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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 005-52501
WARNER CHILCOTT PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
Ireland N/A
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
Lincoln House, Lincoln Place, Dublin 2, Ireland
(Address of principal executive offices)
353 1 662-4962
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
American Depositary Shares, representing Ordinary Shares, par value $.05 each;
Ordinary Shares, par value $.05 each; 12,390,730 Ordinary Shares outstanding at
March 31, 2000.
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WARNER CHILCOTT PUBLIC LIMITED COMPANY
Table of Contents
Page No.
Item 6. Exhibits and Reports on Form 8-K 3
Signatures 4
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Item 6. Exhibits and Reports on Form 8-K
a. The following exhibits were filed as follows:
Exhibit No. Description
10.1 Asset Purchase Agreement between Warner
Chilcott, Inc. and Medicis Pharmaceutical
Corporation, dated September 14, 1999(1)
27 Financial Data Schedule(2)
b. Reports on Form 8-K:
No report was filed during the three months ended September
30, 1999.
(1) This exhibit is being refiled with this amendment. Confidential material
has been omitted from this exhibit and filed separately with the SEC pursuant to
a request for confidential treatment.
(2) This exhibit was filed with the Form 10-Q on November 9, 1999.
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
WARNER CHILCOTT PUBLIC LIMITED COMPANY
(Registrant)
April 27, 2000 /s/ Paul S. Herendeen
-----------------
Paul S. Herendeen
Executive Vice President &
Chief Financial Officer
(Principal Financial Officer)
April 27, 2000 /s/ David G. Kelly
-----------------
David G. Kelly
Group Vice President, Finance
(Principal Accounting Officer)
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EXHIBIT 10.1
REDACTED
ASSET PURCHASE AGREEMENT
BETWEEN
WARNER CHILCOTT, INC.
AND
MEDICIS PHARMACEUTICAL CORPORATION
Dated as of September 14, 1999
[REDACTED] Confidential treatment has been requested for certain portions of
this document which have been omitted and filed separately with the Secretary of
the Securities and Exchange Commission. Omitted portions are indicated by
[REDACTED].
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS......................................................................................................1
1.1 Definitions...........................................................................................1
ARTICLE 2 PURCHASE AND SALE OF ASSETS......................................................................................4
2.1 Assets to be Purchased................................................................................4
2.2 Assumption of Liabilities.............................................................................5
2.3 Purchase Price........................................................................................5
2.4 Contingent Payments...................................................................................5
2.5 Closing Transactions..................................................................................8
2.6 Right of Set-off.....................................................................................10
ARTICLE 3 CONDITIONS TO CLOSING...........................................................................................10
3.1 Conditions to Purchaser's Obligations................................................................10
3.2 Conditions to Seller's Obligations...................................................................11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER........................................................................12
4.1 Organization.........................................................................................12
4.2 Valid and Binding Agreements.........................................................................13
4.3 No Violation, Etc....................................................................................13
4.4 Consents and Approvals; Transfer.....................................................................13
4.5 Compliance with Law, Etc.............................................................................13
4.6 Title; Sufficiency of Purchased Assets...............................................................14
4.7 Intellectual Property................................................................................14
4.8 Litigation...........................................................................................16
4.9 Broker's or Finder's Fees............................................................................16
4.10 Power and Authority..................................................................................16
4.11 Absence of Certain Changes...........................................................................16
4.12 Assumed Contracts....................................................................................16
4.13 Suppliers and Customers..............................................................................16
4.14 Inventory............................................................................................16
4.15 Legal Compliance-Food and Drug Administration........................................................17
4.16 Product Liability....................................................................................18
4.17 Product Revenues.....................................................................................18
4.18 Limitations..........................................................................................18
4.19 Sale of Products in Puerto Rico......................................................................18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................................................................18
5.1 Organization.........................................................................................19
5.2 Valid and Binding Agreements.........................................................................19
5.3 No Violation, Etc....................................................................................19
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5.4 Consents and Approvals...............................................................................19
5.5 Brokers' or Finders' Fees............................................................................19
5.6 Funds................................................................................................19
ARTICLE 6 INDEMNIFICATION.................................................................................................20
6.1 Indemnification by Seller............................................................................20
6.2 Indemnification by Purchaser.........................................................................20
6.3 Procedures for Control of Third Party Claims.........................................................20
6.4 Survival of Representations and Warranties...........................................................21
6.5 Limits on Indemnification............................................................................21
6.6 Limitation of Consequential and Other Damages........................................................22
6.7 Assumption of Risk...................................................................................22
ARTICLE 7 COVENANTS.......................................................................................................22
7.1 Conduct of Business..................................................................................22
7.2 Regulatory Documents; Recordkeeping..................................................................23
7.3 Validation Costs.....................................................................................23
7.4 Assigned Trademarks..................................................................................23
7.5 Rebates; Chargebacks; Returns; Other Payments to Third Parties.......................................24
7.6 Third Party Consents.................................................................................24
7.7 Payments after Closing...............................................................................24
7.8 Government Consents..................................................................................24
7.9 Transitional License.................................................................................25
7.10 Insurance............................................................................................25
7.11 Access...............................................................................................25
7.12 Further Assurances...................................................................................25
7.13 Payment of Taxes.....................................................................................26
7.14 Noncompetition Agreement.............................................................................26
7.15 Termination of Legal Action..........................................................................26
7.16 Permits..............................................................................................27
7.17 UCC-3s...............................................................................................27
7.18 Inventory............................................................................................27
7.19 No Shop..............................................................................................27
ARTICLE 8 TERMINATION.....................................................................................................28
8.1 Termination of Agreement.............................................................................28
8.2 Effect of Termination................................................................................28
ARTICLE 9CONFIDENTIALITY..................................................................................................28
9.1 Confidential Information.............................................................................28
ARTICLE 10 GENERAL MATTERS................................................................................................29
10.1 Tax Matters..........................................................................................29
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10.2 Dispute Resolution...................................................................................30
10.3 Press Releases and Announcements.....................................................................30
10.4 Agency...............................................................................................30
10.5 Expenses.............................................................................................30
10.6 Amendment; Modification..............................................................................31
10.7 Waiver...............................................................................................31
10.8 Notices..............................................................................................31
10.9 Assignment...........................................................................................31
10.10 No Strict Construction...............................................................................32
10.11 Complete Agreement...................................................................................32
10.12 Governing Law........................................................................................32
10.13 Counterparts.........................................................................................32
10.14 Bulk Transfer Laws...................................................................................32
10.15 Severability.........................................................................................32
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EXHIBITS TO ASSET PURCHASE AGREEMENT
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Exhibit A -- Trademark Assignment (Section 2.5(b)(i))
Exhibit B -- Regulatory Assignment (Section 2.5(b)(ii))
Exhibit C -- Bill of Sale (Section 2.5(b)(iii))
Exhibit D -- Assignment and Assumption Agreement (Section 2.5(b)(iv))
Exhibit E -- Transition Services Agreement (Section 2.5(b)(v))
Exhibit F -- Release
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as
of September 14, 1999, by and between Warner Chilcott, Inc., a Delaware
corporation ("Seller"), and Medicis Pharmaceutical Corporation, a Delaware
corporation ("Purchaser").
WHEREAS, Seller owns all rights to the ANDAs filed with the FDA with
respect to the Products;
WHEREAS, on the terms and subject to the conditions set forth in this
Agreement, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain rights in and to the Products, including any
rights associated with Seller's pending ANDAs, and certain related assets and
Purchaser agrees to assume certain related obligations.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms listed
below shall have the following meanings:
"Affiliate" of a party means any individual, corporation, partnership,
limited liability company, association, trust, estate or other business entity
or organization controlled by, controlling or under common control with, such
party.
"ANDAs" means the Abbreviated New Drug Applications numbered 63-066 and
63-067 which were submitted to the FDA in order to obtain approval to market the
Products in the United States, together with all amendments, modifications,
supplements and updates thereto.
"Assigned Trademark" means the trademark Vectrin(R) U.S. Registration No.
2,096,055, the registration thereof and the goodwill associated therewith.
"Assumed Contracts" means the Manufacturing Agreement between Seller and
Oread, Inc., dated December 14, 1998 (the "Manufacturing Agreement").
"Business" means the development, manufacture, distribution, packaging,
testing, marketing and sale of the Products.
"Closing Date" has the meaning set forth in Section 2.5(a).
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"Closing Documents" has the meaning set forth in Section 2.5(b).
"Confidentiality Agreement" means the Confidentiality Agreement, dated as
of June 9, 1999, between Seller and Purchaser.
"Developing Products" means alternative forms of minocycline HCl,
including those set forth in Section 1.1 of the Disclosure Letter.
"Disclosure Letter" means the disclosure letter delivered by the Seller
to Purchaser concurrently with the execution and delivery of this Agreement.
"Existing Products" means 50 mg and 100mg minocycline HCl capsules under
the brand name Vectrin.
"FDA" means the United States Food and Drug Administration.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
as amended, and the rules and regulations thereunder.
"Inventory" means all (i) inventory of the Existing Products and New
Products (if any) that has been labeled and packaged for sale and conforms to
applicable Specifications including all sample and promotional inventory of
Existing Products and New Products; (ii) work in process, which includes filled
but unlabeled vials, capsules and batches not yet packaged; (iii) active
ingredients and dedicated raw materials including all bulk minocycline HCl on
hand; and (iv) packaging materials, which includes labels, inserts, cartons and
partitions.
"Know-how" means technical information and data related to the Developing
Products and the Products as set forth in the ANDAs.
"knowledge," when used in the phrase "to Seller's knowledge" shall mean,
and shall be limited to, the actual knowledge of any person employed by Seller
as of the date hereof and the actual and constructive knowledge of Seller's
executive officers.
"Material Adverse Effect" means a material adverse effect on the Products
or the Purchased Assets.
"Net Sales" means for the applicable period, the gross amount invoiced
for any Royalty Product by Purchaser, its Affiliates or either of their
licensees, to unaffiliated third parties, less amounts deducted on [REDACTED]:
(i) [REDACTED], (ii) [REDACTED], (iii) [REDACTED]; and (iv) [REDACTED].
"New Product" means the [REDACTED].
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"Payment Claims" means any and all claims and/or amounts due to third
parties, including, wholesalers, retailers, distributors, government buyers or
group purchasing organizations (whether by agreement, government mandate or
otherwise) that result or arise from rebate payments (e.g., Medicaid rebates),
chargebacks (i.e., refunds owed to wholesalers due to a decrease in the average
wholesale price), buy-againsts (i.e., reimbursements due to government customers
when such government customer is forced to buy substitute product from another
source at a higher price), returns, credits, price adjustments or other similar
payments with respect to the Products.
"Products" means the Existing Products and the New Product.
"Purchaser Indemnified Party" means Purchaser and its Affiliates,
directors, officers, employees, agents, consultants, advisors or other
representatives of such person including legal counsel, accountants and
financial advisors.
