1
EXHIBIT 2.1
*** Text Omitted and Filed
Separately. Confidential
Treatment Requested Under
17 C.F.R. Sections
200.80(b)(4), 200.83 and
240.24b-2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PROMETHEUS LABORATORIES, INC.
AND
CONNETICS CORPORATION
APRIL 9, 2001
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PAGE
ARTICLE 1 DEFINITIONS...................................................................1
1.1 Defined Terms.................................................................1
ARTICLE 2 PURCHASED ASSETS..............................................................6
2.1 Assets to be Sold and Purchased...............................................6
2.2 Liabilities...................................................................6
ARTICLE 3 PURCHASE PRICE; TAXES; PAYMENTS...............................................7
3.1 Purchase Price................................................................7
3.2 Payment of Purchase Price.....................................................7
3.3 Transfer Taxes................................................................8
3.4 Royalty Payments to Connetics.................................................8
3.5 Payments to SKB...............................................................8
3.6 Invoices from SKB.............................................................8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF CONNETICS...................................8
4.1 Incorporation, Organization and Qualification.................................8
4.2 Authorization and Validity of Agreement.......................................8
4.3 Title to Purchased Assets.....................................................9
4.4 Financial Information.........................................................9
4.5 Litigation....................................................................9
4.6 Inventory.....................................................................9
4.7 Product Formulas.............................................................10
4.8 Regulatory Issues............................................................10
4.9 Compliance with Law..........................................................10
4.10 Connetics Contracts..........................................................11
4.11 Intellectual Property Rights.................................................12
4.12 Schedules....................................................................12
4.13 Copies of Marketing Documents................................................13
4.14 Health, Safety, Employment and Environmental Matters.........................13
4.15 Ordinary Course..............................................................13
4.16 Governmental Approvals.......................................................13
4.17 Manufacturing................................................................13
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4.18 Product Transfer.............................................................14
4.19 Customers; Distributors......................................................14
4.20 Sale of Products.............................................................14
4.21 Solvency.....................................................................14
ARTICLE 5 COVENANTS OF CONNETICS.......................................................15
5.1 Conduct of the Business After Date of Term Sheet.............................15
5.2 Release of Security Interest.................................................15
5.3 Post Closing Orders..........................................................16
5.4 Confidentiality..............................................................16
5.5 Financial Information........................................................16
5.6 Product Complaints...........................................................16
5.7 Recalls of Product...........................................................16
5.8 Non-Compete..................................................................17
5.9 Insurance....................................................................17
5.10 Access and Investigation.....................................................17
5.11 Notification; Updates to Schedules...........................................17
5.12 No Negotiation...............................................................18
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PROMETHEUS.................................18
6.1 Incorporation, Organization and Qualification of Prometheus..................18
6.2 Corporate Action.............................................................18
6.3 Governmental Approvals.......................................................18
6.4 Governmental Permits and Licenses............................................19
6.5 Solvency.....................................................................19
ARTICLE 7 COVENANTS OF PROMETHEUS......................................................19
7.1 Insurance....................................................................19
7.2 Confidentiality..............................................................19
7.3 Pharmascience Agreement; Supply Agreement....................................20
7.4 Connetics' Audit Rights......................................................20
7.5 Audit Fees...................................................................20
7.6 Financial Information........................................................20
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7.7 Paladin Inventory and Credit.................................................20
7.8 Ridaura Agreement............................................................20
ARTICLE 8 MUTUAL COVENANTS.............................................................21
8.1 Trade Returns................................................................21
8.2 Product Liability............................................................21
8.3 Brokers......................................................................21
8.4 Allocation of Purchase Price.................................................22
8.5 Best Efforts.................................................................22
8.6 Best Efforts to Obtain Satisfaction of Conditions............................22
8.7 Adverse Event Reports........................................................22
8.8 Transfer of Registrations, Etc...............................................22
8.9 Use of Name..................................................................22
8.10 Transfer of Regulatory Documents and Responsibility..........................23
8.11 Coordination of Regulatory Reporting Responsibilities........................23
ARTICLE 9 CLOSING ARRANGEMENTS.........................................................24
9.1 Closing Arrangements.........................................................24
9.1.1 Connetics' Delivery of Closing Documents..............................24
9.1.2 Prometheus' Delivery of Closing Documents.............................24
9.1.3 Payment of Purchase Price.............................................24
9.1.4 Physical Delivery.....................................................25
9.1.5 Paladin Inventory.....................................................25
9.2 Transfer Expenses--Intellectual Property.....................................25
ARTICLE 10 PROMETHEUS' CONDITIONS OF CLOSING............................................25
10.1 Representations and Warranties at Closing....................................25
10.2 Compliance With Terms and Conditions.........................................25
10.3 Necessary Consents...........................................................25
10.4 No Actions Taken Restricting Sale............................................25
10.5 SKB Consent..................................................................26
10.6 Pharmascience Consent........................................................26
10.7 Financing....................................................................26
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10.8 Insurance Certificate........................................................26
ARTICLE 11 CONNETICS' CONDITIONS OF CLOSING.............................................26
11.1 Compliance with Terms........................................................26
11.2 No Action Taken Restricting Sale.............................................26
11.3 Insurance Certificate........................................................26
ARTICLE 12 CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES.................................27
ARTICLE 13 INDEMNIFICATION..............................................................27
13.1 Connetics' Indemnification...................................................27
13.2 Prometheus' Indemnification..................................................27
13.3 Claims Procedures............................................................28
13.4 Nature of Survival of Representations, Etc...................................29
ARTICLE 14 TERMINATION..................................................................29
14.1 Termination Events...........................................................29
14.2 Termination Procedures.......................................................29
14.3 Effect of Termination........................................................30
14.4 Non-Exclusivity of Termination Rights........................................30
14.5 Termination Fee..............................................................30
ARTICLE 15 MISCELLANEOUS................................................................30
15.1 Further Assurances...........................................................30
15.2 Announcements................................................................31
15.3 Fees and Expenses............................................................31
15.5 Attorneys' Fees..............................................................32
15.6 Notices......................................................................32
15.7 Applicable Law...............................................................32
15.8 Remedies Cumulative; Specific Performance....................................32
15.9 Entire Agreement.............................................................33
15.10 Waiver.......................................................................33
15.11 Severability.................................................................33
15.12 Knowledge....................................................................33
15.13 Counterparts.................................................................33
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15.14 Singular/Plural..............................................................33
15.15 Headings, Etc................................................................33
15.16 Successors and Assigns; Parties in Interest..................................34
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT entered into as of April 9, 2001 (the
"EFFECTIVE DATE") is made by and between PROMETHEUS LABORATORIES, INC., a
California corporation, having its principal place of business at 0000 Xxxxxxx
Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("PROMETHEUS"), and CONNETICS
CORPORATION, a Delaware corporation, having its principal place of business at
0000 Xxxx Xxxxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 ("CONNETICS"). Prometheus
and Connetics are sometimes referred to in this Agreement individually as a
"PARTY" and collectively as the "PARTIES."
BACKGROUND
Connetics manufactures and sells the prescription pharmaceutical product
Ridaura(R) (auranofin) (the "PRODUCT"), and Prometheus, desires to purchase and
Connetics desires to sell the Product and the Purchased Assets (as defined in
this Agreement), on the terms and conditions set forth in this Agreement.
THEREFORE, in consideration of the mutual covenants and undertakings of
the Parties set forth below, the Parties, intending to be legally bound, agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. The following terms shall be deemed to have the
meanings stated below:
"ACQUISITION TRANSACTION" means any transaction involving the sale or
other disposition of all or any portion of the Purchased Assets (other than the
sale and disposal of Product in the ordinary course of business), whether by
asset sale, stock sale, merger, consolidation, business combination, share
exchange, reorganization or similar transaction involving Connetics.
"AFFILIATE" means, for so long as one of the following relationships is
maintained, any corporation or other business entity controlled by, controlling,
or under common control with another entity; with "control" meaning direct or
indirect beneficial ownership of more than 50 percent (50%) of the voting stock
of such corporation, or more than 50 percent (50%) interest in the
decision-making authority of such other unincorporated business entity.
"AGREEMENT" means this Asset Purchase Agreement (including all exhibits
and schedules hereto) and any amendments to this Agreement.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 2.2.1.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any other
day which in the United States is a national legal holiday or any day on which
national banking institutions are authorized by law to close.
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"CLOSING" shall mean the closing of the transactions contemplated by
this Agreement.
"CLOSING DATE" means 1:00 o'clock p.m. Pacific Time on April 30, 2001 or
such other date as the Parties mutually agree, at which time the Parties are to
deliver the closing documents described in Article 9 and at which time the
Closing will take place.
"CONNETICS CONTRACTS" shall have the meaning set forth in Section 4.10.
"CONNETICS PERIOD OF OWNERSHIP" shall mean the period from December 2,
1996 to the Closing Date.
"CONTRACT" means any written, oral, implied or other agreement,
contract, understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, benefit plan, commitment,
covenant, assurance or undertaking of any nature.
"ENCUMBRANCE" means any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, equity, trust, equitable interest, claim,
preference, right of possession, lease, tenancy, license, encroachment,
covenant, infringement, interference, Order, proxy, option, right of first
refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
"ENTITY" means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, cooperative, foundation, society, political party,
union, company (including any limited liability company or joint stock company),
firm or other enterprise, association, organization or entity.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED ASSETS" means the assets identified on Schedule 1.1 (to the
extent owned by Connetics on the Closing Date).
"FINISHED GOODS" means Product that is finished, packaged and ready for
commercial sale.
"GOVERNMENTAL BODY" means any: (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; (c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court, arbitrator or
other tribunal); (d) multi-national organization or body; or (e) individual,
Entity or body exercising, or entitled to exercise, any executive, legislative,
judicial, administrative, regulatory, police, military or taxing authority or
power of any nature.
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"GOVERNMENTAL AUTHORIZATION" means any: (a) permit, license,
certificate, franchise, concession, approval, consent, ratification, permission,
clearance, confirmation, endorsement, waiver, certification, designation,
rating, registration, qualification or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement; or (b) right under any Contract with any
Governmental Body.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 13.3.1.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 13.3.1.
"INTELLECTUAL PROPERTY" means:
(a) all trademarks (whether registered or unregistered),
trade names and applications therefor, brand names, logotypes and symbols to the
extent owned by or licensed to Connetics and used solely or primarily in the
manufacture or sale of the Product in the Territory, all renewals, modifications
and extensions thereof, together with the goodwill associated with any of the
foregoing, including, without limitation, such of the foregoing as are listed or
described in Schedule 4.11; and
(b) all patents and patent applications (including
continuations, continuations-in-part, renewals, reissues, modifications and
extensions thereof), trade secrets, know-how, formulations, designs,
discoveries, processes, manufacturing techniques, improvements, ideas,
copyrights (whether registered or unregistered), copyrightable works and other
inventions (whether or not patentable), in each case to the extent owned by or
licensed to Connetics and claiming the manufacture, use or sale of the Product
in the Territory, including, without limitation, those that are listed in
Schedule 4.11; provided, however, that "Intellectual Property" does not include
Connetics' name or any variation thereof, the corresponding logos or current
trade dress of the Product (except for the trademarks listed in Schedule 4.11).
"INVENTORIES" means all of Connetics' inventories of Finished Goods in
the Territory at the Closing Date and any rights of Connetics to any warranties
received from manufacturers and sellers with respect to such Finished Goods as
set forth in Schedule 4.6.
"LEGAL REQUIREMENT" means any federal, state, local, municipal, foreign
or other law, statute, legislation, constitution, principle of common law,
resolution, ordinance, code, edict, decree, proclamation, treaty, convention,
rule, regulation, ruling, directive, pronouncement, requirement, specification,
determination, decision, opinion or interpretation issued, enacted, adopted,
passed, approved, promulgated, made, implemented or otherwise put into effect by
or under the authority of any Governmental Body.
