FIRST AMENDMENT
TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this "AMENDMENT") is made
this 2nd day of May, 2008 by and among (i) Amneal Pharmaceuticals of New York,
LLC, a Delaware limited liability company ("BUYER"), (ii) Interpharm Holdings,
Inc., a Delaware corporation, and Interpharm, Inc., a New York corporation
(collectively, "COMPANY"), and (iii) the shareholders of Company indicated as
"Majority Shareholders" on the signature pages hereto (the "MAJORITY
SHAREHOLDERS"). All capitalized terms used in this Amendment and not otherwise
defined in this Amendment shall have the respective meanings ascribed to them in
that certain Asset Purchase Agreement dated as of April 24, 2008 (the "PURCHASE
AGREEMENT") by and among the parties.
RECITALS:
WHEREAS, as an inducement not to exercise its termination rights pursuant
to Section 7.1(e) of the Purchase Agreement, Buyer requires that Company agree
to amend certain terms and conditions of the Purchase Agreement, all on the
terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. MODIFICATIONS OF PURCHASE AGREEMENT.
1.1 MODIFICATION OF PURCHASE PRICE AND BASE CASH AMOUNT. SECTION
2.5(A) of the Purchase Agreement is hereby deleted and replaced with the
following:
"(a) AMOUNT OF PURCHASE PRICE. In full and complete
consideration for the acquisition of the Acquired Assets, at the
Closing Buyer shall (i) pay to Company the sum of Sixty One Million Six
Hundred Thousand Dollars ($61,600,000.00) (the "BASE CASH AMOUNT"), as
adjusted pursuant to SECTION 2.6 below (the Base Cash Amount, as so
adjusted, the "CLOSING CASH AMOUNT"), (ii) deliver to the Escrow Agent
the Escrow Amount, and (iii) assume the Assumed Liabilities as set
forth in SECTION 2.3 hereof (clauses (i)-(iii) collectively, the
"PURCHASE PRICE")."
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1.2 MODIFICATIONS TO COMPANY INDEMNITY OBLIGATIONS. SECTION 8.1
of the Purchase Agreement is hereby modified to add the following new
subsections:
"(vii) all reasonable attorneys fees and disbursements or
other Losses incurred by Buyer and its Representatives in connection
with any pending litigation against the Acquired Assets or the Business
which is not set forth on SCHEDULE 2.3(C) (after giving effect to any
amendments to said schedule effected in accordance with SECTION
2.3(C)); provided, however, that in the event that there are more than
Two Hundred Thousand Dollars ($200,000) of attorneys' fee and
disbursements, no amount no amount in excess of Two Hundred Thousand
Dollars ($200,000) shall be released to Buyer therefor without
Company's written consent, which consent shall not be unreasonably
withheld; and in the event that Company reasonably withholds such
consent, then Company shall be obligated to provide, at Company's sold
cost and expense, legal counsel reasonably acceptable to Buyer to
represent Buyer in connection with any such pending litigation;
(viii) any failure by any Employee or IP Contractor who has
contributed to or participated in the conception and development of
Sellers Intellectual Property (that is not Licensed Intellectual
Property) on behalf of Sellers to either (A) be and have been a party
to an enforceable arrangement or agreement with Sellers in accordance
with applicable law that has accorded Sellers full, effective,
exclusive and original ownership of all tangible property and
Intellectual Property thereby arising, or (B) have executed appropriate
instruments of assignment in favor of Sellers as assignee that have
conveyed to Sellers effective and exclusive ownership of all tangible
property and Intellectual Property thereby arising;
(ix) any brokers fees, commissions or similar payments to
Xxxxxxx-Xxxxx Company of Long Island, Inc. or any its Affiliates with
respect to the sale of the Facility or otherwise;
(x) any failure by Company to pay costs, to the extent such
payment is required by SECTION 6.1(B) of the Purchase Agreement, to
remedy deficiencies which Buyer has notified Company (in accordance
with SECTION 6.1(B) of the Purchase Agreement) would be an impediment
to the transfer to Buyer of Company's Drug Enforcement Agency
controlled substances Permit; or
(xi) any costs of product recalls, which recalls occur within
one hundred eighty (180) days from the Closing Date, for product lots
which were manufactured prior to the Closing Date."
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1.3 ADDITIONAL COVENANTS. The Purchase Agreement is hereby
modified to add the following new SECTION 5.12:
"5.12. ADDITIONAL COVENANTS.
(a) Company shall, prior to Closing and at Company's sole
cost, cause each of Buyer and Amneal Pharmaceuticals, LLC to be added
as additional insureds to Company's tail insurance coverage.