"Regulatory Documents" means all files regarding the ANDAs, including
correspondence, annual reports, adverse event reports and specifications, but
only copies of such files to the extent not exclusively related to the Products
or that Seller is required by law to retain the originals.
"Release" has the meaning set forth in Section 7.15.
"Royalty Products" means any [REDACTED] product sold by Purchaser, its
Affiliates or either of their licensees.
"Seller Indemnified Party" means Seller and its Affiliates, directors,
officers, employees, agents, consultants, advisors or other representatives of
such person including legal counsel, accountants and financial advisors.
"Specifications" means the manufacturing and quality specifications for
the Existing Products set forth in the ANDAs.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, franchise, capital,
paid-up capital, profits, greenmail, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount (whether or not disputed) imposed
by any governmental authority (domestic or foreign) responsible for the
imposition of any such tax or any amount of Tax to be collected on behalf of a
governmental authority.
"Transition Services Agreement" has the meaning set forth in Section
2.5(b).
"Warner Chilcott Trademarks" means the trademarks and trade names "Warner
Chilcott" and any other trademark, trade name, corporate or company name, or
service mark, in each
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case that incorporates the term "Warner Chilcott", including any abbreviations
and derivations of the term "Warner Chilcott", and all logos, designs, trade
dress and goodwill associated therewith.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Assets to be Purchased.
(a) Subject to the conditions specified in this Agreement, at the
Closing (as defined herein), Seller shall sell, assign and transfer to
Purchaser, and Purchaser shall buy from Seller, the following property, assets
and rights (collectively, the "Purchased Assets"):
(i) the Assigned Trademark and the goodwill associated
therewith;
(ii) all copyrights owned by Seller in the labels and
inserts used with the Products;
(iii) all Inventory owned by Seller as of the Closing Date;
(iv) the Know-how;
(v) all ANDAs;
(vi) all Regulatory Documents; and
(vii) all of Seller's rights under the Assumed Contracts.
(b) The Purchased Assets shall not include any assets other than
the assets specifically listed or described in Section 2.1(a). Notwithstanding
the definition of Purchased Assets set forth above, the following assets
(collectively, the "Excluded Assets") are expressly excluded from the purchase
and sale contemplated hereby and, as such, are not included in the Purchased
Assets and shall be retained by Seller:
(i) the Warner Chilcott Trademarks;
(ii) any refunds payable to Seller for Taxes of any nature paid
prior to the Closing Date; and
(iii) all cash, cash equivalents, trade and account receivables
and similar items of Seller accrued prior to the Closing Date, whether or
not the same may relate in whole or in part to the Products or the
manufacturing, marketing or sale thereof by Seller.
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2.2 Assumption of Liabilities. Subject to the terms of this
Agreement, at the Closing, Purchaser shall assume and agree to discharge and
perform, as and when due, all liabilities and obligations arising after the
Closing Date with respect to the Purchased Assets and the Products, including
performance of all obligations and payment of all costs and expenses accruing
after the Closing Date pursuant to the Assumed Contracts and Sections 7.2, 7.3,
7.7, 7.8 and 7.13 and payment of all costs and expenses for which Purchaser is
responsible pursuant to Section 7.5.
2.3 Purchase Price. The purchase price for the Purchased Assets
shall be $11 million in cash (the -------------- "Purchase Price").
2.4 Contingent Payments. In addition to the Purchase Price, in
consideration of the sale of the Purchased Assets to Purchaser, Purchaser shall
pay Seller the contingent payments set forth below:
(a) [REDACTED]
(b) [REDACTED]
(c) [REDACTED]
(d) Royalties. Commencing upon the Approval date and continuing
for [REDACTED] years from the Approval date, Purchaser shall pay Seller the
following royalties on Net Sales of Royalty Products:
(i) [REDACTED] of Net Sales on annual Net Sales less than
[REDACTED];
(ii) [REDACTED] of Net Sales on annual Net Sales equal to or
greater than [REDACTED] but less than [REDACTED];
(iii) [REDACTED] of Net Sales on annual Net Sales equal to or
greater than [REDACTED] but less than [REDACTED]; and
(iv) [REDACTED] of Net Sales on annual Net Sales equal to or
greater than [REDACTED].
(e) Payments; Report. Purchaser shall make payments due under
Section 2.4(c) within [REDACTED] days following the end of the Bonus Year such
payment was earned. Purchaser shall make all payments due under Section 2.4(d)
within [REDACTED] days following the end of each calendar quarter. All payments
pursuant to Sections 2.4(c) and (d) shall be accompanied by a report in writing
showing the calendar quarter or Bonus Year, as the case may be, for which such
payment applies, [REDACTED] the total payment due.
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(f) Payment; Currency. All payments by Purchaser to Seller under
this Agreement shall be made in United States dollars and shall be made by wire
transfer to a bank account designated in writing to Purchaser by Seller, and
except as expressly set forth above all such payments shall be non-refundable.
(g) Interest. Any late payments under this Agreement shall bear
interest at a rate of [REDACTED] (as defined in The Wall Street Journal
published on the date closest to the date payment was due). Such interest shall
be calculated from the date payment was due until the date Purchaser sends the
payment to Seller if Seller has not received such payment within [REDACTED] days
after the date such payment was due (the "Grace Period"). Seller shall use its
reasonable efforts to notify Purchaser of any payments owed to Seller that have
not been paid by the end of the Grace Period; provided, however, that Purchaser
acknowledges that Purchaser shall have no remedy in the event Seller fails to
provide such notice; provided further, that in the event Seller does not receive
a payment before the expiration of the Grace Period applicable to such payment,
and Purchaser is able to demonstrate that it made such payment in good faith
before the expiration of the Grace Period and that the failure of such payment
was through no fault of Purchaser, then Seller shall extend the Grace Period
until such time as it provides Purchaser with notice that such payment was not
received. Purchaser shall be responsible for and pay any and all costs,
including reasonable attorney's fees incurred by Seller in connection with
collecting past due amounts from Purchaser after the Grace Period.
(h) Books and Records; Audits. Purchaser shall maintain at its
office, accurate and complete books and records of its sales relating to the
Products consistent with customary business and accounting practices and in such
form and in such detail as to enable the amount of payments payable hereunder to
be determined. Commencing January 1, 2000, no more than once per year, Purchaser
shall permit Seller or any representative of a nationally recognized accounting
firm appointed by Seller or otherwise approved by Purchaser, at Seller's
expense, upon reasonable notice and during normal business hours, to examine
such books and records for the purposes of verifying Purchaser's reports and
accounting submitted to Seller hereunder and determining the correctness of
payments. The results of each such inspection shall be provided to Purchaser
upon completion thereof. In the event of any underpayment of any payment by at
least [REDACTED], the costs of such inspection shall be borne by Purchaser and
such underpayment shall be immediately due and payable to Seller by Purchaser
with interest specified in Section 2.4(g). In the event of any overpayment of
any payment by at least [REDACTED], such overpayment shall be immediately due
and payable to Purchaser by Seller, or subject to set-off pursuant to Section
2.6. Notwithstanding anything to the contrary contained in this Section 2.4(h),
neither party shall be liable for incorrect payments occurring more than two (2)
years prior to such examination.
2.5 Closing Transactions.
(a) Subject to the terms and conditions of this Agreement, the
transactions described in this Agreement shall be consummated (the "Closing") at
the offices of Kirkland & Ellis,
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153 E. 53rd Street, New York, NY 10022, 10:00 a.m. (local time), on the first
business day following the date on which the conditions to the Closing set forth
in Article 3 have been satisfied or waived, or at such other place, time or date
as Seller and Purchaser may agree. The date of the Closing is referred to herein
as the "Closing Date".
(b) At the Closing, the Seller shall execute and deliver to the
Purchaser the following agreements and instruments (collectively, the "Closing
Documents"):
(i) an assignment of Assigned Trademark, in substantially
the form attached hereto as Exhibit A (the "Trademark Assignment");
(ii) an assignment of the ANDAs in substantially the form
attached hereto as Exhibit B (the "Regulatory Assignment");
(iii) a bill of sale, in substantially the form attached
hereto as Exhibit C (the "Bill of Sale") transferring ownership of the Inventory
to Purchaser;
(iv) an assignment and assumption agreement, substantially
in the form attached hereto as Exhibit D (the "Assignment and Assumption
Agreement"), pursuant to which Seller assigns to Purchaser, Seller's right,
title and interest under the Assumed Contracts and Seller assumes Seller's
obligations thereunder;
(v) a transition services agreement, substantially in the
form attached hereto as Exhibit E (the "Transition Services Agreement"),
pursuant to which Seller shall provide to Purchaser certain services in
connection with the Products until January 31, 2000.
(vi) an opinion of Kirkland & Ellis, counsel to Seller
solely as to due incorporation, due authorization, execution, delivery and
enforceability.
(vii) a certificate of an executive officer of Seller
confirming the satisfaction of the conditions set forth in Section 3.1;
(viii) a certificate of the Secretary or an Assistant
Secretary of Seller certifying as to (A) Seller's charter documents, (B)
Seller's good standing, (C) the resolutions in which Seller's board of directors
approved this Agreement, the Closing Documents and the transactions contemplated
hereby and thereby, and (D) the incumbency of Seller's officers who execute any
documents on behalf of Seller in connection with this Agreement;
(ix) the Release;
(x) a consent executed by Oread, Inc. consenting to the
assignment by Seller to Purchaser of the Manufacturing Agreement; and
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(xi) a release from PNC Bank, National Association and
BankAmerica Business Credit Inc. substantially in the form of Exhibit F
hereto and the related UCC-3s.
(c) At the Closing, the Purchaser shall execute and/or
deliver to the Seller:
(i) by wire transfer to a bank designated by Seller, in
immediately available funds, an amount equal to the Purchase Price;
(ii) the Trademark Assignment;
(iii) the Regulatory Assignment;
(iv) the Bill of Sale;
(v) the Assignment and Assumption Agreement;
(vi) the Transition Services Agreement
(vii) a certificate of an executive officer of Purchaser
confirming the satisfaction of the conditions set forth in Section 3.2;
and
(viii) a certificate of the Secretary or an Assistant
Secretary of Purchaser certifying as to (A) Purchaser's charter
documents, (B) Purchaser's good standing, (C) the resolutions in which
Purchaser's board of directors approved this Agreement, the Closing
Documents and the transactions contemplated hereby and thereby, and (D)
the incumbency of Purchaser's officers who execute any documents on
behalf of Purchaser in connection with this Agreement.
2.6 Right of Set-off. Purchaser expressly reserves the right
to set-off any amounts due to Seller under this Agreement, including under
Section 2.4, by any material amounts due to Purchaser, if any, pursuant to
Article 6 or Sections 7.7 and 7.13.