"LIABILITY" means any debt, obligation, duty or liability of any nature
(including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
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"NET SALES" means the proceeds actually received from the sale of the
Product to purchasers, less:
(a) credits on account of the rejection, return or billing
errors relating to any Product previously billed and paid; and
(b) Product returns, reimbursement and invoice
adjustments, including rebates and chargebacks;
in each case, to the extent allowed and taken and separately stated in the
statements or invoices therefor and/or supported by written documentation
pertaining thereto.
"ORDER" means any: (a) order, judgment, injunction, edict, decree,
ruling, pronouncement, determination, decision, opinion, verdict, sentence,
subpoena, writ or award issued, made, entered, rendered or otherwise put into
effect by or under the authority of any court, administrative agency or other
Governmental Body or any arbitrator or arbitration panel; or (b) Contract with
any Governmental Body entered into in connection with any Proceeding.
"PALADIN" means Paladin Labs, Inc.
"PERSON" means any individual, Entity or Governmental Body.
"PHARMASCIENCE AGREEMENT" means the Supply Agreement between Connetics
and Pharmascience, Inc. dated December 19, 1997, a copy of which is set forth at
Exhibit A.
"PHARMASCIENCE" means Pharmascience, Inc., a Canadian corporation, and
its divisions and Affiliates.
"PRE-CLOSING PERIOD" shall mean the period from January 1, 2001 through
the Closing Date.
"PROCEEDING" means any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding and any informal proceeding), prosecution, contest, hearing, inquiry,
inquest, audit, examination or investigation commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental Body or any
arbitrator or arbitration panel.
"PRODUCT" means Ridaura(R) (auranofin).
"PURCHASE PRICE" shall have the meaning set forth in Section 3.1.
"PURCHASED ASSETS" means any and all of the property, rights, interests
and other tangible and intangible assets of Connetics necessary for or related
to the use, manufacture or sale of the Product in the Territory (wherever
located and whether or not required to be reflected on a balance sheet prepared
in accordance with generally accepted accounting principles), including any such
assets acquired by Connetics during the Pre-Closing Period; provided, however,
that the Purchased Assets shall not include any Excluded Assets. Without
limiting the generality of the foregoing, the Purchased Assets shall include:
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(a) all Intellectual Property;
(b) the Internet domain name "Xxxxxxx.xxx" and any content
associated with such Internet domain name or website;
(c) all regulatory submissions (whether completed or in
process) to any Governmental Body in the Territory relating to the manufacture,
use or sale of the Product, including all annual reports, adverse event reports,
Event Net database and other adverse event submission tracking information, and
amendments and supplements to any of the foregoing, including, without
limitation, New Drug Application No. * and all supplements thereto, as amended,
* dated * and * dated *, each on file with the U.S. Food and Drug Administration
(the "FDA") (collectively, the "REGULATORY DOCUMENTS");
(d) all data and information in the possession of
Connetics or its Affiliates or agents relating to the Product, including,
without limitation, all data generated from clinical trials of the Product
(whether completed or in progress) and all information in the possession of
Connetics or its Affiliates or agents as of the Closing Date relating to the
manufacture, testing, stability, release and shelf life of the Product;
(e) all Inventories, active pharmaceutical ingredient
("API") and all work-in-process inventory relating to the Product owned by
Connetics (whether held at Connetics' facilities or the facilities of Connetics'
contract manufacturers, contractors, subcontractors, or agents);
(f) with the exception of any and all rights Connetics may
have against SKB relating to Product up to and including Lot * all rights
of Connetics under the Ridaura Agreement;
(g) all rights of Connetics under the Pharmascience
Agreement;
(h) all rights of Connetics under the Supply Agreement;
(i) the existing lists of current, past and prospective
customers for the Product, records of volumes of gross sales and all reserves by
month for the twelve months ending December 31, 2000 and unaudited from January
1, 2001 through the Closing Date; written contracts and documentation in
Connetics' possession pertaining to any of the foregoing; provided, however,
that Connetics retains its rights to such information with respect to sales of
Connetics' products other than the Product;
(j) Connetics' existing files pertaining to the Product
(whether in written or machine readable form), including, without limitation,
research and development files, FDA files pertaining to the Product (including
applications and registrations, as applicable), market studies, marketing plans,
key physician records, copies of consumer complaint files, sales histories,
quality control histories, manufacturing know-how and all other information and
data pertaining to the Product which are in the possession of Connetics or its
Affiliates or agents and which are accessible by Connetics or its Affiliates
using reasonable efforts;
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
5.
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(k) all work in progress with respect to the improvement,
planning, promotion, production, validation, development and distribution of the
Product, including, without limitation, all sales, advertising and promotional
materials and sales collateral materials (whether in stock or in-process), all
original art mechanicals, artwork, electronic media, chromes or other materials
for the production of packaging components or sales, advertising and marketing
materials, television masters, agreements with advertising agencies and other
materials associated with the Product;
(l) all unfilled customer orders for the Product as of the
Closing Date; and
(m) any and all rights Connetics has with regard to *
which was withdrawn *.
"REPRESENTATIVES" means officers, directors, employees, agents,
attorneys, accountants, advisors and representatives.
"RIDAURA AGREEMENT" means the Asset Purchase Agreement for the purchase
of Ridaura between Connetics and SKB dated December 2, 1996, a copy of which is
set forth at Exhibit D.
"SKB" means SmithKline Xxxxxxx Corporation, a Pennsylvania corporation,
and its divisions, Affiliates, successors and assigns.
"SUPPLY AGREEMENT" means the Supply Agreement for Ridaura (auranofin)
between SKB and Connetics (under its former name Connective Therapeutics, Inc.)
dated as of December 31, 1996, a copy of which is set forth at Exhibit B.
"TERRITORY" means the United States and Puerto Rico.
ARTICLE 2
PURCHASED ASSETS
2.1 ASSETS TO BE SOLD AND PURCHASED. Subject to the terms and conditions
of this Agreement, Connetics shall cause to be sold, assigned, transferred,
conveyed and delivered to Prometheus, and Prometheus shall purchase from
Connetics, at the Closing Date, good, valid and marketable title to the
Purchased Assets, free of any Encumbrances (other than the Assumed Liabilities).
2.2 LIABILITIES.
2.2.1 Prometheus shall assume all Liabilities relating to actions
taken, or omissions to act, from and after the Closing Date related to the
Purchased Assets, including, without limitation, (a) any Liability arising from
any product liability claim or lawsuit or any FDA or other state or federal
governmental agency action or notification relating to the Product to the extent
the same relate to actions taken, or omissions to act, from and after the
Closing Date, (b) Liabilities arising from and after the Closing Date under the
Supply Agreement and the Pharmascience Agreement and Liabilities arising from
and after the Closing Date under Section
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
6.
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4.2 of the Ridaura Agreement and such other Connetics Contracts listed in
Schedule 4.10 hereto, (c) Liabilities arising from any product liability claim
or lawsuit or any FDA or other state or federal government agency action or
notification relating to Lot * or any subsequent Lots, except to the
extent any such claim, lawsuit, action or notification described in this clause
(c) is made, or initiated prior to the Closing Date (collectively, the "ASSUMED
LIABILITIES"). Notwithstanding the foregoing, if the Closing does not occur and
Prometheus does not acquire the Purchased Assets as contemplated by this
Agreement, then Prometheus shall not assume, and shall not be liable for, the
Assumed Liabilities for any period of time.
2.2.2 Subject to 2.2.1 above, prior to and after the Closing Date,
Connetics shall promptly pay and discharge all Liabilities arising prior to the
Closing Date in respect of the Purchased Assets as such liabilities come due.
2.2.3 Except for the Assumed Liabilities and except as otherwise
provided in this Agreement, Prometheus shall not assume or be liable for any
Liabilities of Connetics whatsoever, including, without limitation, product
liability, liability in tort (including unripened liabilities due to past
actions or sales), indebtedness for money borrowed, tax liabilities, obligations
to employees, and liabilities for trade promotions related to the Purchased
Assets occurring prior to the Closing Date or to acts or omissions occurring
prior to the Closing Date.
ARTICLE 3
PURCHASE PRICE; TAXES; PAYMENTS
3.1 PURCHASE PRICE.
3.1.1 As consideration for the sale of the Purchased Assets to
Prometheus, Prometheus shall pay Connetics nine million dollars ($9,000,000)
(the "PURCHASE PRICE"). Notwithstanding the foregoing, if Connetics realizes Net
Sales of Product in excess of *, provided that the difference between gross
sales and Net Sales in the Pre-Closing Period will not exceed *, and Closing
occurs on or before April 30, 2001, then such Net Sales that Connetics realizes
in excess of the * in the Pre-Closing Period shall be deducted from the Purchase
Price. If the Closing does not occur on or before April 30, 2001, then the
parties shall renegotiate the allowed Pre-Closing Period Net Sales described in
this Section 3.1.
3.1.2 No later than ninety (90) days following the Closing Date,
Connetics shall supply to Prometheus audited Product line financial statements
down to gross margin for the Product for each of the three calendar years prior
to the Closing Date as required by Section 5.5, Prometheus' sole remedy shall be
an adjustment to the Purchase Price in the following circumstance: if the
audited gross margin supplied shows gross margin to be less than *, or there is
a difference between the audited and unaudited gross margin in excess of * in
any of the three individual years, the Purchase Price shall be reduced by an
amount equal to the difference between the unaudited gross margin for the three
years ending December 31, 2000 and the audited gross margin for the three years
ending December 31, 2000, or the difference between audited and unaudited gross
margin for any individual year in excess of *. Connetics
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
7.
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shall pay any such required amount to Prometheus within (15) days following
completion of the audit.
3.2 PAYMENT OF PURCHASE PRICE. The Purchase Price specified in Section
3.1 shall be paid and satisfied by the delivery by Prometheus to Connetics at
the Closing Date of a wire transfer of funds to a bank account to be designated
by Connetics.
3.3 TRANSFER TAXES. Prometheus shall be liable for and shall pay all
state and local sales and use taxes payable in connection with the conveyance
and transfer of the Purchased Assets by Connetics to Prometheus.
3.4 ROYALTY PAYMENTS TO CONNETICS. Prometheus shall pay Connetics a
royalty equal to * percent * of the Net Sales of the Product in excess of
$4,000,000 in any calendar year for a period of five years, beginning on the
Closing Date. Royalty payments and quarterly reports for the sale of Product
shall be calculated and reported to Connetics for each calendar quarter and each
calendar year, commencing with the Closing Date and continuing for a period of
five (5) years from said date. All royalty payments due to Connetics under this
Agreement shall be paid within thirty (30) days of the end of each calendar
quarter for which royalty payments are due; provided, however, that no royalty
payments shall become due in any calendar quarter prior to the time that Net
Sales of Product for such calendar year exceed $4,000,000. Each payment of
royalties shall be accompanied by a report of Net Sales of Product in sufficient
detail to permit confirmation of the accuracy of the royalty payments made,
including, without limitation, the quantity of Product sold, the gross sales and
Net Sales of Product, the royalties, in U.S. dollars, payable, the method used
to calculate the royalty and the exchange rates used.
3.5 PAYMENTS TO SKB. Subject to Closing occurring, Prometheus shall pay
to SKB the payments to be paid by Connetics to SKB with respect to sales of
Product from and after the Closing Date pursuant to Section 4.2 of the Ridaura
Agreement.
3.6 INVOICES FROM SKB. Prometheus shall pay all SKB invoices for Product
acquired after the Closing Date other than invoices relating to Lots * which
shall be the responsibility of Connetics.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CONNETICS
Connetics hereby represents and warrants to Prometheus as follows:
4.1 INCORPORATION, ORGANIZATION AND QUALIFICATION. Connetics is a
corporation duly incorporated, validly existing and in good standing under the
law of Delaware, and has the corporate power to carry on its business as it is
now being conducted. Connetics is duly qualified to do business and is in good
standing in every jurisdiction where the nature of the business conducted by it
with respect to the Purchased Assets or the Product makes such qualification
necessary, except in such jurisdictions where the failure to so qualify does not
in the aggregate have a material adverse effect on Connetics' business taken as
a whole.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
8.
