"CONFIDENTIAL MATERIAL FILED SEPARATELY WITH THE COMMISSION"
EXHIBIT 10.27
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of August 25, 1997, among Hoechst Xxxxxx
Xxxxxxx, Inc., a Delaware corporation ("PARENT"), Marisub, Inc., a Delaware
corporation and the wholly-owned subsidiary of Parent ("SELLER"), and Xxxxxx
Pharmaceuticals, Inc., a Nevada corporation ("XXXXXX").
RECITALS
A. Seller owns all of the outstanding shares of capital stock ("Shares")
of The Rugby Group, Inc., a New York corporation (the "COMPANY"), which Shares
consist of 220 shares of common stock, 3,980 shares of first preferred stock and
2,400 shares of second preferred stock.
X. Xxxxxx desires to purchase all the outstanding Shares from Seller and
Seller desires to sell such Shares to Xxxxxx, on the terms and subject to the
conditions herein contained.
AGREEMENTS
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES; CLOSING AND MANNER OF PAYMENT
1.1 AGREEMENT TO PURCHASE AND SELL SHARES. On the terms and subject to the
conditions contained in this Agreement, Xxxxxx shall purchase from Seller, and
Seller shall sell to Xxxxxx, all of the outstanding Shares. At the Closing (as
defined herein), Seller shall deliver to Xxxxxx certificates evidencing the
Shares duly endorsed in blank, or accompanied by valid stock powers duly
executed in blank, in proper form for transfer.
1.2 PURCHASE PRICE. Subject to the adjustments set forth in this Article
I, the aggregate purchase price of the Shares shall be equal to * (the "CLOSING
PURCHASE PRICE"), plus the amount of the Upside Sharing Payment (as defined
herein), if any (collectively, the "PURCHASE PRICE").
1.3 ADJUSTMENT TO THE PURCHASE PRICE. The Closing Purchase Price shall be:
(a) increased by the amount by which the Net Book Value (as defined herein)
exceeds *; or (b) reduced by the amount by which exceeds the Net Book Value. The
Net Book Value shall be the amount by which the aggregate consolidated assets of
the Company and its Subsidiaries exceeds the aggregate consolidated liabilities
of the Company and its Subsidiaries, all as determined and adjusted in
accordance with Section 1.5 below and as shown on the Closing Balance Sheet.
"*SEE PAGE ONE OF EXHIBIT"
1.4 MANNER OF PAYMENT OF THE PURCHASE PRICE. For purposes of the Closing,
the parties shall make a good-faith estimate of the Closing Purchase Price (the
"ESTIMATED CASH PAYMENT"), based upon the most recent ascertainable financial
information. At the Closing, Xxxxxx shall pay the Estimated Cash Payment to
Seller, by wire transfer to such account as Seller shall designate by written
notice delivered to Purchaser not later than two (2) business days prior to the
Closing. Following the Closing, the parties shall determine the final Closing
Purchase Price, taking into account the adjustments required pursuant to Section
1.3 and employing the procedures and criteria set forth in Sections 1.5 and 1.6.
If, based on the Closing Purchase Price as finally determined: (a) the Closing
Purchase Price exceeds the Estimated Cash Payment, Xxxxxx shall forthwith pay
the excess to Seller; or (b) the Estimated Cash Payment exceeds the Closing
Purchase Price, Seller shall forthwith pay the excess to Xxxxxx. Notwithstanding
anything to the contrary contained herein, if (x) the Company or any of its
Subsidiaries reverses any of the reserves set forth on the Interim Financial
Statements at any time from July 31, 1997 through the Closing Date where the
effect of such reversal would be to increase the Company's and its Subsidiaries'
consolidated net income; and (y) the Net Book Value, as calculated on the
Closing Balance Sheet, exceeds *, then the Net Book Value, as calculated on the
Closing Balance Sheet, shall be reduced by the amount of the increase in Net
Book Value resulting from such reversal and resultant increase in consolidated
net income; provided, however, that the Net Book Value shall not be reduced to
less than * based upon such reserve reversal.
1.5 DETERMINATION OF NET BOOK VALUE. The Net Book Value shall be
determined from a statement of the consolidated assets and liabilities of the
Company and its Subsidiaries as of the close of business on the day next
preceding the Closing (the "CLOSING BALANCE SHEET"). The Closing Balance Sheet
shall be prepared by Seller, at Seller's expense. Except as otherwise provided
in this Section 1.5, the Closing Balance Sheet shall be prepared in accordance
with generally accepted accounting principles ("GAAP") applied in a manner
consistent with the accounting principles applied in the preparation of the
Financial Statements (as defined herein) and the Interim Financial Statements
(as defined herein) based upon the Company's historical accounting practices.
Notwithstanding anything to the contrary contained in this Article I, (a) the
Closing Balance Sheet shall contain pro rata accruals for accrued salaries,
wages and vacation pay with respect to all of the employees of the Company and
its Subsidiaries, utilities and like items; (b) assets and liabilities shall be
reflected without regard to materiality; (c) the Closing Balance Sheet shall be
prepared on the basis that the intercompany payable from the Company to Parent
has been converted to equity in accordance with Section 5.3(j) of this
Agreement; (d) for purposes of preparing the Closing Balance Sheet, the *.
Seller shall cause the Closing Balance Sheet to be delivered to Xxxxxx not later
than sixty (60) days after the Closing Date. Seller shall make available to
Xxxxxx and Xxxxxx'x accountants its work papers used in connection with the
preparation of the Closing Balance Sheet.
1.6 DISPUTES REGARDING CLOSING BALANCE SHEET. Disputes with respect to the
Closing Balance Sheet shall be dealt with as follows:
(a) Xxxxxx shall have sixty (60) days after receipt of the Closing Balance
Sheet from Seller (the "DISPUTE PERIOD") to dispute any of the elements of the
Closing Balance Sheet (a "DISPUTE"). If Xxxxxx does not give written notice of a
Dispute within the Dispute Period to Seller (a "DISPUTE NOTICE"), the Closing
Balance Sheet shall be deemed to have been accepted and agreed to by Xxxxxx in
the form in which it was delivered by Seller, and shall be final and binding
upon the parties hereto. If Xxxxxx has a Dispute, Xxxxxx shall give Seller a
Dispute
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"*SEE PAGE ONE OF EXHIBIT"
Notice within the Dispute Period, setting forth in reasonable detail the
elements and amounts with which it disagrees. Within thirty (30) days after
delivery of such Dispute Notice, the parties hereto shall attempt to resolve
such Dispute and agree in writing upon the final content of the disputed Closing
Balance Sheet.
(b) If Xxxxxx and Seller are unable to resolve any Dispute within the
thirty (30) day period after Seller's receipt of a Dispute Notice, the New York
office of the certified public accounting firm of Xxxxxx Xxxxxxxx LLP (the
"ARBITRATING ACCOUNTANT") shall be engaged as arbitrator hereunder to settle
such Dispute as soon as practicable. In the event Xxxxxx Xxxxxxxx LLP is
unwilling or unable to serve as the Arbitrating Accountant, the parties hereto
shall select by mutual agreement another nationally recognized certified public
accounting firm, who is not rendering (and during the preceding two-year period
has not rendered) services to either Parent, Xxxxxx or any of their respective
affiliates, to serve as the Arbitrating Accountant. In connection with the
resolution of any Dispute, the Arbitrating Accountant shall have access to all
documents, records, work papers, facilities and personnel necessary to perform
its function as arbitrator. The arbitration before the Arbitrating Accountant
shall be conducted in accordance with the commercial arbitration rules of the
American Arbitration Association. The Arbitrating Accountant's award with
respect to any Dispute shall be final and binding upon the parties hereto, and
judgment may be entered on the award. Parent and Xxxxxx shall each pay one-half
of the fees and expenses of the Arbitrating Accountant with respect to any
Dispute.
1.7 TIME AND PLACE OF CLOSING. Unless terminated earlier as provided in
Article VIII hereof, the transactions contemplated by this Agreement shall be
consummated (the "CLOSING") at 10:00 a.m., prevailing business time, at the
offices of X'Xxxxxx & Xxxxxx, 00 Xxxxx XxXxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000 two (2) business days after all the conditions of Closing set forth in
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Article V hereof are satisfied or waived, or on such other date, or at such
other place, as shall be agreed upon by Seller and Xxxxxx. The date on which the
Closing shall occur in accordance with the preceding sentence is referred to in
this Agreement as the "CLOSING DATE". If the Closing shall occur, it shall be
deemed to be effective as of 12:01 a.m., prevailing time at the place of Closing
on the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants to Seller that the statements contained in
this Article II are true and correct as of the date hereof (except as otherwise
noted), except as set forth in the disclosure statement delivered by Xxxxxx to
Seller concurrently herewith and identified as the "XXXXXX DISCLOSURE
STATEMENT." All exceptions noted in the Xxxxxx Disclosure Statement shall be
numbered to correspond to the applicable sections to which such exception
refers; provided, however, that any disclosure set forth on any particular
schedule shall be deemed disclosed in reference to all applicable schedules.
2.1 EXISTENCE, GOOD STANDING, CORPORATE AUTHORITY. Xxxxxx is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada and has all requisite power and authority to (i) own or lease,
and operate its properties and assets and to carry on its business as now
conducted, except where the failure to have such power and authority would not
have a Xxxxxx Material Adverse Effect (as defined herein); (ii) enter into and
perform this Agreement and the other agreements executed in connection herewith
to which Xxxxxx is a party (collectively, the "XXXXXX ANCILLARY DOCUMENTS"); and
(iii) consummate the transactions contemplated hereby and thereby. For purposes
of this Agreement, (a) the term "MATERIAL ADVERSE EFFECT" when used with respect
to any Person (as defined herein) means (i) a material adverse effect on the
business, results of operations, assets, product pipeline or financial condition
of such Person and its Subsidiaries (as defined herein), if any, taken as a
whole, or (ii) a material impairment in the ability of such Person or its
Subsidiaries to perform any of their obligations under this Agreement or to
consummate the transactions contemplated hereby or under the Xxxxxx Ancillary
Documents or the Ancillary Documents (as defined herein), as the case may be,
(b) the term "SUBSIDIARY" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated, of
which (i) at least fifty percent (50%) of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such Person or by any one or more of its Subsidiaries; or (ii) such Person or
any other Subsidiary of such Person is a general partner, it being understood
that representations and warranties of a Person concerning any former Subsidiary
of such Person shall be deemed to relate only to the periods during which such
former Subsidiary was a Subsidiary of such Person; and (c) the word "PERSON"
means an individual, a corporation, a partnership, a limited liability company,
an association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof, or
any affiliate (as that term is
4
defined in the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT")) of any of the
foregoing.
2.2 AUTHORIZATION OF AGREEMENT AND OTHER DOCUMENTS. The execution and
delivery of this Agreement and the Xxxxxx Ancillary Documents and the
consummation by Xxxxxx of the transactions contemplated hereby and thereby have
been duly authorized by the Board of Directors of Xxxxxx and no other
proceedings on the part of Xxxxxx or its stockholders are necessary to authorize
the execution, delivery or performance of this Agreement or any Xxxxxx Ancillary
Document. This Agreement has been duly and validly executed and delivered and
is, and, as of the Closing Date, each of the Xxxxxx Ancillary Documents will be
duly and validly executed and delivered and will constitute, a valid and binding
obligation of Xxxxxx enforceable against Xxxxxx in accordance with its terms,
except to the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws affecting enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
2.3 NO VIOLATION. Neither the execution and delivery by Xxxxxx of this
Agreement or the Xxxxxx Ancillary Agreements, nor the consummation by Xxxxxx of
the transactions contemplated hereby and thereby in accordance with their
respective terms, will (a) violate or conflict with or result in a breach of any
provisions of the Articles of Incorporation or By-Laws of Xxxxxx; (b) contravene
or conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
Xxxxxx, except for any of the foregoing matters which would not have a Xxxxxx
Material Adverse Effect; (c) violate, conflict with, result in a breach of any
provision of, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination, or
in a right of termination or cancellation of, accelerate the performance
required by, result in the triggering of any payment or other obligations
pursuant to, result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties of Xxxxxx or any of its Subsidiaries
under, or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease, contract,
agreement or other instrument, commitment or obligation to which Xxxxxx or any
of its Subsidiaries is a party, or by which Xxxxxx or any of its Subsidiaries or
any of their respective properties is bound or affected, in each case, where
such violation, conflict, lien or breach would have a Xxxxxx Material Adverse
Effect; or (d) other than the filings under applicable federal, state and local
laws and regulations, or filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 and the expiration or early termination of all waiting
periods thereunder (the "HSR ACT") (collectively, the "REGULATORY FILINGS"),
require any consent, approval or authorization of, or declaration of, or
registration or filing with, any domestic governmental or regulatory authority,
the failure to obtain or make which would have a Xxxxxx Material Adverse Effect.
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2.4 NO BROKERS. Xxxxxx has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
Parent, Seller, Xxxxxx or their respective Subsidiaries to pay any finder's fee,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Xxxxxx has retained Bear, Xxxxxxx & Co. Inc. as
its financial advisor.
2.5 ACCREDITED INVESTOR. Xxxxxx is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended (the "SECURITIES ACT") and is acquiring the Shares for its own account
for investment and not with a view to, or for resale in connection with, any
"distribution" within the meaning of the Securities Act. Xxxxxx understands that
the Shares have not been registered under the Securities Act or any state
securities laws and are being transferred to Xxxxxx, in part, in reliance on the
foregoing representation.
2.6 LITIGATION. There is no litigation or proceeding, in law or in equity,
and there are no proceedings or governmental investigations before any
commission or other administrative authority, pending or, to Xxxxxx'x knowledge,
threatened against Xxxxxx or any of its Subsidiaries, which, if determined
adversely to Xxxxxx or its Subsidiaries, would reasonably be likely to have a
Xxxxxx Material Adverse Effect.
2.7 FINANCING. Upon the terms and subject to the conditions of this
Agreement, Xxxxxx will have all funds necessary for the payment of the Closing
Purchase Price and anticipates having sufficient funds to pay the Upside Sharing
Payment.
2.8 EFFECT ON AGREEMENT. There is no agreement or arrangement binding on
Xxxxxx or any of its Subsidiaries that would materially limit its ability to
develop, sell or distribute any of the Products (as defined herein) or run the
Distribution Business (as defined herein) as such Distribution Business existed
on July 31, 1997, assuming the Closing had occurred as of such date, other than,
in each case, limitations which affect the pharmaceutical industry generally or
limitations which arise due to Xxxxxx'x allocation of its limited resources.
Xxxxxx believes that it currently has adequate resources to run the Distribution
Business and develop, sell and/or distribute the Products in a commercially
reasonable good faith manner.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Seller and Parent, jointly and severally, represent and warrant to Xxxxxx
that the statements contained in this Article III are true and correct as of the
date hereof (except as otherwise noted), except as set forth in the disclosure
statement delivered by Parent and Seller to Xxxxxx concurrently herewith and
identified as the "DISCLOSURE STATEMENT." All exceptions noted in the Disclosure
Statement shall be numbered to correspond to the applicable sections to which
such exception refers; provided, however, that any disclosure set forth on any
particular schedule shall be deemed disclosed in reference to all applicable
schedules.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. Seller and Parent are each
corporations duly organized, validly existing and in good standing under the
laws of their respective states of incorporation and has all power and authority
to (i) enter into and perform this Agreement and the other agreements executed
in connection herewith to which Parent or Seller is a party (collectively, the
"ANCILLARY DOCUMENTS"); and (ii) consummate the transactions contemplated hereby
and thereby. The Company and each of its Subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the laws of their
respective jurisdiction of incorporation; (ii) has all requisite power and
authority to own or lease, and operate their respective properties and assets,
and to carry on their respective businesses as now conducted, except where the
failure to have such power and authority would not have a Company Material
Adverse Effect; (iii) is duly qualified or licensed to do business and is in
good standing in all jurisdictions in which they own or lease property or in
which the conduct of their respective businesses requires them to so qualify or
be licensed except where the failure to so qualify would not have a Company
Material Adverse Effect; and (iv) has obtained all licenses, permits, franchises
and other governmental authorizations necessary to the ownership or operation of
their respective properties or the conduct of their respective businesses except
where the failure to have obtained such licenses, permits, franchises or
authorizations would not have a Company Material Adverse Effect.
3.2 CAPITALIZATION.
(a) The total authorized capital stock of the Company consists of (i) 400
shares of common stock, par value $50 per share, 220 shares of which are issued
and outstanding as of the date of this Agreement; (ii) 20,000 shares of first
preferred stock, par value $1 per share, 3,980 shares of which are issued and
outstanding as of the date of this Agreement; and (iii) 2,400 shares of second
preferred stock, par value $1,000 per share, 2,400 shares of which are issued
and outstanding as of the date of this Agreement. There are no shares of capital
stock of the Company of any other class authorized, issued or outstanding.
7
(b) Each of the Shares is (i) duly authorized and validly issued; (ii)
fully paid and nonassessable and free of preemptive and similar rights; and
(iii) owned by Seller free and clear of all options, proxies, voting trusts,
voting agreements, judgments, pledges, charges, escrows, rights of first refusal
or first offer, mortgages, indentures, claims, transfer restrictions, liens,
equities, encumbrances, security interests and other encumbrances of every kind
and nature whatsoever, whether arising by agreement, operation of law or
otherwise (collectively, "CLAIMS").
