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EXHIBIT 10.2
CONFIDENTIAL
ASSET PURCHASE AGREEMENT
Between
AMERICAN HOME PRODUCTS CORPORATION
And
KING PHARMACEUTICALS, INC.
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of June 22, 2000 (the
"Agreement") by and between AMERICAN HOME PRODUCTS CORPORATION, a Delaware
corporation ("AHP" or "Seller") and King Pharmaceuticals, Inc., a Tennessee
corporation ("Buyer"). Seller and Buyer may each be referred to herein
individually as a "Party" and collectively as the "Parties".
W I T N E S S E T H:
WHEREAS, Seller, through its Wyeth-Ayerst Laboratories Division, is
engaged in, among other things, the marketing and sale of certain products for
human use marketed under the Bicillin(R), Wycillin(R) and Nordette(R) brand
names (the "Brands"); and
WHEREAS, Buyer desires to purchase certain assets of Seller relating to
the Brands in the Territory (as defined below), and Seller desires to sell such
assets to Buyer, upon the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, the
Parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, unless otherwise clearly indicated by
the context, the terms defined below shall have the indicated meanings:
1.1 "Affiliate" shall mean, with respect to any Person, any Person
which directly or indirectly through stock ownership or through other
arrangements either controls, or is controlled by or is under common control
with, such Person, provided, however, for purposes of this Agreement the term
"Affiliate" shall not include subsidiaries in which a Person owns a majority of
the ordinary voting power to elect a majority of the board of directors but is
restricted from electing such majority by contract or otherwise, until such time
as such restrictions are no longer in effect.
1.2 "Aggrieved Party" shall have the meaning set forth in Section 8.2.
1.3 "Allocation Statement" shall have the meaning set forth on Section
2.6.
1.4 "Applicable Laws" shall mean, with respect to the Purchased Assets
in the Territory, all laws, treaties, statutes, ordinances, judgments, decrees,
rules, injunctions, writs, regulations, binding arbitration rulings, orders,
judicial or administrative interpretations of, any
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Governmental Authority having jurisdiction over the Purchased Assets in the
Territory, as may be in effect prior to the Closing Date.
1.5 "Applicable Permits" shall mean any waiver, exemption, variance,
permit, authorization, license or similar approval, required to be obtained
under Applicable Laws in connection with the Purchased Assets.
1.6 "Assumed Liabilities" shall mean (i) all future obligations
relating exclusively to the Products that are required to be performed and
fulfilled after the Closing under the terms of the Customer Contracts; (ii)
except to the extent Buyer is specifically entitled to reimbursement pursuant to
the terms of Section 2.10, obligations for the return of Products and for
Product coupons returned after the Closing Date; (iii) state and federal
Medicaid/Medicare rebates, managed care and administrative fees, in connection
with Products sold in the Territory by Buyer (a) under the Marketing and
Distribution Agreement, or (b) after the Closing Date; (iv) all customer
chargebacks and similar payments to customers in connection with Products sold
in the Territory, having activity dates (the date that a wholesaler ships the
Product to a customer) from and after June 22, 2000; and (v) all product
liability claims relating to the occurrences of injuries caused by Products sold
by Buyer or the Purchased Assets from and after the Closing, except for any
liabilities for which Seller has specifically agreed to indemnify Buyer pursuant
to the terms of the Supply Agreements.
1.7 "Books and Records" shall mean the original books and records of
Seller related exclusively to the Products or the Purchased Assets and copies of
such other books and records of Seller to the extent related to the Purchased
Assets.
1.8 "Brands" shall have the meaning set forth in the first whereas
clause of this Agreement.
1.9 "Closing" shall have the meaning set forth in Section 2.3.
1.10 "Closing Date" shall have the meaning set forth in Section 2.3.
1.11 "Code" shall mean the U.S. Internal Revenue Code of 1986, as
amended.
1.12 "Commercially Reasonable Efforts" shall mean reasonable efforts
and resources at least equal to those normally used by a Party for a product
owned by it or to which it has rights.
1.13 "Copromotion Agreement" shall mean that certain copromotion
agreement entered into by the parties on even date herewith, pursuant to which
Seller will have the right to copromote with Buyer, Buyer's pharmaceutical
products containing ramipril or ramiprilat, including, without limitation,
ALTACE(R).
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1.14 "Customer Contracts" shall mean those contracts listed in Exhibit
B hereto, between Seller or any of its Affiliates and certain third parties
pursuant to which such third parties, inter alia, purchase or use any Products
sold by Seller or its Affiliates in the Territory.
1.15 "Costs" shall have the meanings set forth in Section 8.1.
1.16 "Encumbrances" shall mean all claims, security interests, liens,
pledges, charges, escrows, rights of first refusal, mortgages, hypothecations,
indentures, security agreements or any other encumbrances of any kind, whether
existing now or by reason of acceleration because of the conveyance of the
Purchased Assets.
1.17 "Excluded Assets" shall mean any and all of the assets of Seller
not specifically included among the Purchased Assets, including but not limited
to, cash; cash equivalents; accounts receivables; any type of receivable
relating to Taxes; inventory for all Products which are subject to the Supply
Agreements, including but not limited to finished goods, packaging materials,
raw materials and works in progress; all machinery and equipment used in the
manufacture of all Products; Excluded Know-How; and other intellectual property
(to the extent relating to geographic areas outside the Territory).
1.18 "Excluded Know-How" shall mean any and all Know-How owned or
controlled by Seller or one of its Affiliates other than the Included Know-How,
including without limitation Know-How related to Seller's product(s) other than
the Products.
1.19 "Governmental Authority" shall mean any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States including but not limited to federal, state, district, territory
possession, or commonwealth thereof.
1.20 "HSR Act" shall have the meaning set forth in Section 6.3.
1.21 "Included Intellectual Property" shall mean (i) all Included
Know-how; (ii) all Purchased Trademarks; (iii) the registered internet domain
name "Nordette.com"; and (iv) all copyrights, copyright registrations and
applications for registration, inventions, designs, industrial and utility
models (including registrations and applications for registration thereof), and
all other intellectual property rights (other than the Licensed Trademarks)
whether registered or not, in each case in this clause (iv) which are owned by
Seller and exclusively related to the Products.
1.22 "Included Know-How" shall mean any and all Know-How owned by
Seller exclusively related to the Products and/or the Purchased Assets.
1.23 "Indemnifying Party" shall have the meaning set forth in Section
8.2(i).
1.24 "Indicia" shall have the meaning set forth in Section 7.
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1.25 "Know-How" shall mean any and all product specifications,
processes, product designs, plans, trade secrets, ideas, concepts,
manufacturing, engineering and other manuals and drawings, SOP's, PLC's, flow
diagrams, chemical, pharmacological, toxicological, pharmaceutical, physical and
analytical, safety, quality assurance, quality control and clinical data,
technical information, data, research records, all promotional literature,
customer and supplier lists and similar data and information, and all other
confidential or proprietary technical and business information.
1.26 "License Agreement" shall mean the non-exclusive license
agreement, in the form of Exhibit C attached hereto and incorporated herein by
reference.
1.27 "Licensed Trademarks" shall mean the those trademarks indemnified
on Exhibit D attached hereto in the Territory.
1.28 "Marketing and Distribution Agreement" shall mean the Marketing
and Distribution Agreement in the form of Exhibit E attached hereto, pursuant to
which Seller shall market and distribute the Products on Buyer's behalf from
June 22, 2000 until the Closing Date, or such earlier date as this Agreement may
be terminated pursuant to Section 9.2.
