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Exhibit 10.12
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of December 13, 1995 by and among Mallinckrodt Chemical, Inc.
("Mallinckrodt"), a Delaware corporation, King Pharmaceuticals, Inc. ("King"), a
Tennessee corporation, and King Pharmaceuticals of Nevada, Inc. ("King-Nevada"),
a Nevada corporation.
WITNESSETH, THAT:
WHEREAS, subject to the terms of this Agreement and the covenants,
representations and promises of King set forth therein, Mallinckrodt desires to
purchase and King-Nevada wishes to sell all of its right, title and interest in
and to its APAP/hydrocodone bitartrate dosage forms, as hereinafter more fully
described; and
WHEREAS, subject to the terms of this Agreement and the covenants,
representations and promises of King set forth therein, Mallinckrodt desires to
purchase and King-Nevada wishes to sell all of its right, title and interest in
and to its brand name line of APAP/hydrocodone bitartrate dosage forms, as
hereinafter more fully described;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties hereinafter contained, the parties hereto agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein; the following terms shall have the following meanings,
respectively:
1.1 An "affiliate" shall mean, any entity which, directly or
indirectly, controls, is controlled by or is under common
control with another entity or entities or any group of common
shareholders or similar holders of an equity interest of any
such entity and "control", for the preceding purpose, shall
mean the possession, directly or indirectly, of the power to
direct or cause the direction of the
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management and policies of any entity, whether through the
ownership of voting securities, by contract or otherwise.
1.2 "ANDA" shall mean an Abbreviated New Drug Application as
described in the federal Food, Drug and Cosmetic Act, as
amended, and regulations promulgated thereunder.
1.3 "ANDA Agreements" shall mean any and all agreements of King or
King-Nevada, whether written or oral, (i) that relate to the
Purchased Assets (including without limitation and without
exception all contracts or agreements with customers for the
purchase of any Current Products or any agreements with any
party or parties relative to the distribution of such
products) or (ii) that relate to APAP/hydrocodone bitartrate
elixir that King or King-Nevada has contracted for the
manufacture of pursuant to an ANDA or other permit or license
owned by another party, a list of which agreements (along with
their expiration dates and a brief description of each) is set
forth on Schedule 1.3 hereto; provided that "ANDA Agreements"
shall not refer to any contracts of King to the extent related
to products of King other than those included in the Purchased
Assets.
1.4 "ANDA Business" shall mean the business activities of King and
King-Nevada and any of their affiliates related to the Current
Products and/or the Future Products, as the context shall
require.
1.5 "ANDA Financial Statements" shall have the meaning ascribed to
it in Section 5.3 hereof.
1.6 "Branded Line" shall mean the "Anexsia" branded
APAP/hydrocodone bitartrate dosage form product line and the
goodwill associated therewith, as well as any registered
trademarks or service marks (or applications therefor) or any
tradenames or other intellectual property rights of any nature
associated therewith.
1.7 "Bristol Facility" shall mean King's current manufacturing
facility located in Bristol, Tennessee.
1.8 "Bristol Shutdown" shall have the meaning ascribed to it in
Section 4.l(c) hereof.
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1.9 "cGMP" shall have the meaning ascribed to it in Section
5.13(c)(iv) hereof.
1.10 "Closing Date" shall mean the date hereof or such other date
as the parties hereto shall mutually agree.
1.11 "Closing Purchase Price" shall mean the amount to be paid by
Mallinckrodt to or on behalf of King-Nevada on the Closing
Date in accordance with Section 2.2 and as described in
subsections (a) and (b) of Section 2.4 hereof.
1.12 "Collateral Agreements" shall mean (i) those agreements
between King or King-Nevada and Mallinckrodt or executed by
either King or King-Nevada in favor of Mallinckrodt, as
appropriate, of even date herewith that are attached hereto as
Exhibits A, B and C and (ii) such other agreements entered
into as of the Closing Date as the parties shall deem
reasonably necessary to the consummation of the transactions
contemplated herein.
1.13 "Current Products" shall mean the four product codes and
strengths associated with King-Nevada's current three ANDAs
(#89-160, #89-725 and #40-084), and any and all changes,
amendments, periodic reports, supplements, authorizations,
documentation or permits relative thereto, for the production
of APAP/hydrocodone bitartrate dosage forms, a copy of the
full ANDA documentation for which product codes and strengths
is attached hereto as Schedule 1.13.
1.14 "Damages" shall have the meaning ascribed to it in Section
8.1 hereof.
1.15 "Deferred Payment" shall mean the amounts to be paid by
Mallinckrodt to King-Nevada in accordance with Section 2.4(c)
hereof.
1.16 The term "direct manufacturing costs" shall mean all costs of
labor, raw materials, quality assurance and packaging incurred
by King that are directly associated with production under the
Current Products or the Future Products, as
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appropriate, and shall not include any directly or indirectly
allocated overhead or similar general company expenses or
charges and shall also not include the value or cost of any
raw materials provided to King by Mallinckrodt. King's direct
manufacturing costs (excluding the cost of raw materials) are
attached hereto as Schedule 1.16.
1.17 "FDA Approval" shall have the meaning ascribed to it in
Section 2.4(c) hereof.
1.18 "Finished Goods Cost" shall have the meaning ascribed to it in
Section 3.4(a) hereof.
1.19 "Future Products" shall collectively mean (i) the two dosage
form product codes and strengths that are planned to be filed
as future supplements to currently existing ANDAs (i.e., 10
mg. hydrocodone bitartrate/650 mg. APAP and 10 mg. hydrocodone
bitartrate/660 mg. APAP, hereinafter referred to as "Future
Product One" and "Future Product Two", respectively) and (ii)
the three dosage form product codes and strengths that are
planned to be filed as one or more future ANDAs (i.e., 10 mg.
hydrocodone bitartrate/500 mg. APAP, 7.5 mg. hydrocodone
bitartrate/500 mg. APAP and 5.0 mg. hydrocodone bitartrate/
500 mg. APAP, hereinafter referred to as "Future Product
Three", "Future Product Four" and "Future Product Five",
respectively), all of which are currently under development by
King and/or which have been filed by King with the FDA but
have not yet received approval, and any and all changes,
amendments, supplements, periodic reports, authorizations,
documentation or permits relative thereto, a copy of the
current ANDA or other documentation for which product codes
and strengths is attached hereto as Schedule 1.19.
1.20 "Future Product One" shall have the meaning ascribed to it in
Section 1.19 above.
1.21 "Future Product Two" shall have the meaning ascribed to it in
Section 1.19 above.
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1.22 "Future Product Three" shall have the meaning ascribed to it
in Section 1.19 above.
1.23 "Future Product Four" shall have the meaning ascribed to it in
Section 1.19 above.
1.24 "Future Product Five" shall have the meaning ascribed to it in
Section 1.19 above.
1.25 "Hazardous Materials" shall have the meaning ascribed to it in
Section 5.14 hereof.
1.26 "Indemnified Party" shall have the meaning ascribed to it in
Section 8.2 hereof.
1.27 "Indemnifying Party" shall have the meaning ascribed to it in
Section 8.2 hereof.
1.28 "King Business" shall mean the full range of business
activities of King or its affiliates related to the production
of generic or branded drug dosage forms, including without
limitation the ANDA Business, whether or not carried out on
the premises of the Bristol Facility.
1.29 "Manufacturing Agreement" shall have the meaning ascribed to
it in Section 4.1 hereof.
1.30 "Pharmaceutical Products" shall have the meaning ascribed to
it in Section 5.13 hereof.
1.31 "Purchased Assets" shall mean the Current Products, Future
Products, the Branded Line, the ANDA Agreements, as well as
(i) any and all intellectual property rights related solely or
primarily to any of the foregoing, (ii) any and all
documentation, data or other information in King's or
King-Nevada's possession related solely or primarily to any of
the foregoing and (iii) any and all tooling,
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punches and dies related to the production of the Current
Products or Future Products, as appropriate.
1.32 "Purchase Price" shall refer to the total consideration paid
and payable to King-Nevada by Mallinckrodt in accordance with
the provisions of Section 2.4 below.
1.33 "Work-in-Process Cost" shall have the meaning ascribed to it
in Section 3.4 hereof.
1.34 All references to days herein refer to calendar days and not
business days, unless otherwise expressly provided.
ARTICLE II
PURCHASE AND SALE
2.1 Actions by King-Nevada on the Closing Date.
On the Closing Date, in reliance upon and in consideration of
the representations, warranties, covenants and agreements of
Mallinckrodt set forth herein and subject to the terms and
conditions set forth herein, King-Nevada shall sell, transfer
and assign to Mallinckrodt all of its right, title and
interest in and to the Purchased Assets, free and clear of
liens, claims, charges, encumbrances and restrictions of any
kind and deliver to Mallinckrodt an irrevocable General Xxxx
of Sale and Assignment relative to the Purchased Assets in the
form attached hereto as Exhibit A.
2.2 Actions by Mallinckrodt on the Closing Date.
On the Closing Date, in reliance upon and in consideration of
the representations, warranties, covenants and agreements of
King and King-Nevada set forth herein and subject to the terms
and conditions set forth herein, and against delivery of
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the General Xxxx of Sale and Assignment attached hereto as
Exhibit A, Mallinckrodt shall pay to King-Nevada the Closing
Purchase Price by wire transfer in immediately available
United States funds as follows:
(i) Mallinckrodt will pay, to an account designated by
King-Nevada to Mallinckrodt in writing at least five (5)
business days prior to the Closing Date, the sum of Sixteen
Million Seven Hundred Ninety Nine Thousand One Hundred
Seventy Eight Dollars and Eight Cents ($16,799,178.08)
against receipt by Mallinckrodt of a release of all liens,
rights and claims, in a form and in substance satisfactory
to Mallinckrodt, of Boehringer Mannheim Pharmaceuticals
Corporation ("Boehringer") with respect to the Branded Line
and any of the other Purchased Assets, and
(ii) immediately subsequent to the completion of the steps
outlined in clause (i) set forth immediately above and in
addition to the amount specified therein, Mallinckrodt will
pay, to an account designated by King-Nevada to Mallinckrodt
in writing at least five (5) business days prior to the
Closing Date, the sum of Fifteen Million Two Hundred
Thousand Eight Hundred Twenty One Dollars and Ninety Two
Cents ($15,200,821.92).
