LICENSE AGREEMENT
THIS
LICENSE AGREEMENT (this “Agreement”) is made and entered into as of the
19th
day of
August, 2006, by and among Auriga Laboratories, Inc., a Delaware corporation
(“LICENSEE”), and ATHLON Pharmaceuticals, Inc., a Mississippi corporation
(“ATHLON”).
RECITALS
WHEREAS,
ATHLON has developed and marketed certain pharmaceutical products that are
more
particularly described and defined herein as the “Products.”
WHEREAS,
subject to the terms and conditions of this Agreement, ATHLON desires to
exclusively license to LICENSEE, and LICENSEE desires to acquire an exclusive
license from ATHLON for, the Products, together with certain other tangible
and
intangible assets related to, or necessary for the continued development and
marketing of, the Products.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the Parties hereby
agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Defined
Terms. As
used
in this Agreement, the following defined terms have the meanings described
below:
(a) “Action
or Proceeding”
means
any action, suit, proceeding, arbitration, Order, inquiry, hearing, assessment
with respect to fines or penalties, or litigation (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental or Regulatory
Authority.
(b) “Affiliate”
means,
with respect to any Person, another Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with such Person. “Control” and, with correlative meanings, the terms
“controlled by” and “under common control with” means the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract, resolution, regulation or
otherwise.
(c) “Books
and Records”
means
all files, documents, instruments, papers, books and records (including
scientific and financial) of ATHLON to the extent relating to the Licensed
Assets or the Products, including any pricing lists, quotations, proposals,
customer lists (to the extent owned and/or contractually permissible by ATHLON),
information pertaining to sales of the Products, vendor lists, financial data,
regulatory information or files, sales training materials,
trademark registration certificates, trademark renewal certificates, and other
documentation to the extent relating to the Products or the Licensed
Assets.
(d) “Breach”
means
any breach of, or any inaccuracy in, any representation or warranty or any
breach of, or failure to perform or comply with, any covenant or obligation,
in
or of this Agreement or any other Contract, or any event which with the passing
of time or the giving of notice, or both, would constitute such a breach,
inaccuracy or failure.
(e) “Business
Day”
means
a
day other than Saturday, Sunday or any day on which banks located in Atlanta,
Georgia are authorized or obligated to close.
(f) “Calendar
Month”
shall
mean the period of time beginning on the first (1st)
day of
a month and ending on the last day of the month.
(g) “Calendar
Quarter”
shall
mean the following three (3) month periods: January to March, April to June,
July to September, October to December.
(h) “Closing”
has
the
meaning set forth in Section 2.4.
(i) “Closing
Date”
means
the date on which the Closing actually takes place.
(j) “Consent”
means
any approval, consent, ratification, waiver or other authorization.
(k) “Contemplated
Transactions”
means
all of the transactions contemplated by this Agreement.
(l) “Contract”
means
any and all legally binding commitments, contracts, leases, indentures, purchase
orders, leases, or other agreements, whether written or oral, including all
amendments thereto.
(m) “Damages”
has
the
meaning set forth in Section 7.5(a).
(n) “DEA”
means
the United States Drug Enforcement Agency, and any successor agency or entity
thereto that may be established hereafter, and any comparable agencies or
entities of a Foreign Jurisdiction.
(o) “Encumbrance”
means
any mortgage, pledge, security interest, deed of trust, lease, lien, Liability,
adverse claim, levy, charge, easement, right of way, covenant, restriction,
or
other encumbrance, third-party right or retained right of any kind whatsoever,
or any conditional sale or title retention agreement or other agreement to
give
any of the foregoing in the future.
(p) “FDA”
means
the United States Food and Drug Administration or any comparable agency of
a
Foreign Jurisdiction.
2
(q) “Foreign
Jurisdiction”
means
any Governmental or Regulatory Authority other than those in the United
States.
(r) “Governmental
or Regulatory Authority”
means
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of any country, state, county, city or other political
subdivision.
(s) “Inventory”
means
ATHLON’s inventory of the Products with expiration dates exceeding twelve (12)
months after the Closing Date and any raw materials owned by ATHLON used in
the
manufacture of the Products.
(t) “Know-How”
means
all the Products specifications; manufacturing, physical chemistry and
formulation know-how; analytical testing methods and validations; technical
knowledge; expertise; skill; practices and procedures; formulae; trade secrets;
inventions; confidential information; analytical methodology; processes;
methods; preclinical, clinical, stability and other data and results; market
studies; and all other experience and know-how, in each case in tangible form
and only to the extent related to the Products, whether or not patentable.
Know-How shall also include all drug master files and other documents/files
relating to the Products, and reports and manuals relating to standard operating
procedures in the manufacture of the Products
(u) “Law”
means
any national, supranational, federal, state or local law, statute or ordinance,
or any rule, regulation, or published guidelines promulgated by any Governmental
or Regulatory Authority, including all regulations and guidance of the FDA
(including its current good manufacturing practices, or cGMP) or the
DEA.
(v) “Levall
Trademark”
means
the trademark of the “Levall” name, which trademark is owned by ATHLON and is
registered with the United States Patent and Trademark Office as Registration
Number 2693565 and Serial Number 78135487.
(w) “Liability”
means
any obligations, debts or liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, matured or unmatured, determinable or undeterminable, and due
or
to become due), including any of the foregoing arising under any Contract,
Law
or Order or in or as a result of any Action or Proceeding, and any liability
for
Taxes (whether arising under Treasury Regulation §1.1502-6 or
otherwise).
(x) “Licensed
Assets”
means
all assets and rights owned or licensed by ATHLON related to the Products in
the
Territory, including all Product Intellectual Property, Product Trademarks
and
Product Trade Dress.
(y) “Marketing
Materials”
means
all marketing and promotional materials useable with respect to the marketing
and sale of the Products to the extent such materials are within the possession
of ATHLON.
3
(z) “Net
Sales”
means
with respect to any Products, the gross amount invoiced by LICENSEE, its
licensee or sub-licensee for the Products sold in bona fide, arms-length
transactions, less (i) quantity and/or cash discounts from the gross invoice
price which are actually taken; (ii) freight, postage and insurance included
in
the invoice price; (iii) amounts repaid or credited by reasons of rejections
or
return of goods, (iv) third-party rebates and chargebacks actually repaid or
credited (v) invoiced customer duties and sales taxes (excluding income,
value-added and similar taxes), if any, actually paid and directly related
to
the sale that are not reimbursed by LICENSEE; but in no event shall the
cumulative amount of all adjustments, deductions and allowances referred to
in
(i) through (v) above exceed fifteen percent (15%) of the gross amount invoiced
by LICENSEE, its licensee or sub-licensee for the Products.
(aa) “Nondisclosure
Agreement”
has
the
meaning set forth in Section 11.1.
(bb) “Order”
means
any writ, judgment, decree, injunction or similar order of any Governmental
or
Regulatory Authority (in each such case whether preliminary or
final).
(cc) “Party”
means
each of LICENSEE and ATHLON and “Parties”
means
LICENSEE and ATHLON collectively.
(dd) “Person”
means
any natural person, corporation, general partnership, limited partnership,
limited liability company, joint venture, proprietorship, other business
organization, trust, union, association, or other entity, or any Governmental
or
Regulatory Authority.
(ee) “Product
Intellectual Property”
means
any and all of the following intellectual property rights owned or licensed
by
ATHLON that are used or useful in the manufacture, sale, use, marketing and
distribution of the Products: (i) Know-How; (ii) copyrights; (iii) patents,
if
any, (iv) the Product Trademarks; and (v) the Product Trade
Dress.
(ff) “Product
Trade Dress”
means
any trade dress related to the Products.
(gg) “Product
Trademarks”
means
any trademarks related to the Products, including the Levall
Trademark.