1.29 "Material Adverse Effect" shall mean any event, circumstance or
effect that is materially adverse to the Purchased Assets or the business,
assets, operations, results of operations or financial condition of the
manufacture, distribution or sale of any of the Products, taken as a whole,
other than any event, change, circumstance or effect relating (x) to the United
States economy in general, (y) in general to the industries in which the
Products are sold and not specifically relating to the Products; provided that
the Products, taken as a whole, are not materially disproportionately affected
as compared to other Persons engaged in such industry by such event, change,
circumstance or effect or (z) changes, circumstances and effects relating to the
announcement of the transactions contemplated by this Agreement.
1.30 "Minimum Loss" shall have the meaning set forth in Section 8.3.
1.31 "Net Sales" shall mean the gross amount invoiced for a Product by
Buyer or its Affiliates to unaffiliated third parties in the Territory, less
returns and less the following amounts to the extent deducted from or on such
invoice or absorbed or accrued by Buyer or its Affiliates as required by United
States generally accepted accounting principles: (i) customary quantity, trade
and/or cash discounts, chargebacks, returns, allowances, rebates (including any
and all federal, state or local government rebates, e.g., Medicaid rebates) and
price adjustments allowed or given; and (ii) sales and other excise taxes and
duties directly related to the sale, to the extent such items are included in
the gross invoice price.
1.32 "Note" shall mean the promissory note in the principal amount of
$25 million, in the form attached as Exhibit A to the Stock and Note Purchase
Agreement.
1.33 "Permitted Encumbrances" shall have the meaning set forth in
Section 3.3(b).
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1.34 "Person" shall mean an individual, a corporation, a limited
liability company, a partnership, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
1.35 "Post-Closing Tax Period" shall mean any Tax period (or portion
thereof) beginning on the day immediately following the Closing Date.
1.36 "Pre-Closing Tax Period" shall mean any Tax period (or portion
thereof) ending on the Closing Date.
1.37 " Products" shall mean the products bearing one of the Trademarks
assisting of one of the Brands listed in Exhibit A hereto and sold for human use
prior to Closing.
1.38 "Purchase Price" shall have the meaning set forth in Section 2.1.
1.39 "Purchased Assets" shall mean, collectively, in each case relating
solely to the Products in the Territory, the Included Intellectual Property,
Buyer's rights and obligations under the License Agreement, Books and Records,
historical sales data, marketing and promotional materials and plans, all
transferable licenses, permits or other Governmental Authority authorizations
exclusively relating to the Products, including the Regulatory Approvals (except
for the New Drug Applications for the Nordette(R) Product, which shall be
transferred to Buyer as provided in Section 6.8(d)), the rights and future
obligations of Seller relating exclusively to the Products under the Customer
Contracts, and all goodwill related exclusively to the Brands.
1.40 "Purchased Trademarks" shall mean (a) the trademarks listed on
Schedule 3.6(a), service marks, trade names (excluding the names "American Home
Products," "Wyeth-Ayerst," "Lederle", the "Safer Sex Initiative" and "Pilpak"
trademark currently used in connection with the Nordette(R) Product, and
derivatives and variations thereof), trade dress, labels, logos and all other
names and slogans owned by Seller and exclusively associated with the Brands,
whether or not registered, and any applications or registrations therefor, and
(b) any associated goodwill incident thereto, in each case which are exclusively
employed in connection with the Purchased Assets as currently manufactured,
distributed and sold and specifically limited to applicability and use in the
Territory.
1.41 "Regulatory Approvals" shall mean all authorizations by the
appropriate Governmental Authorities which are required for the manufacture
(other than manufacturing facilities licenses, approvals or authorization),
marketing, promotion, pricing and sale of the Products in the Territory,
including approved New Drug Applications for the Products which are owned by
Seller or its Affiliates, together with all supplements, licenses and all
correspondence to or from Governmental Authorities exclusively related to the
Products in the Territory.
1.42 "Stock and Note Purchase Agreement" shall mean the Stock and Note
Purchase Agreement entered into by the Parties on June 22, 2000.
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1.43 "Supply Agreements" shall mean the Supply Agreements substantially
in the form of Exhibit F-1 and Exhibit F-2 related to (a) the Bicillin(R) and
Wycillin(R) Products; and (b) the Nordette(R) Product.
1.44 "Taxes" (and with correlative meanings, "Tax," "Taxes," and
"Taxable") shall mean all taxes of any kind imposed by a federal, state, local
or foreign Governmental Authority, including but not limited to those on, or
measured by or referred to as income, gross receipts, financial operation,
sales, use, ad valorem, value added, franchise, profits, license, excise, stamp,
premium, property, transfer or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
such Governmental Authority with respect to such amounts.
1.45 "TB Tine Test Products" shall mean Seller's tuberculin, purified
protein derivative (PPD) tine test products.
1.46 "Termination Date" shall have the meaning set forth in Section
9.1.
1.47 "Territory" shall mean the United States of America, the District
of Columbia and the Commonwealth of Puerto Rico.
1.48 "Trademark License Agreement" shall mean the Trademark License
Agreement covering the Licensed Trademarks substantially in the form of Exhibit
G attached hereto.
1.49 "Transaction Agreements" shall mean this Agreement, the Marketing
and Distribution Agreement, the Supply Agreements, the License Agreement, the
Stock and Note Purchase Agreement and the Trademark License Agreement.
ARTICLE 2
PURCHASE AND SALE; CLOSING; ALLOCATION
2.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, (a) Seller shall sell, assign, transfer and deliver to Buyer the
Purchased Assets, and (b) Buyer shall purchase and accept the Purchased Assets
from Seller, subject to Buyer's assumption of the Assumed Liabilities, for an
aggregate purchase price of two hundred million dollars ($200,000,000)
(collectively, the "Purchase Price"). The Purchase Price shall be payable as
provided in Section 2.4(a).
2.2 Assumption of Liabilities. With respect to the purchase and sale of
the Purchased Assets, in addition to payment of the Purchase Price and pursuant
to assumption agreements to be executed and delivered in accordance with Section
2.4(g), Buyer shall assume at the Closing and subsequently, in due course in
accordance with the terms applicable thereto,
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pay, honor and discharge (except where it is contesting in good faith) all of
the Assumed Liabilities.
2.3 The Closing. Unless this Agreement shall have been terminated, on
the terms and subject to the conditions of this Agreement, the closing of the
sale and purchase of the Purchased Assets and the consummation of the other
transactions contemplated hereby (the "Closing") shall take place at the offices
of Wyeth-Ayerst Laboratories, 150 A-3 North Radnor-Chester Road, St. Davids, PA
19087 on the later of July 7, 2000 or the third business day after the date on
which the last to be fulfilled or waived of the conditions set forth in Article
7 shall be fulfilled or waived in accordance with this Agreement or at such
other time, date or place as the parties may mutually agree upon in writing (the
"Closing Date"). At the Closing, the parties to this Agreement will exchange
funds, certificates and other documents specified in this Agreement. For
purposes of this Agreement the Closing will be treated as if it occurred at
11:59 p.m. on the Closing Date.