(c) There are currently no outstanding, and, as of the Closing, there will
be no outstanding (i) securities convertible into or exchangeable for any
capital stock of the Company or any of its Subsidiaries, (ii) options, warrants
or other rights to purchase or subscribe to capital stock of the Company or any
of its Subsidiaries or securities convertible into or exchangeable for capital
stock of the Company or any of its Subsidiaries, or (iii) contracts,
commitments, agreements, understandings, arrangements, calls or claims of any
kind to which the Company or any of its Subsidiaries is a party or is bound
relating to the issuance of any capital stock of the Company or any of its
Subsidiaries.
3.3 SUBSIDIARIES. The Company owns directly or indirectly each of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such Subsidiary) of each of the
Company's Subsidiaries indicated in the Disclosure Statement as being owned by
the Company. Each of the outstanding shares of capital stock owned by the
Company of each of the Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and is owned, directly or indirectly, by
the Company free and clear of all Claims. The following information for each
Subsidiary of the Company is listed in the Disclosure Statement, if applicable:
(a) its name and jurisdiction of incorporation or organization; (b) the location
of its principal office; (c) a summary of its lines of business; (d) its
authorized capital stock or share capital; (e) the number of issued and
outstanding shares of capital stock or share capital and the owners thereof; and
(f) a list of its officers and directors. The only material asset owned by
Caribe is a manufacturing facility located in Puerto Rico.
3.4 OWNERSHIP INTERESTS. Neither the Company nor any of its Subsidiaries
owns any direct or indirect equity interest in, or is a party to any agreement
or arrangement relating to the ownership or control of a direct or indirect
equity interest in, any corporation, joint venture, limited liability company,
partnership, association or other entity. Since January 1, 1994, the Company has
not (i) disposed of the capital stock or all or substantially all of the assets
of any ongoing business, or (ii) purchased the business and/or all or
substantially all of the assets of another person, firm or corporation (whether
by purchase of stock, assets, merger or otherwise).
3.5 CONSTITUENT DOCUMENTS. True and complete copies of the Certificate of
Incorporation and all amendments thereto and the By-Laws as amended or restated,
as the case may be, and currently in force, of the Company and each of the
Company's Subsidiaries, and all stock records and all corporate minute books and
records of the Company and each of the Company's Subsidiaries have been
furnished or made available by Parent and Seller to Xxxxxx for inspection. Said
stock
8
records accurately reflect all stock transactions and the current stock
ownership of the Company and its Subsidiaries. The corporate minute books and
records of the Company and its Subsidiaries contain true and complete copies of
all resolutions adopted by the stockholders or the board of directors of the
Company and its Subsidiaries and any other action formally taken by them
respectively as such.
3.6 AUTHORIZATION OF AGREEMENT AND OTHER DOCUMENTS. The execution and
delivery of this Agreement and the Ancillary Documents, and the consummation by
Seller and Parent of the transactions contemplated hereby and thereby, have been
duly authorized by the Board of Directors and sole shareholder of Seller and by
the Board of Directors of Parent and no other proceedings on the part of Seller
or Parent are necessary to authorize the execution, delivery or performance of
this Agreement or any Ancillary Document. This Agreement has been duly and
validly executed and delivered and is, and, as of the Closing Date, each of the
Ancillary Documents will be duly and validly executed and delivered and will
constitute, a valid and binding obligation of Seller and Parent, to the extent
each is a party thereto, enforceable against Seller and Parent, to the extent
each is a party thereto, in accordance with their respective terms, except to
the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting enforcement of creditors' rights generally, and by general principles
of equity (regardless of whether enforcement is considered in a proceeding at
law or in equity).
3.7 NO VIOLATION. Neither the execution and delivery of this Agreement nor
the Ancillary Documents by Seller or Parent nor the consummation by Seller or
Parent of the transactions contemplated hereby and thereby in accordance with
their respective terms, will (a) violate or conflict with or result in a breach
of any provisions of the Certificate of Incorporation or By-Laws of Seller,
Parent, the Company or any of the Company's Subsidiaries; (b) violate, conflict
with, result in a breach of any provision of, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
result in the termination, or in a right of termination or cancellation of,
accelerate the performance required by, result in the triggering of any payment
or other material obligations pursuant to, result in the creation of any lien,
security interest, charge or encumbrance upon any of the material properties of
the Company or any of its Subsidiaries under, or result in being declared void,
voidable, or without further binding effect, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust or any material
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which the Company or any of its Subsidiaries is a
party, or by which the Company or any of its Subsidiaries or any of their
respective properties is bound or affected; (c) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Parent, Seller, the
Company or any of the Company's Subsidiaries, except for any of the foregoing
matters which would not have a Company Material Adverse Effect; or (d) other
than the Regulatory Filings, require any consent, approval or authorization of,
or declaration of, or filing or registration with, any domestic governmental or
regulatory authority, the failure to obtain or make which would have a Company
Material Adverse Effect.
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3.8 COMPLIANCE WITH LAWS--GENERAL.
(a) The Company and each of its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of any court, arbitral, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency ("GOVERNMENTAL ENTITIES") necessary for the lawful conduct
of their respective businesses as they are currently conducted (the "PERMITS"),
except where the failure to hold such Permits would not have a Company Material
Adverse Effect.
(b) The Company and its Subsidiaries are in substantial compliance with
the terms of their respective Permits, except for any noncompliance that would
not have a Company Material Adverse Effect.
(c) The Company and its Subsidiaries are in substantial compliance with
all laws, ordinances or regulations of all Governmental Entities (including, but
not limited to, those related to occupational health and safety, controlled
substances or employment and employment practices) that are applicable to the
Company or any of its Subsidiaries, except for any noncompliance that would not
have a Company Material Adverse Effect.
(d) No investigation, review, inquiry or proceeding by any Governmental
Entity with respect to the Company or any of its Subsidiaries is, to the
knowledge of the Company, pending or threatened.
(e) Neither the Company nor any of its Subsidiaries are subject to any
agreement, contract or decree with any Governmental Entities arising out of any
current or previously existing violations of any laws, ordinances or regulations
applicable to the Company or any of its Subsidiaries.
3.9 COMPLIANCE WITH LAWS--FDA.
(a) As to each drug of the Company or its Subsidiaries for which a new
drug application or abbreviated new drug application has been approved by the
Food and Drug Administration ("FDA"), which drug is described in the Disclosure
Statement, the applicant and all persons performing operations covered by the
application are in substantial compliance with 21 U.S.C. xx.xx. 355 or 357, 21
C.F.R. Parts 314 or 430 et. seq., respectively, and all terms and conditions of
the application.
(b) As to each biologic product of the Company or its Subsidiaries for
which an established license application ("ELA") and/or product license
application ("PLA") has been filed, which products are described in the
Disclosure Statement, the applicant and all persons performing operations
covered by the application are in substantial compliance with 42 U.S.C. ss. 262,
21 C.F.R. Part 601 et. seq., and all terms and conditions of the ELA and/or PLA.
10
(c) The Company and each of its Subsidiaries are in substantial compliance
with all applicable registration and listing requirements set forth in 21 U.S.C.
ss. 360 and 21 C.F.R. Part 207. To the extent required, the Company and each of
its Subsidiaries have obtained licenses from the Drug Enforcement Agency ("DEA")
and are in substantial compliance with all such licenses and all applicable
regulations promulgated by the DEA.
(d) Since January 1, 1994, all manufacturing operations conducted by or,
to the knowledge of the Company, for the benefit of the Company and its
Subsidiaries have been and are being conducted in substantial compliance with
the good manufacturing practice regulations set forth in 21 C.F.R. Parts 210 and
211.
(e) Neither the Company, its Subsidiaries nor, to the knowledge of the
Company, their respective officers, employees, or agents have made an untrue
statement of material fact or fraudulent statement to the FDA or the DEA, failed
to disclose a material fact required to be disclosed to the FDA or the DEA, or
committed an act, made a statement, or failed to make a statement that could
reasonably be expected to provide a basis for the FDA to invoke its policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities," set forth in 56 Fed. Reg 46191 (September 10, 1991).
(f) Parent and Seller have made available to Xxxxxx copies of any and all
reports of inspection observations, establishment inspection reports, warning
letters and any other documents received from or issued by the FDA or the DEA
within the last three years that indicate or suggest lack of compliance with the
FDA or the DEA regulatory requirements by the Company, its Subsidiaries or
persons covered by product applications or otherwise performing services for the
benefit of the Company or its Subsidiaries.
(g) Neither the Company nor its Subsidiaries have received any written
notice that the FDA or the DEA has commenced, or threatened to initiate, any
action to withdraw its approval or request the recall of any product of the
Company or its Subsidiaries or commenced or threatened to initiate, any action
to enjoin production at any facility owned or used by the Company or its
Subsidiaries or any other facility at which any of the Company's or its
Subsidiaries' products are manufactured, processed, packaged, labeled, stored,
distributed, tested or otherwise handled (the "MANUFACTURING Locations").
(h) As to each article of drug or consumer product currently manufactured
and/or distributed by the Company or its Subsidiaries, which products are
described in the Disclosure Statement, such article is not adulterated or
misbranded within the meaning of the FDCA, 21 U.S.C. xx.xx. 301c et. seq.
(i) As to each drug referred to in (a), the Company, its Subsidiaries and
their respective officers, employees, agents and affiliates have included or
caused to be included in the application for such drug, where required, the
certification described in 21 U.S.C. ss. 335a(k)(l) and the list described in 21
U.S.C. ss. 335a(k)(2), and such certification and such list was in each case
true and
11
"*SEE PAGE ONE OF EXHIBIT"
accurate when made and remained true and accurate thereafter.
(j) Neither the Company, its Subsidiaries, nor, to the knowledge of the
Company, their respective officers, employees, agents or affiliates, has been
convicted of any crime or engaged in any conduct for which debarment is mandated
by 21 U.S.C. ss. 335a(a) or authorized by 21 U.S.C. ss. 335a(b).
(k) As to each application or abbreviated application submitted to, but
not approved by, the FDA, and not withdrawn by the Company or its Subsidiaries,
or applicants acting on its behalf as of the date of this Agreement, the Company
and its Subsidiaries have complied in all material respects with the
requirements of 21 U.S.C. xx.xx. 355 and 357 and 21 C.F.R. Parts 312, 314 and
430 et. seq. and has provided, or will provide, all additional information and
taken, or will take, all additional action requested by the FDA in connection
with the application.
3.10 BOOKS AND RECORDS. The Company's and its Subsidiaries' books,
accounts and records are, and have been, in all material respects, maintained in
the Company's and its Subsidiaries usual, regular and ordinary manner, in
accordance with GAAP, and all material transactions to which the Company or any
of its Subsidiaries is or has been a party are properly reflected therein.
3.11 FINANCIAL STATEMENTS. The Disclosure Statement contains complete and
accurate copies of the audited consolidated balance sheets, statements of income
and retained earnings, statements of cash flows and notes to financial
statements (together with any supplementary information thereto) of the Company
and its Subsidiaries as of and for the years ended December 31, 1995 and 1996.
The financial statements described in the preceding sentence are hereinafter
referred to as the "FINANCIAL STATEMENTS". The Disclosure Statement also
contains complete and accurate copies of the unaudited consolidated balance
sheet and statement of income and retained earnings and unaudited statement of
cash flows of the Company and its Subsidiaries as of and for the seven month
period ended July 31, 1997. The financial statements described in the preceding
sentence are referred to herein as the "INTERIM FINANCIAL STATEMENTS". The
Financial Statements and the Interim Financial Statements present fairly, in all
material respects, the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of operations
and cash flows of the Company and its Subsidiaries for the periods covered by
said statements, subject, in the case of the Interim Financial Statements, to
normal year end adjustments, all in accordance with GAAP applied on a consistent
basis, except as set forth in the notes to such Financial Statements and Interim
Financial Statements. The Disclosure Statement contains complete and correct
copies of all attorneys' responses to audit inquiry letters and all management
letters from the Company's and its Subsidiaries' independent certified public
accountants for the last three (3) fiscal years of the Company. Since January 1,
1994, there has been no material change in the Company's or its Subsidiaries'
accounting methods or principles, except (i) as described in the notes to the
Financial Statements or the Interim Financial Statements; and (ii) as provided
in the following sentence. Since July 31, 1997 through the date hereof, neither
the Company nor any of its Subsidiaries has *.
3.12 ACCOUNTS RECEIVABLES. To the knowledge of the Company, none of the
trade receivables and notes receivable which are reflected in the Financial
Statements or the Interim Financial Statements or which arose subsequent to July
31, 1997, is or was subject to any material counterclaim or set off. All of such
trade receivables arose out of bona fide, arms-length transactions for the sale
of goods or performance of services, and to the Company's
12
"*SEE PAGE ONE OF EXHIBIT"
knowledge, all such trade receivables and notes receivable are good and
collectible (or have been collected) in the ordinary course of business using
normal collection practices at the aggregate recorded amounts thereof, less the
amount of applicable reserves (i.e. rebates, returns or price adjustments),
customary charge backs, allowances for doubtful accounts and discounts. All such
reserves, charge backs, allowances for doubtful accounts and discounts, were and
are materially consistent in extent with reserves, charge backs, allowances for
doubtful accounts and discounts previously maintained by the Company in the
ordinary course of its business, subject to industry changes due to shelf
restocking or customer rebates. The Company reasonably believes that all
reserves, charge backs, allowances for doubtful accounts and discounts set forth
on the Financial Statements and the Interim Financial Statements are sufficient.
Since July 31, 1997, there has not been a material write-down or write-off of
the Company's aggregate trade receivables or a material adverse change in the
aging thereof.
3.13 INVENTORY. All inventory of the Company or any of its Subsidiaries
which is held for sale or resale, including raw materials, work in process and
finished goods (collectively, "INVENTORY"), consists of items of a quantity and
quality historically useable and/or saleable in the normal course of business,
except for immaterial items of Inventory or items of obsolete and slow-moving
material, substantially all of which have been written down to estimated net
realizable value on an item by item basis. None of such write-downs have had a
Company Material Adverse Effect. With the exception of items of below standard
quality which have been written down to their estimated net realizable value, no
material portion of the materials and/or workmanship comprising the Inventory is
defective. All Inventory reflected in the Financial Statements and the Interim
Financial Statements is valued at the lower of cost or market with cost
determined by the trailing average accounting method. Since July 31, 1997, there
has not been a material change in the level of the Inventory. All Inventory is,
and, to the knowledge of the Company, all material tools, dies, jigs, patterns,
molds, equipment, supplies and other materials used in the production of
Inventory are, located at the Real Estate (as defined herein), the Leased
Premises (as defined herein) or the Company's or its Subsidiaries' manufacturing
locations.
3.14 BANK ACCOUNTS. The Disclosure Statement contains a list showing: (a)
the name of each bank, safe deposit company or other financial institution in
which the Company or any of its Subsidiaries has an account, lock box or safe
deposit box; (b) the names of all persons authorized to draw thereon or to have
access thereto and the names of all persons and entities, if any, holding powers
of attorney from the Company or any of its Subsidiaries; and (c) all instruments
or agreements to which the Company or any of its Subsidiaries is a party as an
endorser, surety or guarantor, other than checks or other instruments endorsed
for collection or deposit.
13
3.15 INTELLECTUAL PROPERTY.
(a) The Disclosure Statement identifies all of the following which are
used in the Company's or any of its Subsidiaries' businesses and in which the
Company or any of its Subsidiaries claims any ownership rights: (i) all
registered trademarks, service marks, slogans, trade names, trade dress and the
like (collectively with the associated goodwill of each, "TRADEMARKS"); (ii) all
common law Trademarks; (iii) all patents on and pending applications to patent
any technology or design; (iv) all registrations of and applications to register
copyrights; and (v) all licenses or rights in computer software, Trademarks,
patents, copyrights, unpatented formulations, manufacturing methods and other
know-how, to which the Company or any of its Subsidiaries is a party, other than
licenses to commercially available computer software and other know-how acquired
or entered into by the Company or any of its Subsidiaries in the ordinary course
of business. The rights required to be so identified, together with all
proprietary formulation, manufacturing methods, know-how and trade secrets that
are material to the Company's or any of its Subsidiaries' businesses, are
referred to herein collectively as the "INTELLECTUAL PROPERTY".
(b)(i) The Company or one of its Subsidiaries is the owner of or duly
licensed to use each Trademark and its associated goodwill; (ii) each of the
Trademark registrations exists and, to the Company's knowledge, has been
maintained in good standing; (iii) each patent and application included in the
Intellectual Property exists, is owned by or licensed to the Company or one of
its Subsidiaries and, to the Company's knowledge, has been maintained in good
standing; (iv) each copyright registration included in the Intellectual Property
exists and is owned by the Company or one of its Subsidiaries; (v) to the
Company's knowledge, no other firm, corporation, association or person claims
the right to use in connection with similar or closely related goods and in the
same geographic area, any xxxx which is identical or confusingly similar to any
of the Trademarks; (vi) the Company has no knowledge of any claim that any third
party asserts ownership rights in any of the Intellectual Property; (vii) the
Company has no knowledge of any claim that the Company's or its Subsidiaries'
use of any Intellectual Property infringes any right of any third party; (viii)
the Company has no knowledge that any third party is infringing on any of the
Company's or one of its Subsidiaries' rights in any of the Intellectual
Property; (ix) the Company has no knowledge that any of its actions or the
actions of its Subsidiaries has infringed or is infringing on any third party's
Intellectual Property rights; (x) to the Company's knowledge, there are no
undisclosed government restrictions which specifically limit the manner in which
any of the Intellectual Property may be used or licensed; and (xi) to the
Company's knowledge, neither the Company, its Subsidiaries nor any of their
respective officers or directors has disclosed any confidential information of
the Company or any of its Subsidiaries which would constitute trade secrets
under applicable law, except in the ordinary course of business of the Company
and its Subsidiaries or with the authority of the Company or one of its
Subsidiaries.
