agreement, the Manufacturing Agreement, or any
document attached hereto and thereto need to be modified as a result of
the delay in such closing; provided, however, that neither Party will
have an obligation to agree to such modification. Each Party hereby
agrees to use commercially reasonable best efforts to consummate the
transactions contemplated herein, as modified, on or before the
sixtieth (60th) day after the Effective Date; provided, however, that
if the Parties are unable to close the transactions contemplated hereby
within one-hundred twenty (120) days after the Effective Date, or such
later date as is mutually agreed to in writing by Lilly and NeoSan,
then any Party that is not in material default of its obligations under
this Agreement (including its obligation to deliver the certificates
described in Sections 7.1(c) in the case of Lilly and 7.2(c) in the
case of NeoSan) may terminate this Agreement upon written notice to the
other and each may pursue such other remedies as are available to it at
law, in equity or under this Agreement. If neither Party is then in
default of its obligations under this Agreement upon delivery of such
termination notice, then this Agreement will terminate and neither
Party will have any Obligation to the other with respect to such
termination. In all other circumstances, the Parties may each pursue
such remedies as are available to it at law, in equity or under this
Agreement. In addition to, but in no way in limitation of the
foregoing, Lilly may terminate this Agreement in its entirety if NeoSan
(or aaiPharma) has not initiated the Loan Facility portion of the
Transaction Financing by February 21, 2002 (unless such termination
right has not been exercised by written notice to NeoSan prior to the
commencement of the offering of the Loan Facility), the Bond Offering
Portion of the Transaction Financing by March 1, 2002 (unless such
termination right has not been exercised by written notice to NeoSan
prior to the commencement of the Bond Offering), and closed the
Transaction Financing by March 15, 2002 as more fully described in
Section 6.25. In the event Lilly terminates this Agreement for NeoSan's
or aaiPharma's failure to close the Transaction Financing by March 15,
2002, NeoSan will have no Obligation to Lilly with respect to such
termination provided that NeoSan and/or aaiPharma used commercially
reasonable best efforts to close the Transaction Financing by March 15,
2002 and NeoSan is not otherwise in breach of this Agreement.
40
7.4 DELIVERIES AT CLOSING.
(a) CLOSING DELIVERIES BY LILLY. At the Closing, Lilly
will deliver or cause to be delivered to NeoSan:
(i) physical possession of all tangible personal
property included in the Purchased Assets, including (A) the Regulatory
Approvals, and (B) the Marketing Materials;
(ii) the duly executed Xxxxx Xxxx of Sale;
(iii) copies of all Required Lilly Third Party
Consents obtained as of Closing Date;
(iv) a duly executed counterpart of the Quality
Agreement; and
(v) the certificate contemplated by Section
7.1(c), above, duly executed by an authorized representative of Lilly.
(b) CLOSING DELIVERIES BY NEOSAN. At the Closing, NeoSan
will deliver or cause to be delivered to Lilly:
(i) the payment required of it pursuant to
Section 2.1;
(ii) a duly executed counterpart of the Quality
Agreement;
(iii) the certificate contemplated by Section
7.2(c), above, duly executed by an authorized representative of NeoSan;
and
(iv) the Guaranty duly executed by an authorized
representative of aaiPharma.
7.5 SALES TAXES. Lilly will be responsible for all sales, use, stamp duty,
transfer, value added and other related or similar Taxes (excluding VAT
Taxes associated with Product delivered to NeoSan in accordance with
the Manufacturing Agreement), if any, arising out of the sale by Lilly
and its Affiliates of the Purchased Assets to NeoSan pursuant to this
Agreement or payable in connection with the transactions contemplated
hereby.
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ARTICLE 8
CONFIDENTIALITY
8.1 CONFIDENTIAL INFORMATION. The Parties agree that, for a ten (10)-year
period following the Effective Date, the Receiving Party will keep
completely confidential, will not publish or otherwise disclose and
will not use directly or indirectly for any purpose other than as
contemplated by this Agreement or the Manufacturing Agreement any such
Confidential Information of the Disclosing Party, whether such
Confidential Information was received by the Receiving Party prior to,
on or after the Effective Date. Notwithstanding anything to the
contrary herein, neither Party will be under any non-disclosure or
non-use obligation whatsoever with respect to its own Confidential
Information.