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4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Connetics has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the performance of Connetics'
obligations under this Agreement have been duly authorized by all necessary
corporate action of Connetics' Board of Directors, and no other corporate
proceedings on the part of Connetics are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by Connetics and
constitutes a valid and binding obligation of Connetics, enforceable against
Connetics in accordance with its terms. Execution of this Agreement and
consummation of the transactions contemplated by this Agreement will not result
in the violation of, or conflict with, any of the terms and provisions of
Connetics' certificate of incorporation or bylaws or of any Legal Requirement or
Order of any Governmental Body having jurisdiction over Connetics, the Product
or the Purchased Assets or of any Contract to which Connetics may be a party.
4.3 TITLE TO PURCHASED ASSETS. Connetics is the sole owner of all the
Purchased Assets with good, valid and marketable title, free and clear of any
Encumbrances (subject to a security interest in favor of Silicon Valley Bank,
which security interest shall be released prior to the Closing in accordance
with Section 5.2), and has the right to transfer to Prometheus good, valid and
marketable title, free and clear of any Encumbrances. The Purchased Assets will
collectively constitute, as of the Closing Date, all of the properties, rights,
interests and other tangible and intangible assets necessary to enable
Prometheus to conduct the business of manufacturing and selling the Product in
the manner in which such business is currently being conducted by Connetics.
4.4 FINANCIAL INFORMATION. All financial statements provided by
Connetics to Prometheus pursuant to Section 5.5 hereof will have been prepared
in accordance with U.S. generally accepted accounting standards, consistently
applied, and will be in such form and include such content as is necessary to
satisfy the Securities and Exchange Commission Regulation S-X reporting
requirements of Prometheus with regard to the business related to the Purchased
Assets. In addition, all financial statements and financial information provided
by Connetics to Prometheus pursuant to Section 5.5 hereof will fairly and
accurately represent the subject matter of such financial statements and
financial information.
4.5 LITIGATION. There is no pending Proceeding, and no Person has
threatened to commence any Proceeding, at law or in equity or by or before any
Governmental Body that (a) relates to or might affect any of the Purchased
Assets or (b) challenges, or may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated by
this Agreement. No event has occurred, and no claim, dispute or other condition
or circumstance exists, that might directly or indirectly give rise to or serve
as the basis for the commencement of any such Proceeding. There is no Order to
which Connetics or any of the Purchased Assets is subject. Since December 31,
1996, there has not been any occurrence of, nor is there under consideration or
investigation by Connetics or any Governmental Body of, any product recall, or
post-sale warning conducted by or on behalf of Connetics or any Governmental
Body concerning any product or any product recall conducted by or on behalf of
any Entity as a result of any alleged defect in any Product.
4.6 INVENTORY. Schedule 4.6 provides an accurate and complete breakdown
of all Inventory of Finished Goods and all raw materials, API and
work-in-process inventory relating
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to the Product as of the Effective Date, which schedule shall be updated at
Closing and delivered to Prometheus and shall include the quantities of such
Inventories and the location where it is stored. Each of the foregoing is of a
type, quality and quantity useable and saleable (without discount in excess of
discounts customarily provided by Connetics) in the ordinary course of business
related to the Product. The inventory levels maintained by Connetics (a) are not
excessive in light of Connetics' normal operating requirements and (b) are
adequate for the conduct of Connetics' operations in the ordinary course of
business. Upon delivery to Prometheus, all Inventories of Finished Goods will
have a remaining shelf life of not less than twelve (12) months. If any
Inventory of Finished Goods sold by Prometheus has a remaining shelf life of
less than twelve (12) months, then Connetics shall reimburse to Prometheus the
average wholesale price (AWP) of every individual unit of Product not sold by
the expiration date of that unit or subsequently returned from Prometheus'
distributors or customers.
4.7 PRODUCT FORMULAS. Connetics shall have, prior to the date of the
Closing, supplied Prometheus with a true and complete copy of the current
formulations and production methodologies of the Product and that the same is
sufficient to enable Prometheus to manufacture the Product as it is manufactured
by or on behalf of Connetics immediately prior to the Closing Date, including,
without limitation, all existing information in written or electronic form that
relates to chemical processes for the production of API and intermediates in the
preparation of the Product, the in-process analytical controls for the
production of the API and the Product, the process, formulation and development
reports generated for the preparation of the Product, the analytical methods and
validation for the quality control release of the API and the Product, and the
stability protocols, stability indicating methods and stability dates for the
API and the Product.
4.8 REGULATORY ISSUES. Connetics shall have, prior to the Closing Date,
delivered or made available to Prometheus all documents that reflect all
material regulatory issues with respect to the Product. Such copies shall be
true and correct in all material respects. In particular, and notwithstanding
the generality of the foregoing, on or before the Closing Date, Connetics shall
have provided Prometheus with:
4.8.1 true and accurate copies of all relevant FDA and other
regulatory agency correspondence, including, without limitation, Connetics'
adverse event and post-marketing surveillance databases of the Product for the
three years preceding the date of this Agreement;
4.8.2 any medical communications department correspondence
regarding the Product for the three years preceding the date of this Agreement;
4.8.3 true and accurate written disclosure of any pending, or, to
Connetics' knowledge, threatened, product liability claims or litigation
pertaining to the Product;
4.8.4 a copy of the FDA regulatory chronology for the Product
detailing interactions with the agency since the filing of the NDAs for the
Product;
4.8.5 the Annual Reports for the Product for the three years
preceding the date of this Agreement; and
4.8.6 true and accurate copies of all Regulatory Documents.
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4.9 COMPLIANCE WITH LAW. Schedule 4.9 lists all FDA and other
administrative approvals, registrations and permits relating to the Purchased
Assets. Except as described on Schedule 4.9, (a) Connetics has at all times
conducted and is currently conducting the manufacture, promotion, advertising,
marketing and sale of the Product in compliance with all applicable Legal
Requirements, (b) no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) constitute or
result directly or indirectly in a violation by Connetics of, or a failure on
the part of Connetics to comply with, any Legal Requirement; and (c) Connetics
has not received, at any time, any notice or other communication (in writing or
otherwise) from any Governmental Body or any other Person regarding (i) any
actual, alleged, possible or potential violation of, or failure to comply with,
any Legal Requirement, or (ii) any actual, alleged, possible or potential
obligation on the part of Connetics to undertake, or to bear all or any portion
of the cost of, any cleanup or any remedial, corrective or response action of
any nature. The manufacture of the Products by Connetics and its contract
manufacturers conforms in all material respects to the FDA's current "good
manufacturing practices" regulations for finished pharmaceuticals as applicable
and as currently interpreted and enforced. Connetics has delivered to Prometheus
an accurate and complete copy of each report, study, survey or other document to
which Connetics has access that addresses or otherwise relates to the compliance
of Connetics with, or the applicability to Connetics of, any Legal Requirement.
To the best of the knowledge of Connetics, no Governmental Body has proposed or
is considering any Legal Requirement that, if adopted or otherwise put into
effect, (i) may have an adverse effect on the business of the manufacture and
sale of the Products or on the ability of Connetics to comply with or perform
any covenant or obligation under this Agreement, or (ii) may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
transactions contemplated by this Agreement.
4.10 CONNETICS CONTRACTS. Schedule 4.10 identifies and provides an
accurate description of each Contract included in or relating to the Purchased
Assets or the manufacture, use or sale of the Product in the Territory
(collectively, "CONNETICS CONTRACTS"). Connetics has delivered to Prometheus
accurate and complete copies of all Connetics Contracts, including all
amendments thereto. Without limiting the generality of the foregoing, Connetics
has provided Prometheus with copies of all managed care contracts, retail
incentive contracts, distribution agreements, policies and procedures regarding
pricing and promotion to wholesale, trade, managed care organizations,
hospitals, and any other special deals, prices, contracts and programs of
historical value to the Product. Except as otherwise provided in Schedule 4.10,
the Connetics Contracts are valid and in full force and effect, as of the
Closing Date. Except as set forth in Schedule 4.10: (a) there are no contracts
which relate to the Product in the Territory; (b) no Person has violated or
breached, or declared or committed any default under, any Connetics Contract;
(c) no event has occurred, and no circumstance or condition exists, that might
(with or without notice or lapse of time) (i) result in a violation or breach of
any of the provisions of any Connetics Contract, (ii) give any Person the right
to declare a default or exercise any remedy under any Connetics Contract, (iii)
give any Person the right to accelerate the maturity or performance of any
Connetics Contract, or (iv) give any Person the right to cancel, terminate or
modify any Connetics Contract; (d) Connetics has not received any notice or
other communication (in writing or otherwise) regarding any actual, alleged,
possible or potential violation or breach of, or default under, any Connetics
Contract; and (e) Connetics has not waived any right under any Connetics
Contract. Connetics will use its best endeavors to facilitate the transfer
and/or assignment of all contracts of value relating to the Product to
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Prometheus; provided, however, that Connetics shall only be obligated to use its
best endeavors to assign any managed care contract relating to the Product to
the extent such contract permits such assignment and only to the extent such
contract relates to the Product. Except as set forth in Schedule 4.10, no Person
is renegotiating, or has the right to renegotiate, any amount paid or payable to
Connetics under any Connetics Contract or any other term or provision of any
Connetics Contract. Connetics has no knowledge of any basis upon which any party
to any Connetics Contract may object to (i) the assignment to Prometheus of any
rights under such Connetics Contract, or (ii) the delegation to or performance
by Prometheus of any obligations under such Connetics Contract. The Connetics
Contracts collectively constitute all of the Contracts necessary to enable
Connetics to conduct its business in the manner in which such business is
currently being conducted and in the manner in which such business is proposed
to be conducted.
4.11 INTELLECTUAL PROPERTY RIGHTS.
4.11.1 Schedule 4.11 identifies and provides a brief description of
all Intellectual Property owned by Connetics. Connetics is the beneficial owner
of all right, title and interest in the Intellectual Property and the registered
owner of all right, title and interest in the items listed on Schedule 4.11, and
has the right to use, license, sublicense or assign the Intellectual Property
without liability to, or any requirement to obtain the consent of, any other
person, except as described in Schedule 4.11. Except as set forth in Schedule
4.11 there are no agreements, understandings, instruments, contracts, trade
secrets or other proprietary rights to or from Connetics affecting the
Intellectual Property.
4.11.2 Except as otherwise set forth in Schedule 4.11, all of the
Intellectual Property listed in Schedule 4.11 as registered or filed has been
duly registered or filed in the U.S. Patent and Trademark office and is
currently valid.
4.11.3 To the best of Connetics' knowledge, there are no
infringements, threats of infringements or asserted or unasserted claims by
Connetics of infringement or misappropriation of any of the Intellectual
Property in the Territory nor are there any asserted or unasserted claims by
Connetics contesting or challenging the right, title, or interest of any other
person in any of the Intellectual Property.
4.11.4 There are no outstanding threatened or actual claims
asserted against Connetics alleging the infringement or misappropriation by
Connetics of any intellectual property of any other party that may affect the
Purchased Assets or the revocation, withdrawal, expiration, abandonment, or
breach of any right to use the Intellectual Property in the Territory. Connetics
has not been notified of any such claim or any person nor does Connetics know of
any basis for the existence of any such claim in the Territory.
4.11.5 Connetics has taken commercially reasonable measures and
precautions necessary to protect and maintain the confidentiality and secrecy of
the Intellectual Property (except Intellectual Property whose value would be
unimpaired by public disclosure) and otherwise to maintain and protect the value
of all Intellectual Property.
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4.11.6 Connetics has, and Prometheus will acquire at the Closing,
the right to use the name "Ridaura" and variations thereof and the domain name
"Xxxxxxx.xxx."
4.12 SCHEDULES. The information included in any Schedule delivered to
Prometheus by Connetics under the terms of this Agreement shall be deemed to
have been delivered with respect to this Agreement as though fully set forth in
this Agreement. All Schedules, and all other information regarding Connetics and
the Purchased Assets that has been furnished to Prometheus by Connetics or any
of Connetics' Representatives, are represented as true, correct and complete in
all respects, except to the extent specifically addressed in individual
representations, warranties and Schedules. To the best of Connetics knowledge
and belief, no representation or warranty of Connetics in this Agreement with
respect to Connetics, the Purchased Assets or the Assumed Liabilities fails to
state any material fact necessary in order to make the representations,
warranties and information of or with respect to Connetics or the Purchased
Assets (in light of the circumstances under which such representations,
warranties or information were or will be made or provided) not false or
misleading.
