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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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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 1-5851
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RHONE-POULENC RORER INC.
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(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PENNSYLVANIA 23-1699163
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 ARCOLA ROAD
COLLEGEVILLE, PENNSYLVANIA 19426-0107
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(Address of principal (Zip Code)
executive offices)
(610) 454-8000
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(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 [ ]
The number of shares of common stock outstanding as of the close
of business July 31, 1996 was 136,104,892.
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The Exhibit Index is located on page 25.
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RHONE-POULENC RORER INC.
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended June 30, 1996
TABLE OF CONTENTS
--------------------------------------------------
PART I. FINANCIAL INFORMATION
Page
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Item 1. Financial statements:
Report of Independent Accountants 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Balance Sheets 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7-13
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 14-20
PART II. OTHER INFORMATION
Item 3. Legal Proceedings 21-24
Item 6. Exhibits 25
2
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Rhone-Poulenc Rorer Inc.:
We have reviewed the accompanying condensed consolidated balance
sheet of Rhone-Poulenc Rorer Inc. and subsidiaries as of June
30, 1996, and the related condensed consolidated statements of
income and cash flows for the three- and six-month periods ended
June 30, 1996 and 1995. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
Rhone-Poulenc Rorer Inc. and subsidiaries as of December 31,
1995, and the related consolidated statements of income and cash
flows for the year then ended and in our report dated January
26, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1995, is fairly stated, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
/s/ COOPERS & LYBRAND L.L.P.
-------------------------------
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
July 22, 1996
3
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
--------------------
RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - amounts in millions except per share data)
Three Months Six Months Ended
Ended June 30, June 30,
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
Net sales $1,346.1 $1,241.3 $2,618.5 $2,339.7
Cost of products sold 443.8 427.7 878.0 831.7
Selling, delivery and
administrative expenses 532.5 474.8 1,046.7 861.6
Research and development
expenses 214.4 184.3 414.3 343.0
-------- -------- -------- --------
Operating income 155.4 154.5 279.5 303.4
Interest expense, net 43.5 12.4 84.5 23.0
Gain on sale of assets -- -- -- (49.5)
Other (income) expense, net (36.6) 10.8 (77.4) 59.8
-------- -------- -------- --------
Income before income taxes 148.5 131.3 272.4 270.1
Provision for income taxes 46.3 39.9 85.2 83.5
-------- -------- -------- --------
Net income 102.2 91.4 187.2 186.6
Dividends on preferred stock
and remuneration on capital
equity notes 10.3 5.7 21.3 11.4
-------- -------- -------- --------
Net income available to
common shareholders $ 91.9 $ 85.7 $ 165.9 $ 175.2
======== ======== ======== ========
Primary earnings per common
share:
Net income available to
common shareholders
per share $ .68 $ .64 $ 1.23
======== ======== ========
Net income available to
common shareholders
per share, pro forma $ 1.29
========
Cash dividends per common
share $ .32 $ .30 $ .62 $ .60
======== ======== ======== ========
Average common shares
outstanding 135.7 134.2 135.3 134.1
======== ======== ======== ========
See Notes to Condensed Consolidated Financial Statements.
4
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RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - dollars in millions)
June 30, December 31,
1996 1995
-------- -------
ASSETS
Current:
Cash and cash equivalents $ 60.9 $ 115.4
Cash pooling arrangements with
Rhone-Poulenc S.A. 10.4 16.0
Short-term investments 66.7 --
Trade accounts and notes receivable, less
reserves of $95.5 (1995: $87.3) 870.6 956.8
Inventories 832.8 765.6
Assets held for sale 9.3 228.8
Other current assets 787.8 707.0
-------- --------
Total current assets 2,638.5 2,789.6
Time deposits, at cost 83.0 83.0
Property, plant and equipment, net of
accumulated depreciation of $1,447.4
(1995: $1,255.5) 1,556.5 1,621.0
Goodwill, net of accumulated amortization of
$274.6 (1995: $241.6) 2,836.9 2,953.5
Intangibles, net of accumulated amortization
of $133.4 (1995: $106.3) 849.2 866.8
Other assets 769.1 673.2
-------- --------
Total assets $8,733.2 $8,987.1
LIABILITIES
Current:
Short-term debt $ 189.1 $ 384.2
Notes payable to Rhone-Poulenc S.A. &
affiliates 225.5 127.6
Accounts payable 529.8 601.8
Other current liabilities 1,143.4 1,291.5
-------- --------
Total current liabilities 2,087.8 2,405.1
Long-term debt 2,415.2 2,159.0
Notes payable to Rhone-Poulenc S.A. &
affiliates 249.5 525.4
Deferred income taxes 363.1 365.5
Other liabilities, including minority
interests 1,201.5 1,174.9
-------- --------
Total liabilities 6,317.1 6,629.9
Contingencies
SHAREHOLDERS' EQUITY
Money market preferred stock, without par
value (liquidation preference $100,000 per
share); authorized, issued and outstanding
1,750 shares 175.0 175.0
Capital equity notes 500.0 500.0
Common stock, without par value; stated value
$1 per share; authorized 200,000,000 shares;
issued and outstanding 135,986,739 shares
(1995: 134,528,487 shares) 141.0 139.5
Capital in excess of stated value 204.2 153.2
Retained earnings 1,662.3 1,580.3
Employee Benefits Trust (185.7) (185.7)
Cumulative translation adjustments (80.7) (5.1)
-------- --------
Total shareholders' equity 2,416.1 2,357.2
-------- --------
Total liabilities and shareholders'
equity $8,733.2 $8,987.1
======== ========
See Notes to Condensed Consolidated Financial Statements.
5
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RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - dollars in millions)
Six Months Ended
June 30,
------------------
1996 1995
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 46.5 $ 136.3
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (165.9) (122.9)
Proceeds from sale of assets 251.3 84.0
Businesses acquired (25.3) (185.0)
Purchases of investments/product rights, net (20.2) (110.6)
Net investment hedging, net -- (9.2)
------- -------
Net cash provided by (used in) investing
activities 39.9 (343.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings (repayments):
Long-term debt, net (9.9) 64.4
Short-term debt, net (71.7) 143.8
Issuances of common stock 52.5 1.8
Dividends and remuneration paid (105.2) (91.9)
------- -------
Net cash provided by (used in) financing
activities (134.3) 118.1
Effect of exchange rate changes on cash and
cash equivalents (6.6) 2.6
------- -------
Net decrease in cash and cash equivalents (54.5) (86.7)
Cash and cash equivalents at January 1 115.4 118.8
------- -------
Cash and cash equivalents at June 30 $ 60.9 $ 32.1
======= =======
See Notes to Condensed Consolidated Financial Statements.
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RHONE-POULENC RORER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1.- RESULTS FOR INTERIM PERIODS
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements reflect the
adjustments, all of which are of a normal recurring nature,
necessary for a fair presentation of financial position, cash
flows and results of operations for the periods presented.
Certain prior year items have been reclassified to conform to
current classifications. The Company restated its first quarter
1995 results to include the accounts of businesses acquired from
Rhone-Poulenc S.A. ("RP") (see Note 9). Earnings per share (pro
forma) for the first half of 1995 reflect pro forma charges
totaling $1.6 million relative to the acquisition transactions.
The Company's consolidated financial statements are prepared on
a basis in conformity with U.S. generally accepted accounting
principles ("U.S. GAAP"). The preparation of the financial
statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent
liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates. See
Note 10 for disclosure of contingent liabilities and related
matters.
The statements are presented in accordance with the requirements
of Form 10-Q and do not include all disclosures required by
generally accepted accounting principles or those made in the
Annual Report on Form 10-K. The Annual Report on Form 10-K for
the year 1995 is on file with the Securities and Exchange
Commission and should be read in conjunction with these
condensed consolidated financial statements.
NOTE 2.- FISONS
In late October 1995, the Company acquired the outstanding
shares of Fisons plc ("Fisons"), a U.K.-based pharmaceutical
company, for a total purchase price, including expenses, of $3.0
billion. The Company is currently finalizing fixed asset
appraisals and the valuation of intangibles. To date, the
preliminary purchase price allocation has resulted in goodwill
of $2.2 billion and intangibles of $600.0 million that will be
amortized on a straight-line basis over lives of 40 years and 15
to 30 years, respectively.
In March 1996, the sale of the majority of Fisons' Scientific
Instruments Division to Thermo Instruments Systems Inc. was
completed; the remaining mass spectrometry and PlasmaTrace
assets of the division were also sold in March. Total
consideration approximated $271.8 million, representing $235.9
million in cash and the assignment of $35.9 million of external
debt. The sale resulted in a decrease in goodwill of
approximately $30.0 million.
On July 3, 1996, the Company finalized its agreement with Medeva
plc to sell certain U.S.-based ex-Fisons fixed assets and
license certain intellectual property rights for total cash
consideration of $370.0 million. At the end of a four-and-one-
half year period, Medeva has the option to purchase the
intellectual property rights. The upfront cash payment includes
fixed asset sale proceeds and certain prepayments under the
licensing arrangement, including licensing fees and a purchase
option payment which are refundable in certain circumstances.
7
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NOTE 3.- PRO FORMA FINANCIAL INFORMATION
In October 1995, the Company acquired Fisons (see Note 2). In
late November 1995, the Company acquired the remaining 53% that
it did not already own of Applied Immune Sciences, Inc. ("AIS"),
a pioneer in cell therapy. The Company's reported results for
1995 included the operations of Fisons and AIS from November and
December, respectively, as well as acquisition-related costs,
financing charges and goodwill amortization incurred during the
respective periods. Prior to the November transaction, the
Company recorded its share of AIS' results under the equity
method.
On January 1, 1996, the joint control and profit-sharing
provisions of the global plasma proteins joint venture formed
between the Company's Armour Pharmaceutical Company subsidiary
and Behringwerke AG ("Centeon") became effective. As a result,
the Company has discontinued consolidation of the operations
contributed to the joint venture and, under the equity method,
is now reporting its share of Centeon's results as income from
equity affiliates.
The following unaudited pro forma financial information shows
the results of the Company's operations for the three and six
months ended June 30, 1995 as if the acquisitions of Fisons and
AIS and the formation of Centeon had occurred on January 1,
1995. Adjustments have been made for financing charges and
goodwill amortization, and income taxes were provided at an
estimated full year effective income tax rate of 36%. The
operations of Fisons' Scientific Instruments Division and
Laboratory Supplies Division, sold in 1996 and 1995,
respectively, are not included in the pro forma results.
Research and development expenses approximating $9.6 million and
$23.9 million for the three- and six-month periods,
respectively, associated with research operations sold by Fisons
in mid-1995 are also excluded. In addition, the pro forma
information excludes acquired research and development of $13.0
million recorded in the first quarter of 1995 associated with
the Company's prior equity investment in AIS. The pro forma
information does not purport to be indicative of the Company's
results of operations had the transactions actually occurred on
the dates presented nor is it necessarily indicative of future
operating results.
Three months Six months
ended ended
June 30, June 30,
1995 1995
--------- ---------
(in millions, except per share data)
Net sales $ 1,317.8 $ 2,495.7
Cost of products sold 423.3 811.3
Selling, delivery and administrative
expenses 577.2 1,068.6
Research and development 205.1 381.7
--------- ---------
Operating income 112.2 234.1
Interest expense, net 45.1 88.5
Gain on sales of assets -- (49.5)
Other (income), net (38.1) (46.8)
--------- ---------
Income before income taxes 105.2 241.9
Provision for income taxes 38.7 90.3
--------- ---------
Net income from continuing operations
before nonrecurring charges 66.5 151.6
Dividends on preferred stock and
remuneration on capital equity notes 14.3 28.5
--------- ---------
Net income from continuing operations
before nonrecurring charges
available to common shareholders,
pro forma $ 52.2 $ 123.1
========= =========
Earnings per common share, pro forma $ .39 $ .91
========= =========
Average common shares outstanding 134.2 134.1
========= =========
8
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NOTE 4.- RESTRUCTURING AND OTHER CHARGES
In December 1995, the Company recorded a $60.0 million pretax
charge related to the restructuring of RPR operations as a
direct result of the acquisition of Fisons. As part of the
Fisons purchase price allocation, the Company has also recorded
a $100.0 million liability for the restructuring of Fisons
operations. The combined $160.0 million liability represents
expected cash outlays, which will be principally severance-
related, associated with eliminating positions principally in
the marketing, administrative and manufacturing functions. Many
of these positions are based in the U.S. and the U.K., although
other locations will also be affected. For the three- and six-
month periods ended June 30, 1996, cash outlays associated with
the restructuring programs totaled $49.0 million and $76.8
million, respectively, with just under 1,400 positions affected.
A rollforward of the 1995 restructuring liability from January
1, 1996 is as follows:
Translation
January 1, adjustments/ June 30,
1996 Payments other 1996
------ ------ ----- ------
(Dollars in millions)
Social costs $148.5 $(63.2) $(3.3) $ 82.0
Third parties 11.5 (13.6) 2.1 --
------ ------ ----- ------
Total $160.0 $(76.8) $(1.2) $ 82.0
====== ====== ===== ======
In June 1994, the Company recorded a $121.2 million pretax
charge in connection with a global restructuring plan. At June
30, 1996, the remaining reserve approximated $15.3 million, the
majority of which represented outstanding social costs. Cash
outlays during the quarter and year-to-date period were not
significant.
NOTE 5.- GAIN ON SALE OF ASSETS AND OTHER (INCOME) EXPENSE, NET
Other (income) expense, net for the second quarter and year-to-
date periods of 1996 included pretax income totaling $40.6
million and $77.7 million, respectively, from equity affiliates,
including the Centeon joint venture. Sales of Centeon,
including sales to certain RPR affiliates, approached $496.7
million for the six-month period ended June 30, 1996 while gross
profit and income before taxes as a percentage of sales
approximated 52% and 29%, respectively. Other (income) expense,
net for the second quarter of 1996 also includes increased
provisions for anti-hemophilic factor litigation and gains on
sales of nonstrategic investments; the impact of these items was
not material.
Other (income) expense, net for the first half of 1995 included
$13.0 million of acquired research and development expense
related to an additional investment in AIS and pretax charges of
$25.4 million related to the reassessment of the carrying value
of certain assets, including those associated with the Company's
prior investment in The Immune Response Corporation. In the
first quarter of 1995, the Company also recorded pretax gains
totaling $49.5 million from the sale to Ciba-Geigy Ltd. of
assets related to the Company's Canadian over-the-counter
business and the sale of certain European product rights.
NOTE 6.- INCOME TAXES
The Company records income tax expense based on an estimated
full year effective income tax rate. The year-to-date June 30
reported effective income tax rate approximated 31.3% in 1996
compared with 30.9% in 1995.
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NOTE 7.- INVENTORIES
Inventories consisted of the following:
June 30, December 31,
1996 1995
-------- --------
(Dollars in millions)
Finished goods $ 352.2 $ 346.2
Work in process 153.2 140.6
Raw materials and supplies 327.4 278.8
-------- --------
$ 832.8 $ 765.6
======== ========
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NOTE 8.- SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Money Common Capital
market Capital stock at in excess Employee Cumulative
preferred equity stated of stated Retained Benefits translation
stock notes value value earnings Trust adjustments
------ ------ ------ ------- -------- -------- -----------
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $175.0 $500.0 $139.5 $153.2 $1,580.3 $(185.7) $ (5.1)
Net income 187.2
Cash dividends, $.62 per
common share (83.9)
Dividends on preferred
stock (4.7)
Remuneration on capital
equity notes (16.6)
Issuance of shares under
employee benefit plans 1.5 51.0
Translation adjustments (75.6)
------ ------ ------ ------ -------- ------- ---------
Balance, June 30, 1996 $175.0 $500.0 $141.0 $204.2 $1,662.3 $(185.7) $ (80.7)
====== ====== ====== ====== ======== ======= =========
</TABLE>
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NOTE 9.- RELATED PARTY TRANSACTIONS
The entities comprising the Company manage their cash
separately. In the largest countries such as the U.S., France,
the U.K. and Germany, the local entities have access to RP cash
pooling arrangements whereby they can, at their own request,
lend to or borrow from RP at market terms and conditions. At
June 30, 1996, cash pooling arrangements with RP totaled $10.4
million.
Receivables from RP at June 30, 1996 included $10.7 million in
accounts receivable from sales of products to RP and $33.4
million classified as other current assets. Receivables and
investments related to Centeon classified as current assets
totaled $55.4 million at June 30, 1996.
Accounts payable related to the purchase of materials and
services from RP were $8.2 million at June 30, 1996; accrued and
other liabilities due to RP totaled $13.0 million. As of June 30,
1996, the Company had $225.5 million short-term and $249.5 million
long-term debt outstanding with RP. Current liabilities due to
Centeon totaled $64.4 million.
Sales to RP totaled $7.9 million in the second quarter and $17.7
million for the six-month period ended June 30, 1996; services
purchased from and interest paid to RP totaled $4.3 million in
the second quarter and $16.0 million for the first half of 1996.
For the comparable 1995 periods, sales to RP were $8.0 million
and $16.5 million, respectively; services purchased from and
interest paid to RP totaled $9.7 million and $19.2 million,
respectively.
In the 1995 second quarter, the Company acquired Cooperation
Pharmaceutique Francaise and a pharmaceutical business in Brazil
from RP for cash and preferred stock of an RPR subsidiary
aggregating approximately $273.2 million. The preferred shares,
accounted for as minority interest in other liabilities, have a
liquidation preference approximating 645.0 million French francs
(approximately $125.2 million) and pay dividends of 7.5% per
annum on a stated value of 145.0 million French francs. The
acquisition agreements call for potential earnings adjustments
to the purchase price of the businesses based on several
factors, including earnings performance.
NOTE 10.- CONTINGENCIES
The Company is involved in litigation incidental to its
business, including, but not limited to: (1) approximately 493
pending lawsuits in the United States, Canada and Ireland
against the Company and its Armour Pharmaceutical Company
subsidiary ("Armour"), in which it is claimed by individuals
infected with the Human Immunodeficiency Virus ("HIV") that
their infection with HIV and, in some cases, resulting
illnesses, including Acquired Immune Deficiency Syndrome-related
conditions or death therefrom, may have been caused by
administration of antihemophilic factor ("AHF") concentrates
processed by Armour in the early-and mid-1980's. Armour has
also been named as a defendant in certain proposed class action
lawsuits filed on behalf of HIV-infected hemophiliacs and their
families. None of the cases involves Armour's currently
distributed AHF concentrates. In April 1996, the Company, with
the three other U.S. plasma fractionators defending the U.S. AHF
litigation, announced a class settlement proposal to resolve
this litigation and, in May 1996, the companies made a formal
settlement offer. Negotiations are continuing with plaintiffs'
counsel with respect to this proposal; (2) legal actions pending
against one or more subsidiaries of the Company and various
groupings of more than one hundred pharmaceutical companies, in
which it is generally alleged that certain individuals were
injured as a result of the development of various reproductive
tract abnormalities because of in utero exposure to
diethylstilbestrol ("DES") (typically, two former operating
subsidiaries of the Company are named as defendants, along with
numerous other DES manufacturers, when the claimant is unable to
identify the manufacturer); (3) antitrust actions alleging that
certain pharmaceutical companies, including the Company, engaged
in price discrimination practices to the detriment of certain
independent community pharmacists, retail chains and consumers;
(4) alleged breach of contract by a subsidiary of the Company
with respect to agreements involving a bisphosphonate compound
and Lozol(r); and (5) potential responsibility relating to past
12
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waste disposal practices, including potential involvement at
three sites on the U.S. National Priority List created by
Superfund legislation.