ARTICLE 3
CONDITIONS TO CLOSING
3.1 Conditions to Purchaser's Obligations. The obligations of
the Purchaser under this Agreement are subject to the fulfillment, prior to or
on the Closing Date, of each of the following conditions, any of which may be
waived in whole or in part by the Purchaser as provided herein, except as
otherwise provided by law:
(a) Representations and Warranties of Seller to be True;
Performance by Seller.
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(i) The representations and warranties of the Seller
contained in this Agreement shall be true and correct in all material
respects as of the Closing Date with the same effect as though such
representations and warranties had been made or given again at and as of
the Closing Date, except for any representation or warranty expressly
stated to have been made or given as of a specified date, which, at the
Closing Date, shall be true and correct in all material respects as of
the date expressly stated.
(ii) The Seller shall have performed and complied in all
material respects with all of its agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior
to or at the Closing Date.
(b) Regulatory Consents; HSR. All notices to, and declarations,
registrations and filings with, and consents, approvals and waivers from,
and waiting periods required by, governmental and regulatory agencies
required to consummate the transactions contemplated hereby, shall have
been obtained. The waiting period required under the HSR Act, including
any extensions thereof, shall have expired and any investigations
relating to the sale hereunder that may have been opened by either the
United States Department of Justice or the United States Federal Trade
Commission by means of a request for additional information or otherwise
shall have terminated.
(c) No Proceeding or Litigation.
(i) No preliminary or permanent injunction or other order
shall have been issued by any court of competent jurisdiction, whether
federal, state or foreign, or by any governmental or regulatory body,
whether federal, state or foreign, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any
governmental authority, whether federal, state or foreign, which prevents
the consummation of the transactions contemplated in this Agreement.
(ii) No suit, action, proceeding or investigation before
any court, arbitrator or administrative, governmental or regulatory body,
whether federal, state or foreign, shall have been commenced and be
pending against the Seller, its Affiliates or any of their respective
associates, officers or directors seeking to prevent the sale of the
Purchased Assets or the Products or asserting that the sale of the
Purchased Assets or the Products would be illegal.
(d) No Material Adverse Change. Seller has not undergone any
Material Adverse Effect between the date hereof and the Closing Date.
(e) Notices. Seller shall have given all notices required to be
given to any persons prior to the consummation of the transactions
contemplated by this Agreement.
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(f) Deliveries. Seller shall have delivered to Purchaser the
documents required by Section 2.5, and fulfilled all of its obligations
pursuant to Section 7.14.
3.2 Conditions to Seller's Obligations. The obligations of the Seller
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions, any of which may be waived in whole
or in part by the Seller as provided herein, except as otherwise provided by
law:
(a) Representations and Warranties of Purchaser to be True;
Performance by Purchaser.
(i) The representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all material
respects as of the Closing Date with the same effect as though such
representations and warranties had been made or given again at and as of
the Closing Date, except for any representation or warranty expressly
stated to have been made or given as of a specified date, which, at the
Closing Date, shall be true and correct in all material respects as of
the date expressly stated.
(ii) The Purchaser shall have performed and complied in all
material respects with all of its agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior
to or at the Closing Date.
(b) Regulatory Consents; HSR. All notices to, and declarations,
filings and registrations with, and consents, approvals and waivers from, and
waiting periods required by, governmental and regulatory agencies required to
consummate the transactions contemplated hereby shall have been obtained
including the expiration of any waiting period under the HSR Act. The waiting
period required under the HSR Act, including any extensions thereof, shall have
expired and any investigations relating to the sale hereunder that may have been
opened by either the United States Department of Justice or the United States
Federal Trade Commission by means of a request for additional information or
otherwise shall have terminated.
(c) No Proceeding or Litigation.
(i) No preliminary or permanent injunction or other order
shall have been issued by any court of competent jurisdiction, whether
federal, state or foreign, or by any governmental or regulatory body,
whether federal, state or foreign, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any
governmental authority, whether federal, state or foreign, which prevents
the consummation of the transactions contemplated in this Agreement.
(ii) No suit, action, proceeding or investigation before
any court, arbitrator or administrative, governmental or regulatory body,
whether federal, state or foreign, shall have been commenced and be
pending against the Purchaser, its Affiliates or
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any of their respective associates, officers or directors seeking to
prevent the sale of the Purchased Assets or the Products or asserting
that the sale of the Purchased Assets or the Products would be illegal.
(d) Deliveries. Purchaser shall have delivered to Seller
the documents required by Section 2.5.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement
and consummate the transactions contemplated herein,
Seller represents and warrants to Purchaser that:
4.1 Organization. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation.
Seller is duly qualified or licensed as a foreign corporation in each
jurisdiction in which the nature of the Business makes such qualification or
licensing necessary, except those jurisdictions where the failure to so qualify
would not have a Material Adverse Effect.
4.2 Valid and Binding Agreements. The board of directors of Seller has
approved the consummation of the transactions contemplated hereby and by the
Closing Documents and no further corporate proceedings on the part of Seller are
necessary to consummate the transactions contemplated herein or therein. This
Agreement has been, and on the Closing Date each of the Closing Documents shall
be, duly and validly executed and delivered by Seller or its applicable
Affiliate, and this Agreement is, and on the Closing Date each of the Closing
Documents shall be, legal, valid and binding obligations of the Seller or its
applicable Affiliate, enforceable against Seller or its applicable Affiliate, in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.
4.3 No Violation, Etc. Neither the execution and delivery of this
Agreement or the Closing Documents nor the consummation of the transactions
contemplated by this Agreement or the Closing Documents nor compliance by Seller
with any of the provisions hereof or thereof (a) violates or conflicts with any
provision of the certificate of incorporation or by-laws of Seller or (b)
violates, or conflicts with, or results in a breach of any provision of, or
constitutes a default (or gives rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any
agreement, lease, instrument, obligation, understanding or arrangement to which
Seller or Seller's properties or assets may be bound or affected by or (c)
violates any law, statute, rule or regulation to which Seller is subject.
4.4 Consents and Approvals; Transfer. Except as set forth on Section 4.4
of the Disclosure Letter, no permit, consent, approval or authorization of, or
declaration, filing or
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registration with, any governmental authority or third party is necessary in
connection with the execution and delivery by Seller of this Agreement or the
Closing Documents or the consummation by it of the transactions contemplated
hereby or thereby, except such consents as would not have a Material Adverse
Effect.
4.5 Compliance with Law, Etc. Seller has conducted its business and
operations, to the extent they relate to the manufacture, distribution and sale
of the Products, in compliance with, and obtained all permits, licenses and
other authorizations required under, all applicable laws, rules, regulations,
orders, ordinances, judgments and decrees of all governmental authorities
(federal, state and local) (collectively "Laws") including, without limitation,
all requirements imposed by the FDA, except for such non-compliance which would
not have a Material Adverse Effect. Seller has not within the past 24 months
received written notice of any non-compliance with respect to, or potential
liability under, any Laws, which Laws, non-compliance or liability relates to
the Products or the Purchased Assets and which has not been satisfied or
otherwise resolved, except for such non-compliance which would not have a
Material Adverse Effect.
4.6 Title; Sufficiency of Purchased Assets. Except as set forth in
Section 4.6 of the Disclosure Letter, Seller has good and marketable title to
the Purchased Assets, free and clear of all mortgages, security interests,
liens, encumbrances and charges of any kind or nature ("Liens"), except for such
Liens which would not have a Material Adverse Effect. The Purchased Assets
constitute all of the assets, properties, licenses and other arrangements that
are necessary to engage in the Business in a manner consistent with past
practice and at Seller's historic capacity; provided, however, that Purchaser
acknowledges that Seller has not and does not conduct any manufacturing
operations related to the Products, all manufacturing operations are conducted
by Oread, Inc.
4.7 Intellectual Property.
(a) Section 4.7 of the Disclosure Letter sets forth an accurate and
complete list of all of the following intellectual property (the
"Intellectual Property"):
(i) all patents and patent applications assigned to or filed by
Seller relating to the Business, including the country of
filing, owner, application number, filing date, patent
number, date of issue, expiration date and title;
(ii) all registered trademarks and service marks, including the
Assigned Trademark, and applications for registration of
trademarks owned by, filed by or used by Seller relating to
the Business, including country of filing, registration or
application number, filing date and date of issue;
(iii) all registered copyrights and applications for registration
of copyrights owned by, filed by or used by Seller relating
to the Business, including country of filing, owner,
application number, date of issue and expiration date;
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(iv) all material common law trademarks, service marks, trade
names, slogans, trade dress and the like owned by Seller relating to the
Business;
(v) all material license agreements pursuant to which Seller
has outstanding rights to any intellectual property of others relating
to the Business and all agreements, oral or written pursuant to which
Seller is obligated to pay royalties to third parties with respect to
such intellectual property; and
(vi) all material license agreements, oral or written, pursuant
to which Seller has granted to any person any outstanding right to any
intellectual property relating to the Business and all agreements, oral
or written, pursuant to which Seller is entitled to receive royalties
from third parties with respect to such intellectual property, including
licenses or other rights in unpatented formulations, manufacturing
methods and other know-how and proprietary information of Seller.
(b) Complete and accurate copies of all patents, trademarks,
copyrights and applications therefor referenced in clauses (i), (ii) and (iii)
of subsection (a) above and all agreements referred to in clauses (v) and (vi)
of subsection (a) above have been made available to Purchaser. The Intellectual
Property referenced in clauses (i), (ii) and (iii) has been duly registered
with, filed in or issued by the United States Patent and Trademark Office to the
extent necessary, and to the extent any ownership of such Intellectual Property
has been registered, Seller is the registered owner thereof, in each case free
and clear of all licenses or liens. Except as would not have a Material Adverse
Effect, the registered trademarks referenced in clause (ii) of subsection (a)
above are (i) valid and (ii) enforceable in their respective countries of filing
against any infringement (as finally determined by a court of competent
jurisdiction) of such trademarks.
(c) None of the Intellectual Property is subject to any outstanding
order, ruling, decree, judgment or stipulation by or of any governmental
authority, and, except as would not have a Material Adverse Effect, to Seller's
knowledge no third party is infringing upon any of the Intellectual Property, no
claim exists that any of the Intellectual Property is not valid or enforceable
by Seller.
(d) Except as would not have a Material Adverse Effect, Seller has
not taken or omitted any action which would have the effect of waiving any of
its rights under any of the Intellectual Property.
(e) Except as would not have a Material Adverse Effect, no licenses,
sublicenses, or other agreements relating to the Intellectual Property exist
which would limit or restrict the rights of Purchaser to operate the Business or
which grant to a third party any rights in any Intellectual Property relating to
the Business.
(f) Except as would not have a Material Adverse Effect, there are no
oppositions, cancellations or governmental, arbitration or other proceedings
currently pending or, to Seller's
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knowledge, threatened, that protest the rights of Seller to use and/or register
the trademarks and copyrights referenced in clauses (ii) and (iii) of subsection
(a) above.
