EXHIBIT 2.3
TRANSITION AGREEMENT
This Transition Agreement ("Agreement"), is made and entered into as of the
20th day of October, 1997, by and between Dura Pharmaceuticals, Inc., a Delaware
corporation ("Dura"), and Scandipharm, Inc., a Delaware corporation
("Scandipharm").
RECITALS
A. Dura, Scandipharm and Scandi Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Dura ("Scandi"), have entered into
an Agreement and Plan of Merger and Reorganization dated as of October 20, 1997
(the "Merger Agreement"), pursuant to which the parties have agreed to combine
the businesses of Dura and Scandipharm by means of a merger of Scandi with and
into Scandipharm upon the terms and subject to the conditions set forth in the
Merger Agreement. Capitalized terms not otherwise defined herein shall have the
same meaning herein as in the Merger Agreement.
B. Scandipharm and its subsidiaries (the "Scandipharm Subsidiaries") are
in the business of providing products for the treatment of cystic fibrosis. The
term "Scandipharm" as used herein shall include the Scandipharm Subsidiaries as
appropriate.
C. Closing under the Merger Agreement is schedule to occur on the date
specified in the Merger Agreement, assuming that all of the conditions to
closing set forth therein have been satisfied as of that date.
D. Dura and Scandipharm wish to provide for a smooth and efficient
transition and integration of the businesses of Dura and Scandipharm, pending
the closing of the transactions provided for in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, IT IS AGREED AS FOLLOWS:
I. STRATEGIC CONSULTING: Scandipharm hereby engages Dura and Dura hereby
accepts such engagement and agrees to provide transition and integration
management, consulting and advisory services to Scandipharm in connection with
the business operations of Scandipharm, upon the terms and conditions set forth
in this Agreement. By entering into this Agreement, Scandipharm does not
delegate to Dura any powers, duties or responsibilities which it is prohibited
by law from delegating. Scandipharm also retains such other authority as shall
not have been expressly delegated to Dura pursuant to this Agreement.
Management and supervisory personnel of Scandipharm shall report to a
representative designated by Dura (the "Dura Representative") who shall be an
employee of Dura. The initial Dura Representative shall be Xxxxx X. Xxxxxx.
Any changes in such designation shall be effected by Dura in Dura's sole
discretion at any time by notice to Scandipharm. Reports to the Dura
Representative by management and supervisory personnel of Scandipharm shall be
in such manner and form and at such times as shall be reasonably required by the
Dura Representative, and such management and
supervisory personnel and the other employees of Scandipharm shall implement the
decisions and directives of the Dura Representative relating to the operation of
Scandipharm's business and consistent with this Agreement. During the term of
this Agreement, Scandipharm shall consult with, and reasonably consider the
advice of, Dura with respect to the following items before implementing any of
such items:
(i) the establishment and the change of Scandipharm operational
procedures;
(ii) a change in product pricing or marketing strategy;
(iii) the making of regulatory filings;
(iv) purchases of capital equipment in excess of $50,000;
(v) preparation of 1998 forecasts and budgets;
(vi) institution of legal proceedings;
(vii) a change in cash management procedures or systems;
(viii) changes in MIS or other operational computer systems.
Dura and Scandipharm recognize and agree that the strategic integration of
the respective sales persons and product lines of Dura and Scandipharm, and
relationships with employees in general, are critically important to the success
of the combined company following the merger. Accordingly, during the term of
the Agreement, Scandipharm, subject to the terms and premises hereof, shall use
its best efforts to implement the Dura Representative's recommendations
regarding:
(i) control and direction of the Scandipharm sales force; and
(ii) retention benefits, severance and other items regarding Scandipharm
employees.
Consistent with the foregoing, managers of the Scandipharm sales force shall
report to the Dura Representative as frequently as is reasonably requested by
Dura.
Notwithstanding anything to the contrary herein, if Scandipharm reasonably
believes that following the advice of the Dura Representative would materially
prejudice the interests of Scandipharm, then Scandipharm shall not be obligated
to follow such advice. Upon making such a determination, Scandipharm shall
notify Dura in writing of the basis of its objections, and
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thereafter Dura and Scandipharm shall meet and confer upon implementation of an
alternative recommendation acceptable to Scandipharm.
II. PROPRIETARY INTEREST: The systems, methods, procedures and controls
employed by Dura and unique to Dura's operations or developed by Dura in
connection with the operation of its own business and any written materials or
brochures developed by Dura to document the same (other than documents relating
to the Dura products to be comarketed by Scandipharm) are to remain the property
of Dura and are not, at any time during or after the term of this Agreement, to
be utilized, distributed, copied or otherwise employed or acquired by
Scandipharm.
III. TERM OF AGREEMENT:
A. THE TERM: The Term of this Agreement shall commence and shall be
effective as of the Effective Date and, unless earlier terminated in accordance
with the terms of Paragraph VI, shall terminate on the earlier to occur of (i)
the Closing, or (ii) June 30, 1998.