The eventual outcomes of the above matters of pending litigation
cannot be predicted with certainty. The defense of these
matters and the defense of expected additional lawsuits related
to these matters may require substantial legal defense
expenditures. The Company follows Statement of Financial
Accounting Standards No. 5 in determining whether to recognize
losses and accrue liabilities relating to such matters.
Accordingly, the Company recognizes a loss if available
information indicates that a loss or range of losses is probable
and reasonably estimable. The Company estimates such losses on
the basis of current facts and circumstances, prior experience
with similar matters, the number of claims and the anticipated
cost of administering, defending and, in some cases, settling
such claims. The Company has also recorded as an asset certain
insurance recoveries which are determined to be probable of
occurrence. If a contingent loss is not probable but is
reasonably possible, the Company discloses this contingency in
the notes to its consolidated financial statements if it is
material. Based on the information available, the Company does
not believe that reasonably possible uninsured losses in excess
of amounts recorded for the above matters of litigation would
have a material adverse impact on the Company's financial
position, results of operations or cash flows.
13
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ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Rhone-Poulenc Rorer Inc. ("RPR" or "the Company") is one of the
largest research-based pharmaceutical companies in the world.
RPR was formed in 1990 by the combination of Rorer Group Inc.
and substantially all of the Human Pharmaceutical Business of
Rhone-Poulenc S.A. ("RP"), based in Paris, France. RP owns
approximately two-thirds of RPR's common stock and controls the
Company.
Strategic Business Developments Affecting Comparability
In the second quarter of 1995, the Company acquired from RP the
businesses of Cooperation Pharmaceutique Francaise ("Cooper")
and a pharmaceutical business in Brazil. The acquisitions of
entities under common control were treated for accounting
purposes on an "as-if pooling" basis; accordingly, the Company's
restated its results effective April 1, 1994 and January 1,
1994, respectively, to include the accounts of Cooper and the
Brazilian business. Earnings per share for the six months ended
June 30, 1995 reflect first quarter pro forma charges totaling
$1.6 million relative to the acquisition transactions.
In late October 1995, RPR acquired the U.K.-based pharmaceutical
company, Fisons plc ("Fisons"), which significantly added to the
Company's global respiratory franchise. In late November 1995,
the Company acquired the remaining 53% of the shares of the cell
therapy pioneer Applied Immune Sciences, Inc. ("AIS") that it
did not already own. Results for 1995 included the operating
results of Fisons and AIS from November and December,
respectively, as well as acquisition-related costs, financing
charges and goodwill amortization incurred during the respective
periods. Prior to the November transaction, the Company
recorded its share of AIS' operating losses in equity from
investments in affiliates.
On January 1, 1996, the joint control and profit-sharing
provisions of the global plasma proteins joint venture formed
between the Company's Armour Pharmaceutical Company subsidiary
and Behringwerke AG ("Centeon") became effective. As a result,
the Company has discontinued consolidation of the operations
contributed to the joint venture and, under the equity method,
is now reporting its share of the venture's results as income
from equity affiliates.
The above strategic business developments affect comparability
of second quarter and six-month 1996 results with reported
results for the comparable 1995 periods. A more meaningful
analysis can be made by comparing 1996 results with the 1995 pro
forma results appearing in Note 3, "Pro Forma Financial
Information" on page 8 in the Notes to Condensed Consolidated
Financial Statements. The 1995 pro forma information does not
purport to be indicative of the Company's results of operations
had the transactions described above actually occurred on the
dates presented nor is it necessarily indicative of future
operating results. The 1995 pro forma information does not
include the effects of cost savings and sales synergies expected
to be realized as a result of the Fisons acquisition and Centeon
joint venture. The following "Results of Operations" discussion
describes the comparison of the second quarter and year-to-date
periods of 1996 to the comparable 1995 pro forma results, unless
otherwise noted.
Results of Operations (Three and six months ended June 30, 1996
versus comparable 1995 periods on a pro forma basis)
Second quarter 1996 net income available to common shareholders
was $92 million ($.68 per common share) as compared with $52
million on a pro forma basis in the prior year ($.39 per common
share). On a year-to-date basis, net income available to common
shareholders totaled $166 million ($1.23 per common share) for
the first half of 1996, an increase of 35% over the comparable
prior year period. Six-month 1995 pro forma results included
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$.10 per common share of asset gains, net of the effects of the
reassessment of certain asset values.
Sales
At $1,346 million, reported second quarter 1996 sales increased
by 2% over 1995 pro forma sales. Excluding negative effects of
currency fluctuations of approximately 4%, sales increased by 6%
substantially due to volume increases, including 3 percentage
points from new product presentations. Reported six-month sales
increased 5% over 1995 pro forma sales; year-to-date sales
growth excluding currency effects approximated 7%.
In the tables and discussion which follow, percentage
comparisons of sales are presented excluding the effects of
currency fluctuations unless otherwise noted.
Sales by geographic area were as follows (% change excludes the
effects of product divestitures and currency fluctuations):
Three Months ended June 30, Six Months ended June 30,
-------------------------- --------------------------
Pro Pro
Forma % Forma %
($ in millions) 1996 1995 Change 1996 1995 Change
------ ------ ----- ------ ------ -----
U.S. $ 280 $ 269 4% $ 486 $ 455 7%
------ ------ ----- ------ ------ -----
France 449 469 --% 921 922 1%
Other Europe 373 360 8% 768 713 10%
Rest of World 244 220 19% 444 406 15%
------ ------ ----- ------ ------ -----
Total Non-U.S. 1,066 1,049 7% 2,133 2,041 7%
------ ------ ----- ------ ------ -----
Total Sales $1,346 $1,318 6% $2,619 $2,496 7%
====== ====== ===== ====== ====== =====
Three-month sales in the United States improved modestly over
prior year pro forma sales with a doubling in sales of the
thrombotic Lovenox(r) and contributions from the innovative new
products Taxotere(r) and Rilutek(r). Quarterly sales declines in
Azmacort(r) and Lozol(r) weakened overall U.S. sales growth for
the period. On a six-month basis, U.S. sales of major prescription
pharmaceuticals (Azmacort(r), Lovenox(r), Dilacor(r) XR and
DDAVP(r)) exceeded prior year levels.
Second quarter sales in France were essentially level with the
prior year as contributions from new oncology products
(Taxotere(r), Campto(r) and Granocyte(r)) exceeded declines in
other categories. Sales in France have been affected by a
slowdown in market growth due in part to restricted physician
prescribing practices in response to government health care
reform proposals. The year-to-date sales comparison in France
reflected oncology product sales gains and higher sales of the
analgesic Doliprane(r), offset by significantly lower Zagam(tm)
sales.
Increased sales in many of the major Other European markets for
the three- and six-month periods resulted from growth of
strategic products. Sales increased on a year-to-date basis in
Germany (Clexane(r)/Lovenox(r), Tilade(r), Taxotere(r)) although
quarterly sales declined slightly due to a decrease in sales of
self-medication products, principally Maalox(r) and certain non-
core products. Three- and six-month sales outperformed prior
year levels in the U.K. (Intal(r), Imovane(r)/Amoban(r) and
generics). Sales for the quarter and year-to-date period
improved in Italy due to contributions from Granocyte(r) and
growth of self-medication products (Maalox(r)). A government-
imposed price reduction on prescription pharmaceuticals will
take effect in Italy later in the year. Increased sales of
strategic products drove sales growth in Spain. Sales were also
higher in Central and Eastern Europe for the reported periods.
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The Rest of World area reported higher quarterly and year-to-
date sales in Japan (Albuminar(r) sold through operations not
contributed to Centeon and Maalox(r)), South Asian markets and
Brazil.
The Company is focusing on innovation and leadership in targeted
key therapeutic areas including asthma/allergy, thrombosis, anti-
infectives and oncology and, in 1996, it realigned its
therapeutic categories accordingly. Certain reclassifications of
amounts shown in prior periods have been made between
therapeutic area categories to conform to classifications now
used by the Company. Sales by therapeutic area for the three-
and six-month periods were as follows:
Three Months ended Six Months ended
June 30, June 30,
----------------------- -----------------------
Therapeutic Pro Pro
Area/Principal Forma % Forma %
Offerings 1996 1995 Change* 1996 1995 Change*
($ in millions)
----- ----- ------- ----- ----- -------
Azmacort(r) $ 41 $ 50 -20% $ 84 $ 80 4%
Intal(r)/Aarane(r) 72 78 -5% 134 142 -4%
Nasacort(r)/
Nasacort(r) AQ 22 24 -7% 34 34 -1%
Tilade(r) 20 1 10% 37 36 1%
Total Asthma/Allergy
and Other Respiratory 277 292 -3% 543 508 8%
Clexane(r)/Lovenox(r) 93 77 26% 177 142 26%
Dilacor(r) XR 28 25 11% 48 44 9%
Lozol(r)/Indapamide 10 16 -32% 25 27 -6%
Total
Cardiovascular/
Thrombosis 247 241 6% 482 439 11%
Flagyl(r) 31 28 17% 59 55 11%
Total Anti-
infectives 151 149 5% 306 300 3%
Doliprane(r) 36 37 3% 73 66 12%
Imovane(r)/Amoban(r) 34 32 17% 68 60 18%
Total Analgesics/
Select Neurological
Disorders 159 157 15% 317 289 20%
Maalox(r) 38 45 -9% 82 82 4%
Total Gastro-
intestinal/Vitamins 113 101 5% 229 196 8%
Calcitonins 19 27 -29% 38 51 -25%
Orudis(r)/Profenid(r)/
Oruvail(r) 49 54 -5% 96 101 -3%
Total Hormone
Replacement Therapy/
Bone Metabolism 89 97 -6% 176 183 -2%
Granocyte(r) 17 12 44% 32 21 55%
Taxotere(r) 23 -- N/A 27 -- N/A
Total Oncology 50 21 140% 81 40 106%
DDAVP(r) 24 23 5% 43 35 21%
Other Therapeutic Areas 260 260 6% 485 541 -8%
* Percentage change calculation excludes effects of currency
fluctuations.
Sales of asthma/allergy products declined slightly from the
comparable prior year quarter on a pro forma basis. The
decrease in sales of Azmacort(r) was partially reflective of
trade buying patterns during the first quarter. On a year-to-
date basis, Azmacort(r) sales exceeded prior year levels with
good growth in prescriptions written, although competitor
products are expected to enter the market in the near future.
Sales of Nasacort(r) were below the prior year for the three and
six months due in part to increased competition and the
expansion of the aqueous segment. In the 1996 second quarter,
the Company received U.S. FDA approval to market Nasacort(r) to
children six years of age and older. The Company also received
FDA approval to market Nasacort(r) AQ, a once-daily,
water-based, nasally inhaled corticosteroid for
the treatment of allergic rhinitis, which added to total
Nasacort(r) sales during the three-month period. Reduced
quarterly and year-to-date sales of Intal(r) reflected declines
in the U.S. and lower European sales due to a slow
asthma/allergy season. Export sales of Intal(r) from the U.K.
to Japan increased during the periods reported due, in part, to
distributor stocking patterns. Higher quarterly Tilade(r) sales
resulted from increased sales in the U.S. and certain European
markets, particularly Germany. On a year-to-date basis, sales of
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Tilade(r) lagged the prior year in the U.S. although sales gains
were registered in European markets.
The thrombosis product Clexane(r)/Lovenox(r) continued to
experience substantial growth in the U.S. and performed well in
most major European markets for the periods reported although
market competition negatively impacted Lovenox(r) sales in
France. Sales of Dilacor(r) XR exceeded prior year levels for
the three and six months while year-to-date sales of total
indapamide products were affected by generic competition.
Quarterly and year-to-date sales of anti-infectives increased
modestly as the effect of higher sales in Asian markets was
reduced by significantly lower Zagam(tm) sales in France. Three-
and six-month sales of anti-infectives in France have also been
affected by restricted physician prescribing patterns. Flagyl(r)
reported quarterly and year-to-date sales gains in Brazil and
South Asia.
Sales of Imovane(r)/Amoban(r) outperformed the prior year
periods in Europe (France, U.K., Germany) and in Japan. Sales
of products for select neurological disorders also benefited
from sales of Rilutek(r), approved in the U.S. in late 1995 for
treatment of Amyotrophic Lateral Sclerosis ("ALS"). Rilutek(r)
received approval from the European Union in June 1996 for the
treatment of ALS.
Lower sales of Maalox(r) during the quarter resulted primarily
from declines in Germany due to competitive pressures. On a year-
to-date basis, increased Maalox(r) sales were reported in Japan
and in certain European countries including Italy.
Sales declines in the HRT/bone metabolism category reflected
lower sales of Orudis(r)/Profenid(r)/Oruvail(r) in the U.K. and
Japan, and reduced calcitonin product sales in the United States
due to generic competition. In the second quarter of 1996, the
Company entered into a global (excluding Japan) co-promotion
agreement with Novo Nordisk A/G with respect to strategic HRT
products of both companies including the Menorest(r) transdermal
patch, launched by RPR in major European markets in early 1996.
Expansion of the Company's oncological products was driven by
sales of the innovative new products Taxotere(r), Granocyte(r),
and Campto(r). Taxotere(r), a semi-synthetic taxoid for solid
tumors, has been approved in 33 countries for treatment of
advanced metastatic breast cancer. Taxotere(r) has
experienced good performance in European markets,
particularly in France and Germany, where it
was launched in mid-first quarter 1996. In June 1996,
Taxotere(r) was launched in the U.S. with good sales acceptance.
Granocyte(r), launched in European markets in 1995 for
chemotherapy-induced neutropenia, recorded good growth
throughout the year in France and southern Europe. Sales of
Campto(r), launched in France in the 1996 second quarter for
treatment of colorectal cancer, also added to growth of the
category.
Sales in other therapeutic areas reflected higher sales of
Albuminar(r), sold through operations not contributed to
Centeon, and dermatologicals. Year-to-date declines were
partially due to reduced sales of the Cooper subsidiary and
certain bulk chemicals. Sales were also impacted by the
reclassification of certain products to other categories in the
current year.
In July 1996, the Company licensed the rights to certain non-
strategic former Fisons products in the cough and cold, diuretic
and appetite suppressant areas to Medeva plc for four-and-one-
half years, after which period Medeva will have the option to
purchase the product rights.
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Operating Income
Three Months ended June 30, Six Months ended June 30,
---------------------------- ---------------------------------
Pro Forma Pro Forma
1996 1995 1996 1995
----------- ----------- ------------- -------------
% of % of Total % of % of Total
(in millions) $ Sales $ Sales Change $ Sales $ Sales Change
---- ----- ---- ----- --- ------ ----- ------ ----- ---
Gross margin $902 67.0% $895 67.9% 1% $1,741 66.5% $1,684 67.5% 3%
Selling,
delivery
and admin-
istrative 532 39.6% 577 43.8% -8% 1,047 40.0% 1,069 42.8% -2%
Research and
development 214 15.9% 205 15.6% 5% 414 15.8% 382 15.3% 9%
Operating
income 155 11.5% 112 8.5% 39% 280 10.7% 234 9.4% 19%
Reductions in second quarter and six-month gross margin from the
prior year reflected the effect of unfavorable product
mix and the negative impact of net royalties, including
lower year-to-date royalty income from Fisons'
joint venture partner in Japan as a result of a weaker-
than-anticipated pollen season. Year-to-date gross margin has
also been affected by certain cost reclassifications from the
prior year. At 67.0%, second quarter gross margin improved from
65.9% in the first quarter; the Company expects to achieve
further improvements particularly with the realization of
favorable margins associated with internally-developed new
products.
Despite increased spending in support of new products, selling,
delivery and administrative expenses decreased on a reported
basis largely due to benefits of cost containment programs and
increased realization in the second quarter of cost savings
associated with the integration of the Fisons business. The
Company anticipates that Fisons-related cost savings will be in-
line with expectations on a full-year basis. Higher research
and development as a percentage of sales reflected increased
investment in later stage development projects including
Synercid(tm) and new indications for Clexane(r)/Lovenox(r), and
the movement of certain Gencell projects into the clinical
development stage.
Operating margin improved for the three- and six-month periods
as reduced selling, delivery and administrative expenses offset
higher Cost of Products Sold and an increased investment in
research and development.
In the fourth quarter of 1995, the Company recorded a $60
million pretax charge related to the restructuring of RPR
operations as a direct result of the acquisition of Fisons. In
addition, as part of the Fisons purchase price allocation, the
Company recorded a $100 million liability for the restructuring
of Fisons operations. The combined $160 million liability
represents expected cash outlays, which will be primarily
severance-related, associated with eliminating positions
principally in the marketing, administrative and manufacturing
functions. Many of these positions are based in the U.S. and
the U.K., although other locations will also be affected. For
the six months ended June 30, 1996, cash outlays associated with
the restructuring approached $77 million with just under 1,400
positions affected.
Interest
Net interest expense for the current and pro forma 1995 periods
reflected the impact of acquisition debt associated with the
Fisons transaction. Current year interest expense was favorably
impacted by lower weighted average interest rates in the U.S.
and Europe.
A reduction in dividends on preferred stock and remuneration on
capital equity notes compared with pro forma 1995 was due to the
absence in 1996 of Market Auction Preferred Shares which were
redeemed in the third quarter of last year. In December 1995,
the Company issued $500 million of capital equity notes to RP,
remuneration on which is based on six-month LIBOR plus a margin.
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Other (Income) Expense, Net and Gain on Sales of Assets
Other (income) expense, net for the second quarter of 1996
included $41 million of income from equity affiliates, including
the Centeon joint venture; income from equity affiliates
approximated $43 million on a pro forma basis in 1995. Other
(income) expense, net also includes increased provisions for
anti-hemophilic factor litigation and gains on sales of
nonstrategic investments; the impact of these items was not
material.
Other (income) expense, net on a year-to-date basis included
income from equity affiliates totaling $78 million and $82
million in 1996 and pro forma 1995, respectively. Six-month pro
forma 1995 other (income) expense, net included $24 million
related to gains on sales of assets, net of certain asset
carrying value reassessments. Six-month pro forma 1995 results
exclude acquired research and development of $13 million ($.06
per share) related to an additional investment in AIS.
Taxes
The Company's year-to-date reported effective income tax rate
approximated 31% in 1996 compared with 37% on a pro forma basis
in 1995 reflecting current year tax planning strategies and the
unfavorable impact in 1995 of asset gains and carrying value
reassessments.
Financial Condition
Cash Flows
Cash flows from operating activities totaled $47 million
compared with $136 million in 1995, reflecting increased working
capital needs and greater cash outlays for restructuring
activities. Net income for 1996 included approximately $78
million of non-cash earnings of equity affiliates, primarily
Centeon; in the second half of 1996, the Company expects to
receive a cash dividend representing a large portion of its
share of Centeon's current year earnings.
Investing activities provided $40 million of cash flows for the
first half of 1996, reflecting cash proceeds of $236 million
from the first quarter sale of Fisons' Scientific Instruments
Division, partially reduced by capital expenditures in support
of new products. Investing activities also included first
quarter cash outlays for Fisons acquisition costs that were
accrued at year-end 1995. Net investing cash outflows in 1995
included $296 million for the acquisitions of new businesses and
investments in technologies/product rights; proceeds from the
sales of the Company's Canadian over-the-counter business and
certain European product rights totaled $84 million.
Current year financing cash outflows reflected debt repayments
totaling $82 million compared with $208 million of proceeds from
increased borrowings in 1995 in support of businesses acquired.