(hh) “Products”
shall
mean the following:
(i) Levall
5.0
-
Phenylephrine HCl 15mg, Guaifenesin 100mg, Hydrocodone Bitartrate
5mg;
(ii) Levall
G
-
Pseudoephedrine HCl/90mg, Guaifenesin 400mg;
(iii) Levall
12
-
Carbetapentane Tannate 30mg, Phenylephrine Tannate 30 mg;
4
(iv) Levall
Liquid
-
Phenylephrine HCl 15mg, Carbetapentane Citrate 25 mg, Guaifenesin
100mg;
(v) Lev/Pse/GG
-
Pseudoephedrine HCl/90mg, Guaifenesin 400mg (Levall G Generic);
(vi) Carb/Phenyl-12
-
Carbetapentane Tannate 30 mg, Phenylephrine Tannate 30mg (Levall 12 Generic);
and
(vii) Any
future product using the Product Intellectual Property, including, but not
limited to, NDAs, product line extensions, ANDAs, 505(b)(2) applications or
the
like.
|
(ii)
|
“Purchase
Price”
has the meaning set forth in Section
3.1.
|
(jj) “Tax”
means
all of the following taxes in connection with the transactions contemplated
hereby: (i) any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment imposed by an governmental, regulatory or administrative entity
or
agency responsible for the imposition of any such tax; (ii) any Liability for
the payment of any amounts of the type described in (i) above as a result of
being a member of any affiliated, consolidated, combined, unitary or other
group
for any taxable period; and (iii) any Liability for the payment of any amounts
of the type described in (i) or (ii) above as a result of any express or implied
obligation to indemnify any other Person.
(kk) “Territory”
means
all countries and territories of the world.
(ll) “Trademarks”
means
all U. S. and other trademarks, trade names, brand names, logotypes, symbols,
service marks, designs and trade names.
Section
1.2 Construction
of Certain Terms and Phrases. Unless
the context of this Agreement otherwise requires, when used in this Agreement:
(a) words of any gender include each other gender; (b) the terms “hereof,”
“herein,” “hereto,” “hereby” and derivative or similar words refer to this
entire Agreement; (c) the terms “including,” “include” or “includes” shall be
deemed to be followed by “without limitation”; and (d) references to currency
means U.S. Dollars. Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified. This
Agreement shall be deemed to be drafted jointly by all the Parties and shall
not
be specifically construed against any Party hereto based on any claim that
such
Party or its counsel drafted this Agreement.
ARTICLE
II
EXCLUSIVE
LICENSE OF LEVALL PRODUCTS
Section
2.1 Grant
of Exclusive License to Licensed Assets. Subject
to the limitations and exceptions contained in this Agreement, effective as
of
the Closing Date, ATHLON hereby
grants
to
LICENSEE an exclusive, even as to ATHLON, license under the Licensed Assets
to
make, have made, sell, offer to sell, have sold, market, promote, distribute,
import and otherwise transfer, dispose, provide and place the Products in the
Territory.
5
Section
2.2 Retention
of Records. Notwithstanding
anything contained in this Agreement to the contrary, ATHLON may retain a copy
of all Books and Records, Marketing Materials and other documents or materials
conveyed hereunder for archival purposes, and for the purpose of fulfilling
its
obligations under applicable Law but for no other uses or purposes.
Section
2.3 Liabilities
Not Assumed. LICENSEE
is assuming no Liabilities of ATHLON with respect to the Products or Licensed
Assets arising prior to the Closing Date.
Section
2.4 Closing.
The
licensing provided for in this Agreement (the “Closing”) will take place at 5:00
p.m. on or before August 31, 2006, at the offices of LICENSEE at 0000 Xxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx, or at such other location as the parties
may agree upon. Subject to the provisions of Article 10, failure to consummate
the license provided for in this Agreement on the date and time and at the
place
determined pursuant to this Section 2.4 will not result in the termination
of
this Agreement and will not relieve any party of any obligation under this
Agreement. In such a situation, the Closing will occur as soon as practicable,
subject to Article 10.
Section
2.5 Closing
Obligations. In
addition to any other documents to be delivered under other provisions of this
Agreement, at the Closing:
(a) ATHLON
shall deliver to LICENSEE:
(i) a
xxxx of
sale executed by ATHLON for all of the Inventory in the form attached as Exhibit
2.5(a)(i). Delivery, transfer of title and risk of loss shall occur at the
locations where such Inventory items are currently stored;
(ii) subject
to Section 2.5(b)(iii), an executed assignment and assumption agreement in
the
form as set forth on Exhibit
2.3(b)
of that
certain Manufacturing and Supply Agreement with Great Southern Labs (“Great
Southern Labs”) dated December 29, 2000 (the “Great Southern Labs Assignment and
Assumption Agreement”);
(iii) Annual
Product sales as presented in the Supplementary Data Section of ATHLON’s
financial audit for 2004 and 2005 and Product sales from ATHLON’s internal
records from January 2006 to July 2006;
(iv) all
information currently in a presentable format in ATHLON’s possession with
respect to ATHLON’s marketing and distribution of the Products to trade level
customers (i.e., mass merchandisers, wholesalers and warehousing chains) and
the
names and gross sales revenues attributable to such customers.
(v) such
other assignments, certificates of title, documents and other instruments of
transfer and conveyance as may reasonably be requested by LICENSEE, each
in
form and substance satisfactory to LICENSEE and its legal counsel and executed
by ATHLON;
6
(vi) a
certificate executed on behalf of ATHLON as to the accuracy of their
representations and warranties as of the date of this Agreement and as of the
Closing in accordance with Section 8.1 and as to their compliance with and
performance of their covenants and obligations to be performed or complied
with
at or before the Closing in accordance with Section 8.2;
(vii) an
executed copy of a mutually agreed upon operational agreement between ATHLON
and
LICENSEE regarding the management of the generic product line by ATHLON on
behalf of LICENSEE (the “Operational Agreement”);
(viii) written
certification that there is no, and that ATHLON has no knowledge of any bases
for any, Action or Proceeding by the FDA pending or threatened against the
Product; and
(ix) the
most
recent wholesaler inventory reports from Cardinal, McKesson and Amerisource
Bergen detailing the Inventory at each company, and certified by an officer
of
ATHLON as being, to the best of its knowledge, true and correct (the “Wholesale
Reports”).
(b) LICENSEE
shall deliver to ATHLON:
(i) One
Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) ;
(ii) the
Shares of LICENSEE common stock comprising the portion of the Purchase Price
described in Section 3.1(b);
(iii) either,
the Great Southern Labs Assignment and Assumption Agreement executed by LICENSEE
or notice that LICENSEE has entered into separate negotiations with Great
Southern Labs with respect to a mutually agreed upon manufacturing agreement;
(iv) a
certificate executed by LICENSEE as to the accuracy of its representations
and
warranties as of the date of this Agreement and as of the Closing in accordance
with Section 9.1 and as to its compliance with and performance of its covenants
and obligations to be performed or complied with at or before the Closing in
accordance with Section 9.2; and
(v) an
executed copy of the Operational Agreement.
7
ARTICLE
III
CONSIDERATION
Section
3.1 Purchase
Price.
The
purchase price for the Licensed Assets shall be the sum of the following (the
“Purchase Price”):
(a) One
Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00);
(b) Two
Million Five Hundred Thousand (2,500,000) shares of restricted common stock
of
LICENSEE (the “Shares”);
(c) Fifty
percent (50%) of Net Sales up to Ten Million and No/100 Dollars ($10,000,000.00)
commencing forty-five (45) days after the Closing Date through the end of the
first (1st)
year
following the Closing Date;
(d) Twenty
percent (20%) of Net Sales in excess of Ten Million and No/100 Dollars
($10,000,000.00) commencing forty-five (45) days after the Closing Date through
the end of the first (1st)
year
following the Closing Date;
(e) Thirty-five
percent (35%) of Net Sales for the second year following the Closing
Date
(f) Twenty-five
percent (25%) of Net Sales for the third year following the Closing
Date;
(g) Eight
percent (8%) of Net Sales for each year following the third year after the
Closing Date until such time as the amounts paid pursuant to Sections 3.1(a)
and
3.1(c)-(g) total Twenty Million and No/100 Dollars ($20,000,000.00) (such
$20,000,000 amount hereinafter referred to as the “Royalty Payment
Ceiling”);
(h) One
percent (1%) of Net Sales for each year after such time as the amounts paid
pursuant to Sections 3.1(a) and 3.1(c)-(g) meet the Royalty Payment Ceiling;
and
(i) Notwithstanding
the foregoing, in the event any Action or Proceeding is commenced by the FDA
against any Product which impairs Net Sales, beginning ninety (90) days after
such Action or Proceeding, all royalty obligations set forth in subsections
(c)
through (h) above, will be automatically reduced by a percentage equal to the
applicable Products’ percentage of revenue (as determined by IMS or NDC data
adjusted to wholesale equivalent dollars) of the Levall product line during
the
twelve (12) months prior to the applicable Action or Proceeding.