4.13 COPIES OF MARKETING DOCUMENTS. Connetics will transfer to
Prometheus all sales and marketing plans for the Connetics Period of Ownership
relating to the Product, including but not limited to copies of all clinical
studies, advertising materials, sales collateral materials, etc., all sales and
marketing materials currently in stock or in-process, all artwork, electronic
media, chromes, and other materials for the production and printing of sales and
marketing materials, and all convention graphics, panels, displays, artwork,
etc. In addition, Connetics shall supply Prometheus with copies of all
qualitative and quantitative market research data and materials including
syndicated and custom studies and reports, sales and prescription data from IMS
Health and any other market data supplier, customer lists, sales targets,
prescriber data, etc.
4.14 HEALTH, SAFETY, EMPLOYMENT AND ENVIRONMENTAL MATTERS. To the extent
that the failure to do so or be so would have a material adverse effect upon the
Purchased Assets, Connetics is in compliance with all Legal Requirements related
to health and occupational safety, environment and hazardous materials and
employment practices, that are applicable to Connetics or its business related
to the Purchased Assets, and Connetics has conducted its business relating to
the Purchased Assets in compliance with such Legal Requirements.
4.15 ORDINARY COURSE. From December 31, 1996 through the date of this
Agreement, Connetics has conducted the business relating to the Purchased Assets
only in the ordinary course and there have been no events or circumstances of
any kind that have materially and adversely affected the business related to the
Purchased Assets.
4.16 GOVERNMENTAL APPROVALS. Schedule 4.16 identifies each Governmental
Authorization that is held by Connetics that relates to or is useful in
connection with the business of the Purchased Assets. Each Governmental
Authorization identified in Schedule 4.16 is valid and in full force and effect.
The Governmental Authorizations identified in Schedule 4.16 constitute all of
the Governmental Authorizations necessary to enable Connetics to conduct the
business of the Purchased Assets in the manner in which such business is
currently being conducted and in the manner in which such business is proposed
to be conducted. Except for compliance with the Exchange Act, or as disclosed in
Schedule 4.16, no Governmental
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Authorization is or will be necessary for, or in connection with, the execution
or delivery by Connetics of this Agreement.
4.17 MANUFACTURING. Connetics agrees to use its best endeavors to assign
its rights under the Supply Agreement to Prometheus on Connetics' current terms
on the Closing Date. As part of this assignment, Connetics will provide a
complete copy of the terms of manufacture and such other contracts to which
Connetics is a party and which are relevant to the manufacture of the Product as
well as those contracts to which Connetics is a party covering the period of
time since acquisition of the right to manufacture and sell the Product from
SKB. Connetics shall use its best endeavors to insure that sufficient quantities
of Product continue to be scheduled and manufactured during the period prior to
the Closing Date so that no back orders occur prior to, or in the six months
following, the Closing. Connetics will use all efforts required to supply or
have SKB supply to Prometheus all data regarding the transfer of contract
manufacturing for the Product, including, but not limited to, manufacturing
processes validation processes, plant and process qualifications, and all
associated data.
4.18 PRODUCT TRANSFER. Subject to Closing occurring, Connetics will
cause SKB to transfer such Product to Prometheus in a packaged and finished
state ready for shipment to the trade that has been prepared by SKB for
Connetics prior to the Closing Date. The Parties agree that quantities of
Product represented by Lots * will be transferred by Connetics to Prometheus at
the Closing Date less such quantities of Product from Lot * required to be sold
by Connetics in light of existing inventory requirements, and subject to the
terms of this Agreement.
4.19 CUSTOMERS; DISTRIBUTORS. Schedule 4.19 accurately identifies, and
provides an accurate and complete breakdown of the revenues received from sales
of Product to, each customer or other Person that (together which such
customer's or other Person's Affiliates) accounted for more than 1% of the sales
of Product in 2000 before discount and reserves. Connetics has not received any
notice or other communication (in writing or otherwise), and Connetics has not
received any other information, indicating that any customer or other Person
identified or required to be identified in Schedule 4.19 may cease dealing with
Connetics or may otherwise reduce the volume of Product purchases transacted by
such Person with Connetics below historical levels. Connetics has not received
any notice or other communication (in writing or otherwise), and has not
received any other information, indicating that any distributor of the Product
may cease acting as a distributor of the Product or otherwise cease dealing with
Connetics.
4.20 SALE OF PRODUCTS. To the best of Connetics knowledge and belief,
each Product that has been sold by Connetics to any Person: (i) conformed and
complied in all respects with the terms and requirements of any applicable
warranty or other Contract and with all applicable Legal Requirements; and (ii)
was free of any design defects construction defects or other defects or
deficiencies at the time of sale. No Product manufactured or sold by Connetics
has been the subject of any recall or other similar action; and no event has
occurred, and no condition or circumstance exists, that might (with or without
notice or lapse of time) directly or indirectly give rise to or serve as a basis
for any such recall or other similar action relating to any such Product.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
14.
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4.21 SOLVENCY. Connetics is not now insolvent, and will not be rendered
insolvent by any of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (a) Connetics will be able to pay
its debts as they become due, (b) Connetics will not have unreasonably small
assets with which to conduct its present or proposed business and (c) taking
into account all contingent pending and threatened litigation, final judgments
which might be rendered against Connetics in actions for money damages are not
reasonably anticipated to be rendered at a time when, or in amounts such that,
Connetics will be unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum probable amount of such
judgments in any such actions might be rendered) as well as all other
obligations of Connetics. The cash available to Connetics, taking into account
all other anticipated uses of the cash, will be sufficient to pay all such
judgments promptly in accordance with their terms. As used in this Section, (i)
"insolvent" means that the sum of the present fair saleable value of Connetics'
assets does not and will not exceed its debts and other probable liabilities,
and (ii) "debts" includes any legal liability, whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent, disputed or
undisputed or secured or unsecured.
ARTICLE 5
COVENANTS OF CONNETICS
5.1 CONDUCT OF THE BUSINESS AFTER DATE OF TERM SHEET. Except for the
steps or actions taken pursuant to the prior written consent of Prometheus,
Connetics, from the date of the Term Sheet through the Closing Date, has
conducted, and will continue to conduct, its business with respect to the
Purchased Assets in good faith and in accordance with the same practices
previously followed by it except to the extent specifically contemplated by this
Agreement. During that period Connetics:
5.1.1 has conducted and will continue to conduct the business
relating to the Purchased Assets, including without limitation marketing of the
Product, only in the normal course;
5.1.2 has not transferred, and will not transfer, any of the
Purchased Assets except Inventories in the normal course;
5.1.3 has not entered, and will not enter, into any patent,
trademark or trade name or know-how licenses, or any other leases, licenses,
contracts or other commitments relating to the Purchased Assets, unless each
such lease, license, contract or commitment (other than purchase orders for raw
materials and Finished Goods placed in the normal course of business) is
disclosed to and approved in advance by Prometheus;
5.1.4 has continued, and will continue, to meet the contractual
obligations of, and to pay obligations relating to, the Purchased Assets as they
mature in the normal course;
5.1.5 has preserved, and will preserve, the good relations with
respect to the Products with suppliers, business customers and others with whom
Connetics has business relations relating to the Products; and
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5.1.6 will not implement any price increases or decreases for the
Product or any new trade or consumer promotions without consultation with, and
the written approval of, Prometheus, and will not change the terms or conditions
of any such promotion in existence on the date of the Agreement without
consultation with, and the written approval of, Prometheus.
5.2 RELEASE OF SECURITY INTEREST. Prior to the Closing Date, Connetics
shall cause the security interest of Silicon Valley Bank in the Purchased Assets
to be released in full.
5.3 POST CLOSING ORDERS. Connetics hereby agrees to cease selling and
distributing the Product as of the Closing Date. Connetics hereby agrees to
assign to Prometheus any orders for Product placed but unfilled as of the
Closing Date. From and after the Closing Date, Connetics shall promptly (but in
no event later than two Business Days after receipt by Connetics' customer
service department) deliver any purchase orders and refer all inquiries it shall
receive with respect to the Product to Prometheus.
5.4 CONFIDENTIALITY. From and after the Closing Date, Connetics shall
use the same efforts to maintain the confidentiality of any proprietary or
confidential information regarding the manufacture or sale of the Product as
Connetics uses with respect to its own prescription pharmaceutical products.
5.5 FINANCIAL INFORMATION. Upon Closing, Connetics shall supply to
Prometheus reviewed but unaudited quarterly Product line financial statements
down to gross margin for the Pre-Closing Period and for each calendar quarter
therein. No later than ninety (90) days following the Closing Date, Connetics
shall supply to Prometheus (i) complete, audited Product contribution financial
statements for the business related to the Purchased Assets for the three
calendar years prior to the Closing Date, (ii) reviewed but unaudited quarterly
Product contribution financial statements down to Product line operating income
for the calendar year 2000, and (iii) such financial information regarding the
business related to the Purchased Assets for the period from January 1, 2001
through the Closing Date as is necessary to permit Prometheus to prepare
complete, audited Product contribution financial statements for the business
related to the Purchased Assets therefrom. Such product line financial
statements shall not include balance sheets or cash flow statements, however, if
it is subsequently determined that such statements are required by the
Securities and Exchange Commission rules and regulations, Connetics will provide
such audited and unaudited financial statements within ninety (90) days. During
the two (2) year period following the Closing Date, at Prometheus' request and
expense, during normal business hours and upon reasonable prior written notice,
Connetics shall permit an independent certified public accountant appointed by
Prometheus to examine such records of Connetics as are necessary to verify the
financial information provided by Connetics regarding the business related to
the Purchased Assets for the Pre-Closing Period. All financial statements
provided by Connetics to Prometheus pursuant to this Section 5.5 shall be
prepared in accordance with U.S. generally accepted accounting standards,
consistently applied, and shall be in such form and include such content as is
necessary to satisfy the Securities and Exchange Commission Regulation S-X
reporting requirements of Prometheus with regard to the business related to the
Purchased Assets. In addition, all financial statements and financial
information provided by Connetics to Prometheus pursuant to this Section 5.5
shall fairly and accurately represent the subject matter of such financial
statements and financial information.
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5.6 PRODUCT COMPLAINTS. Following the Closing Date, Connetics shall
promptly (and in any event within two Business Days of receipt) provide to
Prometheus any complaints received by Connetics with regard to the Product.
5.7 RECALLS OF PRODUCT. With the exception of Product sold and shipped
by Connetics from Lot * and any subsequent Lots which shall be the sole
liability of Prometheus, any costs and expenses incurred by Prometheus for any
recall of Products sold by Connetics shall be reimbursed by Connetics. Upon
initiation of a recall of Product by Prometheus, Prometheus shall notify
Connetics in writing of such occurrence. Prometheus shall maintain records of
all costs and expenses involved in the recall of Products, and shall provide an
invoice of such records to Connetics.
5.8 NON-COMPETE. From and after the Closing Date, Connetics agrees not
to directly or indirectly sell Product, or any product containing the active
ingredient auranofin, or chemically similar gold salt in the Territory, or to
directly or indirectly supply Product, or any product containing the active
ingredient auranofin, or chemically similar gold salt to a Third Party which
sells the Product, or any product containing the active ingredient auranofin, or
chemically similar gold salt in the Territory, or to otherwise support a Third
Party to apply for regulatory approval and commercialize the Product, or any
product containing the active ingredient auranofin, or chemically similar gold
salt in the Territory.