3.16 TITLE TO PROPERTIES. Attached to the Disclosure Statement is a list
and description of each item of tangible personal property owned by the Company
or any of its Subsidiaries which has a net book value in excess of $50,000. The
Company or its Subsidiaries, as the case may be, (i) has good and merchantable
title to such property free and clear of all Claims, except for (A) Claims set
14
forth on the Disclosure Statement and (B) (x) mechanic's, materialmen's, and
similar liens, (y) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation and (z) liens on
goods in transit incurred pursuant to documentary letters of credit; and (ii)
enjoys peaceful and undisturbed possession under all leases to which it is a
party as lessee. All of the leases to which the Company or any of its
Subsidiaries is a party (other than leases for Leased Premises) are legal, valid
and binding obligations of the Company or its Subsidiaries and in full force and
effect, and no default by the Company or its Subsidiaries, or, to the knowledge
of the Company, any other party thereto has occurred and is continuing
thereunder. The Disclosure Statement lists all properties and assets used by the
Company or any of its Subsidiaries in connection with the operation of their
respective businesses which are held under any lease or under any conditional
sale or other title retention agreement to the extent the Company or its
Subsidiaries remaining obligations under any such lease or agreement exceeds
$50,000. Except for such assets and facilities as are immaterial to the business
of the Company or its Subsidiaries, all tangible assets and facilities of the
Company and its Subsidiaries are in good operating condition and repair
(ordinary wear and tear excepted) and, in the aggregate with the intangible
assets of the Company, are sufficient to conduct the business of the Company and
its Subsidiaries as previously conducted prior to the date hereof.
3.17 REAL ESTATE; LEASED PREMISES.
(a) Neither the Company nor any of its Subsidiaries owns any real estate,
or has the option to acquire any real estate (the "REAL ESTATE"). The definition
of Real Estate shall not include the facility located in Monroe, North Carolina
owned by Chelsea Laboratories, Inc. or any real estate owned by Caribe. The
Disclosure Statement accurately sets forth the street addresses of the Real
Estate and the legal descriptions of the Real Estate. Either the Company or one
of its Subsidiaries holds fee simple title to the Real Estate, subject only to
real estate taxes not delinquent and to covenants, conditions, restrictions and
easements of record which are set forth in the Disclosure Statement, none of
which makes title to the Real Estate unmarketable and none of which are violated
by the Company or its Subsidiaries or interfere with the Company's or its
Subsidiaries use thereof. The Real Estate is not subject to any leases or
tenancies. None of the improvements comprising the Real Estate or the businesses
conducted or proposed to be conducted by the Company or its Subsidiaries
thereon, are, to the Company's knowledge, in violation of any material use or
occupancy restriction, limitation, condition or covenant of record or any zoning
or building law, code, ordinance or public utility easement or any other
applicable law. No material expenditures are required to be made for the repair
or maintenance of any improvements on the Real Estate or for the Real Estate to
be used for its intended purpose.
(b) Neither the Company nor any of its Subsidiaries leases any real estate
(the "LEASED PREMISES"). The Leased Premises are leased to the Company or one of
its Subsidiaries, pursuant to written leases, true, correct and complete copies
of which have been provided to Xxxxxx or its counsel. None of the improvements
comprising the Leased Premises, or the businesses conducted or proposed to be
conducted prior to the Closing by the Company or its Subsidiaries thereon are in
violation of any building line or use or occupancy restriction, limitation,
condition or covenant of
15
record or any zoning or building law, code or ordinance, public utility or other
easements or other applicable law, except for violations which do not have a
Company Material Adverse Effect or materially interfere with the conduct of the
business of the Company or its Subsidiaries. No material expenditures are
required to be made for the repair or maintenance of any improvements on the
Leased Premises or for the Leased Premises to be used for its intended purpose.
All options in favor of the Company or its Subsidiaries to purchase any of the
Leased Premises, if any, are in full force and effect.
(c) To the Company's knowledge, the improvements on the Real Estate, the
Leased Premises and the Company's and its Subsidiaries Manufacturing Locations
are currently served by gas, electricity, water, sewage and waste disposal and
other utilities adequate to operate such improvements at their current rates of
production, and none of the utility companies serving any such improvements has
threatened any reduction in service.
(d) There are no condemnation proceedings pending against the Company or
its Subsidiaries or, to the Company's knowledge, threatened with respect to any
portion of the Real Estate or the Leased Premises.
(e) There is no tax assessment (in addition to the normal, annual general
real estate tax assessment) pending against the Company or its Subsidiaries or,
to the Company's knowledge, threatened with respect to any portion of the Real
Estate or, to the extent the Company or its Subsidiaries is liable for payment
therefor, the Leased Premises.
(f) The buildings and other facilities located on the Real Estate and the
Leased Premises are free of any material latent structural or engineering
defects known to the Company or any material patent structural or engineering
defects.
3.18 CONTRACTS
(a) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, or the issuer or beneficiary of, any undischarged written or oral: (i)
agreement or arrangement obligating the Company or its Subsidiaries to pay or
receive, or pursuant to which the Company or its Subsidiaries has previously
paid or received, an amount in excess of $50,000 (excluding purchase and sale
contracts or orders entered into by the Company or its Subsidiaries in the
ordinary course of business consistent with past practices); (ii) employment
agreement or arrangement not terminable at will or with any liability for
additional payments or compensation; (iii) consulting agreement or arrangement
obligating the Company or its Subsidiaries to pay or receive, or pursuant to
which the Company or its Subsidiaries has previously paid or received, an amount
in excess of $50,000 and not terminable at will or with any liability for
additional payments or compensation; (iv) collective bargaining agreement; (v)
plan or contract or arrangement providing for bonuses, severance, options,
deferred compensation, retirement payments, profit sharing, medical and dental
benefits or the like covering employees of the Company, other than the Plans (as
defined herein) described in the Disclosure Statement; (vi) agreement
restricting in any manner the Company's or any of its
16
Subsidiaries' right to compete with any other person or entity, the Company's or
any of its Subsidiaries' right to sell any product to, or purchase any product
from, any other person or entity, the right of any other party to compete with
the Company or any of its Subsidiaries or the ability of such person or entity
to employ any of the Company's or any of its Subsidiaries' employees; (vii)
secrecy or confidentiality agreements, except for secrecy or confidentiality
provisions contained in agreements relating primarily to the purchase or sale of
products; (viii) any distributorship (excluding purchase and sale contracts or
orders entered into by the Company or its Subsidiaries in the ordinary course of
business consistent with past practices), non-employee commission or marketing
agent, representative or franchise agreement providing for the marketing and/or
sale of the products or services of the Company or any of its Subsidiaries and
obligating the Company or its Subsidiaries to pay or receive, or pursuant to
which the Company or its Subsidiaries has previously paid or received, an amount
in excess of $50,000; (ix) guaranty, performance, bid or completion bond, or
surety or indemnification agreement obligating the Company or its Subsidiaries
to pay or receive, or pursuant to which the Company or its Subsidiaries has
previously paid or received, an amount in excess of $50,000, other than
provisions contained in such agreements relating primarily to the purchase or
sale of products; (x) requirements contract; (xi) loan or credit agreement,
pledge agreement, note, security agreement, mortgage, debenture, indenture,
factoring agreement or letter of credit; (xii) agreement for the treatment or
disposal of Materials of Environmental Concern (as defined herein); (xiii) power
of attorney; (xiv) any contract, agreement or arrangement containing change of
control provisions and obligating the Company or its Subsidiaries to pay or
receive, or pursuant to which the Company or its Subsidiaries has previously
paid or received, an amount in excess of $50,000; or (xv) any other agreement
not entered into in the ordinary course of business and obligating the Company
or its Subsidiaries to pay or receive, or pursuant to which the Company or its
Subsidiaries has previously paid or received, an amount in excess of $50,000.
Neither the Company nor any of its Subsidiaries are currently negotiating (and
have not entered into preliminary discussions with respect to) any transaction
involving an aggregate payment by the Company or its Subsidiaries and/or
receipts to the Company or its Subsidiaries in excess of $150,000 excluding
purchase and sale contracts or orders entered into by the Company or its
Subsidiaries in the ordinary course of business consistent with past practices.
(b) All agreements, leases, subleases and other instruments referred to in
this Section 3.18, are, pursuant to their terms, in full force and binding upon
the Company or its Subsidiaries, and, to the knowledge of the Company, the other
parties thereto. There are no events of default by the Company or its
Subsidiaries or, to the knowledge of the Company, any other party thereto, under
any such agreement, lease, sublease or other instrument. No event, occurrence or
condition exists which, with the lapse of time, the giving of notice, or both,
or the happening of any further event or condition, would become an event of
default under any such agreement, lease, sublease or other instrument by the
Company or its Subsidiaries, or, to the knowledge of the Company, the other
contracting party. Neither the Company nor any of its Subsidiaries has released
or waived any material right under any such agreement, lease, sublease or other
instrument other than in the ordinary course of business consistent with past
practices.
(c) Immediately after the Closing, except as contemplated by this
Agreement, neither the
17
Company nor any of its Subsidiaries will be bound by the terms of any stock
option agreement, registration rights agreement, stockholders agreement,
management agreement, consulting agreement or any other agreement relating to
the equity or management of the Company or its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any unexpired, undischarged or unsatisfied written or oral contract,
agreement, indenture, mortgage, debenture, note or other instrument under the
terms of which performance by Parent and Seller according to the terms of this
Agreement will be an event of default under or an event of acceleration, or
grounds for termination, or whereby timely performance by Parent and Seller of
this Agreement may be prohibited, prevented or delayed.
3.19 INSURANCE. The Disclosure Statement contains a true and correct list
of all insurance policies which are owned by the Company or its Subsidiaries or
which name the Company or any of its Subsidiaries as an insured (or loss payee),
including without limitation those which pertain to the Company's or its
Subsidiaries' assets, employees or operations. All such insurance policies are
in full force and effect and neither the Company nor any of its Subsidiaries
have received notice of cancellation of any such insurance policies. In the two
(2) year period ending on the date hereof, neither the Company nor any of its
Subsidiaries have received any written notice from, or on behalf of, any
insurance carrier relating to or involving an annual increase by over 10% in
insurance rates (except to the extent that insurance risks may be increased for
all similarly situated risks) or non-renewal of a policy, or requiring material
alteration of any of the Company's or its Subsidiaries' assets, purchase of
additional equipment, or material modification of any of the Company's or its
Subsidiaries' methods of doing business. Neither the Company nor any of its
Subsidiaries made any claim for reimbursement from its insurance carriers since
June 30, 1993.
3.20 LITIGATION. Except for matters which are immaterial to the Company or
its Subsidiaries, there is no litigation or proceeding, in law or in equity, and
there are no proceedings or governmental investigations before any commission or
other administrative authority, pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries, or any of the
Company's or its Subsidiaries' respective officers, directors or affiliates,
with respect to or affecting the Company's or its Subsidiaries' respective
operations, businesses, products, sales practices or financial condition, or
related to the consummation of the transactions contemplated hereby or by the
Xxxxxx Ancillary Documents or the Ancillary Documents. There are no facts known
to the Company which, if known by a potential claimant or governmental
authority, would reasonably give rise to a claim or proceeding which, if
asserted or conducted with results unfavorable to the Company or its
Subsidiaries, would have a Company Material Adverse Effect.
3.21 WARRANTIES. To the Company's knowledge, neither the Company nor any
of its Subsidiaries has made any oral or written warranties with respect to the
quality or absence of defects of its products or services which they have sold
or performed which are in force as of the date hereof. There are no material
warranty claims pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries with respect to the quality of or absence
of defects in such products. The Disclosure Statement sets forth a summary,
which is accurate in all material
18
respects, of all returns of products (on a product by product basis) during the
period beginning on April 1, 1997 and ending on the date hereof. Since January
1, 1995, neither the Company nor any of its Subsidiaries has had any reoccurring
product defects (other than returns due to date expirations) or product returns
or warranty claims that exceed historical levels.
3.22 PRODUCTS LIABILITY. Neither the Company nor any of its Subsidiaries
have received any written notice relating to, any claim involving any product
manufactured, produced, distributed or sold by or on behalf of the Company or
its Subsidiaries resulting from an alleged defect in design, manufacture,
materials or workmanship, or any alleged failure to warn, or from any breach of
implied warranties or representations, other than notices or claims that have
been settled or resolved by the Company or its Subsidiaries prior to the date of
this Agreement.
3.23 ARBITRATION. Neither the Company nor any of its Subsidiaries is a
party to, or bound by, any decree, order or arbitration award (or agreement
entered into in any administrative, judicial or arbitration proceeding with any
governmental authority) with respect to or affecting in any material respect the
properties, assets, personnel or business activities of the Company or its
Subsidiaries.
3.24 ERISA
(a) DEFINITIONS. The following terms, when used in this Section 3.24 and
elsewhere throughout this Agreement, shall have the following meanings. Any of
these terms may, unless the context otherwise requires, be used in the singular
or the plural depending on the reference.
(i) "EMPLOYEE BENEFIT PLAN" shall mean any bonus, stock, stock
purchase, or stock option plan, severance plan, salary continuation, vacation,
sick leave, fringe benefit, incentive, insurance or similar plan or arrangement
which (A) the Company maintains, administers, contributes to or has any
liability under, or has maintained, administered, contributed to or had any
liability under, (B) covers any current or former employees of the Company and
(C) is not a Pension Plan, Multiemployer Plan or Welfare Plan.
(ii) "ERISA AFFILIATE" shall mean any corporation, business or other
venture or person, which is now or at any relevant time was an affiliate of the
Company as determined under Code Sections 414(b), (c) (m) or (o) or ERISA
Section 4001(b)(1).
(iii)"MULTIEMPLOYER PLAN" shall mean any "multiemployer plan" as
defined in Sections 3(37) or 4001(a)(3) of ERISA which (A) the Company or any
ERISA Affiliate contributes to or has any liability under, or has contributed to
or had any liability under and (B) covers any current or former employees of the
Company or an ERISA Affiliate.
(iv) "PENSION PLAN" shall mean any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), including,
without limitation any qualified or non-qualified deferred compensation or
retirement plan, which (A) the Company
19
maintains, administers, contributes to or has any liability under, or has
maintained, administered, contributed to or had any liability under and (B)
covers any current or former employees of the Company.
(v) "PLANS" shall mean all Employee Benefit Plans, Multiemployer
Plans, Pension Plans and Welfare Plans.
(vi) "WELFARE PLAN" shall mean any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA which (i) the Company maintains, administers,
contributes to or has any liability under, or has maintained, administered,
contributed to or had any liability under and (ii) covers any current or former
employees of the Company.
(b) DISCLOSURE; DELIVERY OF RELEVANT DOCUMENTS. The Disclosure Statement
sets forth a complete list of each Pension Plan, Multiemployer Plan, Welfare
Plan and Employee Benefit Plan which covers any employees or former employees of
the Company. With respect to each Pension Plan, Welfare Plan and Employee
Benefit Plan set forth on the Disclosure Statement, true and complete copies of
the following documents, where applicable, have been delivered or made available
by the Company to Xxxxxx: (i) each Pension Plan, Welfare Plan and Employee
Benefit Plan document, related trust agreements, insurance contracts, annuity
contracts or other funding vehicles; (ii) the IRS determination letters for each
Pension Plan which is intended to be qualified under Code Section 401(a) and
each Welfare Plan fund that is intended to be tax exempt under Code Section
501(c)(9); (iii) each summary plan description; (iv) copies of any pending
applications, filings or notices with respect to any of the Pension Plans,
Welfare Plans or Employee Benefit Plans with or from the IRS, the Pension
Benefit Guaranty Corporation ("PBGC"), the Department of Labor or any other
governmental agency; (v) copies of all corporate resolutions or other documents
pertaining to the adoption of the Pension Plans, Welfare Plans or Employee
Benefit Plans or any amendments thereto or to the appointment of any fiduciaries
thereunder; (vi) copies of any investment management agreements and of any
fiduciary insurance policies, surety bonds, rules, regulations or policies, of
the Plan trustee or of any committee or other fiduciary thereof; (vii) written
descriptions of each Plan that is not evidenced by a formal plan document and
all communications and notices to employees regarding any such Plan; (viii)
annual reports on Form 5500, Form 990 financial statements and actuarial reports
for the most recent four Plan years; and (ix) all vendor contracts for services
performed for or on the behalf of the Plans, including, but not limited to,
third party administrative services, accounting and audit services and brokerage
services.
(c) REPRESENTATIONS AND WARRANTIES. The Company represents and warrants as
follows:
20
(i) To the knowledge of the Company, all Pension Plans, Welfare Plans
and Employee Benefit Plans and any related trust agreements, insurance contracts
or annuity contracts (or any related trust instruments) have been established
and operated in material compliance with the applicable provisions of ERISA, the
Code (including, without limitation, the requirements of Code section 401(a) to
the extent any Pension Plan is intended to conform to that section), other
Federal statutes, state law (including, without limitation, state insurance law)
and the regulations and rules promulgated thereunder. A favorable determination
as to the qualification under Section 401(a) of the Code (and the tax exempt
status of the related trust) of each Pension Plan which is intended to so
qualify and each material amendment thereto has been made by the Internal
Revenue Service ("IRS"). All required reports, notices and descriptions with
respect to the Pension Plans, Welfare Plans and Employee Benefit Plans have been
appropriately filed or distributed (including without limitation IRS Forms 5500
Annual Reports, summary plan descriptions, summary annual reports, notice to
interested parties and any notice of plan amendment which is required prior to
the effectiveness of such amendments) and all required surety bonds have been
properly and timely purchased and maintained. The charges for administering the
Plans, Welfare Plans and Employee Benefit Plans, including fees for the trustees
and other service providers, which are customarily paid by the Company and which
are due and payable on or before July 31, 1997, have been paid or will be paid
or accrued on the Company's Interim Financial Statements.