B. SURVIVAL: Scandipharm shall be liable for any wages or benefits
earned or accrued by its employees and owing to them under applicable law,
Scandipharm's policies and procedures or otherwise (including under the terms of
any applicable union contract) and Scandipharm shall indemnify, defend and hold
harmless Dura from and against any and all costs, expenses and liabilities with
respect thereto (the "Benefits Indemnity"). Scandipharm specifically
acknowledges and agrees that in the event of the termination of this Agreement
other than upon the Closing, such Benefits Indemnity shall survive the
termination of this Agreement and Scandipharm shall be and remain liable to Dura
with respect thereto.
IV. TERMINATION: Dura may terminate this Agreement at any time upon one
business day's notice to Scandipharm.
V. ASSIGNMENT: This Agreement and the duties hereunder shall not be
assigned or delegated in whole or in part by either party, it being understood
and agreed that this Agreement is personal to Scandipharm and Dura.
VI. NOTICES: All notices required or permitted hereunder shall be given
in writing and shall be delivered in the manner and at the addresses set forth
in the Merger Agreement.
VII. RELATIONSHIP OF THE PARTIES: The relationship of the parties shall
be that of owner and independent contractor and all acts performed by Dura
during the term hereof by Dura shall be deemed to be performed in its capacity
as an independent contractor. Nothing contained in this Agreement is intended
to or shall be construed to give rise to or create a partnership or
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joint venture or lease between Scandipharm, its successors and assigns on the
one hand, and Dura, its successors and assigns on the other hand. Dura will not
be liable in the performance of its duties for any loss incurred by or damage to
Scandipharm. Scandipharm shall indemnify, defend and hold Dura harmless from
any loss incurred by or damage to Dura where such loss or damage results from
the negligence or willful misconduct of Scandipharm in performing its
obligations under the Agreement or a breach by Scandipharm of its obligations
hereunder.
VIII. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and shall be
binding upon and inure to the benefit of their successors, and shall be
construed in accordance with the laws of the State of Delaware. This Agreement
may not be modified or amended except by written instrument signed by both of
the parties hereto.
IX. CAPTIONS: The captions used herein are for convenience of reference
only and shall not be construed in any manner to limit or modify any of the
terms hereof.
X. ATTORNEYS' FEES: In the event either party brings an action to
enforce this Agreement, the prevailing party in such action shall be entitled to
recover from the other party all costs incurred in connection therewith,
including reasonable attorneys' fees.
XI. SEVERABILITY: In the event one or more of the provisions contained
in this Agreement is deemed to be invalid, illegal or unenforceable in any
respect under applicable law, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be impaired thereby.
XII. CUMULATIVE; NO WAIVER: A right or remedy herein conferred upon or
reserved to either of the parties hereto is intended to be cumulative of any
other right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder, or now or
hereafter legally existing upon the occurrence of an Event of Default hereunder.
The failure of either party hereto to insist at any time upon the strict
observance or performance of any of the provisions of this Agreement or to
exercise any right or remedy as provided in this Agreement shall not impair any
such right or remedy or be construed as a waiver or relinquishment thereof with
respect to subsequent defaults. Every right and remedy given by this Agreement
to the parties hereof may be exercised from time to time and as often as may be
deemed expedient by the parties thereto, as the case may be.
XIII. AUTHORIZATION FOR AGREEMENT: The execution and performance of this
Agreement by Scandipharm and Dura have been duly authorized by all necessary
laws, resolutions or corporate action, and this Agreement constitutes the valid
and enforceable obligations of Scandipharm and Dura in accordance with its
terms.
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XIV. COUNTERPARTS: This Agreement may be executed in any number of
counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.
XV. THIRD PARTY BENEFICIARY: Nothing in this Agreement express or
implied is intended to and shall not be construed to confer upon or create in
any person, other than the parties hereto, any rights or remedies under or by
reason of this Agreement, including without limitation, any right to enforce
this Agreement.
XVI. NO OTHER EFFECT ON MERGER AGREEMENT: Each of the parties hereby
acknowledges and agrees that entry into this Agreement, and the performance of
their respective obligations hereunder, and the termination of this Agreement by
Dura under Section IV, shall have no other effect on the Merger Agreement
including, without limitation, the satisfaction of the conditions thereto or any
rights of the parties with respect to termination thereof.
XVII. NO HIRING: Without the prior written consent of the other party,
neither party hereto, nor any affiliate of either such party, shall offer
employment to, or employ, any person then employed, or employed within the
preceding ninety days, by the other party hereto prior to the earlier of (A) the
Closing under the Merger Agreement, or (B) January 1, 1999. The provisions of
htis Section XVII shall survive the termination of this Agreement and any
termination of the Merger Agreement.
IN WITNESS WHEREOF, the parties have hereto caused this Agreement to be duly
executed, as of the day and year first above written.
SCANDIPHARM, INC.
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By:
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Its:
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DURA PHARMACEUTICALS, INC.
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By: Cam X. Xxxxxx
Its: Chairman, President and Chief Executive
Officer