(g) To Seller's knowledge, the conduct of the Business does
not contravene, conflict with, violate or infringe upon any patent, trademark,
service mark, copyright or other intellectual property right of a third party
and no proprietary information or trade secret has been misappropriated by
Seller from any third party. In addition, the use, licensing or sale by Seller
of any of the Intellectual Property does not contravene, conflict with, violate
or infringe upon any patent, trademark, service mark, copyright or other
intellectual property right of a third party and does not require the agreement
or consent of any third party that has not been obtained.
(h) Other than the Warner Chilcott Trademarks, the
Intellectual Property constitutes all of the intellectual property used or
required by Seller to sell the Products.
4.8 Litigation. Except as set forth on Section 4.8 of the Disclosure
Letter, there is no litigation, proceeding, investigation, arbitration or claim
pending or to Seller's knowledge, threatened which affects in whole or in part
the Products or the Purchased Assets.
4.9 Broker's or Finder's Fees. There are no claims for brokerage
commissions, finders fees or similar compensation in connection with the
transactions contemplated in this Agreement based upon any arrangement, actions
or agreement by or on behalf of Seller.
4.10 Power and Authority. Seller has all requisite corporate power and
authority necessary to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby,
including the execution, delivery and performance of all documents and
instruments to be delivered by Seller pursuant to the terms hereof. Seller has
all requisite corporate power and authority necessary to carry on the Business.
4.11 Absence of Certain Changes. From the date hereof until the Closing
Date, Seller shall conduct the Business only in the ordinary course of business
consistent with past practices and, without limiting the generality of the
foregoing, there shall not be (a) an event or occurrence that has caused or will
cause a Material Adverse Effect, (b) an amendment, termination or receipt of
notice of termination of any Assumed Contract or any Permit, or (c) sale, lease
or other disposition of any assets used in the Business, other than assets sold,
leased or otherwise disposed of in the ordinary course of business consistent
with past practices.
4.12 Assumed Contracts. The Assumed Contracts are all the written
contracts relating to the Business, the Purchased Assets or any assumed
liabilities or by which any of the Purchased Assets are bound, pursuant to which
the obligations of any party thereto are, or are contemplated to be, in respect
of any such contract material to the Business. None of the oral contracts
related to the Business are material to the Business. All of the Assumed
Contracts are valid and binding and in full force and effect, subject to laws
affecting creditors' rights. Neither Seller nor, to Seller's knowledge, any
other Person is in default nor has any event occurred that would result in
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an event of default under any Assumed Contract. True and complete copies of all
Assumed Contracts have been provided to Purchaser.
4.13 Suppliers and Customers. Except as Seller does not
reasonably expect would have a Material Adverse Effect, to Seller's knowledge,
(i) the relationships of Seller with its suppliers and customers with respect to
the Business are satisfactory and (ii) no material customer or supplier with
respect to the Business has canceled or otherwise terminated, or threatened to
cancel or otherwise terminate, its relationship with Seller, or to materially
decrease its services to Seller or its usage of the services of Seller.
4.14 Inventory. Section 4.14 of the Disclosure Letter sets forth an
accurate and complete list of the Inventory and the expiration dates of Existing
Products and New Products that have been labeled and packaged for sale as of
[REDACTED]. Since such date, Seller has sold and distributed the Inventory in
the ordinary course of business and consistent with past practice, except for
sales pursuant to the agreements referred to on Exhibit B to the Transition
Services Agreement.
4.15 Legal Compliance- Food and Drug Administration. Except as set forth
on Section 4.15 of the Disclosure Letter:
(a) Except as would not have a Material Adverse Effect,
with respect to the Products for which a new or abbreviated new drug application
has been approved by the FDA, the applicant and all persons performing
operations covered by the application are in compliance with 21 U.S.C. Sections
355 or 357, 21 C.F.R. Parts 314 or 430 et. seq., respectively, and all terms and
conditions of such application.
(b) Seller has not filed any establishment license
application or product license application for any biologic product.
(c) Except as would not have a Material Adverse Effect,
Seller is in compliance with all applicable registration and listing
requirements set forth in 21 U.S.C. Section 360 and 21 C.F.R. Part 207.
(d) Seller does not conduct any manufacturing operations
relating to the Business. All manufacturing operations relating to the Business
are conducted by third parties (each a "Third Party Manufacturer"). To Seller's
knowledge, all manufacturing operations conducted on behalf of Seller relating
to the Business have been and are being conducted in compliance with current
good manufacturing practices set forth in 21 C.F.R. Parts 210 and 211.
(e) Except as would not have a Material Adverse Effect,
Seller has made available to Purchaser copies of
any and all reports of inspection observations, establishment inspection
reports, warning letters and any other documents received by Seller from the FDA
that indicate or suggest lack of compliance with the FDA regulatory requirements
by Seller or any person
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covered by a new or abbreviated new drug application of, or otherwise performing
manufacturing operations for the benefit of, Seller.
(f) Neither Seller, nor to Seller's knowledge, any Third
Party Manufacturer, has received any notice that the FDA has commenced, or
threatened to initiate any action to withdraw its approval or request the recall
of any Product, or commenced or threatened to initiate any action to enjoin
production at any facility of Seller or any facility at which a Third Party
Manufacturer conducts manufacturing operations on behalf of Seller.
(g) Except as would not have a Material Adverse Effect,
none of the Products are adulterated or misbranded within the meaning of the
FDCA, 21 U.S.C. Sections 301c et. seq. in any manner that gives rise to any
liability on the part of Seller.
(h) To Seller's knowledge, neither Seller, nor its
officers, employees or agents, has been convicted of any crime or engaged in any
conduct for which debarment is mandated by 21 U.S.C. Section 335a(a) or
authorized by 21 U.S.C. Section 335a(b).
(i) Except as would not have a Material Adverse Effect,
neither Seller, nor its officers, employees or
agents, has made an untrue statement of a material fact or fraudulent statement
to the FDA, failed to disclose a material fact required to be disclosed to the
FDA, or committed an act, made a statement or failed to make a statement that
could reasonably be expected to provide a basis for the FDA to invoke its policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities" as set forth in 56 Fed. Reg 46191 (September 10, 1991).
4.16 Product Liability. Except as set forth on Section 4.16 of the
Disclosure Letter, Seller has not received any written notice or claim involving
any of the Products resulting from an alleged defect in design, manufacture,
materials or workmanship, or any alleged failure to warn, or from any breach of
implied warranties or representations; nor is there any basis for any such
notice or claim.
4.17 Product Revenues. Section 4.17 of the Disclosure Letter sets forth
the accurate and complete Net Sales for the Product since the inception of the
Product, including amounts invoiced for the Product.
4.18 Limitation. SELLER MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER,
OTHER THAN EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT
AND IN THE CLOSING DOCUMENTS. EXCEPT AS SET FORTH IN THIS AGREEMENT AND IN THE
CLOSING DOCUMENTS, SELLER HEREBY SPECIFICALLY DISCLAIMS WITH RESPECT TO THE
PURCHASED ASSETS: (A) ANY IMPLIED REPRESENTATIONS OR WARRANTIES AS TO THE
CONDITION, VALUE OR QUALITY OF THE PURCHASED ASSETS AND (B) ANY IMPLIED
REPRESENTATIONS AND WARRANTIES OF MERCHANTABILITY, USAGE OR FITNESS FOR ANY
PARTICULAR PURPOSE.
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4.19 Sale of Products in Puerto Rico. Seller has not directly sold any
Products for delivery to or in the Commonwealth of Puerto Rico; provided that
Seller makes no representation as to whether the ultimate customer of any
Products is located in the Commonwealth of Puerto Rico.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement for Seller to enter into this Agreement
and consummate the transactions contemplated herein, Purchaser represents and
warrants to Seller that:
5.1 Organization. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation.
Purchaser is duly qualified or licensed as a foreign corporation in each
jurisdiction in which the nature of its business makes such qualification or
licensing necessary, except those jurisdictions where the failure to qualify
would not have a material adverse effect.
5.2 Valid and Binding Agreements. The board of directors of the Purchaser
has approved the transactions contemplated hereby and by the Closing Documents
and has authorized the execution and delivery hereof and thereof and no further
corporate proceedings on the part of the Purchaser are necessary to consummate
the transactions contemplated herein or therein. This Agreement has been, and on
the Closing Date each of the Closing Documents shall be, duly and validly
executed and delivered by Purchaser, and this Agreement is, and on the Closing
Date each of the Closing Documents shall be, legal, valid and binding
obligations of the Purchaser enforceable against Purchaser in accordance with
their respective terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general principles of equity.
5.3 No Violation. Neither the execution and delivery of this Agreement or
the Closing Documents nor the consummation of the transactions contemplated by
this Agreement or the Closing Documents nor compliance by Purchaser with any of
the provisions hereof or thereof (a) violates or conflicts with any provision of
the certificate of incorporation or by-laws of Purchaser or (b) violates, or
conflicts with, or results in a breach of any provision of, or constitutes a
default (or gives rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
agreement, lease, instrument, obligation, understanding or arrangement to which
Purchaser or Purchaser's properties or assets may be bound or affected by or (c)
violates any law, statute, rule or regulation to which Purchaser is subject.
5.4 Concent and Approvals. Except for any consents needed to transfer all
ANDAs to Purchaser and register all ANDAs in the name of Purchaser and for the
expiration of the waiting period under the HSR Act, no permit, consent, approval
or authorization of, or declaration, filing or registration with, any
governmental authority or third party is necessary in connection with the
execution and delivery by Purchaser of this Agreement or the Closing Documents
or the
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consummation by it of the transactions contemplated hereby or thereby except
such consents as would not have a Material Adverse Effect.
5.5. Brokers' or Finders' Fees. Except for Corporate Development
Specialists, the fees of which will be paid by Purchaser, no person is or will
become entitled to receive any brokerage or finder's fee, advisory fee or other
similar payment for the transactions contemplated by this Agreement by virtue of
having been engaged by or acted on behalf of Purchaser.
5.6 Funds. Purchaser and any of its successors or assigns has available
to it sufficient funds to enable it to consummate the transactions and to
fulfill its obligations contemplated by this Agreement (including the payments
contemplated by Section 2.4) and the Closing Documents, and to conduct the
business of manufacturing, distributing and selling the Products.
ARTICLE 6
INDEMNIFICATION
6.1 Indemnification by Seller. Seller shall indemnify, defend and hold
harmless each Purchaser Indemnified Party from and against any and all loss,
liability, damage, action, proceeding and expense (including, without
limitation, reasonable attorneys fees and expenses) (collectively, "Losses")
which a Purchaser Indemnified Party suffers or sustains or to which a Purchaser
Indemnified Party becomes subject as a result of (i) the inaccuracy or breach by
Seller of any representation or warranty made by Seller in this Agreement, (ii)
the nonperformance of any covenant or the nonobservance of any agreement made or
undertaken by Seller in this Agreement or in any of the Closing Documents, or
(iii) except as set forth in Sections 6.7(b) and 7.5, all liabilities or
obligations of Seller to third parties arising prior to the Closing Date (A)
under any Assumed Contract, (B) with respect to any of the Purchased Assets
including any tax liabilities relating to the Business owed by Seller that
accrued prior to the Closing Date, and (C) with respect to any Products sold,
shipped or manufactured by Seller or on its behalf or any services provided by
Seller or on its behalf in connection therewith.