5.9 INSURANCE. At all times from the Closing Date through *, Connetics
shall maintain product liability insurance written on a claims made form in the
amount of not less than * per occurrence, * annual aggregate. Connetics shall
provide Prometheus with a certificate of insurance as evidence of such insurance
at or before the Closing Date and annually thereafter evidencing the renewal of
said insurance. If any such insurance is significantly reduced or restricted,
terminated or is otherwise not renewed, Connetics shall immediately notify
Prometheus. Connetics' product liability policies shall name Prometheus as an
additional insured, *.
5.10 ACCESS AND INVESTIGATION. Connetics shall ensure that, at all times
during the Pre-Closing Period: (a) Connetics and its Representatives provide
Prometheus and its Representatives with free and complete access to Connetics'
Representatives, personnel and assets and to all existing books, records, tax
returns, work papers and other documents and information relating to Connetics
and its business relating to the Purchased Assets; (b) Connetics and its
Representatives provide Prometheus and its Representatives with such copies of
existing books, records, tax returns, work papers and other documents and
information relating to Connetics and its business relating to the Purchased
Assets as Prometheus may request in good faith; and (c) Connetics and its
Representatives compile and provide Prometheus and its Representatives with such
additional financial, operating and other data and information relating to
Connetics and its business relating to the Purchased Assets as Prometheus may
request in good faith.
5.11 NOTIFICATION; UPDATES TO SCHEDULES. During the Pre-Closing Period,
Connetics shall promptly notify Prometheus in writing of: (a) the discovery by
Connetics of any event,
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a Breach of any representation
or warranty made by Connetics in this Agreement; (b) any event, condition, fact
or circumstance that occurs, arises or exists after the date of this Agreement
and that would cause or constitute a Breach of any representation or warranty
made by Connetics in this Agreement if (i) such representation or warranty had
been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (ii) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement; (c) any Breach of any covenant or obligation of Connetics; and (d)
any event, condition, fact or circumstance that may make the timely satisfaction
of any of the conditions set forth in Article 10 or Article 11 impossible or
unlikely. If any event, condition, fact or circumstance that is required to be
disclosed pursuant to this Section 5.11 requires any change in any Schedule
hereto, or if any such event, condition, fact or circumstance would require such
a change assuming the Schedule were dated as of the date of the occurrence,
existence or discovery of such event, condition, fact or circumstance, then
Connetics shall promptly deliver to Prometheus an update to the Schedule
specifying such change. No such update shall be deemed to supplement or amend
the Schedules for the purpose of (i) determining the accuracy of any
representation or warranty made by Connetics in this Agreement or in the closing
certificate delivered pursuant to Article 9, or (ii) determining whether any of
the conditions set forth in Article 10 has been satisfied.
5.12 NO NEGOTIATION. Connetics shall ensure that, during the Pre-Closing
Period, neither Connetics, nor any Representative of Connetics directly or
indirectly: (a) solicits or encourages the initiation of any inquiry, proposal
or offer from any Person (other than Prometheus) relating to any Acquisition
Transaction; (b) participates in any discussions or negotiations with, or
provides any non-public information to, any Person (other than Prometheus)
relating to any proposed Acquisition Transaction; or (c) considers the merits of
any unsolicited inquiry, proposal or offer from any Person (other than
Prometheus) relating to any Acquisition Transaction.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PROMETHEUS
Prometheus hereby represents and warrants to Connetics as follows:
6.1 INCORPORATION, ORGANIZATION AND QUALIFICATION OF PROMETHEUS.
Prometheus is a corporation duly incorporated, validly existing and in good
standing under the law of the jurisdiction of its incorporation, and has the
corporate power to own or lease its property and to carry on its business as now
being conducted by it. Prometheus is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction where the nature of
the business conducted by it makes such qualification necessary except in such
jurisdictions where the failure to so qualify does not in the aggregate have a
material adverse effect on Prometheus' business taken as a whole.
6.2 CORPORATE ACTION. This Agreement and any other agreements and
instruments executed in connection with this Agreement are the valid and binding
obligations of Prometheus, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency or
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similar laws of general application affecting the enforcement of rights of
creditors, and subject to equitable principles limiting rights to specific
performance or other equitable remedies, and subject to the effect of federal
and state securities laws on the enforceability of indemnification provisions
relating to liabilities arising under such laws. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of Prometheus.
6.3 GOVERNMENTAL APPROVALS. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, under any applicable laws, rules or regulations presently in effect, is
or will be necessary for, or in connection with, execution and delivery of this
Agreement or for the performance by Prometheus of its obligations under this
Agreement.
6.4 GOVERNMENTAL PERMITS AND LICENSES. Prometheus is licensed and has
received all necessary permits from such state and federal governmental agencies
in the Territory where Prometheus will from time to time sell and distribute the
Product and will renew and maintain such licenses and permits for those states
and territories.
6.5 SOLVENCY. Prometheus is not now insolvent, and will not be rendered
insolvent by any of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (a) Prometheus will be able to pay
its debts as they become due, (b) Prometheus will not have unreasonably small
assets with which to conduct its present or proposed business and (c) taking
into account all contingent pending and threatened litigation, final judgments
against Prometheus in actions for money damages are not reasonably anticipated
to be rendered at a time when, or in amounts such that, Prometheus will be
unable to satisfy any such judgments promptly in accordance with their terms
(taking into account the maximum probable amount of such judgments in any such
actions might be rendered) as well as all other obligations of Prometheus. The
cash available to Prometheus, taking into account all other anticipated uses of
the cash, will be sufficient to pay all such judgments promptly in accordance
with their terms. As used in this Section, (i) "insolvent" means that the sum of
the present fair saleable value of Prometheus' assets does not and will not
exceed its debts and other probable liabilities, and (ii) "debts" includes any
legal liability, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent, disputed or undisputed or secured or unsecured.
ARTICLE 7
COVENANTS OF PROMETHEUS
7.1 INSURANCE. At all times from the Closing Date through * ,
Prometheus shall maintain product liability insurance written on a claims made
form in the amount of not less than * per occurrence, * annual aggregate.
Prometheus shall provide Connetics with a certificate of insurance as evidence
of such insurance at or before the Closing Date and annually thereafter
evidencing the renewal of said insurance. If any such insurance is significantly
reduced or restricted, terminated or is otherwise not renewed, Prometheus shall
immediately notify Connetics. Prometheus' product liability policies shall
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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name Connetics as an additional insured, *
7.2 CONFIDENTIALITY. If there is no Closing under this Agreement,
Prometheus shall return all information regarding the Product to Connetics,
retaining no copies, excerpts or other analysis or redactions of such
information, except that Prometheus may retain one copy of such information in
its legal records solely for purposes of establishing its rights and
obligations, and Prometheus covenants that no such information shall be
disclosed to any third party, other than the Representatives of Prometheus
involved in the transaction, and so bound by confidentiality to Prometheus, or
utilized in any way by Prometheus in the conduct of its own business.
7.3 PHARMASCIENCE AGREEMENT; SUPPLY AGREEMENT. Prometheus shall assume
all of Connetics' obligations under the Pharmascience Agreement and the Supply
Agreement to the extent arising from and after the Closing Date, effective as of
the Closing Date, and shall execute such documents as may be required to effect
a release of Connetics from such obligations arising from and after the Closing
Date under those agreements.
7.4 CONNETICS' AUDIT RIGHTS. During each year of the period during which
royalty payments are payable by Prometheus to Connetics pursuant to Section 3.4
and for a period of two (2) years thereafter, Prometheus shall keep complete and
accurate records pertaining to the sale or other disposition of Products in
sufficient detail to permit Connetics to confirm the accuracy of payments due
under Section 3.4. Connetics shall have the right to cause an independent,
certified public accountant reasonably acceptable to Prometheus to audit such
records to confirm Net Sales and royalty payments for a period covering not more
than the preceding two (2) years. Such audits may be exercised during normal
business hours upon reasonable prior written notice to Prometheus. Prompt
adjustments shall be made by the Parties to reflect the results of such audit.
Connetics shall bear the full cost of such audit unless such audit discloses a
variance of more than * due under this Agreement. In such case, Prometheus
shall bear the full cost of such audit and shall promptly remit to Connetics the
amount of any underpayment.
7.5 AUDIT FEES. Prometheus has requested that Connetics commission a
firm of independent accountants to audit the Product contribution financials
down to product-line operating income for the three calendar years prior to the
Closing Date as contemplated by Section 5.5 hereof (the "AUDIT"). Upon the
Parties entering into this Agreement, Connetics will commence efforts to
commission a firm of accountants to perform the Audit in accordance with
Prometheus' requirements. Prometheus agrees to reimburse Connetics in accordance
with the terms of Connectics' invoice for any and all reasonable fees and
associated expenses directly incurred by Connetics or its agents for such
independent accountants in connection with the Audit upon presentation of
supporting documentation for such expenses.
7.6 FINANCIAL INFORMATION. Prometheus shall provide SKB and Paladin with
such financial information concerning the business of Prometheus as they may
from time to time reasonably require in order to facilitate the assignment of
their respective agreements with Connetics to Prometheus.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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7.7 PALADIN INVENTORY AND CREDIT. Prometheus shall assume and perform
Connetics' obligations to Paladin with regard to the physical Product inventory
held by Connetics in favor of Paladin and transferred to Prometheus at Closing
and such credit amount held by Connetics in favor of Paladin with regard to said
inventory and agrees to release Connetics from any and all liability Connetics
has or may have to Paladin with regard to said inventory and credit.
7.8 RIDAURA AGREEMENT. With effect from Closing Date Prometheus shall
assume all of Connetics' obligations to SKB under Section 4.2 of the Ridaura
Agreement and shall execute such documents as may be required to effect a
release of Connetics from such obligations arising from and after the Closing
Date under the Ridaura Agreement.
ARTICLE 8
MUTUAL COVENANTS
8.1 TRADE RETURNS. Connetics will be responsible for handling and
crediting of all returned Product from Lots up to and including Lots * ,
according to Connetics' currently published returned goods policy. Prometheus
will only be responsible for returned Product from Lots beginning with Lot *,
according to Prometheus' currently published returned goods policy. Neither
Party will take any action to encourage any returns of Products to the other
Party. Connetics shall be responsible for all Medicaid rebates rebate
transactions with respect to Products for a occurring within the period of *
months, from the Closing Date and all other managed care, wholesaler, and
retailer rebates and chargebacks rebate and chargeback transactions with respect
to Products for a occurring within the period of * months, from the Closing
Date. Prometheus shall be responsible for all Medicaid rebates rebate
transactions with respect to Products occurring after the end of the * month
period following the Closing Date and for all other managed care, wholesaler,
and retailer rebates and chargebacks rebate and chargeback transactions with
respect to Products occurring after the end of the * month period following the
Closing Date. The Parties agree that should Prometheus accept returns of
Products or grant credit for or pay Medicaid rebates or other managed care,
wholesaler or retailer rebates or chargebacks and rebates with respect to
Products during any period that Connetics is responsible for such activities
pursuant to this Section 8.1, Connetics shall reimburse Prometheus, within 30
days, upon presentation of proper evidence by Prometheus of such return, credit
or payment.
8.2 PRODUCT LIABILITY. With the exception of Product sold and
distributed from Lot * and any subsequent Lots which shall be the sole
responsibility of Prometheus (except to the extent any claim, lawsuit, action or
notification with respect thereto is made or initiated prior to the Closing
Date), Connetics will maintain responsibility for and indemnify Prometheus for
all product liability claims arising out of manufacture, use, or sale of Product
prior to the Closing Date. Prometheus will maintain responsibility for all
product liability claims arising out of manufacture, use, or sale of Product
following the Closing Date and for Prometheus' Liability arising from any
product liability claim or lawsuit or any FDA or other state or federal
governmental agency action or notification relating to the Product sold and
distributed from Lot * and any subsequent Lots from which Product is sold
and distributed prior to the Closing Date (except to the extent any claim,
lawsuit, action or notification with respect thereto
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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is made or initiated prior to the Closing Date). In particular, Prometheus shall
assume liability for and defend, indemnify and hold Connetics harmless from and
against any and all claims, proceedings and judgments in any way related to the
sale and distribution of the Product from Lot * and any subsequent Lots
in any way related to the sale and distribution of the Product by Prometheus
after the Closing Date with Connetics' trade dress or packaging.