8.2 DISCLOSURE. Each Party may disclose the other Party's Confidential
Information to the extent that such disclosure is:
(a) made in response to a valid order or subpoena of a
court of competent jurisdiction or other governmental body of a country
or any political subdivision thereof of competent jurisdiction;
provided, however, that the Receiving Party will first have given
notice to the Disclosing Party and given the Disclosing Party a
reasonable opportunity to quash such order or subpoena and to obtain a
protective order requiring that the Confidential Information and
documents that are the subject of such order or subpoena be held in
confidence by such court or governmental body or, if disclosed, be used
only for purposes for which the order or subpoena was issued; provided
further, however, that if a disclosure order or subpoena is not quashed
or a protective order is not obtained, the Confidential Information
disclosed in response to such court or governmental order or subpoena
will be limited to that information which is legally required to be
disclosed in such response to such court or governmental order or
subpoena;
(b) otherwise as required by law, in the opinion of legal
counsel to the Receiving Party, as expressed in an opinion letter in
form and substance reasonably satisfactory to the Disclosing Party,
which will be provided to the Disclosing Party at least twenty-four
(24) hours prior to the Receiving Party's disclosure of the
Confidential Information pursuant to this Section 8.2;
(c) made by NeoSan as the Receiving Party to the
Governmental or Regulatory Authority as required to obtain or maintain
marketing approval for the Product or a NeoSan New Product, provided
that reasonable measure will be taken to assure confidential treatment
of such information;
42
(d) made by Lilly as Receiving Party to a Third Person as
may be necessary or useful in connection with the activities of Lilly
and its Affiliates following the Closing Date within the scope of the
Permitted Uses during the remaining term thereof or made by NeoSan as
the Receiving Party in connection with the activities of NeoSan, its
Affiliates and contractors in the manufacture or development and
commercialization of the Product and NeoSan New Product, provided that
the Receiving Party will in each case obtain from the proposed Third
Person recipient a written confidentiality agreement containing
confidentiality obligations no less onerous than those set forth in
this Section;
(e) made by the Receiving Party to a United States tax
authority;
(f) made by the Receiving Party to its Representatives;
provided, however, that (i) the Representative has a need to know such
Confidential Information for purposes of this Agreement or the
Manufacturing Agreement; (ii) the Receiving Party informs its
Representatives receiving Confidential Information of its confidential
nature; and (iii) the Receiving Party will be responsible for any
breach of this Section 8 by any of its Representatives to the same
extent as if the breach were by the Receiving Party; or
(g) by NeoSan and aaiPharma with respect to the Financial
Statements (and Confidential Information pertaining to the Products
that is required, in the opinion of their outside SEC counsel, to be
included in legally required filings or disclosures with the Securities
and Exchange Commission or that, in the opinion of their outside
counsel or of B of A, is commercially necessary in carrying out the
Transaction Financing and subsequent public exchange offer for the Bond
Offering (the "Subsequent Exchange Offer")) that are incorporated into,
included in, or attached to, (I) aaiPharma's filings with the
Securities and Exchange Commission pertaining to the entering into of
this Agreement by the Parties, at such times as aaiPharma makes such
filings as provided in Sections 6.6 or 6.25, subject to the conditions
set forth in the three provisos at the end of Section 6.6 pertaining to
disclosures that are required by Applicable Laws; provided, however,
that such disclosure of information for which aaiPharma receives
confidential treatment from the Securities and Exchange Commission will
only be made to the Securities and Exchange Commission, and provided
further that NeoSan and aaiPharma may use and disclose, without further
restriction, Confidential Information included in any such filings or
disclosures with the Securities and Exchange Commission which is not
accorded confidential treatment by the Securities and Exchange
Commission and, as a result, enters the public domain; and (II) the
Offering Memoranda and other documents pertaining to the Transaction
Financing and Subsequent Exchange Offer, (A) at any time (with respect
to recipients who have entered into Confidentiality Agreements no less
restrictive than those confidentiality obligations customarily used by
B of A with Third
43
Persons in other similar transactions), and (B) at and after the time
set forth in Section 6.25 (i.e., following the receipt of such Bond
Financing Highly-Confident Letter or such legal advice of an earlier
public disclosure or filing obligation (subject to the conditions set
forth in Section 6.25), whichever comes first) (with respect to the
Offering Memoranda and other documents related to the Bond Offering and
Subsequent Exchange Offer) to potential investors; provided, however,
that such disclosures will only be made as permitted by and within the
scope of Section 6.25.
8.3 NOTIFICATION. The Receiving Party will notify the Disclosing Party
immediately, and cooperate with the Disclosing Party as the Disclosing
Party may reasonably request, upon the Receiving Party's discovery of
any loss or compromise of the Disclosing Party's Confidential
Information.