Financing cash flows benefited from increased issuances of
common stock primarily associated with stock option exercises. Cash
dividends paid to common shareholders in 1996 totaled $84
million ($.62 per share). In July 1996, the Board of Directors
declared a third quarter cash dividend of $.32 per share payable
on August 30, 1996 to holders of record on August 9, 1996.
Third quarter 1996 cash flows will benefit from the July 3rd
receipt of $370 million associated with a sale and licensing
agreement with Medeva plc. In July, the Company also announced
the divestiture of assets in the U.K. and Spain for cash
proceeds just under $65 million.
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Liquidity
The Company's net debt (short- and long-term debt including
notes payable to RP, less cash and cash equivalents, cash
pooling arrangements, short-term investments and time deposits)
to net debt plus equity ratio declined slightly to .54 to 1 at
June 30, 1996 from .56 to 1 at December 31, 1995. After
consideration of the July 1996 receipt of $435 million
associated with the Medeva agreement and additional divestitures
in the U.K. and Spain, the Company's net debt has declined from
$2,997 million at December 31, 1995 to $2,423 million with a net
debt ratio of .50 to 1. The Company expects to achieve further
improvement in its net debt ratio by the end of 1996 through
cash generated from operations and proceeds from additional
divestitures of non-strategic assets. The ratio of current
assets to current liabilities was 1.26 to 1 at June 30, 1996
compared to 1.16 to 1 at December 31, 1995, reflecting a
decrease in short-term debt balances.
At June 30, 1996, the Company had committed medium-term lines of
credit totaling $2,325 million. Of this amount, $1,825 million
represented multicurrency medium-term facilities with fourteen
banks expiring in the year 2000. An additional $500 million
represented two medium-term credit agreements with Rhone-Poulenc
S.A. expiring in 2000 and 2002. Borrowings outstanding under the
above lines totaled $1,053 million at June 30, 1996. The Company
classified this amount plus an additional $1,272 million of
short-term borrowings as long-term debt at June 30, 1996 as it
had the ability and intent to finance these amounts on a long-
term basis under the above medium-term facilities.
Pursuant to a shelf registration, the Company has the ability to
issue an additional $325 million in public debt securities
and/or preferred shares.
Management believes that cash flows from operations,
supplemented by proceeds from selected divestitures and
financing expected to be available from external sources, will
provide sufficient liquidity to meet its needs for the
foreseeable future. The Company's competitive position,
including its ability to discover, develop and market innovative
new therapies, build leadership positions in targeted
therapeutic areas and maximize the benefits of business
acquisitions and alliances, will drive its liquidity on a long-
term basis.
The Company is involved in litigation incidental to its
business. A discussion of contingencies appears in Note 10 of
the Notes to Condensed Consolidated Financial Statements and in
Legal Proceedings in Part II of this Form 10-Q.
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ITEM 3. LEGAL PROCEEDINGS
Diethylstilbestrol ("DES") Litigation
There are approximately 500 actions pending against one or more
current and/or former subsidiaries of the Company and various
groupings of more than one hundred pharmaceutical companies, in
which it is generally alleged that "DES daughters" and/or their
offspring were injured as a result of the development of various
reproductive tract abnormalities in the "DES daughters" because
of their in utero exposure to DES. Typically, the Company's
subsidiaries are named as defendants, along with numerous other
former DES manufacturers, when the claimant is unable to
identify the manufacturer of the DES to which she was exposed.
While the aggregate monetary damages sought in all of these DES
actions are substantial, the Company believes that it has
adequate defenses to DES claims. The Company and certain of its
current and former subsidiaries were named in a putative class
action, Ballo et al., v. Abbott Laboratories, et al., No. 96-CV-
0774, filed in the United States District Court for the Eastern
District of New York in February 1996. The case, brought on
behalf of all women in the United States exposed to DES while in
utero, seeks compensation for future medical expenses allegedly
associated with the exposure, as well as financial support for
educational and research efforts related to DES. The class does
not seek compensation for existing DES-related injuries. All
pending cases are currently being defended by insurance
carriers, sometimes under a reservation of rights.
AHF Litigation
There are approximately 430 lawsuits in the United States, 7 in
Canada and 56 in Ireland pending against the Company's Armour
Pharmaceutical Company ("Armour") subsidiary, and in some
instances, the Company and certain of its other subsidiaries, in
which individuals with hemophilia and infected with the Human
Immunodeficiency Virus ("HIV"), or their representatives claim
that such infection and, in some cases, resulting illnesses,
including Acquired Immune Deficiency Syndrome-related conditions
or death therefrom, may have been caused by administration of
anti-hemophilic factor ("AHF") concentrates processed by Armour
in the early and mid-1980s. None of these cases involves
Armour's currently distributed AHF concentrates. In most of
these suits, Armour is one of a number of defendants, including
other fractionators who supplied AHF during that period. To
date, approximately 120 cases and claims have been resolved
either by dismissal by the plaintiffs or the Court or through
settlement. A majority of the currently pending lawsuits were
filed in 1993, and management expects additional lawsuits will
be filed. It is not possible, however, to predict with
certainty the number of additional lawsuits that may eventually
be filed alleging HIV-related claims.
In December 1993, the Federal Multi-District Litigation Panel
("MDL") authorized the consolidation of all AHF litigation
pending in U.S. Federal Courts for purposes of pre-trial
discovery and the transfer of such cases to the U.S. District
Court for the Northern District of Illinois for this purpose.
Five proposed federal class action lawsuits (Richard Roe and his
mother, Jane Roe v. Armour Pharmaceutical Company, et al.,
United States District Court, Idaho District; Jose Alvarez, Jr.
et al. v. Armour Pharmaceutical Company, et al., United States
District Court for the Eastern District of Louisiana; Timmy Dale
Martin, et al. v. Armour Pharmaceutical Company, et al., United
States District Court for the Northern District of Alabama;
Thorne v. Alpha Therapeutic, et al., United States District
Court for the Eastern District of Louisiana and Morabito v.
Rhone-Poulenc Rorer, et al., United States District Court for
the District of Wyoming [removed from state Colorado court]),
and three proposed state court class actions (Richard Murphy, et
al. v. Armour Pharmaceutical Company, et al., Superior Court,
Pima County, Arizona, James David Hepworth v. Armour, et al.,
Marion County Superior Court, Indiana; and Jones v. Bayer
Corporation et al., Florida), discussed further below, have been
filed against several fractionators, including Armour. The
federal actions are part of the MDL proceeding in Chicago.
In October 1995, the United States Supreme Court denied
plaintiffs' petition for a writ of certiorari related to
plaintiffs' proposed certification of a federal nationwide
class action captioned Wadleigh, et al v. Armour Pharmaceutical
Company (United States District Court, Northern District,
Illinois). Wadleigh was decertified in January 1996. As noted
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above, the Jones action is pending in a Florida state court
against the same defendants as in Wadleigh, together with a
Florida plasma provider; plaintiffs' counsel consist of a
subgroup of counsel from Wadleigh. The Jones action seeks
certification of a nationwide class and a Florida subclass.
Evidentiary hearings on plaintiffs' motion for class
certification have been completed and the judge has indicated
his intention to deny certification of both proposed classes.
In October 1993, Armour obtained a directed verdict dismissing
it from a lawsuit pending in a state court in Louisiana on the
basis that the plaintiff had not presented evidence sufficient
to maintain an action against Armour. That decision was
appealed by plaintiff and affirmed by the appellate court on May
29, 1996. Plaintiffs have filed an application for rehearing.
With respect to the above litigation, the Company has
contractual rights to certain insurance coverage provided by
carriers that insured Revlon, Inc., the party from whom it
purchased Armour in 1986 ("Revlon carriers"). The Company also
has access to "excess" liability insurance coverage from other
carriers, effective in 1986, for certain of these cases if self-
insured retention levels from relevant insurable losses are
exceeded.
From late 1988 until November 1995, the Company was involved in
litigation with a principal insurance carrier ("the principal
carrier"), an umbrella insurance carrier ("the umbrella
carrier") and many of the Revlon carriers, relative to carrier
defense and indemnity obligations associated with the AHF
litigation ("the insurance coverage litigation"). In late 1994,
the Company settled the dispute being litigated with the
principal carriers by entering into an agreement which defines
the principal carrier's obligations with respect to the
underlying AHF litigation. The Company also settled its
disputes with the umbrella carrier and many of the Revlon
carriers. After lengthy discussions, the Company and the
remaining Revlon carriers in the insurance coverage litigation
agreed in November 1995 regarding the extent and other
conditions of coverage of those carriers, and the litigation was
concluded. Based upon the above, the Company believes that
there is a substantial level of coverage (including substantial
coverage for legal defense expenditures) for the Company's
estimated probable liability determined in accordance with
Statement of Financial Accounting Standards No. 5 ("SFAS 5").
In April 1996, the Company, with the three other U.S. plasma
fractionators defending the U.S. AHF litigation, announced a
settlement proposal to resolve this litigation. The April
proposal contemplated a $600 million dollar fund to be divided
per capita among those who made claims, with attorneys fees and
settlement administration costs to be paid out of a separate
fund in an amount to be determined by the settlement judge, up
to a maximum of $40 million. The proposal, subject to a variety
of conditions, contemplated the use of a class settlement
vehicle, no more than 100 opt-outs, and required an indication
from the plaintiffs that at least 95% of the currently filed
plaintiffs would accept the proposal. Following a meeting with
representatives of the plaintiffs, the companies made a formal
settlement offer on May 29, 1996 that responded to certain
demands by the plaintiffs' negotiating committee, including the
removal of the opt-out limit and a guaranteed commitment to a
settlement resulting in 150 or fewer opt-outs. Negotiations are
continuing with plaintiffs' counsel with respect to this
proposal. A preliminary approval hearing before the settlement
judge has been scheduled for August 14, 1996.
Commercial Litigation
Rhone-Poulenc Rorer Pharmaceuticals Inc. ("RPRP"), a subsidiary
of the Company, has been named as a defendant in two related
arbitration proceedings in Zurich, Switzerland initiated by
Boehringer Mannheim GmbH and its American affiliate, Boehringer
Mannheim Pharmaceuticals Corporation (collectively, "BM"),
seeking substantial compensatory damages for alleged breach of
contract by RPRP. Specifically, BM commenced arbitration
proceedings in Switzerland and litigation in the state court of
Maryland alleging that RPRP breached an agreement related to the
development of BM's bisphosphonate compound and a copromotion
agreement pertaining to the Company's licensed product Lozol(r).
RPR filed a counterclaim in the Maryland litigation against BM
for fraud related to representations made by BM and its agents
prior to the execution of the agreements. In March 1995, the
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parties agreed to dismiss the Maryland litigation and to
transfer all of those claims to final and binding arbitration in
Switzerland. At present, two arbitration proceedings before the
same panel are underway. The Company believes that the claims
asserted by BM are without merit and RPRP is vigorously
defending its position. A hearing on liability may be held in
Zurich this fall.
In the spring of 1995, the Company and its subsidiary, Rhone-Poulenc
Rorer International (Holdings) Inc. ("RIH"), together with three
former officers and/or directors of a former subsidiary, Rorer
International (Overseas) Inc. ("RIO") were named as
defendants in a lawsuit filed by a Mexican pharmaceutical
company known as Laboratorios A.F. Aplicaciones Farmaceuticas,
S.A. de C.V. ("LAF"). The suit arose out of an action brought
in 1985 in Mexico by RIO against LAF for infringement of
intellectual property rights. The suit alleged that RIO
obtained a wrongful injunction against LAF and pursued its
claims against LAF in bad faith, resulting in lost profits and
damage to LAF's reputation. The parties agreed to settle this
litigation in August 1996.
Antitrust Litigation
The Company has been named as a defendant in 134 antitrust
lawsuits. It is presently a party to ten state court actions
pending in California, two each in Alabama, Minnesota and
Wisconsin, and one each in the District of Columbia, Washington,
Colorado, Arizona, Maine, New York and Michigan. Additionally,
the Company has been named in 111 antitrust actions brought in
several federal courts which have been coordinated before a
judge in the U. S. District Court for the Northern District of
Illinois (Chicago). All of the cases brought in California
state court have similarly been coordinated before a judge in
the San Francisco Superior Court. The suits allege that many
pharmaceutical companies (including RPR) and wholesalers, in
conjunction with certain pharmacy benefits managers,
discriminated against independent community pharmacist
plaintiffs and/or retail chains with respect to the prices
charged for brand name pharmaceutical products and further
conspired to maintain prices at artificially high levels to the
detriment of these pharmacies. Three of the California actions
allege injury to classes of California residents who are
consumers of brand name prescription products. One of the cases
in each of Alabama, Minnesota, Wisconsin and the cases in the
District of Columbia, New York, Arizona, Colorado, Washington,
Maine and Michigan allege proposed consumer class claims. An
Alabama state court has conditionally certified a consumer class
action on behalf of Alabama residents and consumers in seven
other states and the District of Columbia. In October 1995, the
Washington state court action was dismissed with prejudice with
the court holding that Washington law did not permit a consumer
action in this instance. This ruling is currently on appeal.
The Colorado state court action was dismissed in January 1996
and no appeal has been filed. Many of the federal actions were
brought on behalf of an alleged class of retail pharmacies
throughout the United States; three of the state cases similarly
allege classes of pharmacists within those states. Plaintiffs
in these lawsuits seek injunctive relief and a monetary award
for past damages alleged. The federal class plaintiffs have
filed an amended consolidated Complaint so that issues affecting
the class are pleaded consistently. The coordinating federal
court certified the class alleged in the amended consolidated
Complaint in November 1994. Notice to the class was given and
the opt-out period ended March 10, 1995. The coordinating
California state court certified retail and consumer classes in
June 1995. These cases have been stayed in order to trail the
federal litigation proceedings. Notice to the retailer class
was given and the opt-out period has expired; notice to the
consumer class has not yet been provided.
On April 4, 1996, the court denied summary judgment motions
filed by the pharmaceutical companies and summary 1judgment
motions filed by the wholesaler defendants were granted. The
court entered final judgment in favor of the wholesalers and
certified certain issues relating for the denial of the
manufacturer defendants' summary judgment motions for
interlocutory appeal to the Seventh Circuit. Plaintiffs have
also filed appeals on the orders granting the wholesaler
defendants' summary judgment motions. Due to the pendency of
the appellate proceedings, the court withdrew the May 7, 1996
trial date previously set in the federal class conspiracy case
and has not set a new trial date in any federal action. In
addition, several of the companies named as defendants in the
federal class action, excluding RPR, entered into a settlement
23
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<PAGE>
with independent and chain pharmacies who are members of that
class. That settlement was approved by the court on June 21,
1996. The Company believes that none of the claims against it
have any merit and is vigorously defending these lawsuits.
Environmental Litigation
Fisons plc has been named along with other defendants in a U.S.
Federal Court action (Olin Corporation v. Fisons plc, et al.,
United States District Court for the District of Massachusetts)
in which Olin Corporation is seeking to recover its response
costs for environmental contamination resulting from operations
at a Wilmington, Massachusetts facility. The facility was
operated during the late 1960s by a separate Fisons entity.
Fisons plc and another subsidiary, Fisons Finance Ltd., are
named in a cross-claim and third-party complaint, respectively,
filed by one of the co-defendants in the Olin action, NOR-AM
Chemical Company ("NOR-AM"). NOR-AM is asserting claims for
indemnification and/or contribution if it is found liable in
Olin. Fisons plc has filed a motion to dismiss the Complaint
for lack of personal jurisdiction. The Court has not yet ruled
on this motion.
The Company and/or its subsidiaries, including the recently-
acquired Fisons companies, have been named as potentially
responsible parties at three sites on the U.S. National Priority
List created by Superfund legislation.
Patent and Intellectual Property Litigation
In February 1993, Tanabe Seiyaku Company ("Tanabe") of Japan and
their U.S. licensee, Marion Merrell Dow Inc. ("MMD") initiated
an action before the International Trade Commission ("ITC"), the
administrative agency responsible for handling complaints of
imports which allegedly infringe U.S. intellectual property
rights. The complaint names ten domestic and foreign
respondents, including the Company, and alleges infringement of
a Tanabe U.S. patent, claiming a process for preparing bulk
diltiazem, the active ingredient in the Company's Dilacor XR
product. In January 1995, the ITC Administrative Judge ruled
that2 Dilacor XR does not infringe the MMD/Tanabe patent
under any circumstances and that the MMD/Tanabe patent is
invalid and unenforceable. An appeal was taken and the
Commission effectively affirmed the ITC Judge's rulings.
MMD/Tanabe has appealed to the Court of Appeals for the Federal
Circuit.
The Company is a plaintiff in a patent infringement lawsuit with
Chiron Corporation filed in the United States District Court in
California involving the patent licensed exclusively to the
Company by the Scripps Research Institute covering the anti-
hemophilic Factor VIII:C. The Court is considering pending
summary judgment motions. If this case goes to trial, such
trial is likely to be scheduled to commence within the six to
twelve months after the Court's decision on the summary judgment
motions.
The outcomes of the referenced litigation cannot be predicted
with certainty. The defense of these cases and the defense of
expected additional lawsuits may require substantial legal
defense expenditures. The Company follows SFAS 5 in determining
whether to recognize losses and accrue liabilities relating to
such matters. Accordingly, the Company recognizes a loss if
available information indicates that a loss or range of losses
is probable and reasonably estimable. The Company estimates
such losses on the basis of current facts and circumstances,
prior experience with similar matters, the number of claims and
the anticipated cost of administering, defending and, in some
cases, settling such claims. The Company has also recorded as
an asset insurance recoveries that are probable of occurrence as
a result of the insurance coverage litigation settlement
previously described. If a contingent loss is not probable, but
is reasonably possible, the Company discloses this contingency
in the notes to its consolidated financial statements if it is
material. Based on the information available, the Company does
not believe that reasonably possible uninsured losses in excess
of amounts recorded for the referenced litigation would have a
material adverse impact on the Company's financial position,
results of operations or cash flows.
24
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<PAGE>
ITEM 6. Exhibits
a. Exhibits
10 Material Contracts
(a) Amendment to the Company's
Articles of Incorporation
increasing the number of
authorized common shares to 600
million.
(b) Asset Purchase Agreement between
Medeva plc, Medeva Rochester
Inc. and Fisons Corporation,
Fisons Investments Inc., Fisons
plc, and Fisons B.V. dated June
6, 1996.
(c) Amendment No. 1 to the Asset
Purchase Agreement [referred to
in (b) above] dated July 2,
1996.
(d) License Agreement between Fisons
Corporation, Fisons B.V., Fisons
Investments Inc., Fisons plc,
and Medeva Pharmaceuticals
Manufacturing, Inc. dated July
2, 1996.
11 Statement re computation of
earnings per common share.
15 Letter re unaudited interim
financial information.
27 Financial data schedule (electronic
filing only).
25
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
RHONE-POULENC RORER INC.
------------------------------------
(Registrant)
August 12, 1996 /s/ PATRICK LANGLOIS
-------------------------------------
Patrick Langlois
Senior Vice President and
Chief Financial Officer
26
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<PAGE>
INDEX TO EXHIBITS
Exhibit No.
- -----------
10 Material Contracts
(a) Amendment to the Company's
Articles of Incorporation
increasing the number of
authorized common shares to 600
million.
(b) Asset Purchase Agreement between
Medeva plc, Medeva Rochester
Inc. and Fisons Corporation,
Fisons Investments Inc., Fisons
plc, and Fisons B.V. dated June
6, 1996.