6.2 Indemnification by Purchaser. Purchaser shall indemnify, defend and
hold harmless each Seller Indemnified Party from and against any and all Losses
which a Seller Indemnified Party suffers or sustains or to which a Seller
Indemnified Party becomes subject as a result of (i) the inaccuracy or breach by
Purchaser of any representation or warranty made by Purchaser in this Agreement,
(ii) the nonperformance of any covenant or the nonobservance of any agreement
made or undertaken by Purchaser in this Agreement or in any of the Closing
Documents, or (iii) all liabilities or obligations arising after the Closing
Date (A) under any Assumed Contract, (B) with respect to any of the Purchased
Assets and (C) with respect to any Products sold, shipped or manufactured by
Purchaser or on its behalf or any services provided by Purchaser or on its
behalf in connection therewith.
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6.3 Procedures for Control of Third Party Claims. The Purchaser
Indemnified Party or Seller Indemnified Party making a claim for indemnification
under this Section 6 shall be, for the purposes of this Agreement, referred to
as the "Indemnified Party" and the party against whom such claims are asserted
under this Section 6 shall be, for purposes of this Agreement, referred to as
the "Indemnifying Party". In order for an Indemnified Party to be entitled to
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim or demand, made by any person, firm, governmental
authority or corporation against the Indemnified Party (a "Third Party Claim")
such Indemnified Party must notify the Indemnifying Party in writing of the
Third Party Claim within ten (10) business days after receipt by such
Indemnified Party of written notice of the Third Party Claim; provided, however,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
actually and materially prejudiced as a result of such failure. If a Third Party
Claim is made against an Indemnified Party, the Indemnifying Party shall be
entitled to participate in the defense thereof and, upon notice to the
Indemnified Party, to assume the defense thereof; provided, that (i) the
Indemnifying Party's counsel is reasonably satisfactory to the Indemnified
Party, and (ii) the Indemnifying Party shall thereafter consult with the
Indemnified Party upon the Indemnified Party's reasonable request for such
consultation from time to time with respect to such suit, action or proceeding.
If the Indemnifying Party assumes such defense, the Indemnified Party shall have
the right (but not the duty) to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party. The Indemnifying Party shall be liable for the fees and
expenses of counsel employed by the Indemnified Party for any period during
which the Indemnifying Party has not assumed the defense thereof, but the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. Whether or not the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, the parties hereto shall cooperate in the
defense or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Party's request) the provision to the Indemnifying Party
of records and information which are reasonably relevant to such Third Party
Claim, and making employees or any other Indemnified Party available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Whether or not the Indemnifying Party shall
have assumed the defense of a Third Party Claim, neither the Indemnifying Party
nor the Indemnified Party shall admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the other party's prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed.
6.4 Survival of Representations and Warranties. No claim or action for
indemnity under Sections 6.1(i) or 6.2(i) shall be asserted or maintained by an
Indemnified Party after the expiration of twenty-four (24) months following the
Closing Date, except for (i) a claim for indemnity made in writing by an
Indemnified Party to an Indemnifying Party prior to such expiration, which sets
forth in detail the basis for such claim or (ii) a claim by Seller pursuant to
Section 5.6, which may be asserted until the termination of all rights of Seller
to receive royalty payments pursuant to Section 2.4(d).
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6.5 Limits on Indemnification. No claim for indemnification under Section
6.1(i) and 6.2(i) may be made, and no payment in respect thereof shall be
required unless the aggregate amount of Losses against which an Indemnified
Party is entitled to be indemnified exceeds tw0 hundred thousand dollars
($200,000.00), in which case the Indemnifying Party shall be liable for all
Losses, including all Losses up to and including two hundred thousand dollars
($200,000.00). The maximum aggregate amount of Losses that an Indemnified Party
shall be entitled to pursuant to Section 6 shall be ten million dollars
($10,000,000.00). The amount of any recovery to which an Indemnified Party may
be entitled pursuant to this Section 6 shall be net of (i.e., after deducting)
all national, federal, state, provincial and local income tax benefits and
insurance proceeds inuring to such Indemnified Party as a result of the set of
facts which entitle such Indemnified Party to recover from the Indemnifying
Party pursuant to this Section 6. Notwithstanding anything contained in this
Section 6.5, Seller shall be liable to Purchaser for all Losses, without regard
to the minimum or limitation contained in this Section 6.5, suffered by
Purchaser in connection with the lawsuit styled Natasha Frazier v. Lederle
Laboratories, American Cyanamid, Warner Chilcott, Inc., Warner Lambert Company,
R.M. McMillin, M.D. and Roane County Family Practice.
6.6 Limitation of Consequential and Other Damages. In no event shall
Purchaser or Seller be liable for indirect, special, incidental, consequential
or punitive damages suffered by the other party or an Indemnified Party,
including, costs of procurement of substitute Product or services, business
interruption losses, loss of business relationships or lost profits; provided,
however, that nothing in this Section 6.6 shall be deemed to limit the
indemnification obligations of Purchaser and Seller in this Section 6 to the
extent a third party recovers any indirect, special, incidental, consequential
or punitive damages from an Indemnified Party.
6.7 Assumption of Risk. (a) Except as set forth in Section 6.7(b),
Purchaser assumes all risk of and liability for loss, damage or injury, proven
or unproven, to persons or property arising out of the manufacture, use,
possession, packaging, testing, labeling, distribution or sale of the Products
occurring on or after the Closing Date. After the Closing, Purchaser shall be
responsible for compliance with all regulatory matters in relation to the
Products, materials incorporated therein and the Purchased Assets (including the
labels, inserts, packaging and processes used in connection thereto) and
Purchaser shall be responsible for any and all communications with its customers
regarding the Products and all of the foregoing. Except as set forth in Section
6.7(b), Seller shall bear no responsibility for the content and/or form of any
warning, instruction or labeling provided in connection with Product sold by
Purchaser on or after the Closing Date or otherwise communicated to customers.
Purchaser shall not make any claim or raise any defense against Seller nor take
any position in any litigation inconsistent with the provisions of this Section
6.7.
(b) Notwithstanding the foregoing, in the event Purchaser
shall be liable to any third party for any Losses for any product liability
claim relating to any Product included as part of the Inventory transferred
pursuant to this Agreement, subject to Section 6.5, Seller shall indemnify
Purchaser for such Losses; provided that Seller shall not be required to
indemnify Purchaser for any Losses under this Section 6.7(b) to the extent and
only to the extent, (i) any such Loss is attributable to Purchaser's failure to
handle the Inventory in a manner consistent with industry practice or (ii) any
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such Loss is otherwise attributable to Purchaser's or its Affiliates' or either
of their agents' gross negligence or wilful misconduct.
ARTICLE 7
COVENANTS
7.1 Conduct of Business. (a) Seller agrees that from the date hereof
until the Closing Date, without the written consent of the Purchaser, Seller
shall not:
(i) Conduct the business exclusively related to
the manufacture, distribution and sale of the Products
other than in the ordinary course;
(ii) Make any sale, transfer or other disposition
of any material Purchased Assets other than in the ordinary
course of business or pledge or otherwise create a security
interest in any of the Purchased Assets; or
(iii) Consent to the termination of any Assumed
Contract or waive any material rights with respect thereto.
(b) Seller agrees that from the date hereof until the
Closing Date, Seller shall use all reasonable efforts to (i) preserve
substantially the relationships with its material representatives, suppliers and
customers, (ii) perform its obligations under all Assumed Contracts and Permits
in all material respects and (iii) comply with all Laws.
7.2 Regulatory Documents; Recordkeeping.
(a) Promptly following the Closing, the parties shall
file with the FDA all documents required to transfer the ANDAs from Seller to
Purchaser. Seller shall prepare and file the documents required of a former
owner, and Purchaser shall prepare and file the documents required of a new
owner.
(b) Following the Closing, Purchaser shall assume all
regulatory responsibilities required under all Laws in connection with the
Products, the ANDAs and the Regulatory Documents; provided, however, that in the
event that the approval from the FDA to market the New Product has not been
obtained prior to the Closing Date, Seller shall automatically be appointed as
the exclusive agent of Purchaser to continue seeking approval from the FDA for
the New Product. In addition, Purchaser shall pay any user fees associated with
the Products that accrues after Closing but prior to the effective date of the
transfer of the ANDAs.
(c) Promptly following the Closing, Purchaser shall
take any and all action necessary to change, as expeditiously as possible, the
National Drug Code ("NDC") number for the Products and to apply such new NDC
number to the Products.
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<PAGE> 27
7.3 Validatiion Costs. Seller shall be responsible for the payment of
all validation costs and expenses relating to the approval of the manufacture of
the Products by Oread, Inc.
7.4 Assigned Trademark. Purchaser shall be responsible, at its sole cost
and expense, for preparing, recording and registering in the United States
Patent and Trademark Office the Trademark Assignment and all other assignments,
documents or filings that may be necessary to record the transfer of the
Assigned Trademarks to Purchaser. At the request of Purchaser, Seller shall use
its reasonable efforts to assist Purchaser in performing its obligations under
this Section 7.4.
7.5 Rebates; Chargebacks; Returns; Other Payments to Third Parties.
(a) On and after the Closing Date, Purchaser shall
be solely liable and responsible for all Payment Claims whether received by
Purchaser or Seller, with respect to Product distributed or sold before and
after the Closing Date and regardless of which batch code or NDC number is
affixed to the Products; provided, however, that until June 30, 2000, Seller
shall remain solely liable and responsible for any Payment Claim received by
Purchaser, up to an aggregate liability of [REDACTED], relating to a return of
any Product that at the time of receipt by Purchaser has expired or will expire
within six (6) months thereafter. Any amount owed to Purchaser under this
Section 7.5 shall be subject to set-off pursuant to Section 2.6.
(b) In the event that any Payment Claim is received
by Seller on or after the Closing Date, Seller may either (i) forward such
Payment Claim to Purchaser as promptly as possible after receipt, in which case
Purchaser shall immediately pay all amounts due under such Payment Claim, or
(ii) pay the amounts due under such Payment Claim. In the event that Seller
elects to pay the amounts due under such Payment Claim, Purchaser shall
promptly reimburse Seller for all amounts paid by Seller in satisfaction of the
Payment Claim, upon receipt of evidence indicating that such Payment Claim was
paid and the amount of such Payment Claim.