2.3 Joint Actions on the Closing Date.
On the Closing Date (or as soon thereafter as possible), the
parties will execute such documents, including the Collateral
Agreements, and take such other actions as have been deemed by
them to be reasonably necessary and appropriate to consummate
fully the transactions contemplated herein.
2.4 Purchase Price.
In consideration for King-Nevada's sale, transfer and
assignment of the Purchased Assets to Mallinckrodt pursuant to
the terms and conditions set forth herein, Mallinckrodt agrees
to pay King-Nevada, as full and fair purchase consideration
therefor, the sums set forth below ("Purchase Price"):
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(a) In consideration of King-Nevada's transfer to Mallinckrodt on
the Closing Date of all of King-Nevada's right, title and
interest in and to the Current Products, Mallinckrodt will pay
to King-Nevada, as full and fair consideration therefor, the
sum of Ten Million Dollars ($10,000,000).
(b) In consideration of King-Nevada's transfer to Mallinckrodt on
the Closing Date of all of King-Nevada's right, title and
interest in and to the Branded Line, Mallinckrodt will pay to
King-Nevada, as full and fair consideration therefor, the sum
of Twenty Two Million Dollars ($22,000,000).
(c) In consideration of King-Nevada's transfer to Mallinckrodt on
the Closing Date of all of King-Nevada's right, title and
interest in and to the Future Products, and subject to the
provisions of Section 3.3 set forth herein below, Mallinckrodt
will pay to King-Nevada, as full and fair consideration
therefor, up to Ten Million Dollars ($10,000,000) in
accordance with the following:
(i) Mallinckrodt will pay King-Nevada Two Million Five Hundred
Thousand Dollars ($2,500,000), by wire transfer of
immediately available United States funds to an account
designated by King-Nevada to Mallinckrodt in writing within
ten (10) days after each date on which King or King-Nevada
notifies Mallinckrodt in writing of (A) the final and
unqualified approval by the FDA of any of Future Product
One, Future Product Two, Future Product Three or Future
Product Four such that manufacture and commercial sale is
permitted with respect thereto (which notice shall include a
copy of the FDA's written approval with respect to any such
Future Product) and (B) upon completion of a process
validation report with respect to any such Future Product
and Mallinckrodt's written acknowledgment approving such
report (which approval shall not unreasonably be withheld),
for a total of up to Ten Million Dollars ($10,000,000) in
the aggregate
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once King or King-Nevada has notified Mallinckrodt that all
Future Products (with the exception of Future Product Five
for which no additional sums to King-Nevada shall be due
hereunder) have met the requirements of clauses (A) and (B)
set forth immediately above. For purposes of this Agreement,
the occurrence of the events described in clauses (A) and
(B) of the immediately preceding sentence shall constitute
and be referred to hereinafter as "FDA Approval".
(ii) King and King-Nevada hereby agree that if any one or more of
Future Product One, Future Product Two, Future Product Three
and Future Product Four shall not have received FDA Approval
on and as of the end of the thirtieth (30th) month after the
Closing Date but does receive FDA Approval on or before the
end of the thirty sixth (36th) month after the Closing Date,
then the amount otherwise payable by Mallinckrodt to
King-Nevada upon FDA Approval of any such Future Product
shall be One Million Five Hundred Thousand Dollars
($1,500,000) for each such Future Product as opposed to the
amount specified in clause (i) immediately above.
Furthermore, notwithstanding clause (i) set forth above,
King and King-Nevada hereby agree that if any one or more of
Future Product One, Future Product Two, Future Product Three
and Future Product Four shall nor have received FDA Approval
on and as of the end of the thirty sixth (36th) month after
the Closing Date, then no amount shall be payable by
Mallinckrodt to King-Nevada with respect to any such Future
Product, which fact shall in no respect have any effect on
Mallinckrodt's right to full title and interest in and to
any such Future Products and Mallinckrodt shall have full
right of ownership and use with respect to all regulatory
"work-in-process" relative to the unsuccessful attempt by
King to achieve FDA Approval for any such Future Products.
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2.5 Fair Market Value of Assets.
The parties hereto agree that the Purchase Price represents
the fair market value of the Purchased Assets. Any allocation
of the Purchase Price among the Purchased Assets that is
agreed upon by the parties shall be binding on King,
King-Nevada and Mallinckrodt for all purposes relating in any
fashion to liability for sales tax, income tax or any other
kind of tax or assessment.
2.6 Assets Purchased and Obligations Assumed.
The parties understand and agree that Mallinckrodt is not
hereunder purchasing any assets of King other than the
Purchased Assets as specifically defined herein. The parties
further understand and agree that Mallinckrodt is not
hereunder assuming or agreeing to be liable in any manner with
respect to any debt, obligation or liability of King except
and to the extent that Mallinckrodt expressly agrees to be
liable and responsible pursuant to Section 2.7 below, pursuant
to any other terms hereof or pursuant to the General Xxxx of
Sale and Assignment attached hereto as Exhibit A. The
trademarks, servicemarks, trade names, designs and logos,
whether registered, applied for or pending, associated with
King or King-Nevada that are not exclusively related to the
ANDA Business are not conveyed pursuant to this Agreement and
all right, title, and interest in and to the same shall remain
with King or King-Nevada as the case may be.
2.7 Assignment of Contracts.
In connection with the acquisition and sale of the Purchased
Assets provided for herein, King and King-Nevada hereby assign
to Mallinckrodt all of their rights, obligations and interests
under the ANDA Agreements; provided however, in no event shall
Mallinckrodt be deemed to have assumed liability or
responsibility for any obligations or liabilities under and
pursuant to the ANDA Agreements to the extent relating to any
performance required by and undertaken pursuant to the terms
of such agreements prior to the Closing Date unless
Mallinckrodt specifically and unambiguously so agrees in
writing. King and King-Nevada
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represent and warrant that, to the extent they have not done
so prior to the Closing Date, they will take all actions
available to them to obtain any and all consents that are
necessary for the assignment of the ANDA Agreements to
Mallinckrodt in order to vest in Mallinckrodt the full benefit
of all rights and payments granted under the terms of each and
every one of the ANDA Agreements to the same extent that King
and King-Nevada had such benefit prior to the Closing Date.
2.8 Delivery of Documentation
On the Closing Date or as soon thereafter as reasonably
possible, King-Nevada will deliver to Mallinckrodt any and all
intellectual property, documentation and other data included
within the Purchased Assets, including without limitation,
annual product reviews, copies of completed batch records,
stability reports, product complaint files, adverse drug
experience reports, supplier audit reports, and field alert
reports. King and King-Nevada may retain such materials and
data as may be necessary for them to carry out their
obligations under this Agreement and under the Collateral
Agreements. In addition, on the Closing Date or as immediately
thereafter as possible, King or King-Nevada (as appropriate)
will send to the FDA the notice required by 21 CFR
314.72(a)(i) relative to the transfer of ownership of the
Purchased Assets and shall thereafter provide all information
and make all further filings as Mallinckrodt shall direct to
confirm and perfect the ownership of Mallinckrodt in and to
the Purchased Assets.
ARTICLE III
CERTAIN OBLIGATIONS, RIGHTS AND COVENANTS OF THE PARTIES
3.1 Obligations of King and King-Nevada with Respect to Future
Products.
(a) From and after the Closing Date and until FDA
Approval or the elapse of thirty six (36) months
after the Closing Date (whichever occurs first), King
and King-Nevada will take all actions, at their
expense, that may be
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required (i) to ensure that future ANDAs or
supplements to existing ANDAs, as appropriate, with
respect to each of the Future Products are filed with
the FDA in compliance with all regulatory
requirements, in full and final form and as
expeditiously as possible, (ii) to ensure that the
FDA grants final and unqualified approval in writing
with respect to each of such future ANDAs or
supplements to existing ANDAs as soon as possible
such that manufacture and commercial sale of the
Future Product in question is permitted, and (iii) to
ensure that a process validation report with respect
to any such Future Product is prepared with
completeness and accuracy and as quickly as possible.
The actions required by King and King-Nevada in
accordance with the immediately preceding sentence
will be taken with the intent and effect that
Mallinckrodt will not be in any manner, as the owner
of each of the Future Products, limited in its
ability commercially to utilize each of such Future
Products to the fullest extent possible consistent
with the limitations of applicable laws and
regulations of general force and effect. It is
understood that all filings and other actions taken
by King and King-Nevada in connection with the Future
Products to secure FDA Approval will be subject to
review by and approval of Mallinckrodt. King and
King-Nevada will have an obligation hereunder to
answer any FDA inquiries with respect to the Future
Products in a timely and accurate manner, subject to
approval of and supervision by Mallinckrodt. The
parties expressly agree that if at any time
King-Nevada and Mallinckrodt or King and Mallinckrodt
disagree about the adequacy, form, content,
necessity, advisability, manner, procedure or timing
of any filing, response, action or inquiry related to
securing FDA Approval of any of the Future Products,
they will consult Xxxxxxx Consultants, Inc. at 0000
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 in order to
resolve their disagreement and the parties further
agree to follow the course of action suggested by
Xxxxxxx Consultants, Inc. The fees and expenses of
Xxxxxxx Consultants, Inc. arising from such
consultations shall be shared equally by either King
and Mallinckrodt or King-Nevada and Mallinckrodt, as
appropriate.
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(b) Notwithstanding the preceding subsection (a), if, upon the
expiration of thirty six (36) months from and after the
Closing Date and despite the best efforts of King and
King-Nevada in accordance with the requirements of this
Section 3.1, FDA Approval has not been received for any one
or more of the Future Products, King or King-Nevada will
immediately hand over to Mallinckrodt all of the
documentation and other materials relative to such Future
Products so that Mallinckrodt may continue to prosecute with
the FDA the applications with respect to any such Future
Products and, in connection with that process, King and
King-Nevada will continue to provide advice and consultation
to Mallinckrodt as reasonably necessary and will further
continue to provide to Mallinckrodt (or its agents or
representatives) and the FDA such access to the Bristol
Facility as may be required to ensure approval by the FDA
and any other relevant regulatory agencies with respect to
each of such Future Products.
3.2 Assurances of Title to Future Products.
Notwithstanding King's and King-Nevada's success or failure in
securing FDA Approval with respect to the Future Products, at
all times after the Closing Date Mallinckrodt will continue to
have full right, title and interest in and to the Future
Products and King and King-Nevada will do whatever is
necessary to defend and secure Mallinckrodt's full right,
title and interest in and to the Future Products.