8.3 BROKERS. Prometheus represents to Connetics that Prometheus has not
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated by this Agreement who might be entitled to a
fee or commission upon the execution of this Agreement or the consummation of
such transactions other than Mazier Partners and Credit Suisse First Boston
(CSFB). Prometheus shall be solely responsible for any amounts due to Mazier
Partners and CSFB. Connetics represents to Prometheus that Connetics has not
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to a fee or
commission upon the execution of this Agreement or the consummation of such
transactions. Each Party agrees to indemnify and hold the other Party harmless
with respect to any action, claim or demand with respect to any third party
claiming any such fee or commission by reason of its relationship to the
indemnifying party.
8.4 ALLOCATION OF PURCHASE PRICE. Schedule 8.4, such schedule to be
attached within 90 days of Closing, sets forth the Parties' mutually negotiated
allocation of the Purchase price among the Purchased Assets. The Parties agree
that said allocation shall be reflected on any returns required to be filed with
the Internal Revenue Service or any other foreign or state tax authority arising
from this transaction.
8.5 BEST EFFORTS. Each Party shall use its best efforts to comply with
all covenants in this Agreement and to consummate the sale contemplated by this
Agreement as expeditiously as possible.
8.6 BEST EFFORTS TO OBTAIN SATISFACTION OF CONDITIONS. Connetics and
Prometheus covenant and agree to use their best efforts to obtain the
satisfaction of the conditions specified in this Agreement.
8.7 ADVERSE EVENT REPORTS. Upon the transfer of the FDA product
registrations, Prometheus shall assume responsibility for compliance with FDA
regulations, including without limitation adverse event reporting requirements.
To the extent that Connetics receives any adverse event reports, Connetics shall
promptly (but in no event later than two Business Days after receipt by
Connetics) forward copies of such reports to Prometheus at the address set forth
in Section 15.3, Attention: Regulatory Affairs. To the extent that Prometheus
receives any adverse event reports, whether within or outside of the Territory,
Prometheus shall advise SKB and Pharmascience, as appropriate.
8.8 TRANSFER OF REGISTRATIONS, ETC. Upon Prometheus' request, Connetics
will transfer to Prometheus, to the extent legally permissible, any federal
health registrations necessary to enable uninterrupted manufacture, marketing
and sale of the Product. Connetics will cooperate with Prometheus in disclosing
and copying any relevant records and reports that are required to be made,
maintained and reported pursuant to law.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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8.9 USE OF NAME. For a period of 12 months after the Closing Date or
such longer period as shall be necessary to exhaust any Inventories (but in no
event later than 18 months after the Closing Date), Connetics shall permit
Prometheus to use the term and logo for "Connetics Corporation" on the Product
and on its packaging and in connection with the sale and distribution in the
Territory of the Product (including samples) to wholesale and retail
distributors; provided, that Prometheus shall not order any new packaging from
four months after the Closing Date which bears any of such names or logos; and
provided further, that except as provided in this Section 8.9, Prometheus shall
have no right to use the term "Connetics Corporation" as a trade name, trademark
or service xxxx, and provided further that the continued existence in the market
place of Finished Goods bearing the foregoing terms and logos after the
conclusion of such twelve month or longer period in connection with goods which
were sold by Prometheus during such twelve month or longer period shall be
permitted.
8.10 TRANSFER OF REGULATORY DOCUMENTS AND RESPONSIBILITY. Connetics and
Prometheus shall each use their best efforts to transfer the FDA registration
and to transfer regulatory responsibilities for the Product from Connetics to
Prometheus as expeditiously as possible following the Closing Date. Without
limiting the generality of the foregoing, promptly after the Closing Date, * and
all supplements thereto, as amended, * and * and * which was withdrawn * shall
be transferred from Connetics to Prometheus by (i) Connetics providing, and
Prometheus receiving, the following: original copies of * and all supplements
thereto, as amended, * all annual reports, and all Field alert reports that were
filed with the FDA, and copies of other reports, including advertisements and
promotional labeling and reports of withdrawals of approved drug products from
sale, and (ii) the completion of the following requirements of 21 C.F.R. Section
314.72:
8.10.1 Connetics shall submit to the FDA a letter or other
documents that states that all rights of Connetics to the applications have been
transferred to Prometheus;
8.10.2 Prometheus shall submit to the FDA an application form,
signed by Prometheus, and a letter or other document containing the following:
(a) Prometheus' commitment to agreements, promises and
conditions made by Connetics and contained in the applications;
(b) The effective date of the change in ownership of the
NDA;
(c) A statement that Prometheus has a complete copy of the
approved application, including supplements and records that are required to be
kept under 21 C.F.R. Section 314.81 and
8.10.3 Prometheus agrees to advise the FDA about any changes in the
conditions in the approved applications under 21 C.F.R. Section 314.70, and that
Prometheus will advise the FDA
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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in the next annual report about a change in the Product' s label or labeling or
for any change in the Product's brand or the name of its manufacturer, packer,
or distributor.
8.11 COORDINATION OF REGULATORY REPORTING RESPONSIBILITIES. To
accomplish the transfer of Section 8.10, Connetics shall designate a regulatory
affairs individual to coordinate Prometheus' receipt of the original copies of *
and all supplements thereto, as amended, * all annual reports, and any field
alert reports that were filed with the FDA; and copies of other reports,
including advertisements and promotional labeling and reports of withdrawals of
approved Products from sale.
ARTICLE 9
CLOSING ARRANGEMENTS
9.1 CLOSING ARRANGEMENTS. At or before the Closing Date upon fulfillment
of all conditions of this Agreement which have not been waived in writing by
Prometheus or Connetics respectively:
9.1.1 CONNETICS' DELIVERY OF CLOSING DOCUMENTS. Connetics shall
deliver to Prometheus:
(a) a xxxx of sale substantially in the form of Exhibit C;
(b) all financial statements required to be provided prior to
Closing under Section 5.5;
(c) such instruments of conveyance, assignment and transfer,
in form and substance satisfactory to Prometheus, as shall be appropriate to
convey, transfer and assign to, and to vest in Prometheus, good title to the
Purchased Assets, free and clear of all Encumbrances;
(d) all technical data, formulations, product literature and
other documentation related to the Purchased Assets;
(e) such certificates of Connetics' officers and such other
documents evidencing satisfaction of the conditions specified in Articles 4 and
5 as Prometheus may reasonably request; and
(f) such other documents, instruments and certificates as
Prometheus may reasonably request.
9.1.2 PROMETHEUS' DELIVERY OF CLOSING DOCUMENTS. Prometheus shall
deliver to Connetics:
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(a) such certificates of Prometheus' officers and such other
documents evidencing satisfaction of the conditions specified in Articles 6 and
7 as Connetics may reasonably request; and
(b) such other documents, instruments and certificates as
Connetics may reasonably request.
9.1.3 PAYMENT OF PURCHASE PRICE. Subject to the fulfillment of the
foregoing terms of Section 9.1 and upon the fulfillment of all the conditions of
this Agreement, which have not been specifically waived in writing by Prometheus
or Connetics, as the case may be, Prometheus shall pay and satisfy the Purchase
Price as provided in Section 3.1 of this Agreement.
9.1.4 PHYSICAL DELIVERY. Pursuant to delivery arrangements
specified by Prometheus to Connetics prior to the Closing Date, and reasonably
acceptable to Connetics, Connetics shall deliver to Prometheus at Prometheus'
premises those tangible assets included in the Purchased Assets at the Closing
Date or as soon thereafter as reasonably practical but in no event later than
ten (10) Business Days after the Closing Date.
9.1.5 PALADIN INVENTORY. Connetics shall transfer to Prometheus the
amount of physical inventory of the Product held by Connetics for Paladin.
9.2 TRANSFER EXPENSES--INTELLECTUAL PROPERTY. Connetics shall deliver to
Prometheus such internet domain name, trademark and patent assignment documents
in recordable form necessary to effect the transfer of such internet domain
name, trademarks and patents to Prometheus. Prometheus shall be responsible for
the recordation of same and Prometheus shall bear any costs and fees related
thereto. Prometheus shall be responsible for all costs associated with the
maintenance of the domain name, trademarks and patents from the Closing Date.
ARTICLE 10
PROMETHEUS' CONDITIONS OF CLOSING
Prometheus' obligation to purchase the Purchased Assets in accordance
with the terms of this Agreement is subject to the following terms and
conditions, each of which is to be fulfilled and/or performed at or prior to the
Closing Date:
10.1 REPRESENTATIONS AND WARRANTIES AT CLOSING. The representations and
warranties of Connetics to Prometheus contained in this Agreement and Exhibits
and Schedules to this Agreement shall be true and correct in all material
respects.
10.2 COMPLIANCE WITH TERMS AND CONDITIONS. All of the terms, covenants
and conditions of this Agreement to be complied with or performed by Connetics
at or before the Closing Date shall have been complied with or performed in all
material respects.
10.3 NECESSARY CONSENTS. There shall have been obtained from all
appropriate federal, state, municipal or other governmental or administrative
bodies such approvals or
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consents as are required to permit the change of ownership of the Purchased
Assets contemplated by this Agreement.
10.4 NO ACTIONS TAKEN RESTRICTING SALE. No action or proceeding in the
Territory by law or in equity shall be pending or threatened by any person,
firm, corporation, government, governmental authority, regulatory body or agency
to enjoin, restrict or prohibit the purchase and sale of the Purchased Assets
contemplated by this Agreement or the right of Prometheus to conduct the
business in respect of the Purchased Assets.
10.5 SKB CONSENT. Connetics shall have received the consent of SKB to
transfer the Supply Agreement and Connetics' payment obligations to SKB under
the Ridaura Agreement and the commitment of SKB to obtain an FDA-approved
validation of the manufacturing transfer regardless of the expiration date of
the Supply Agreement, should such FDA-approved validation of manufacturing
transfer not be completed to the satisfaction of the FDA prior to the expiration
of the Supply Agreement, and commitment to Prometheus to extend the term of the
Supply Agreement beyond the expiration date until such time as SKB has effected
the transfer of the API, vendor and manufacturing agreements required to
continue the manufacture of the Product to Prometheus on terms acceptable to
Prometheus in terms of Exhibit E hereto.
10.6 PHARMASCIENCE CONSENT. Connetics shall have received the consent of
Pharmascience to transfer the Pharmascience Agreement, which consent shall be in
a form and substance reasonably acceptable to the Parties.
10.7 FINANCING. Prometheus shall have secured financing on terms and
conditions reasonably satisfactory to Prometheus in an amount equal to the
Purchase Price plus an amount necessary to pay all costs and expenses related to
the transactions contemplated by this Agreement. Prometheus shall undertake best
efforts to raise such financing, and Connetics shall show good faith to assist
Prometheus and its Representatives in accessing historical information regarding
the Product.
10.8 INSURANCE CERTIFICATE. Connetics shall have provided Prometheus
with a certificate of insurance documenting the coverage described in Section
5.9.
ARTICLE 11
CONNETICS' CONDITIONS OF CLOSING
Connetics' obligation to sell the Purchased Assets in accordance with
the terms of this Agreement is subject to the following terms and conditions,
each of which is to be fulfilled and/or performed at or prior the Closing Date.
11.1 COMPLIANCE WITH TERMS. All the terms, covenants and conditions of
this Agreement to be complied with or performed by Prometheus at or before the
Closing Date shall have been duly complied with or performed in all material
respects.
11.2 NO ACTION TAKEN RESTRICTING SALE. No action or proceeding in the
United States at law or in equity shall be pending or threatened by any person,
firm, corporation, government, governmental authority, regulatory body or agency
to enjoin, restrict or prohibit the purchase and
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sale of the Purchased Assets contemplated by this Agreement or Connetics' right
to sell the Purchased Assets.
11.3 INSURANCE CERTIFICATE. Prometheus shall have provided Connetics
with a certificate of insurance documenting the coverage described in Section
7.1.