7.6 Third Party Consent. Prior to the Closing, Seller shall obtain the
consent required for the assignment of the Manufacturing Agreement.
7.7 Payments after Closing. In the event that a payment is received by
Seller from any person or entity and such payment indicates an intent (or is
accompanied by or is the subject of any other unsolicited unambiguous indication
of intent) that the payment is being made with respect to Product sold after
Closing, then Seller shall forward such payment to Purchaser as promptly as
practicable after receipt. In the event that a payment is received by Purchaser
from any person or entity and such payment indicates an intent (or is
accompanied by or is the subject of any other unsolicited, unambiguous
indication of intent) that the payment is being made with respect to Product
sold before Closing, then the Purchaser shall forward such payment to the Seller
as promptly as practicable after receipt. In the event that a payment is
received by either Purchaser or Seller from any person or entity and such
payment does not indicate any indication or intent, the payment shall be
allocated first to pay for sales of Product prior to Closing by Seller, and
after all such sales are
22
<PAGE> 28
fully paid and accounted for, the payment shall be applied to sales of Product
after Closing by Purchaser.
7.8 Government Consents. Each party shall use its reasonable efforts, and
the parties shall cooperate with each other (including without limitation by
exchange of information), to obtain all waivers, permits, consents and approvals
and to effect all registrations or other filings and notices with governmental
or public bodies or authorities, including any filings required by the HSR Act,
that are in the reasonable opinion of the Seller or the Purchaser necessary or
reasonably desirable in connection with the transactions contemplated by this
Agreement.
7.9 Transactional License. Seller hereby grants to Purchaser a
non-exclusive, non-transferable, royalty-free license until (i) Purchaser is in
a position to distribute Products without use of packaging and labeling
materials containing Warner Chilcott Trademarks, or (ii) twelve (12) months
after the Closing Date, whichever is earliest, to use the Warner Chilcott
Trademarks to the extent necessary to distribute and sell the Products using the
existing packaging and labeling materials forming part of the Inventory;
provided, that Purchaser shall use its reasonable efforts to make all necessary
arrangements as soon as possible to enable Purchaser to ship Products without
the use of any packaging or labeling materials that includes the Warner Chilcott
Trademarks. When (i) the Purchaser is in a position to distribute Products
without use of packaging and labeling materials containing Warner Chilcott
Trademarks or (ii) the twelve (12) month period has expired, whichever is
earliest, Purchaser shall not use any packaging or labeling materials that
includes the Warner Chilcott Trademarks, for any purpose and shall destroy all
such materials. Except for the express grant of rights to Purchaser under this
Section 7.9, Purchaser shall not use the Warner Chilcott Trademarks.
7.10 Insurance. Purchaser shall provide and maintain a comprehensive
product liability insurance policy or policies, written by a good and solvent
insurance company satisfactory to Seller. Seller shall be named as an additional
insured. The liability insurance policy shall insure against all liability
related to the Purchased Assets and the Products (whether a party's liability
arises from its own conduct or by virtue of its participation in this
Agreement), including liability for bodily injury, property damage, wrongful
death, and any contractual indemnity obligations imposed by this Agreement. The
coverage limits of the policy or policies shall be in amounts that are
reasonable and customary in the pharmaceutical industry for companies of
comparable size and with comparable activities but in no event less than
[REDACTED] per occurrence and [REDACTED] in the aggregate. The policy shall
provide that it shall not be modified or canceled without prior notification to
Seller. Within [REDACTED] days after the Closing Date, Purchaser shall provide a
certificate of insurance to Seller which evidences the above-described coverage.
7.11 Access. In addition to Seller's rights pursuant to Section 2.4(h),
for a period of two years after the Closing Date, upon Seller's reasonable
request, Purchaser shall permit Seller and its authorized agents to have access
during normal business hours and upon reasonable prior notice, to inspect and
copy agreements, records, books and other documents that are included in the
Purchased Assets and identified with reasonable particularity, wherever located,
solely for the
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<PAGE> 29
purpose of (i) preparing tax returns and financial statements and responding to
tax audits or (ii) prosecuting or defending any claim, litigation, proceeding or
investigation which arises out of or relates to the Products or the Purchased
Assets.
7.12 Further Assurance. Each party hereto shall use all reasonable
efforts to implement the provisions of this Agreement, and for such purpose each
party, at the request of the other party, at or after the Closing, shall,
without further consideration, (except as provided in Section 7.2) execute and
deliver, or cause to be executed and delivered, to the other party such deeds,
assignments, bills of sale, consents and other instruments in addition to those
required by this Agreement, in form and substance satisfactory to the other
party, as such other party may reasonably deem necessary or desirable to
implement any provision of this Agreement.
7.13 Payment of Taxes. All recordation, transfer and documentary taxes
and fees, and any excise, sales or use taxes in connection with the transfer of
the Purchased Assets not attributable to either party, shall be split evenly
between the parties.
7.14 Noncompetition Agreement.Except as provided to the contrary below,
Seller agrees with the Purchaser, for the Purchaser's sole and exclusive
benefit, that for a period commencing on the Closing Date until the termination
of all rights of Seller to receive royalty payments pursuant to Section 2.4(d),
neither Seller nor any of its Affiliates shall, directly or indirectly, engage
in the Business or develop, manufacture, distribute, package, test, market or
sell (i) any Developing Product or (ii) any line extensions or improvements on
any Product or Developing Product; provided, however, that the foregoing
covenant shall not apply with respect to (i) any Person that acquires a majority
of the stock or assets of Seller or Warner Chilcott PLC, or any Person that
acquires a majority of the stock or assets of an Affiliate of Seller, that prior
to such acquisition already shall engage in the business described in the
foregoing covenant; or (ii) the ownership or acquisition of up to five percent
by Seller or any of its Affiliates of any Person which is engaged in the
business described in the foregoing covenant; or (iii) the acquisition by Seller
or any of its Affiliates of a majority of the stock or a majority of the assets
of a Person that engages in the business described in the foregoing covenant;
provided with respect to (iii), that the portion of the business of such Person
that so competes does not exceed ten percent of the total business of such
Person.
Seller and the Purchaser agree that a breach of this
Section 7.14 shall cause irreparable harm to the Purchaser
and its Affiliates, that Purchaser's remedies at law for any breach or threat of
breach of the provisions of this Section 7.14 shall be inadequate, and that the
Purchaser shall be entitled to an injunction or injunctions to prevent breaches
of this Section 7.14 and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which Purchaser may be entitled at
law or in equity.
Seller acknowledges that (i) the scope of the protective
restrictions provided for in this Section are reasonable when taking into
account (A) the negotiations between the parties and (B) that Seller is the
direct beneficiary of the Purchase Price paid pursuant to this Agreement, (ii)
the
24
<PAGE> 30
consideration being paid to Seller pursuant to this Agreement is sufficient
inducement for Seller to agree to the terms hereof, (iii) the provisions of this
Section are reasonable and necessary to protect the Business of the Purchaser
and (iv) the terms of this Section preclude Seller from competing with Purchaser
with respect to the Business, the Developing Products and any line extensions
and improvements on any Product or Developing Product.
7.15 Termination of Legal Action. Contemporaneous with the Closing Date,
Seller shall (a) prepare and file all papers necessary and required to withdraw
from the Warner Chilcott, Inc. v. Medicis Dermatologists, Inc. lawsuit filed in
the United States District Court of New Jersey, Civ. Act. No. 98-4085 (the
"Litigation"), (b) enter into a release agreement related thereto in a form that
is mutually acceptable to both parties (the "Release") and (c) prepare and file
all papers and take all action necessary and required to withdraw any complaints
filed with the FDA by Seller relating to Purchaser.
7.16 Permits.
(a Cooperation and Reasonable Efforts. Seller
shall use reasonable efforts, to take reasonable actions and to cooperate with
Purchaser as may be necessary to transfer to Purchaser, or assist Purchaser in
obtaining, all permits required to conduct the Business (the "Permits"). On or
as soon as practicable after the Closing Date, the Seller shall file all
applications necessary to transfer the Permits. The Seller shall use reasonable
efforts to resolve objections, if any, as may be asserted by any governmental
authority with respect to the applications contemplated hereby.
(b No Assignment. Notwithstanding anything to
the contrary in this Agreement, Seller shall not transfer or assign any interest
in any Permit, and Purchaser shall not assume any liability arising thereunder
or resulting therefrom, if an assignment or transfer or an attempt to make an
assignment or transfer of such Permit without the consent of a governmental
authority would constitute a breach or violation thereof or a violation of law,
or affect adversely the rights of Purchaser or Seller thereunder, until such
consent has been obtained.
7.17 UCC-3's. Promptly following the Closing, Seller shall prepare and
file all documents and take all commercially reasonable actions, including the
filing of UCC-3s ("UCC-3s"), required to terminate any and all financing
statements relating to any of the Purchased Assets.
7.18 Inventory. Following the Closing, Seller shall prepare and deliver
to Purchaser a statement which sets forth an accurate and complete list of the
Inventory and the expiration dates of Existing Products and New Products that
have been labeled and packaged for sale as of the Closing Date (the "Final
Inventory Statement").
7.19 No Shop. Until the earlier to occur of the Closing Date or the
termination of this Agreement pursuant to Article 8, Seller shall not, directly
or indirectly, through any officer, director, agent, representative or
otherwise, (i) solicit, initiate or encourage submission of proposals or offers
from any person (other than Purchaser), relating to any acquisition or purchase
of the
25
<PAGE> 31
Business or the Purchased Assets, or (ii) participate in any discussions
or negotiations regarding any of the foregoing, or (iii) otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any effort
or attempt by any other person to do or seek any of the foregoing. Seller shall
promptly notify Purchaser if it receives any such proposal or offer or any
inquiry or contact with respect thereto.
ARTICLE 8
TERMINATION
8.1 Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the
Closing Date:
(a By the mutual written consent of Seller and
Purchaser;
(b By either Seller or Purchaser if the Closing shall not
have occurred on or before September 30, 1999, unless such date has
been extended by mutual agreement in writing or unless the parties
are continuing to pursue clearance under the HSR Act;
(c By either Seller or Purchaser if consummation of the
transactions contemplated hereby shall violate any non-appealable
final order, decree or judgment of any court or governmental body
having competent jurisdiction;
(d By Purchaser if there has been a material violation or
breach by Seller of any of the agreements, representations or
warranties contained in this Agreement that have not been cured
within fifteen (15) days from the date Seller receives notice of such
violation or breach and that has not been waived in writing, or if
there has been a material failure of satisfaction of a condition to
the obligations of Purchaser that has not been waived in writing; or
(e By Seller if there has been a material violation or breach
by Purchaser of any of the agreements, representations or warranties
contained in this Agreement that has not been cured within fifteen
(15) days from the date Purchaser receives notice of such violation
or breach and that has not been waived in writing or if there has
been a material failure of satisfaction of a material condition to
the obligations of Seller hereunder that has not been waived in
writing.