8.4 REMEDIES. Each Party agrees that the unauthorized use or disclosure of
any Confidential Information by the Receiving Party in violation of
this Agreement or any other agreement forming a part of this
transaction will cause severe and irreparable damage to the Disclosing
Party. In the event of any violation of this Article 8, the Receiving
Party agrees that the Disclosing Party will be authorized and entitled
to obtain from any court of competent jurisdiction injunctive relief,
whether preliminary or permanent, without the necessity of proving
irreparable harm or monetary damages, as well as any other relief
permitted by applicable law. The Receiving Party agrees to waive any
requirement that the Disclosing Party post bond as a condition for
obtaining any such relief. Except as otherwise limited pursuant to
Section 11.7, below, the rights provided in the immediately preceding
sentences will be cumulative and in addition to any other rights or
remedies that may be available to Disclosing Party. Nothing in this
Section is intended, or should be construed, to limit a Party's right
to preliminary and permanent injunctive relief or any other remedy for
a breach of any other provision of this Agreement.
ARTICLE 9
TERMINATION
9.1 TERMINATION PRIOR TO THE CLOSING. Anything herein to the contrary
notwithstanding, this Agreement may be terminated as follows prior to
the Closing Date:
(a) Termination for Insolvency. Each Party may
immediately terminate this Agreement by providing written notice to the
other Party if the other Party (or, in the case of NeoSan, an Affiliate
of NeoSan) is declared insolvent or bankrupt by a court of competent
jurisdiction, or a voluntary petition of bankruptcy is filed in any
court of competent jurisdiction
44
by the other Party (or, in the case of Neosan, an Affiliate of NeoSan),
or an involuntary petition for relief under the United States
Bankruptcy Code is filed in a court of competent jurisdiction against
the other Party (or, in the case of NeoSan, an Affiliate of NeoSan)
which is not dismissed within thirty (30) days of its filing, or the
other Party (or, in the case of NeoSan, an Affiliate of NeoSan) makes
or executes any assignment for the benefit of creditors.
(b) Termination for Default. Either Party may terminate
this entire Agreement because of a material breach or material default
of this Agreement by the other Party as follows: The terminating Party
will give the other Party prior written notice thereof, specifying in
reasonable detail the alleged material breach or material default, and
if such alleged material breach or material default continues
unremedied for a period of thirty (30) days with respect to monetary
breaches or defaults or sixty (60) days with respect to non-monetary
material breaches or material defaults after the date of receipt of the
notification or, if the non-monetary material breach or material
default reasonably cannot be corrected or remedied within sixty (60)
days, then if (i) the defaulting Party has not commenced remedying said
material breach or material default with said sixty (60) days and be
diligently pursuing completion of same, and (ii) said material breach
or material default has not been corrected or remedied within
one-hundred twenty (120) days, then such terminating Party may
immediately terminate this Agreement by again providing written
notification to the defaulting Party. Except as otherwise limited
pursuant to Section 11.7 of this Agreement and Section 11.2 of the
Manufacturing Agreement, this Section 9.1(b) will not be exclusive and
will not be in lieu of any other remedies available to a Party hereto
for any breach or default hereunder on the part of the other Party.
9.2 TERMINATION FOLLOWING CLOSING. Following the Closing Date and the
payment by NeoSan of the $211,400,000 to be paid pursuant to Section
2.1, this Agreement may not be terminated by either Party, except that
Lilly may suspend the licenses granted pursuant to Sections 3.2 and 3.3
utilizing the procedures set forth in Section 9.1(b) as a result of any
breach by NeoSan in the payment of Royalty Payments owed with respect
to a NeoSan New Product in the United States only to the extent such
licenses relate to the affected NeoSan New Product therein (but will
have no such effect with respect to any Products or other NeoSan New
Products in the United States and will not constitute a material breach
of this Agreement or give Lilly any rights to terminate any rights of
NeoSan hereunder whatsoever other than the foregoing express suspension
with respect to the relevant NeoSan New Product) until and unless
NeoSan pays Lilly any Royalty Payments so owed (including with respect
to relevant Net Sales of such NeoSan New Product during any period of
suspension), plus accrued interest as provided in Section 2.6, at which
time such licenses will be automatically reinstated.
45
Except as otherwise set forth in this Section 9.2, the Parties agree
that the sole and exclusive remedies following the Closing Date will be
to seek injunctive relief to require compliance by the breaching Party
and relief to seek damages (subject to Section 11.7) with respect to
such breach.
9.3 TERMINATION OF SUBLICENSES. Any sublicenses granted by NeoSan under
this Agreement with respect to the Licensed Technology or License
Trademark and Trade Dress will provide for immediate termination (or
suspension, as the case may be) upon termination (or suspension) of
this Agreement or the licenses granted in Sections 3.2 and 3.3, as the
case may be, to the same, and only to the same, extent as such
termination (or suspension).