Section
3.2 Royalty
Reduction. Notwithstanding anything herein to the contrary, if, at any time
after the Registration (as defined in Section 6.6 below), the thirty (30) day
average closing price per share of LICENSEE’s common stock is equal to or
greater than $5.00 per share, and the thirty (30) day average daily trading
volume of LICENSEE’s common stock is equal to or greater than 75,000 shares per
day (the “Reduction Date”), then all amounts payable after the Reduction
Date by LICENSEE to ATHLON pursuant to Sections 3.1(c)-(h) shall be reduced
by
fifty percent (50%), and the Royalty Payment Ceiling shall not be reduced.
8
Section
3.3 Reports.
For purposes of determining the payments described in Sections 3.1(c)-(h),
LICENSEE agrees to provide ATHLON with monthly reports indicating LICENSEE’s Net
Sales for such month, and supporting documentation therefor, for each Calendar
Month following the Closing Date until such time as payments under Sections
3.1(a) and (c)-(h) equal or exceed Ten Million and No/100 Dollars
($10,000,000.00). After the payments under Sections 3.1(a) and (c)-(h) equal
or
exceed Ten Million and No/100 Dollars ($10,000,000.00), LICENSEE shall provide
ATHLON with quarterly reports indicating LICENSEE’s Net Sales for such Calendar
Quarter, and supporting documentation therefore.
Section
3.4 Inspection
Right.
Upon
reasonable prior written notice and at mutually agreeable times, but in no
event
more than twice every twelve (12) months, ATHLON shall have the right to appoint
an independent accounting firm or other agent reasonably acceptable to LICENSEE
and ATHLON, at ATHLON’s expense to inspect the LICENSEE’s financial records and
information, solely for the purpose of auditing the monthly and quarterly
reports, as the case may be, referred to in Section 3.2 and the payments under
Sections 3.2(c)-(h) with respect to the calculation of the payments referred
to
in Section 3.1(c)-(h) hereof.
Such
auditor shall be bound by confidentiality terms consistent with the
Nondisclosure Agreement as described in Section 11.1 and shall share with ATHLON
information obtained or learned during such audit only to the extent that it
relates to the purpose of the audit, as specified in this Section 3.4. In the
event such audit discloses an underpayment or overpayment of amounts due
hereunder, the appropriate party will promptly remit the amounts due to the
other party and, if LICENSEE has underpaid ATHLON by more than 10%, LICENSEE
shall reimburse ATHLON the reasonable costs of the audit.
Section
3.5 Payment
of Purchase Price.
That
portion of the Purchase Price described in Section 3.1(a) shall be paid by
LICENSEE to ATHLON in immediately available funds by wire transfer on such
dates
as due, pursuant to wiring instructions provided by ATHLON to LICENSEE not
less
than three (3) Business Days prior to the Closing Date. That portion of the
Purchase Price described in Sections 3.1(c)-(h) shall be paid by LICENSEE to
ATHLON not later than the twenty-fifth (25th)
day
following the Calendar Month in which the respective sale of the Products occurs
until such time as payments under Sections 3.1(a) and (c)-(h) equal or exceed
Ten Million and No/100 Dollars ($10,000,000.00). After the payments under
Sections 3.1(a) and (c)-(h) equal or exceed Ten Million and No/100 Dollars
($10,000,000.00), LICENSEE shall pay the Purchase Price described in Sections
3.1(c)-(h) to ATHLON not later than the forty-fifth (45th)
day
following the Calendar Quarter in which the respective sale of the Products
occurs.
Section
3.6 Payment
of Sales, Use and Other Taxes.
ATHLON
shall be responsible for all sales, use, stamp duty, transfer, value added
and
other related or similar Taxes, if any, arising out of the assignment of the
Inventory by ATHLON of the Licensed Assets to LICENSEE pursuant to this
Agreement or payable in connection with the transactions contemplated
hereby.
9
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF ATHLON
ATHLON
represents and warrants to LICENSEE, as follows:
Section
4.1 Organization.
ATHLON
is a corporation duly organized, validly existing and in good standing under
the
laws of the state of its incorporation and has all requisite power and authority
to own the Licensed Assets.
Section
4.2 Authority
of ATHLON.
ATHLON
has all necessary power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby. ATHLON has taken all action required
by Law, its certificate of incorporation, bylaws or otherwise to be taken by
it
to authorize the execution and delivery of this Agreement by ATHLON and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by ATHLON and, when duly authorized,
executed and delivered by LICENSEE, will constitute a legal, valid and binding
obligation of ATHLON enforceable against it in accordance with its terms except
as limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally.
Section
4.3 Consents
and Approvals.
Except
as set forth on Schedule
4.3,
no
consents, waivers, approvals, Orders or authorizations of, or registrations,
declarations or filings with, any Governmental or Regulatory Authority, or
by
any customer, supplier or other third party, are required by or with respect
to
ATHLON in connection with the execution and delivery of this Agreement by ATHLON
or the performance of its obligations hereunder, except for such consents,
waivers, approvals, Orders or authorizations the failure to obtain which, and
such registrations, declarations or filings the failure to make which, would
not
have a material adverse effect or materially impair or delay ATHLON’s ability to
perform its obligations hereunder.
Section
4.4 Non-Contravention.
Except
as set forth on Schedule 4.4, the execution and delivery by ATHLON of this
Agreement does not, and the performance by it of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict
with or result in a violation or breach of any of the terms, conditions or
provisions of the articles of incorporation, bylaws, or other organizational
documents of ATHLON, other than such conflicts, violations or breaches as would
not have a material adverse effect;
(b) conflict
with or result in a violation or breach of any term or provision of any Law
applicable to ATHLON, the Products or the Licensed Assets, other than such
conflicts, violations or breaches as would not have a material adverse effect;
or
(c) conflict
with or result in a breach or default (or an event which, with notice or lapse
of time or both, would constitute a breach or default) under, or result in
the
termination or cancellation of, or accelerate the performance required by,
or
result in the creation or
imposition of any security interest, lien or any other Encumbrance upon any
Contract to which ATHLON is a party or by which ATHLON or any of its assets
is
bound.
10
Section
4.5 Intellectual
Property Rights.
(a) ATHLON
owns all right, title and interest in and to, and is legally entitled to license
to LICENSEE, all of the Product Intellectual Property free and clear of all
Encumbrances.
(b) Neither
the Product Intellectual Property, the use of Product Intellectual Property
nor
the Products, infringe or misappropriate the intellectual property rights of
any
third party, and ATHLON has not received any written notice from any Person
of
any claims of infringement or misappropriation with respect thereto.
(c) All
trademarks included in the Product Intellectual Property, if any, are the
subject of current registrations. There are no third-party rights in ATHLON’s
current registrations relating to the Product Trademarks. There is not any
prior
use, infringement, piracy or counterfeiting of such Product Trademarks, any
superior rights by any third party in such Product Trademarks, or any adverse
claims pertaining to such Product Trademarks.
Section
4.6 Litigation.
There
are no Actions or Proceedings pending, threatened or reasonably anticipated
against ATHLON or its Affiliates that relate to (a) the Licensed Assets or
the
Products; (b) this Agreement; or (c) the transactions contemplated by this
Agreement. ATHLON is not subject to any Order that could reasonably be expected
to materially impair or delay the ability of ATHLON to perform its obligations
hereunder.
Section
4.7 Compliance
with Law.