(b) Company shall, not later than five (5) Business Days
prior to Closing, take such action as may be necessary to dismiss with
prejudice its first cause of action (titled 'RESCISSION OF CONTRACT DUE
TO FRAUDULENT MISREPRESENTATION/CONCEALMENT') in its complaint filed
November 2, 2007 in INTERPHARM, INC. X. XXXXXX LABORATORIES, INC.
(Index No: 0000-XX-00, X.X. Xxxxxxxx Xxxxx, Xxxxxxx Xxxxxxxx of New
York).
(c) Company shall, prior to Closing and at Company's sole
cost, remove all Materials of Environmental Concern (including, at the
request of Buyer, hormonal and controlled substances) from all Sellers
Real Property, except that for purposes of this Section 5.12(c) only,
Inventory shall not be deemed Materials of Economic Concern."
1.4 BASKET AND CEILING. Notwithstanding anything to the
contrary in the Purchase Agreement or this Amendment, Company's indemnification
obligations under clauses (vii) through (xi) of SECTION 8.1 and, to the extent
arising from a breach of SECTION 5.12 of the Purchase Agreement or Section 3 of
this Amendment, under clause (ii) of SECTION 8.1 shall be subject to the Basket
and the Ceiling.
1.5 EPA NOTICE OF VIOLATION. SECTION 6.2(Q) of the Purchase
Agreement is hereby amended to add the following at the end of the first
sentence:
"In the event that any violation raised by the U.S. Environmental
Protection Agency in such notice also exists as a condition at
any other Sellers Real Property, Company shall have resolved, to
Buyer's reasonable satisfaction, all such conditions at such
other Sellers Real Property."
1.6 INFORMATION STATEMENT; PUBLIC ANNOUNCEMENT; SEC FILINGS. The
first sentence of Section 5.10 of the Purchase Agreement shall be deleted and
replaced with the following:
"Not more than 17 calendar days after the Signing Date, Company
shall file with the SEC an Information Statement on Schedule 14C
(the "Information Statement") containing the information required
by the Exchange Act with respect to the Transaction Written
Consent and the
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transactions contemplated by this Agreement."
1.7 CERTAIN EMPLOYEE ARRANGEMENTS. SECTION 9.1(A) of the Purchase
Agreement shall be deleted and replaced with the following:
"Not less than fifteen (15) after the Signing Date, Buyer will
provide to Company a list identifying the number of the Employees
that will be offered employment (each, a "SPECIFIED EMPLOYEE") as
Buyer determines satisfy Buyer's needs and hiring criteria (which
shall be not less than fifty percent (50%) of Sellers'
employees). Prior to (but conditioned upon) the Closing, Buyer
shall offer each of the Specified Employees engagement or
employment with Buyer. Other than the Specified Employees, Buyer
shall have no obligation to engage or hire any Seller Employees."
1.8 AMENDMENT TO REAL ESTATE LEASE AGREEMENT. SECTION 9.5 of the
Purchase Agreement shall be deleted in its entirety.
1.9 CONDITIONS TO BUYER'S OBLIGATIONS - NO MATERIAL ADVERSE
EFFECT. SECTION 6.2(J) of the Purchase Agreement shall be deleted and replaced
with the following:
"(j) NO MATERIAL ADVERSE EFFECT. Since the date of
the Most Recent Balance Sheet , there shall not have been (i)
any change resulting in a Material Adverse Effect, or (ii) any
damage, destruction or loss affecting the assets, properties,
business, operations or condition of Company or any other
Seller or the Business, whether or not covered by insurance,
which could reasonably be expected to result in a Material
Adverse Effect, or (iii) any FDA Inspection which discloses
items that could reasonably be expected to materially and
adversely affect Buyer's ability to manufacture at the
Facility or sell one or more Products which, individually or
in the aggregate, have resulted in revenues to the Company of
in excess of $5 million in the twelve months prior to the
Closing and which have been FDA approved."
1.10 CONDITIONS TO BUYER'S OBLIGATIONS - TAX CLEARANCE
CERTIFICATES. Section 6.2(m) of the Purchase Agreement shall be deleted in its
entirety.
1.11 COVENANT - TAX CLEARANCE. The Purchase Agreement is hereby
modified to add the following new SECTION 5.13:
"5.13 TAX CLEARANCE CERTIFICATES. At Company's sole
expense, it shall use its best efforts to deliver to Buyer Tax
Clearance Certificates from the New York Department of
Taxation and Finance by the Closing, and, if not by such date,
as soon as practicable thereafter."
2. MODIFICATIONS TO SCHEDULES.
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2.1 MODIFICATIONS TO SCHEDULE 2.1(C). SCHEDULE 2.1(C) to the
Purchase Agreement is hereby amended to add all receivables or other payment
obligations owed to Company by Xxxxxx Health Products or its subsidiaries.
2.2 MODIFICATIONS TO SCHEDULE 2.3(C). SCHEDULE 2.3(C) to the
Purchase Agreement is hereby deleted in its entirety and replaced with Schedule
2.3(c) hereto.