9.4 CONTINUING OBLIGATIONS. Termination of this Agreement for any reason
will not relieve the Parties of any antecedent breach of the provisions
of this Agreement or any obligation accruing prior thereto and, subject
to Section 11.7, below, will be without prejudice to the rights and
remedies of either Party with respect to any antecedent breach of the
provisions of this Agreement. Without limiting the generality of the
foregoing and in addition to the foregoing, no termination of this
Agreement, whether by lapse of time or otherwise, will serve to
terminate the rights and obligations under Section 9.4 and Articles 8,
11 and 12 hereof, and such obligations will survive any such
termination.
9.5 NON-EXCLUSIVE REMEDIES. Except as otherwise limited pursuant to Section
11.7, below, the remedies set forth in this Article 9 or elsewhere in
this Agreement will be in addition to, and will not be to the exclusion
of, any other remedies available to the Parties at law, in equity or
under this Agreement.
ARTICLE 10
ASSUMPTION OF LIABILITIES BY NEOSAN
Except as otherwise provided in this Agreement, NeoSan hereby
assumes and agrees, in each case, following the Closing Date, to bear
and be responsible for and to perform and satisfy all responsibilities,
duties (including compliance with all Applicable Laws), obligations,
claims, Damages, liabilities, debts, burdens and problems of any nature
whatsoever (whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated,
matured or unmatured, determinable or undeterminable and due or to
become due) (collectively, the "Obligations") to the extent arising
following the Closing Date from NeoSan's ownership, licensing,
operation and/or use of the Product Intellectual Property, the
Marketing Materials, the Licensed Trademark and Trade Dress, the
46
NDAs, Books and Records and the Licensed Technology, as well as those
associated directly or indirectly with the manufacturing (but only to
the extent the Product has been manufactured by NeoSan or its
contractor (other than Lilly)), distributing, marketing, promoting,
selling or using the Product from and after the Closing Date, including
all recalls, all warranty claims and all product liability claims
(without regard to the nature of the causes of action alleged or
theories of recovery asserted) arising in connection with Product sold
on or after the Closing Date, except for those Obligations with respect
to which Lilly is providing indemnification pursuant to the provisions
of Section 11.1 of this Agreement, which Obligations will remain the
responsibility of Lilly as set forth herein. All of the foregoing are
hereinafter collectively referred to as the "Assumed Liabilities."
Notwithstanding the foregoing, NeoSan will not be deemed to, and does
not, assume the Excluded Liabilities.
ARTICLE 11
INDEMNIFICATION; INSURANCE
11.1 INDEMNIFICATION BY LILLY. Lilly will indemnify and hold NeoSan (and its
Affiliates, and its and its Affiliates' directors, officers, and
employees) harmless from and against any and all Damages incurred or
suffered by NeoSan (and its Affiliates, and its and its Affiliates'
directors, officers and employees) to the extent caused by or arising
out of or in connection with:
(a) any breach of any representation or warranty made by
Lilly in this Agreement or the Manufacturing Agreement;
(b) any failure to perform duly and punctually any
covenant, agreement or undertaking on the part of Lilly contained in
this Agreement or the Manufacturing Agreement;
(c) any Excluded Liabilities;
(d) Lilly's failure to comply in all material respects
with Applicable Laws in connection with the performance of its
obligations hereunder or the Manufacturing Agreement;
(e) the negligence, gross negligence or willful
misconduct of Lilly, its Affiliates, or its or its Affiliates'
employees, agents or contractors (other than NeoSan); and
(f) Lilly's and its Affiliates' conduct of Activities
prior to the Closing Date, including the material compliance of such
Activities pursuant to Applicable Law or applicable obligations
pursuant to Contracts.