To the
best knowledge of ATHLON, ATHLON has been in compliance with all applicable
Laws
with respect to the Products, and ATHLON has not received any written notice
alleging any violation of such Laws, and is unaware of any bases for the
foregoing.
Section
4.8 Title
to Licensed Assets.
Except
as set forth on Schedule
4.8,
ATHLON
has good and marketable title to the Licensed Assets free and clear of any
Encumbrances. ATHLON has the legal right and ability to license the Licensed
Assets to LICENSEE.
Section
4.9 Brokers.
ATHLON
has not retained any broker in connection with the transactions contemplated
hereunder. LICENSEE has no, and will have no, obligation to pay any brokers,
finders, investment bankers, financial advisors or similar fees in connection
with this Agreement or the transactions contemplated hereby by reason of any
action taken by or on behalf of ATHLON.
Section
4.10 No
Non-Competition Agreements or Preferential Obligations.
The
Licensed Assets are not subject to any non-competition agreements with, or
other
stipulations, covenants, settlements, agreements or the like granting
preferential rights to purchase or license the Licensed Assets to, any third
Persons.
11
Section
4.11 Products
Not Subject of FDA Review.
To the
best knowledge of ATHLON, the Products are not, and have not been, either
directly or indirectly, the subject of any FDA Form 483 inspections within
the
thirty-six (36) months prior to the date of this Agreement and, to the best
knowledge of ATHLON, no FDA correspondence exists regarding adverse findings,
warning letters, the regulatory or manufacturing status of the Products or
other
written correspondence.
Section
4.12 Inventory.
All
Inventory assigned to LICENSEE pursuant to Section 6.7 hereto was manufactured,
packaged, labeled, tested, stored and handled, at all times, in compliance
with
the written specifications for the Product and in compliance with all current
Good Manufacturing Practices as defined under 21 U.S.C. 351(a)(2)(B) as in
effect from time to time, and is undamaged, merchantable and fit for its
intended purpose and at the Closing or such other delivery date such Inventory
will be of saleable quality and will not be adulterated or misbranded within
the
meaning of any Law. LICENSEE shall receive good and marketable title, and
certificates of analysis, to all raw materials and Inventory acquired by
LICENSEE hereunder, if any.
Section
4.13 Trade
Inventories.
To the
best of ATHLON’s knowledge, the Wholesale Reports are true, complete
and accurate. Any trade and trade customer inventory for any Product,
other than Levall 12 Trade and Levall G Trade, represents no more than
forty-five (45) days of inventory. Trade and trade customer inventory for
any Levall 12 Trade and Levall G Trade represents no more than one
hundred twenty (120) days of inventory and sixty (60) days of inventory,
respectively. ATHLON represents and warrants that McKesson, Cardinal and
Amerisource Bergen account for over ninety percent (90%) of the Products’
revenues for the last twelve (12) months. ATHLON further represents and
warrants that its sales or load in the trade and trade customer channels over
the sixty (60) days prior the date hereof have been in the ordinary course
of
business in that ATHLON’s Products’ sales during this sixty (60) days period
shall not significantly impact revenues for LICENSEE, in the ordinary course
of
business, during the period sixty (60) days after the day of this
agreement. ATHLON further represents and warrants that ATHLON shall not
sell or load any Product into the wholesale trade or trade customer channels,
or
fill any purchase orders from any customers, after date hereof without
LICENSEE’s written consent; provided however, LICENSEE shall not unreasonably
withhold such consent.
Section
4.14 Sufficiency
Of Assets.
The
Licensed Assets and the licenses granted hereunder, together with the services
to be provided under the Operations Agreement for the generic business, are
sufficient in all material respects on the date hereof and at the time of the
Closing to sell and distribute the Products in the Territory in the manner
sold
and distributed by ATHLON and its Affiliates on the date hereof and immediately
prior to the time of the Closing.
Section
4.15 Representations with respect to the acquisition of LICENSEE’s
shares:
(a) Purchase
Entirely for Own Account.
This
Agreement is made with ATHLON in reliance upon such ATHLON’s representation to
LICENSEE, which by ATHLON’s execution of this Agreement ATHLON hereby confirms,
that the Shares to be received by ATHLON will be acquired for investment for
ATHLON’s own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part thereof,
and that ATHLON has no present intention of selling, granting any participation
in, or otherwise distributing the same. By executing this Agreement, ATHLON
further represents that ATHLON does not have any contract, undertaking,
agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third person, with respect to any of
the
Shares.
12
(b) Disclosure
of Information.
ATHLON
believes it has received all the information it considers necessary or
appropriate for deciding whether to purchase the Shares. ATHLON further
represents that it has had an opportunity to ask questions and receive answers
from the LICENSEE regarding the terms and conditions of the offering of the
Shares and the business, properties, prospects and financial condition of the
Company.
(c) Investment
Experience.
ATHLON
has experience as an investor in securities of companies in the development
stage and acknowledges that it is able to fend for itself, can bear the economic
risk of its investment, and has such knowledge and experience in financial
or
business matters that it is capable of evaluating the merits and risks of the
investment in the Shares. ATHLON further represents it has not been organized
for the purpose of acquiring the Shares.
(d) Accredited
Investor.
ATHLON
is an “accredited investor” within the meaning of Securities and Exchange
Commission (“SEC”) Rule 501 of Regulation D, as presently in
effect.
(e) Restricted
Securities.
ATHLON
understands that the Shares it is purchasing are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Act, only in certain limited circumstances. In this
connection, ATHLON represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby
and
by the Act.
(f) Legends.
It is
understood that the certificates evidencing the Shares may bear one or all
of
the following or similar legends:
“These
securities have not been registered under the Securities Act of 1933, as
amended. They may not be sold, offered for sale, pledged or hypothecated in
the
absence of a registration statement in effect with respect to the securities
under such Act or an opinion of counsel satisfactory to the Company that such
registration is not required or unless sold pursuant to Rule 144 of such
Act.”
Section
4.16 Non-Competition.
ATHLON
shall not, and shall not assist any third party to, develop, market, sell or
distribute any generic equivalent of any of the Products.
Section
4.17 Exclusive
Representations and Warranties.
EXCEPT
AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ATHLON MAKES NO REPRESENTATION OR
WARRANTY WITH RESPECT TO THIS AGREEMENT, THE LICENSED ASSETS OR THE PRODUCTS,
EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR
OTHERWISE, AND ATHLON SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY
WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE AND WARRANTY OF NON-INFRINGEMENT.
13
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF LICENSEE
LICENSEE
represents and warrants to ATHLON as follows:
Section
5.1 Organization.
LICENSEE
is a corporation duly organized, validly existing and in good standing under
the
laws of the state of its incorporation and has all requisite power and authority
to own its assets and carry on its business as currently conducted by it.
Section
5.2 Authority
of LICENSEE.
LICENSEE
has all necessary power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby. LICENSEE has taken all action required
by Law, its organizational documents, or otherwise to be taken by it to
authorize the execution and delivery of this Agreement by LICENSEE and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by LICENSEE and, when duly authorized,
executed and delivered by ATHLON, will constitute a legal, valid and binding
obligation of LICENSEE enforceable against it in accordance with its terms
except as limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally.
Section
5.3 Consents
and Approvals.
No
consents, waivers, approvals, Orders or authorizations of, or registrations,
declarations or filings with, any Governmental or Regulatory Authority are
required by LICENSEE in connection with the execution and delivery of this
Agreement by LICENSEE or the performance of its obligations
hereunder.
Section
5.4 Non-Contravention.
The
execution and delivery by LICENSEE of this Agreement does not, and the
performance by it of its obligations under this Agreement and the consummation
of the transactions contemplated hereby will not:
(a) conflict
with or result in a violation or breach of any of the terms, conditions or
provisions of the articles of incorporation, bylaws or other organizational
documents of LICENSEE;
(b) conflict
with or result in a violation or breach of any term or provision of any Law
applicable to LICENSEE; or
(c) conflict
with or result in a breach or default (or an event which, with notice or lapse
of time or both, would constitute a breach or default) under, or result in
the
termination or cancellation of, or accelerate the performance required by,
or
result in the creation or imposition of any security interest, lien or any
other
Encumbrance upon any Contract to which LICENSEE is a party or by which LICENSEE
or any of its assets is bound.