2.4 Deliveries by Buyer. At the Closing, Buyer shall deliver, or cause
to be delivered, to Seller the following:
(a) cash in the amount of One Hundred and Seventy-Five Million
Dollars ($175 million) payable by wire transfer in immediately
available funds to a U.S. bank account of Seller (which account shall
be designated by Seller no fewer than two business days prior to the
Closing Date);
(b) the certificate executed by an authorized officer of Buyer
required to be delivered pursuant to Section 7.2(c);
(c) a certificate, executed by an authorized officer of Buyer,
certifying (i) the due organization and good standing of Buyer, and
(ii) the authority and incumbency of officers of Buyer executing this
Agreement and the other agreements, instruments or certificates
delivered at the Closing;
(d) the Supply Agreements, duly executed by Buyer;
(e) the License Agreement, duly executed by Seller;
(f) the Trademark License Agreement, duly executed by Seller;
(g) the Note in the principal amount of Twenty-Five Million Dollars
($25 million), duly issued and executed by Buyer;
(h) a copy of the notice(s) required by 21 CFR 314.72(a)(i) from
Buyer to the FDA relative to the transfer of ownership of the
Bicillin(R) and Wycillin(R) Products;
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(i) such instruments of assumption and other certificates,
instruments or documents, in form and substance reasonably acceptable
to Buyer and Seller, as may be necessary to effect Buyer's assumption
under Applicable Laws of the Purchased Assets and the Assumed
Liabilities; and
(j) such other instruments and documents, in form and substance
reasonably acceptable to Buyer and Seller, as may be necessary to
effect the Closing.
2.5 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer
the following:
(a) the certificate executed by authorized officers of Seller
required to be delivered pursuant to Section 7.3(c);
(b) a certificate, executed by an authorized officer of Seller,
certifying (i) the due organization and good standing of Seller, and
(ii) the authority and incumbency of officers of Seller executing this
Agreement and the other agreements, instruments or certificates
delivered upon the Closing;
(c) the Supply Agreements, duly executed by Seller;
(d) the License Agreement, duly executed by Seller;
(e) the Trademark License Agreement, duly executed by Seller;
(f) the Note, duly acknowledged and agreed to by Seller
(g) a copy of the notice(s) required by 21 CFR 314.72(a)(i) from
Seller to the FDA relative to the transfer of ownership of the
ownership of the Bicillin(R) and Wycillin(R) Products;
(h) bills of sale and any other appropriate instruments of sale and
conveyance, in form and substance reasonably acceptable to Buyer and
Seller, transferring under Applicable Laws all Included Intellectual
Property included within the Purchased Assets to Buyer or its
Affiliates subject to the Permitted Encumbrances. Buyer, at its own
expense, shall prepare any and all individual assignment documents
required and record them with the U.S. Patent and Trademark Offices;
(i) to the extent the following items have not previously been
provided to Buyer;
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(i) complete and accurate copies of Seller's and its relevant
Affiliates' customer lists including relevant sales data
for the Products; and
(ii) copies of current and pending Customer Contracts for the
Products, which shall be redacted for the purpose of
deleting information that is not related to the Products
and other confidential information; and
(i) such other instruments and documents, in form and substance
reasonably acceptable to Buyer and Seller, as may be necessary to
effect the Closing.
2.6 Delivery of Financial Statements. Within thirty (30) days of the
Closing Date, Seller will deliver to Buyer audited financial statements for the
Products for the year 1999. In addition, Seller will deliver to Buyer unaudited
financial statements for the Products for the first two calendar quarters of
2000. King agrees to reimburse AHPC for the expenses for the preparation of such
financial statements which are estimated to be thirty-five thousand dollars
($35,000). Buyer and Seller shall cooperate with one another in connection with
the preparation of said financial statements for the Products. Buyer
acknowledges that said financial statements for the Products will be prepared in
accordance with usual and customary financial information provided in prior
audited statements delivered to Buyer by Seller.
2.7 Allocation.
(a) Prior to Closing, Buyer and Seller shall use diligent efforts
to agree upon a statement, (the "Allocation Statement") setting forth
the respective values of the Purchased Assets, which shall be used for
the allocation of the Purchase Price among the Purchased Assets.
(b) Seller and Buyer covenant and agree to report for Tax purposes
the allocation of such Purchase Price among the Purchased Assets in a
manner entirely consistent with the Allocation Statement and agree to
act in accordance with such Allocation Statement and in filing all tax
returns (including without limitation filing Form 8594 with its federal
income tax return for the taxable year that includes the date of the
Closing) and in the course of any tax audit, tax review or tax
litigation relating thereto.
2.8 Seller's Retention of Certain Rights. Notwithstanding anything to
the contrary contained in this Agreement, and for purposes of clarity, except as
described on Schedule 2.8, Seller shall retain ownership of and all rights in
and to (i) the current NDC numbers and product codes it uses for each of the
Products (subject to Buyer's right to sell Products under the Supply Agreements
using said NDC numbers and product codes), (ii) the real and personal property
(including without limitation all equipment) and general manufacturing know-how
used by Seller in manufacturing the Products (either before, during or after the
term of this Agreement)
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other than the Included Know-How, (iii) the Excluded Know-how without
limitation, (iv) to utilize the Included Know-how (a) without restriction
outside the Territory, and (b) within the Territory (i) to manufacture,
distribute, promote, advertise, use, and/or sell products other than the
Products, (ii) to produce the Products under the Supply Agreements, (iii) to
manufacture, use and sell Products both in and outside the Territory as
veterinary pharmaceutical products, or have the foregoing activities done, (iv)
to manufacture, distribute, promote, advertise, use and/or sell Products for
direct export by Seller and/or its Affiliates outside of the Territory, or have
the foregoing activities done. This Agreement shall not affect the rights of
Seller, and/or its Affiliates, to utilize in countries and territories other
than the Territory, Seller's trademarks, copyrights, trade dress, product
shapes, packaging, label, product, and other designs and Indicia of Seller's
ownership; and (v) to supply Berlex Laboratories with its requirements of the
monophasic oral contraceptive product equivalent to the Nordette(R) Product.
2.9 Contingent Payment. Seventy five million dollars ($75,000,000) of
the Purchase Price (the "Contingent Payment") shall be received by Seller as
contingent payment for aggregate, consolidated Net Sales of the Products in
calendar year 2001 totaling not less than twenty one million dollars
($21,000,000) (the "Sales Target"), such Contingent Payment subject to pro rata
reduction for Net Sales of Products below the Sales Target. Notwithstanding the
foregoing, the full Purchase Price, including the Contingent Payment, shall be
retained by Seller with no refund of the Contingent Payment if Buyer fails to
use Commercially Reasonable Efforts to promote and sell the Products, or if
there are Net Sales of any Product greater than in the ordinary course of
business for the calendar quarter ending December 31, 2000 or calendar years
ending December 31, 2001 and starting January 1, 2002. If the immediately
preceding sentence does not apply, then Seller shall pay to Buyer, within thirty
(30) days after receiving from Buyer's chief financial officer a certificate as
to the aforesaid Net Sales during the relevant periods, a payment in the amount
of the Contingent Payment if the Sales Target is not achieved, or such portion
of such Payment as shall reflect a pro rata reduction for consolidated Net Sales
of Products during 2001 of less than the Sales Target.
2.10 Seller's Covenant Not to Compete. Seller covenants not to sell,
directly or indirectly, in the Territory any generic to the Products until after
the third annual anniversary of the Closing Date, provided that in the event
Seller or any of its Affiliates merges with, acquires, or is acquired by any
other business that, prior to such merger or acquisition was selling any generic
to any of the Product(s) in the Territory, then Seller shall be permitted to
continue selling such generic to the Product(s) in unlimited quantities
notwithstanding anything in this Agreement to the contrary. The Supply Agreement
between Seller and Berlex Laboratories by which Seller has agreed to supply
Berlex with its requirements of the monophasic oral contraceptive product
equivalent to the Nordette(R) Product shall be deemed not to be a breach of
Seller's covenant not to compete. In the event that Seller merges with, acquires
or is acquired by any other business selling any generic to any of the
Product(s), Seller shall promptly notify Buyer in writing if and when Seller
determines to sell or outlicense any such generic product. Buyer shall have
sixty (60) days from the date such notice is given to make a written proposal to
Seller for the acquisition of rights to such generic product(s). If Buyer
provides such notice to Seller within such sixty (60) days, the Parties shall
negotiate in good faith the terms and conditions of an agreement for Buyer's
acquisition of rights to such generic product(s). In the
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event that (i) Buyer does not provide such notice to Seller within sixty (60)
days of the giving of Seller's notice or (ii) Buyer does provide such notice and
after a period of sixty (60) days from the date of such notice, despite good
faith negotiations, the Parties have not entered into a written agreement
setting forth the terms and conditions of such acquisition of rights to such
generic product(s), Seller shall have the right to at any time within the
following six (6) calendar months sell or otherwise transfer rights to such
generic product(s) to any third party on terms and conditions, taken as a whole,
that are not more favorable to the third party than those last offered to Buyer
by Seller in writing, and after such six (6) calendar month period at any time
on any terms and conditions.