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11.2 INDEMNIFICATION BY NEOSAN. NeoSan will indemnify and hold Lilly (and
its Affiliates and its and its Affiliates' directors, officers and
employees) harmless from and against any and all Damages incurred or
suffered by Lilly (and its Affiliates and its and its Affiliates'
directors, officers and employees) to the extent caused by or arising
out of or in connection with:
(a) any breach of any representation or warranty made by
NeoSan in this Agreement or the Manufacturing Agreement;
(b) any failure to perform duly and punctually any
covenant, agreement or undertaking on the part of NeoSan contained in
this Agreement or the Manufacturing Agreement;
(c) any Assumed Liabilities;
(d) any NeoSan New Product or assets related to the
NeoSan New Products infringing or violating the patent rights or other
intellectual property rights of Third Persons;
(e) the manufacturing, handling, possession, marketing,
distribution, promotion, sale, importation or use of the Product by
NeoSan or a Permitted Seller after the Closing Date including any Third
Person claim alleging breach of any express or implied warranties of
merchantability or fitness for a particular purpose or asserting strict
liability, except to the extent such Damage is caused by Lilly Error
(as defined in the Manufacturing Agreement), by a breach of this
Agreement or the Manufacturing Agreement by Lilly or is an Excluded
Liability;
(f) NeoSan's failure to comply in all material respects
with Applicable Laws in connection with the performance of its
obligations hereunder or under the Manufacturing Agreement or NeoSan's
failure to comply with Applicable Laws relating to its using,
importing, distributing, marketing, promoting and selling of the
Product or NeoSan New Products on or following the Closing Date;
(g) the handling, possession, marketing, distribution,
promotion, sale, importation or use of any NeoSan New Product by NeoSan
or any other Permitted Seller, including any Third Person claim
alleging breach of any express or implied warranties of merchantability
or fitness for a particular purpose or asserting strict liability; and
(h) the negligence, gross negligence or willful
misconduct of NeoSan, its Affiliates or its or its Affiliates'
employees, agents or contractors (other than Lilly).
11.3 NOTICE AND OPPORTUNITY TO DEFEND. Promptly after receipt by a Party
hereto of notice of any claim which could give rise to a right to
indemnification pursuant to Section 11.1 or 11.2,
48
such Party (the "Indemnified Party") will give the other Party (the
"Indemnifying Party") written notice describing the claim in reasonable
detail. The failure of an Indemnified Party to give notice in the
manner provided herein will not relieve the Indemnifying Party of its
obligations under this Article 11, except to the extent that such
failure to give notice materially prejudices the Indemnifying Party's
ability to defend such claim. The Indemnifying Party will have the
right, at its option, to compromise or defend, at its own expense and
by its own counsel, any such matter involving the asserted liability of
the Party seeking such indemnification. The assumption of the defense
of a claim by the Indemnifying Party will be construed as a binding
acknowledgement that the Indemnifying Party is liable to indemnify any
indemnitee for Damages in respect to such claim. If the Indemnifying
Party undertakes to compromise or defend any such asserted liability,
it will promptly (and in any event not more than ten (10) business days
after receipt of the Indemnified Party's original notice) notify the
Indemnified Party in writing of its intention to do so, and the
Indemnified Party agrees to cooperate fully with the Indemnifying Party
and its counsel in the compromise or defense against any such asserted
liability, provided that the Indemnified Party is not obligated to
disclose legally privileged documents or information in such
cooperation. All reasonable costs and expenses incurred in connection
with such cooperation will be borne by the Indemnifying Party. If the
Indemnifying Party elects not to compromise or defend the asserted
liability, fails to timely notify the Indemnified Party of its election
to compromise or defend as herein provided, fails to admit its
obligation to indemnify under this Agreement or the Manufacturing
Agreement with respect to the claim, or, if in the reasonable opinion
of the Indemnified Party, the claim could result in the Indemnified
Party becoming subject to injunctive relief or relief (other than the
payment of money damages) that could materially adversely affect the
ongoing business of the Indemnified Party, the Indemnified Party will
have the right, at its option, to pay, compromise or defend such
asserted liability by its own counsel and its reasonable costs,
expenses, and any payment made therewith will be included as part of
the indemnification obligation of the Indemnifying Party hereunder,
where such indemnification obligation exists hereunder. Notwithstanding
the foregoing, neither the Indemnifying Party nor the Indemnified Party
may settle or compromise any claim without consent of the other where
such settlement or compromise would impose injunctive obligations on
the non-settling or non-compromising Party or any Damages on the
non-settling or non-compromising Party that are not subject to
indemnification hereunder; provided, however, that consent to
settlement or compromise will not be unreasonably withheld. In any
event, the Indemnified Party and the Indemnifying Party may
participate, at their own expense (or at the Indemnifying Party's
expense, in the circumstances described above (i.e., if the
Indemnifying Party elects not to compromise or defend the asserted
liability where such indemnification obligation exists hereunder)), in
the defense of such asserted liability. If the
49
Indemnifying Party chooses to defend any claim, the Indemnified Party
will make available to the Indemnifying Party any non-privileged books,
records or other documents within its control that are necessary or
appropriate for such defense; provided, however, any such books,
records or other documents within the control of the Indemnified Party
which are made available to the Indemnifying Party hereunder will be
held in strict confidence by the Indemnifying Party (except to the
extent disclosure is reasonably necessary for the defense of such
claim) and will be disclosed by the Indemnified Party to the
Indemnifying Party only to the extent that such books, records or other
documents relate to the claim.