(c) Amendment No. 1 to the Asset
Purchase Agreement [referred to
in (b) above] dated July 2,
1996.
(d) License Agreement between Fisons
Corporation, Fisons B.V., Fisons
Investments Inc., Fisons plc,
and Medeva Pharmaceuticals
Manufacturing, Inc. dated July
2, 1996.
11 Statement re computation of
earnings per common share.
15 Letter re unaudited interim
financial information.
27 Financial data schedule (electronic
filing only).
Microfilm Number 9633-1326
---------
Filed with the Department of State on MAY 09 1996
-----------
Entity Number 0309279
-------
/s/ Yvette Kane
-----------------------------
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (REV 90)
In compliance with the requirements of the applicable provisions
of 15 Pa.C.S. Section 1915 (relating to articles of amendment) the
undersigned business corporation, desiring to amend its Articles,
hereby states that:
1. The name of the corporation is: Rhone-Poulenc Rorer Inc.
---------------------------
2. The (a) address of this corporation's current registered
office in this Commonwealth or (b) name of its commercial registered
office provider and the county of venue is: (the Department is hereby
authorized to correct the following information to conform to the
records of the Department):
(a) 500 Arcola Road Collegeville PA 19426-0107 Montgomery
-------------------------------------------------------------
Number and Street City State Zip County
(b) c/o: ________________________________________________________
Name of Commercial Registered Office Provider
For a corporation or a limited partnership represented by a
commercial registered office provider, the county in (b) shall be
deemed the county in which the corporation or limited partnership is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: _____
4. The date of incorporation is: : July 1, 1968
------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
The amendment shall be effective on ___________ at __________
Date Hour
6. (Check one of the following):
X The amendment was adopted by the shareholders (or members)
pursuant to 15 Pa.C.S. Section 1914(a) and (b).
The amendment was adopted by the board of directors pursuant to
15 Pa.C.S. Section 1914(c).
7. (Check, and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full, is
as follows:
<PAGE>
<PAGE>
DSCB:15-1915 (REV 90)-2
X The amendment adopted by the corporation as set forth in full in
Exhibit A attached hereto and made a part hereof.
8. The restated Articles of Incorporation supersede the original
Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer
thereof this 7th day of May, 1996.
Rhone-Poulenc Rorer Inc.
----------------------------------------
(Name of Corporation)
BY: /s/ Richard B. Young
------------------------
Richard B. Young
TITLE: Secretary
--------------------
<PAGE>
<PAGE>
EXHIBIT A
RESOLVED, that pursuant to Section 1914(a) of the Pennsylvania
Business Corporation Law, the Articles of Incorporation of the
Corporation be and they are hereby are amended by deleting the
first paragraph of Article FIFTH thereof and substituting
therefore the following:
FIFTH: The authorized Capital Stock of the corporation
shall be six hundred and three million (603,000,000) shares,
to be divided into two classes consisting of (a) three
million (3,000,000) Preferred Shares, without par value, and
(b) six hundred million (600,000,000) Common Shares, without
par value. The following shares shall be uncertificated
shares: all previously issued shares of the corporation
owned by it and those Common Shares that may be issued under
the Rhone-Poulenc Rorer Inc. Amended and Restated Stock Plan
or the Rhone-Poulenc Rorer Inc. Equity Compensation Plan and
are subject to any restrictions under either of such plans.
ASSET PURCHASE AGREEMENT
Between
MEDEVA PLC,
MEDEVA ROCHESTER INC.
AND
FISONS CORPORATION,
FISONS INVESTMENTS INC.,
FISONS PLC, AND
FISONS B.V.
June 6, 1996
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS
1.1. Definitions 1
1.2. Additional Definitions 17
ARTICLE 2.
PURCHASE AND SALE OF THE ASSETS; CLOSING CONSIDERATION
2.1. Purchase and Sale of the Assets 17
2.2. Excluded Assets 18
2.3. Assumption of Liabilities 21
2.4. Excluded Liabilities 23
2.5. Closing Consideration 26
2.6. Closing Inventory Adjustment 27
2.7. Payment of the Closing Consideration 28
2.8. Allocation of the Purchase Price 28
2.9. Revenue Adjustment 29
ARTICLE 3.
THE CLOSING
3.1. Time and Place of Closing 31
3.2. Payment of Closing Consideration;
Deliveries 31
3.3. Assignment of Contracts, Etc 32
3.4. Further Assurances 33
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
4.1. Organization and Good Standing 35
4.2. Power and Authority 35
4.3. Organizational Documents. 36
4.4. No Violation 36
4.5. Financial Information; Undisclosed
Liabilities 37
4.6. Absence of Certain Changes or Events 38
4.7. Material Contracts; No Default 39
4.8. Patents, Trademarks and Trade Names 43
4.9. Actions 43
4.10. Compliance with Laws 43
4.11. Taxes 44
4.12. Title to Property 44
4.13. Insurance; Product Liability Claims 45
4.14. Approvals 45
4.15. Employee Benefit Plans; ERISA 46
4.16. Suppliers and Customers 46
i
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4.17. Environmental Matters 47
4.18. Labor Matters 48
4.19. Personal Property 49
4.20. Real Property 49
4.21. Broker's or Finder's Fees 52
4.22. Regulatory and Product Matters 52
4.23. Transactions with Affiliates 54
4.24. Inventory 54
4.25. Sufficiency of Assets. 54
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1. Organization and Good Standing 55
5.2. Power and Authority 55
5.3. No Violation 56
5.4. Actions 57
5.5. Approvals 57
5.6. Broker's or Finder's Fees 57
5.7. Disclosure 58
5.8. Financing 58
ARTICLE 6.
CERTAIN OBLIGATIONS OF THE SELLERS PRIOR TO THE CLOSING
6.1. Conduct of Business 59
6.2. Restricted Activities and Transactions 59
6.3. Cooperation 61
6.4. No Solicitation of Transaction. 61
6.5. Access to the Sellers 62
6.6. Confidentiality 63
6.7. Premerger Notification 63
6.8. Disclosure Supplements 64
ARTICLE 7.
CERTAIN OBLIGATIONS OF THE
PURCHASER PRIOR TO THE CLOSING
7.1. Cooperation 65
7.2. Confidentiality 65
7.3. Premerger Notification 66
7.4. Shareholder Circular; Shareholder
Approvals; Etc. 66
7.5. Financing 67
ARTICLE 8.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE PURCHASER
8.1. Representations and Warranties True 68
8.2. Performance 68
8.3. Title Insurance 68
ii
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<PAGE>
8.4. No Material Adverse Change 69
8.5. Approvals 69
8.6. Deliveries 69
8.7. Absence of Litigation 71
8.8. Shareholder Approval, Etc 71
ARTICLE 9.
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SELLERS
9.1. Representations and Warranties True 72
9.2. Performance 72
9.3. Approvals 72
9.4. Deliveries 72
9.5. Absence of Litigation 74
ARTICLE 10.
ADDITIONAL COVENANTS AND AGREEMENTS
10.1. Books and Records; Access 74
10.2. Confidentiality 75
10.3. Employment and Employee Benefits 76
10.4. Specific Performance; Injunctive Relief 78
10.5. Noncompetition; Nonsolicitation 78
10.6. Use of Fisons Name; NDC Licenses 80
10.7. Reconveyance of Intangible Assets 81
10.8. Expenses 81
10.9. Access 82
ARTICLE 11.
SURVIVAL; INDEMNIFICATION
11.1. Survival 82
11.2. Indemnification by the Sellers 83
11.3. Indemnification by the Sellers for
Product Recalls 84
11.4. Indemnification by the Purchaser 86
11.5. Notice and Payment of Claims 87
11.6. Matters Involving Third Parties 88
11.7. Limitation of Remedies 89
11.8. Minimum Warranty Claim. 90
11.9. Maximum Warranty Claim 90
11.10. Mitigation of Damages 90
11.11. Bulk Sales Law 91
ARTICLE 12.
TERMINATION
12.1. Termination 91
12.2. Effect of Termination 92
iii
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<PAGE>
ARTICLE 13.
MISCELLANEOUS
13.1. Public Announcements 92
13.2. Amendment; Waiver 93
13.3. Fees and Expenses 93
13.4. Transfer Taxes 93
13.5. Notices 94
13.6. Assignment 95
13.7. Governing Law; Consent to Jurisdiction 96
13.8. Counterparts 97
13.9. Headings 97
13.10. Entire Agreement 97
13.11. Severability 98
13.12. No Third Party Beneficiaries 98
13.13. Singular and Plural Forms 98
13.14. References to Articles, Etc. 98
13.15. References to "Herein," Etc. 98
13.16. Effect of Schedules 99
EXHIBITS
Exhibit A Guaranty
Exhibit B License Agreement
Exhibit C Security Agreement
Exhibit D Bargain and Sale Deed with Covenants Against
Grantors Acts
Exhibit E Sellers' Counsel Opinions
SCHEDULES
Schedule 1.1(as) Headquarters Services
Schedule 1.1(au) Inactive Products
Schedule 1.1(bb) Knowledge of the Seller
Schedule 1.1(bi) Fisons Product List (Rochester)
Schedule 1.1(bx) Products
Schedule 2.1(e) Certain Excluded Assets
Schedule 2.2(l) Excluded Equipment
Schedule 2.2(q) Other Excluded Assets
Schedule 2.3(a) Excluded Contracts
Schedule 3.2 License Agreement Payments
Schedule 4.1 Organization and Good Standing
Schedule 4.4 No Violation
Schedule 4.5(a) Financial Information
Schedule 4.5(b) Material Liabilities
Schedule 4.6 Absence of Certain Changes or Events
Schedule 4.7(a) Competition Restrictions
Schedule 4.7(b) Certain Contracts
iv
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<PAGE>
Schedule 4.7(c) No Defaults
Schedule 4.8 Patents, Trademarks and Trade Names
Schedule 4.9 Actions
Schedule 4.10 Compliance with Laws
Schedule 4.11 Tax Liens
Schedule 4.12 Title to Property
Schedule 4.13 Insurance
Schedule 4.14(a) Approvals - Governmental
Schedule 4.14(b) Approvals - Operation of the Business
Schedule 4.16(a) Suppliers and Customers
Schedule 4.16(b) Suppliers and Customers
Schedule 4.16(c) Suppliers and Customers
Schedule 4.16(d) Suppliers and Customers - Cancellations,
Terminations, etc.
Schedule 4.17(a) Environmental Matters
Schedule 4.17(b) Environmental Approvals
Schedule 4.18(a) Labor Matters
Schedule 4.18(b) Labor Claims
Schedule 4.19 Personal Property
Schedule 4.20(a) Real Property - Owned Real Property
Schedule 4.20(b) Real Property - Leased Real Property
Schedule 4.20(c) Real Property - Options and Rights of First
Refusal
Schedule 4.20(d) Real Property - Improvements, Utilities and
Access
Schedule 4.20(e) Real Property - Nonconforming Uses, Special
Permits
Schedule 4.20(f) Real Property - Real Estate Taxes
Schedule 4.20(i) Real Property - Money Owed to Contractors
Schedule 4.22 Regulatory and Product Matters
Schedule 4.23 Transactions with Affiliates
Schedule 5.7 Purchaser's Knowledge
Schedule 8.5 Contracts/Approvals Which Require Obtaining
of Consent by Closing
Schedule 8.6 Astra and Commerce Avenue Estoppel
Certificate
Schedule 9.3 Approvals - Sellers
Schedule 10.3(a) List of Plan Employees
Schedule 10.3(b) List of Employees Not to be Solicited
v
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement"), dated June
6, 1996, is entered into among (i) Medeva PLC, an English
corporation ("Medeva") and Medeva Rochester Inc., a Delaware
corporation, on the one hand ("Medeva Rochester" and collectively
with Medeva, the "Purchaser"), and Fisons Corporation, a
Massachusetts corporation ("Fisons"), Fisons Investments Inc., a
Delaware corporation ("FII"), Fisons plc, an English corporation
("FPLC"), and Fisons B.V., a company organized under the laws of
Holland ("FBV"), on the other hand (Fisons, FII, FPLC and FBV are
collectively referred to as the "Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers desire to transfer, sell, convey,
assign and deliver to the Purchaser, and the Purchaser desires to
acquire from the Sellers, the Business (as defined herein), in
accordance with the terms and subject to the conditions of this
Agreement.
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements contained
herein, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1. Definitions. The following terms, as used in
this Agreement, shall have the following meanings:
(a) "Acquisition Primary Documents" shall mean,
collectively, this Agreement, the License Agreement, the
Manufacturing Agreement, the Bill(s) of Sale, the Assignment and
Assumption Agreement, the Deed, the Transitional Services
Agreement, the Supply Agreement, the Security Agreement and the
Guaranty to be delivered pursuant to Section 3.2 hereof and the
guaranty, if any, to be delivered pursuant to Section 9.4(f)
hereof.
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<PAGE>
(b) "Acquisition Documents" shall mean the
Acquisition Primary Documents and all agreements, instruments,
certificates and other documents executed and delivered in
connection herewith or contemplated hereby.
(c) "Action" shall mean any claim, dispute, action,
arbitration, litigation, proceeding, suit or investigation, and
any appeal therefrom.
(d) "Adjustment Current Assets" shall mean all
Inventory, prepaid property taxes in respect of the Real
Property, fees prepaid to the FDA in respect of the Facility and
the Products, prepaid expenses for travel and other activities
primarily related to the Business, prepaid rent in respect of the
Leased Real Property and any other current assets that the
Purchaser in its sole discretion agrees to include in connection
with the Audit (as defined in Section 2.6 hereof).
(e) "Affiliate" shall mean, with respect to any
Person, any Person which, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under
common control with, such Person; provided, however, that with
respect to the Sellers, only RPR and Persons directly or
indirectly controlled by RPR shall be an Affiliate of any Seller
for any provision of this Agreement.
(f) "Agreement" shall mean this Asset Purchase
Agreement and shall include all of the Schedules and Exhibits, if
any, attached hereto.
(g) "Antitrust Division" shall have the meaning
ascribed to such term in Section 6.7 hereof.
(h) "Approval" shall mean any approval,
authorization, consent, license, franchise, order or permit of or
by, notice to, or filing or registration with, a Person.
2
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(i) "Assumed Liabilities" shall have the meaning
ascribed to such term in Section 2.3 hereof.
(j) "Astra Lease" shall mean that certain Lease,
dated May 24, 1995, between Fisons, as landlord, and Astra
Research Corporation ("Astra"), as tenant, covering certain
portions of the Facility (as hereinafter defined), as amended by
the letter agreement between such parties dated June 13, 1995.
(k) "Astra Cohabitation Agreement" shall mean that
certain Cohabitation Agreement, dated as of May 24, 1995, between
Fisons and Astra, as amended by the letter agreement between such
parties dated June 13, 1995.
(l) "Books and Records" shall mean originals or
copies of all books, financial and other records and any
information and data which has been reduced to written,
electronically formatted, recorded or encoded form primarily
relating to the Business, the Products in the Territory or the
Inactive Products in the Territory, the Transferred Assets, the
Licensed Assets, or the Assumed Liabilities (delivery of such
Books and Records to be deemed to occur upon the Transfer to
Purchaser of the Real Property) and that are not Licensed Assets,
including without limitation, to the extent relating to the
Business, customer lists and related sales histories, credit
policies and credit information with respect to existing
customers, existing cost and pricing data, employee records for
current employees of the Business who accept the Purchaser's
offer of employment, existing business plans, advertising and
promotion plans, product development plans, forecasts, market
research reports, competitor information, reference catalogs, and
all existing product data and studies including product
distribution records (such as shipping documentation and
invoices), FSS product sales and price data, batch records and
results of pre-clinical and clinical studies and other product
evaluation studies, audit reports (including environmental
reports, financial reports and audits, QA/QC reports and Good
Manufacturing Practices Reports), and adverse drug experience
3
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<PAGE>
information and drug product complaints concerning the Products,
and correspondence to the extent relating to the Business
(including without limitation, with the Environmental Protection
Agency, the FDA, the DEA and the FTC).
(m) "Bought-In Products" shall mean Gastrocrom(R)
(cromolyn sodium, USP) Capsules; Gastrocrom(R) (cromolyn sodium,
USP) Oral Concentrate; Hylorel(R) (guanadrel sulfate tablets,
USP) Tablets; K-Norm(R) (potassium chloride extended relief cap
sules, USP) Capsules; Americaine(R) (benzocaine) Otic Topical
Anesthetic Ear Drops; and Americaine(R) (benzocaine) Anesthetic
Lubricant.
(n) "Business" shall mean the business, assets,
properties, rights and operations of the Sellers and their
Affiliates, wherever located and whether or not reflected on the
books and records of the Sellers or their Affiliates, that are
primarily used in, or primarily pertain or relate to, the
manufacture at the Facility and/or sale and/or distribution of
the Products in the Territory, excluding any such items related
to the Sellers' sales force.
(o) "Business Day" shall mean each day which is not a
day on which banking institutions in New York, New York or
London, England are authorized or obligated by Law to close.
(p) "CERCLA" shall have the meaning ascribed to such
term in Section 4.17(a) hereof.
(q) "Closing" shall mean the consummation of the
transactions contemplated by this Agreement with effect at and as
of the Effective Time.
(r) "Closing Date" shall mean July 2, 1996 or such
other date as the parties shall determine, if the conditions to
Closing described in Articles 8 and 9 hereof have been fully
satisfied or waived by the appropriate party or parties hereto on
or prior to such date.
4
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(s) "Closing Purchase Price" shall have the meaning
ascribed to such term in Section 2.5.
(t) "Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder.
(u) "Commerce Drive Lease" shall mean that certain
Agreement of Lease, dated as of July 23, 1976, between Morris
Rock, Julius Rock and Joelle Kheel, as lessor, and Pennwalt
Corporation, as lessee, as subsequently amended on February 24,
1982, June 29, 1987, June 28, 1991 and August 15, 1991.
(v) "Contract" shall mean each instrument, contract
and other agreement (including without limitation, all leases,
subleases and other agreements relating to real property and all
unshipped purchase orders) primarily relating to the Business,
the Products in the Territory, the Inactive Products in the
Territory, the Transferred Assets or the Licensed Assets to which
any of the Sellers is a party or by which any of them or any of
their properties or assets are bound.
(w) "Competitive Business" shall have the meaning
ascribed to such term in Section 10.5(a) hereof.
(x) "Damages" shall mean any claim, loss, liability,
debt, cost or expense (including, without limitation, reasonable
attorneys' and accountants' fees, costs and expenses but
excluding in all cases consequential damages) or damage of any
kind or nature whatsoever.
(y) "DEA" shall mean the U.S. Drug Enforcement
Administration.
(z) "Deed" shall mean the Bargain and Sale Deed with
Covenants Against Grantor's Acts in the form attached hereto as
Exhibit D.
5
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(aa) "DOJ" shall have the meaning ascribed to such
term in Section 4.22(c).
(ab) "Effective Time" shall mean 11:59 p.m. New York
Time on the Closing Date.
(ac) "Environmental Laws" shall have the meaning
ascribed to such term in Section 4.17(a) hereof.
(ad) "Equipment" shall mean each item of machinery,
equipment and fixture owned by the Sellers or their Affiliates
(i) which is located on the Real Property on the date hereof or
(ii) which is not so located but is now, or was at any time since
December 20, 1995, used by the Sellers or their Affiliates
primarily in connection with the manufacturing of Products at the
Facility, including without limitation, the equipment listed on
Schedule 4.19 hereto.