2.11 Returns. As of the Closing Date and thereafter, Buyer shall be
responsible for all returns of Products sold in the Territory by Buyer provided,
however, that for the period of six (6) months following the Closing Date,
Seller will reimburse Buyer in an amount not to exceed one million dollars
($1,000,000) for all qualified returns of Products bearing a Seller label sold
by or on behalf of Seller or its Affiliates prior to the Closing Date (other
than Products sold by Buyer under the Marketing and Distribution Agreement) for
which returns, Buyer gives a refund or credit to the customer, provided,
however, that any credits or refunds Seller directly gives to any customer's
returns of any such Product shall be credited toward such reimbursement and
Buyer shall refund to Seller any amount of credits and refunds given by Seller
to customers which amount, in conjunction with any reimbursements made by Seller
to Buyer under this Section 2.10, exceeds one million dollars ($1,000,000). Five
(5) months after the Closing Date, Seller shall send a written notice to all
customers for Products during calendar year 2000 up to the Closing Date stating
that Seller shall no longer accept returns of the Products and refer such
customers to Buyer. Seller's reimbursement obligation shall not extend to
storage or other defects attributable to Buyer. Buyer shall not encourage
Products returns or accept unusual amounts of Products returns outside of the
normal course of business without the prior written consent of Seller. Seller
shall have the right to audit the Products returns submitted by Buyer for
reimbursement. For reimbursement, Buyer must submit a written request for
reimbursement to Seller and supply Seller with all related supporting
documentation reasonably requested by Seller and in the possession or control of
Buyer.
2.12 Chargebacks. As of the Closing Date and thereafter, Buyer shall be
responsible for all customer chargebacks for Products sold in the Territory,
provided, however, that with respect to such sales of Products, Seller for a
period of six (6) months after June 22, 2000 shall reimburse Buyer for all
qualified customer chargebacks having activity dates prior to June 22, 2000.
2.13 Reacquisition Rights. In the event that Seller terminates the
Copromotion Agreement pursuant to Section 11.3(a) or Section 11.3(b) thereof,
Seller shall have the right, but not the obligation, to reacquire all Purchased
Assets sold to Buyer hereunder which in any way relate to the Nordette(R)
Products. If Seller so elects to reacquire such Purchased Assets, Seller shall,
within thirty (30) days of the effective termination date of the Copromotion
Agreement, give Buyer written notice of such election. Upon Buyer's receipt of
such notice the Parties shall promptly, but in no event less than thirty (30)
days, negotiate, in good faith and execute an asset purchase agreement for the
transfer of such Purchased Assets to Seller, provided, however, that
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the total consideration payable by Seller for such reacquisition of rights shall
be one hundred ten million dollars ($110,000,000) payable in immediately
available funds by wire transfer on the closing date of such asset purchase
agreement. Additionally, upon Sellers reacquisition of such Purchased Assets (i)
Buyer's rights under the Trademark License Nordette(R) Products shall
automatically terminate, (ii) Buyer's rights, under the License Agreement, to
use Excluded Know-How relating to the Nordette(R) Products shall automatically
terminate, (iii) the Nordette(R) Supply Agreement shall automatically terminate,
and (iv) Buyer's rights, under the Marketing and Distribution Agreement to the
extent they relate to the Nordette(R) Products shall automatically terminate.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 Organization, Good Standing, Power, Etc. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware. Seller has the requisite corporate power and authority to
execute and deliver this Agreement and the Transaction Agreements contemplated
hereby and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement by Seller, the execution and delivery
by Seller of the Transaction Agreements, and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Seller and no other or further
corporate proceedings will be necessary for the execution and delivery of such
agreements by Seller, the performance by Seller of its obligations hereunder and
thereunder and the consummation by Seller of the transactions contemplated
hereby or thereby. This Agreement has been duly executed and delivered by Seller
and constitutes a legal, valid and binding obligation of Seller enforceable
against such Seller in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, moratorium, reorganization or other laws of
general applicability relating to or affecting the enforcement of creditors'
rights and general principles of equity.
3.2 Governmental Authorization; Required Consents. The execution,
delivery and performance by Seller of this Agreement and the Transaction
Agreements and the consummation by Seller of the transactions contemplated
hereby or thereby will not require any notice to, filing with, or the consent,
approval or authorization of, any Person or Governmental Authority, except as
contemplated in Section 6.3 hereof or as set forth in Schedule 3.2, other than
where the failure to obtain such consent, approval or authorization, or to give
or make any such notice or filing, would not be reasonably expected to have a
Material Adverse Effect.
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3.3 Properties.
(a) Except as set forth on Schedule 3.3(a), Seller has good and
marketable title to all Purchased Assets.
(b) No Purchased Asset is subject to any Encumbrance, except (i)
liens for Taxes, assessments and other governmental charges not yet due
and payable or being contested in good faith; (ii) immaterial
mechanics', workmen's, repairmen's, warehousemen's, carriers' or other
like liens arising or incurred in the ordinary course of business; and
(iii) any Encumbrances which do not materially detract from the value
of such Purchased Asset as now used, or materially interfere with any
present or intended use of such Purchased Assets (all items included in
items (i) through (iii) are referred to collectively herein as the
"Permitted Encumbrances").
3.4 Sufficiency of Intellectual Property. Upon consummation of the
transactions contemplated hereby, Buyer will have acquired good and marketable
title in and to each of the Purchased Assets, free and clear of all
Encumbrances, except the Permitted Encumbrances. Other than as described on
Schedule 3.3 (subject to Section 3.7 of this Agreement) or any Excluded Asset,
the Included Intellectual Property and the Licensed Trademarks constitute, and
on the Closing Date will constitute, all of the intellectual property rights
used, necessary for use, or held for use in the manufacture, testing, release
sale and distribution of the Products in the Territory.
3.5 Litigation. Except as set forth in Schedule 3.5, there is no civil,
criminal or administrative action, suit, hearing, proceeding or investigation
pending or, to the knowledge of Seller, threatened against the Seller relating
directly to the Purchased Assets or the transactions contemplated hereby, other
than those that individually or in the aggregate would not be reasonably
expected to have a Material Adverse Effect.
3.6 Intellectual Property Rights.
(a) Schedule 3.6(a) sets forth a listing of (i) all Purchased
Trademarks, registered copyrights and applications for copyright
registration, industrial and utility model registrations and
applications therefor, and design registrations and applications
therefor, included in the Included Intellectual Property that are owned
by Seller and included in the Purchased Assets, (ii) all contracts
under which Seller is licensed or otherwise uses or is permitted to use
Included Intellectual Property primarily in connection with the
Purchased Assets, (iii) all contracts under which Seller licenses or
otherwise permits any Party to use Included Intellectual Property used
primarily in connection with the Purchased Assets.
(b) To the knowledge of Seller (i) except as set forth in Schedule
3.6(b)(i), no Person has claimed that the Purchased Assets infringe on
or
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otherwise violate the intellectual property rights of any other Person
and (ii) except as set forth on Schedule 3.6(b)(ii) no Person is
challenging or infringing or otherwise violating the Included
Intellectual Property.