Notwithstanding anything to the contrary in this Section 11.3,
(a) the Party conducting the defense of a claim will (1) keep the other
Party informed on a reasonable and timely basis as to the status of the
defense of such claim (but only to the extent such other Party is not
participating jointly in the defense of such claim), and (2) conduct
the defense of such claim in a prudent manner, and (b) to the extent
the Indemnifying Party has elected to defend a claim, the Indemnifying
Party will not cease to defend such claim without the prior written
consent of the Indemnified Party (which consent will not be
unreasonably withheld).
11.4 INDEMNIFICATION PAYMENT OBLIGATION. Notwithstanding anything in this
Agreement to the contrary, Lilly and NeoSan will have no obligations
under subsections 11.1(a) and 11.2(a), respectively, of this Agreement
and as incorporated by reference in the Manufacturing Agreement to
indemnify the other Party (or its Affiliates or its or its Affiliates'
directors, officers and employees) until the cumulative aggregate
amount of Damages incurred or suffered by such other Party (or its
Affiliates or its or its Affiliates' directors, officers and employees)
which Lilly or NeoSan, as the case may be, is otherwise subject to
under this Agreement and the Manufacturing Agreement exceeds one
hundred thousand US Dollars (US$100,000) (the "Deductible Amount"), at
which time Lilly or NeoSan will have the obligation under subsections
11.1(a) and 11.2(a), respectively, of this Agreement and as
incorporated by reference in the Manufacturing Agreement to indemnify
the other Party (or its Affiliates or its or its Affiliates' directors,
officers and employees) only for Damages in excess of the Deductible
Amount.
11.5 INDEMNIFICATION PAYMENT ADJUSTMENTS. The amount of any Damages for
which indemnification is provided under this Article 11 will be reduced
by the net insurance proceeds received and any other amount recovered,
if any, by the Indemnified Party with respect to any Damages; provided,
however, that the foregoing will not under any circumstances reduce the
Damages for which either Party is obligated to indemnify the other to
the extent the insurance proceeds received result from a self-insurance
program or are required to be repaid to the insurer upon recovery of
Damages; provided, however, that to the extent that an insurance
50
claim would be made under a self-insurance program, an Indemnified
Party will not be subject to an obligation to pursue an insurance claim
relating to any Damages for which indemnification is sought hereunder,
and provided further that the Indemnifying Party will reimburse the
Indemnified Party for the present value of any increased premiums
directly attributable to such claims for the five year period following
such increase, discounted at a 15% discount rate. To the extent the
preceding sentence is applicable, if any Indemnified Party will have
received any payment pursuant to this Article 11 with respect to any
Damages and will subsequently have received insurance proceeds or other
amounts with respect to such Damages, then such Indemnified Party will
pay to the Indemnifying Party an amount equal to the difference (if
any) between (a) the sum of the amount of those insurance proceeds or
other amounts received and the amount of the payment by such
Indemnifying Party pursuant to this Article 11 with respect to such
Damages and (b) the amount necessary to fully and completely indemnify
and hold harmless such Indemnified Party from and against such Damages;
provided, however, that in no event will such Indemnified Party have
any obligation pursuant to this sentence to pay to such Indemnifying
Party an amount greater than the amount of the payment by such
Indemnifying Party pursuant to this Article 11 with respect to such
Damages.
11.6 INDEMNIFICATION PAYMENT. Upon the final determination of liability and
the amount of the indemnification payment under this Article 11, the
Indemnifying Party will pay to the Indemnified Party, within ten (10)
business days after such determination, the amount of any claim for
indemnification made hereunder.
11.7 LIMITATION OF LIABILITY. EXCEPT FOR (i) THE COSTS OF RECALL ENUMERATED
IN SECTION 10.3 OF THE MANUFACTURING AGREEMENT TO THE EXTENT SUCH COSTS
CONSTITUTE INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES, AND (ii) WITH RESPECT TO DAMAGES INCURRED BY THIRD PERSONS FOR
WHICH A PARTY HERETO OTHERWISE HAS AN INDEMNIFICATION OBLIGATION
PURSUANT TO SECTION 11.1 OR SECTION 11.2 OF THIS AGREEMENT OR SECTION
11.1 OF THE MANUFACTURING AGREEMENT, IN NO EVENT WILL EITHER PARTY BE
LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST
PROFITS) OR PUNITIVE DAMAGES, HOWEVER CAUSED OR UPON ANY THEORY OF
LIABILITY (INCLUDING A PARTY'S OR ITS AFFILIATES' OWN NEGLIGENCE, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OR THE NEGLIGENCE, GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF A PARTY'S OR A PARTY'S AFFILIATES' EMPLOYEES,
AGENTS OR CONTRACTORS), ARISING OUT OF THIS AGREEMENT OR THE
PERFORMANCE OF, OR THE FAILURE TO PERFORM, ANY OBLIGATION(S) SET FORTH
HEREIN.