(ii) To the knowledge of the Company, neither any Pension Plan or
Welfare Plan fiduciary nor any Pension Plan or Welfare Plan has engaged in any
transaction in violation of Section 406 of ERISA or section 4975(c)(1) of the
Code for which an exemption has not been granted or is not available. The
Company has not failed to make any contributions or to pay any amounts due and
owing to any Plan, as required by the terms of any such Plan or ERISA or any
other applicable law. There has been no reduction or curtailment of accrued
benefits with respect to any of the Plans which did not comply with the terms of
the Plan, the Code or ERISA. Full payment has been made or such amount has been
accrued on the Company's financial statements of all amounts which the Company
is required or committed to pay to the Plans as of the date hereof.
(iii) Each Plan is legally valid, binding, in full force and effect,
and, to the knowledge of the Company, there are no defaults by the Company
thereunder; and none of the rights of the Company thereunder will be impaired by
this Agreement or the consummation of the transaction contemplated hereby. The
annual reports on Form 5500 furnished to Xxxxxx fully and accurately set forth
the financial condition of each Plan and each trust funding any Welfare Plan.
With respect to each Pension Plan, Welfare Plan and Employee Benefit Plan, the
Disclosure Statement sets forth the name and address of the administrator and
trustees and the policy number and insurer under all insurance policies.
(iv) Neither the Company nor any of its Subsidiaries maintain any
Pension Plans subject to Title IV of ERISA or Section 412 of the Code. None of
the Pension Plans, Welfare Plans or Employee Benefit Plans has any material
unfunded liabilities which are not reflected on the Financial Statements. None
of the Pension Plans which are intended to be qualified under Code Section
401(a) is a "top-heavy" plan, as defined in Section 416 of the Code. The Company
does not
21
have plans, programs, arrangements and has not made any other commitments to its
employees, former employees or their beneficiaries under which it has any
obligation to provide any retiree or other employee benefit payments which are
not adequately funded through a trust, insurance or other funding arrangement.
There have been no changes in the operation or interpretation of any of the
Pension Plans, Welfare Plans or Employee Benefit Plans since the most recent
annual report which would have any material effect on the cost of operating or
maintaining such Pension Plans, Welfare Plans or Employee Benefit Plans.
(v) Except for routine claims for benefits, there are no pending or
threatened claims, lawsuits or arbitration asserted or instituted against any of
the Pension Plans, Welfare Plans, or Employee Benefit Plans or against any
fiduciaries thereof, with respect to their duties to the Pension Plan, Welfare
Plans or Employee Benefit Plan or the assets of any trusts thereunder, by any
co-fiduciary or employee or beneficiary covered under any Pension Plans, Welfare
Plans or Employee Benefit Plans, or otherwise involving any Pension Plan,
Welfare Plan or Employee Benefit Plan, and the Company has no knowledge of any
facts which would give rise to or could reasonably be expected to give rise to
any such claims, lawsuits or arbitrations. To the knowledge of the Company,
neither the Company, nor any of its directors, officers, employees or any other
"fiduciary," as such term in defined in Section 3(21) of ERISA of any Pension
Plan, Welfare Plan or Employee Benefit Plan, has any liability for failure to
comply with ERISA, the Code or the terms of any Pension Plan, Welfare Plan or
Employee Benefit Plan.
(vi) The Company has not incurred, nor does it reasonably expect to
incur, any of the following:
(A) with respect to each "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) which is or was (I) maintained by an ERISA
Affiliate and (II) subject to the requirements of Title IV of ERISA, any
liabilities or penalties arising under Title IV of ERISA;
(B) with respect to each "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) which is or was (I) maintained by an ERISA
Affiliate and (II) subject to the requirements of Section 412 of the Code,
any liabilities, penalties or liens arising from an "accumulated funding
deficiency" (as such term is used in Section 412 or 4971 of the Code or
Section 302 of ERISA) or from a failure to make required contributions as
set forth in Section 412(n) of the Code;
(C) with respect to any "group health plan" (as defined in Section
5000(b)(1) of the Code) which is or was maintained by an ERISA Affiliate,
any liability relating to such ERISA Affiliate's obligations under Section
4980B of the Code and Sections 601 through 609 of ERISA.
(vii) Neither the Company nor any of its Subsidiaries is currently
contributing to or required to contribute to any Multiemployer Plan and except
as set forth on the Disclosure
22
Statement, neither the Company nor any of its Subsidiaries ever contributed to
or been required to contribute to any Multiemployer Plan. Neither the Company,
its Subsidiaries or any ERISA Affiliate have any liability, potential liability
or contingent liability (including without limitation liability for past due
contributions) with respect to any Multiemployer Plan on behalf of any current
or former employee. Neither the Company, its Subsidiaries or any ERISA Affiliate
has incurred any current or potential withdrawal liability under Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability under
Sections 4207 or 4208 thereof), as a result of a complete or partial withdrawal
(or potential partial withdrawal) from any Multiemployer Plan.
3.25 LABOR MATTERS. Except for events that occur after the date hereof
which are disclosed in writing by the Company to Xxxxxx, (a) there is no labor
strike, dispute, slowdown, work stoppage or lockout pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its
Subsidiaries and during the past three years, there has not been any such
action; (b) there are no union claims to represent the employees of the Company
or any of its Subsidiaries; (c) neither the Company nor any of its Subsidiaries
is a party to or bound by any collective bargaining or similar agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company or
any of its Subsidiaries; (d) none of the employees of the Company or any of its
Subsidiaries are represented by any labor organization and the Company does not
have any knowledge of any current union organizing activities among the
employees of the Company or any of its Subsidiaries, nor to the knowledge of the
Company does any question concerning representation exist with respect to such
employees; (e) the Company and its Subsidiaries are, and has at all times been,
in material compliance with all applicable employment laws and practices,
including, without limitation, any such laws relating to employment
discrimination, occupational safety and health and unfair labor practices; (f)
there is no unfair labor practice charge or complaint against the Company or any
of its Subsidiaries pending or, to the knowledge of the Company, threatened
before the National Labor Relations Board or, to the knowledge of the Company,
any charges or complaints, pending or threatened with any Governmental Entity
who has jurisdiction over unlawful employment practices; (g) there is no
grievance or arbitration proceeding arising out of any collective bargaining
agreement or other grievance procedure pending relating to the Company or any of
its Subsidiaries; (h) neither the Company nor any of its Subsidiaries is
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to the date of this Agreement or amounts required to be reimbursed to such
employees; (i) upon termination of the employment of any of the employees of the
Company or any of its Subsidiaries after the Closing, neither the Company nor
any of its Subsidiaries will be liable to any of its employees for severance
pay, except as otherwise required by federal law; (j) the employment of each of
the Company's or its Subsidiaries' employees is terminable at will without cost
to the Company or any of its Subsidiaries except as required under the Plans and
payment of accrued salaries or wages and vacation pay; (k) no employee or former
employee of the Company or any of its Subsidiaries has any right to be rehired
by the Company or its Subsidiaries prior to the Company's or its Subsidiaries'
hiring a person not previously employed by the Company or its Subsidiaries; and
(l) the Disclosure Statement contains a true and complete list of all employees
23
who are employed by the Company or any of its Subsidiaries as of July 31, 1997,
and said list correctly reflects their salaries, wages, other compensation
(other than benefits under the Plans), dates of employment and positions.
Neither the Company nor any of its Subsidiaries owes any past or present
employee any sum in excess of $25,000 individually or $50,000 in the aggregate
other than for accrued wages or salaries for the current payroll period, and
amounts payable under the Plans. No employee owes any sum to the Company or any
of its Subsidiaries in excess of $25,000, and all employees together do not owe
the Company or any of its Subsidiaries in excess of $50,000.
3.26 ENVIRONMENTAL MATTERS.
(a) The Company, its Subsidiaries and their respective assets and
businesses are in substantial compliance with all Environmental Laws and
Environmental Permits (as herein defined) applicable to them. A copy of any
notice, citation, inquiry or complaint which the Company or any of its
Subsidiaries has received in the past three years of any alleged material
violation of any Environmental Law or Environmental Permit is contained in the
Disclosure Statement, and all such violations alleged in said notices have been
or are being corrected. A description of all such violations currently being
corrected is contained in the Disclosure Statement. The Company and its
Subsidiaries possess all Environmental Permits which are required for the
operation of their respective businesses, and are in substantial compliance with
the provisions of all such Environmental Permits. Copies of all material
Environmental Permits issued to the Company or any of its Subsidiaries have been
provided or made available to Xxxxxx or its counsel. To the Company's knowledge,
the Company has delivered to Xxxxxx copies of all environmental reports with
respect to the Real Estate and the Leased Premises in its possession (other than
reports prepared by or on behalf of Xxxxxx) which were conducted during the last
five years.
(b) The Company has provided or made available to Xxxxxx the material
safety data sheets kept in its possession or a list thereof for the Real Estate
and the Leased Premises. There has been no storage, treatment, generation,
transportation or Release of any Materials of Environmental Concern by the
Company or any of its Subsidiaries, or, to the knowledge of the Company, by any
other person or entity for which the Company or any of its Subsidiaries is or
may be held responsible, at any Facility (as herein defined) or any Offsite
Facility (as herein defined) in material violation of, or which could give rise
to any material obligation under, Environmental Laws.
(c) To the Company's knowledge, the Disclosure Statement sets forth a
complete list of all Containers (as herein defined) that are now present at, or
have heretofore been removed during the last two years from, the Real Estate or
the Leased Premises. To the Company's knowledge, all Containers which have been
heretofore removed from the Real Estate or the Leased Premises have been removed
substantially in accordance with all applicable Environmental Laws.
24
(d) For the purposes of this Agreement: (i) "ENVIRONMENTAL LAWS" means all
federal, state and local statutes, regulations, ordinances, rules, regulations
and policies, all court orders and decrees and arbitration awards, and the
common law, which pertain to environmental matters or contamination of any type
whatsoever. Environmental Laws include, without limitation, those relating to:
manufacture, processing, use, distribution, treatment, storage, disposal,
generation or transportation of Materials of Environmental Concern; air, surface
or ground water or noise pollution; Releases; protection of wildlife, endangered
species, wetlands or natural resources; Containers; health and safety of
employees and other persons; and notification requirements relating to the
foregoing; (ii) "ENVIRONMENTAL PERMITS" means licenses, permits, registrations,
governmental approvals, agreements and consents which are required under or are
issued pursuant to Environmental Laws; (iii) "MATERIALS OF ENVIRONMENTAL
CONCERN" means (A) pollutants, contaminants, pesticides, radioactive substances,
solid wastes or hazardous or extremely hazardous, special, dangerous or toxic
wastes, substances, chemicals or materials within the meaning of any
Environmental Law, including without limitation any (i) "hazardous substance" as
defined in CERCLA, and (ii) any "hazardous waste" as defined in the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C., Sec. 6902 ET. SEQ., and all
amendments thereto and reauthorizations thereof; and (B) even if not prohibited,
limited or regulated by Environmental Laws, all pollutants, contaminants,
hazardous, dangerous or toxic chemical materials, wastes or any other
substances, including without limitation, any industrial process or pollution
control waste (whether or not hazardous within the meaning of RCRA) which could
pose a hazard to the environment or the health and safety of any person, or
impair the use or value of any portion of the Real Estate or the Leased
Premises; (iv) "RELEASE" means any spill, discharge, leak, emission, escape,
injection, dumping, or other release or threatened release of any Materials of
Environmental Concern into the environment, whether or not notification or
reporting to any governmental agency was or is, required, including without
limitation any Release which is subject to CERCLA; (v) "FACILITY" means any
facility as defined in the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. 9601, ET. SEQ., as amended and reauthorized
("CERCLA"); (vi) "OFFSITE FACILITY" means any Facility which is not presently,
and has not heretofore been, owned, leased or occupied by the Company; and (vii)
"CONTAINERS" means above-ground and under-ground storage tanks.
3.27 INTERIM CONDUCT OF BUSINESS. Except as otherwise contemplated by this
Agreement, since December 31, 1996, neither the Company nor any of its
Subsidiaries has:
(a) sold, assigned, leased, exchanged, transferred or otherwise disposed
of any material portion of its assets or property, except for sales of Inventory
and cash applied in the payment of the Company's or its Subsidiaries'
liabilities in the usual and ordinary course of business in accordance with the
Company's or its Subsidiaries' past practices;
(b) written off any asset which has a net book value which exceeds $25,000
individually or $50,000 in the aggregate in value, or suffered any casualty,
damage, destruction or loss, or interruption in use, of any material asset,
property or portion of Inventory (whether or not covered by insurance), on
account of fire, flood, riot, strike or other hazard or Act of God;
25
(c) waived any material right arising out of the conduct of, or with
respect to, its business;
(d) made (or committed to make) capital expenditures, except for such
capital expenditures as are in the ordinary course of business, which
expenditures in the aggregate do not exceed $100,000;
(e) made any material change in accounting methods or principles;
(f) borrowed any money or issued any bonds, debentures, notes or other
corporate securities (other than equity securities) in excess of $25,000
individually or $50,000 in the aggregate, including without limitation, those
evidencing borrowed money;
(g) increased the compensation payable to any employee, except for normal
pay increases in the ordinary course of business consistent with past practices,
but in any event, not granted any increase to any employee in excess of five
percent (5%) per annum;
(h) made any payments or distributions to its employees, officers or
directors except such amounts as constitute currently effective compensation for
services rendered, amounts paid pursuant to the Plans or reimbursement for
reasonable ordinary and necessary out-of-pocket business expenses;
(i) paid or incurred any management or consulting fees, or engaged any
consultants, except in the ordinary course of business consistent with past
practices;
(j) hired any employee who has an annual salary in excess of $50,000;
(k) terminated any employee having an annual salary or wages in excess of
$50,000;
(l) adopted any new Plan;
(m) issued or sold any securities of any class; or
(n) paid, declared or set aside any dividend or other distribution on its
securities of any class, or purchased, exchanged or redeemed any of its
securities of any class.
Notwithstanding the foregoing, the Company shall not be deemed to have breached
the terms of this Section 3.27 by entering into this Agreement or by
consummating the transactions contemplated hereby.
3.28 AFFILIATED TRANSACTIONS. Since January 1, 1996, neither the Company
nor any of its Subsidiaries has been a party to any transactions (other than
employee compensation and other ordinary incidents of employment) in excess of
$15,000 individually or $50,000 in the aggregate with a "Related Party". For
purposes of this Agreement, the term "RELATED PARTY" shall mean:
26
any present or former officer or director, direct or indirect 10% stockholder or
present affiliate of the Company or any of its Subsidiaries, any present or
former known spouse, ancestor or descendant of any of the aforementioned persons
or any trust or other similar entity for the benefit of any of the foregoing
persons. No property or interest in any property (including, without limitation,
designs and drawings concerning machinery) which relates to and is or will be
necessary or useful in the present or currently contemplated future operation of
the Company's or its Subsidiaries' respective businesses, is presently owned by
or leased or licensed by or to any Related Party. Prior to the Closing, all
amounts due and owing to or from the Company or its Subsidiaries by or to any of
the Related Parties (excluding the amounts contemplated in Section 5.3(j) and
employee compensation and other incidents of employment) shall be paid in full
and all amounts owed by the Company or its Subsidiaries to any Related Party
shall be canceled and of no further force and effect. Except for the ownership
of securities representing less than a 5% equity interest in various publicly
traded companies, neither the Company, its Subsidiaries, nor to the Company's
knowledge, any present or former officer or director of the Company or any
present or former known spouse, ancestor or descendant of any of the
aforementioned persons or any trust or other similar entity for the benefit of
any of the foregoing persons has an interest, directly or indirectly, in any
business, corporate or otherwise, which is in competition with the Company's or
its Subsidiaries' respective businesses.
3.29 SIGNIFICANT CUSTOMERS, SUPPLIERS AND EMPLOYEES. The Disclosure
Statement sets forth an accurate list of the Company's and its Subsidiaries'
Significant Customers (as defined herein), Significant Suppliers (as defined
herein) and Significant Employees (as defined herein). The Company has no
knowledge of any intention by a (a) Significant Customer to terminate its
business relationship with the Company or its Subsidiaries or to limit or alter
its business relationship with the Company or its Subsidiaries in any material
respect; (b) Significant Supplier to terminate its business relationship with
the Company or its Subsidiaries or to limit or alter its business relationship
with the Company or its Subsidiaries in any material respect; or (c) Significant
Employee intends to terminate his employment with the Company or its
Subsidiaries. As used herein, (w) "SIGNIFICANT CUSTOMER" means the 10 largest
customers of the Company and its Subsidiaries, taken as a whole, including
distributors of the Company's products, measured in terms of sales volume in
dollars for the year ended December 31, 1996 and the seven month period ended
July 31, 1997, (x) "SIGNIFICANT SUPPLIER" means any supplier of the Company and
its Subsidiaries from whom the Company or its Subsidiaries has purchased
$250,000 or more of goods during the year ended December 31, 1996 and the seven
month period ended July 31, 1997, for use in the Company's or its Subsidiaries'
respective businesses; and (y) "SIGNIFICANT EMPLOYEE" means any officer (other
than officers who are employees of Parent) or significant research and
development employees of the Company or any of its Subsidiaries.