(ae) "ERISA" shall have the meaning ascribed to such
term in Section 4.15(a).
(af) "Establishment Registration" shall mean the
registration of the Facility and the listing of the Products with
the FDA, as required under the FFDCA and, if required by Law, the
DEA and the State Education Department, New York State Board of
Pharmacy.
(ag) "Excluded Assets" shall have the meaning ascribed
to such term in Section 2.2 hereof.
(ah) "Excluded Liabilities" shall have the meaning
ascribed to such term in Section 2.4 hereof.
(ai) "Facility" shall mean the real property, plant
and fixtures owned and operated by Fisons, located at 755
Jefferson Road, Rochester, New York.
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(aj) "FDA" means the U.S. Federal Food and Drug
Administration.
(ak) "FFDCA" shall have the meaning ascribed to such
term in Section 4.22(c).
(al) "FTC" shall have the meaning ascribed to such
term in Section 6.7 hereof.
(am) "Former Real Property" means any real property
other than the Real Property but only with respect to such
periods when it was owned, leased, operated or otherwise used in
respect of the Transferred Assets and the Business, whether by
Sellers or by their predecessors in interest.
(an) "GAAP" shall mean generally accepted accounting
principles in the United States as in effect on the date hereof.
(ao) "Good Manufacturing Practices" shall mean the
current good manufacturing practices for the preparation of drug
products for administration to humans, as set forth in the rules
and regulations issued under the FFDCA and the guidelines and
other similar pronouncements issued by the FDA interpreting and
giving effect to the "current" status of such rules and
regulations regarding good manufacturing practices, all as in
effect from time to time up to the Effective Time.
(ap) "Governmental Authority" shall mean any foreign,
federal, state, local or other governmental, administrative or
regulatory authority, body, agency, court, tribunal or similar
entity.
(aq) "Guaranty" shall mean the Guaranty in the form of
Exhibit A hereto.
(ar) "Hazardous Materials" means any substance which
is or becomes defined as "hazardous waste", "hazardous material",
"hazardous substance", "asbestos", "industrial waste",
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"radioactive material", "radioactive waste", "low-level
radioactive waste", "oil", "petroleum", "petroleum products",
"polychlorinated biphenyls", "pollutant", or "contaminant" under
any Environmental Law, including, without limitation, CERCLA and
the Resource Conservation and Recovery Act (42 U.S.C. section
6901 et seq.) and the regulations promulgated thereunder.
(as) "Headquarters Services" shall mean the services
listed on Schedule 1.1(as).
(at) "HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
(au) "Inactive Products" shall mean the products
listed on Schedule 1.1(au).
(av) "Income Taxes" shall mean any foreign, federal,
state or local income Tax or franchise Tax based on income,
including any interest, penalties, additions, assessments or
deferred liability with respect thereto, whether disputed or not.
(aw) "Indemnified Party" shall mean any party entitled
to indemnification pursuant to Article 11 hereof and shall
include such party's Affiliates, successors and permitted
assigns.
(ax) "Indemnifying Party" shall mean any party liable
for indemnification pursuant to Article 11 hereof and shall
include such party's successors and assigns.
(ay) "Intangible Assets" shall mean all intangible
property owned by Sellers primarily relating to the Pennkinetic
Process, and all of the following owned by or issued to Sellers
or their Affiliates, primarily relating to the Business, the
Products in the Territory, the Inactive Products in the Territory
or the other Transferred Assets whether or not constituting or
recorded in the Books and Records of the Sellers: warranties and
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other similar guarantees of quality or performance given by third
parties in respect of goods delivered or services performed,
inventions, designs, know-how, patents, patent applications,
trademarks, trademark registrations and applications therefor,
goodwill, goodwill associated with trademarks that are not
Licensed Assets, trade names, trade secrets, trade processes,
labels and other trade rights, whether or not registered,
copyrights (including copyrights in computer software and
computer software documentation, source code and systems
documentation), copyright registrations and applications
therefor, Specifications, Approvals (including without limitation
the Product Licenses and Establishment Registration and any
similar filings made and Approvals given in respect of the
Inactive Products), customer identities and related sales
histories, covenants not to compete, capitalized closing costs,
Proprietary Information, research and development projects,
materials and data, and any other assets, identifiable or
unidentifiable, normally considered an "intangible asset" under
GAAP and to which the guidance under GAAP for intangible assets
would apply for purposes of accounting.
(az) "Inventory" shall mean all inventories owned by
the Sellers or their Affiliates primarily relating to the
Business, the Products in the Territory or the other Transferred
Assets, wherever located, including without limitation all
packaging, finished goods, raw materials, supplies, work in
process, spare parts and other miscellaneous items of tangible
property normally considered a part of "inventory" under GAAP.
(ba) "IRS" shall mean the U.S. Internal Revenue
Service.
(bb) "knowledge" or "known" shall mean with reference
to Sellers' knowledge, the actual knowledge after reasonable
inquiry of the persons listed, or holding the offices and
positions listed, on Schedule 1.1(bb) hereto.
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(bc) "Labelling" means package inserts, labels, carton
imprints and samples used in connection with the marketing and
sale of the Products in the Territory.
(bd) "Law" shall mean any applicable law, statute,
rule, regulation, ordinance, standard, requirement,
administrative ruling, order or process promulgated by any
Governmental Authority as in effect from time to time (including,
without limitation, any zoning or land use law or ordinance,
building code, Environmental Law, securities, blue sky, civil
rights or occupational health and safety law or regulation and
any court or arbitrator's order or process).
(be) "Leased Real Property" shall mean the leasehold
interests of Sellers or their Affiliates listed on Schedule
4.20(b) hereto.
(bf) "Liability" shall mean any debt, liability,
commitment or obligation of any kind, character or nature
whatsoever, whether known or unknown, secured or unsecured,
accrued, fixed, absolute, potential, contingent or otherwise, and
whether due or to become due.
(bg) "License Agreement" shall mean the License
Agreement in the form attached hereto as Exhibit B and "Licensed
Assets" shall mean the Intellectual Property and Assumed
Contracts, each as defined therein.
(bh) "Lien" shall mean any lien, statutory lien,
pledge, mortgage, security interest, charge, easement, right of
way, covenant, claim, restriction, right, option, conditional
sale or other title retention agreement, or encumbrance of any
kind or nature.
(bi) "Lost Operating Profit" shall mean in respect of
each Primary Product that becomes subject to a Product Recall, if
any, the amount equal to 60% of the difference between (i) the
agreed upon forecast sales for such Primary Product as set forth
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in Schedule 1.1(bi) hereof and (ii) any actual sales thereof
during the period commencing with the Product Recall of such
Primary Product and ending thirty-six (36) months thereafter.
(bj) "manufacture/manufacturing/manufactured" means
all processes and operations involved in the production,
formulation, blending, quality assurance, testing, storage,
filling and packaging of the Products.
(bk) "Manufactured Products" shall mean Delsym(R)
(dextramethorphan polistirex) Cough Formula, Ionamin(R)
(phentermine resin) Capsules, Mykrox(R) (metolazone tablets, USP)
Tablets, Pediapred(R) (prednisolone sodium phosphate, USP) Oral
Liquid, Tussionex(R) (hydrocodone polistirex/chlorpheniramine
polistirex) Pennkinetic Extended Release Suspension, Zaroxolyn(R)
(metolazone tablets, USP) Tablets.
(bl) "Marks" shall have the meaning ascribed to such
term in Section 10.6(a) hereof.
(bm) "Manufacturing Agreement" shall mean a
Manufacturing Agreement for the supply of certain Products to the
Sellers for sale in Canada in form and substance reasonably
acceptable to the parties.
(bn) "Other Personalty" shall mean all personal
property (including parts, furniture and furnishings) other than
Equipment, Intangible Assets, Inventory, Inactive Products,
Products, Proprietary Information, Product Licenses and
Establishment Registrations owned, held or leased by Sellers or
their Affiliates and which is used by Sellers primarily in
connection with the Business, the Inactive Products in the
Territory or the Products in the Territory or the other
Transferred Assets excluding any Licensed Assets.
(bo) "Owned Real Property" shall mean the real
property and fixtures owned, in whole or in part, by the Sellers
or their Affiliates listed on Schedule 4.20(a) hereto.
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(bp) "Pennkinetic Process" shall mean the prolonged
release pharmaceutical preparation process described in United
States Patent Nos. 4,221,778 and 4,762,709.
(bq) "Permitted Liens" shall mean (a) mechanics',
carriers', warehousemens', workmens' and other similar Liens aris
ing in the ordinary course of the Business which are not yet due
and payable or are being contested in good faith by appropriate
proceedings, which will be satisfied in full by the Sellers or
omitted from the Purchaser's title insurance policy by bonding or
escrow, and which would not, individually or in the aggregate,
reasonably be expected to have a Seller Material Adverse Effect,
(b) Liens for Taxes, assessments and other governmental charges
not yet due and payable or that may subsequently be paid without
penalty or that are being contested in good faith by appropriate
proceedings and will be satisfied in full by the Sellers and
which would not, individually or in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect, (c) with
respect to the Owned Real Property, (i) easements, covenants,
rights-of-way, claims, restrictions and other encumbrances of
record set forth in the title insurance commitment for the
Facility prepared for the Purchaser by Chicago Title Insurance
Company under its title number 9616-25011, dated April 9, 1996,
(ii) any state of facts shown on the survey of the Facility pre
pared for the Purchaser by RV-SH/APS Consultants Land Surveyors,
PC dated May 8, 1996, and (iii) zoning, building and other
similar restrictions imposed by Law, (d) with respect to the
Leased Property, such Liens as shall not render any Real Property
Leases unmarketable, and any state of facts that a current survey
of the Leased Real Property would show, provided the same shall
not render the same unmarketable, (e) such other matters shown on
Schedule 4.12 and (f) Liens under title retention agreements
entered into the ordinary course of the Business and either
involving annual payments by Purchaser of less than $25,000 or
listed on Schedule 4.7.
(br) "Person" shall mean any individual, general or
limited partnership, corporation, limited liability company,
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association, business trust, joint venture, Governmental
Authority, business entity or other entity of any kind or nature.
(bs) "Personal Property Lease" shall mean each lease
of personal property (including capital leases) primarily
relating to the Business, the Transferred Assets or the Licensed
Assets which provides for payments in excess of $25,000 per
annum.
(bt) "Placement" shall have the meaning ascribed to
such term in Section 8.8 hereof.
(bu) "Placing Agreement" shall have the meaning
ascribed to such term in Section 8.8 hereof.
(bv) "Product License" shall mean the pending and/or
approved New Drug Application, Abbreviated New Drug Application,
Claimed Exemption for Investigational Use (i.e., Investigational
New Drug Application), Drug Master File, or other similar product
license applicable in the Territory for a Product including all
supplements and amendments thereto.
(bw) "Product Recall" shall have the meaning ascribed
to such term in Section 11.3(a) hereof.
(bx) "Products" shall mean, collectively, the products
listed on Schedule 1.1(bx).
(by) "Proprietary Information" shall mean, all of the
following owned by Sellers or their Affiliates and primarily
relating to the Business, the Products in the Territory, the
Inactive Products in the Territory, or the other Transferred
Assets whether or not recorded in the Books and Records of the
Sellers: the content of the Books and Records, confidential
information, trade secrets, pricing and marketing strategies,
customer information, business leads, research and results
thereof, technology, know-how, discoveries, improvements,
techniques, data, methods, processes, instructions, formulae,
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recipes, drawings and specifications (whether or not such items
have been reduced to written, computer-readable or other tangible
form and whether patented or patentable or not), shop rights,
license agreements and other agreements relating to any of the
foregoing and other proprietary information and materials of
every kind and character.
(bz) "Purchase Price" shall have the meaning ascribed
to such term in Section 2.5 hereof.
(ca) "Purchaser Material Adverse Effect" shall
mean any change or effect that taken alone or together with other
changes or effects has had or is likely to have a material
adverse effect on the Purchaser's ability to consummate the
transactions contemplated by this Agreement or the other
Acquisition Documents.
(cb) "Real Property" shall mean all Leased Real
Property and Owned Real Property.
(cc) "Real Property Leases" shall mean the
leases, subleases, licenses and other agreements which relate to
the use of real property.
(cd) "Representative" shall mean, with respect
to a Person, any employee, officer, director, stockholder,
partner, accountant, attorney, investment banker, broker, finder,
investor, subcontractor, consultant or other authorized agent or
representative of such Person.
(ce) "Restricted Assets" shall have the meaning
ascribed to such term in Section 3.3 hereof.
(cf) "Returned Products" means any Products
validly returned to Purchaser, including without limitation, any
Products returned because they are out of date or as part of a
general recall of such Product from its channels of distribution
but exclusive, however, of Product Recalls.
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(cg) "RPR" shall mean Rhone-Poulenc Rorer Inc.
(ch) "Security Agreement" shall mean the
Intellectual Property Security Agreement in the form attached
hereto as Exhibit C.
(ci) "Seller Material Adverse Effect" shall
mean any change or effect that taken alone or together with other
changes or effect has had or is likely to have a material adverse
effect on the Business or the Sellers' ability to consummate the
transactions contemplated by this Agreement or the other
Acquisition Documents.
(cj) "Special Indemnification Deductible" shall
have the meaning ascribed to such term in Section 11.3(a) hereof.
(ck) "Special Indemnification Limit" shall have
the meaning ascribed to such term in Section 11.3(a) hereof.
(cl) "Specifications" means the specifications
(including manufacturing procedures, agreed upon regulatory
analytical methods, quality assurance procedures and validation
procedures) for manufacturing the Products set forth in the
Sellers' Product Licenses, manufacturing manuals and batch
records.
(cm) "Supply Agreement" shall mean an agreement
in form and substance reasonably acceptable to the parties
providing for the supply by the Sellers of bulk cromolyn sodium,
USP to Purchaser after the Closing.
(cn) "Tax" shall mean any foreign, federal,
state or local income, gross receipts, franchise, license,
severance, occupation, premium, environmental (including taxes
under Code Section 59A), customs duties, profits, disability,
registration, alternative or add-on minimum, estimated,
withholding, payroll, employment, unemployment insurance, social
security (or similar), excise, sales, use, value-added,
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occupancy, franchise, real property, personal property, business
and occupation, mercantile, windfall profits, capital stock,
stamp, transfer, workmen's compensation or other tax, fee or
imposition of any kind whatsoever, including any interest,
penalties, additions, assessments or deferred liability with
respect thereto, whether disputed or not, and including taxes
referred to in Section 13.4.
(co) "Tax Return" shall mean any return,
report, declaration, claim for refund, estimate, election, or
information statement or return relating to any Tax, including
any schedule or attachment thereto, and any amendment thereof.
(cp) "Territory" shall mean (i) with respect to
all the Products and Inactive Products except Gastrocrom(R)
(cromolyn sodium, USP) Capsules and Oral Concentrate and
Pediapred Oral Solution (prednisolone sodium phosphate, USP),
anywhere in the world (other than Canada), (ii) with respect to
Gastrocrom(R) (cromolyn sodium, USP) Capsules and Oral Con
centrate, the United States and its commonwealths, territories
and possessions, including without limitation, Puerto Rico, and
(iii) with respect to Pediapred Oral Solution (prednisolone
sodium phosphate, USP), the United States and its commonwealths,
territories and possessions, including without limitation, Puerto
Rico, and Aruba, Bahamas, Barbados, Curacao/Netherlands Antilles,
Denmark, Guatemala, Saipan, Surinam and Trinidad.
(cq) "Third Party Claim" shall have the meaning
ascribed to such term in Section 11.6(a) hereof.
(cr) "Transfer" shall mean any sale, transfer,
conveyance, assignment, delivery or other disposition, and
"Transferred" and "Transferrable" shall have a correlative
meaning.
(cs) "Transferred Assets" shall have the
meaning ascribed to such term in Section 2.1 hereof.
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(ct) "Transitional Services Agreement" shall
mean an agreement in form and substance reasonably acceptable to
the parties with respect to certain post Closing services and
assistance that each is to provide the other for a transitional
period after Closing.
(cu) "WARN" shall mean the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. Section 2101, et seq.,
as it may be amended from time to time.
1.2. Additional Definitions. In addition to the
foregoing defined terms, other capitalized terms appearing in
this Agreement shall have the respective meanings ascribed to
such terms where they first appear in the text of this Agreement.
ARTICLE 2.
PURCHASE AND SALE OF THE ASSETS; CLOSING CONSIDERATION
2.1. Purchase and Sale of the Assets. Subject to the
terms and conditions of this Agreement, and on the basis of the
representations, covenants and warranties set forth herein, at
the Closing the Sellers shall transfer, sell, convey, assign and
deliver to the Purchaser, and the Purchaser shall purchase and
accept from the Sellers, all of the Sellers' respective rights,
title and interests in and to the Business, free and clear of all
Liens other than Permitted Liens and the Assumed Liabilities (but
in no event including the Excluded Assets) including, without
limitation or duplication, all of the Sellers' respective rights,
titles and interests in and to the following, free and clear of
all Liens other than Permitted Liens and the Assumed Liabilities,
(collectively, the "Transferred Assets"):
(a) all Equipment;
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(b) to the extent legally Transferable and subject to
the Sellers' rights pursuant to Section 10.7 hereof, all
Intangible Assets;
(c) to the extent legally Transferrable and subject
to the Sellers' rights pursuant to Section 10.7 hereof, all
Proprietary Information;
(d) all Inventory;
(e) all Real Property;
(f) to the extent legally Transferrable and subject
to the Sellers' rights pursuant to Section 10.7 hereof, all
rights to the Products in the Territory and Inactive Products in
the Territory;
(g) to the extent legally Transferrable and subject
to the Sellers' rights pursuant to Section 10.7 hereof, all
Contracts, including without limitation, rights under supply
agreements primarily relating to the Products in the Territory,
and the Astra Lease, the Astra Cohabitation Agreement and the
Commerce Drive Lease;
(h) all Other Personalty;
(i) to the extent legally Transferrable and subject
to the Sellers' rights pursuant to Section 10.7 hereof, all Books
and Records;
(j) without limiting the foregoing, all prepaid
expenses, advances and security deposits primarily relating to
the Business other than those relating to Income Taxes.
2.2. Excluded Assets. Notwithstanding anything to the
contrary contained herein, including Section 2.1 above, the
Transferred Assets shall not include and the Sellers shall retain
all of their respective rights, title and interest in and to, and
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shall not Transfer to the Purchaser, any asset of the Sellers or
their Affiliates set forth below (collectively, the "Excluded
Assets"):
(a) any assets of the Sellers or their Affiliates
which are not Transferred Assets including rights to products
other than the Products and Inactive Products;
(b) the Licensed Assets;
(c) any proceeds paid or payable to Sellers in
connection with, and all other rights of Sellers under, this
Agreement or the other Acquisition Documents, including the
Purchase Price and payments under the License Agreement;
(d) any Tax credits or Tax refunds paid with respect
to the Business for periods ending prior to the Effective Time;
(e) any refunds of fees paid to the FDA with respect
to the Business for periods ending prior to the Effective Time;
(f) all causes of action and choses in action in
respect of the Business for periods ending prior to the Effective
Time or relating to the Excluded Liabilities;
(g) all Drug Master Files relating to the Products or
the Inactive Products;
(h) cash and cash equivalents;
(i) rights to the Products outside the Territory and
the Inactive Products outside the Territory;
(j) the other current assets that the Purchaser
elects not to include in the definition of "Adjustment Current
Assets" as permitted by such provision.