51
NOTWITHSTANDING THE FOREGOING, A PARTY'S AGGREGATE LIABILITY TO THE
OTHER PARTY UNDER THIS AGREEMENT AND THE MANUFACTURING AGREEMENT WITH
RESPECT TO ALL INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING
LOST PROFITS) OR PUNITIVE DAMAGES INCURRED BY THIRD PARTIES FOR WHICH
SUCH PARTY HERETO OTHERWISE HAS AN INDEMNIFICATION OBLIGATION PURSUANT
TO SECTION 11.1 OR SECTION 11.2 OF THIS AGREEMENT OR SECTION 11.1 OF
THE MANUFACTURING AGREEMENT WILL BE LIMITED TO FIVE MILLION US DOLLARS
($5,000,000).
11.8 INSURANCE. NeoSan will maintain at its own expense, with a reputable
insurance carrier reasonably acceptable to Lilly, insurance coverage
for NeoSan, written on a claims made basis, which will name Lilly as an
additional insured, including errors and omissions insurance and
comprehensive general liability insurance for claims for damages
arising from bodily injury (including death) and property damages
arising out of acts or omissions of NeoSan, which will be specifically
endorsed to name Lilly as an additional insured. Minimum limits of such
insurance (not warranted to be necessarily sufficient for the purposes
of NeoSan's obligation under this Agreement or the Manufacturing
Agreement) will be ten million US Dollars (US$10,000,000) annual
aggregate coverage. Maintenance of such insurance coverage will not
relieve NeoSan of any responsibility under this Agreement or the
Manufacturing Agreement for damage in excess of insurance limits or
otherwise. NeoSan will provide Lilly with a certificate from the
insurer(s), evidencing such insurance coverage.
11.9 SURVIVAL. Each Indemnified Party's rights under Article 11 will not be
deemed to have been waived or otherwise affected by such Indemnified
Party's waiver of the breach of any representation, warranty, agreement
or covenant contained in or made pursuant this Agreement or the
Manufacturing Agreement, unless such waiver expressly and in writing
also waives any or all of the Indemnified Party's right under Article
11.
ARTICLE 12
MISCELLANEOUS
12.1 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and will
inure to the benefit of the Parties hereto and their respective
successors and assigns; provided that NeoSan may only assign this
Agreement as follows:
(a) NeoSan may freely make such assignments in NeoSan's
sole discretion following the payment of the
$211,400,000 pursuant to Section 2.1, for assignments
52
wherein NeoSan remains liable for the assignee's
performance hereunder; and
(b) NeoSan may make such assignments following such
payment only with Lilly's consent, which may not be
unreasonably withheld, for assignments wherein NeoSan
does not remain liable for the assignee's performance
hereunder.
12.2 NOTICES. Unless otherwise stated in this Agreement as to the method of
delivery, all notices or other communications required or permitted to
be given hereunder will be in writing and will be deemed to have been
duly given if delivered by hand, courier, facsimile or if mailed first
class, postage prepaid, by registered or certified mail, return receipt
requested (such notices will be deemed to have been given on the date
delivered in the case of hand delivery or delivery by courier, on the
date set forth in the confirmation sheet in the case of facsimile
delivery, and on the fifth business day following the date of post xxxx
in the case of delivery by mail) as follows:
If to Lilly, as follows:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Executive Vice President, Pharmaceutical Products
With a copy to:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attn: General Counsel
If to NeoSan, as follows:
NeoSan Pharmaceuticals Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Mr. Xxxxx Xxxxxx, President
With copies to:
aaiPharma Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
53
Attn: Xxxxxxx X. Xxxxxxx, General Counsel
Attn: Xx. Xxxxxx Xxxxxxxx, President
or in any case to such other address or addresses as hereafter will be
furnished in a written notice as provided in this Section 12.2 by any
Party hereto to the other Party.
12.3 WAIVER. Any term or provision of this Agreement may be waived at any
time by the Party entitled to the benefit thereof only by a written
instrument executed by such Party. No delay on the part of Lilly or
NeoSan in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any waiver on the part of either
Lilly or NeoSan of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder, nor will any
single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
12.4 ENTIRE AGREEMENT. This Agreement, the Manufacturing Agreement, each of
their appendices, exhibits, schedules and certificates and all
documents and certificates delivered in connection herewith and
therewith constitute the entire agreement between the Parties with
respect to the subject matter hereof and supersede all prior agreements
or understandings of the Parties relating thereto.