3.30 MATERIAL ADVERSE CHANGE. Since December 31, 1996, neither the Company
nor its Subsidiaries has suffered any material adverse change in the business,
operations, assets, product pipeline, liabilities or financial condition of the
Company or its Subsidiaries, taken as a whole, except for changes that have
affected the generic pharmaceutical industry as a whole.
27
"*SEE PAGE ONE OF EXHIBIT"
3.31 BRIBES. Neither the Company, its Subsidiaries nor, to the Company's
knowledge, any of their respective officers, directors, employees, agents or
representatives has made, directly or indirectly, with respect to the Company,
its Subsidiaries or their respective business activities, any bribes or
kickbacks, illegal political contributions, payments from corporate funds not
recorded on the books and records of the Company or its Subsidiaries, payments
from corporate funds to governmental officials, in their individual capacities,
for the purpose of affecting their action or the action of the government they
represent, to obtain favorable treatment in securing business or licenses or to
obtain special concessions, or illegal payments from corporate funds to obtain
or retain business.
3.32 ABSENCE OF INDEMNIFIABLE CLAIMS, ETC. There are no pending claims nor
to the knowledge of the Company, any threatened claims by any director, officer
or employee of the Company or its Subsidiaries to indemnification by the Company
or its Subsidiaries under applicable law, the Certificate of Incorporation or
By-laws of the Company or its Subsidiaries or any insurance policy maintained by
the Company or its Subsidiaries.
3.33 NO UNDISCLOSED LIABILITIES. There are no liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) of the
Company or its Subsidiaries other than (i) liabilities disclosed or provided for
in the Financial Statements or the Interim Financial Statements; (ii)
liabilities under this Agreement (or contemplated hereby); (iii) liabilities
incurred since July 31, 1997 in the ordinary course of business and consistent
with past practices; or (iv) liabilities which, individually or in the
aggregate, are not material to the Company or its Subsidiaries.
3.34 NO BROKERS. Neither the Company nor any of its Subsidiaries has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of the Company, Xxxxxx or their respective
Subsidiaries to pay any finder's fee, brokerage or agent's commissions or other
like payments in connection with negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby, except that Parent has
retained Xxxxxx, Read & Co. Inc. as its financial advisor.
3.35 * AGREEMENT. Neither the Company nor any of its Subsidiaries is, or
as a result of the consummation of the transactions contemplated hereby will be,
a party to, or bound by, nor are any of their respective assets or businesses
subject to or limited by, any of the provisions of the Supply Agreement dated as
of * by and among * and Parent (the "* SUPPLY AGREEMENT") or the Agreement dated
as of *, as amended, between Parent and (the " SUPPLY AGREEMENT") other than
limitations which affect the pharmaceutical industry generally. The Company is a
party to a Settlement Agreement (the "SETTLEMENT AGREEMENT") dated as of * by
and among Parent, the Company, *. Neither Xxxxxx nor any of its Subsidiaries
will be a party to, or bound by, nor will any of their respective assets or
businesses be subject to or limited by, any of the provisions of the * Supply
Agreement or the * Supply Agreement upon Xxxxxx'x or one of its Subsidiaries'
appointment
28
"*SEE PAGE ONE OF EXHIBIT"
as Parent's exclusive distributor of * under such agreements, other than
limitations which affect the pharmaceutical industry generally and the terms of
the Exclusive Distribution Agreement, the terms of which are attached hereto as
Exhibit A. Neither Parent nor any of its Subsidiaries are bound by or are a
party to any agreement relating to the distribution or sale of * in the United
States other than the * Supply Agreement, the * Supply Agreement or the
Settlement Agreement. Neither the Company nor any of its Subsidiaries are bound
by or are a party to any agreement relating to the distribution or sale of * in
the United States other than the Settlement Agreement.
ARTICLE IV
COVENANTS
4.1 ALTERNATIVE PROPOSALS. From and after the date hereof and continuing
thereafter until the earlier of the termination of this Agreement or the Closing
Date, Parent and Seller agree (a) that they shall not, and they shall direct and
cause the Company, the Company's Subsidiaries and Parent's, Seller's, the
Company's and the Company's Subsidiaries' respective officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by Parent, Seller, the
Company or any of the Company's Subsidiaries) not to, initiate or solicit,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer with respect to a merger, acquisition, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, the Company or its Subsidiaries (any
such proposal or offer being hereinafter referred to as an "ALTERNATIVE
PROPOSAL") or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Alternative Proposal, or otherwise facilitate any effort or attempt to make or
implement an Alternative Proposal; (b) that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing, and it will
take the necessary steps to inform the individuals or entities referred to above
of the obligations undertaken in this Section 4.1; and (c) that it will notify
Xxxxxx promptly if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it.
4.2 INTERIM OPERATIONS.
(a) During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Closing Date, except as
set forth in the Disclosure Statement or as contemplated by the terms of this
Agreement, unless Xxxxxx has consented in writing thereto (which consent shall
not be unreasonably withheld), Parent and Seller shall cause the Company and
each of the Company's Subsidiaries to:
(i) conduct their respective operations according to their usual,
regular and ordinary
29
"*SEE PAGE ONE OF EXHIBIT"
course in substantially the same manner as heretofore conducted, including,
without limitation, continue to purchase inventory (subject to Section 5.3(j)
with respect to the purchase of *), sell products (i.e. no special sales
promotions or discount programs outside the ordinary course of business) and pay
outstanding obligations in the ordinary course of business consistent with past
practices;
(ii) to the extent consistent with their respective businesses, use
commercially reasonable good faith efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective Significant Employees and maintain satisfactory relationships with
those persons having business relationships with them;
(iii) not amend their respective Certificates of Incorporation or
By-Laws or comparable governing instruments;
(iv) promptly notify Xxxxxx of any Company Material Adverse Effect,
any material litigation or material governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the material breach of any representation or warranty contained herein;
(v) not (A) issue any shares of its capital stock, effect any stock
split or otherwise change its capitalization as it existed on the date hereof;
(B) grant, confer or award any option, warrant, conversion right or other right
not existing on the date hereof to acquire any shares of its capital stock; (C)
increase any compensation or enter into or amend any employment agreement with
any of its present or future officers, directors or employees, except for normal
increases consistent with past practice, but in any event, not grant any
increase in compensation to any officer, director or employee in excess of five
percent (5%) per annum; (D) grant any severance or termination package to any
employee or consultant, except to the extent consistent with past practices; (E)
hire any new employee who shall have, or terminate the employment of any
employee who has, an annual salary in excess of $50,000; or (F) adopt any new
Plan (including any stock option, stock benefit or stock purchase plan) or amend
any existing Plan in any material respect, except for changes which are less
favorable to participants in such Plans;
(vi) not (A) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock or
other ownership interests; or (B) directly or indirectly, redeem, purchase or
otherwise acquire any shares of its capital stock, or make any commitment for
any such action;
(vii) not enter into any agreement or transaction, or agree to enter
into any agreement or transaction, outside the ordinary course of business,
including, without limitation, any transaction involving a merger,
consolidation, material joint venture, material license agreement, partial or
complete liquidation or dissolution, reorganization, recapitalization,
restructuring or a purchase, sale, lease or other disposition of a material
portion of assets or capital stock;
30
"*SEE PAGE ONE OF EXHIBIT"
(viii) not enter into any additional research and development
contracts which call for the payment or receipt of funds in excess of $10,000
individually or $50,000 in the aggregate;
(ix) not incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of others other than in the ordinary course of its
business consistent with past practices, but in no event in an amount exceeding
$100,000 in the aggregate (other than normal expenditures for the purchase of
raw materials or other supplies);
(x) not make any loans, advances or capital contributions to, or
investments in, any other Person;
(xi) not make or commit to made any capital expenditures in excess
of $25,000 individually or $50,000 in the aggregate;
(xii) not apply any of its assets to the direct or indirect
payment, discharge, satisfaction or reduction of any amount payable directly or
indirectly to or for the benefit of any affiliate or Related Party of the
Company or any of its Subsidiaries or enter into any transaction with any
affiliate or Related Party of the Company or its Subsidiaries (except for
payment of salary and other customary expense reimbursements made in the
ordinary course of business to Related Parties who are employees of the Company
or its Subsidiaries);
(xiii) not voluntarily elect to alter the manner of keeping its
books, accounts or records, or change in any manner the accounting practices
therein reflected, except for changes in accounting laws which effect all
pharmaceutical companies generally;
(xiv) not grant or make any mortgage or pledge or subject itself or
any of its material properties or assets to any lien, charge or encumbrance of
any kind, except liens for taxes not yet delinquent;
(xv) maintain insurance on its tangible assets and its businesses in
such amounts and against such risks and losses as are currently in effect;
(xvi) not exercise any of the options contained in the * Agreements
between the Company and *; or
(xvii) not *.
4.3 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the
31
Company and Xxxxxx shall: (a) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act with respect to
the transactions contemplated herein; (b) use all reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Closing Date with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Closing Date from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations; (c) use commercially reasonable good faith efforts to
obtain all consents under or with respect to, any contract, lease, agreement,
purchase order, sales order or other instrument, Permit or Environmental Permit,
where the consummation of the transactions contemplated hereby would be
prohibited or constitute an event of default, or grounds for acceleration or
termination, in the absence of such consent; and (d) take, or cause to be taken,
all other commercially reasonable actions as are reasonably necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement. If, at any time after the Closing Date, any further commercially
reasonable action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of Xxxxxx, Parent and Seller shall
take all such necessary action.
4.4 INSPECTION OF RECORDS. From the date hereof to the earlier of the
Closing Date or the termination of this Agreement, Parent and Seller shall cause
the Company and each of the Company's Subsidiaries to (a) allow all designated
officers, attorneys, accountants and other representatives of Xxxxxx reasonable
access during normal business hours to the offices, records and files,
correspondence, audits and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise pertaining
to the business and affairs of the Company and its Subsidiaries; (b) furnish to
Xxxxxx, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
persons may reasonably request; and (c) instruct the employees, counsel and
financial advisors of the Company and its Subsidiaries to cooperate with Xxxxxx
and its investigation of the business of the Company and its Subsidiaries. All
information disclosed by the Company to Xxxxxx and its representatives shall be
subject to the terms of that certain Non-Disclosure Agreement (the
"CONFIDENTIALITY AGREEMENT") dated as of February 22, 1996 between Xxxxxx and
the Company, which agreement is hereby ratified and confirmed in its entirety.
4.5 PUBLICITY. Neither party hereto shall make any press release or public
announcement with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other party hereto (which
consent shall not be unreasonably withheld); provided, however, that each party
hereto may make any disclosure or announcement which such party, in the opinion
of its legal counsel, is obligated to make pursuant to applicable law or
regulation of any national securities exchange, in which case, the party
desiring to make the disclosure shall consult with the other party hereto prior
to making such disclosure or announcement.
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4.6 FURTHER ACTION. Each party hereto shall, subject to the fulfillment at
or before the Closing Date of each of the conditions of performance set forth
herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the transactions contemplated
hereby, including, without limitation, the conditions to closing set forth in
Article V hereof.
4.7 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses except as expressly provided herein; provided, however, that
Parent shall pay all of the transaction costs and expenses incurred by the
Company or Seller in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of Xxxxxx, Read
& Co. Inc., Shook, Hardy & Bacon L.L.P. and KPMG Peat Marwick LLP.
ARTICLE V
CONDITIONS
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE TRANSACTION. The
respective obligations of each party to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
each of the following conditions (unless waived by each of the parties hereto in
accordance with the provisions of Section 8.7 hereof):
(a) The waiting period applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been terminated.
(b) No preliminary or permanent injunction or other order or decree by any
federal or state court which prevents the consummation of the transactions
contemplated hereby or materially changes the terms or conditions of this
Agreement shall have been issued and remain in effect. In the event any such
order or injunction shall have been issued, each party agrees to use its
reasonable efforts to have any such injunction lifted.
(c) All material consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings or registrations required to be filed or registered after the Closing
Date.
(d) The Company and shall have amended (the "AMENDMENT") the Preferred
Supplier Agreement (the "*AGREEMENT") dated as of * between the Company and * to
delete Section 15.6 of the * Agreement or shall terminate the * Agreement. If
amended, no provision of the * Agreement other than Section 15.6, shall be
amended
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without the prior written consent of Xxxxxx, which consent shall not be
unreasonably withheld. Xxxxxx shall also have received sufficient evidence that
any and all payments required to be made to * as consideration for entering into
the * Amendment or terminating the * Agreement have been paid by Seller or
Parent.
(e) The Company and Parent shall have entered into an Exclusive
Distribution Agreement, which shall incorporate the provisions set forth on
EXHIBIT A attached hereto.
(f) The Company and Parent shall have entered into a Contract
Manufacturing Agreement in the form attached hereto as EXHIBIT B.
(g) Xxxxxx and Parent shall have entered into an Agreement with Respect to
Tax Matters in the form attached hereto as EXHIBIT C.
(h) The Company and Parent shall have entered into the Supply and License
Agreement in the form attached hereto as EXHIBIT D.
(i) The Company and Merrell Pharmaceuticals, Inc. ("MERRELL") shall have
entered into the Lease in the form attached hereto as EXHIBIT E, relating to the
lease of a portion of Merrell's facility located in Cincinnati, Ohio.
(j) The Company and Parent shall have entered into the Information
Services Agreement in the form attached hereto as EXHIBIT F relating to the use
of Parent's computer system.
(k) The Company and Parent shall have entered into the Seconding Agreement
in the form attached hereto as EXHIBIT G.
5.2 CONDITIONS TO OBLIGATION OF SELLER TO EFFECT THE TRANSACTION. The
obligation of Parent and Seller to effect the transactions contemplated hereby
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions (unless waived by Parent in accordance with the provisions
of Section 8.7 hereof):
(a) Xxxxxx shall have paid the Estimated Cash Payment to Seller as
provided in Section 1.4 hereof.
(b) Xxxxxx shall have performed, in all material respects, all of its
agreements contained herein that are required to be performed by Xxxxxx on or
prior to the Closing Date, and Seller shall have received a certificate of a
duly authorized officer of Xxxxxx, dated the Closing Date, certifying to such
effect.
(c) The representations and warranties of Xxxxxx contained in this
Agreement and in any document delivered in connection herewith shall be true and
correct as of the Closing, except
34
to the extent that a failure to be true and correct would not have a Xxxxxx
Material Adverse Effect, and Seller shall have received a certificate of a duly
authorized officer of Xxxxxx, dated the Closing Date, certifying to such effect.
(d) Seller shall have received from Xxxxxx certified copies of the
resolutions of Xxxxxx'x Board of Directors approving and adopting this
Agreement, the Xxxxxx Ancillary Documents and the transactions contemplated
hereby and thereby.
(e) Seller shall have received the opinion of X'Xxxxxx & Xxxxxx relating
to certain portions of Xxxxxx'x representations and warranties contained in
Sections 2.1, 2.2, 2.3 and 2.6 of this Agreement, which opinion shall be
reasonably acceptable to Parent.
(f) Xxxxxx shall have executed and delivered such other documents and
taken such other actions as Seller shall reasonably request.
5.3 CONDITIONS TO OBLIGATION OF XXXXXX TO EFFECT THE TRANSACTION. The
obligations of Xxxxxx to effect the transactions contemplated hereby shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions (unless waived by Xxxxxx in accordance with the provisions of Section
8.7 hereof):
(a) Seller shall have delivered to Xxxxxx certificates representing all of
the outstanding Shares, duly endorsed in blank or with duly executed stock
powers attached.
(b) Parent and Seller shall have caused the Company and each of its
Subsidiaries to deliver to Xxxxxx written resignations effective as of the
Closing Date of all of the directors of the Company and its Subsidiaries.
(c) Parent and Seller shall have performed, in all material respects, all
of their respective agreements contained herein that are required to be
performed by Seller and/or Parent on or prior to the Closing Date, and Xxxxxx
shall have received a certificate of a duly authorized officer of each of Seller
and Parent, dated the Closing Date, certifying to such effect.
(d) The representations and warranties of Seller and Parent contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing, except to the extent that a failure to be
true and correct would not have a Company Material Adverse Effect, and Xxxxxx
shall have received a certificate of a duly authorized officer of each of Seller
and Parent, dated the Closing Date, certifying to such effect.
(e) Xxxxxx shall have received from Seller certified copies of the
resolutions of Seller's Board of Directors and sole stockholder approving and
adopting this Agreement, the Ancillary Documents and the transactions
contemplated hereby and thereby.
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(f) Xxxxxx shall have received from Parent certified copies of the
resolutions of Parent's Board of Directors and stockholders, if necessary,
approving and adopting this Agreement, the Ancillary Documents and the
transactions contemplated hereby and thereby.
(g) Xxxxxx shall have received the opinion of Shook, Hardy & Bacon L.L.P.
relating to certain portions of Parent's and Seller's representations and
warranties contained in Sections 3.1, 3.2, 3.3, 3.6 and 3.7 of this Agreement,
which opinion shall be reasonably acceptable to Xxxxxx.
(h) From the date of this Agreement through the Closing Date, there shall
not have occurred any (i) material adverse change in the financial condition,
business, assets, product pipeline or operations of the Company and its
Subsidiaries, taken as a whole; or (ii) material damage to or material loss of
any of the assets of or premises occupied by the Company or any of its
Subsidiaries due to fire, flood, riot, theft, act of God or other casualty,
which is not adequately covered by insurance, including business interruption
insurance.