2.3 ALLOCATION OF THE PURCHASE PRICE. SCHEDULE 2.7 to the
Purchase Agreement is hereby deleted and replaced with the following:
"Each of Company and Buyer covenants to endeavor to negotiate in good
faith and use its diligent efforts to reach mutual agreement on the
terms of this SCHEDULE 2.7 at least five (5) Business Days prior to the
Closing Date."
3. ADDITIONAL COVENANTS.
3.1 TRANSACTION WRITTEN CONSENT. On or before the date of signing
of this Amendment, the Company shall have delivered to Buyer executed copies of
(i) a binding written consent approving this Amendment and its execution and
delivery, and of Company's consummation of each of the transactions contemplated
hereby, signed by the holders of (A) a majority of the outstanding shares of the
Series A-1 Preferred Stock, (B) all of the outstanding shares of the Series D-1
Preferred Stock, and (C) a majority of the outstanding shares of the Common
Stock; and (ii) reasonable evidence as to the approval by Company's Board of
Directors of this Amendment and its execution and delivery, and of Company's
consummation of each of the transactions contemplated hereby.
3.2 REMEDIATION PLAN. Company shall deliver to Buyer, within two
(2) Business Days of the date of this Amendment, a plan for remediation of all
conditions that are required to be remedied under SECTION 6.2(Q) of the Purchase
Agreement for each of the Sellers Real Property, as amended by this Amendment
(the "REMEDIATION PLANS"). Buyer and Company shall each endeavor to negotiate in
good faith, within three (3)) Business Days after receipt by Buyer of the
Remediation Plans, any reasonable changes requested by Buyer to the Remediation
Plans. Upon the parties final agreement as to the Remediation Plans, it will be
annexed hereto as EXHIBIT A and Sellers' compliance with the Remediation Plans
shall be deemed to satisfy all of the conditions under SECTION 6.2(Q) of the
Purchase Agreement, as amended by this Amendment.
3.3 CONNECTION TO PUBLIC SEWERAGE SYSTEM. Company shall, within
two (2) days of the date of this Amendment, at its sole expense, deliver to
Buyer all materials (including, without limitation, correspondences, engineering
details, reports, plans, studies, and contact information to engineers and
attorneys retained and/or used by Company) with respect to or in connection with
the Company's analysis, efforts and ability to connect with the local sewage
system for the Facility. Buyer shall have until 5:00 p.m. Eastern time on May
16, 2008 to review said materials, contact the county and appropriate
municipalities and utility providers, retain and consult with in-house and third
party consultants, interview Company's engineering staff and its third party
consultants and attorneys (and Company shall, within such two (2) day period,
instruct such
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engineering staff, consultants and attorneys to openly discuss with Buyer and
its representatives all of such materials and their respective efforts and
analysis in connection with such sewerage system connection) to analyze and
assess Buyer's ability to obtain the applicable permits for such sewage system
connection, the timing thereof, capacity issues, and feasibility. In the event
that Buyer determines, in its reasonable discretion, that it will be unable to
obtain any such required permits, or that the sewage capacity required by Buyer
for maximum utilization of the Facility will be insufficient, or that the time
within which it can obtain such permits and construct the sewage system
connection is unacceptable to Buyer, then Buyer may terminate the Purchase
Agreement pursuant to Section 7.1(e) thereof (and solely for purposes hereof,
the Due Diligence Period shall be deemed to be extended to May 16, 2008 at 5:00
p.m. Eastern time).
4. MISCELLANEOUS. Except as amended pursuant to this Amendment, the
Purchase Agreement (including the Schedules and Exhibits thereto) remains in
effect in all respects. The provisions of Article X of the Purchase Agreement,
to the extent applicable, are hereby incorporated herein by reference.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Asset Purchase Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first written above.
BUYER:
AMNEAL PHARMACEUTICALS OF
NEW YORK, LLC
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Title: President & Managing
Member
COMPANY:
INTERPHARM HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: COO/CFO
INTERPHARM, INC.
By: /s/ Xxxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: COO/CFO
MAJORITY SHAREHOLDERS:
XXXXXX-XXXXXXXXX CAPITAL FOCUS
III, L.P.
By: Xxxxxx-Xxxxxxxxx Partners III,
L.L.C., its general partner
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Principal
MAJORITY SHAREHOLDERS (CONTINUED):
AISLING CAPITAL II, L.P.
By: AISLING CAPITAL PARTNERS, LP,
its General Partner
By: AISLING CAPITAL PARTNERS, LLC,
its General Partner
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Name: Title:
RAJS HOLDINGS I, LLC
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Manager
XXXXX HOLDINGS I, LLC
By: /s/ Xxxxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Manager
/s/ P&K HOLDINGS I, LLC
Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Manager
/s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