8.2. Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of Seller and Purchaser under this
Agreement shall terminate without further liability of Seller or Purchaser. The
provisions of Sections 8.2, 9.1 and 10.3 shall survive any termination of the
Agreement pursuant to Section 8.1.
ARTICLE 9
CONFIDENTIALITY
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<PAGE> 32
9.1 Confidential Information. From and after the Closing, with respect to
all confidential information or other proprietary information furnished, either
in writing or orally, by one party or its Affiliates, directors, officers,
employees, agents or representatives to the other party or its Affiliates,
directors, officers, employees, agents or representatives pursuant to this
Agreement (collectively, "Confidential Information"), the party receiving such
Confidential Information shall maintain the confidential and proprietary status
of such Confidential Information, keep such Confidential Information and each
part thereof within its possession or under its control, use all its reasonable
best efforts to prevent the disclosure of any Confidential Information to any
other person, and use all its reasonable best efforts to ensure that such
Confidential Information is used only for those purposes specifically authorized
by this Agreement. These mutual obligations of confidentiality shall apply until
five (5) years after termination or expiration of this Agreement, but such
obligations shall not apply to any information to the extent that such
information is:
(a) independently developed by such party as documented by
prior written records outside the scope and not in violation of this Agreement;
(b) in the public domain at the time of its receipt or
thereafter becomes part of the public domain through no fault of the recipient;
(c) received without an obligation of confidentiality from
a third party having the right to disclose such information; and
(d) released from the restrictions of this Section 9 by the
express written consent of the disclosing party.
If disclosure of Confidential Information is required by
court order or governmental requirements, regulations, or investigations, the
party being required to disclose the other party's Confidential Information,
prior to such disclosure, shall notify the other party in a timely fashion to
allow that party to take the necessary steps to seek a protective order or to
otherwise take the necessary actions to maintain the confidentiality of this
Confidential Information.
Notwithstanding the provisions of this Section 9, each
party may, to the extent necessary, disclose the Confidential Information of the
other party to its Affiliates, directors, officers, employees, consultants,
vendors and clinicians under written agreements of confidentiality at least as
restrictive on those set forth in this Agreement, who have a need to know such
information in connection with such party performing its obligations or
exercising its rights under this Agreement.
ARTICLE 10
GENERAL MATTERS
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<PAGE> 33
10.1 Tax matters. Seller and Purchaser shall cooperate following the
Closing to comply with the requirements of Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") (including, without limitation, completing
form 8594), and any other applicable provisions of the Code. For all such
purposes the allocation of the Purchase Price shall be set forth on a statement
which shall be prepared by Purchaser and delivered to Seller promptly following
Seller's delivery of the Final Inventory Statement. The allocations contained in
Purchaser's Statement shall be used by each party in preparing all relevant tax
returns and reports. Seller shall inform Purchaser of the amount of qualified
research expenditure attributable to the Purchased Assets for purposes of
Section 41(f)(3) of the Code, and Seller and Purchaser shall make all returns
and reports of Taxes (including Section 41 of the Code) consistently with the
information provided to Purchaser. Such cooperation shall include, without
limitation, delivery of any necessary information and access to the books and
records of the other party. Seller and Purchaser shall also remit to each other
completed resale exemption certificates and other similar certificates or
instruments as are necessary to claim available exemptions from the payment of
sales or use taxes under applicable laws.
10.2 Dispute Resolution. The parties shall initially attempt in good
faith to resolve any significant controversy, claim, or dispute arising out of
or relating to this Agreement or the breach, termination or validity thereof
(hereinafter collectively referred to as "Dispute") through at least one
face-to-face negotiation between senior executives of the rank of at least Vice
President at the place of business of the party of whom the meeting is first
requested. Disputes which cannot be amicably resolved by the settlement
discussions referenced above shall be submitted to binding arbitration conducted
under the auspices of the Center for Public Resources (the "CPR") pursuant to
the CPR Rules for Non-Administrative Arbitration. The arbitration shall be
conducted before three (3) neutral arbitrators, one selected by each party and
the third to be selected by the other two. The arbitration shall be governed by
Delaware law as set forth in the Delaware Uniform Arbitration Act, Del. Code
Ann. tit. 10 Sections 5702-5725, and judgment upon the award rendered by the
arbitrators may be entered and enforced by any court having jurisdiction
thereof. Any arbitration shall take place in Wilmington, Delaware. The
prevailing party shall be entitled to recover its reasonable costs and
attorneys' fees.
10.3 Press Release and Announcements. No press release related to this
Agreement or the transactions contemplated herein, or other announcement related
to this Agreement or the transactions contemplated herein to the customers for,
or suppliers of materials for, the Products, shall be issued without the joint
approval of the Purchaser and Seller, except as otherwise required by law or
stock exchange rule or regulations.
10.4 Agency. Except as set forth in Section 7.2(b), neither party is, nor
shall be deemed to be, an employee, agent, co-venturer or legal representative
of the other party for any purpose. Neither party shall be entitled to enter
into any contracts in the name of, or on behalf of the other party, nor shall
either party be entitled to pledge the credit of the other party in any way or
hold itself out as having the authority to do so.
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<PAGE> 34
10.5 Expenses. Except as otherwise expressly provided herein, each party
to this Agreement shall pay its own expenses in connection with the negotiation
of this Agreement, the performance of its obligations hereunder, and the
consummation of the transactions contemplated herein.
10.6 Amendment; Modification. No amendment, modification or supplement of
any provision of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each party.
10.7 Waiver. No provision of this Agreement shall be waived by any act,
omission, course of dealing or knowledge of a party or its agents except by an
instrument in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving party.
10.8 Notices. All notices to be given hereunder shall be in writing,
shall be effective when received, and shall be delivered personally, by
facsimile transmission (receipt verified), mailed by registered or certified
mail (return receipt requested), postage prepaid, or sent by express courier
service, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice, also effective only upon receipt
thereof):
<TABLE>
<CAPTION>
Notices to Purchaser: with a copy to:
- --------------------- ----------------
<S> <C>
Medicis Pharmaceutical Corporation Akin, Gump, Strauss, Hauer & Feld, L.L.P.
4343 East Camelback Road, Suite 250 1700 Pacific Avenue, Suite 4100
Phoenix, AZ 85018-2700 Dallas, TX 75201
Attention: Jonah Shacknai Attention: Alan M. Utay
Telephone: 602-808-8800 Telephone: 214-969-2800
Telecopy: 602-808-3874 Telecopy: 214-969-4343
Notices to the Seller: with a copy to:
- --------------------- ----------------
Warner Chilcott, Inc. Kirkland & Ellis
Rockaway 80 Corporate Center Citicorp Center
100 Enterprise Drive, Suite 280 153 East 53rd Street, 39th Floor
Rockaway, NJ 07866 New York, NY 10022-4675
Attention: Beth P. Hecht Attention: Frederick Tanne
Telephone: (973) 442-3211 Telephone: (212) 446-4831
Telecopy: (973) 442-3316 Telecopy: (212) 446-4900
</TABLE>
10.9 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither party may assign any of its
rights, liabilities or obligations hereunder without the prior written consent
of the other party and any assignment without such consent shall be void,
provided, however, that Purchaser may assign any of its rights, liabilities or
obligations
29
<PAGE> 35
hereunder to (i) any wholly-owned subsidiary of Purchaser but only if such
subsidiary has sufficient funds to enable it to fulfill all obligations
contemplated by this Agreement; and (ii) commencing three (3) years after the
Closing Date, to any third party that has sufficient funds to enable it to
fulfill all obligations contemplated by this Agreement (and credible evidence of
such assignee's sufficient funds, reasonably satisfactory to Seller, shall be
provided to Seller prior to any assignment) and such assignment shall not have a
material adverse effect on Seller.
10.10 No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
person. In this Agreement, the words "including" and "includes" shall be deemed
to be followed by the phrase "without limitation."
10.11 Complete Agreement. This Agreement (including the Disclosure Letter
attached hereto and the agreements and documents referred to herein) contains
the complete agreement between the parties and supersedes any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way. The
Confidentiality Agreement shall be deemed to have been superseded by this
Agreement as of the Closing Date.
10.12 Governing Law. The internal laws (without regard to the conflicts
of law provisions) of the State of Delaware shall govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
10.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
shall be considered one and the same instrument.
10.14 Bulk Transfer Laws. Purchaser hereby waives compliance by Seller
with the provisions of any so-called bulk transfer laws of any jurisdiction in
connection with the sale of the Purchased Assets.
10.15 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or unenforceability of
the other provisions of this Agreement shall not be affected thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
* * * * *
30
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
<TABLE>
<CAPTION>
MEDICIS PHARMACEUTICAL
CORPORATION
<S> <C>
By: /s/Mark A. Prygocki, Sr.
--------------------------------------------
Name: Mark A. Prygocki, Sr.
-------------------------------------------
Title: Chief Financial Officer
-------------------------------------------
<CAPTION>
WARNER CHILCOTT, INC.
<S> <C>
By: /s/Beth P. Hecht
-------------------------------------------
Name: Beth P. Hecht
-------------------------------------------
Title: Senior Vice President and General Counsel
--------------------------------------------
</TABLE>
31
<PAGE> 37
EXECUTION COPY
WARNER CHILCOTT, INC.
Rockaway 80 Corporate Center 100
Enterprise Drive, Suite 280
Rockaway, New Jersey 07866
Medicis Pharmaceutical Corporation
4343 East Camelback Road, Suite 250
Phoenix, Arizona 85018-2700
Ladies and Gentlemen:
In connection with the sale of certain assets by Warner Chilcott,
Inc. ("Seller") to Medicis Pharmaceutical Corporation, Seller is providing the
disclosures contained in this letter in accordance with the Asset Purchase
Agreement dated as of the date hereof (the "Agreement"). The disclosures set
forth herein are to be taken as relating to the representations and warranties
in the section of the Agreement to which they expressly relate and not to any
other representation or warranty in the Agreement, unless explicitly stated
otherwise herein. No disclosure made herein shall (i) constitute an admission or
determination that any fact or matter so disclosed is material to the Products
or the Purchased Assets or (ii) be deemed to modify in any respect the standard
of materiality set forth in any representation, warranty, covenant or other
provision contained in the Agreement.
Capitalized terms used herein and not defined herein have the
meanings ascribed to such terms in the Agreement.
WARNER CHILCOTT, INC.
/s/ Beth P. Hecht
----------------------------
Name: Beth P. Hecht
Title: Senior VP & General Counsel
<PAGE> 38
DISCLOSURE LETTER
1.1 Developing Products
4.4 Consents
4.6 Liens
4.7 Intellectual Property
4.8 Litigation
4.14 Inventory
4.15 Legal Compliance - Food and Drug Administration
4.16 Product Liability
4.17 Net Sales
-2-
<PAGE> 39
1.1
DEVELOPING PRODUCTS
75 mg Minocycline HCL tablet
100 mg Minocycline HCL tablet
-3-
<PAGE> 40
4.4
CONSENTS
1. Approval under Hart Scott Rodino (HSR) is necessary to consummate the
transaction.