(c) Except as disclosed on Schedule 3.6(c), Seller either (i) owns
the entire right, title and interest in and to the Included
Intellectual Property free and clear of any Encumbrances; or (ii) has
the royalty-free right to use the same.
3.7 Compliance with Law. Except as set forth in Schedule 3.4 or
Schedule 3.7 the Purchased Assets have been utilized in compliance with all
Applicable Laws, except where the failure so to comply would not be reasonably
expected to have a Material Adverse Effect.
3.8 FDA Matters. Except as set forth on Schedule 3.8, none of the
Products are being manufactured (other than manufacture in connection with
research and development) packaged, tested or released or sold by Seller which
at the date hereof would require any approval of the FDA or any other
Governmental Authority for the purpose for which they are being manufactured,
assembled or sold for which such approval has not been obtained. There is no
action or proceeding by the FDA or any other Governmental Authority, including,
but not limited to, recall procedures, pending or, to the knowledge of Seller,
threatened against Seller relating to safety or efficacy of any of the Purchased
Assets.
3.9 Facilities and Manufacturing. Except as set forth on Schedule 3.9,
and only to the extent it could have a Material Adverse Effect on the Purchased
Assets or AHPC's performance hereunder or under any of the Transaction
Agreements, during the period commencing on January 1, 1998, and ending on the
date hereof, with respect only to the Products, neither AHPC nor its Affiliates
have received or been subject to: (i) any FDA form 483's relative to the
Products; (ii) any FDA Notices of Adverse Findings relative to the Products; or
(iii) warning letters or other correspondence from the FDA or any other
governmental officials or agencies concerning the Products in which the FDA or
other such governmental officials or agencies asserted that the operations of
AHPC were not in compliance with applicable law, regulations, rules or
guidelines.
3.10 Broker's Fees. Seller has not employed any broker, finder or
investment banker or incurred any liability for any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement.
3.11 No Other Representations of Warranties. Except for the
representations and warranties of Seller expressly set forth in this Agreement,
neither Seller nor any other Person makes any other express or implied
representation or warranty on behalf of Seller, or otherwise with respect of the
Products or the Purchased Assets.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.1 Corporate Organization, Good Standing, Power. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Tennessee. Buyer has the requisite corporate power and authority
to execute and deliver this Agreement and the Transaction Agreements
contemplated hereby and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement by Buyer, the execution
and delivery by Buyer of the Transaction Agreements, and the consummation by
Buyer of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Buyer and no other
or further corporate proceedings will be necessary for the execution and
delivery of such agreements by Buyer, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer of the
transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer enforceable against such Buyer in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating to or affecting
the enforcement of creditors' rights and general principles of equity.
4.2 Broker's Fees. None of Buyer or any of its Affiliates has employed
any broker, finder or investment banker or incurred any liability for any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement.
4.3 Consents and Approvals. Except as contemplated by Section 6.3
hereof, no material filing with, and no material permit, authorization, consent
or approval of, any public body or authority is necessary for the consummation
by Buyer of the transactions contemplated by this Agreement or the other
agreements which Buyer will execute pursuant to the terms of this Agreement.
4.4 Financial Capability. Buyer has sufficient funds available or loan
commitments to purchase the Purchased Assets on the terms and subject to the
conditions of this Agreement.
4.5 No Other Representations or Warranties. Except for the
representations and warranties of Buyer expressly set forth in this Agreement,
neither Buyer nor any other Person makes any other express or implied
representation or warranty on behalf of Buyer.
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ARTICLE 5
CONDUCT OF BUSINESS PENDING THE CLOSING
Seller agrees that:
5.1 Conduct of the Business. From the date hereof until the Closing
Date, Seller shall utilize the Purchased Assets in the ordinary course
consistent with past practice and shall not take any action to encourage its
customers to purchase quantities of Products prior to the Closing Date that are
in excess of the quantities needed by such customers to satisfy their normal
inventory requirements for such Products. Buyer acknowledges that Seller
implemented a 3.4% price increase for the Bicillin(R) product on or about June
1, 2000 with no buy-in.
5.2 Certain Actions. Seller shall not waive, release, grant or transfer
any Included Intellectual Property or modify or change in any material respect
any existing material license, distribution agreement or other document, in each
case, other than in the ordinary course of business.
ARTICLE 6
ADDITIONAL AGREEMENTS
The parties hereto agree that:
6.1 Expenses. All expenses, including the fees of any attorneys,
accountants, investment bankers or others engaged by a Party, incurred in
connection with this Agreement and the transactions contemplated hereby, shall
be paid by the Party incurring such expenses whether or not the transactions
contemplated by this Agreement are consummated.
6.2 Additional Agreements. Subject to the terms and conditions herein
provided, each of the Parties hereto agrees (i) to use reasonable efforts to do,
or cause to be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and to cooperate with each other in
connection with the foregoing, (ii) to use reasonable efforts to obtain all
necessary consents and approvals (or effective waiver thereof) from other
parties to material agreements, contracts, instruments and other contracts;
provided, however, that if any such consents and approvals are not obtained,
Seller shall cooperate with Buyer after the Closing to provide to Buyer
substantially equivalent benefits under or with respect to the matter as to
which the approval or consent is not obtained, (iii) to defend all lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby, (iv) to use reasonable efforts to effect all
necessary registrations and filings and submissions of information required or
requested by Governmental Authorities with respect to the transactions
contemplated hereby, and (v) including assigning or reassigning, or granting
rights, in relation to assets contemplated by this Agreement to be
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retained by Seller or transferred to Buyer and inadvertently transferred to
Buyer or retained by Seller, as the case may be.
6.3 Filings and Authorizations. Seller and Buyer have filed all
notifications and information required to be filed or supplied pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
in connection with the transactions contemplated by this Agreement. Seller and
Buyer, as promptly as practicable, will make, or cause to be made, all such
other filings and submissions under Applicable Laws, or to their subsidiaries
and Affiliates, as may be required for them to consummate the transactions
contemplated hereby in accordance with the terms of this Agreement, and Buyer
will obtain, or cause to be obtained, all authorizations, approvals, consents
and waivers from all Governmental Authorities necessary to be obtained by them,
or their Affiliates, in order for them so to consummate such transactions.
6.4 Use of Certain Names. Within ninety (90) days after the Closing,
Buyer shall revise product literature and labeling (including stickering),
change packaging and stationery, and otherwise discontinue use of the names
"American Home Products," "Wyeth-Ayerst," "Lederle", the "Safer Sex Initiative"
and "Pilpak" trademarks currently used in connection with the Nordette(R)
Product, and derivatives and variations thereof in the manner set forth in the
Supply Agreements.
6.5 Transaction Agreements. At the Closing, Seller will enter into the
Marketing and Distribution Agreement, the Supply Agreements, the License
Agreement, and the Trademark License Agreement with Buyer.
6.6 Use of Certain Assets. The parties agree that Seller, and/or its
Affiliates, own trademarks, copyrights, trade dress, product shapes, packaging,
label, product, and other designs and indicia of ownership (hereinafter
collectively, "Indicia") associated with the Brands and the Products and the
cartons and containers therefor used for advertising and other materials
associated therewith as well as various registrations thereof in countries and
territories other than the Territory. Buyer hereby acknowledges the validity and
ownership by Seller of any and all such Indicia and any and all registrations
thereof and hereby agrees that except in the Territory and as expressly provided
for in this Agreement, Buyer shall not after the Closing directly or indirectly
associate, register, use, or apply or permit the association, registration, use
or application of any of such Indicia or registrations or anything imitative of
or which resembles or is confusingly similar to or with any of such Indicia or
registrations in connection with any business of or associated with Buyer or its
Affiliates or to or with any products manufactured, permitted, or distributed by
or for Buyer or its Affiliates. The provisions of this paragraph shall survive
Closing indefinitely.