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(k) all rights of the Sellers under Contracts which
according to such Contracts relate to periods prior to the
Effective Time and were paid, performed, discharged or satisfied
prior to the Effective Time, and the Sellers shall retain all
such rights including without limitation, all of Sellers'
accounts receivable as of the Effective Time;
(l) the personal computers, the zebra printer and the
other machinery and equipment relating to (i) blister packing,
(ii) the performance of stability work with respect to products
other than the Products and (iii) release testing for products
other than the Products as more fully described, in the case of
clauses (i), (ii) and (iii) above, on Schedule 2.2(l)
(collectively, the "Excluded Equipment"); provided, that any
Books and Records contained therein will be down loaded onto
portable computer disks and delivered to Purchaser with the Books
and Records in accordance with Section 10.1;
(m) all assets of the Pension Plan for Employees of
Fisons Corporation, all assets of any tax-qualified defined
contribution plan in which Plant Employees (as defined in Section
10.3(a) hereof) participate (other than any assets which are
transferred in accordance with Section 10.3(e) hereof) and all
assets associated with any Excluded Liability described in
Sections 2.4(a) and 2.4(g) hereof;
(n) all insurance policies and all rights and claims
thereunder;
(o) rights to the name "Fisons" or any variation
thereof except as provided by Section 10.6 hereof; and
(p) the corporate and financial books and records
(including without limitation, the general ledgers) of Sellers,
other than those primarily relating to the Business, the Trans
ferred Assets or the Licensed Assets; and
(q) the assets set forth on Schedule 2.2(q).
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2.3. Assumption of Liabilities. Subject to the terms
and conditions of this Agreement, as of the Effective Time, the
Purchaser shall assume, and shall be solely and exclusively
liable with respect to, and shall pay, perform, discharge and
satisfy when due, only those Liabilities of the Sellers which are
specifically enumerated below (collectively, the "Assumed
Liabilities"):
(a) all Liabilities of the Sellers under Contracts
included in the Transferred Assets which according to such
Contracts relate to periods after the Effective Time and are to
be paid, performed, discharged or satisfied after the Effective
Time (exclusive, however, of the obligation to make any payments
under the Contracts listed on Schedule 2.3(a) to the extent such
payments relate to periods ending prior to the Effective Time),
and the Sellers shall retain the balance of such Liabilities
including without limitation, all accounts payable as of the
Effective Time;
(b) all Liabilities for Damages to third parties or
their property arising out of the sale of the Products after the
Effective Time; provided, however, that Purchaser shall not
assume, and Sellers shall retain, any such Liabilities for any
Damages attributable to Products manufactured prior to the
Effective Time that at the Effective Time were adulterated or
misbranded within the meaning of the FFDCA; and
(c) all Liabilities in respect of Product warranties
and Returned Products provided, however, that:
(i) in respect of such Liabilities attributable
to defective Products that were manufactured by the
Sellers, the Sellers shall reimburse the Purchaser
within thirty (30) days of being invoiced by the
Purchaser for the out-of-pocket costs of replacing such
Products or the rebate or credit issued in lieu of such
replacement plus any other Liabilities incurred by the
Purchaser under the Product warranties applicable to
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such Products, provided, further, that where such
defective Products are from a lot a portion of which
was manufactured by the Sellers and a portion of which
was manufactured by the Purchaser, the Sellers shall
reimburse the Purchaser as specified above based on the
proportion of such lot manufactured by the Sellers; and
(ii) in respect of such Liabilities attributable
to Returned Products that are not defective but have
expiration dating of less than 12 months and were sold
by the Sellers, the Sellers shall reimburse the
Purchaser with thirty (30) days of being invoiced by
the Purchaser for the out-of-pocket costs of replacing
such Products or the rebate or credit issued in lieu of
such replacement, provided, further, that where such
Returned Products are from a lot a portion of which was
sold by the Sellers and a portion of which was sold by
the Purchaser, the Sellers shall reimburse the
Purchaser as specified above based on the proportion of
such lot sold by the Sellers as determined by the Audit
(as defined in Section 2.6(a) hereof).
(d) all Liabilities in respect of chargebacks,
governmental or other rebates (including without limitation
Medicaid rebates) and other similar refunding mechanisms
(collectively, "chargebacks"); provided, however, that:
(i) where the chargeback request is made in respect of a product
that can be identified as having been sold by the Sellers, the
Sellers shall reimburse the Purchaser within thirty (30) days of
being invoiced by the Purchaser for the amount of the rebate or
credit awarded in respect of such chargeback; and (ii) where the
chargeback request is made in respect of a Product that cannot be
identified as having been sold by the Sellers or the Purchaser
and the chargeback request reflects an activity date (i.e. date
of sale of the Product by a wholesaler to a customer for all
chargebacks other than government rebates ("Non-Government
Chargebacks") and the date of dispensing for government rebates
("Government Chargebacks")) (A) prior to the Effective Time, the
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Sellers shall reimburse the Purchaser for one hundred percent
(100%) of such Non-Government Chargeback or Government Chargeback
or (B) after the Closing Date but prior to the sixty-first (61st)
calendar day after the Effective Time, the Sellers shall
reimburse the Purchaser for one-hundred percent (100%) of such
Non-Government Chargeback or Government Chargeback, up to a
maximum liability of Sellers under this clause (d)(ii)(B) of Six
Hundred Thousand Dollars ($600,000). The Purchaser will provide
the Sellers with copies of such backup documentation reasonably
satisfactory to the Sellers to support Purchaser's reimbursement
claims under this Section 2.3(d) and Section 2.3(c). Amounts
reimbursed by Sellers to Purchaser under this Section 2.3(d) and
Section 2.3(c) shall be treated as a reduction of the Purchase
Price.
(e) all Liability under any Environmental Law to
treat, remove, remediate, dispose of or manage any Hazardous
Materials that were released, as such term is defined in CERCLA,
on, in, under, about or from the Real Property after the
Effective Time; and all Liability for claims (whether asserted in
common law or under statute and regardless of form, including
strict liability and negligence) arising out of or in respect of
any Hazardous Materials (i) that were present or stored on the
Real Property in compliance with applicable Environmental Laws
prior to the Effective Time and which were shipped, transferred,
removed, released, disposed of, arranged for disposal, or
otherwise transported off the Real Property after the Effective
Time or (ii) that were released on, in, under, about or from the
Real Property after the Effective Time; and
(f) except as provided in Section 13.4 hereof, all
Real Estate Taxes payable with respect to the Owned Real Property
(and, with respect to the Leased Real Property, if the related
Real Property Lease obligates the Sellers to pay the same) for
the period commencing on the Effective Time.
2.4. Excluded Liabilities. Except for the Assumed
Liabilities, the Purchaser shall not assume, and shall have no
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liability or obligation whatsoever, at any time, for any and all
Liabilities arising from the operation of, or any act or omission
occurring in respect of, the Business or the ownership of the
Transferred Assets prior to the Effective Time, (collectively,
the "Excluded Liabilities"). Without limiting the foregoing, the
following shall be Excluded Liabilities:
(a) any Liability of Sellers under any collective
bargaining, non-competition, consulting, employment or any
similar agreement;
(b) any Liability of Sellers for any Federal, state
or local Taxes, including without limitation, Taxes measured upon
income or profits earned or other Tax Liabilities incurred in
respect of the Business, the Transferred Assets or the Licensed
Assets or events or circumstances prior to the Effective Time
(including but not limited to any deferred Income Tax Liability);
(c) any Liability for expenses incurred by Sellers in
connection with or resulting from or attributable to the
transactions contemplated by this Agreement;
(d) any Liability for any investment banking,
brokerage or similar charge or commission payable or incurred by
Sellers in connection with this Agreement or the transactions
contemplated hereby;
(e) any Liability arising out of activities
undertaken by, or omissions of, the Sellers subsequent to the
Effective Time;
(f) any Liability giving rise to a Permitted Lien
prior to the Effective Time of the type included in clauses (a)
or (b) of the definition of Permitted Liens (it being agreed that
nothing herein shall be deemed to be a waiver of the Purchaser's
obligation to pay any Taxes with respect to any Real Property for
periods after the Effective Time);
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(g) any Liability arising out of or with respect to
any "employee benefit plan" (as defined in Section 3(3) of ERISA)
maintained, sponsored or contributed to by the Sellers other than
any Liability associated with any asset transferred in accordance
with Section 10.3(e) hereof which is a claim for or in respect of
an amount equal to the assets that were transferred or which
arises in respect of acts or omissions with respect thereto
subsequent to the transfer thereof to the Purchaser;
(h) any other Liability the Sellers may have to their
employees, or such employees' dependents, including without
limitation for wages, salaries, individual or group life or
health insurance, property damage or personal injury claims
including workers' compensation claims or proceedings,
discrimination claims or proceedings, benefits or severance or
other Liabilities relating to employment with the Sellers or in
connection with any accident or incident while employed by the
Sellers;
(i) any intercompany Liabilities between any of the
Sellers;
(j) any Liabilities for Damages to third parties or
their property arising out of the sale of the Products prior to
the Effective Time;
(k) any Liability under any Personal Property Lease
or other lease of personal property listed on Schedule 4.7(b) if
the property covered thereby is not located on the Real Property
on the Closing Date and is not delivered to the Purchaser within
ten (10) days of the Purchaser's demand therefor; and
(l) all Liability under any Environmental Law to
treat, remove, remediate, dispose of or manage any Hazardous
Materials that were released, as such term is defined in CERCLA,
on, in, under, about or from the Real Property prior to the
Effective Time or on, in, under, about or from the Former Real
Property during the period it was owned, leased, operated or
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otherwise used in respect of the Business, whether or not such
release was then in compliance with applicable Environmental
Laws; and all Liability for claims (whether asserted in common
law or under statute and regardless of form, including strict
liability and negligence) arising out of or in respect of (A) any
Hazardous Materials (i) that were stored at or otherwise present
or disposed of on the Real Property prior to the Effective Time
or on the Former Real Property during the period it was owned,
leased, operated or otherwise used in respect of the Business,
and which were shipped, transferred, removed, released, disposed
of, arranged for disposal, or otherwise transported off the Real
Property prior to the Closing or off the Former Real Property
during the period it was owned, leased, operated or otherwise
used in respect of the Transferred Assets and the Business,
whether or not then in compliance with applicable Environmental
Laws or (ii) that were released on, in, under, about or from the
Real Property prior to the Effective Time and which migrate off
the Real Property either on or prior to or after the Effective
Time; (B) any violation by Sellers prior to the Effective Time of
any Environmental Law with respect to the Transferred Assets or
operations of the Business; and (C) any failure to obtain or
maintain, prior to the Effective Time, any Approval required by
any Environmental Law to operate the Business.
2.5. Closing Consideration. The aggregate closing
consideration to be paid by the Purchaser to the Sellers at the
Closing in respect of the purchase of the Transferred Assets and
in full satisfaction of Purchaser's payment obligations under the
License Agreement shall be Three Hundred Seventy Million Dollars
($370,000,000). The portion of the closing consideration paid in
respect of the purchase of the Transferred Assets is Sixty-one
Million Dollars ($61,000,000) (the "Closing Purchase Price"),
which will be allocated as provided in Section 2.8, and subject
to increase or decrease by the amounts reimbursed by Sellers to
Purchaser under Section 2.3(c) and (d) and the amount of the
Closing Adjustment and 1996 Sales Adjustment as set forth in
Section 2.6 and Section 2.9 (the Closing Purchase Price so
adjusted being the "Purchase Price").
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2.6. Closing Inventory Adjustment. (a) Promptly
after Closing, the Sellers, at their expense, shall conduct a
physical count of the Inventory and audit of the other Adjustment
Current Assets as of the Effective Time (the "Audit"). To the
extent necessary, the Purchaser shall provide the Sellers and
their Representatives reasonable access to the Facility and
Leased Real Property during normal business hours to conduct the
Audit. The Audit may be witnessed by the Purchaser and its
accountants, at Purchaser's expense. The Inventory shall be
identified by lot number and valued as of the Effective Time
based on its net book value determined in accordance with GAAP;
provided that Inventory with expiration dating of less than
twelve (12) months measured from the Closing Date shall be valued
at zero. The Audit shall be completed, and the Sellers'
valuation of the Adjustment Current Assets as of the Effective
Time (the "Sellers' Valuation") completed and delivered to the
Purchaser, no later than thirty (30) days after the Closing Date.
Sellers' Valuation shall be deemed agreed by the Purchaser and
become binding among the parties unless the Purchaser shall
reject such valuation in a written notification specifying the
Purchaser's objections in reasonable detail delivered to the
Sellers within fifteen (15) business days of receipt of Sellers'
Valuation. In the event that the Purchaser shall notify the
Sellers in writing within such fifteen (15) business days period
that the Purchaser disagrees with the Sellers' Valuation, and if
the Purchaser and the Sellers are unable to resolve any such
disagreement within thirty (30) days after the Purchaser gives
the Sellers notice thereof, the disagreement shall be submitted
for determination to an accounting firm of national reputation
which is acceptable to the Purchaser and the Sellers, provided
that if the Purchaser and Sellers cannot promptly agree upon such
accounting firm, the disagreement shall be submitted to Ernst &
Young. The determination by such accounting firm shall be
conclusive, non-appealable and binding upon the Purchaser and the
Sellers for all purposes, and the fees of such firm shall be
borne as it shall determine after considering the positions
asserted by the parties in light of its final decision. The
value of the Adjustment Current Assets as of the Effective Time,
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as finally agreed among the parties or determined under this
paragraph, is referred to herein as the "Adjusted Valuation".
(b) Within ten (10) business days following the final
agreement on, or determination of, Adjusted Valuation, the
Closing Purchase Price paid by the Purchaser to the Sellers shall
be adjusted as follows (the "Closing Adjustment"):
(1) by payment by the Purchaser to the Sellers
of the amount by which the Adjusted Valuation exceeds Ten Million
Dollars ($10,000,000); or
(2) by payment by the Sellers to the Purchaser
of the amount by which the Adjusted Valuation is less than Ten
Million Dollars ($10,000,000).
2.7. Payment of the Closing Consideration. At the
Closing, the Purchaser shall pay the Closing Purchase Price to
Fisons and/or FII by wire transfer of immediately available funds
to a United States bank account or accounts identified in writing
by Fisons to the Purchaser at least two (2) business days prior
to the Closing Date. The Closing Inventory Adjustment and
amounts payable under Section 2.3, if any, and 3.2 shall be paid
in immediately available funds as directed by the recipient.
2.8. Allocation of the Purchase Price. The Sellers
and the Purchaser agree that the Purchase Price shall be
allocated among the Transferred Assets on the basis of an
allocation (the "Allocation") to be prepared by the Purchaser.
Such Allocation shall, upon delivery to the Sellers, become part
of this Agreement for all purposes. The Sellers and the
Purchaser agree to report, pursuant to Section 1060 of the Code
and the regulations promulgated thereunder, if and when required,
the Allocation of the Purchase Price, as adjusted, in a manner
entirely consistent with such Allocation in the preparation and
filing of all Tax Returns (including IRS form 8594). Neither the
Sellers nor the Purchaser will take any action that would call
into question the bona fides of such Allocation; and neither
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party shall take any position for Tax purposes which is
inconsistent with such Allocation, unless required to do so under
applicable law. The parties further agree that for U.S. federal
and state Income Tax purposes they shall each treat the Transfer
of the assets contemplated hereby as a purchase and sale of such
assets in their entirety.
2.9. Revenue Adjustment
(a) Promptly after the Closing, the Purchaser, at its
sole expense and discretion, shall analyze the sales practices
(the "Sales Analysis") of the Sellers in the United States with
respect to the Tussionex, Zaroxolyn, Deslym and Pediapred (the
"Adjustment Products") during each of the months of January
through June 1996. The Sales Analysis shall be based on the
relevant books and records of the Sellers and shall be for the
sole purpose of identifying any Incentive Sales Practices during
such period. "Incentive Sales Practices" shall mean any
promotional tool that could reasonably be expected to provide an
incentive to customers to purchase, or salesmen, distributors,
wholesalers or promoters to sell or promote, greater quantities
of the Adjustment Products. Incentive Sales Practices shall
include without limitation, increased commissions to salesmen,
distributors, wholesalers or promoters, the announcement of a
price increase, special price discounts, changes in rebate or
returns policies, extended dating and free goods.
(b) To the extent the Sellers enjoyed increased sales
of the Adjustment Products during May and June 1996 as a result
of Sellers' use of Incentive Sales Practices in such months that
were not used in January through April 1996, the Sellers shall
pay the Purchaser an amount equal to sixty percent (60%) of the
increase in sales attributable to such Incentive Sales Practices
(the "1996 Sales Adjustment"). If the Sellers shall dispute the
existence or amount of any proffered 1996 Sales Adjustment, the
parties shall submit the dispute to arbitration in accordance
with the following procedures:
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(i) The arbitration shall take place in New
York, New York, and be conducted by the American Arbitration
Association in accordance with the commercial arbitration rules
thereof (the "Rules") except as modified hereby. All necessary
determinations, including the arbitration decision, shall be made
by an independent arbitrator (the "Arbitrator"). Within ten (10)
days after delivery of a notice of arbitration, the parties shall
mutually agree upon the selection of the Arbitrator, provided,
however, if the parties cannot agree on such independent
arbitrator within ten (10) days after delivery of a notice of
arbitration, such independent arbitrator shall be selected in
accordance with the Rules. The Arbitrator shall establish a
schedule of discovery and hearings such that the Arbitrator's
final written decision shall be issued within one hundred twenty
(120) days after selection of the Arbitrator. Each party must
produce all relevant non-privileged documents requested by the
other party within thirty (30) days after the request therefor.
The Arbitrator's decision must be in writing and shall set forth
the reasons therefor. Such decision shall be a conclusive
determination of the matter and binding on the parties, shall
have the effect of an arbitration award, and shall not (to the
extent permitted by applicable law) be contested by any of them.
Any litigation necessary to enforce any such arbitration award
may be commenced in any State or Federal Court sitting or located
in the County of New York, and the parties consent to the
personal jurisdiction of the State of New York in connection with
any such action. To the fullest extent permitted by law, the
parties waive all rights to a jury trial in connection with any
such action. The parties agree that service of process in any
arbitration or litigation referred to above may be effected by
mail or in any other manner permitted by the laws of the State of
New York.
(ii) Each party in any arbitration and/or
litigation arising under this Section 2.9 shall bear its own
expenses, except that the fees and expenses of the Arbitrator
shall be borne equally by the parties.
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ARTICLE 3.
THE CLOSING
3.1. Time and Place of Closing. The Closing shall
take place on the Closing Date at the offices of Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York New York 10022,
or at such other place as may be mutually agreed upon by the
parties hereto. The Closing, the Transfer of the Transferred
Assets, the effectiveness of the documents, agreements, opinions
and certificates delivered in accordance with this Agreement, and
the consummation of the transactions contemplated hereby shall be
deemed to occur at the Effective Time.