12.5 AMENDMENT. This Agreement may be modified or amended only by written
agreement of the Parties hereto signed by authorized representatives of
the Parties.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original but all of which
together will constitute a single instrument.
12.7 GOVERNING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of New York excluding any choice
of law rules that may direct the application of the law of another
state.
12.8 CAPTIONS. All section titles or captions contained in this Agreement
and in any exhibit, schedule or certificate referred to herein or
annexed to this Agreement are for convenience only, will not be deemed
a part of this Agreement and will not affect the meaning or
interpretation of this Agreement.
12.9 NO THIRD-PERSON RIGHTS. No provision of this Agreement will be deemed
or construed in any way to result in the creation of any rights or
obligation in any Person not a Party to this Agreement (except for the
rights of a Party's Affiliates and its and its Affiliates' directors,
54
officers and employees to receive indemnification from the other Party
hereunder and except for rights of permitted assignees hereunder
pursuant to Section 12.1).
12.10 CONSTRUCTION. This Agreement will be deemed to have been drafted by
both Lilly and NeoSan and will not be construed against either Party as
the draftsperson hereof. Unless the context of this Agreement otherwise
requires: (a) words of any gender include each other gender; (b) words
using the singular or plural number also include the plural or singular
number, respectively, (c) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; (d) the
terms "Article" or "Section" refer to the specified Article or Section
of this Agreement; and (e) the term "including" or "includes" means
"including without limitation" or "includes without limitation."
Whenever this Agreement refers to a number of days, such number will
refer to calendar days unless business days are specified.
12.11 APPENDICES, EXHIBITS, SCHEDULES AND CERTIFICATES. Each appendix,
exhibit, schedule and certificate attached hereto is incorporated
herein by reference and made a part of this Agreement.
12.12 NO JOINT VENTURE. Nothing contained herein will be deemed to create any
joint venture or partnership between the Parties hereto, and, except as
is expressly set forth herein, neither Party will have any right by
virtue of this Agreement to bind the other Party in any manner
whatsoever.
12.13 SEVERABILITY. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective while
this Agreement remains in effect, the legality, validity and
enforceability of the remaining provisions will not be affected
thereby.
12.14 FORCE MAJEURE. If either Party is prevented from complying, either
totally or in part, with any of the terms or provisions set forth
herein by reason of force majeure, including, by way of example and not
of limitation, fire, flood, explosion, storm, strike, lockout or other
labor dispute, riot, war, rebellion, accidents, acts of God, acts of
governmental agencies or instrumentalities, failure of suppliers or any
other similar or dissimilar cause, in each case to the extent beyond
its control despite its commercially reasonable best efforts to avoid,
minimize, and resolve such cause as promptly as possible, said Party
will (a) provide written notice of same to the other Party and (b)
subject to its following obligations with respect to said Party's
efforts to remove the disability, its obligations that are prevented
from compliance by such force majeure are suspended, without liability,
during such period of force majeure. Said notice will be provided
within five (5) business days of the occurrence of such event and will
identify the requirements of this Agreement
55
or such of its obligations as may be affected. The Party prevented from
performing hereunder will use commercially reasonable best efforts to
remove such disability as promptly as possible and will continue
performance whenever such causes are removed. The Party so affected
will give to the other Party a good faith estimate of the continuing
effect of the force majeure condition and the duration of the affected
Party's nonperformance. If the Closing Date has not occurred and the
period of any previous actual nonperformance of Lilly because of Lilly
force majeure conditions plus the anticipated future period of Lilly
nonperformance because of such conditions will exceed an aggregate of
one hundred twenty (120) days within any one year period, NeoSan may
terminate this Agreement immediately by written notice to Lilly. If the
Closing Date has not occurred and the period of any previous actual
nonperformance of NeoSan because of NeoSan force majeure conditions
plus the anticipated future period of NeoSan nonperformance because of
such conditions will exceed an aggregate of one hundred twenty (120)
days within any one year period, Lilly may terminate this Agreement
immediately by written notice to NeoSan. When such circumstances as
those contemplated herein arise, the Parties will discuss in good
faith, what, if any, modification of the terms set forth herein may be
required in order to arrive at an equitable solution.
56
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
XXX XXXXX AND COMPANY
By: /s/ Xxxx x. Xxxxxxxxxx
---------------------------------
Printed Name: Xxxx x. Xxxxxxxxxx
Title: Executive Vice President
NEOSAN PHARMACEUTICALS INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Xx. Xxxxxx Xxxxxxxx
President
57