14
Section
5.5 Litigation.
There
are no Actions or Proceedings pending or, to the knowledge of LICENSEE
threatened or reasonably anticipated against LICENSEE which if adversely
determined would delay the ability of LICENSEE to perform its obligations
hereunder.
Section
5.6 Brokers.
LICENSEE
has not retained any broker in connection with the transactions contemplated
hereunder. ATHLON has no, and will have no, obligation to pay any brokers,
finders, investment bankers, financial advisors or similar fees in connection
with this Agreement or the transactions contemplated hereby by reason of any
action taken by or on behalf of LICENSEE.
ARTICLE
VI
OTHER
AGREEMENTS OF THE PARTIES
Section
6.1 Returns,
Chargebacks, Rebates.
The
Parties agree that from the Closing Date until December 31, 2006, ATHLON shall
be responsible for any and all returns, chargeback claims and rebate claims
made
in connection with Products which were sold by ATHLON prior to the Closing
Date
and that LICENSEE shall be responsible for any and all other returns, chargeback
claims and rebate claims made in connection with Products.
To
the
extent that LICENSEE issues credits following the Closing Date relating to
returns, chargebacks or rebates for Products which were sold by ATHLON prior
to
the Closing Date and for which ATHLON is responsible, LICENSEE will deliver
to
ATHLON on a quarterly basis an invoice for the same, together with documentation
evidencing such returns, chargebacks or rebates, and the credits issued by
LICENSEE in connection with the same, and such amounts shall reduce the amount
of the Purchase Price to be delivered to ATHLON pursuant to Section 3.1(c)-(h).
ATHLON agrees to accept a reduction in Purchase Price payable from LICENSEE
for
any such credits based on the lesser of (x) the price which would be paid or
credited for such Products pursuant to LICENSEE’s return policy, or (y) in the
event that LICENSEE has made discretionary increases in the prices of such
Products following the Closing Date, such increased prices, provided that
LICENSEE provides ATHLON with sufficient documentation to reflect that the
credits issued by LICENSEE were issued at such increased prices.
The
Parties shall mutually agree on the timing and method of notifying applicable
federal agency customers and the Centers for Medicare and Medicaid Services
of
the license of the Licensed Assets to LICENSEE, and shall take whatever action
is necessary to simultaneously add Products to LICENSEE’s federal supply
schedule and Medicaid rebate agreement, if applicable, and delete Products
from
the federal supply schedule and Medicaid rebate agreement of ATHLON as
applicable. ATHLON shall be responsible for the processing and payment of
Medicaid and Medicare rebates applicable to sales of Products made by ATHLON
and
submitted under ATHLON’s Products NDC numbers as set forth on Schedule
6.1
and any
other rebates, charge backs or similar payments owed to a third party for such
products from the Closing Date until December 31, 2006. After such period,
ATHLON shall process and pay Medicaid and Medicare rebates submitted under
ATHLON’s Products NDC as set forth on Schedule 6.1 and any other rebates, charge
backs or similar payments owed to a third party, but LICENSEE shall be
responsible for reimbursing ATHLON for all such rebates, charge backs and
similar payments until
one
(1) year after the last lot expiration date of Products labeled with ATHLON’s
Products NDC. ATHLON will invoice LICENSEE for such rebates, charge backs,
and
similar payments and LICENSEE shall pay ATHLON for such rebates, charge backs,
and similar payments within forty-five (45) days following the date of any
such
invoice; provided, however, that if any such amounts are disputed by LICENSEE,
then all undisputed amounts shall be paid in such forty-five (45) day period
and
the parties shall use good faith efforts to resolve any such dispute. Each
invoice will be submitted to LICENSEE with the documents supporting such
invoices.
15
Section
6.2 Termination
Upon Bankruptcy.
Until
such time as ATHLON has received Ten Million and No/100 Dollars ($10,000,000.00)
in Consideration under this Agreement, in the event that LICENSEE files for
or
is forced into any receivership or bankruptcy proceeding at any time prior
to
the third anniversary of this Agreement, and such proceeding is not dismissed
within ninety (90) days of its commencement, the license granted hereunder
related to the Licensed Assets shall automatically be revoked and all
obligations of ATHLON shall immediately terminate. For purposes of this Section
6.2, “Consideration” shall mean the payments set forth in Article III. herein,
except that LICENSEE stock shall only be included in the $10,000,000 figure
(i)
to the extent such stock is freely tradable (at the value on the date such
stock
is freely tradable), or (ii) at the liquidation value to the extent such stock
is liquidated by ATHLON prior to the time that the LICENSEE stock is freely
tradable, whichever occurs first.
Section
6.3 License
for Use of Levall Trademark.
The
Parties agree and acknowledge that the Levall Trademark shall not be conveyed
by
ATHLON to LICENSEE in connection with this Agreement or the Contemplated
Transactions but, rather, ATHLON shall continue to own the Levall Trademark
and
all other Product Intellectual Property following the Closing Date. ATHLON
acknowledges that use of the Levall Trademark is necessary for the marketing
and
sale of the Products licensed to LICENSEE hereunder and, therefore, ATHLON
agrees to grant to LICENSEE on the Closing Date an exclusive, even as to ATHLON,
license to use the Levall Trademark in connection with LICENSEE’s marketing and
sales of the Products following the Closing Date, and for use in connection
with
any reformulation of the Products or further expansion of the Levall product
line which LICENSEE may develop or undertake following the Closing
Date.
Section
6.4 Complaints,
Adverse Events and Recalls.
LICENSEE shall maintain, or cause to be maintained, all complaint files and
other records required to be maintained by the FDA and other regulatory agencies
with respect to Product. ATHLON shall promptly provide to LICENSEE copies of
all
complaints received or
other
information regarding a Product which it would be required under applicable
Law
to disclose to a Regulatory Agency
with
respect to the Product that it may receive, if any. LICENSEE shall promptly
provide ATHLON with copies of any complaints relating to the Product received
by
LICENSEE
or other
information regarding a Product which it would be required under applicable
Law
to disclose to a Regulatory Agency.
In
addition, the Parties shall promptly communicate to the other any serious
adverse event related to the Products as specified in Title 21 Code of Federal
Regulations Part 314.80 relating to the Products within one (1) Business Day.
LICENSEE, except where its required by law to submit directly to the FDA, shall
submit in a timely manner to ATHLON for submission to the FDA, all information
about the Product required to be submitted to the FDA including but not limited
to, reports
of complaints, malfunctions, failures or deterioration in the characteristics
or
performance or instructions for use or inadequacy in labeling which may cause
or
caused death, injury or other event which could reasonably lead to legal action
against LICENSEE. Each
Party shall provide to the other Party all available follow-up information
related to any such complaint, information or incident (including any
information in such Party’s possession as may be reasonably required by the
other Party to satisfy its regulatory filing obligations). LICENSEE shall
coordinate any recalls of Products which occur within the Territory after the
Closing Date.
16
Section
6.5 Manufacturing.
LICENSEE shall use commercially reasonable efforts to cause the manufacturing
of
the Products to comply with all GMP requirements. LICENSEE shall notify ATHLON
of any citations from discussions with a regulatory body where such discussions
and citations relate to a material aspect of GMP compliance.
Section
6.6 Registration
Rights.
Within
one hundred twenty (120) days after the Closing Date, LICENSEE agrees
to file a Form SB-2 registration statement with the SEC which shall
include the Shares issued to ATHLON pursuant to Section 3 hereof (the
“Registration”). The Shares shall be included in the first Form SB-2 filed by
LICENSEE within the above-referenced one hundred twenty (120) day
period.
Section
6.7 Inventory.
ATHLON
shall
assign, at no cost to LICENSEE,
all
existing Inventory.