(i) The Company shall have received the consent of * for the change of
control to the Preferred Distributor Agreement (the "* AGREEMENT") dated August
29, 1994 between the Company and * ("*"), which consent shall not alter any of
the provisions of the * Agreement in any manner, without the prior written
consent of Xxxxxx, which consent shall not be unreasonably withheld.
(j) Xxxxxx shall have received a letter from Parent stating that the
intercompany payable owed by the Company and/or its Subsidiaries to Parent
and/or its affiliates has been converted from * by Parent to Seller and by
Seller to the Company as of the Closing Date; provided, however, that all
additional amounts loaned by Parent to the Company and its Subsidiaries after
the date hereof through the Closing relating to * (i) shall remain outstanding
as of the Closing Date; (ii) shall not be converted into a *; and (iii) shall be
due and payable on the later of the Closing Date or October 1, 1997, with
interest accruing at a rate equal to the thirty day London Interbank Offering
Rate ("LIBOR") plus 1 1/2% per annum.
(k) Xxxxxx shall have received sufficient evidence that the Company and/or
its Subsidiaries have properly disposed of, or transferred the ownership rights
to an entity other than the Company or one of its Subsidiaries with respect to,
(i) its Monroe, North Carolina facility owned by Chelsea Laboratories, Inc.; and
(ii) all of its ownership interests in Caribe.
(l) Xxxxxx can delay the Closing until October 31, 1997 due to Xxxxxx'x
on-going attempt to enter into a satisfactory arrangement with * relating to the
non-competition provisions of the Distribution Agreement dated July 1, 1994
between the Company and *; provided, that this condition shall terminate as of
October 31, 1997.
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(m) Xxxxxx shall have received sufficient evidence that each of the
agreements between the Company and * and its affiliates relating to the products
* and * have been terminated on or prior to the Closing Date.
(n) Seller and Parent shall have executed and delivered such other
documents and taken such other actions as Xxxxxx shall reasonably request.
ARTICLE VI
POST-CLOSING AGREEMENTS
6.1 CERTAIN DEFINITIONS. For purposes of this Article VI, the following
terms shall have the following meanings:
(a) "COST OF SALES" shall be determined using the accrual basis of
accounting in accordance with GAAP applied in a manner consistent with Xxxxxx'x
customary practices. Cost of Sales with respect to each Product and * (as
defined herein), as the case may be, means the sum of the following amounts: (i)
the Manufacturing Costs (as defined herein) relating to such Product or *, as
the case may be; plus (ii) all royalties paid by Xxxxxx or any of its
Subsidiaries with respect to such Product or *, as the case may be, except for
the *. For purposes of calculating Cost of Sales with respect to each unit of
Product purchased by Xxxxxx or any of its Subsidiaries from Parent pursuant to
the terms of the Contract Manufacturing Agreement attached hereto as EXHIBIT B
and the Supply and License Agreement attached hereto as EXHIBIT D, each such
unit of Product shall be deemed to be purchased for the price of such unit of
Product set forth in * the Supply and License Agreement and * the Contract
Manufacturing Agreement *.
(b) "DISTRIBUTION BUSINESS" means the business conducted by Xxxxxx or any
of its Subsidiaries (including the Company), involving both (x) the purchase of
finished pharmaceutical products by Xxxxxx or any of its Subsidiaries
manufactured by any Person (other than Xxxxxx or any of its Subsidiaries); and
(y) the sale of such products by Xxxxxx or any of its Subsidiaries to
pharmaceutical wholesalers, warehousing chains, non-warehousing chains, retail
buying groups, hospital buying groups, independent pharmacies and any other
purchaser; provided, however, that the definition of Distribution Business shall
specifically exclude, and the calculation of Distribution Net Profits (as
defined herein) shall specifically exclude Distribution Net Profits derived by
Xxxxxx or any of its Subsidiaries from, each of the foregoing: (i) the
distribution and/or sale of pharmaceutical products by Xxxxxx or any of its
Subsidiaries in which Xxxxxx or any of its Subsidiaries owns the ANDA or the
NDA; (ii) the distribution and/or sale of pharmaceutical products by Xxxxxx or
any of its Subsidiaries under a brand name and detailed to physicians; (iii) the
distribution and/or sale of the generic equivalent of a branded product (each,
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"*SEE PAGE ONE OF EXHIBIT"
a "GENERICIZED PRODUCT") by Xxxxxx or any of its Subsidiaries if Xxxxxx or any
of its Subsidiaries has acquired such distribution rights from the holder or
licensor of the NDA relating to such branded product so long as the Genericized
Product does not replace an AB rated equivalent product or an AB rated
equivalent Product being distributed by Xxxxxx or any of its Subsidiaries at the
time of the acquisition of such Genericized Product by Xxxxxx or any of its
Subsidiaries; (iv) the distribution and/or sale of any of the Products by Xxxxxx
or any of its Subsidiaries; (v) the distribution and/or sale by Xxxxxx or any of
its Subsidiaries of products distributed in packaging that was not historically
available through the Company's or any of its Subsidiaries' distribution
channels, including, without limitation, specially packaged unit dose products;
(vi) the distribution and/or sale of * or * by Xxxxxx or any of its
Subsidiaries; and (vii) the distribution and/or sale of any pharmaceutical
products by Xxxxxx or its Subsidiaries in any country other than the United
States ((i) through (vii) above being collectively referred to herein as the
"XXXXXX PRODUCTS").
(c) "DISTRIBUTION NET PROFITS" means the actual gross invoice price of
each product sold through the Distribution Business as determined using the
accrual basis of accounting in accordance with GAAP applied in a manner
consistent with Xxxxxx'x customary practices, less the sum of (i) any and all
promotional allowances, rebates, quantity and cash discounts, and other usual
and customary discounts to customers accrued in the ordinary course of business,
in accordance with historical practice and GAAP and current industry trends;
plus (ii) amounts repaid or credited by reason of rejections or returns of
goods; plus (iii) retroactive price reductions; plus (iv) 50% of the reasonable
allowance for doubtful accounts accrued in the ordinary course of business, in
accordance with historical practice and GAAP; plus (v) the aggregate amount paid
by Xxxxxx or any of its Subsidiaries to any third party to purchase products
sold through the Distribution Business; plus (v) all royalties paid by Xxxxxx or
any of its Subsidiaries with respect to the Distribution Business; provided,
however, that the calculation of Distribution Net Profits shall exclude the
impact of unusual and non-recurring items as determined in accordance with GAAP
applied in a manner consistent with Xxxxxx'x customary practices.
(d) "MANUFACTURING COST" means, with respect to a Product, Xxxxxx'x or any
of its Subsidiaries' Direct Material Costs, Direct Labor Costs and Overhead
attributable to such Product. "DIRECT MATERIAL COSTS" shall mean reasonable
costs incurred in purchasing raw materials (without deduction for waste),
including sales and excise taxes imposed thereon, and all costs of packaging
components. "DIRECT LABOR COSTS" shall mean the reasonable cost of temporary and
full-time employees engaged in manufacturing activities who are directly
involved in product manufacturing and packaging and in quality assurance/quality
control. "OVERHEAD" allocated to a Product means indirect costs associated with
the production, testing, packaging, storage and handling of product, including a
reasonable allocation of facilities' costs allocable to product manufacturing
and packaging, including electricity, water, sewer, waste disposal, property
taxes and depreciation of building and machinery. The allocation and calculation
of Xxxxxx'x or its Subsidiaries' Manufacturing Costs shall be made in accordance
with standard cost and reasonable cost accounting methods in accordance with
GAAP, applied in a manner consistent with Xxxxxx'x
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"*SEE PAGE ONE OF EXHIBIT"
customary practices. In the case of Products or * manufactured in whole or in
part by a third party or third parties on behalf of Xxxxxx or its Subsidiaries,
"Manufacturing Cost" shall include all costs paid to such third party or third
parties by Xxxxxx or its Subsidiaries in order to complete the Products or *, as
the case may be, including, without limitation, costs related to the purchase of
labels. With respect to products purchased by Xxxxxx or one of its Subsidiaries
in finished package form, only the costs paid by Xxxxxx or one of its
Subsidiaries to such third party to purchase such products shall be included in
the calculation of Manufacturing Costs with respect to such product.
Notwithstanding the foregoing, Manufacturing Costs shall not include costs
relating to distribution expenses.
(e) "NET PROFITS" means for each Product and for *, the amount by which
Net Sales with respect to each Product or *, as the case may be, exceeds Cost of
Sales with respect to each Product or *, as the case may be; provided, however,
that the calculation of Net Profits shall exclude the impact of unusual and
non-recurring items as determined in accordance with GAAP applied in a manner
consistent with Xxxxxx'x customary practices.
(f) "NET SALES" shall be determined using the accrual basis of accounting
in accordance with GAAP applied in a manner consistent with Xxxxxx'x customary
practices. Net Sales means the actual gross invoice price of each Product or *,
as the case may be, sold by Xxxxxx or any of its Subsidiaries, regardless of
whether such Product is distributed or manufactured, less (i) any and all
promotional allowances, rebates, quantity and cash discounts, and other usual
and customary discounts to customers accrued in the ordinary course of business,
in accordance with historical practice and GAAP and current industry trends,
(ii) amounts repaid or credited by reason of rejections or returns of goods,
(iii) retroactive price reductions, and (iv) 50% of the reasonable allowance for
doubtful accounts accrued in the ordinary course of business, in accordance with
historical practice and GAAP.
(g) "PRODUCT" or "PRODUCTS" means the products listed on EXHIBIT H
attached hereto.
6.2 SALE OF PRODUCT.
(a) Xxxxxx and its Subsidiaries shall sell each Product and each product
included in the Distribution Business at prices to be determined by Xxxxxx in
its sole and absolute discretion. Xxxxxx and its Subsidiaries agree to use
commercially reasonable good faith efforts to develop, market, manufacture or
have manufactured, as the case may be, and sell each Product or each product
included in the Distribution Business, unless it becomes commercially unfeasible
for Xxxxxx or its Subsidiaries to continue to develop, market, manufacture or
have manufactured such product. Notwithstanding the foregoing, such efforts
shall be used without regard to the payment to be made pursuant to Section 6.5
of this Agreement.
(b) During calendar years *, Xxxxxx and its Subsidiaries shall record
sales of Products or products included in the Distribution Business according to
their usual,
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regular and ordinary course in substantially the same manner as recorded in the
past. Without limiting the foregoing, Xxxxxx and its Subsidiaries shall not (i)
take any actions outside the ordinary course of business *; or (ii) *.
(c) The Upside Sharing Payment (as defined herein) shall reflect the net
profit (as calculated in the same manner as the calculation of Net Profit)
received by Xxxxxx or its Subsidiaries on the bundled sale of Products or
products included in the Distribution Business multiplied by the following
fraction, the numerator of which is equal to the number of units of such Product
or Distribution Business product, as the case may be, included in such bundled
sale multiplied by the standard invoice unit price thereof, and the denominator
of which is equal to the sum of the number of units of each product (including
the Products or any product sold through the Distribution Business) or service
included in such bundled sale multiplied by the respective standard invoice unit
price thereof.
6.3 QUARTERLY REPORTING. From the Closing Date through the period that
Watson or any of its Subsidiaries sells * as a distributed (rather than a
manufactured) product through goods purchased from * or any other third party *,
within forty-five (45) days after the end of each calendar quarter, Watson shall
provide Seller with a statement of accounting (the "QUARTERLY REPORT") which
shall set forth in full detail Xxxxxx'x and its Subsidiaries' computation of Net
Profits relating to Xxxxxx'x or any of its Subsidiaries' sale of * during the
calendar quarter recently ended. The Quarterly Report shall be accompanied by a
certificate of an executive officer of Watson certifying the amount of * sold by
Watson and its Subsidiaries for the period covered by such Quarterly Report.
6.4 *PAYMENT ON*.
(a) Together with the delivery of the Quarterly Report by Watson to
Seller, Watson shall pay Seller an amount equal to * of the Net Profit relating
to Xxxxxx'x or any of its Subsidiaries' sale of * during the calendar quarter
covered by the Quarterly Report; provided, however, that, in lieu of the
foregoing *, until the earlier of the date upon which the * Payment (as defined
herein) has been paid in full or December 31, 1998, Watson or one of its
Subsidiaries shall pay Seller * of the Net Profit earned by Watson and its
Subsidiaries on the sale of * during the period beginning on the Closing Date
and ending on December 31, 1998. For purposes of this Agreement, the "*PAYMENT"
shall mean an amount equal to $*, which amount is comprised of the sum of (i)
any amount of Net Profit earned by the Company or one of its Subsidiaries on the
sale of * during the period from the opening of business
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on August 11, 1997 through the Closing Date; and (ii) any amounts paid by Watson
or one of its Subsidiaries to Seller pursuant to the proviso at the end of the
first sentence of this Section 6.4(a) or Section 6.4(b)(ii) herein; and (iii)
amounts paid to Seller or Parent pursuant to Section 2.13 of the Contract
Manufacturing Agreement attached hereto as EXHIBIT B, but shall exclude the
amounts paid by Watson to Seller pursuant to Section 6.4(e) herein.
(b) To the extent Watson, the Company or any of their respective
Subsidiaries actually receives any refund of the amounts described in Sections 6
and 9(a) of the * Agreement, or any other amounts from * due to the breach of
such agreement by * or due to purchase credits or similar adjustments (other
than credits for shortages of goods or damaged goods), whether such amounts are
received, or relate to events occurring, before or after the Closing, Watson
agrees that such refund or payment shall be distributed as follows: (i) first,
to pay any and all out-of-pocket costs and expenses incurred by Watson, the
Company or their respective Subsidiaries, or by Parent and its Subsidiaries, at
the request of Watson, to collect such refund or payment, including, without
limitation, all out-of-pocket legal expenses and court costs; (ii) second, if
the event that gave rise to such breach or credit occurred on or prior to
December 31, 1998, to Seller in an amount up to the unpaid portion of the *
Payment as of the date Watson or any of its Subsidiaries actually receives such
refund or payment; and (iii) finally, any remainder of such refund or payment
shall be shared by the Company and Seller as follows: *. Notwithstanding the
foregoing, the amounts described in Section 6.4(e) hereof shall be paid by
Watson or one of its Subsidiaries to Seller.
(c) Within a reasonable time after there are no limitations (legal or
otherwise) on the Company's or its Subsidiaries' ability to sell * under its own
ANDA, or such earlier date as Xxxxxx determines, in its sole and absolute
discretion, Watson shall cause the Company to deliver a termination notice to *
pursuant to Section 4 of the * Agreement.
(d) Watson and its Subsidiaries shall sell * at a price to be determined
by Watson in its sole and absolute discretion. Until such time as Xxxxxx or one
of its Subsidiaries begins to sell * as a manufactured product, Watson and its
Subsidiaries agree to use commercially reasonable good faith efforts to market
and sell *, unless it becomes commercially unfeasible for Watson or its
Subsidiaries to continue to market and sell *. Such efforts shall be used
without regard to the payments to be made pursuant to this Section 6.4. Payments
to Seller based upon the Net Profit earned on the sale of * shall reflect the
net profit (as calculated in the same manner as the calculation of Net Profit)
received by Watson or its Subsidiaries on the bundled sale of products including
* multiplied by the following fraction, the numerator of which is equal to the
number of units of * multiplied by the standard invoice unit price thereof, and
the denominator of which is equal to the sum of the number of units of each
product (including *) or service included in such bundled sale multiplied by the
respective standard invoice unit price thereof.
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(e) To the extent that Watson or one of its Subsidiaries actually receives
any amounts from * relating to purchase credits on any units of * sold by the
Company or its Subsidiaries and such purchase credits relate in whole or in part
to the period of time prior to *, Watson or one of its Subsidiaries shall pay
such amount of the credits which relate to the sale of * made by the Company or
its Subsidiaries prior to * to Seller within ten (10) days after its receipt of
such amount.
6.5 UPSIDE SHARING PAYMENT.
(a) Subject to the provisions of Section 6.6 herein, on or prior to *,
Watson shall provide Seller with a statement of accounting (the "UPSIDE SHARING
REPORT") which shall set forth in full detail the computation of (i) the Net
Profit on Xxxxxx'x and its Subsidiaries' sale of the Products during calendar
year *; and (ii) the Distribution Net Profit during calendar year * (the sum of
(i) and (ii) being collectively referred to herein as the "UPSIDE NET PROFITS").
The Upside Sharing Report shall be accompanied by a certificate of an executive
officer of Watson certifying the amount of the Upside Net Profits.