6.7 Option to TB Tine Test Products. Provided that Buyer is not in
breach of any material term of this Agreement at the time of its exercise, Buyer
shall have an exclusive option (the "Option Right") to purchase the TB Tine Test
Products for the sum of seven million dollars ($7,000,000), exercisable on or
after January 2, 2001 and before April 1, 2001. Buyer may exercise its Option
Right by written notice to Seller made at any time from January 2, 2001
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through March 31, 2001. If Buyer exercises its Option Right the Parties shall
negotiate in good faith the remaining terms of an asset purchase agreement for
the sale and purchase of the TB Tine Test Products. If, after a period of ninety
(90) days from the date of Buyer's notice of exercise of its Option Right,
despite good faith negotiations, the Parties have not entered into a written
agreement setting forth the terms of the sale and purchase of the TB Tine Test
Products, Seller shall have the right to at any time within the following six
(6) calendar months sell the TB Tine Test Products to any third party on terms
and conditions, taken on a whole, that are not more favorable to the third party
than those last offered to Buyer by Seller in writing, and after such six (6)
calendar month period at any time on any terms and conditions.
6.8 Regulatory Matters.
(a) Within thirty (30) days after the Closing Date, Seller shall
provide Buyer with complete copies of Sellers Regulatory Approvals for
the Products on the Territory and all correspondence or other documents
reasonably related to such Regulatory Approvals.
(b) Buyer irrevocably grants to Seller and its Affiliates the right
to reference and quote the Regulatory Approvals and all portions
thereof to support Seller's Product related activities outside of the
Territory and to support any veterinary pharmaceutical products, which
Seller currently markets or sells or may, in the future, market or
sell. Buyer shall not amend the Regulatory Approvals for the
Bicillin(R) and Wycillin(R) Products during the respective term of the
Supply Agreement for each such Product without the prior written
consent of Seller, such consent not to be unreasonably withheld, and
Seller shall respond to Buyer's request for consent within thirty (30)
days from such request.
(c) Upon transfer and assignment of each of the Regulatory
Approvals to Buyer, as provided in Section 2.5 and Section 6.8(d), and
thereafter Buyer shall be solely responsible for conducting all
activities in connection with such Regulatory Approvals for the
Bicillin(R), Wycillin(R), and Nordette(R) Products, as applicable,
including, without limitation, communicating, and preparing and filing
all reports (including, without limitation, adverse drug experience
reports) with the appropriate Governmental Authorities in the Territory
and interacting with any third parties with respect to Products sold or
distributed in the Territory; provided, however, that for up to sixty
(60) days after such transfer, Seller shall assist and cooperate in the
transition of such activities to Buyer. Additionally, to the extent
that Buyer is obligated, under Applicable Laws, to report to
Governmental Authorities in the Territory, adverse drug experiences
associated with Products sold by or on behalf of Seller outside of the
Territory, Seller shall provide Buyer with information about such
adverse drug experiences in accordance with the provisions of this
Section, and to the extent that Seller is obligated under Applicable
Laws to report adverse drug experiences associated with Products sold
by or on behalf of Buyer inside the Territory, Buyer shall
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provide Seller with information about such adverse drug experiences in
accordance with the provisions of this Section 6.9.
(d) Seller and Buyer shall work together to transfer and assign
Seller's current New Drug Application for the Nordette(R) Product in
the Territory to Buyer at such time and in such a manner that is
reasonably acceptable to both Parties and which will permit AHPC to
continue manufacturing products equivalent to the Nordette(R) for sale
to Berlex for resale in the Territory or for sale by AHPC or its
Affiliates, directly or indirectly, outside the Territory
(e) After the Closing Date, Buyer shall pay all NDA maintenance
fees and any establishment license fees of Buyer, its Affiliates or
third parties which must be paid with respect to facilities used in the
manufacture of Products by or on behalf of Buyer. Notwithstanding the
foregoing, for so long as Seller is supplying Products to Buyer in
accordance with the Supply Agreements, Seller shall pay any
establishment license fees which must be paid with respect to Seller's,
its Affiliates or subcontractor's facilities used for the manufacture
of the Products.
(f) In order for the Parties to comply with their respective
responsibilities under this Section 6.8 and otherwise relating to the
reporting of adverse drug experiences, to the extent either Party
receives any information regarding adverse drug experiences related to
the use of the Product, whether such use is within or outside of the
Territory, such Party shall promptly provide the other Party with such
information in accordance with the Adverse Event Reporting Procedures
(as may be amended from time to time upon mutual agreement) set forth
in Exhibit H.
(g) AHPC covenants to complete at its expense the open regulatory
issues identified on Exhibit I, as soon as reasonably practicable
after the Closing, for filing with the FDA by King.
6.9 Technology Transfer.
(a) As soon as practicable after the Closing, Seller shall furnish
Buyer with one (1) copy of the Included Know-How, including all
technical, manufacturing and Seller's other written information,
including but not limited to process sheets, raw material and process
specifications, manuals, vendors lists, and other writing specifically
relating to the Products, which are currently used by Seller, its
Affiliates or sub-contractors to manufacture package, test or release
or have manufactured, packaged, tested or released Products according
to the methods used by Seller or its Affiliates or sub-contractors to
manufacture, package, test or release or have manufactured, packaged,
tested or released Products according to the methods used by Seller or
its Affiliates or sub-contractors. Seller agrees that Buyer, its
Affiliates or its permitted sublicensees,
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may use all Included Know-How listed in the preceding sentence for the
manufacture, packaging, testing or release of the Products for sale in
the Territory.
(b) In connection with the transfer of information described in
Section 6.9(a), Seller shall permit a reasonable number of Buyer's
technically skilled personnel and sub-contractors designated by Buyer
(with travel and living expenses paid by Buyer) to make one or more
visits to such facilities of Seller or its Affiliates as may be engaged
in the manufacture of Products for up to an aggregate of thirty (30)
man-days in order to inspect and be instructed in all manufacturing
techniques and procedures used by Seller, its Affiliates or
sub-contractors in the manufacture of Products.
(c) Buyer agrees that it and its designees shall use all Included
Know-How provided to Buyer by or on behalf of Seller, its Affiliates or
sub-contractors for the sole purpose of making, using and/or selling
the Products only for human use in the Territory and shall not use or
permit any third party to use such Included Know-How for the purpose of
making Products for sale outside the Territory or for use as veterinary
pharmaceutical products within or outside of the Territory. In the
event, due to Buyer's failure to comply with any provision of the
Transaction Agreements, the Included Know-How is used for the purpose
of making Products for either sale outside the Territory or sale as
veterinary pharmaceutical products within or outside of the Territory,
Buyer shall immediately cease such use and/or sale and take such action
as may be necessary to prevent a third party from using such Included
Know-How for the purpose of making Products for sale outside the
Territory. The provisions of this Section shall not limit any other
remedy Seller has on account of the use of the Included Know-How for
the purpose of making Products for sale outside the Territory or for
sale as veterinary pharmaceutical products within or outside the
Territory.
(d) Seller agrees that it and its designees shall use all Included
Know-How only for purposes consistent with Seller's retained rights
under Section 2.7. In the event, due to Seller's failure to comply with
any provisions of the Transaction Agreements, the Included Know-How is
used for purposes inconsistent with Seller's retained rights under
Section 2.7, Seller shall immediately cease such use and/or sale and
take such action as may be necessary to prevent a third party from
using such Included Know-How for the purpose of making Products for
human use for sale inside the Territory. The provisions of this Section
shall not limit any other remedy Buyer has an account of the use of the
Included Know-How for the purpose of making Products for human use for
sale inside the Territory.