ARTICLE
VII
COVENANTS
OF THE PARTIES
Section
7.1 Cooperation.
Each
Party shall reasonably cooperate with the other in preparing and filing all
notices, applications, submissions, reports and other instruments and documents
that are necessary, proper or advisable under applicable Laws to consummate
and
make effective the transactions contemplated by this Agreement, including
ATHLON’s reasonable cooperation in the efforts of LICENSEE to obtain any
consents and approvals of any Governmental or Regulatory Authority required
for
LICENSEE to be able to sell the Products.
Each
Party shall reasonably cooperate with the other to continue all manufacturer,
vendor, repackager and governmental relationships and any other relationships
necessary for the sale of the Products by the LICENSEE.
Section
7.2 Regulatory
Covenants.
From and
after the Closing Date, but consistent with Section 7.1 hereof, LICENSEE, at
its
cost, shall be solely responsible and liable for directing and controlling
all
regulatory and Product development issues for the Licensed Assets.
Section
7.3 Use
of
Sales Representatives.
Upon
the
first (1st)
anniversary of the Closing Date, LICENSEE shall have employed at least fifty
(50) sales representatives assigned to actively detail the Products to
physicians in the Territory (the “Minimum Promotion Commitment”). The
Minimum Promotion Commitment, for each of the three (3) twelve (12) month
periods following the first (1st)
anniversary of the Closing Date, will be calculated by adding the total number
of sales representatives assigned to actively detail the Products to physicians
in the
Territory at the end of each month during each twelve (12) month period and
then
dividing that sum by twelve (12).
17
Section
7.4 Further
Assurances.
On and
after the Closing Date, ATHLON shall from time to time, at the request of
LICENSEE, execute and deliver, or cause to be executed and delivered, such
other
instruments of conveyance and transfer and take such other actions as LICENSEE
may reasonably request, in order to more effectively consummate the transactions
contemplated hereby and to vest in LICENSEE good and marketable title to the
Licensed Assets (including assistance in the collection or reduction to
possession of any of the Licensed Assets).
Section
7.5 Indemnification.
(a) By
ATHLON.
ATHLON
shall indemnify, reimburse, and hold harmless LICENSEE, its Affiliates, and
their respective officers, directors, employees, agents, successors and assigns
from and against any and all costs, losses, Liabilities, Damages, pending,
threatened or concluded lawsuits, deficiencies, claims and expenses (including
reasonable fees and disbursements of attorneys) (collectively, the “Damages”)
to the
extent such Damages are incurred in connection with or arise out of (i) any
breach of any covenant or agreement of ATHLON herein; (ii) the breach of any
representation or warranty made by ATHLON in this Agreement (without regard
to
materiality qualifiers contained in such representations or warranties); (iii)
the negligence or willful misconduct of ATHLON, its employees, agents or
contractors; and (iv) Liabilities related to the Products or Licensed Assets
incurred prior to the Closing Date.
(b) By
LICENSEE.
LICENSEE shall indemnify, reimburse, and hold harmless ATHLON, its Affiliates
and their respective officers, directors, employees, agents, successors and
assigns from and against any and all Damages to the extent such Damages are
incurred in connection with or arise out of (i) any breach of any covenant
or
agreement of LICENSEE herein; (ii) the negligence or willful misconduct of
LICENSEE, its employees, agents or contractors (other than ATHLON); (iii) the
breach of any representation or warranty made by LICENSEE in this Agreement
(without regard to materiality qualifiers contained in such representations
or
warranties); and (iv) Liabilities related to the Products or Licensed Assets
incurred after the Closing Date.
(c) Damages
Net of Insurance; Limitations on Liability.
The
amount of any Damages for which indemnification is provided under this Section
7.5 shall be net of any amounts recovered by the indemnified party under
insurance policies with respect to such Damages except to the extent such
recovered amounts are from such Party’s or its Affiliates’ self insurance
programs. IN
NO
EVENT SHALL ANY PARTY BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), NO MATTER HOW
SUCH
DAMAGES OR LOST PROFITS ARE INCURRED INCLUDING A PARTY’S, OR ITS EMPLOYEES’,
AGENTS’ OR CONTRACTORS’ NEGLIGENCE, EXCEPT TO THE EXTENT THAT ANY SUCH DAMAGES
OR LOST PROFITS ARE INCURRED BY ANY THIRD PARTY FOR WHICH SUCH PARTY HAS AN
OBLIGATION TO INDEMNIFY HEREUNDER.
18
(d) Time
Limitations.
Neither
Party will have Liability (for indemnification or otherwise) with respect to
claims of breach of any representation, warranty or covenant, contained in
this
Agreement unless on or before the first (1st)
anniversary of the Closing Date (with respect to breaches of representations
or
warranties) or of the breach of the relevant covenant (with respect to breaches
of covenant), the otherwise liable Party is notified by the other Party of
a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known. Any time limitations herein do not apply to payments due
to
ATHLON pursuant to Article III of this Agreement.
(e) Limitations
on Amount.
ATHLON
will have no Liability for indemnification pursuant to Section 7.5(a)(i), (ii),
(iii) and (iv) in excess of One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00), except to the extent such Liability was caused by fraudulent
or
criminal conduct. LICENSEE will have no Liability for indemnification pursuant
to Section 7.5(b)(i), (ii), (iii) and (iv) in excess of One Million Five Hundred
Thousand and No/100 Dollars ($1,500,000.00), except to the extent such Liability
was caused by fraudulent or criminal conduct. In addition, neither Party shall
have Liability for Damages pursuant to Section 7.5(a)(i), (ii), (iii) and/or
(iv) in the case of ATHLON, and pursuant to Section 7.5(b)(i), (ii), (iii)
and/or (iv) in the case of LICENSEE, until Damages exceed Fifty Thousand and
No/100 Dollars ($50,000.00) in the aggregate, at which time such Party shall
be
liable only for all Damages in excess of Fifty Thousand and No/100 Dollars
($50,000.00). Notwithstanding the foregoing, any limitations on amount herein
do
not apply to (1) payments due to ATHLON pursuant to Article III of this
Agreement, (2) Liabilities related to the Products or Licensed Assets
arising as a result of acts or omissions that occurred prior to the Closing
Date, or (3) Liabilities arising as a result of a breach of Sections 4.3,
4.5, 4.11 or 4.16.
(f) Procedure
for Indemnification - Third Party Claims.
Promptly after receipt by an indemnified party under Section 7.5(a) or 7.5(b)
of
notice of commencement of any proceeding against it by a third party (not a
Party or Affiliate of a Party), such indemnified party will, if a claim is
to be
made against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim. The failure to notify
the
indemnifying party within thirty (30) days of receipt of notice of the third
party claim will relieve the indemnifying party of any liability that it may
have to any indemnified party with respect to such claim only to the extent
indemnifying party is actually prejudiced by the failure to provide such timely
notice. If such notice is timely given, the indemnifying party will be entitled
to participate in such proceeding and, to the extent that it wishes, may assume
the defense of such proceeding with counsel satisfactory to the indemnified
party and, after notice from the indemnifying party to the indemnified party
of
its election to assume the defense of such proceeding, the indemnifying party
will not be liable to the indemnified party under this Article VII for any
fees
of other counsel or any other expenses with respect to the defense of such
proceeding incurred after such notice. If the indemnifying party assumes the
defense of the proceeding, (1) it will be conclusively established that for
purposes of this Agreement that the claims made in that proceeding are within
the scope of and subject to indemnification; and (2) no compromise or settlement
of such claims may be effected by the indemnifying party without the indemnified
party’s Consent unless (A) there is no finding or admission of any violation of
legal requirements or any violation of the rights of any Person and no effect
on
any other claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that
are
paid in full by the indemnifying party. If notice is given to an indemnifying
party of the commencement of any proceeding and the indemnifying party does
not,
within fifteen (15) days after the indemnified party’s notice is given, give
notice to the indemnified party of its election to assume the defense of such
proceeding, the indemnifying party will be bound by any determination made
in
such proceeding or any compromise or settlement effected by the indemnified
party, provided, however, that the indemnifying party is otherwise obligated
to
indemnify the indemnified party pursuant to this Section 7.5.
19
(g) Procedure
for Indemnification - Other Claims.
A claim
for indemnification for any matter not involving a third-party claim may be
asserted by notice to the Party from whom indemnification is sought.