ARTICLE 12
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
The obligations of each of the Parties are subject to the condition that
as at the Closing Date, there shall exist no obligation to comply with the
premerger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and there shall exist no injunction or
other order issued by a court of competent jurisdiction which would make
unlawful the consummation of the transactions contemplated by this Agreement.
ARTICLE 13
INDEMNIFICATION
13.1 CONNETICS' INDEMNIFICATION. Connetics will indemnify and hold
harmless Prometheus and each of its directors, officers, employees, advisors,
affiliates, agents and shareholders from and against any and all losses,
damages, liabilities, costs, claims and expenses, including but not limited to
attorney's fees, arising out of, based upon or resulting from:
13.1.1 any claims against, or liabilities or obligations of,
Connetics or against the Purchased Assets other than the Assumed Liabilities;
13.1.2 any inaccuracy of any representation or warranty or schedule
of Connetics which is contained in or made pursuant to this Agreement;
13.1.3 the non-compliance by Connetics with the provisions of any
applicable bulk sales act governing the purchase and sale of the Purchased
Assets;
13.1.4 any tax liability of Connetics (other than sales and use
taxes referred to in Section 3.3 of this Agreement) including, without
limitation, any tax liability arising out of the failure of Connetics or
Prometheus to comply with any provisions of the tax laws of the State of
California (including, without limitation, provisions requiring notice to state
tax authorities concerning bulk or other sales of property); or
13.1.5 any breach by Connetics of any of its agreements, covenants,
warranties or obligations contained in or made pursuant to this Agreement.
Connetics shall have no obligation to indemnify Prometheus under this
Section 13.1 for any breach of Connetics' representations and warranties made in
or pursuant to this Agreement, until such time, if any, as the aggregate amount
of the liabilities, losses, damages, claims costs and expenses arising out of
such breach exceeds * and then only to the extent of such excess.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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13.2 PROMETHEUS' INDEMNIFICATION. Prometheus will indemnify and hold
harmless Connetics and each of its directors, officers, employees, advisors,
affiliates, agents and shareholders from and against any and all losses,
damages, liabilities, costs, claims and expenses including but not limited to
attorney's fees arising out of, based upon or resulting from;
13.2.1 any inaccuracy of any representation or warranty of
Prometheus which is contained in or made pursuant to this Agreement;
13.2.2 any breach by Prometheus of any of its agreements,
covenants, warranties or obligations contained in or made pursuant to this
Agreement; or
13.2.3 any of the Assumed Liabilities, excluding damages,
liabilities, costs and claims arising out of or related to returns to the extent
that Connetics has retained liability pursuant to Section 8.1.
Prometheus shall have no obligation to indemnify Connetics under this
Section 13.2 for any breach of Prometheus's representations and warranties made
in or pursuant to this Agreement, until such time, if any, as the aggregate
amount of the liabilities, losses, damages, claims costs and expenses arising
out of such breach exceeds * and then only to the extent of such excess.
13.3 CLAIMS PROCEDURES.
13.3.1 Promptly after any Party receives notice of or otherwise
becomes aware of (x) any claim or (y) the commencement of any action or
proceeding, such Party (the "INDEMNIFIED PARTY") will, if a claim with respect
thereto is to be made against any Party obligated to provide indemnification
(the "INDEMNIFYING PARTY") pursuant to this Article 13, give such Indemnifying
Party written notice of such claim or the commencement of such action or
proceeding and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting from such claim. Failure by the
Indemnifying Party to notify the Indemnified Party of its election to defend any
such claim or action within a reasonable time, but in no event more than thirty
days after notice thereof shall have been given to the Indemnifying Party of its
right to defend such claim or action, shall be deemed an election by the
Indemnifying Party not to assume the defense of such claim or action.
13.3.2 If the Indemnifying Party assumes the defense of any such
claim, or litigation resulting therefrom, the obligations of the Indemnifying
Party as to such claim shall be limited to taking all steps necessary in the
defense or settlement of such claim or litigation resulting therefrom and to
holding the Indemnified Party harmless from and against any and all losses,
damages and liabilities caused by or arising out of any settlement approved by
the Indemnifying Party or any judgment in connection with such claim or
litigation resulting therefrom. The Indemnified Party may participate, at its
expense, in the defense of such claim or any litigation provided that the
Indemnifying Party shall direct and control the defense of such claim or
litigation. The Indemnifying Party shall not, in the defense of such claim of
any litigation resulting therefrom, consent to entry of any judgment, except
with the written consent of the Indemnified Party, or enter into any settlement,
except with the written consent of the Indemnified Party, which does not include
as an unconditional term thereof the giving by the
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation.
13.3.3 If the Indemnifying Party does not assume the defense of any
such claim or litigation resulting therefrom, the Indemnified Party may defend
against such claim or litigation in such manner as it may deem appropriate and,
unless the Indemnifying Party deposits with the Indemnified Party a sum
equivalent to the total amount demanded in such claim or an irrevocable letter
of credit in form and substance reasonably satisfactory to the Indemnified
Party, the Indemnified Party may settle such claim or litigation on such terms
as it may deem appropriate, and the Indemnifying Party shall promptly reimburse
the Indemnified Party for the amount of all reasonable expenses, including,
without limitation, attorneys' fees, incurred by the Indemnified Party in
connection with the defense against or settlement of such claims or litigation.
If no settlement of such claim or litigation is made, the Indemnifying Party
shall promptly reimburse the Indemnified Party for the amount of any judgment
rendered with respect to such claim or in such litigation and of all expenses,
including, without limitation, attorneys' fees, incurred by the Indemnified
Party in the defense against such claim or litigation.
13.4 NATURE OF SURVIVAL OF REPRESENTATIONS, ETC. All representations
warranties, covenants and agreements made by the Parties shall survive the
Closing Date and any investigation at any time made by or on behalf of either
party; provided, however, that no suit or action may be commenced in respect of
a representation or warranty after thirty-six (36) months from the Closing Date.
ARTICLE 14
TERMINATION
14.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
14.1.1 by Prometheus if (i) there is a material Breach of any
covenant or obligation of Connetics and such Breach shall not have been cured or
Connetics shall not have commenced to cure within ten (10) days after the
delivery of notice thereof to Connetics, or (ii) Prometheus reasonably
determines that the timely satisfaction of any condition set forth in Article 10
has become impossible or impractical (other than as a result of any failure on
the part of Prometheus to comply with or perform its covenants and obligations
set forth in this Agreement);
14.1.2 by Connetics if (i) there is a material Breach of any
covenant or obligation of Prometheus and such Breach shall not have been cured
or Prometheus shall not have commenced to cure within ten (10) days after the
delivery of notice thereof to Prometheus, or (ii) Connetics reasonably
determines that the timely satisfaction of any condition set forth in Article 11
has become impossible or impractical (other than as a result of any failure on
the part of Connetics to comply with or perform any covenant or obligation set
forth in this Agreement);
14.1.3 by the mutual written consent of Prometheus and Connetics.
14.2 TERMINATION PROCEDURES. If Prometheus wishes to terminate this
Agreement pursuant to Section 14.1(a), Prometheus shall deliver to Connetics a
written notice stating that
29.
36
Prometheus is terminating this Agreement and setting forth a brief description
of the basis on which Prometheus is terminating this Agreement. If Connetics
wishes to terminate this Agreement pursuant to Section 14.1(b), Connetics shall
deliver to Prometheus a written notice stating that Connetics is terminating
this Agreement and setting forth a brief description of the basis on which
Connetics is terminating this Agreement.
14.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 14.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) no party shall be relieved of any
obligation or other Liability arising from any Breach by such party of any
provision of this Agreement; and (b) the parties shall, in all events, remain
bound by and continue to be subject to the provisions set forth in Article 14.5
and 15.
14.4 NON-EXCLUSIVITY OF TERMINATION RIGHTS. The termination rights
provided in Section 14.1 shall not be deemed to be exclusive. Accordingly, the
exercise by any party of its right to terminate this Agreement pursuant to
Section 14.1 shall not be deemed to be an election of remedies and shall not be
deemed to prejudice, or to constitute or operate as a waiver of, any other right
or remedy that such party may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
14.5 TERMINATION FEE.
14.5.1 Prometheus agrees to pay to Connetics the sum of * in the
event Prometheus terminates the Agreement pursuant to Section 14.1.1(ii) as a
result of Prometheus being unable to satisfy the condition of closing as set
forth in Section 10.7.
14.5.2 Connetics agrees to pay Prometheus the sum of * in the event
Prometheus is able to satisfy the conditions of Closing as set forth in Section
10.7 and 9.1.2 and Closing does not occur within fifteen (15) working days of
Connetics' receipt of notice from Prometheus that Prometheus is able to satisfy
said conditions because Connetics is either unwilling or unable to transfer to
Prometheus the Purchased Assets; provided however, Connetics shall not be
obligated to pay Prometheus such amount in the event that either (i) Connetics
is unable to assign to Prometheus at Closing either the Supply Agreement or
Pharmascience Agreement as a result of SKB or Pharmascience refusing to accept
such assignment for reasons outside of the control of Connetics or (ii) SKB does
not consent to the assumption by Prometheus of Connetics' payment obligation to
SKB under the Ridaura Agreement.
ARTICLE 15
MISCELLANEOUS
15.1 FURTHER ASSURANCES. Each of the Parties upon the request of the
other Party, whether before or after the Closing Date and without further
consideration, shall do, execute, acknowledge and deliver or cause to be done,
executed acknowledged or delivered all such further acts, deeds, documents,
assignments, transfers, conveyances, powers of attorney and assurances as may be
reasonably necessary or desirable to effect complete consummation of the
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
30.
37
transactions contemplated by this Agreement, and Connetics will provide
Prometheus with access to financial information relating to the Purchased Assets
as Prometheus may reasonably request.
15.2 ANNOUNCEMENTS. The Parties agree that neither Party shall make any
disclosure or public announcement with respect to this Agreement, the Product or
any of the transactions contemplated by this Agreement, including, without
limitation, the Purchase Price, without the prior written consent of the other
Party. Nothing in this Section 15.2 shall restrict Connetics or Prometheus from
making any disclosure or public announcement of the transactions contemplated by
this Agreement to the extent that it, in its sole discretion reasonably
exercised, is of the view that such disclosure or announcement is required or
deemed advisable in order to meet its obligations under the securities or other
applicable laws or stock exchange requirements in the United States of America;
provided that, prior to making such disclosure announcement, the Party making it
shall give written notice to the other Party and shall use reasonable efforts to
secure confidential treatment of such information required to be disclosed.
Further, nothing in this Section 15.2 shall restrict Connetics or Prometheus
from making any disclosure to any of its Representatives, or with respect to
Prometheus to any third party from whom Prometheus may obtain funding for
(provided that such third party is under an obligation of confidentiality), in
connection with the negotiation and consummation of the transactions
contemplated by this Agreement or shall restrict Prometheus from making any
disclosure or public announcement with respect to the Purchased Assets following
the Closing Date. Without limiting the foregoing, Prometheus may disclose this
Agreement and the transactions contemplated by this Agreement, to the extent
reasonably necessary, in connection with any registration of the Product with
any state or Federal agency.
15.3 FEES AND EXPENSES.
15.3.1 Subject to the provisions of Article 13 (including the
indemnification and other obligations of Prometheus thereunder and Section
14.3(b)), Connetics shall bear and pay all fees, costs and expenses that have
been incurred or that are in the future incurred by, on behalf of or for the
benefit of Connetics in connection with: (i) the negotiation, preparation and
review of the Term Sheet; the furnishing of information to Prometheus and its
Representatives in connection with the investigation and review); (iii) the
negotiation, preparation and review of this Agreement (including the Schedules)
and all bills of sale, assignments, certificates, opinions and other instruments
and documents delivered or to be delivered in connection with the transactions
contemplated by this Agreement; (iv) the preparation and submission of any
filing or notice required to be made or given by Connetics in connection with
any of the transactions contemplated by this Agreement, and the obtaining of any
consent required to be obtained by Connetics in connection with any of such
transactions; and (v) the consummation and performance of the transactions
contemplated by this Agreement as required to be performed by Connetics.