3.3 Suspension of Payment.
If, prior to the expiration of the Manufacturing Agreement
between King and Mallinckrodt contemplated by Section 4.1
below, and due to causes other than a material breach by
Mallinckrodt of any of its obligations under this Agreement or
under any of the Collateral Agreements, either King or
King-Nevada ceases or is forced to cease or substantially
curtail production under the Manufacturing Agreement, or
otherwise breaches any of its continuing obligations
hereunder, as a consequence of (i) any action or communication
by the FDA or any other regulatory or governmental authority
or (ii) any financial or other business
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difficulty (including, without limitation, the filing by or
against King or King-Nevada of any petition under the federal
bankruptcy laws, or any similar state laws, or any insolvency,
appointment of a trustee for the assets and business of King
or King-Nevada, or any composition or arrangement for the
benefit of creditors), then the parties agree that
Mallinckrodt will have lost the benefit of the Purchased
Assets it has acquired under this Agreement and Mallinckrodt
shall therefore, in addition to any other rights or remedies
it may have available to it at law or in equity, have the
right to cancel payment of any as yet unpaid portion of the
Deferred Payment.
3.4 Ownership of Existing Inventory.
(a) Subject to King's compliance with the requirements of
subsection (d) of this Section 3.4, in the event that,
on the Closing Date, King has an inventory of finished
goods relative to the Current Products meeting all
applicable specifications (i.e., is not obsolete, is at
least six (6) months from expiration, is currently
useable and salable in the ordinary course of business
and meets the requirements of the appropriate ANDA)
that remains unsold as of the Closing Date, King will
notify Mallinckrodt within seven (7) days after the
Closing Date of the precise nature and amount of such
inventory. Mallinckrodt shall purchase all of such
inventory from King at a price, payable in cash or, at
Mallinckrodt's option, by offset against the amount of
any outstanding trade receivables owed to Mallinckrodt
by King, equal to the actual cost to King of any raw
materials (including but not limited to those raw
materials supplied by Mallinckrodt) utilized in
producing such inventory and the actual direct
manufacturing costs incurred by King in producing such
inventory (all of such actual cost hereinafter referred
to as "Finished Goods Cost"). Within ten (10) days
after notice by King to Mallinckrodt of the nature and
amount of its finished goods inventory, King shall
provide Mallinckrodt with written notice of its
calculation of the Finished Goods Cost and all
documentation supporting such calculation. Mallinckrodt
shall be obligated to consummate the purchase from King
of such finished goods
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inventory on the later of (i) ten (10) days after the date
on which it delivers a notice to King indicating its
agreement with the Finished Goods Cost as calculated xx Xxxx
or (ii) in the event Mallinckrodt does not so agree, ten
(10) days after the date on which the parties shall reach
agreement in good faith and in writing as to the actual
amount of the Finished Goods Cost. Any finished goods
inventory purchased hereunder, except with respect to the
compensation therefor, shall be treated by the parties as
finished product manufactured pursuant to the Manufacturing
Agreement contemplated in Section 4.1 below.
(b) Subject to King's compliance with the requirements of
subsection (d) of this Section 3.4, in the event that, on
the Closing Date, King has an existing inventory of
hydrocodone bitartrate and/or APAP that it has purchased
from Mallinckrodt that is to be used by King for production
hereunder, King will notify Mallinckrodt within seven (7)
days after the Closing Date of the precise nature and amount
of such inventory. Within twenty (20) days after the date of
such notice, Mallinckrodt shall purchase such raw materials
inventory from King at a price, payable in cash or, at
Mallinckrodt's option, by offset against the amount of any
outstanding trade receivables owed to Mallinckrodt by King,
equal to the amount originally invoiced by Mallinckrodt to
King for such raw materials less applicable discounts or
rebates, if any. Any raw materials inventory purchased
hereunder shall be utilized by the parties in the
manufacture of finished product in accordance with the terms
of the Manufacturing Agreement contemplated in Section 4.1
below.
(c) Subject to King's compliance with the requirements of
subsection (d) of this Section 3.4, in the event that, on
the Closing Date, King has an existing inventory of
work-in-process relative to the Current Products meeting all
applicable specifications (i.e., is not obsolete, would be,
if completed, useable and salable in the ordinary course of
business and meets the requirements of the appropriate
ANDA), King will notify Mallinckrodt within seven (7) days
after the Closing Date of the precise
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nature and amount of such inventory. Mallinckrodt shall
purchase all of such inventory from King at a price, payable
in cash or, at Mallinckrodt's option, by offset against the
amount of any outstanding trade receivables owed to
Mallinckrodt by King, equal to the actual cost to King of
any raw materials utilized in producing such inventory and
the actual direct manufacturing costs incurred by King in
producing such inventory (all of such actual costs
hereinafter referred to as "Work-in-Process Cost"). Within
ten (10) days after notice by King to Mallinckrodt of the
nature and amount of its work in process inventory, King
shall provide Mallinckrodt with written notice of its
calculation of the Work-in-Process Cost and all
documentation supporting such calculation. Mallinckrodt
shall be obligated to consummate the purchase from King of
such work-in-process inventory on the later of (i) ten (10)
days after the date on which it delivers a notice to King
indicating its agreement with the Work-in-Process Cost as
calculated by King or (ii) in the event Mallinckrodt does
not so agree, ten (10) days after the date on which the
parties shall reach agreement in good faith and in writing
as to the actual amount of the Work-in-Process Cost. King
shall retain in its physical possession any work-in-process
inventory purchased hereunder and shall complete the process
of converting such work-in-process into finished goods for a
price to be agreed upon by the parties but taking into
account only the incremental cost to King of completing the
manufacturing process with respect to such work-in-process
and in accordance with the applicable terms of the
Manufacturing Agreement provided for in Section 4.1 below.
Notwithstanding the preceding portions of this subsection
(c), King shall make every reasonable effort to avoid having
any inventory of work-in-process on the Closing Date by,
among other things, judicious scheduling of its
manufacturing runs of APAP/hydrocodone bitartrate dosage
forms and careful scheduling of product deliveries to
customers.
(d) King represents and warrants that it has used its best
commercial efforts, since the date of that certain Letter of
Intent by and between the parties dated September 12, 1995,
to keep its inventories of finished goods, work-
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in-process and raw materials as low as reasonably possible
and, in any event, at levels which do not exceed those
normally experienced by King during the past six (6) months
prior to the date hereof in connection with its ANDA
Business, adjusted for the amount of sales King has
experienced in connection with the ANDA Business at various
times during such six (6) month period.
3.5 Covenant Not to Compete.
(a) For and in consideration of the Purchase Price to be paid in
accordance herewith, and further for and in consideration of
Mallinckrodt's willingness to acquire the Purchased Assets
pursuant to the terms hereof, King, on behalf of itself, its
employees, its agents, its shareholders (but only those
owning ten (10%) or more of the stock of King) and its
affiliates (including, without limitation, King-Nevada),
agrees that, for the longer of five (5) years after the
Closing Date or the length of time during which the
Manufacturing Agreement is in effect, it will not, anywhere
in the world, in any manner, directly or indirectly, either
alone or in conjunction with others, engage in the
manufacture, development or sale of any APAP/hydrocodone
bitartrate dosage forms (solid or liquid), including without
limitation any such products that are part of the Purchased
Assets, or otherwise compete in any way with Mallinckrodt or
its affiliates in the manufacture, development or sale of
APAP/hydrocodone bitartrate dosage forms (solid or liquid).
(b) King understands and agrees that, in the event of a breach
by it or any of its affiliates of any obligations under this
Section 3.5, Mallinckrodt and its affiliates will suffer
irreparable damage for which its remedies at law are
inadequate and, therefore, Mallinckrodt or its affiliates
may receive, from a court of proper jurisdiction, an
injunction, a decree for specific performance or such other
equitable relief as may he deemed appropriate under the
circumstances, in addition to any other remedies they may
have.
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3.6 Supplements for Alternate Manufacturing Site.
As soon as possible after the Closing Date, King will file
ANDA supplements with the FDA with respect to each of the
Current Products and Future Products, at King's expense, for
the purpose of designating an alternate manufacturing site for
each of the Current Products and Future Products, such site to
be selected by Mallinckrodt as soon as possible; provided,
however, it is understood that Mallinckrodt will pay all
direct manufacturing costs associated with the production of
pilot product batches as and to the extent necessary to secure
FDA approval relative to such supplements.
ARTICLE IV
CERTAIN COLLATERAL TRANSACTIONS AND AGREEMENTS
4.1 Toll Processing by King.
(a) King, King-Nevada and Mallinckrodt understand and agree that
Mallinckrodt is unwilling to and will be unable for an
extended period of time to commence the manufacture of the
Current Products or to commence manufacture of any of the
Future Products (as and when authority for such manufacture
has been granted to Mallinckrodt) at Mallinckrodt's own
facilities or another facility designated by it and,
therefore, on and as of the Closing Date, King and
Mallinckrodt will enter into an agreement whereby King will
toll manufacture for Mallinckrodt the Current Products and
the Future Products (as and when authority for such
manufacture has been granted to Mallinckrodt) on the terms
and conditions and in the form of the Toll Manufacturing
Agreement for APAP/Hydrocodone Bitartrate Tablets attached
hereto as Exhibit B, herein referred to as the
"Manufacturing Agreement".
(b) The parties further understand and agree that the continued
performance by King of its obligations under the
Manufacturing Agreement is
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absolutely critical to Mallinckrodt since the value to
Mallinckrodt of its acquisition of the Purchased Assets
herein is dependent upon the ability to reach the market
with substantial volumes of finished product within the next
five (5) years. Therefore, the parties agree that, should
King for any reason be unable to perform its obligations
under and pursuant to the Manufacturing Agreement,
Mallinckrodt will have substantially lost the benefit of its
bargain as set forth in this Agreement.
(c) Notwithstanding any other provision hereof, in the event
that, for whatever reason that is not within the reasonable
control or responsibility of Mallinckrodt, and whether or
not within the reasonable control of King, that portion of
the Bristol Facility which is dedicated to or involved in
the production of finished product for Mallinckrodt pursuant
to the terms of the Manufacturing Agreement is unable, for a
period of sixty (60) days or more continuously, to engage in
and sustain production of such finished products and to
lawfully introduce or deliver for introduction into
interstate commerce such finished products ("Bristol
Shutdown"), the parties agree that Mallinckrodt will have
suffered damage, direct and consequential, to its dosage
pharmaceutical business and will have suffered lost
opportunity costs, all of which damage and cost will be, by
its very nature, difficult to calculate with precision.