Section
7.6 IP
Enforcement.
If
a
third party
infringes
any Product
Intellectual Property as
such
relates to the rights granted to LICENSEE
under
Article 2,
LICENSEE
shall
have the first right, but not the obligation, to institute and prosecute an
Action
or
Proceeding to
xxxxx
such infringement and to resolve such matter by settlement or
otherwise.
(a)
LICENSEE shall
notify ATHLON
of
its
intention to bring an Action
or
Proceeding prior
to
filing the same and in sufficient time to allow ATHLON
the
opportunity to discuss with LICENSEE
the
choice of counsel for such matter. LICENSEE
shall
keep ATHLON
timely
informed of material developments in the prosecution or settlement of such
Action
or
Proceeding.
LICENSEE
shall
be
responsible for all fees and expenses of any Action
or
Proceeding against
infringers which LICENSEE
initiates.
ATHLON
shall
cooperate fully at its expense by joining as a party
plaintiff
if reasonably requested to do so by LICENSEE
or
if
required to do so by law
to
maintain such Action
or
Proceeding and
by
executing and making available such documents as LICENSEE
may
reasonably request. ATHLON
may
be
represented by counsel in any such legal proceedings, at ATHLON's
own
expense.
(b)
If
LICENSEE
elects
not to exercise such first right, ATHLON
shall
have the right, at its discretion, to institute and prosecute an Action
or
Proceeding to
xxxxx
such infringement and to resolve such matter by settlement or otherwise.
LICENSEE
shall
cooperate fully by joining as a party
plaintiff
if reasonably requested to do so by ATHLON
or
if
required to do so by law
to
maintain such action and by executing and making available such documents as
ATHLON
may
reasonably request. LICENSEE
may
be
represented by counsel in any such action, at its own expense.
(c)
LICENSEE
Use Of Proceeds.
All
amounts of every kind and nature recovered from an Action or Proceeding of
infringement brought by LICENSEE shall belong to LICENSEE, and shall be used
first to reimburse LICENSEE and, if ATHLON was requested by LICENSEE, or
required by law, to join such Action or Proceeding, ATHLON for their respective
documented and actual costs of prosecution, including attorneys' fees, expert
fees and all other related expenses, and the balance shall thereafter be
considered Net Sales under this Agreement and subject to payments under Article
3.
(d)
ATHLON'S
Use Of Proceeds.
All
amounts of every kind and nature recovered from an Action or Proceeding of
infringement brought by ATHLON shall first be used to
reimburse ATHLON and LICENSEE for their documented and actual costs of
prosecution, and the balance shall belong to LICENSEE and be considered Net
Sales under this Agreement and subject to payments under Article 3.
20
Section
7.7 Patent
Prosecution.
LICENSEE shall be solely responsible for prosecuting and/or defending any and
all patents related to the Licensed Assets after the Closing.
Section
7.8 Governmental
Filings.
Each
Party will prepare and file whatever filings, requests or applications that
are
required to be filed with any Governmental or Regulatory Authority in connection
with the consummation of the transactions contemplated by this
Agreement.
Section
7.9 Bulk
Sales.
LICENSEE and ATHLON waive compliance with all bulk sales Laws applicable to
the
transactions contemplated by this Agreement.
ARTICLE
VIII
CONDITIONS
PRECEDENT TO LICENSEE’S OBLIGATION TO CLOSE
LICENSEE’s
obligation to license the Licensed Assets and to take the other actions required
to be taken by LICENSEE at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may
be
waived by LICENSEE, in whole or in part):
Section
8.1 Accuracy
of Representations.
All of
ATHLON’s representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the
date
of this Agreement, and shall be accurate in all material respects as of the
time
of the Closing as if then made.
Section
8.2 ATHLON’s
Performance.
All of
the covenants and obligations that ATHLON is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been duly performed and complied with in all material
respects.
Section
8.3 Consents.
Each of
the Consents identified on Schedule
8.3
shall
have been obtained and shall be in full force and effect.
Section
8.4 Additional
Documents.
ATHLON
shall have caused the documents and instruments required by Section 2.5(a)
and
the following documents to be delivered (or tendered subject only to Closing)
to
LICENSEE:
(a) Releases
of all Encumbrances on the Licensed Assets, if any;
(b) Such
other documents as LICENSEE may reasonably request for the purpose
of:
(i) evidencing
the accuracy of any of ATHLON’s representations and warranties;
21
(ii) evidencing
the performance by ATHLON, or the compliance by ATHLON with, any covenant or
obligation required to be performed or complied with by ATHLON;
(iii) evidencing
the satisfaction of any condition referred to in this Article 8;
(iv) describing
any issues or concerns to the knowledge of ATHLON regarding any ATHLON
manufacturer of the Products with respect to any Regulatory Agency;
or
(v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
Section
8.5 No
Proceedings.
Since
the date of this Agreement, there shall not have been commenced or threatened
against ATHLON, or against any Affiliate of ATHLON, any Action or Proceeding
(a)
involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated Transactions, or (b) that may have the effect
of
preventing, delaying, making illegal, imposing limitations or conditions on
or
otherwise interfering with any of the Contemplated Transactions, or (c) by
the
FDA, pending or threatened, against the Product, and ATHLON has no knowledge
of
any bases for any such Action or Proceeding.
Section
8.6 No
Conflict.
Neither
the consummation nor the performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time),
contravene or conflict with or result in a violation of or cause LICENSEE or
any
Affiliate of LICENSEE to suffer any adverse consequence under (a) any applicable
Law or Order or (b) any Law or Order that has been published, introduced or
otherwise proposed by or before any Governmental or Regulatory
Authority.
Section
8.7 Governmental
Authorizations.
LICENSEE shall have received such authorizations from any Governmental or
Regulatory Authority as are necessary or desirable to allow LICENSEE to continue
in the business of selling the Licensed Assets from and after the
Closing.
ARTICLE
IX
CONDITIONS
PRECEDENT TO ATHLON’S OBLIGATION TO CLOSE
ATHLON’s
obligation to sell the Licensed Assets and to take the other actions required
to
be taken by ATHLON at the Closing is subject to the satisfaction, at or prior
to
the Closing, of each of the following conditions (any of which may be waived
by
ATHLON in whole or in part):
Section
9.1 Accuracy
of Representations.
All of
LICENSEE’s representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material respects
as
of the date of this Agreement and shall be accurate in all material respects
as
of the time of the Closing as if then made.
22
Section
9.2 LICENSEE’s
Performance.
All of
the covenants and obligations that LICENSEE is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been performed and complied with in all material
respects.
Section
9.3 Consents.
Each of
the Consents identified in Schedule
9.3
shall
have been obtained and shall be in full force and effect.
Section
9.4 Additional
Documents.
LICENSEE shall have caused the documents and instruments required by Section
2.5(b) to be delivered (or tendered subject only to Closing) to ATHLON and
such
other documents as LICENSEE may reasonably request for the purpose
of:
(a) evidencing
the accuracy of any representation or warranty of LICENSEE;
(b) evidencing
the performance by LICENSEE of, or the compliance by LICENSEE with, any covenant
or obligation required to be performed or complied with by LICENSEE;
or
(c) evidencing
the satisfaction of any condition referred to in this
Article 8.
Section
9.5 No
Injunction.
There
shall not be in effect any Law or any injunction or other Order that (a)
prohibits the consummation of the Contemplated Transactions and (b) has been
adopted or issued, or has otherwise become effective, since the date of this
Agreement.
ARTICLE
X
TERMINATION
Section
10.1 Termination
Events.