15.4 Subject to the provisions of Article 13 (including the
indemnification and other obligations of Connetics thereunder and Section
14.3(b)), Prometheus shall bear and pay all fees, costs and expenses (including
all legal fees and expenses payable to Xxxxxx Godward LLP that have been
incurred or that are in the future incurred by or on behalf of Prometheus in
connection with: (i) the negotiation, preparation and review of the Term Sheet;
(ii) the investigation and
31.
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review conducted by Prometheus and its Representatives with respect to the
business of Connetics; (iii) the negotiation, preparation and review of this
Agreement and all bills of sale, assignments, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement; and (iv) the preparation and
submission of any filing or notice required to be made or given by Prometheus in
connection with any of the transactions contemplated by this Agreement, and the
obtaining of any consent required to be obtained by Prometheus in connection
with any such transactions; and (v) the consummation and performance of the
transactions contemplated by this Agreement as required to be performed by
Prometheus.
15.5 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
is brought against any party to this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
15.6 NOTICES. Any notice required or permitted by this Agreement shall
be in writing and in English and shall be sent by prepaid registered or
certified mail, return receipt requested; by facsimile; by internationally
recognized courier; or by personal delivery, in each case addressed to the other
Party at the address below or at such other address for which such Party gives
notice under this Agreement.
IF TO CONNETICS:
Connetics Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: President
Fax: 000-000-0000
AND IF TO PROMETHEUS:
Prometheus Laboratories, Inc.
0000 Xxxxxxx Xxxx.
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: President
Fax: 000-000-0000
Any such notice, direction or other instrument, if delivered, shall be
deemed to have been given on the date on which it was delivered. Any Party may
change its address for service from time to time by notice given to the other
Party in accordance with the foregoing.
15.7 APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the Parties shall be governed by, the laws of
the State of California (without giving effect to its principles of conflicts of
laws).
15.8 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). Connetics
agrees that: (a) in the event of any Breach or threatened Breach by Connetics of
any covenant, obligation or other provision set
32.
39
forth in this Agreement, Prometheus shall be entitled (in addition to any other
remedy that may be available to it) to (i) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other provision, and (ii) an injunction restraining such
Breach or threatened Breach; and (b) Prometheus shall not be required to provide
any bond or other security in connection with any such decree, order or
injunction or in connection with any related action or Proceeding.
15.9 ENTIRE AGREEMENT. This Agreement, including the attached Exhibits
and Schedules which are incorporated in this Agreement by reference, constitutes
the entire agreement between the Parties with respect to the subject matter, and
supersedes all prior or contemporaneous understandings or agreements, whether
written or oral, between Connetics and Prometheus with respect to such subject
matter, including specifically the *. No amendment or modification of this
Agreement shall be valid or binding upon the Parties unless made in writing and
signed by the duly authorized representatives of both Parties.
15.10 WAIVER. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
15.11 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
15.12 KNOWLEDGE. For purposes of this Agreement, Prometheus and
Connetics shall be deemed to have "knowledge" of a particular fact or other
matter if any Representative of Prometheus or Connetics, respectively, has
knowledge of such fact or other matter.
15.13 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same Agreement.
15.14 SINGULAR/PLURAL. In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing a specific
gender shall include the other genders and references to persons shall include
corporations and one or more persons, their heirs, executors, administrators or
assigns as the case may be.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
33.
40
15.15 HEADINGS, ETC. The division of this Agreement into Articles and
Sections, and the insertion of headings, are for convenience of reference only
and shall not affect the interpretation of the Agreement.
15.16 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST. This Agreement shall
inure to the benefit of and be binding upon the Parties and their respective
heirs, executors, successors, administrators, and assigns, but shall not be
assignable by Connetics or Prometheus prior to the Closing Date. Prometheus
shall be permitted to assign any of its rights and assign or delegate any of its
obligations under this Agreement, in whole or in part, to any other Person after
the Closing Date upon obtaining the prior written consent of Connetics, said
consent not to be unreasonably withheld; provided, however, that Prometheus
shall not be required to obtain Connetics' prior written consent after the
expiration of the Royalty Period. Prometheus acknowledges that any such
assignment or delegation may also require the prior written consent of Paladin
and/or SKB. In the event of any such assignment or delegation, Prometheus shall
remain liable to Connetics for the performance of any such assigned right or
assigned or delegated obligation. Connetics shall be permitted to assign any of
its rights and assign or delegate any of its obligations under the Agreement, in
whole or in part, to any other Person after the Closing Date upon obtaining the
prior written consent of Prometheus, said consent not to be unreasonably
withheld. In the event of any such assignment or delegation, Connetics shall
remain liable to Prometheus for the performance of any such assigned right or
assigned or delegated obligation. Except for the provisions of Article 13
hereof, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties to this Agreement and
their respective successors and assigns (if any). Without limiting the
generality of the foregoing, (i) no employee of Connetics shall have any rights
under this Agreement (except as expressly set forth in Section 13.2), and (ii)
no creditor of Connetics shall have any rights under this Agreement.
[THIS SPACE IS INTENTIONALLY LEFT BLANK]
34.
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The undersigned have executed this Agreement of behalf of the Parties as
of the Effective Date.
CONNETICS CORPORATION PROMETHEUS LABORATORIES, INC.
By: /s/ XXXXXX X. XXXXXXX By: /s/ XXXXX X. XXXXXXXXX
--------------------------------------- -------------------------------------
Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxxx
President and Chief Executive Officer President and Chief Executive Officer
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
42
LIST OF EXHIBITS
Exhibit Description
A Pharmascience Agreement
B Supply Agreement with SmithKline Xxxxxxx
C Form of Xxxx of Sale
X Xxxxxxx Agreement
E SKB Letter
LIST OF SCHEDULES
Schedule Description
1.1 Excluded Assets
4.6 Inventory of Finished Goods
4.9 Approvals, Registrations, Permits
4.10 Connetics Contracts
4.11 Intellectual Property
4.16 Governmental Consents
4.19 Customer Product Revenues
8.4 Allocation of Purchase Price
43
EXHIBIT A
SUPPLY AGREEMENT WITH PHARMASCIENCE
Incorporated by reference to Exhibit 10.55 of Connetics' Post-Effective
Amendment No. 1 to our Registration Statement on Form S-1 filed with the SEC on
December 22, 1997. (Registration No. 333-41195)
44
EXHIBIT B
SUPPLY AGREEMENT WITH SKB
Incorporated by reference to Exhibit 10.4 of Connetics' Report on Form 8-K filed
on or about January 15, 1997. Confidential treatment was requested and granted
as to certain portions of this exhibit at the time it was originally filed with
the Securities and Exchange Commission.
45
EXHIBIT C
FORM OF XXXX OF SALE
46
XXXX OF SALE AND ASSIGNMENT
Xxxx of Sale and Assignment, dated ______________ 2001, from CONNETICS
CORPORATION, a Delaware corporation ("Connetics") to PROMETHEUS LABORATORIES,
INC., a California corporation ("Prometheus").
1. Pursuant to the Asset Purchase Agreement between Connetics and
Prometheus dated _____________, 2001 (the "Agreement"), incorporated
herein by reference, and for valuable consideration therein recited,
including a purchase price payable as set forth in Article 3 of the
Agreement, and other good and valuable consideration recited therein,
Connetics has respectively sold, conveyed, assigned, transferred, set
over and delivered and by these presents does hereby sell, convey,
assign, transfer, set over and deliver unto Prometheus, and to its
successors and assigns forever, all and singular rights, title and
interest in and to the Purchased Assets as described in Article 2 of
the Agreement, all of which is incorporated herein by reference.
2. Connetics hereby covenants and agrees to and with Prometheus, its
successors and assigns, to execute and deliver all such other and
further instruments of conveyance, assignment and transfer and all
such other notices, releases, acquittances, powers of attorney and
other documents, and to do all such other acts and things as may be
necessary more fully to convey and assign to Prometheus or its
successors and assigns, all and singular rights, title and interest
in and to the Purchased Assets therein and hereby conveyed, assigned
and transferred to or acquired by Prometheus by any such specific
conveyances and assignments; and in case of conflict, such specific
instrument shall control with respect to the properties or assets
assigned or converted thereby.
3. Connetics represents and warrants to Prometheus that (i) Connetics
is the sole owner of the Purchased Assets with good title thereto
free and clear of any mortgage, lien, charge, security interest,
adverse claim or other encumbrance whatsoever (collectively, the
"Encumbrances"), and (ii) Connetics has the right to transfer to
Prometheus good title to the Purchased Assets, free and clear of all
Encumbrances, and to execute this Xxxx of Sale and Assignment.
IN WITNESS WHEREOF, Connetics has caused this Xxxx of Sale and Assignment to be
executed as of the date first above written.
Connetics Corporation
By: ______________________
Title: ______________________
47
EXHIBIT X
XXXXXXX AGREEMENT
Incorporated by reference to Exhibit 2.1 of Connetics' Report on Form 8-K/A
filed on or about January 15, 1997 and filed with the SEC on April 28, 1997
(Commission File No. 0-27406). Confidential treatment was requested and granted
as to certain portions of this exhibit at the time it was originally filed with
the Securities and Exchange Commission.
48
EXHIBIT E
SKB LETTER
This Exhibit has been omitted and filed separately with the Commission.
Confidential treatment has been requested.
49
SCHEDULE 1.1
EXCLUDED ASSETS
There are no Excluded Assets
50
SCHEDULE 4.6
INVENTORY OF FINISHED GOODS
Ridaura Inventory
End of Accounting Month March 2001
Total Quantity (Bottles of 60's) *
QUANTITY IN
LOT # EXPIRATION DATE BOTTLES PHYSICAL LOCATION
* * * *
* * * *
* * * *
* * * *
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
51
SCHEDULE 4.9
APPROVALS, REGISTRATIONS, PERMITS
List of INDs and NDAs in the United States:
*
*
*
*
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
52
SCHEDULE 4.10
CONNECTICS CONTRACTS
1. Distribution Services Agreement dated December 31, 1997 between Connetics
Corporation and CORD Logistics, Inc (being renegotiated)
2. *
3. *
4. *
5. Medicaid Rebate Agreement
6. Public Health Service
7. Asset Purchase Agreement dated December 2, 1996 between Connetics and SKB
8. Supply Agreement for Ridaura dated December 31,1996 between Connetics and
SKB
9. Supply Agreement between Connetics and Pharmascience dated December 19,1997
10. Canadian Asset Purchase Agreement between Connetics and Pharmascience dated
December 18,1997
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
53
SCHEDULE 4.11
INTELLECTUAL PROPERTY
TRADEMARKS
U.S. Trademark Registration No. 1,179,785 for RIDAURA
U.S. Trademark Registration No. 1,382,960 for RIDAURA & Design
Worldwide agreement dated November 19, 1982 between Laboratories Xxxxx Xxxxx &
French S.A. and Xxxxxxx Group p.l.c. permitting co-existence of RIDAURA and
TYCAURAL for "veterinary preparation for the treatment of ear infections."
PATENTS
U.S.A Patents
Product RIDAURA
Subject Matter: auranofin
Country Patent/Application No. Filing Date Grant Date Expiry Date
U.S.A 4,200,738 21 April 1977 29 April 1980 29 April 1997
U.S.A 4,115,642 30 June 1977 19 Sept 1978 30 June 1997
U.S.A 4,125,711 30 June 1977 14 Nov 1978 30 June 1997
U.S.A 4,125,710 30 June 1977 14 Nov 1978 30 June 1997
COPYRIGHT
No known registrations/applications.
DOMAIN NAMES
Xxxxxxx.xxx
54
SCHEDULE 4.16
GOVERNMENTAL CONSENTS
No Government Consents
55
SCHEDULE 4.19
CUSTOMER PRODUCT REVENUES
56
CONNETICS CORPORATION
RIDAURA SALES BY CUSTOMER
YTD 12/31/00
CUSTOMER SALES (ROUNDED TO WHOLE $) % OF YTD SALES
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
57
SCHEDULE 8.4
ALLOCATION OF PURCHASE PRICE
To be attached within ninety (90) days of Closing