Therefore, the parties agree that, by way of liquidated
damages (and not as a penalty), in the event there is and
any time there is, during the period commencing on the date
hereof and ending on December 31, 2000, a Bristol Shutdown,
King shall pay to Mallinckrodt an amount equal to the sum of
Five Hundred Thousand Dollars ($500,000) and the product
obtained by multiplying Sixteen Thousand Five Hundred
Dollars ($16,500) by the number of days in excess of sixty
(60) that any such Bristol Shutdown continues. The parties
agree that a Bristol Shutdown shall not be deemed to have
ended unless King has demonstrated to Mallinckrodt's
reasonable satisfaction for a period of ten (10) consecutive
days that the appropriate finished product production
facilities have run or are capable of running without
shutdown or material delay or other substantial problems and
that finished product
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produced therein may be lawfully introduced or delivered for
introduction into interstate commerce. The parties further
agree that if King shall have made such demonstration, the
Bristol Shutdown in question shall be deemed to have ended
on and as of the first day of any such demonstration.
Notwithstanding the preceding portions of this subsection
(c), a Bristol Shutdown shall not be deemed to have occurred
if the only reason therefor is that Xxxx'x XXX quota for
manufacture has been completely used or exhausted despite
King's best efforts to meet its continuing obligations to
raise its DEA quota to a level necessary to meet its
production requirements under the Manufacturing Agreement.
For ease of reference and explanation only, attached hereto
as Schedule 4.1 is an example of the operation of the
formula set forth in this subsection (c).
4.2 Transitional Assistance by King and King-Nevada.
In consideration of Mallinckrodt's willingness to acquire the
Purchased Assets on the terms and conditions set forth herein,
from and after the Closing Date and for a period of not less
than one hundred eighty (180) days, King and King-Nevada agree
to provide certain sales and marketing, warehousing, shipping
and technical assistance to Mallinckrodt, at Mallinckrodt's
option, in connection with its use of the Purchased Assets in
accordance with the Transitional Services Agreement attached
hereto as Exhibit C.
ARTICLE V
CERTAIN REPRESENTATIONS AND WARRANTIES OF KING AND KING-NEVADA
King and King-Nevada hereby make the following representations and
warranties, each of which is true and correct on the Closing Date and shall
continue to be true and correct and each of which shall survive the Closing Date
and the transactions contemplated hereby. The phrase "to the knowledge of King
and/or King-Nevada" or any substantially equivalent phrase, as used in this
Article V, shall mean to the actual knowledge of employees or representatives of
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King and King-Nevada (as appropriate) after reasonable inquiry and review of all
relevant documents, facts and circumstances.
5.1 Corporate Existence, Qualification and Power of King and King-Nevada.
(a) King is a corporation duly organized, validly existing and in
good standing under the laws of the State of Tennessee. King has
the corporate power and authority to own and use its properties,
including use of the Purchased Assets, and to transact its
business in the manner in which it currently transacts or plans
to transact such business, including any and all activities in
connection with the ANDA Business, holds all franchises, licenses
and permits necessary and required therefor, and is duly licensed
or qualified as a foreign corporation in all jurisdictions in
which such licensing or qualification is required to conduct such
activities and where the failure to be so licensed or qualified
could reasonably be anticipated to have a material adverse effect
on the Purchased Assets or the ANDA Business. King has the
corporate power to enter into and consummate the transactions
contemplated by this Agreement. Except as set forth on Schedule
5.1, there are no firms or persons who are affiliates of King (or
King-Nevada) who have any ownership interest or rights of use in
and to in the Purchased Assets or the ANDA Business.
(b) King-Nevada is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada.
King-Nevada is a wholly owned subsidiary of King. King-Nevada has
the corporate power to own and use its properties, including the
Purchased Assets, and to transact its business in the manner in
which it currently transacts or plans to transact such business,
including any and all activities in connection with the ANDA
Business, holds all franchises, licenses and permits necessary
and required therefor, and is duly licensed or qualified as a
foreign corporation in all jurisdictions in which such licensing
or qualification is required to conduct such activities and where
the failure to be so licensed or qualified could reasonably be
anticipated to have a material adverse effect on the
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Purchased Assets or the ANDA Business. King-Nevada has the
corporate power to enter into and consummate the transactions
contemplated by this Agreement.
5.2 Authorization of Agreement by King and King-Nevada.
The execution and delivery of this Agreement and the Collateral
Agreements do not, and the compliance with and the fulfillment of, and
the consummation of the transactions contemplated by this Agreement
and the Collateral Agreements will not, violate or conflict with any
provisions of the Articles of Incorporation or Bylaws of King or
King-Nevada or result in a breach of, or constitute a default under,
or result in the acceleration of, any obligation under any agreement
or instrument to which King, King-Nevada or their affiliates is a
party or by which they are bound, or violate any order, judgment,
award or decree to which they are a party or to which they are
subject, which violation, conflict, breach or default could have a
material adverse effect on (i) the King Business, (ii) the Purchased
Assets, (iii) any interest or right of Mallinckrodt under this
Agreement or the Collateral Agreements, (iv) the ANDA Business or (v)
the consummation of the transactions contemplated hereby. Attached
hereto as Schedule 5.2 is a certified copy of all resolutions of the
Boards of Directors of King and King-Nevada and all other documents
authorizing King and King-Nevada to consummate the transactions
contemplated under this Agreement and the Collateral Agreements.
Except as set forth on Schedule 5.2, such resolutions and documents
represent the taking of all action required by law, the Articles of
Incorporation of King or King-Nevada, their Bylaws, or otherwise to
authorize and approve the execution, delivery and performance of this
Agreement and the Collateral Agreements on behalf of King and
King-Nevada. Except as noted on Schedule 5.2, there are no third
parties whose authorization or approval is required with respect to
the execution and performance by King or King-Nevada of this Agreement
or the Collateral Agreements. This Agreement and the Collateral
Agreements represent the binding and enforceable obligations of King
and King-Nevada.
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5.3 Financial Statements.
Attached hereto as Schedule 5.3 are statements of revenue and net
margin associated specifically with the ANDA Business for the nine (9)
months ended September 30, 1995 ("ANDA Financial Statements"). The
ANDA Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently maintained and
applied on a basis consistent with prior practices, and do present
fairly the financial position of the ANDA Business for the period
indicated.
5.4 Events Subsequent to December 13, 1994.
Since December 13, 1994, neither King, King-Nevada nor any of their
affiliates have, except as set forth on Schedule 5.4 hereof:
(i) mortgaged, pledged or caused to be created a security interest
with respect to any of the Purchased Assets,
(ii) suffered any damage, destruction, or loss materially adversely
affecting the Purchased Assets or the ANDA Business or the
ability of King to perform any of its obligations under this
Agreement or the Collateral Agreements,
(iii) sold, transferred or assigned any of the Purchased Assets, other
than finished products in the ordinary course of business,
(iv) been involved in any labor dispute or trouble which materially
and adversely affected or is likely to materially adversely
affect the Purchased Assets or the ANDA Business or the ability
of King to perform any of its obligations under this Agreement or
the Collateral Agreements, or
(v) suffered any material adverse change in the ANDA Business or the
Purchased Assets which materially and adversely affected the
value or utility of the Purchased Assets, the well-being of the
ANDA Business or the ability of King to perform any of its
obligations under this Agreement or the Collateral Agreements.
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5.5 Ability to Conduct Business.
None of King, King-Nevada, their agents, employees or affiliates is
subject to or bound by any judgment, order, writ, injunction or decree
of any court, or of any governmental body or of any arbitrator, or a
party to, bound by or a beneficiary of any agreement, which might
hinder or prevent the permitted use after the Closing Date by
Mallinckrodt of any of the Purchased Assets or its conduct of a
business similar to the ANDA Business as conducted by King or
King-Nevada or interfere in any way with Mallinckrodt's rights under
this Agreement or the Collateral Agreements or King's or King-Nevada's
obligations hereunder or thereunder.
5.6 Absence of Undisclosed Liabilities.
Except as set forth on Schedule 5.6 there are no claims, obligations,
liabilities or indebtedness, existing or contingent, with respect to
King or King-Nevada that relate in any way to the Purchased Assets or
the ANDA Business.
5.7 Inventories.
The Current Products inventories of King (whether finished product,
work-in process or raw materials) will be properly valued in
accordance with Section 3.4 hereof and consist of items of a quality
currently useable and salable in the ordinary course of business, meet
all applicable specifications and are fit for their intended purposes.
King has good and marketable title to all of such inventories free and
clear of any liens, mortgages, pledges, encumbrances, claims or
charges of any kind except as identified on Schedule 5.7.
5.8 Title to Purchased Assets.
Except as noted on Schedule 5.8, King-Nevada has good and marketable
title to all of the Purchased Assets, free and clear of all mortgages,
liens, security interests, charges, claims, restrictions and other
encumbrances of every kind.
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5.9 Intellectual Property.
(a) Set forth on Schedule 5.9(a) is a description of all of the
intellectual property rights (whether owned by King or
King-Nevada or used by either or both of them as a result of
license, lease or other claim of right from a third party)
included as part of the Branded Line or as part of the Purchased
Assets being purchased hereunder.
(b) With respect to any items of intellectual property (including,
without limitation, patents, applications for patent, trademarks,
service marks, trade names, copyrights, trade secrets and
proprietary data, of all types) used by King, King-Nevada or
their affiliates in connection with the Branded Line or as part
of the Purchased Assets that are owned by King-Nevada, title to
such items is held by King-Nevada free and clear of all adverse
claims, liens, security interests, restrictions and other
encumbrances, and, to the knowledge of King and King-Nevada,
there are no circumstances that would indicate that there is any
reasonable basis to believe that any person or persons could or
would assert a claim of ownership, right of possession or use in
any way adverse to King's or King-Nevada's rights in and to any
such intellectual property, except as set forth on Schedule
5.9(b).