3.2. Payment of Closing Consideration; Deliveries. At
the Closing, (a) the Purchaser shall pay to the Sellers in
accordance with Section 2.7 hereof the Closing Purchase Price and
all payments required to be paid at the Closing pursuant to the
License Agreement, as more specifically set forth on Schedule
3.2; (b) the Sellers shall deliver or cause to be delivered to
the Purchaser such bills of sale, assignments and instruments of
Transfer (including, without limitation, the Guaranty, the Deed
and a bill of sale (the "Bill of Sale") and an assignment and
assumption agreement (the "Assignment and Assumption Agreement"),
in form and substance reasonably satisfactory to the Purchaser
and its counsel, as shall be effective to vest in the Purchaser
all of the Sellers' rights, title and interests in, to and under
the Transferred Assets; (c) the Purchaser shall deliver to the
Sellers such agreements, undertakings and other good and
sufficient instruments of assumption (including, without
limitation, the Assignment and Assumption Agreement), in form and
substance reasonably satisfactory to the Sellers and their
counsel, as shall be effective to cause the Assumed Liabilities
to be binding upon the Purchaser; (d) the parties shall execute,
enter into, and deliver to one another the License Agreement, the
Security Agreement, the Transitional Services Agreement, the
Supply Agreement and the Manufacturing Agreement, and (e) each
party shall deliver to the other party such other documents,
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instruments and certificates as may be reasonably requested by
such other party or its counsel.
3.3. Assignment of Contracts, Etc. (a) Anything
contained herein to the contrary notwithstanding, this Agreement
shall not constitute an agreement to Transfer any Contract,
Intangible Asset or any claim or right, or any benefit arising
thereunder or resulting therefrom (collectively, "Restricted
Assets"), if an attempted Transfer thereof, without the consent
of a third party thereto, would constitute a breach thereof or
materially and adversely affect the rights of the Sellers or the
Purchaser, as the case may be, thereunder. If such consent is
not obtained, the Sellers will cooperate with the Purchaser
without further consideration in any reasonable arrangement
designed to provide for the Purchaser the benefits of or under
any such Restricted Asset, including without limitation
enforcement for the benefit of the Purchaser of any and all
rights of the Sellers against a third party thereto arising out
of the breach or cancellation thereof by such third party. Any
Transfer to the Purchaser of any Restricted Asset which shall
require the consent or approval of any third party for such
Transfer as aforesaid shall be made subject to such consent or
approval being obtained. Without limiting the generality of the
foregoing, to the extent any confidentiality agreement
benefitting the Business may not be assigned without a third
party's consent and such consent has not been obtained, Sellers
shall, from time to time after the Closing, upon request of the
Purchaser, take any and all actions reasonably necessary to
enforce such confidentiality agreements for the benefit of the
Purchaser. To the extent that the Purchaser is provided with the
benefits of any Restricted Asset pursuant to this Section 3.3(a),
the Purchaser shall in due course assume, perform, pay and
discharge all debts, obligations and liabilities of the Sellers
with respect to such Restricted Assets to the same extent it
would have had the Restricted Asset been capable of being
Transferred as herein contemplated.
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(b) If (i) a Contract or (ii) any other asset used in
the Business, is not Transferred to the Purchaser under Section
2.1 hereof because it does not "primarily" relate to the
Business, the Products in the Territory, the Inactive Products in
the Territory, the Licensed Assets or the Transferred Assets and
such Contract or asset is material to the operation of the
Business as presently conducted and is not primarily used in
providing the Headquarters Services, the Sellers will cooperate
with the Purchaser without further consideration, to the extent
reasonably practicable, in any reasonable arrangement designed to
provide for the Purchaser, the benefits of or under each portion
of such Contract or other asset that does relate to the Business,
the Products in the Territory, the Inactive Products in the
Territory, the Licensed Assets or the Transferred Assets so long
as the Purchaser agrees to bear the Liabilities reasonably
related thereto; provided, however, nothing in this Section
3.3(b) shall Transfer to the Purchaser any right, title or
interest in and to any Excluded Asset.
3.4. Further Assurances. In addition to the actions,
documents and instruments specifically required to be taken or
delivered by this Agreement, or from time to time after the
Closing, and without further consideration, each party hereto
shall take such other actions, and execute and deliver such other
documents and instruments, as any other party hereto or its
counsel may reasonably request in order to effectuate and perfect
the transactions contemplated by this Agreement, including
without limitation as may be necessary to Transfer, subject to
the Sellers' rights pursuant to Section 10.7, the Sellers' rights
to the Product Licenses and Establishment Registration included
within the Transferred Assets to the Purchaser in the Territory.
Without limiting the foregoing, as soon as practical after
Closing, the Sellers shall or shall cause their Affiliates to use
commercially reasonable efforts to Transfer, subject to the terms
of this Agreement, to the Purchaser the Product Licenses, or
applications therefor, which are capable of being Transferred.
Such assistance shall include the delivery of such information
which on the Closing Date is in the possession of the Sellers or
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their Affiliates and the execution and delivery of letters of
consent to the Transfer thereof insofar as the Sellers or their
Affiliates are legally entitled to do so and letters of access to
information held by any Governmental Authority in the Territory.
To the extent reasonably practicable, the Sellers shall also
promptly submit any information required by any Governmental
Authority in the Territory for the maintenance therein of any
Product Licenses included within the Transferred Assets, the
Transfer thereof to the Purchaser, where practicable, or the
grant of new Product Licenses in respect thereof to the Purchaser
by such Governmental Authority provided that (A) the Purchaser
supplies any such information in a form suitable for submission
to the relevant Governmental Authority, (B) this obligation shall
not require the Sellers to generate any new or additional data
for submission to such body or authority, except information
which relates specifically to the identity or business of the
Sellers and (C) the costs incurred in connection with any such
Transfer or application shall be for the account of the
Purchaser. Following the Closing and in perpetuity or, if the
Purchase Option under, and as defined in, the License Agreement
is not exercised, the end of the Term (as defined in the License
Agreement), to the fullest extent the Sellers have the ownership
or other rights to do the same, the Sellers shall further permit
the Purchaser to reference (and upon request shall so advise the
FDA), and upon the Purchaser's request shall accord the Purchaser
access to, and copies of, all data contained in, the Product
Licenses for the Products and Inactive Products not Transferred
to the Purchaser (including without limitation all Drug Master
Files) to the extent necessary to permit the Purchaser to
manufacture, market and distribute the Products in the Territory
and the Inactive Products in the Territory and to obtain and
maintain Approvals to market and distribute the Products in the
Territory or the Inactive Products in the Territory. Sellers
shall promptly advise Purchaser of any changes made in any such
Product License if such change could reasonably be expected to
have an impact on such Approvals of Purchaser in the Territory.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and
warrant to the Purchaser as of the date hereof and as of the
Closing Date (except to the extent any representation or warranty
relates to a specific date) as follows; provided, however, the
Sellers make no representation or warranty herein with respect to
any of the Inactive Products or the Pennkinetic Process, except
to the extent it relates to a Product:
4.1. Organization and Good Standing. Each of the
Sellers is a company duly incorporated or otherwise organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and has the
requisite power and authority to own, operate and lease its
properties and assets and to conduct its business as they are now
being owned, operated, leased and conducted. Each of the Sellers
is duly qualified or licensed to do business as a foreign
corporation (or other business entity, where applicable) and is
in good standing in every jurisdiction in which the conduct of
the Business or ownership of its properties requires it to be so
licensed or qualified or in good standing except where the
failure to be so qualified or licensed or in good standing could
not reasonably be expected to have a Seller Material Adverse
Effect. Schedule 4.1 hereto sets forth a true and complete list
of all such foreign jurisdictions in which each of the Sellers is
so qualified or licensed and in good standing.
4.2. Power and Authority. Each of the Sellers has the
full legal power and authority to execute and deliver this
Agreement and each other Acquisition Document, perform its
obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and each other Acquisition Document by
the Sellers, the performance by them of their obligations
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hereunder and thereunder and the consummation by them of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate actions on the part of the
Sellers. This Agreement and each other Acquisition Document
constitutes (or will constitute upon the execution thereof) the
legal, valid and binding obligation of the Sellers, enforceable
against them in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium
or similar Laws now or hereafter in effect relating to creditors'
rights generally and subject to general principles of equity.
4.3. Organizational Documents. The copies of the
certificate of incorporation and bylaws (or equivalents thereof)
of the Sellers made available by the Sellers to the Purchaser
prior to the date hereof, if any, were true and complete copies
of such instruments as amended and will be in full force and
effect on the date thereof.
4.4. No Violation. Except as set forth on
Schedule 4.4 hereto, neither the execution and delivery of this
Agreement or any other Acquisition Primary Document by each
Seller, the performance by it of its obligations hereunder or
thereunder, nor the consummation by it of the transactions
contemplated hereby or thereby, will (a) conflict with or result
in a breach of any provision of the certificate of incorporation
or bylaws (or equivalents thereof) of such Seller; (b) with or
without the giving of notice or the lapse of time or both,
violate, be in conflict with, constitute a default under, permit
the termination of, cause the acceleration of the maturity of any
debt or obligation of the Sellers relating to the Business under,
constitute a breach of, create a Liability or loss of a material
benefit under, or result in the creation or imposition of any
Lien upon any of the Transferred Assets or Licensed Assets under,
any Contract, other than such violations, conflicts, defaults,
terminations, accelerations, breaches, Liabilities, loss of
benefits or Liens which (i) could not, individually or in the
aggregate, reasonably be expected to have a Seller Material
Adverse Effect or (ii) will be cured or for which waivers will be
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obtained prior to or concurrently with the Closing; (c) violate
or conflict with, any Law or any judgment, decree or order of any
Governmental Authority to which any of the Sellers are subject or
by which they or any of their assets or properties are bound,
other than such violations, conflicts or noncompliance with such
requirements which could not, individually or in the aggregate,
reasonably be expected to have a Seller Material Adverse Effect;
or (d) result in the loss of any Approval necessary to or
benefitting the Business other than such losses which could not,
individually or in the aggregate, reasonably be expected to have
a Seller Material Adverse Effect.
4.5. Financial Information; Undisclosed Liabilities.
(a) The Sellers have previously delivered to the
Purchaser the financial data, reports and statements listed on
Schedule 4.5(a) (collectively the "Financial Data"). Except as
may otherwise be indicated therein or on Schedule 4.5(a) hereto,
the Financial Data were compiled from the books and records of
the Sellers regularly maintained by such companies in the
ordinary course of their business, on the basis set forth in the
notes contained in such Financial Data. To the Sellers'
knowledge, the Financial Data do not include therein any
information known or believed by such Sellers to be materially
false or materially misleading or omit to include therein any
information known to the Sellers that would be required to be
included therein to make such information not materially
misleading. The Sellers make no representation that the
Financial Data have been prepared in accordance with GAAP or that
they represent the results which may be expected from operation
of the Business by the Purchaser in the future. The Financial
Data are not necessarily the same as that used by the Sellers in
its operation of the Business or shown by RPR in its published
financial statements.
(b) Except as may be set forth in Schedule 4.5(b) or
the other Schedules to this Agreement, since December 20, 1995
none of the Sellers has incurred any Liability primarily relating
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to the Business of a nature required by GAAP to be reflected on a
corporate balance sheet or disclosed in the notes thereto, except
such liabilities and obligations which (i) were incurred in the
ordinary course of business and (ii) which individually or when
aggregated with other similar Liabilities are not material to the
Business taken as a whole.
4.6. Absence of Certain Changes or Events. Except as
set forth on Schedule 4.6 hereto or as otherwise contemplated by
this Agreement:
(a) since December 20, 1995 there has not occurred
any change or event that has had or would reasonably be expected
to have, individually or in the aggregate, a Seller Material
Adverse Effect; and
(b) the Sellers have not, to the extent the following
relate to the Business, (i) since December 20, 1995 mortgaged,
pledged or subjected to or permitted the imposition of any Lien
(other than Permitted Liens) upon any of the Transferred Assets
or Licensed Assets, (ii) since December 20, 1995 entered into any
material commitment or transaction (including, without
limitation, any capital expenditure) except such as entail
remaining Liabilities of less than $50,000 or were incurred in
the ordinary course of business in a manner and amount consistent
with past practice, (iii) since December 20, 1995 disposed of or
permitted to lapse in the United States any rights to use any
patent, trademark or copyright or other Intangible Asset, other
than such dispositions or lapses which would not, individually or
in the aggregate, have a Seller Material Adverse Effect,
(iv) since December 31, 1995 granted any increase in the
compensation of any individual listed in Schedule 10.3(a) earning
in excess of $50,000 per annum, including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or
commitment, or any increase in the compensation payable or to
become payable to any such employee, except, in each case, for
increases in accordance with the terms of any of the Contracts
disclosed on Schedule 4.7(b) hereto or periodic salary increases
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of not more than 10% made in the ordinary course of business, or
made any payment or commitment to pay any severance or
termination pay to, any individuals listed on Schedule 10.3(a),
(v) since December 20, 1995 entered into or agreed (whether in
writing or otherwise) to enter into any agreement or other
arrangement to take any action referred to in this
Section 4.6(b), (vi) since December 20, 1995 sold, transferred,
otherwise disposed of or agreed to sell, transfer or otherwise
dispose of any of the Transferred Assets or Licensed Assets (or
assets that would have, but for such actions, qualified as
Transferred Assets or Licensed Assets) other than in the ordinary
course of business and, in the case of assets other than
Inventory, involving assets with an aggregate fair market value
of less than $50,000 or an aggregate book value of less than
$10,000, (vii) since December 20, 1995 waived, compromised or
cancelled any right, or cancelled or compromised any claim or
Liability, related to the Business or any of the Transferred
Assets or any of the Licensed Assets, other than in the ordinary
course of business and involving assets, rights, claims or
Liabilities with an aggregate fair market value of less than
$50,000 or aggregate book value of less than $10,000, or (viii)
since December 20, 1995, other than the provision of the
Headquarters Services from locations other than the Facility and
the reduction in the number of employees employed at the
Facility, introduced any material change with respect to the
operation of the Business, including with respect to advertising,
marketing, pricing, purchasing, sales, credit, rebates, returns
or discounts or (ix) except as disclosed in the Financial Data
since December 20, 1995 not made any material change with respect
to the accounting methods or practices prevailing during the year
prior thereto.
4.7. Material Contracts; No Default.
(a) Except as set forth in a Contract listed on
Schedule 4.7(a) hereto or otherwise contemplated by this
Agreement, none of the Sellers is a party to or bound by any
Contract which will be binding on the Purchaser after the
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Effective Time and which materially limits or restricts it from
competing in any line of business included in the Business or
expanding the nature or geographical scope of the Business.
(b) Schedule 4.7(b) hereto sets forth a true and
complete list of all Contracts (excluding completed purchase
orders and purchase orders open on the date hereof involving
aggregate payments of less than $50,000 and a performance period
of one year or less) of the following type primarily relating to
the Business, the Transferred Assets or the Licensed Assets, a
true and correct copy of each of which was provided or made
available to the Purchaser prior to the date hereof:
1. Personal Property Leases.
2. Service Contracts involving aggregate
payments of more than $50,000 and which cannot be
terminated without penalty on less than thirty
(30) days notice.
3. Confidentiality, non-disclosure or secrecy
Contracts under which the Purchaser will have any
Liabilities after the Closing.
4. Government Contracts involving aggregate
payments of more than $50,000 and which cannot be
terminated without penalty on less than thirty
(30) days notice.
5. Contracts relating to the acquisition or
disposition of products or businesses within the
last five years under which the Purchaser will
have any Liabilities after the Closing.
6. Manufacturing Contracts under which the
Purchaser will have any Liabilities after the
Closing.
7. Distribution Contracts involving aggregate
payments of more than $50,000 and which cannot be
terminated without penalty on less than thirty
(30) days notice.
8. License and royalty Contracts under which
the Purchaser will have any Liabilities after the
Closing.
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9. Research and/or development Contracts
involving aggregate payments of more than $50,000
and which cannot be terminated without penalty on
less than thirty (30) days notice.
10. Commission, brokerage and agency Contracts
involving aggregate payments of more than $50,000
and which cannot be terminated without penalty on
less than thirty (30) days notice.
11. Oral Contracts and commitments involving
aggregate payments of more than $50,000 and which
cannot be terminated without penalty on less than
thirty (30) days notice.
12. All Contracts or plans for mergers,
consolidations or reorganizations involving the
Business within the last five years under which
the Purchaser will have Liabilities after the
Closing.
13. All joint venture and partnership
Contracts.
14. Storage Contracts and Contracts for the
production or supply by Sellers of goods or
services involving aggregate payments of more
than $50,000 and which cannot be terminated
without penalty on less than thirty (30) days
notice.
15. Contracts for (i) capital expenditures or
(ii) the purchase of materials, supplies,
equipment or services involving aggregate
payments of more than $50,000 and which cannot be
terminated without penalty on less than thirty
(30) days notice.
16. Advertising Contracts involving aggregate
payments of more than $50,000 and which cannot be
terminated without penalty on less than thirty
(30) days notice.
17. Contracts relating to any sale lease-back
transactions under which the Purchaser will have
any Liabilities after the Closing.
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18. Industrial revenue bond Contracts and
related documents under which the Purchaser will
have any Liabilities after the Closing.
19. Options Contracts relating to the purchase
of any of the Transferred Assets or Licensed
Assets.
20. Contracts in the nature of settlement
agreements within the past five years involving
aggregate payments of more than $50,000 and which
cannot be terminated without penalty on less than
thirty (30) days notice, if they might reasonably
affect the manufacture or sale of the Products in
the future.
21. Any other Contracts involving aggregate
payments of more than $100,000 and which cannot
be terminated without penalty on less than 30
days notice.
(c) Except as set forth on Schedule 4.7(c) hereto and
except for defaults resulting from late performance due, or
payments of amounts owed to the Sellers which, in the aggregate,
do not involve Liabilities in excess of $50,000, each of the
Sellers and, to the knowledge of the Sellers, each other party to
each Contract (including without limitation each Personal
Property Lease, the Astra Lease, the Astra Cohabitation
Agreement, the Commerce Drive Lease and the Ionamin Co-Promotion
Agreement dated 22 December 1992 between Fisons and Lotus
Biochemical Corporation) has performed in all material respects,
or is now performing in all material respects, its obligations
under, and is not in default (and would not by the lapse of time
or the giving of notice or both be in default) under, or in
breach or violation of, nor has it received notice of any
asserted claim of a default by any other party thereto under, or
a breach or violation by such other party of, any of such
Contracts to which such person is a party, which failure of
performance, default, breach or violation could, individually or
in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect.
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4.8. Patents, Trademarks and Trade Names. Schedule
4.8 hereto contains a true and complete list of (i) all patents,
trademarks, tradenames and copyrights, if any, included in the
Intangible Assets that are either registered with the U.S. Patent
and Trademark Office or are not so registered but are material to
the operation of the Business as presently conducted, (ii) all
pending applications therefor and (iii) all licenses and other
Contracts relating thereto or to the Know-How (as defined in the
License Agreement) (whether as licensor or licensee) (the
"Scheduled IP"). Except as set forth on Schedule 4.8 and
Schedule 4.4 hereto, no consent of any third party will be
required for the use by the Purchaser of any Scheduled IP whether
pursuant to the License Agreement or otherwise or the acquisition
of any of the Licensed Assets pursuant to the Purchase Option (as
defined in the License Agreement). Except as set forth on
Schedule 4.8 to the Sellers' knowledge, no claims are currently
being asserted by any Person involving or questioning the
Sellers' right to use any Scheduled IP or challenging or
questioning the validity or effectiveness of any Scheduled IP;
and, to the Sellers' knowledge, the use of such Scheduled IP by
the Sellers does not infringe the rights of any Person nor, to
the knowledge of the Sellers, is any person infringing such
Scheduled IP.