Subject
to Section 10.2, this Agreement may be terminated as follows:
(a) by
LICENSEE if a material Breach of any material provision of this Agreement has
been committed by ATHLON and such Breach has not been cured within thirty (30)
days of notice (as provided for in Section 11.2) of such Breach or has not
been
waived by LICENSEE;
(b) by
ATHLON
if a material Breach of any material provision of this Agreement has been
committed by LICENSEE and such Breach has not been cured within thirty (30)
days
of notice (as provided for in Section 11.2) of such Breach or has not has not
been waived by ATHLON;
(c) by
LICENSEE if any condition in Article 8 has not been satisfied as of the date
specified for Closing in Section 2.4 or if satisfaction of such a condition
by
such date is or becomes
impossible (other than through the failure of LICENSEE to comply with its
obligations under this Agreement), and LICENSEE has not waived such condition
on
or before such date;
(d) by
ATHLON
if any condition in Article 9 has not been satisfied as of the date specified
for Closing Section 2.4 or if satisfaction of such a condition by such date
is
or becomes impossible (other than through the failure of ATHLON to comply with
its obligations under this Agreement), and ATHLON has not waived such condition
on or before such date; and
23
(e) by
mutual
consent of LICENSEE and ATHLON.
Section
10.2 Effect
of Termination.
Each
Party’s right of termination under Section 10.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of such
right of termination will not be an election of remedies. If this Agreement
is
terminated pursuant to Section 10.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 10.2 and Sections 10.3, 11.1 and 11.11 will survive, provided, however,
that, if this Agreement is terminated because of a Breach of this Agreement
by
the non-terminating party or because one or more of the conditions to the
terminating party’s obligations under this Agreement is not satisfied as a
result of the party’s failure to comply with its obligations under this
Agreement, the terminating party’s right to pursue all legal remedies will
survive such termination unimpaired.
Section
10.3 Remedy
For Breach By LICENSEE.
Notwithstanding any of the foregoing, upon
the
termination of this Agreement by ATHLON due to a breach of this Agreement by
LICENSEE which is not cured within the applicable cure period, the Licensed
Assets and all rights associated therewith shall revert to ATHLON. Furthermore,
ATHLON shall have the right to pursue any and all other remedies that it may
have pursuant to this Agreement.
ARTICLE
XI
MISCELLANEOUS
Section
11.1 Nondisclosure
Agreement.
The
Nondisclosure Agreement between the Parties, dated July 17, 2006 (the
“Nondisclosure Agreement”), is hereby incorporated herein by reference and shall
continue in full force and between the date of this Agreement and the Closing
Date. LICENSEE and ATHLON will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of LICENSEE and the ATHLON
to maintain in confidence, any written, oral, or other information obtained
in
confidence from one another in connection with this the Products, the Licensed
Assets, this Agreement or the Contemplated Transactions, unless (a) such
information is already known to such party or to others not bound by a duty
of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate
in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use
of
such information is required by legal proceedings. If the Contemplated
Transactions are not consummated, each party will return or destroy as much
of
such written information as the other party may reasonably request.
Section
11.2 Notices.
All
notices, requests and other communications hereunder must be in writing and
will
be deemed to have been duly given only if delivered personally against written
receipt or by facsimile transmission with answer back confirmation or mailed
(postage prepaid by certified or registered mail, return receipt requested)
or
by nationally recognized overnight courier that maintains records of delivery
to
the Parties at the following addresses or facsimile numbers:
24
If
to
LICENSEE to:
0000
Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
With
a
copy to:
Xxxxx
X.
Xxxxxxx
Xxxxxxx
& Associates
0000
Xxxxxxxx Xxxx
Xxxxx
Xxxx, XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If
to
ATHLON to:
ATHLON
Pharmaceuticals, Inc.
0000
Xxxxxxxxx Xxxx
Xxxxx
000
Xxxx
Xxxxxxx,
Xxxxxxxxxxx 00000
Attn:
Xxxxx Xxx Xxxx, Jr.
Telephone:
000-000-0000
Facsimile:
000-000-0000
With
a
copy to:
Xxxxxx
X.
Xxxxxx, III
Brunini,
Grantham, Grower & Xxxxx, PLLC
P.
O.
Drawer 119 (39205)
000
Xxxx
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxxx 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
All
such
notices, requests and other communications will (a) if delivered personally
to
the address as provided in this Section, be deemed given upon receipt, (b)
if
delivered by facsimile to
the
facsimile number as provided in this Section, be deemed given upon receipt
by
the sender of the answer back confirmation and (c) if delivered by mail in
the
manner described above or by overnight courier to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other Person
to
whom a copy of such notice, request or other communication is to be delivered
pursuant to this Section). Any Party from time to time may change its address,
facsimile number or other information for the purpose of notices to that Party
by giving notice specifying such change to the other Party hereto in accordance
with the terms of this Section.
25
Section
11.3 Entire
Agreement.
This
Agreement (and all Exhibits and Schedules attached hereto and all other
documents delivered in connection herewith) and the Confidentiality Agreement
supersede all prior discussions and agreements, both written and oral, among
the
Parties with respect to the subject matter hereof and contain the sole and
entire agreement among the Parties with respect to the subject matter
hereof.
Section
11.4 Waiver.
Any term
or condition of this Agreement may be waived at any time by the Party that
is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the Party
waiving such term or condition. No waiver by any Party of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement
or
by Law or otherwise afforded, will be cumulative and not
alternative.
Section
11.5 Amendment.
This
Agreement may be amended, supplemented or modified only by a written instrument
duly executed by each Party.
Section
11.6 Third
Party Beneficiaries.
Except
as otherwise expressly set forth herein, the terms and provisions of this
Agreement (and all Exhibits and Schedules attached hereto and all other
documents delivered in connection herewith) are intended solely for the benefit
of each Party and their respective successors or permitted assigns and it is
not
the intention of the Parties to confer third-party beneficiary rights or
remedies hereunder or thereunder upon any other Person.
Section
11.7 Assignment;
Binding Effect.
Neither
this Agreement nor any right, interest or obligation hereunder may be assigned
by any Party without the prior written consent of the other Party;
provided,
however,
that
either Party may assign its rights and obligations under this Agreement, without
the prior written consent of the other Party, to an Affiliate provided that
such
Affiliate agrees in writing to be bound by this Agreement. Such consent shall
not be unreasonably withheld or delayed. Any permitted assignee shall assume
all
obligations of its assignor under this Agreement.
Section
11.8 Headings.
The
headings used in this Agreement have been inserted for convenience of reference
only and do not define or limit the provisions hereof.
Section
11.9 Severability.
If any
provision of this Agreement is held to be illegal, invalid, or unenforceable
under present or future laws effective while this Agreement remains in
effect,
the legality, validity and enforceability of the remaining provisions will
not
be affected thereby.
Section
11.10 Governing
Law and Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Georgia applicable to contracts executed and performed in such state,
without giving effect to the conflicts of laws principles. Any Action or
Proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the Parties in the Courts
of the State of Georgia, or, if it has or can acquire jurisdiction, in a United
States District Court located in Georgia, and each of the Parties consents
to
the jurisdiction of such Courts (and of the appropriate appellate courts) in
any
such Action or Proceeding and waives to any objection to venue.
26
Section
11.11 Expenses.
Except
as otherwise provided in this Agreement, each Party shall pay its own expenses
and costs incidental to the preparation of this Agreement and to the
consummation of the transactions contemplated hereby.
Section
11.12 Counterparts.
This
Agreement may be executed in any number of counterparts and by facsimile, each
of which will be deemed an original, but all of which together will constitute
one and the same instrument.
[Remainder
of page intentionally left blank; signatures appear on the following
page.]
27
IN
WITNESS WHEREOF, this Agreement has been executed by the Parties hereto all
as
of the date first above written.
ATHLON
ATHLON
Pharmaceuticals, Inc.
By:/s/
Xxxxx Xxxx, Xx.
Name:
Xxxxx
Xxxx, Xx.
Title:
__President/CEO______________
LICENSEE
By:/s/
Xxxxxx X. Xxxxx
Name:
Xxxxxx
X. Xxxxx
Title:
Chairman
& CEO
28
Schedule
List
Schedule
4.3 Consents
and Approvals
Schedule
4.4 Non-Contravention
Schedule
4.8 Encumbrances
Schedule
6.1 Product
NDC Numbers
Schedule
8.3 Material
Consents
Schedule
9.3 Consents
Exhibits
Exhibit
2.3(b) Great
Southern Labs Assumption and Assignment Agreement
Exhibit
2.5(a)(i) Xxxx
of
Sale