(c) With respect to any items of intellectual property (including,
without limitation, patents, applications for patent, trademarks,
service marks, trade names, copyrights, trade secrets and
proprietary data, of all types) used by King, King-Nevada or
their affiliates in connection with the Branded Line or in
connection with the Purchased Assets for which King, King-Nevada
or their affiliates have only the right of use as opposed to
ownership, King and King-Nevada are, to the knowledge of King and
King-Nevada, in compliance in all respects with the contracts,
agreements or understandings granting any such rights of use,
such contracts, agreements or understandings are in full force
and effect and there exists
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no default by any other party to such contracts, agreements or
understandings which might in any way jeopardize the rights of
King, King-Nevada or their affiliates to any intellectual
property therein granted or adversely affect in any manner the
Branded Line or the Purchased Assets.
(d) Except as set forth on Schedule 5.9(d), there are no claims,
demands, proceedings or other actions instituted, pending or, to
the knowledge of King and King-Nevada, threatened, nor to the
knowledge of King and King-Nevada are there any facts and
circumstances which could reasonably be anticipated to result in
any such claims, demands or proceedings, alleging that the use by
King, King-Nevada or their affiliates of any intellectual
property related to the Branded Line or the Purchased Assets, or
that the use, manufacture or licensing of any product, material,
design or process in connection with the Branded Line or the
Purchased Assets, infringes any patents or other intellectual
property rights of third parties, or otherwise challenging the
right of King, King-Nevada or their affiliates with respect to
the Branded Line or the Purchased Assets to maintain or use any
patent, trademark or service xxxx, or any application or
registration therefor, or any trade names, copyrights, trade
secrets, inventions, processes, machines, manufacture or
compositions of matter or any other item of intellectual
property.
(e) Except as set forth on Schedule 5.9(e), neither King nor
King-Nevada have granted to any party (including any affiliates)
any licenses, sublicenses or other rights (whether or not
presently outstanding) under any intellectual property rights
used in connection with the Branded Line or the Purchased Assets.
5.10 ANDA Agreements.
Except as set forth on Schedule 5.10, each of the ANDA Agreements is
valid and subsisting and represents a bona fide commercial
transaction, is currently in full
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force and effect, is enforceable in accordance with its terms, no
rights thereto have been assigned or transferred and no one has any
adverse claims with respect to the right of King or King-Nevada to
obtain the full benefits thereunder. Except as set forth on Schedule
5.10, to the knowledge of King and King-Nevada, there exist no events
of default by King, King-Nevada or any other party with respect to any
of the ANDA Agreements and no event has occurred which, upon the
passage of time or the giving of notice, or both, could result in any
such events of default or prevent King or King-Nevada from exercising
or obtaining the benefits thereunder or the benefits of any option
contained therein, or could cause the creation of a lien, restriction
or any sort of encumbrance upon any of the Purchased Assets. Further,
except as set forth on Schedule 5.10, each of the ANDA Agreements is
either fully assignable by King or King-Nevada to Mallinckrodt without
the need to secure consent from the other party or parties thereto or
King or King-Nevada (as appropriate) has secured any written consents
to assignment required with respect thereto.
5.11 Agreements with Suppliers.
Except as set forth on Schedule 5.11, each of the contracts (written
or oral) between King, King-Nevada or their affiliates and any other
party or parties for the supply by such third parties of raw
materials, products and/or services relative to the ANDA Business is
valid and subsisting, is currently in full force and effect, is
enforceable in accordance with its terms, no rights thereto have been
assigned or transferred and no one has any adverse claims with respect
to the right of the ANDA Business to obtain the full benefits
thereunder. Except as set forth on Schedule 5.11, to the knowledge of
King and King-Nevada, there exist no events of default by King or
King-Nevada with respect to such supply contracts.
5.12 Relationship With Suppliers and Customers.
King-Nevada and King have maintained and continue to maintain, with
respect to the ANDA Business, good working relationships with all of
their customers and suppliers and, except as set forth and explained
on Schedule 5.12 hereof, within
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the eleven (11) months prior to the Closing Date, no customer of the
ANDA Business has canceled or threatened any cancellation of any of
the ANDA Agreements (or has materially diminished any of its orders
thereunder) and no supplier to the ANDA Business has canceled or
threatened any cancellation of any supplied materials (or has
materially diminished the level of its supply).
5.13 Pharmaceutical Products.
(a) King and King-Nevada represent and warrant that they have
delivered to Mallinckrodt certain information or given
Mallinckrodt access to all existing information regarding each of
the Current Products (along with a description of its
container/closure system) currently manufactured, marketed, sold
or licensed by King, King-Nevada or their affiliates. The Current
Products and all other products currently manufactured, sold or
licensed by King, King-Nevada or their affiliates are referred to
collectively as the "Pharmaceutical Products".
(b) Except as set forth on Schedule 5.13 there have been no (i)
Pharmaceutical Products which have been recalled, withdrawn or
suspended by King, King-Nevada or their affiliates in the United
States and/or outside of the United States (whether voluntarily
or otherwise) during the period commencing January 1, 1995 and
ending on the date hereof, or (ii) proceedings in the United
States and/or outside of the United States pending against King,
King-Nevada or their affiliates at any time during the period
commencing January 1, 1995 and ending on the date hereof (whether
such proceedings have since been completed or remain pending)
seeking the recall, withdrawal, suspension or seizure of any
Pharmaceutical Product or seeking to enjoin King or its
affiliates from engaging in any activities pertaining to such
Pharmaceutical Products or to affirmatively perform activities
pertaining to such Pharmaceutical Products prior to shipping such
products.
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(c) To the knowledge of King and King-Nevada. except as set forth in
Schedule 5.13:
(i) there exists no set of facts which could reasonably be
expected to furnish a basis for the recall or withdrawal of
any Pharmaceutical Product or the suspension of any product
registration, product license, manufacturing license,
wholesale dealers license, export license or other
governmental license, approval or consent of any
governmental regulatory agency with respect to any of the
Pharmaceutical Products or the Bristol Facility;
(ii) there exists no set of facts which could reasonably be
expected to furnish a basis for the recall, withdrawal,
suspension or seizure by order of any state, federal or
foreign agency or court of law of any Pharmaceutical Product
or which could reasonably be expected to form the basis for
the issuance of an injunction pertaining to such
Pharmaceutical Products, including, without limitation, the
procedures used to manufacture and test such products;
(iii) there exists no set of facts which could reasonably be
expected to otherwise cause King, King-Nevada or their
affiliates to recall, withdraw or suspend any Pharmaceutical
Product from the market or to cease further distribution or
marketing of commercially available products pending further
approval or authorization from a governmental official or
agency, or to change the marketing classification of any
Pharmaceutical Product or to terminate or suspend clinical
testing of any Pharmaceutical Product; and
(iv) the Current Products have been manufactured in accordance
with the specifications under which such Current Products
have normally been manufactured and in accordance with the
specifications provided in the appropriate ANDA, and,
furthermore in accordance with all applicable requirements
of law,
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including without limitation current Good Manufacturing
Practices as defined by the FDA ("cGMP").
(d) Except as set forth on Schedule 5.13, and to the extent it
might have any adverse effect on the Purchased Assets or
King's and King-Nevada's performance hereunder or under any
of the Collateral Agreements, during the period commencing
on January 1, 1995 and ending on the date hereof, with
respect to Pharmaceutical Products, King, King-Nevada or
their affiliates have not received or been subject to (i)
any FDA Form 483s, (ii) any FDA Notices of Adverse Findings,
(iii) establishment inspection reports, (iv) consent
decrees, orders, settlement agreements or similar matters
relating in any fashion to the Pharmaceutical Products or
(v) warning letters or other correspondence from the FDA or
other governmental officials or agencies concerning the
Pharmaceutical Products in which FDA or such other
governmental officials or agencies asserted that the
operations of King or its affiliates (or their predecessors
in interest) may not be in compliance with applicable law,
regulations, rules or guidelines. If King is in receipt of
or been subject to any of the reports or actions listed in
the immediately preceding sentence, King has responded or
taken appropriate remedial measures in a timely fashion, as
detailed specifically on Schedule 5.13.
(e) Except as set forth on Schedule 5.13, neither King or
King-Nevada nor any of their affiliates and, to King's and
King-Nevada's knowledge, none of its customers for Current
Products, have filed any Adverse Reaction Reports with the
FDA during the period commencing January 1, 1995 and ending
on the date hereof and have complied in all respects with
current reporting requirements.
(f) Except as set forth on Schedule 5.13, no employee of King,
King-Nevada or their affiliates, nor any consultant
retained by King, King-Nevada or their affiliates during
the period beginning on January 1, 1994 and ending on the
date hereof, has been debarred under Section 306(a) or
Section 306(b) of the
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Federal Food, Drug and Cosmetic Act or has, during that
period, been convicted of or formally charged with a
criminal offense relating to the development or approval
process of any drug product, or a felony of any kind and
under any law, statute or regulation involving bribery,
payment of illegal gratuities, fraud, perjury, false
statements, racketeering, blackmail, extortion,
falsification or destruction of records, or interference
with, obstruction of an investigation into, or prosecution
of, any criminal offense or a conspiracy to commit, aid or
abet such felony.
(g) Except as set forth on Schedule 5.13 and during the period
commencing on January 1, 1994 and ending on the date hereof,
with respect to King, King-Nevada or their affiliates, there
have been no inspections, inspection reports or other
correspondence from the Drug Enforcement Administration
("DEA") in which the DEA or any other government agency
asserts that the operations of King, King-Nevada or their
affiliates is or was not or may not be in compliance with
the federal Controlled Substances Act, as amended, or any
similar law of any country or other jurisdiction.
5.14 Environmental Compliance at the Bristol Facility.
(a) To the knowledge of King-Nevada and King and except as set
forth on Schedule 5.14, on and as of the Closing Date, King
and its affiliates are, with respect to the Bristol
Facility, in compliance with all applicable laws, rules,
regulations and decrees (including all reporting
requirements) under any federal, state, local or foreign
body of law or authority, relative to environmental, health
and safety matters, including, but not limited to, the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251
et seq., as amended ("FWPCA"), the Safe Drinking Water Act,
42 U.S.C. Section 300f et seq., as amended, the Clean Air
Act, 42 U.S.C. 7401 et seq., as amended ("CAA"), the
Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., as amended ("RCRA"), the Toxic Substances
Control Act 15 U.S.C. Section 2601 et seq., as amended
("TSCA"), the
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Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq., as amended, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, as
amended ("CERCLA"), and the Emergency Planning and Community
Right-To-Know Act. 42 U.S.C. Section 11001, or the state law
counterparts of any of the foregoing listed statutes, as
well as all rules and regulations promulgated pursuant to
any of the foregoing statutes or their state law
counterparts, where any noncompliance with any of the
foregoing might have an adverse effect on the Purchased
Assets, the ANDA Business or King's or King-Nevada's
compliance with and performance under the terms of this
Agreement or any of the Collateral Agreements.