6.10 Customer Contracts. A complete and accurate list of each Customer
Contract pursuant to which Seller or its Affiliates is, immediately prior to the
date of this Agreement, selling any of the Products, either with or without
other products of Seller and its
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Affiliates, to third party buyers is attached hereto as Exhibit B. Seller shall
provide, pursuant to Section 2.5(g), to Buyer a complete and accurate copy of
each such Customer Contract except that such copies may have information
redacted as provided in Section 2.5(g). After the Closing Date, Seller and Buyer
shall use their mutual Commercially Reasonable Efforts to obtain the release of
Seller and/or its Affiliate(s) from any further obligation with respect to the
Products under each of the Customer Contracts, except that Seller will continue
to comply with the Customer Contracts in respect to its obligations thereunder
relating to products other than the Products and events and actions, omissions
or contractual obligations of Seller occurring or accruing prior to the Closing
Date other than filling customer orders not filled as of the Closing Date. The
Parties understand and agree that, because the right to sell the Products is
being transferred to Buyer pursuant to this Agreement, after the Closing Date,
Seller will no longer have the right to sell the Products under the Customer
Contracts. Buyer covenants and agrees that it will continue to honor all of
Seller's and its Affiliates' commitments made in each such Customer Contract
with respect to supplying the Products after the Closing Date, including,
without limitation, the sale prices, for the Products throughout the term of
each such Customer Contract. Buyer covenants that it will not terminate any
Customer Contract as to any of the Products which is terminable by Buyer, other
than for uncured breach by the third party buyer, except on at least sixty (60)
days notice to the third party buyer. Seller agrees that after the Closing Date
it will not take any action with respect to any Customer Contract which will
extend the term of such Customer Contract for any Product or otherwise adversely
affect Buyer, or create or agree to any additional obligations, with respect to
any Product, without the prior written consent of Buyer.
ARTICLE 7
CONDITIONS
7.1 Conditions to Obligation of each Party to Effect the Transactions
Contemplated by this Agreement. The obligation of each Party to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) all consents and approvals of Governmental Authorities, if any,
necessary to permit the consummation of the transactions contemplated
by this Agreement shall have been obtained and any waiting period
(including any extension thereof) applicable to the consummation of the
Agreement under the HSR Act shall have expired or been terminated; and
(b) no preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a
Governmental Authority or executive order promulgated or enacted by any
Governmental Authority shall be in effect that would restrain or
otherwise prevent the consummation of the transactions contemplated by
the Agreement.
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7.2 Conditions to the Obligation of Seller. The obligation of Seller to
effect the transactions contemplated by this Agreement is subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Buyer shall have performed in all material respects each
obligation and agreement and complied in all material respects with
each covenant to be performed and complied with by it hereunder at or
prior to the Closing Date;
(b) the representations and warranties of Buyer in this Agreement
shall be true and correct in all material respects, as of the Closing
Date with the same force and effect as though made at such time, except
for changes contemplated by this Agreement;
(c) Buyer shall have furnished to Seller a certificate, dated as of
the Closing Date, signed by a duly authorized officer of Buyer to the
effect that all conditions set forth in Sections 7.2(a) and (b) have
been satisfied; and
(d) Buyer shall have sufficient funds to meet its obligations under
Section 2.4(a) hereof.
7.3 Conditions to the Obligation of Buyer. The obligation of Buyer to
effect the transactions contemplated by this Agreement is subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Seller shall have performed in all material respects each
obligation and agreement and complied in all material respects with
each covenant to be performed and complied with by them hereunder at or
prior to the Closing;
(b) the representations and warranties of Seller in this Agreement
shall be true and correct in all material respects, as of the Closing
Date with the same force and effect as though made at such time, except
for changes contemplated by this Agreement; and
(c) Seller shall have furnished to Buyer a certificate, dated as of
the Closing Date, signed by a duly authorized officer of Seller to the
effect that all conditions set forth in Sections 7.3(a) and (b) have
been satisfied.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification.
(a) Subject to Section 8.3, Seller shall indemnify, defend and hold
harmless Buyer and its Affiliates, and their respective officers,
directors,
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employees, agents and controlling Persons from any liability, damage,
deficiency, loss, judgments, assessments, cost or expense, including
reasonable attorneys' fees and costs of investigating and defending
against lawsuits, complaints, actions or other pending or threatened
litigation (being hereafter referred to in this Article VIII as
"Costs"), arising from or attributable to:
(i) The breach of any representation or warranty made by
Seller in this Agreement;
(ii) Any failure of Seller duly to perform or observe any
covenant or agreement to be performed or observed by
Seller pursuant to this Agreement;
(iii) The Excluded Liabilities; and
(iv) Except as otherwise specifically set forth in the Supply
Agreements, any bodily injuries occurring before the
Closing Date based upon, arising out of or resulting from
the use of a Product.
(b) Buyer shall indemnify and hold harmless Seller and its
Affiliates, and their respective officers, directors, employees, agents
and controlling Persons from Costs arising from or attributable to:
(i) The breach in any representation or warranty made by
Buyer in this Agreement;
(ii) Any failure of Buyer duly to perform or observe any
covenant or agreement to be performed or observed by
Buyer pursuant to this Agreement; and
(iii) The Assumed Liabilities.
(c) Seller and Buyer shall indemnify the other for all Taxes for
the periods and in the manner described in Section 6.4 which shall be
the sole and exclusive basis of indemnity for Taxes under this
Agreement.
8.2 Procedures.
(a) Promptly after the receipt by any Person entitled to indemnity
hereunder of notice under this paragraph 8.2, of (i) any claim or (ii)
the commencement of any action or proceeding, such Person (the
"Aggrieved Party") will, if a claim with respect thereto is to be made
against any Party obligated to provide indemnification pursuant to this
Article 8 (the "Indemnifying Party"), give such Indemnifying Party
written notice of such claim or the commencement
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of such action or proceeding and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting from
such claim, and, upon such assumption, shall cooperate fully with the
Indemnifying Party in the conduct of such defense. Failure by the
Indemnifying Party to notify the Aggrieved Party of its election to
defend any such action within a reasonable time, but in no event more
than fifteen days after notice thereof shall have been given to the
Indemnifying Party, shall be deemed a waiver by the Indemnifying Party
of its right to defend such action. If the Indemnifying Party assumes
the defense of any such claim or litigation resulting therefrom, the
obligations of the Indemnifying Party as to such claim shall be limited
to taking all steps necessary in the defense or settlement of such
claim or litigation resulting therefrom. The Aggrieved Party may
participate, at its expense, in the defense of such claim or litigation
provided that the Indemnifying Party shall direct and control the
defense of such claim or litigation. The Indemnifying Party shall not,
in the defense of such claim or any litigation resulting therefrom,
consent to entry of any judgment, except with the written consent of
the Aggrieved Party, or enter into any settlement, except with the
written consent of the Aggrieved Party, which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff
to the Aggrieved Party of a release from all liability in respect of
such claim or litigation. In addition, all awards and costs payable by
a third party to the Aggrieved Party or the Indemnifying Party shall
belong to the Indemnifying Party.