2. Consent to assignment of Manufacturing Agreement between Oread, Inc.
and Warner Chilcott dated December 14, 1998. Consent obtained from
Oread, Inc. on August 6, 1999.
3. See Section 4.6, which provides disclosure relating to the Revolving
Credit and Security Agreement.
-4-
<PAGE> 41
4.6
LIENS
Under a Revolving Credit and Security Agreement dated March 30, 1998 between
Warner Chilcott, Inc. and PNC Bank, National Association (the "Credit
Agreement"), Warner Chilcott pledged certain assets as collateral for such loan.
The assets pledged include Warner Chilcott's rights to the Vectrin(R) trademark
as well as its inventory of Vectrin samples and inventory (including without
limitation raw materials and work in process). To perfect PNC's security
interest in the Vectrin(R) trademark under the Credit Agreement, Warner Chilcott
also entered into a Trademark Collateral Assignment and Security Agreement dated
March 30, 1998. PNC has agreed to release all liens and security interest in the
Vectrin(R) trademark and inventory and will execute all documents necessary
thereto so that Medicis will obtain clear title to such assets at the closing.
-5-
<PAGE> 42
4.7
INTELLECTUAL PROPERTY
PATENTS: None
<TABLE>
<CAPTION>
- ----------------- ------------------- --------------------- ------------------- --------------------------
Trademark Country Registration No. Reg. Date Class of Goods
- ----------------- ------------------- --------------------- ------------------- --------------------------
<S> <C> <C> <C> <C>
VECTRIN United States 2,096,055 9/9/97 Pharmaceutical Products,
namely minocycline
hydrochloride in Class 5
- ----------------- ------------------- --------------------- ------------------- --------------------------
</TABLE>
COPYRIGHTS: None Registered. Warner Chilcott transfers all such common law
copyrights to packaging, inserts, labeling and advertising copy used exclusively
for Vectrin.
TRADE DRESS: Warner Chilcott transfers all such rights, to extent trade dress is
distinctive and legally protectable, in existing packaging and labeling of
finished product and sample packs except for elements containing the Warner
Chilcott logo or tradename.
LICENSE RIGHTS: None
-6-
<PAGE> 43
4.8
LITIGATION
1. Natasha Frazier v. Lederle Laboratories, American Cyanamid, Warner
Chilcott, Inc., Warner Lambert Company, R.M. McMillin, M.D. and Roane
County Family Practice, Circuit Court for Roane County, Tennessee, No
11620
Product liability suit. Plaintiffs are legal parents of a
12 year old female decedent, Natasha Frazier. Complaint
alleges that Ms. Frazier's death was attributable to
medical malpractice and failure of pharmaceutical companies
to warn of risks of minocycline. Warner Chilcott's
insurance company has assumed full defense of the claim.
2. Warner Chilcott, Inc. v. Medicis Dermatologies, Inc., United States
District Court of New Jersey, Hon. Alfred M. Wolin,
Civ. Act. No. 98-4085
Warner Chilcott is plaintiff in this suit alleging damage
due to certain advertising and statements made by
defendant.
3. Claudia Wojnarowicz Claim: On June 3, 1999, the law firm of Goforth
Lewis & Williams in Houston, Texas, wrote the CEO of Warner Chilcott
notifying it that it had been retained by Ms. Wojnarowicz to
represent her in her claim of personal injuries arising out of
minocycline, 100 mg. capsules. [REDACTED] Upon advise of outside
counsel, the Company wrote to Goforth on July 27 asking for
additional information so that this claim could be examined in more
detail. As of August 20, 1999, no reply has been received. It is
unclear at this point whether this claim will ripen into a lawsuit.
-7-
<PAGE> 44
4.14
INVENTORY
See attached chart
-8-
<PAGE> 45
<TABLE>
<CAPTION>
VECTRIN INVENTORY AS OF AUGUST 19, 1999
50 MG BOTTLES OF 100S 5 MG SAMPLE 20S 100MG SAMPLE 20S
- ----------------------------------------------------------------------------------------------------------------------------------
LOT # EXP Date QUANTITY LOT # EXP Date QUANTITY LOT # EXP Date
- ----------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
617D8L NOV-00 668 618D8L NOV-00 18,192 626D8L NOV-00
65019L DEC-00 4,509 13628L JAN-00 197 35168L JUN-00
65119L DEC-00 4,603 35068L JUL-00 5,948 44386L AUG-00
65219L DEC-00 4,565 619D8L NOV-00 20,013 623D8L NOV-00
65319L DEC-00 4,692 620D8L NOV-00 23,649 624D8L NOV-00
37278L JUL-00 213 634D8L NOV-00
633D8L NOV-00
635D8L NOV-00
636D8L NOV-00
637D8L NOV-00
---------------- ----------------
UNITS 19,250 67,999
$272,195 $278,116
==================================================================================================================================
<CAPTION>
100MG BOTTLES OF 50
- --------------------------------------------------------------------
QUANTITY LOT # EXP Date QUANTITY
---------------- ---------------- ---------------- ----------------
<C> <C> <C> <C>
22,589 622D8L NOV-00 48
144 321D8L NOV-00 38
144 68019L DEC-00 9,331
96 68219L DEC-00 9,660
144 68319L DEC-00 9,538
24,184
11,209
23,771
24,536
24,243
---------------- ----------------
131,060 28,615
$800,777 $341,091
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
VALIDATION BATCHES
100S 60S
50MG BOTTLES 75MG BOTTLES
- ----------- --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
08461B MAY-01 3,465 08548B MAY-01 10,035
08550B MAY-01 10,193
08551B MAY-01 10,328
--------------- ----------------
UNITS 3,465 30,556
$ TOTAL $36,500 $109,500
==============================================================================================
<CAPTION>
50S
100MG BOTTLES
---------------- ----------------- ----------------
<C> <C> <C>
08186D JUN-00 6,431
08458B FEB-01 8,823
08460B MAR-01 9,212
----------------
UNITS 24,466
$ TOTAL $109,500
</TABLE>
<TABLE>
<CAPTION>
RAW MATERIAL
- -----------------------------------------------------------------------------------
LOT #'S DESCRIPT KGS ON HAND VALUE
- ----------------- ----------------------- -------------------- --------------------
<S> <C> <C> <C>
M23040 MINOCYCLINE 205.62 $328,992
M23041 MINOCYCLINE 179.79 $287,664
M23064 MINOCYCLINE 126.73 $202,768
M23065 MINOCYCLINE 49.63 $79,408
M23063 MINOCYCLINE 61.43 $98,288
-------------------- --------------------
TOTALS 623.20 $997,120
====================================================================================
<CAPTION>
EMPTY CAPSULE SHELLS
---------------------------------------------------------------------------------------
LOT #'S STRENGTH ON hands VALUE
----------------------- -------------------- ------------------ -----------------------
<C> <C> <C> <C>
ON ORDER 50MG T 1,000,000 $4,110.00
M23060 50MG T 493,945 $2,030.11
M23059 50MG S 493,945 $2,153.60
M23028 75MG T 313,945 $1,290.31
M22915 75MG S 300,000 $1,308.00
M23076 75MG S 1,581,775 $6,896.54
M22924 100MG T 767,710 $3,193.67
M23061 100MG T 170,410 $708.91
M23062 100MG S 520,410 $2,295.01
----------------------
TOTALS $21,691.15
===========================================================================================
</TABLE>
<PAGE> 46
4.15
LEGAL COMPLIANCE-FOOD AND DRUG ADMINISTRATION
1. As per 21 CFR 314.81(b)(2), annual reports containing post-marketing
information are required to be submitted within 60 days of the
anniversary date of the approval of the application. The 1999 Annual
Reports for ANDAs 63-066 and 63-067 have not yet been submitted.
However, please note that our target date for completion of these
reports is on or before September 30, 1999. This proposed date falls
within the 60 day period permitted by the regulations. In the event
that Closing occurs prior to September 30, 1999, the Regulatory
Affairs Department of the Seller shall use best effort to complete
the report and submit it on behalf of Purchaser.
2. Certain information regarding ANDA 63-067 was not made available to
representatives of Medicis at the time of diligence activities. The
documents are as follows:
- Annual report [21 CFR 314.81 (b)(2)] dated 8/31/92
- Letter from V. Kumar (of Warner Chilcott) to Dr. S. Dighe
(of the FDA) dated 1/28/93
- FDA Contact Sheets (which documented telephone
conversations) and/or written correspondence between Ms. N.
Enders (of Warner Chilcott) and Mr. N. Drezin or Dr. J.
Spearmoo (both of the FDA's Division of Drug Marketing,
Advertising and Communications) regarding a complaint filed
by Warner Chilcott against certain advertising materials
utilized to market a competitive brand of minocycline HCI
capsules.
-10-
<PAGE> 47
4.16
PRODUCT LIABILITY
See Section 4.8, which provides disclosures for Frazier and Wojnarowicz claims.
-11-
<PAGE> 48
4.17
NET SALES
See attached chart.
12
<PAGE> 49
[ACCOMPANYING CHART WAS REDACTED]
13
<PAGE> 50
EXHIBIT B to TRANSITION SERVICES AGREEMENT
CURRENT LIST PRICES FOR PRODUCTS
Attached is a Product Listing containing the current prices of Vectrin(R) 50 mg
capsules and Vectrin(R) 100 mg capsules. However, please note that also attached
are 2 sheets detailing special pricing offered to Health Care Purchasing Agency
in Orange, California. Also note that Warner Chilcott is a party to three
agreements with pharmaceutical wholesalers, namely Bergen Brunswig, McKesson
HBOC and Bindley Western providing for certain rebates and sales terms, which
arrangements were previously disclosed to Medicis in their due diligence
examination.
<PAGE> 51
WARNER CHILCOTT
LABORATORIES
Professional Products Division
(letterhead)
PRODUCT LISTING
-----------------
<TABLE>
<CAPTION>
JULY 1999
---------
NDC# PRODUCT SIZE FLAVOR/SHAPE PRICE PRICE
- ------- ---------------- ---------------------------------------------- ------------ ----------------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
RX 0047-0688 19 VECTRIN (MINOCYCLINE HCL CAPSULES, USP) 10 50 BLUE/OPAQUE [REDACTED] [REDACTED]
- ------- ---------------- ---------------------------------------------- ------------ ----------------------- ---------- ----------
RX 0047-0687 24 VECTRIN (MINOCYCLINE HCL CAPSULES, USP) 50 100 ORANGE/OPAQUE [REDACTED] [REDACTED]
- ------- ---------------- ---------------------------------------------- ------------ ----------------------- ---------- ----------
</TABLE>