(b) To the knowledge of King and King-Nevada, all environmental
and operating permits necessary for the operation of the
Bristol Facility or production hereunder have been obtained
or have been applied for within the period of time permitted
by law, and if already obtained are in effect on the date
hereof. To the knowledge of King and King-Nevada, King is in
compliance with the terms of any such permits and no action
or investigation has been taken, commenced or threatened by
governmental authorities or any other person to revoke or
modify such permits or applications or to enforce the terms
of or take action for violation of such permits, and there
is no known condition which could cause such action or
investigation to be taken. Except as set forth on Schedule
5.14, neither King nor King-Nevada have, with respect to the
ANDA Business or the Bristol Facility, filed any
applications for permits to store, treat, handle, dispose or
transport waste or any Hazardous Materials (as defined below
in subsection (e) of this Section 5.14).
(c) To the knowledge of King and King-Nevada and except as set
forth on Schedule 5.14, no spill, release or discharge of
Hazardous Materials to the air, land or water subject to the
reporting requirements of any federal, state or local law or
regulation has occurred at the Bristol Facility and there
has been no corrective action, remediation or clean up
required as a
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consequence of such spill, release or discharge which spill,
release or discharge might have any material adverse effect
on the Purchased Assets, the ANDA Business or King's or
King-Nevada's compliance with or performance under this
Agreement or the Collateral Agreement.
(d) To the knowledge of King and King-Nevada, the Bristol
Facility has not been designated as a "Superfund Site" and
is not otherwise the subject of an order of removal or
remedial action pursuant to any applicable federal, state or
local law, and there are no conditions or circumstances
affecting the Bristol Facility which might cause it to be
designated as a "Superfund Site" or render it subject to an
order of removal or remedial action.
(e) For purposes of this Section 5.14, "Hazardous Materials"
means any materials defined as hazardous materials,
substances or waste in any way by law as of the Closing
Date, including without limitation: (i) any "hazardous
substance" or "Pollutant or Contaminant" (as defined in
Sections 101(14), (33) of CERCLA or the regulations
designated pursuant to Section 102 of CERCLA, 42 U.S.C.
Section 9602 and found at 40 C.F.R. Part 302), including any
element, compound, mixture, solution, or substance
designated pursuant to Section 102 of CERCLA and as
regulated by CERCLA, (ii) any substance designated pursuant
to Section 311(b)(2)(A) of FWPCA and as regulated by FWPCA,
(iii) any hazardous waste having the characteristics
identified under or listed pursuant to Section 3001 of RCRA,
42 U.S.C. Sections 6901, 6921, (iv) any substance containing
petroleum, as defined in Section 9001(8) of RCRA, 42 U.S.C.
Section 6991(8) or 40 C.F.R. Part 280 and as regulated by
RCRA, (v) any toxic pollutant listed under Section 307(a) of
the FWPCA, 33 U.S.C. Section 1317(a) and as regulated by
FWPCA, (vi) any hazardous air pollutant listed under Section
112 of the CAA, 42 U.S.C. Section 7401, 7412, as amended and
as regulated by the CAA, (vii) any imminently hazardous
chemical substance or mixture with respect to which action
has been taken pursuant to Section 7 of TSCA, 15 U.S.C.
Sections 2601, 2606, as amended and as regulated by TSCA, or
(ix) any other hazardous or toxic
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materials, contaminants, substances or wastes regulated by
any applicable environmental law.
5.15 Compliance with Other Laws.
In addition to King's and King-Nevada's representations and
warranties relative to compliance with laws, rules and
regulations as detailed in Sections 5.13 and 5.14 above,
except as set forth on Schedule 5.15, King and King-Nevada
are, with respect to the ANDA Business or the King Business in
general, not in violation of or in default with respect to any
applicable law, rule, regulation, order, writ or decree of any
court or any governmental commission, board, bureau, agency or
instrumentality, which violation or default might have an
adverse effect on the Purchased Assets, the ANDA Business or
King's or King-Nevada's compliance with and performance under
the terms of this Agreement or any of the Collateral
Agreements.
5.16 Litigation.
Except as set forth on Schedule 5.16 hereto, there is no suit,
claim, action or proceeding now pending or, to the knowledge
of King and King-Nevada, threatened before any court,
administrative or regulatory body, arbitrator, or any
governmental agency, or any grounds therefor which may result
in any judgment, order, decree, liability or other
determination which will, or could, have an adverse effect
upon the ANDA Business, the Purchased Assets or King's or King
Nevada's compliance with and performance under the terms of
this Agreement or any of the Collateral Agreements. No such
judgment, order or decree has been entered or any such
liability incurred which has or could have such effect. No
party has tendered to King, King-Nevada or their affiliates,
nor has King, King-Nevada or their affiliates accepted the
tender of the defense of any claim, action or proceeding which
has or could have such effect. There is no claim, action or
proceeding now pending or, to the knowledge of King and
King-Nevada, threatened before any court, administrative or
regulatory body, arbitrator, or any governmental agency, which
has or could have such effect.
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5.17 Product and Service Warranties.
King and King-Nevada represent and warrant that they have
delivered to Mallinckrodt all relevant information or given
Mallinckrodt access to all relevant information regarding the
standard forms of product and service warranties and
guarantees utilized by King and King-Nevada with respect to
the ANDA Business. Except as set forth on Schedule 5.17
hereof, during a period beginning on January 1, 1995 through
the date hereof, neither King or King-Nevada nor their
affiliates have received notice of, or become aware of facts
or circumstances that might support, any claims (including,
but not limited to, claims for product liability, defects or
breaches of product or service warranties) in connection with
the manufacture, production, sale, distribution or use of any
products under the ANDA Business or with respect to the King
Business generally, which claims might have an adverse effect
on the ANDA Business, the Purchased Assets or King's or
King-Nevada's compliance with and performance under the terms
of this Agreement or any of the Collateral Agreements.
5.18 Broker's Fees.
No broker, finder or agent has been retained by King,
King-Nevada or any of their affiliates, nor by anyone acting
on behalf of any one of them, with respect to the transactions
contemplated herein, nor have King, King-Nevada or any of
their affiliates agreed to pay any brokerage fees, finder's
fees or commissions with respect to the transactions
contemplated by this Agreement.
5.19 Consents.
Other than the notice required by 21 CFR 314.72(a)(i), no
consents, approval or authorization of the FDA, the DEA or any
other governmental agency or official, or under the terms of
any law, rule, regulation, judgment, order or consent decree,
are required for the execution and performance by King or
King-Nevada
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of this Agreement and/or the Collateral Agreements or for
the consummation of the transactions set forth herein or
therein.
5.20 Material Facts.
To the knowledge of King and King-Nevada, neither this
Agreement nor any schedule or exhibit hereto (including
without limitation the Collateral Agreements), nor any written
statement or certificate furnished in connection herewith or
any of the transactions contemplated hereby, contains or will
contain an untrue statement of a fact or omits or will omit to
state a fact that is necessary in order to make the statements
contained herein and therein, in the light of the
circumstances under which they are made, not materially
misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF MALLINCKRODT
Mallinckrodt hereby makes the following representations and warranties,
each of which is true and correct on the Closing Date and shall continue to be
true and correct, and each of which shall survive the Closing Date and the
transactions contemplated hereby.
6.1 Corporate Status.
Mallinckrodt is a corporation duly organized, validly existing
and in good standing under the laws of the Stare of Delaware,
and has the corporate power and the authority to own and use
its properties and to transact its business in which it is
engaged and has the corporate power to enter into and
consummate this Agreement.
6.2 Authorization of Agreement.
The execution and delivery of this Agreement and the
Collateral Agreements do not, and the compliance with and the
fulfillment of, and the consummation of the
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transactions contemplated by this Agreement and the Collateral
Agreements will not, violate or conflict with any provision of
the Articles of Incorporation or Bylaws of Mallinckrodt, or
its affiliates, or result in a breach of, or constitute a
default under, or result in the acceleration of, any
obligation under any agreement or instrument to which
Mallinckrodt, or its affiliates, is a party or by which it is
bound, or violate any order, judgment, award or decree to
which it is a party or to which it is subject which could have
a material adverse effect on the consummation of the
transactions contemplated hereby. Attached hereto as Schedule
6.2 is a copy of the resolution of the Board of Directors of
Mallinckrodt Group Inc., Mallinckrodt's ultimate corporate
parent, authorizing Mallinckrodt to consummate the
transactions contemplated hereunder, which resolution
constitutes all action required by law, Mallinckrodt's or
Mallinckrodt Group Inc.'s Articles of Incorporation, their
Bylaws or otherwise to authorize and approve the execution,
delivery and performance of this Agreement and the Collateral
Agreements by Mallinckrodt.
6.3 Broker's Fees.
Neither Mallinckrodt nor anyone on its behalf has retained any
broker, finder or agent or agreed to pay any brokerage fees,
finder's fees or commissions with respect to the transactions
contemplated by this Agreement.
6.4 Consents.
Except as noted specifically in Section 6.2 above, no consent
of any third party is necessary for Mallinckrodt to effect
consummation of the transactions contemplated hereby.
6.5 Ability to Conduct Business.
Neither Mallinckrodt nor its agents, employees or affiliates
is subject to or bound by any judgment, order, writ,
injunction or decree of any court, or of any governmental body
or any arbitrator, or a party to, bound by or a beneficiary of
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any agreement which might interfere in any way with King's or
King Nevada's rights under this Agreement or the Collateral
Agreements or Mallinckrod's obligations hereunder or
thereunder.
6.6 Compliance with Laws.
Mallinckrodt is not in violation of or in default with respect
to any applicable law, rule, regulation, order, writ or decree
of all court or any governmental commission, board, bureau,
agency or instrumentality, which violation or default might
have an adverse effect on Mallinckrodt's compliance with and
performance under the terms of this Agreement or any of the
Collateral Agreements.