(b) If the Indemnifying Party shall not assume the defense of any
such claim or litigation resulting therefrom, the Aggrieved Party may
defend against such claim or litigation in such manner as it may deem
appropriate and, unless the Indemnifying Party shall deposit with the
Aggrieved Party a sum equivalent to the total amount demanded (subject
to the limitation set forth in Section 8.3(b)) in such claim or
litigation less the Minimum Loss, or shall deliver to the Aggrieved
Party a surety bond in form and substance reasonably satisfactory to
the Aggrieved Party in such amount, the Aggrieved Party may settle such
claim or litigation on such terms as it may deem appropriate, and the
Indemnifying Party shall promptly reimburse the Aggrieved Party for the
amount of all expenses, legal or otherwise, incurred by the Aggrieved
Party in connection with the defense against or settlement of such
claim or litigation. If no settlement of such claim or litigation is
made, the Indemnifying Party shall promptly reimburse the Aggrieved
Party for the amount of any judgment rendered with respect to such
claim or in such litigation and of all expenses, legal or otherwise,
incurred by the Aggrieved Party in the defense against such claim or
litigation.
8.3 Limitations. An Aggrieved Party shall not be entitled to recover
any Costs under Section 8.1(a) until the aggregate amount of the Costs suffered
by the Aggrieved Party thereunder shall equal or exceed one million dollars
($1,000,000) (the "Minimum Loss"), at which time the indemnification provided
under Section 8.1(a) shall apply to all Costs in excess
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of the Minimum Loss, and (b) the maximum liability under Section 8.1(a) for an
Indemnifying Party shall not exceed ten million dollars ($10,000,000) in the
aggregate.
8.4 Indemnification as Sole Remedy. The indemnification provided in
this Article 8, subject to the limitations set forth herein, shall be the
exclusive post-Closing remedy for damages available to any Aggrieved Party.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of Buyer and Seller;
(b) by Seller if the Closing shall not have occurred on or prior to
September 30, 2000; or
(c) Subject to Section 6.3, by Buyer or Seller if a court of
competent jurisdiction or Governmental Authority shall have issued an
order, decree or ruling or taken any other action, in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable.
The date on which this Agreement is terminated pursuant to any of the
foregoing subsections of this Section 9.1 is herein referred to as the
"Termination Date."
9.2 Effect of Termination. Upon the termination of this Agreement
pursuant to Section 9.1, (a) this Agreement shall forthwith become null and
void, except that nothing herein shall relieve any Party from liability for
breach of this Agreement prior to such termination, (b) the Marketing and
Distribution Agreement shall automatically terminate, and (c) Buyer shall pay to
Seller one hundred thousand dollars ($100,000) for each day that the Marketing
and Distribution Agreement was in effect.
ARTICLE 10
GENERAL PROVISIONS
10.1 Public Statements. So long as this Agreement is in effect, none of
the Parties hereto shall issue or cause the dissemination of any press release
or other announcement with respect to this Agreement or the transactions
contemplated hereby without consulting with and obtaining the consent of the
other Party which shall not be unreasonably withheld; provided, however, that
such consent shall not be required where such release or announcement is
required
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by applicable law or legal process. The parties agree that the press release
attached hereto as Exhibit J may be released on the Closing Date.
10.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally,
mailed by reputable overnight courier or certified mail (return receipt
requested) or sent by telecopier (confirmed thereafter by certified mail) to the
parties at the following addresses or at such other addresses as shall be
specified by the Parties by like notice:
(a) if to Seller:
Wyeth-Ayerst Laboratories
555 E. Lancaster Avenue
St. Davids, PA 19087
Attention: Senior Vice President
Global Business Development
Telecopier Number: (610) 688-9498
with a copy to:
American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Attention: Senior Vice President
and General Counsel
Telecopier Number: (973) 660-7155
(b) if to Buyer:
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620
Attention: President
Telecopier Number: (423) 989-8806
with a copy to:
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620
Attention: Executive Vice President and General Counsel
Telecopier Number: (423) 989-6282
Notice so given (in the case of notice so given by mail) shall be
deemed to be given and received on the third calendar day after mailing or the
next business day if sent by a
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reputable overnight courier and (in the case of notice so given by telecopier or
personal delivery) on the date of actual transmission or (as the case may be)
personal delivery.
10.3 Survival of Representations and Warranties. The respective
representations and warranties of the Parties hereto shall survive the Closing
and shall remain in full force and effect for a period of thirty six (36) months
after the Closing Date except for those relating to Taxes, which representations
and warranties shall survive until the period of the applicable statute of
limitations has expired. Except for claims relating to Taxes, in no event shall
any amounts be recovered from an Indemnifying Party under Article 8 or otherwise
for any matter for which a written notice of claim specifying in reasonable
detail the specific nature of the Costs and the estimated amount of such Costs
("Claim Notice") is not delivered to the other Party prior to the close of
business on the thirty six (36) month anniversary date of the Closing Date, and
the indemnities granted by Seller and Buyer in Article 8 shall terminate thirty
six (36) months after the Closing Date; provided, however, that such indemnities
shall survive with respect only to the specific matter that is the subject of
any Claim Notice delivered in good faith within such thirty six (36) month
period and otherwise in compliance with the requirements of Article 8 until the
earlier to occur of (A) the date on which a final nonappealable resolution of
the matter described in such Claim Notice has been reached or (B) the date on
which the matter described in such Claim Notice has otherwise reached final
resolution.
10.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Parties hereto.
10.5 Waiver. At any time prior to the Closing, any term, provision or
condition of this Agreement may be waived in writing (or the time for
performance of any of the obligations or other acts of the Parties hereto may be
extended) by the Party that is entitled to the benefits thereof.
10.6 Parties in Interest. This Agreement may not be assigned by a Party
without the prior written consent of the other Parties hereto provided, however,
that either Party may assign this Agreement without such consent in connection
with the sale or other transfer for of all or substantially all of its assets.
This Agreement shall not run to the benefit of or be enforceable by any Person
other than a Party to this Agreement and, subject to the first sentence of this
Section, its successors and assigns.
10.7 Seller's Knowledge. When "to the knowledge of Seller" or similar
phrase is used herein it shall be deemed to refer to the actual knowledge of any
Executive Vice President, Sr. Vice President or Vice President of the
Wyeth-Ayerst Laboratories division of American Home Products Corporation.
10.8 Entire Agreement; Governing Law; Miscellaneous. With the exception
of the Confidentiality Agreements dated April 5, 2000 by and between the
Parties, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement and supersedes all other prior
agreements and undertakings, both written and oral, among the Parties, or any of
them, with respect to the subject matter hereof; is not intended to confer upon
any other
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Person any rights or remedies hereunder; and shall be governed in all respects,
including validity, interpretation and effect, by the internal laws of the State
of New York without giving effect to the principles of conflicts of laws
thereunder. This Agreement may be executed in one or more counterparts which
together shall constitute a single agreement. If any provisions of this
Agreement shall be held to be illegal, invalid or unenforceable under any
applicable law, then such contravention or invalidity shall not invalidate the
entire Agreement. Such provision shall be deemed to be modified to the extent
necessary to render it legal, valid and enforceable, and if no such modification
shall render it legal, valid and enforceable, then this Agreement shall be
construed as if not containing the provision held to be invalid, and the rights
and obligations of the parties shall be construed and enforced accordingly.
10.9 Waiver of Bulk Sales. The Parties waive compliance with any bulk
sales or similar laws in connection with the consummation of the transactions
contemplated by the Transaction Agreements.
(remainder of page intentionally left blank)
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10.10 Exhibits and Schedules. All Exhibits and Schedules referred to
herein form an integral part of this Agreement and are incorporated into this
Agreement by reference.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
AMERICAN HOME PRODUCTS CORPORATION
By: /s/ Kenneth J. Martin
----------------------------------------
Name: Kenneth J. Martin
Title: Senior Vice President and Chief
Financial Officer
KING PHARMACEUTICALS, INC.
By: /s/ Jefferson J. Gregory
----------------------------------------
Name: Jefferson J. Gregory
Title: President and Chief Operating
Officer
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