(b) Subject to the provisions of Section 6.6 herein, together with the
delivery of the Upside Sharing Report by Watson to Seller, Watson shall pay to
Seller an amount equal to the following (the "UPSIDE SHARING PAYMENT") provided,
however, that the Upside Sharing Payment shall not exceed $*:
*
6.6 SALES AND ACQUISITIONS.
(a) Except for acquisitions which qualify for the treatment under Section
6.6(b) herein: if (i) Watson or any of its Subsidiaries (A)(I) acquires any
pharmaceutical distribution business or
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any portion thereof in one or a series of related transactions; or (II) acquires
any entity which is in the pharmaceutical distribution business in one or a
series of related transactions and such distribution business is acquired by
Watson or any of its Subsidiaries in connection with such acquisition, and, in
each of (I) or (II) above, the aggregate net sales of the distribution business
acquired exceeds $* during the twelve month period immediately prior to such
acquisition, excluding the net sales of any products acquired which are or will
be Watson Products; or (ii) Watson sells to an unaffiliated third party all or
substantially all of the Distribution Business in one or a series of related
transactions (each of (i) and (ii) being collectively referred to herein as a
"SALE EVENT"), then, except as provided below in this Section 6.6(a), for
purposes of calculating the Upside Net Profit, the Distribution Net Profits
derived by Watson and its Subsidiaries from the Distribution Business during
calendar year * shall be deemed to be equal to (x) if the Sale Event occurs on
or after January 1, 1998, the Distribution Net Profits derived by Watson and its
Subsidiaries from the Distribution Business during the twelve month period
ending on the last day of the calendar month immediately preceding such Sale
Event; or (y) if the Sale Event occurs prior to January 1, 1998, the
Distribution Net Profits derived by Watson and its Subsidiaries from the
Distribution Business during calendar year 1997 for the period beginning on
January 1, 1997 and ending on the day immediately preceding the closing date of
the Sale Event multiplied by the following fraction, the numerator of which is
equal to 365 and the denominator of which is equal to the number of days between
January 1, 1997 and the day immediately preceding the closing date of the Sale
Event. Notwithstanding the foregoing, if the net profits (calculated in the same
manner as the calculation of Distribution Net Profits) of any distribution
business acquired by Watson or any of its Subsidiaries pursuant to Section
6.6(a)(i) is not less than zero for the twelve month period ending on the date
of the most recent financial statements referenced in the principal acquisition
agreement relating to Xxxxxx'x or any of its Subsidiaries' acquisition of such
distribution business, then, in lieu of the foregoing calculation of
Distribution Net Profits, Watson may, in its sole discretion, elect to calculate
Distribution Net Profits derived by Watson and its Subsidiaries from the
Distribution Business during calendar year 1999 in accordance with the
provisions of Section 6.5 hereof. Watson must exercise such election by
delivering written notice to Parent on or prior to the closing date of the
acquisition of such distribution business. If Watson or one of its Subsidiaries
acquires any entity described in Section 6.6(a)(i)(A) above, with net sales
(excluding sales attributable to Watson Products) equal to or less than $*
during the twelve month period immediately prior to such acquisition, the net
profits (calculated in the same manner as the calculation of Distribution Net
Profits) derived by Watson and its Subsidiaries from such acquired business
during calendar year * shall be included in the calculation of Distribution Net
Profits.
(b) If (i) Watson or any of its Subsidiaries acquires any pharmaceutical
company primarily engaged in the manufacture and sale of pharmaceutical products
(an "ACQUIRED COMPANY"); and (ii) the Acquired Company distributes (but not
manufactures) five or less pharmaceutical products at the time of such
acquisition (the "ACQUIRED DISTRIBUTED Products"), then, for purposes of
calculating Upside Net Profits, the Distribution Net Profits derived by Watson
and its Subsidiaries from the sale of the Acquired Distributed Products during
calendar year * shall be deemed to be equal to the sum of (x) the Distribution
Net Profits derived by
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Watson and its Subsidiaries from the sale of the Acquired Distributed Products
during the twelve month period ending on the last day of the calendar month
immediately preceding the closing date of the acquisition of the Acquired
Company by Watson or any of its Subsidiaries; plus (y) the difference between
(A) the Distribution Net Profits derived by Watson and its Subsidiaries from the
sale of the Acquired Distributed Products during calendar year *; and (B) the
sum of (I) the Distribution Net Profits derived by Watson and its Subsidiaries
from the sale of the Acquired Distributed Products during the twelve month
period ending on the last day of the calendar month immediately preceding the
closing date of the acquisition of the Acquired Company by Watson or any of its
Subsidiaries; plus (II) the Distribution Net Profits derived by the Acquired
Company from the sale of the Acquired Distributed Products during the twelve
month period ending on the last day of the calendar month immediately preceding
the closing date of the acquisition of the Acquired Company by Watson or any of
its Subsidiaries; provided, however, that the amount calculated pursuant to this
subparagraph (y) shall not be less than zero.
(c) If Watson or any of its Subsidiaries disposes of any Product at any
time on or prior to December 31, *, (i) all Net Profits received from the
commercial sale of such Product during calendar year * shall be excluded from
the calculation of Upside Net Profits; and (ii) as consideration for the
exclusion of the Net Profits derived from the commercial sale of such Product
from the calculation of Upside Net Profits, Watson or one of its Subsidiaries
shall pay Seller an amount in cash equal to one-half (1/2) of any and all
consideration received by Watson and its Subsidiaries in connection with such
sale, including, without limitation, one-half (1/2) of the reasonably estimated
present value (using an 8% discount factor) of any future payments (including
royalty payments) to be received by Watson or any of its Subsidiaries in
connection with the disposition of such Product and the fair market value of the
securities or other non-cash consideration received by Watson or its
Subsidiaries, but after payment of all reasonable out-of-pocket costs and
expenses related to such sale, including, without limitation, any legal,
accounting and investment banking fees; provided, however, that if the closing
of the disposition of such Product occurs at any time prior to December 31, *,
in lieu of receiving the amounts set forth in Section 6.6(c)(ii), Parent may
elect to include the Net Profits derived from the sale of such Product during
the twelve month period ending on the last day of the calendar month immediately
preceding the closing date of the disposition of such Product in the calculation
of the Upside Net Profits. Parent must exercise such election by delivering
written notice to Watson on or prior to thirty (30) days after its receipt of
the Transfer Notice (as defined herein) with respect to the transaction
consummated by Watson or any of its Subsidiaries pursuant to this Section
6.6(c).
(d) If Watson or any of its Subsidiaries acquires any company which is
selling one or more of the Products or if Watson or any of its Subsidiaries
acquires the right to sell one or more of the Products from an unaffiliated
third party (each, a "PRODUCT ACQUISITION") and Watson or one of its
Subsidiaries is selling such Product as of the date of the Product Acquisition,
for purposes of calculating the Upside Net Profits, the Net Profit derived from
the sale of such Product by Watson and its Subsidiaries during calendar year *
shall be equal to the Net Profit derived by Watson and its Subsidiaries from the
sale of such Product during calendar year * multiplied by the following
fraction: the numerator of which is equal to the Net Profit derived by
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"*SEE PAGE ONE OF EXHIBIT"
Watson and its Subsidiaries from the sale of such Product for the twelve month
period ending on the day immediately preceding the closing of the Product
Acquisition, and the denominator of which is equal to the sum of (i) the Net
Profit derived by Watson and its Subsidiaries from the sale of such Product for
the twelve month period ending on the day immediately preceding the closing of
the Product Acquisition; plus (ii) the Net Profit derived by the Person selling
the Product to Watson or one of its Subsidiaries (the "PRODUCT SELLING ENTITY")
from the sale of such Product for the twelve month period ending on the day
immediately preceding the closing of the Product Acquisition. If either Watson
or any of its Subsidiaries, on the one hand, or the Product Selling Entity, on
the other hand, has not been selling such Product for the entire twelve month
period referenced above, then the twelve month period referenced above shall be
revised to only include the period of time that each of Watson or any of its
Subsidiaries, on the one hand, or the Product Selling Entity, on the other hand,
has been selling such Product. The Net Profit derived by each of Watson or any
of its Subsidiaries, on the one hand, or the Product Selling Entity, on the
other hand, from the sale of such Product shall be appropriately adjusted to
exclude the Net Profits earned by Watson or any of its Subsidiaries, on the one
hand, or the Product Selling Entity, on the other hand, on the sale of the
Product due to initial new product launch stocking orders.
(e) Except as otherwise specified in this Section 6.6, all Net Profit
earned by Watson or its Subsidiaries from the sale of the Products during
calendar year * and all Distribution Net Profit earned by Watson and its
Subsidiaries from the sale of products included in the definition of
Distribution Business during calendar year * shall be included in the
calculation of Upside Net Profits pursuant to Section 6.5.
(f) Watson agrees to provide Parent with written notice of the occurrence
of any of the events set forth in this Section 6.6 within fifteen (15) days
after the closing of such event (the "TRANSACTION NOTICE").
(g) At any time on or prior to December 31, *, Watson and its Subsidiaries
agree not to dispose of any Product at less than such Product's fair market
value or, in connection with the acquisition of any business or product, grant
any significant royalty on sales of any of the Products, if the effect of such
disposition or acquisition would cause (i) Watson or one of its Subsidiaries to
obtain an asset or right of material value; and (ii) a material decrease or a
potentially material decrease to the anticipated value of the Upside Sharing
Payment calculated as of the date of such disposition or acquisition, as the
case may be; provided, however, that Watson or its Subsidiaries may enter into
the transactions described in Section 6.6(c) without complying with the
provisions of this Section 6.6(g).
6.7 DISPUTES REGARDING ARTICLE VI PAYMENTS. Disputes with respect to
payments made pursuant to this Article VI shall be dealt with as follows:
(a) Seller shall have until December 31, * (the "UPSIDE DISPUTE Period")
to dispute the amount of the Upside Sharing Payment (an "UPSIDE DISPUTE"). If
Seller does not give written notice of an Upside Dispute within the Upside
Dispute Period to Watson (an "UPSIDE DISPUTE
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"*SEE PAGE ONE OF EXHIBIT"
NOTICE"), the amount of such payment shall be deemed to have been accepted and
agreed to by Seller and Parent and shall be final and binding upon the parties
hereto. If Seller has an Upside Dispute, Seller shall give Watson an Upside
Dispute Notice within the Upside Dispute Period, setting forth in reasonable
detail the elements and amounts with which it disagrees. Within thirty (30) days
after delivery of such Upside Dispute Notice, the parties hereto shall attempt
to resolve such Upside Dispute and agree in writing upon the final amount of the
disputed payment.
(b) If Watson and Seller are unable to resolve any Dispute within the
thirty (30) day period after Xxxxxx'x receipt of an Upside Dispute Notice, the
Arbitrating Accountant shall be engaged as arbitrator hereunder to settle such
Upside Dispute as soon as practicable. In the event Xxxxxx Xxxxxxxx LLP is
unwilling or unable to serve as the Arbitrating Accountant, the parties hereto
shall select by mutual agreement another nationally recognized certified public
accounting firm, who is not rendering (and during the preceding two-year period
has not rendered) services to either Parent, Watson or any of their respective
affiliates, to serve as the Arbitrating Accountant. In connection with the
resolution of any Upside Dispute, the Arbitrating Accountant shall have access
to all documents, records, work papers, facilities and personnel necessary to
perform its function as arbitrator. The arbitration before the Arbitrating
Accountant shall be conducted in accordance with the commercial arbitration
rules of the American Arbitration Association. The Arbitrating Accountant's
award with respect to any Upside Dispute shall be final and binding upon the
parties hereto, and judgment may be entered on the award. Parent and Watson
shall each pay one-half of the fees and expenses of the Arbitrating Accountant
with respect to any Upside Dispute.
(c) Any dispute with respect to a payment made pursuant to Section 6.4
shall be handled in the same manner as provided in subparagraphs (a) and (b)
above; provided, however, that Seller shall have a period of three years from
the receipt of such payment to dispute the amount of each such payment.
Notwithstanding the foregoing, once Parent has directly or indirectly reviewed
Xxxxxx'x or any of its Subsidiaries' records relating to the calculation of Net
Profits on the sale of * for a specific time period, no dispute shall be made by
Parent or Seller relating to any payment made pursuant to Section 6.4 with
respect to any time period prior to such review, except for any disputes made in
connection with such review.
(d) Any payments due by a party hereto to any other party hereto pursuant
to this Section 6.7 shall be payable within five business days of the final
resolution of any dispute, with interest accruing (i) from the date such dispute
was made for disputes under Section 6.4 at a rate equal to LIBOR plus 1 1/2% per
annum; and (ii) from the date such payment is due for disputes under Section 6.5
at a rate equal to LIBOR plus 1 1/2% per annum.
6.8 RECORDS: INSPECTION OF RECORDS. Watson and its Subsidiaries shall each
maintain complete and accurate books and records of account relating to the sale
of products in sufficient detail to permit an accurate calculation of Xxxxxx'x
and its Subsidiaries' Net Profit on the sale of Products and the calculation of
the Distribution Net Profits. Seller shall have the right at any time while
payments are being made by Watson to Seller pursuant to the terms of this
Article VI and
46
for one year thereafter to examine the relevant books and records of Watson and
its Subsidiaries relating to the sale of their products during normal business
hours and upon reasonable advance written notice to verify that appropriate
accounting and payments have been made by Watson to Seller under this Agreement.
Watson shall cooperate with Seller and Parent with respect to all reasonable
requests made by Seller or Parent with respect to such inspection.
6.9 INTELLECTUAL PROPERTY RIGHTS. Seller and Parent recognize and agree
that, they shall not acquire any intellectual or other property rights in the
Products or in the ANDAs relative to the Products. Seller and Parent hereby
acknowledge that they do not have, and shall not acquire, any interest in any of
Xxxxxx'x or any of its Subsidiaries' trademarks or trade names unless otherwise
expressly agreed. Additionally, Parent and Seller shall not use and shall not
license or permit any third party to use, any name, slogan, logo or trademark
which is similar or deceptively similar to any of the names or trademarks used
in connection with the business of the Company or any of its Subsidiaries.
6.10 CONFIDENTIAL INFORMATION. During the period in which Watson is
required to make payments to Seller pursuant to this Article VI and for one year
thereafter, each party shall keep confidential and not disclose to others or use
for any purpose, other than as authorized by this Agreement, all "Confidential
Information" of the other party. For purposes of this Agreement, the term
"CONFIDENTIAL INFORMATION" means all know-how, trade secrets, formulae, data,
inventions, technology and other information, including financial information,
related to the manufacture, sale or marketing of the Products. The restrictions
of this Section shall not apply to any Confidential Information which (a) is or
becomes public knowledge through no fault of the recipient; (b) is received from
a third party having the lawful right to disclose the information; (c) is
required by law to be disclosed; or (d) is required to be disclosed in
connection with any applications filed with the FDA for approval to market the
Products. Additionally, Parent and Seller agree not to communicate or divulge
to, or use for the benefit of, any person, firm or corporation other than
Watson, its agents and representatives, any of the Company's or its
Subsidiaries' confidential information relating to the business conducted by the
Company or any of its Subsidiaries.
6.11 INSPECTION OF RECORDS. Parent and Seller, on the one hand, and
Watson, on the other hand, and their respective affiliates, shall each retain
and make their respective books and records (including expired insurance
policies and work papers in the possession of their respective accountants) with
respect to the Company and its Subsidiaries available for inspection by the
other party, or by its duly accredited representatives, for reasonable business
purposes at all reasonable times during normal business hours, for a seven (7)
year period after the Closing Date, with respect to all transactions of the
Company and its Subsidiaries occurring prior to and relating to the Closing, and
the historical financial condition, assets, liabilities, operations and cash
flows of the Company and its Subsidiaries. As used in this Section 6.11, the
right of inspection includes the right to make extracts or copies. The
representatives of a party inspecting the records of the other party shall be
reasonably satisfactory to the other party.
47
6.12 HIRING AWAY EMPLOYEES. For a period of two (2) years from the Closing
Date, Parent and Seller shall not, and shall cause its employees and agents to
not, solicit for hire any salaried, technical or professional employees,
representatives or agents of the Company or any of its Subsidiaries. .
6.13 THIRD PARTY CLAIMS. The parties shall cooperate with each other with
respect to the defense of any claims or litigation made or commenced by third
parties subsequent to the Closing Date which are not subject to the
indemnification provisions contained in Article VII, provided that the party
requesting cooperation shall reimburse the other party for the other party's
reasonable out-of-pocket costs and expenses of furnishing such cooperation.
6.14 FURTHER ASSURANCES. The parties shall execute such further documents,
and perform such further acts, as may be necessary to transfer and convey the
Shares to Watson on the terms herein contained and to otherwise comply with the
terms of this Agreement.
6.15 INJUNCTIVE RELIEF. Parent and Seller specifically recognize that any
breach of Sections 6.9, 6.10 or 6.12 will cause irreparable injury to Watson and
that actual damages may be difficult to ascertain, and in any event, may be
inadequate. Accordingly (and without limiting the availability of legal or
equitable, including injunctive, remedies under any other provisions of this
Agreement), Seller and Parent agree that in the event of any such breach, Watson
shall be entitled to injunctive relief in addition to such other legal and
equitable remedies that may be available.
6.16 EMPLOYEE BENEFIT PLANS. In the event that Watson terminates any Plan
in which any employees or former employees of the Company (and their spouses,
dependents and beneficiaries) participate, then such employees and former
employees (and their spouses, dependents and beneficiaries) shall immediately
become eligible to participate in any comparable employee benefit plan or
program available to Xxxxxx'x similarly-situated employees (and their spouses,
dependents and beneficiaries) upon terms and conditions which are no less
favorable than those afforded Xxxxxx'x similarly-situated employees (and their
spouses, dependents and beneficiaries). Such employees and former employees
shall receive credit for their service with the Company (including service with
any predecessor company to the extent credited under Company plans) for purposes
of determining their eligibility to participate, vesting and eligibility for
benefits under such employee benefit plans and programs of Watson. Further, with
respect to any of Xxxxxx'x health and dental care plans in which the Company's
employees or former employees (and their spouses, dependents and beneficiaries)
become entitled to participate in pursuant to this Section 6.16, Watson agrees
that such individuals shall be entitled to so participate without regard to any
applicable waiting periods and any limitations on pre-existing conditions.