6.7 Relationship with Suppliers.
Mallinckrodt has maintained and continues to maintain, with
respect to its production of raw materials that will be used
by King in its performance under the Manufacturing Agreement,
good working relationships with all of its suppliers and,
within the one (1) year prior to the Closing Date, no such
supplier has canceled or threatened cancellation of any of its
agreements with Mallinckrodt or has materially diminished its
supply of any materials thereunder.
6.8 Material Facts
To the knowledge of Mallinckrodt, neither this Agreement nor
any schedule or exhibit hereto (including without limitation
the Collateral Agreements), or any written statement or
certificate furnished in connection herewith or any of the
transactions contemplated hereby, contains or will contain an
untrue statement of a fact or omits or will omit to state a
fact that is necessary in order to make the statements
contained herein and therein, in light of the circumstances
under which they are made, nor materially misleading.
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ARTICLE VII
FURTHER AGREEMENTS OF THE PARTIES
7.1 Preservation of Business.
From and after the Closing Date and subject to normal
commercial and business requirements, King and King-Nevada
shall carry on the King Business diligently and shall use all
reasonable efforts to keep their business organization intact
(including maintaining appropriate levels of insurance against
normally insurable risks given the nature of its business).
7.2 Full Access.
Representatives of Mallinckrodt, at Mallinckrodt's expense,
shall have access after the Closing Date at all reasonable
times and upon advance arrangement with King to all premises,
properties, books, records, contracts and documents of the
ANDA Business (including, without limitation, access to raw
data in support of product lot approvals and stability
reports) and such other information concerning the King
Business generally as may be relevant to the protection of
Mallinckrodt's rights and interests hereunder, and King will
furnish to Mallinckrodt any information related to the
foregoing as Mallinckrodt may from time to time request.
Specifically, from and after the Closing Date, Mallinckrodt,
at its own expense, shall have the right, from time to time
and upon reasonable advance notice, during normal business
hours, when the Bristol Facility is in operation, to have one
or more of its employees or representatives visit the Bristol
Facility to review any of King's or King-Nevada's operations
relative to the ANDA Business or the King Business generally
as necessary for the protection of any of Mallinckrodt's
rights hereunder or under the Collateral Agreements. It is not
the intent of the parties, by the provisions of this Section
7.2 to give general access to Mallinckrodt to financial
information or other confidential and proprietary information
of King but only to give Mallinckrodt access to that
information it reasonably requires to ensure the continued
performance by King and King-
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Nevada of their obligations under this Agreement or the
Collateral Agreements. Mallinckrodt acknowledges that King and
King-Nevada and their affiliates will have manufacturing,
supply, development, confidentiality and distribution
agreements with entities other than Mallinckrodt involving
products other than the Current Products, Future Products, and
the Branded line and Mallinckrodt acknowledges it shall have
no right to access such confidential. proprietary, or general
business information about such operations or agreements.
7.3 Taxes.
Each of King-Nevada and Mallinckrodt shall pay and be
responsible for one-half of any sales, use or transfer tax
levied upon or incident to the consummation of the
transactions contemplated herein.
7.4 Further Assurances.
From time to time after the Closing Date, King and King-Nevada
shall, at the request of Mallinckrodt, execute and deliver or
cause to be executed or delivered all such deeds, assignments,
consents, documents and further instruments of transfer and
conveyance, and take or cause to be taken all such other
actions, all as Mallinckrodt may reasonably deem necessary or
desirable in order to fully and effectively vest in
Mallinckrodt, or to confirm its title to and possession of,
the Purchased Assets, or to assist Mallinckrodt, particularly
with regard to any requirements imposed by the FDA or any
other regulatory agency, in exercising any rights which
Mallinckrodt is currently or ultimately (as the case may be)
entitled to exercise with respect thereto.
7.5 Notification of Claims.
After the Closing Date, each party shall promptly notify all
of the others of any action, suit or proceeding that shall be
instituted or threatened against a party to restrain, prohibit
or otherwise challenge the legality of the continuing
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performance of any transactions or obligations under this
Agreement or the Collateral Agreements.
7.6 No Public Announcement.
Within thirty (30) days after the Closing Date the parties
agree to make a joint announcement to the press and trade
journals substantially and substantively in the form of
Schedule 7.6. Except as contemplated by the immediately
preceding sentence, neither of the parties shall, without the
approval of the other party hereto, make any press release or
other public announcement concerning the transactions
contemplated by this Agreement or the Collateral Agreements,
except to the extent that any party is reasonably of the
opinion that it must make a disclosure of relevant facts to
its shareholders in any particular circumstance and except as
and to the extent that any party shall be obligated by law to
make such an announcement, and in either case the disclosing
party shall so advise the other party in advance and both
parties hereto shall use their best efforts to cause a
mutually agreeable release or announcement to be issued.
7.7 Opinions of Counsel.
On and as of the Closing Date, King and King-Nevada will
provide to Mallinckrodt an opinion of King's counsel, Hunter,
Xxxxx and Xxxxx of Kingsport, Tennessee, as follows:
(i) King is a corporation duly organized, validly
existing and in good standing under the laws of the
State or Tennessee, has full corporate power and
authority to own and use its properties and to
transact the business in which it is engaged;
(ii) King-Nevada is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Nevada, has full corporate power and
authority to own and use its properties and to
transact the business in which it is engaged;
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(iii) King and King-Nevada have full corporate power and
authority to enter into this Agreement and the
Collateral Agreements and to consummate the
transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement
and the Collateral Agreements by King and King-Nevada
have been duly authorized by all requisite corporate
action on the part of King and King-Nevada, and this
Agreement and the Collateral Agreements constitute the
valid and binding obligations of King and King-Nevada,
enforceable against them in accordance with their terms
except (A) as such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating
to creditors' rights and (B) that the remedy of
specific performance and injunctive and other forms of
equitable relief are subject to certain equitable
defenses and to the discretion of the court before
which any proceeding therefor may be brought;
(iv) the Xxxx of Sale and Assignment attached hereto as
Exhibit A and any other instruments of transfer and
conveyance being delivered to Mallinckrodt on and as of
the Closing Date are jointly sufficient and in proper
form to convey to Mallinckrodt all of the right, title
and interest of King-Nevada in and to the Purchased
Assets, and payment by Mallinckrodt of any
consideration hereunder as, when and if specifically
required, will effectively convey, transfer and assign
such right, title and interest in and to the Purchased
Assets to Mallinckrodt;
(v) to such counsel's knowledge, except as set forth on any
of the Schedules to this Agreement, neither King or
King-Nevada nor their affiliates are parties to,
subject to or bound by any agreement or any judgment,
order, writ, injunction, or decree of any court,
governmental body or arbitrator which would or could
conflict with or be breached by the execution, delivery
or performance by King or King-Nevada of this Agreement
or the Collateral Agreements or which would or could
prevent the carrying out of any of King's or
King-Nevada's obligations under this Agreement or the
Collateral Agreements;
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(vi) to such counsel's knowledge, except as set forth herein
on any of the Schedules to this Agreement, neither King
or King-Nevada nor their affiliates are subject to or
bound by any judgment, order, writ, injunction or
decree of any court or of any governmental body or of
any arbitrator, or a party to, bound by, or a
beneficiary of any agreement which would or could
prevent the use by Mallinckrodt, after the Closing
Date, of the Purchased Assets, or which might create
any security interest, lien or other encumbrance
against any of the Purchased Assets;
(vii) to such counsel's knowledge, except as set forth on
any of the Schedules to this Agreement or as specified
in its opinion, no litigation, proceeding or
governmental investigation is pending against or
relating to the ANDA Business, the Purchased Assets or
the King Business; and
(viii) to such counsel's knowledge, except as set forth on
any of the Schedules to this Agreement, neither King or
King-Nevada nor their affiliates is in default under or
in violation of any agreement or any law or
governmental regulation, ordinance or rule applicable
to them or their operations, which default or violation
could have a material adverse effect on the ANDA
Business, the Purchased Assets or the King Business or
might prevent King or King-Nevada from complying with
or performing under this Agreement or the Collateral
Agreements.
ARTICLE VIII
INDEMNIFICATION
8.1 Agreement to Indemnify.
(a) King and King-Nevada hereby agree to indemnify,
defend and hold harmless Mallinckrodt and its
affiliates, from and against any and all demands,
claims, actions or causes of action, assessments,
losses, damages, injuries, liabilities, costs and
expenses, including without limitation, interest,
penalties and reasonable attorneys' fees and expenses
(collectively, "Damages") asserted against, resulting
to, imposed upon or
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incurred by Mallinckrodt or its affiliates, directly or
indirectly, related to, arising out of or resulting from:
(i) any and all claims, liabilities or obligations (whether
absolute, accrued or contingent) relating to or arising
out of any acts of, or omissions to act by King,
King-Nevada or their affiliates, or any of their
employees, agents or representatives, which take place
on or prior to the Closing Date hereunder in connection
with the ANDA Business, the Purchased Assets or the
King Business (including, without limitation any
obligations or liabilities under any of the ANDA
Agreements relating to performance required or
undertaken with respect thereto prior to the Closing
Date, except to the extent Mallinckrodt has and
specifically and unambiguously otherwise agreed in
writing), or
(ii) any breach of the representations, warranties,
covenants or agreements of King or King-Nevada
contained in this Agreement or in any of the Collateral
Agreements, or
(iii) any acts or omissions to act by King, King-Nevada or
their affiliates, or any of their employees, agents or
representatives, that result in any violation or
alleged violation of any law, rule, regulation, order
or judicial decree of any federal, state or local
government, domestic or international, that in any
manner adversely affect the rights and benefits of
Mallinckrodt under this Agreement or under any of the
Collateral Agreements or that materially affect or
prevent the performance by King or King-Nevada of any
of their obligations hereunder or thereunder.
(b) Mallinckrodt hereby agrees to indemnify, defend and
hold harmless King, King-Nevada and their affiliates
from and against any and all Damages asserted
against, resulting to, imposed upon or incurred by
King, King-Nevada or their affiliates directly or
indirectly, related to, arising out of or resulting
from:
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(i) any breach of the representations, warranties,
covenants or agreement of Mallinckrodt or its
affiliates contained in this Agreement or in any of the
Collateral Agreements, or
(ii) any acts or omissions to act by Mallinckrodt or its
affiliates, or any of its employees, agents or
representatives, that result in any violation or
alleged violation of any law, rule, regulation, order
or judicial decree of any federal, state or local
government, domestic or international, that in any
manner adversely affect the rights and benefits of
King, King-Nevada or their affiliates under this
Agreement or under any of the Collateral Agreements or
that hinder or prevent the performance by Mallinckrodt
of any of its obligations hereunder or thereunder.