In addition to the foregoing, Watson agrees that, in accordance with the
terms of the Company's severance and retention plans, programs and policies (or
in accordance with the terms of any replacement severance and retention plans,
programs or policies provided by Watson), all of which are listed on the
Disclosure Statement, Watson shall provide all severance and retention
48
benefits to all employees and former employees of the Company who are or who
become entitled to such benefits prior or subsequent to the Closing.
6.17 PARENT EMPLOYEE STORE. For a period of five years from the Closing
Date (the "INITIAL TERM"), the Company agrees to continue to supply Parent's
employee store with over-the-counter products for the Company's cost of such
products plus ten percent (10%). The Initial Term shall automatically renew for
successive one year periods unless either party notifies the other party of its
desire to terminate the obligations set forth in this Section 6.17 at least
ninety (90) days prior to the expiration of the Initial Term or any renewal term
thereof.
ARTICLE VII
INDEMNIFICATION
7.1 GENERAL. From and after the Closing, subject to the limitations set
forth in Section 7.5, the parties shall indemnify each other as provided in this
Article VII. For purposes of this Article VII, each party shall be deemed to
have remade all of its representations and warranties contained in this
Agreement at the Closing with the same effect as if originally made at the
Closing; provided, however, that the Watson Disclosure Statement and the
Disclosure Statement may be updated at the Closing by Watson and Seller, as the
case may be, and, except as otherwise provided in this Article VII, no indemnity
shall be provided hereunder with respect to the matters set forth therein. No
disclosure contained in the updated Watson Disclosure Statement or the
Disclosure Statement, as the case may be, shall be deemed a waiver of Xxxxxx'x
or Seller's and Parent's representations and warranties made on the date hereof
with respect to the conditions to closing set forth in Sections 5.2(c) and
5.3(d) hereof.
7.2 CERTAIN DEFINITIONS. As used in this Article VII, the following terms
shall have the indicated meanings:
(a) "DAMAGES" shall mean all liabilities, assessments, levies,
losses, fines, penalties, damages, costs and expenses, including, without
limitation, reasonable fees and expenses of attorneys, accountants and other
professionals, actually sustained or incurred by an Indemnified Party in
connection with the defense or investigation of any claim (after giving effect
to any insurance proceeds actually received by an Indemnified Party).
(b) "INDEMNIFIED PARTY" shall mean a party hereto who is entitled to
indemnification from another party hereto pursuant to this Article VII.
(c) "INDEMNIFYING PARTY" shall mean a party hereto who is required to
provide indemnification under this Article VII to another party hereto.
49
(d) "THIRD PARTY CLAIMS" shall mean any claims for Damages which are
asserted or threatened by a party other than the parties hereto, their
successors and permitted assigns, against any Indemnified Party or to which an
Indemnified Party is subject.
7.3 SELLER'S INDEMNIFICATION OBLIGATIONS. Subject to the terms of Section
7.5, Seller and Parent, jointly and severally, and their respective successors
and assigns, shall indemnify, save and keep Xxxxxx, the Company, each of their
respective Subsidiaries and their respective successors and permitted assigns
(each a "XXXXXX INDEMNITEE" and collectively the "XXXXXX INDEMNITEES") harmless
against and from all Damages sustained or incurred by any Xxxxxx Indemnitee, as
a result of or arising out of: (a) any inaccuracy in or breach of any
representation and warranty made by Seller or Parent to Xxxxxx herein or in any
Ancillary Document; (b) any breach by Seller or Parent of, or failure of Seller
or Parent to comply with, any of the covenants or obligations under this
Agreement or the Ancillary Documents to be performed by Seller or Parent
(including, without limitation, Seller's and Parent's obligations under this
Article VII); and (c) without being limited by the foregoing paragraphs (a) and
(b), and without regard to whether any one or more of the items listed in this
subparagraph (c) may be disclosed in the Disclosure Statement or otherwise known
to Xxxxxx or any of its Subsidiaries as of the date hereof or the Closing Date,
(i) the Company's or its Subsidiaries ownership of the capital stock of Caribe
and the property located at Monroe, North Carolina which was owned by Chelsea
Laboratories, Inc., including, without limitation, any Damages caused by the
violation of any Environmental Law at such facilities or the presence or release
of any Hazardous Materials upon, about or beneath such facilities; (ii) any item
which should have been disclosed on the Disclosure Statement as of the Closing
Date in response to the representations and warranties set forth in Section 3.20
herein; and (iii) without being limited by subparagraph (ii) above, each of the
items disclosed on Schedules 3.8(d) and 3.20 of the Disclosure Statement and
each of the items described in the audit response letters attached as exhibits
to Schedule 3.11 of the Disclosure Statement; provided, however, that after the
Closing Date, Xxxxxx and the Company shall bear all liability for the item
disclosed on Schedule 3.8(d) of the Disclosure Statement relating to a contract
entered into by the Company with the Department of Defense.
7.4 XXXXXX'X INDEMNIFICATION OBLIGATIONS. Subject to the terms of Section
7.5, Xxxxxx shall indemnify, save and keep Parent and Seller and their
respective successors and permitted assigns ("SELLER INDEMNITEES"), forever
harmless against and from all Damages sustained or incurred by any Seller
Indemnitee, as a result of or arising out of: (a) any inaccuracy in or breach of
any representation and warranty made by Xxxxxx to Seller and Parent herein or in
any Xxxxxx Ancillary Document; and (b) any breach by Xxxxxx of, or failure by
Xxxxxx to comply with, any of the covenants or obligations under this Agreement
or the Xxxxxx Ancillary Documents to be performed by Xxxxxx (including, without
limitation, its obligations under this Article VII).
7.5 LIMITATION ON INDEMNIFICATION OBLIGATIONS.
(a) All representations and warranties made by any party to this
Agreement shall survive the Closing for a period of twenty months from the
Closing Date; provided however,
50
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that the representations and warranties contained in Section 3.9 shall survive
the Closing until the expiration of the applicable statute of limitations (the
"SURVIVAL PERIOD"). A claim by a Xxxxxx Indemnitee or a Seller Indemnitee for
indemnification under this Article VII must be asserted within the applicable
Survival Period.
(b) (i) the Xxxxxx Indemnitees shall only be entitled to
indemnification pursuant to Section 7.3 hereof once the Xxxxxx Indemnitees'
aggregate claims for indemnification exceed $*, but after such claims exceed
such amount, the Xxxxxx Indemnitees shall be entitled to seek indemnification
for all indemnification claims from the first dollar of Damages; and (ii) the
indemnification obligations of Parent and Seller pursuant to Section 7.3 hereof
shall be limited to an amount equal to $* in the aggregate.
(c) (i) the Seller Indemnitees shall only be entitled to
indemnification pursuant to Section 7.4 hereof once the Seller Indemnitees'
aggregate claims for indemnification exceed $*, but after such claims exceed
such amount, the Seller Indemnitees shall be entitled to seek indemnification
for all indemnification claims from the first dollar of Damages; and (ii) the
indemnification obligations of Xxxxxx pursuant to Section 7.4 hereof shall be
limited to an amount equal to $* in the aggregate.
(d) Notwithstanding anything to the contrary contained herein, the
limitations on Seller's and Parent's indemnification obligations contained in
this Section 7.5, including the time limitations contained in Section 7.5(a)
hereof, shall not apply to a claim for indemnification by a Xxxxxx Indemnitee
pursuant to Section 7.3(c) hereof, which claims may be brought by a Xxxxxx
Indemnitee against Seller or Parent at any time after the date hereof.
7.6 COOPERATION. Subject to the provisions of Section 7.8, the
Indemnifying Party shall have the right, at its own expense, to participate in
the defense of any Third Party Claim, and if said right is exercised, the
parties shall cooperate in the investigation and defense of said Third Party
Claim. Xxxxxx and its Subsidiaries shall take all reasonable directions from
Parent relating to any claim made with respect to Caribe or the Monroe, North
Carolina facility previously owned by Chelsea Laboratories, Inc., at Parent's
sole cost and expense.
7.7 SUBROGATION. The Indemnifying Party shall not be entitled to require
that any action be brought against any other person before action is brought
against it hereunder by the Indemnified Party and shall not be subrogated to any
right of action until it has paid in full or successfully defended against the
Third Party Claim for which indemnification is sought.
7.8 INDEMNIFICATION CLAIMS PROCEDURES.
(a) Promptly following the receipt of notice by the Xxxxxx
Indemnitees of a Third Party Claim which the Xxxxxx Indemnitees believe may
result in a demand for indemnification pursuant to this Article VII, Xxxxxx
shall notify Seller and Parent of such claim. Promptly following the receipt by
a Seller Indemnitee of notice of a Third Party Claim which
51
such Seller Indemnitee believes may result in a demand for indemnification
pursuant to this Article VII, such Seller Indemnitee shall notify Xxxxxx of such
claim. The failure to give such notice shall not relieve the Indemnifying Party
of its obligations under this Agreement except to the extent that the
Indemnifying Party is substantially prejudiced as a result of the failure to
give such notice. Within fifteen (15) business days after receipt of the notice
by the Indemnifying Party pursuant to the preceding sentence, the Indemnifying
Party shall notify the Indemnified Party whether it elects to control the
defense of the Third Party Claim. If the Indemnifying Party elects to undertake
the defense of such Third Party Claim, it shall do so at its own expense with
counsel of its own choosing and it shall acknowledge in writing without
qualification its indemnification obligations as provided in this Agreement to
the Indemnified Party as to such Third Party Claim. If the Indemnifying Party
elects not to defend the Third Party Claim or fails to pursue such Third Party
Claim diligently, the Indemnified Party shall have the right to undertake,
conduct and control the defense of such Third Party Claim through counsel of its
own choosing and the Indemnifying Party shall be entitled to participate in (but
not control) the defense of such Third Party Claim, with its counsel and at its
expense. The party that litigates or contests the Third Party Claim shall keep
the other party fully advised of the progress and disposition of such claim.
(b) In the event the Indemnifying Party elects not to undertake the
defense of the Third Party Claim or fails to pursue diligently the defense of
such a claim and the Indemnified Party litigates or otherwise contests or
settles the Third Party Claim, then, provided that a final determination has
been made that the Indemnified Party is entitled to indemnification hereunder,
the Indemnifying Party shall promptly reimburse the Indemnified Party for all
amounts paid to settle such claim or all amounts paid in satisfaction of a
judgment against the Indemnified Party in contesting such claim and in providing
its right to indemnification hereunder, all in accordance with the provisions of
this Article VII. Notwithstanding the foregoing, no settlement of any Third
Party Claim without the prior written consent of the Indemnifying Party shall be
determinative of the validity of any claim that the Indemnified Party is
entitled to indemnification hereunder.
(c) No Third Party Claim will be settled by the Indemnifying Party without
the prior written consent of the Indemnified Party, which consent will not be
unreasonably withheld; provided, however, that if such claim asserts that the
Indemnifying Party is jointly and severally liable and the Indemnified Party
shall be fully released from all liability relating to such Third Party Claim in
connection with such settlement, the Indemnifying Party shall not be required to
obtain the consent of the Indemnified Party. If, however, the Indemnified Party
refuses to consent to a bona fide offered settlement which the Indemnifying
Party wishes to accept, the Indemnified Party may continue to pursue such Third
Party Claim free of any participation by the Indemnifying Party, at the sole
expense of the Indemnified Party. In such event, the Indemnifying Party shall
pay to the Indemnified Party the amount of the offer of settlement which the
Indemnified Party refused to accept, plus the reasonable costs and expenses
incurred by the Indemnified Party prior to the date the Indemnifying Party
notifies the Indemnified Party of the offer of settlement, all in accordance
with the terms of this Article VII, and, upon the payment or receipt of such
amount, as the case may be, the Indemnifying Party shall have no further
liability with respect to such Third Party Claim. The Indemnifying Party shall
be entitled to
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recover from the Indemnified Party any additional expenses incurred by such
Indemnifying Party as a result of the decision of the Indemnified Party to
pursue the matter.
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Closing Date by the mutual consent of Xxxxxx, on the one hand, and Seller and
Parent, on the other hand.
8.2 TERMINATION BY EITHER PARTY. This Agreement and the transaction
contemplated hereby may be terminated at any time prior to the Closing by either
party if (a) the Closing shall not have occurred at or before 11:59 p.m. on
November 30, 1997; provided, however, that the right to terminate this Agreement
under this Section 8.2(a) shall not be available to any party whose failure to
fulfill any material obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or prior to the aforesaid
date; (b) a court of competent jurisdiction or a governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action either (i) permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or (ii)
compelling Xxxxxx, the Company or any of their respective Subsidiaries to
dispose of or hold separate all or a material portion of the respective
businesses or assets of Xxxxxx, the Company or their respective Subsidiaries or
sell or license any material product of Xxxxxx, the Company or their respective
Subsidiaries, and such order, decree, ruling or other action shall have become
final and non-appealable.
8.3 TERMINATION BY THE COMPANY. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date by Seller and Parent if (a) there has been a breach by Xxxxxx of
any representation or warranty contained in this Agreement which would have a
Xxxxxx Material Adverse Effect; or (b) there has been a breach of any of the
covenants or agreements set forth in this Agreement on the part of Xxxxxx which
would have a Xxxxxx Material Adverse Effect, and which breach is not curable or,
if curable, is not cured within 30 days after written notice of such breach is
given by Seller to Xxxxxx.
8.4 TERMINATION BY XXXXXX. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date by Xxxxxx if (a) there has been a breach by Seller or Parent of any
representation or warranty contained in this Agreement which would have a
Company Material Adverse Effect; or (b) there has been a material breach of any
of the covenants or agreements set forth in this Agreement on the part of Seller
or Parent which would have a Company Material Adverse Effect, and which breach
is not
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curable or, if curable, is not cured within 30 days after written notice of such
breach is given by Xxxxxx to Seller.
8.5 REMEDIES. No party shall be limited to the termination right granted
in Sections 8.3 and 8.4 by reason of the nonfulfillment of any condition to such
party's closing obligations but may, in the alternative, elect to do one of the
following: proceed to close despite the nonfulfillment of any closing condition,
it being understood that consummation of the transaction contemplated herein
shall not be deemed a waiver of a party's wilful breach of any representation,
warranty or covenant or of any party's rights and remedies with respect thereto;
decline to close, terminate this Agreement as provided in Sections 8.3 and 8.4,
and thereafter seek damages to the extent permitted in Section 8.6; or seek
specific performance of the obligations of the other party. Each party hereby
agrees that in the event of any breach by such party of this Agreement, the
remedies available to the other party at law would be inadequate and that such
party's obligations under this Agreement may be specifically enforced.
8.6 RIGHT TO DAMAGES. If this Agreement is terminated pursuant to Sections
8.3 or 8.4, neither party hereto shall have any claim against the other except
if the circumstances giving rise to such termination were caused by either (a)
the other party's material breach of Article IV; or (b) a party's
representations and warranties contained in Articles II or III are incorrect
when made such that the incorrect representation and warranty would have a
Material Adverse Effect with respect to such party, in which event termination
shall not be deemed or construed as limiting or denying any legal or equitable
right or remedy of said party, and said party shall be entitled to recover,
without limitation, its costs and expenses which are incurred in pursuing its
rights and remedies (including reasonable attorneys' fees).
8.7 EXTENSION; WAIVER. At any time prior to the Closing Date, any party
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto; and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
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ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES. All notices required or permitted to be given hereunder shall
be in writing and may be delivered by hand, by facsimile, by nationally
recognized private overnight courier, or by United States mail. Notices
delivered by mail shall be deemed given three (3) business days after being
deposited in the United States mail, postage prepaid, registered or certified
mail. Notices delivered by hand or by facsimile, or by nationally recognized
private overnight courier shall be deemed given on the day following receipt;
provided, however, that a notice delivered by facsimile shall only be effective
if such notice is also delivered by hand, or deposited in the United States
mail, postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by facsimile. All notices shall be addressed as
follows:
If to Xxxxxx: If to Parent or Seller:
Xxxxxx Pharmaceuticals, Inc. Hoechst Xxxxxx Xxxxxxx, Inc.
000 Xxxxxx Xxxxxx 00000 Xxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000 X.X. Xxx 0000
Fax: (000) 000-0000 Xxxxxx Xxxx, XX 00000-0000
Attn: Xx. Xxxxx Xxxx, Fax: (000) 000-0000
Chairman & CEO Attn: North American General Counsel
With copies to: With copies to:
X'Xxxxxx & Xxxxxx Shook, Hardy & Bacon L.L.P.
00 Xxxxx XxXxxxx, Xxxxx 0000 0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000 One Kansas City Place
Fax: (000) 000-0000 Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
9.2 ASSIGNMENT, BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, which consent shall not be unreasonably
withheld. Subject to the preceding sentence, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in
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this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.3 ENTIRE AGREEMENT. This Agreement, the Exhibits, the Disclosure
Statement, the Xxxxxx Disclosure Statement, the Confidentiality Agreement, the
Ancillary Documents, the Xxxxxx Ancillary Agreements and any other documents
delivered by the parties in connection herewith constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
9.4 AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its rules of
conflict of laws.
9.6 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
9.7 HEADINGS. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever.
9.8 INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
9.9 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
9.10 INCORPORATION OF EXHIBITS. The Disclosure Statement, the Xxxxxx
Disclosure Statement and all Exhibits attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if fully
set forth herein.
9.11 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such
56
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable in order to achieve the intent of the parties to the extent
possible.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
XXXXXX PHARMACEUTICALS, INC.
By:____________________________
Title:_________________________
HOECHST XXXXXX XXXXXXX, INC.
By:____________________________
Title:_________________________
MARISUB, INC.
By:____________________________
Title:_________________________
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