8.2 Post Closing Claims.
(a) In the event that a party (the "Indemnified Party") shall
reasonably believe that it has a claim for Damages ("Post
Closing Claim"), it shall give prompt notice in accordance
herewith to the responsible party or parties (the
"Indemnifying Party") of the nature and extent of such Post
Closing Claim and the Damages incurred by it. If the Damages
are liquidated in amount, the notice shall so state, and
such amount shall be deemed the amount of such Post Closing
Claim of the Indemnified Party against the Indemnifying
Party (subject to the right of the Indemnified Party to
submit claims for additional Damages incurred after the date
of any such notice). If the amount is not liquidated, the
notice shall so state and, in such event, such Post Closing
Claim shall be deemed asserted against the Indemnifying
Party, but no payment or satisfaction shall be made on
account thereof until the amount of such claim is
liquidated.
(b) If the Indemnifying Party shall not, within thirty (30) days
after the giving of such notice by the Indemnified Party,
notify the Indemnified Party in accordance herewith that the
Indemnifying Party disputes the right of the Indemnified
Party to indemnity in respect of such Post Closing Claim,
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then any such Post Closing Claim shall he paid or satisfied
as follows: (i) if said Post Closing Claim is liquidated,
the full amount of Damages associated with such Post Closing
Claim shall be paid to the Indemnified Party by the
Indemnifying Party at the end of such thirty (30) day
period, or (ii) if the amount of such Post Closing Claim is
unliquidated at the time notice is originally given to the
Indemnifying Party, the Indemnified Party shall give a
second notice to the Indemnifying Party when the liquidated
amount of such Post Closing Claim is known and, unless the
Indemnifying Party shall object in writing to such amount
(as opposed to the Post Closing Claim itself, as to which
the right to dispute had expired) within twenty (20) days
after the giving of said second notice, then payment of the
Damages associated with such Post Closing Claim shall be
made by the Indemnifying Party to the Indemnified Party at
the end of such twenty (20) day period.
(c) Any portion of the amount of Damages asserted by an
Indemnified Party in connection with a Post Closing Claim
shall, if not objected to by the Indemnifying Party in
accordance with the procedures established herein, be
considered to be subject to satisfaction by payment without
further objection.
(d) If an Indemnifying Party shall notify the Indemnified Party
that it disputes any Post Closing Claim or the amount
thereof (which notice shall only be given if the
Indemnifying Party has a good faith belief that the
Indemnified Party is not entitled to indemnity or the full
amount of indemnity as claimed) then the parties hereto
shall endeavor to settle and compromise such claim, or may
agree to submit the same to arbitration, and, if unable to
agree on any settlement or compromise or on submission to
arbitration, such claim shall be settled by appropriate
litigation, and any liability and the amount of the Damages
established by reason of such settlement, compromise,
arbitration or litigation, or incurred as a result thereof,
shall be paid and satisfied as provided herein.
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8.3 Conditions of Indemnification with Respect to Third Party Claims.
(a) An Indemnified Party will promptly give notice to the
Indemnifying Party of any claim of a third party which may
reasonably be expected to result in a Post Closing Claim by
the Indemnified Party. An Indemnifying Party shall have the
right to direct the defense, compromise or settlement of
such claim with counsel selected by it, provided the
Indemnifying Party gives written notice to the Indemnified
Party of its election to do so within twenty (20) days after
receipt of notice in accordance with the preceding sentence.
If the Indemnifying Party fails to so notify the Indemnified
Party of its election to defend any such third party claim,
the Indemnified Party will (upon further notice to the
Indemnifying Party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for
the account and expense of the Indemnifying Party, subject
to the right of the Indemnifying Party to assume the defense
of such claim at any time prior to settlement, compromise or
final determination thereof if and only if such assumption
would not prejudice the defense of such claim or the rights
of the Indemnified Party.
(b) In the event an Indemnifying Party has assumed the defense
of any such claim, the Indemnified Party shall nonetheless
have the right to select its own counsel and participate in
the defense of such claim at and for its own expense and
account, subject to the right of the Indemnifying Party to
retain ultimate control of the management of the defense of
such claim, and further subject to the obligation of the
Indemnified Party reasonably to cooperate in all respects
with the Indemnifying Party for the effective defense of
such claim. Counsel for the Indemnified Party in such
circumstances shall consult and cooperate with counsel for
the Indemnifying Party in defending against any such third
party claim.
(c) An Indemnifying Party shall not under any circumstances,
without the written consent of the Indemnified Party, settle
or compromise any claim or consent to the entry of any
judgment which does not include as an
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unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all
liability in respect of such claim, in form and substance
reasonably satisfactory to the Indemnified Party.
(d) Notwithstanding anything to the contrary contained herein,
if a third party claim is made which the third party is
unequivocally willing to settle for the payment of money but
the Indemnified Party elects not to settle, then the
Indemnifying Party shall not be liable hereunder with
respect to any Post Closing Claim arising from such third
party claim for more than the amount which such third party
at any time unequivocally agrees in writing to accept in
payment or compromise of the claim plus any related costs
and expenses incurred by the Indemnified Party as of the
date of such offer of settlement.
ARTICLE IX
MISCELLANEOUS
9.1 Remedies Cumulative.
The remedies provided in this Agreement shall be cumulative and shall
not preclude assertion by any party hereto of any other rights
(whether legal or equitable in nature) or the seeking of any other
remedies against any other party hereto.
9.2 Survival of Representations and Warranties.
The representations and warranties contained herein or in any schedule
or other document attached hereto shall be deemed representations and
warranties by the party by whom, or on whose behalf, the same is
delivered, except and unless as otherwise provided herein, and all
representations and warranties made by the parties in this Agreement,
or delivered pursuant hereto, are incorporated in and constitute a
part of this Agreement and shall survive the Closing Date.
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9.3 Payment of Fees and Expenses.
Mallinckrodt shall pay and be responsible for all of its own
fees and expenses (including fees and expenses of its counsel,
accountants and other advisers) incurred incident to the
negotiation, preparation and execution of this Agreement and
the Collateral Agreements and the consummation of the
transactions contemplated herein. King-Nevada shall pay and be
responsible for all of its own and King's fees and expenses
(including fees and expenses of counsel, accountants and other
advisers) incurred by them incident to the negotiation,
preparation and execution of this Agreement and the Collateral
Agreements and the consummation of the transactions
contemplated herein.
9.4 Entire Agreement.
This Agreement, and any exhibits (including the Collateral
Agreements), schedules or other documents referenced herein
constitute the entire agreement of the parties as to the
subject matter hereof, and supersede all prior discussions,
negotiations and agreements, whether written or oral, express
or implied, between the parties with respect to its subject
matter, including that certain Letter of Intent between
Mallinckrodt and King dated September 12, 1995.
9.5 Modification.
This Agreement may not be modified except by a writing
specifically referring to this Agreement and executed by duly
authorized representatives of all parties.
9.6 Waiver.
The failure by any party to exercise any of its rights
hereunder or to enforce any of the terms or conditions of this
Agreement on any occasion shall not constitute or be deemed a
waiver of that party's rights thereafter to exercise any
rights hereunder or to enforce each and every term and
condition of this Agreement.
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9.7 Severability.
A determination that any portion of this Agreement is
unenforceable or invalid shall not affect the enforceability
or validity of any of the remaining portions hereof or of this
Agreement as a whole. In the event that any part of any of the
covenants, sections or provisions herein may be determined by
a court of law or equity to be overly broad or against
applicable precedent or public policy, thereby making such
covenants, sections or provisions invalid or unenforceable,
the parties shall attempt to reach agreement with respect to a
valid and enforceable substitute for the deleted provisions
which shall be as close in its intent and effect as possible
to the deleted portions.
9.8 Notices.
All notices, consents, approvals or other notifications
required to be sent by any party to another party hereunder
shall be in writing and shall be deemed served upon a party if
delivered by hand or sent by United States registered or
certified mail, postage prepaid, with return receipt
requested, addressed to such other party at the address set
out below, or the last address of such party as shall have
been communicated to the other party. If a party changes its
address, written notice shall be given promptly to the other
party of the new address. Notice shall be deemed given on the
day it is mailed (in the case of delivery by mail) or the date
of delivery (in the case of delivery by hand) in accordance
with the provisions of this paragraph. All periods for notice
specified herein shall be deemed to refer to calendar days and
not business days, unless otherwise expressly provided. The
address for notices is as follows:
King: Xxxx X. Xxxxxxx
President and CEO
King Pharmaceuticals, Inc.
000 0xx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
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King-Nevada: Xxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Copy to: Xxxx X. X. Xxxxxxx
Corporate Counsel and Vice President
King Pharmaceuticals, Inc.
000 0xx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Mallinckrodt: Xxxxxxx X. Xxxxxxx
Group Vice President
Mallinckrodt Chemical, Inc.
00000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Copy to: Xxxx X. Xxxxxxx
Vice President and General Counsel
Mallinckrodt Chemical, Inc.
00000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
9.9 Binding Effect and Assignment.
This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their successors and assigns;
provided, however, that neither party shall, without the prior
written consent of the other party, assign or transfer any of
its rights, benefits, obligations, or other interest under
this Agreement or the Collateral Agreements to any other
party.
9.10 Governing Law.
This Agreement shall be construed, interpreted and enforced in
accordance with the laws (both substantive and procedural) of
the State of Missouri, but excluding any provision thereof
which would mandate the application of the laws of any other
jurisdiction.
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IN WITNESS WHEREOF, the parties hereto, by and through their duly
authorized representatives have executed this Agreement, as of the day and year
first above written.
MALLINCKRODT CHEMICAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx,
Vice President Strategic Development
KING PHARMACEUTICALS OF NEVADA, INC.
By: /s/ Xxxx X.X. Xxxxxxx
---------------------------------------
Xxxx X.X. Xxxxxxx, Vice President
KING PHARMACEUTICALS, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx, President and CEO
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