4.9. Actions. Except as set forth on Schedule 4.9
hereto, there is no Action pending or, to the knowledge of the
Sellers, threatened, against any of the Sellers or any
Transferred Asset or Licensed Asset, before any Governmental
Authority which (a) questions or challenges the validity of this
Agreement or the other Acquisition Documents or any action taken
or proposed to be taken by the Sellers pursuant hereto or thereto
or in connection with the transactions contemplated hereby or
thereby or (b) would, if adversely determined, reasonably be
expected to have a Seller Material Adverse Effect.
4.10. Compliance with Laws. Except as set forth on
Schedule 4.10 hereto, (a) to the Sellers knowledge the Sellers
have complied in all material respects with all Laws binding on
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them relating to the Business or binding on the Transferred
Assets or the Licensed Assets except where the failure to so
comply would not, individually or in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect, (b) none of
the Sellers has been charged with or, to the knowledge of any of
the Sellers, threatened with any charge concerning, or is under
any investigation with respect to, any violation of any provision
of any Law relating to the Business, the Transferred Assets or
the Licensed Assets, except for such violations which would not,
individually or in the aggregate, reasonably be expected to have
a Seller Material Adverse Effect and (c) none of the Sellers is
in violation of or in default under, and to the knowledge of any
of the Sellers, no event has occurred which, with the lapse of
time or the giving of notice or both, would result in the
violation of or default under, the terms of any judgment, decree,
order, injunction or writ of any Governmental Authority relating
to the Transferred Assets, the Licensed Assets or the Business,
except for such violations or defaults which would not,
individually or in the aggregate, reasonably be expected to have
a Seller Material Adverse Effect; provided, however, the Sellers
make no representation or warranty in clause (a) of this Section
4.10 with respect to Laws referred to in Sections 4.17, 4.20 and
4.22.
4.11. Taxes.
Except as set forth on Schedule 4.11, (i) all sales,
use, real estate, payroll withholding, unemployment compensation
and similar Taxes have been or will be paid when due in respect
of the Transferred Assets, the Licensed Assets and the Business
and (ii) except for any Liens specified in clause (b) of the
definition of Permitted Liens, there are no Tax Liens on any
Transferred Assets or Licensed Assets.
4.12. Title to Property. Except as set forth on
Schedule 4.12 hereto, the Sellers have good and marketable title
to or, in the case of a Real Property Lease or Contract, a valid
leasehold interest or Contract right in all of the Transferred
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Assets, all of the Licensed Assets in the United States, and all
Intangible Assets and Proprietary Information in the United
States material to the Business, free and clear of all Liens
other than Permitted Liens and the Assumed Liabilities.
4.13. Insurance; Product Liability Claims. To the
knowledge of the Sellers, Schedule 4.13 hereto sets forth a true
and complete list of all material insurance policies or binders
currently insuring the property, assets or Liabilities of the
Sellers with respect to the Business. To Sellers' knowledge,
Schedule 4.13 contains a list and description of all material
product liability claims that have been made in respect of the
Products over the past five (5) years.
4.14. Approvals.
(a) Except as set forth on Schedule 4.14(a) hereto,
and except for any filings under the HSR Act and pursuant to
Article 31-B of the New York State Tax Law, no Approval of any
Governmental Authority or other Person is required to be made,
obtained or given by or with respect to the Sellers in connection
with the execution or delivery by the Sellers of this Agreement
and the other Acquisition Primary Documents, the performance by
it of its obligations hereunder or thereunder or the consummation
by it of the transactions contemplated hereby or thereby
including without limitation the Transfer of the Transferred
Assets to the Purchaser, except where the failure to make, obtain
or give such Approval would not have a Seller Material Adverse
Effect.
(b) The Sellers have all Approvals required for the
operation of the Business and the use and ownership or leasing of
the Transferred Assets and the Licensed Assets, as currently
operated, used, owned or leased, except where the loss,
expiration or failure to have such Approvals could not,
individually or in the aggregate, reasonably be expected to have
a Seller Material Adverse Effect. All of such Approvals are
listed on Schedule 4.14(b) hereto and are valid, in full force
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and effect and in good standing, except where the failure to be
so could not, individually or in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect. Except as
could not, individually or in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect, there is no
Action pending or, to the knowledge of the Sellers, threatened,
that disputes the validity of any such Approval or that is likely
to result in the revocation, cancellation or suspension, or any
adverse modification of, any such Approval.
4.15. Employee Benefit Plans; ERISA. (a) All plans
maintained or contributed to by Sellers in which Plant Employees
(as defined in Section 10.3(a)) participate and which are
"defined contribution plans" within the meaning of Section 3(34)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which are intended to be qualified under
Section 401(a) of the Code have received determination letters
from the IRS stating that such plans are qualified with respect
to all applicable provisions of Tax Law and each trust created
under any such plan is exempt from Tax under Section 501(a) of
the Code. Copies of all such favorable determination letters
have been delivered to Purchaser.
(b) Sellers have no Liability under any "multi-
employer plan" within the meaning of Section 3(37) of ERISA which
could become a Liability of the Purchaser.
4.16. Suppliers and Customers. (a) Schedule 4.16
sets forth the sales of the Products during the period from May
1995 through May 1996 to Fisons' top twenty (20) customers.
(b) Schedule 4.16 sets forth a list of material
suppliers for the Business and the Material Sourcing Plan in
respect of the period from June 1996 to May 1997.
(c) Except as set forth on Schedule 4.16, no supplier
of the Sellers listed on Schedule 4.16 has within the last twelve
(12) months cancelled or otherwise terminated, or threatened in
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writing to cancel or otherwise terminate, its relationship with
the Sellers or has within the last twelve (12) months decreased
materially its services or supplies of materials to the Sellers
relating to the Business, except for such cancellations,
terminations, decreases or limits which could not reasonably be
expected to have a Seller Material Adverse Effect.
4.17. Environmental Matters. (a) Except as set forth
on Schedule 4.17(a), (i) the Transferred Assets and operations of
the Business are, and have been, in compliance with all Laws
relating to the protection of the environment and/or human health
and safety from environmental effects or from the generation,
management, removal, remediation, emission, discharge, control,
processing, use, treatment, storage, disposal, transport,
release, recycling, or handling of Hazardous Materials including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA")
(collectively, "Environmental Laws") and with all requirements of
applicable Approvals issued pursuant to Environmental Laws,
except where failure to be in compliance could not individually
or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect, (ii) there has been no unauthorized
release, as such term is defined in CERCLA, of Hazardous
Materials on, in, under, about or from any of the Real Property,
and to Sellers' knowledge no condition exists on, in, under or
about the Real Property that gives rise to any Liability or
potential Liability under Environmental Laws or common law, which
could, individually or in the aggregate, reasonably be expected
to have a Seller Material Adverse Effect, (iii) to Sellers'
knowledge, there has been no unauthorized release of Hazardous
Materials on, in, under, about or from the Former Real Property
that gives rise to any Liability or potential Liability under
Environmental Laws or common law, that Seller has assumed either
contractually or by operation of Law which could, individually or
in the aggregate, reasonably be expected to have a Seller
Material Effect, (iv) during the last five (5) years, the Sellers
have not received any notice from any Governmental Authority or
other Person claiming any violation of or potential Liability
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under Environmental Laws in respect of the Business or the
Transferred Assets, which could, individually or in the
aggregate, reasonably be expected to have a Seller Material
Adverse Effect, (v) to Sellers' knowledge, Hazardous Materials
that were present or stored on the Real Property have not been
disposed of, or arranged to be disposed of, in a manner or at a
location that would reasonably be expected to result in Liability
under any Environmental Law, and which could, individually or in
the aggregate, reasonably be expected to have a Seller Material
Adverse Effect, and (vi) in connection with the Business, the
Sellers have not assumed, contractually or through a merger, any
Liabilities or obligations under any Environmental Law which
could, individually or in the aggregate, reasonably be expected
to have a Seller Material Adverse Effect.
(b) Schedule 4.17(b) sets forth a complete and
accurate list of all Approvals required under Environmental Laws
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, discharge, emission, transport,
release, recycling or handling of Hazardous Materials in
connection with the operation of the Business, copies of which
have been delivered to or made available to the Purchaser. Each
such Approval is valid and in full force and effect. There are
no pending or threatened administrative or judicial proceedings
to revoke, cancel or declare such Approvals invalid in any
material respect. The Sellers agree to reasonably cooperate with
Purchaser to take all steps required for the Transfer and/or
assignment to the Purchaser of all such Approvals.
4.18. Labor Matters. (a) Except as set forth on
Schedule 4.18(a), (i) there is no unfair labor practice charge or
complaint or petition for representation against the Sellers
pending before the National Labor Relations Board or any other
Governmental Authority and, to the best of Sellers' knowledge,
none is threatened or has been threatened within the last three
(3) years; (ii) there is no proposal for collective bargaining or
agreement, labor strike, dispute, request for representation,
slowdown or stoppage actually pending against or affecting
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Sellers relating to the Business and, to the best of Sellers'
knowledge, none is threatened or has been threatened within the
last three (3) years; and (iii) no employees employed by Sellers
in connection with the Business at any time during the last three
(3) years have been represented by a labor union or governed by a
collective bargaining agreement in respect of such employment.
(b) Except as set forth on Schedule 4.18(b), there
are no current written claims against the Sellers arising out of,
or relating to, or alleging any violation of Title VII of the
Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, the National Labor Relations Act, the Labor
Management Relations Act, the Fair Labor Standards Act, as
amended, the Immigration Reform and Control Act of 1986, the
Americans with Disabilities Act, the Family Medical Leave Act,
and all other Laws governing illegal discrimination, equal
employment opportunity, civil rights, occupational safety and
health requirements, payment of minimum wages and overtime rates
and the withholding and payment of Taxes from compensation of
employees.
4.19. Personal Property. Schedule 4.19 hereto sets
forth a true and complete list of all Equipment and Other
Personalty (other than items or categories of items having a book
value of less than $10,000 individually). Except as set forth on
Schedule 4.19 hereto, all Equipment and Other Personalty (other
than items and categories of items having a book value of less
than $10,000 individually) in the aggregate is in substantially
good condition and repair in all material respects, normal wear
and tear excepted, and is adequate for the uses to which it is
being put in the ordinary course of the Business.
4.20. Real Property.
(a) Set forth in Schedule 4.20(a) is a brief
description of all the Owned Real Property.
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(b) Set forth in Schedule 4.20(b) is a brief
description of all Leased Real Property and the Real Property
Leases which relate thereto and all the Real Property Leases
binding on Sellers which relate to any of the Owned Real
Property. Except for the consents set forth on Schedule 4.20,
the assignment to the Purchaser of each such Real Property Lease
pursuant to the terms of this Agreement does not require the
consent of the other party thereto.
(c) Except as may be provided in the Real Property
Leases and the documents, instruments and other items referred to
in the title insurance commitment referred to in the definition
of Permitted Liens in Section 1.1(bq) hereof or as set forth in
Schedule 4.20(c), the Sellers do not own or hold, and are not
obligated under or a party to, any option, right of first refusal
or other contractual right to sell, dispose of or sublease any of
the Real Property or any portion thereof or interest therein.
Except as provided in the Real Property Leases and the documents,
instruments and other items referred to in the title insurance
commitment referred to in the definition of Permitted Liens in
Section 1.1(bq) hereof or as set forth in Schedule 4.20(c), the
Sellers do not own or hold, and are not obligated under or a
party to, any option, right of first refusal or other contractual
right to purchase or lease any other real property or any portion
thereof or interest therein which would be binding on or could
create a Lien upon any of the Transferred Assets or the Licensed
Assets.
(d) To Sellers' knowledge, all buildings, structures
and other improvements (the "Improvements") included within the
Owned Real Property, including but not limited to the roofs and
structural elements thereof and the heating, ventilation, air
conditioning, plumbing, electrical, mechanical, sewer, waste
water, storm water, paving and parking equipment, systems and
facilities included therein (other than items and categories of
items having a book value of less than $10,000 individually), in
the aggregate, are in substantially good condition and repair in
all material respects, except for normal wear and tear, and are
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adequate for the purposes for which they are being put in the
ordinary course of the Business. All water, gas, electrical,
steam, compressed air, telecommunication, sanitary and storm
sewage lines and systems and other similar systems serving the
Real Property are installed and operating and are sufficient to
enable the Real Property to continue to be used and operated in
the manner currently being used and operated, and any so-called
hookup fees or other associated charges payable by Sellers have
been fully paid. Except as set forth in Schedule 4.20(d), each
such utility or other service is provided by a public or private
utility or service company. No Improvement or portion thereof is
dependent for its access, operation or utility on any land,
building or improvement not included in the Real Property.
(e) Schedule 4.20(e) sets forth each certificate of
occupancy for all Improvements on the Owned Real Property. All
Improvements which are not covered by the certificates of
occupancy listed on Schedule 4.20(e) have been completed prior to
the requirement of Law providing that any improvement to Real
Property have a certificate of occupancy. Sellers have no
knowledge that, and have not received any notices from any
Governmental Authority stating or alleging that, any Improvements
have not been constructed in compliance with Law.
(f) Except as set forth on Schedule 4.20(f), to
Sellers' knowledge, the Owned Real Property and its continued
use, occupancy and operation as currently used, occupied and
operated does not constitute a nonconforming use under any Law.
Except as set forth on Schedule 4.20, the continued existence,
and occupancy of each Improvement, and rights to repair and/or
rebuild the same to the condition existing on the date hereof
following damage or destruction by fire or other casualty is not
dependent on the granting of any special permit, exception,
approval or variance from any Governmental Authority other than
customary building permits and approvals.
(g) Each of the parcels included in the Owned Real
Property is assessed for real estate Tax purposes as a wholly
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independent tax lot, separate from any adjoining land or
Improvements not included in the Transferred Assets. Schedule
4.20(g) sets forth all current Tax bills for each and every such
parcel and sets forth with respect to each such parcel in such
year whether certiorari proceedings were instituted and, if so,
whether the same are pending or have been adjudicated or settled
(and if adjudicated or settled, the terms of such judgment or
settlement). Except as otherwise set forth herein, the
assessment of each Improvement set forth in Schedule 4.20(g)
reflects the current state of completion and condition of such
Improvement.
(h) Sellers have not received any notice and have no
knowledge of any pending, threatened or contemplated condemnation
proceeding affecting the Real Property or any part thereof or of
any sale or other disposition of the Real Property or any part
thereof in lieu of condemnation.
(i) No portion of the Real Property has suffered any
material damage by fire or other casualty in the three (3) years
immediately preceding the date hereof which has not heretofore
been completely repaired and restored to the condition necessary
for Sellers properly to own and operate the Business as such
portion of the Real Property is currently used.
4.21. Broker's or Finder's Fees. None of Sellers nor
any of their Affiliates has authorized any Person to act as
broker, finder, banker, consultant, intermediary or in any other
similar capacity which would entitle such Person to any
investment banking, brokerage, finder's or similar fee in
connection with the transactions contemplated by this Agreement
or any of the other Acquisition Documents.
4.22. Regulatory and Product Matters. Except as set
forth on Schedule 4.22:
(a) The Sellers have all Product Licenses and
Establishment Registrations necessary to manufacture and market
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the Manufactured Products in the United States. All such Product
Licenses and Establishment Registrations are valid and in full
force and effect. To Sellers' knowledge, no such Product License
or Establishment Registration contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, except where such untruth or
omission could not reasonably be expected to have a Seller Materi
al Adverse Effect.
(b) The Sellers have made available to the Purchaser
true, correct and complete copies of all portions of the
Specifications relating to the Manufactured Products that have
been requested by the Purchaser.
(c) In the last five (5) years, none of the Sellers
has received any notice from the FDA, the DEA or the United
States Department of Justice (the "DOJ") that (i) any Product
currently manufactured or marketed by the Sellers is an
unapproved new drug or an adulterated or misbranded drug within
the meaning of the Federal Food, Drug and Cosmetic Act 21 U.S.C.
Sections 321, et seq., as amended and the rules and regulations
promulgated thereunder ("FFDCA"), or any other similar Law, or
(ii) that any of the Products are articles which may not,
pursuant to the FFDCA, be introduced into interstate commerce at
the time of delivery. Such notice includes (1) correspondence
from the FDA, DEA or DOJ alleging the foregoing, (2) an order or
request from the FDA, DEA, DOJ that any of the Sellers cease to
market any of the Products, or (3) a lawsuit by the FDA, DEA or
DOJ filed against any of the Products or against any of the
Sellers or any of their respective officers, directors or
employees alleging any of the foregoing.
(d) True, correct and complete copies of all Forms
FDA 483 received by Sellers with respect to the Transferred
Assets or the Products in the last five years are attached
hereto.
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(e) Fisons is registered with the DEA as needed to
manufacture and distribute controlled substances in the
Territory. To Sellers' knowledge, during the last five (5)
years, Fisons has filed all required annual registration forms,
all required listing forms, and all annual reports or other
periodic reports with the FDA and the DEA relating to the
Products. To Sellers' knowledge, during the last five (5) years
Fisons has filed with the FDA and, if required, the DEA, all
reports required to be filed by Sellers with respect to adverse
drug experiences relating to the Products or shortages or
unaccounted for amounts of controlled substances in connection
with the Business.
(f) To Sellers' knowledge, all samples for the
Products comply with the applicable Product License.
(g) Schedule 4.22 lists all product recalls or
similar actions by the Sellers in respect of any of the Products
within the last five (5) years.
4.23. Transactions with Affiliates. Schedule 4.23
lists all Contracts and arrangements relating to the supply of
Inventory to the Business between Sellers, on the one hand and
any other Seller or Affiliate of such Seller on the other hand
involving annual payments in excess of $25,000 or a remaining
term after the Closing Date in excess of one year.
4.24. Inventory. Except for Ionamin, the Inventory
Transferred at Closing will be sufficient and adequate in kind
and amount to permit the Purchaser to operate the Business after
the Closing in the ordinary course having regard and making
allowances for delivery lead times and Contracts assumed by the
Purchaser hereunder.
4.25. Sufficiency of Assets. Except for the Excluded
Assets and subject to the Headquarters Services, the Transferred
Assets and Licensed Assets Transferred or licensed to the
Purchaser hereunder and under the License Agreement are
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sufficient in all material respects to permit the Purchaser to
manufacture the Manufactured Products and to purchase for resale
in the Territory the Bought In Products in substantially the same
manner as done by Sellers since December 20, 1995. No
representation is made in this Section 4.25 with respect to the
adequacy of any supply arrangements or with respect to any
regulatory matters.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each Purchaser hereby jointly and severally represents
and warrants to the Sellers as of the date hereof and as of the
Closing Date (except to the extent any representation or warranty
relates to a specific date) as follows:
5.1. Organization and Good Standing. Each Purchaser
is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and
has the requisite corporate power and authority to own, operate
and lease its properties and assets and to conduct its business
as they are now being owned, operated, leased and conducted,
except where the failure to have such power and authority would
not, individually or in the aggregate, have a Purchaser Material
Adverse Effect. Each Purchaser is duly qualified or licensed to
do business as a foreign corporation, and is in good standing as
a foreign corporation, in every jurisdiction in which the nature
of the property owned, leased or operated by it or the nature of
the business conducted by it requires such qualification or
license, except where the failure to be so qualified or licensed
or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Purchaser Material Adverse
Effect.
5.2. Power and Authority. Each Purchaser has the
requisite corporate power and authority to execute and deliver
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this Agreement and the other Acquisition Documents, perform its
obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other Acquisition Documents by
each Purchaser, the performance by it of its obligations
hereunder and thereunder and the consummation by it of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate actions on the part of such
Purchaser. This Agreement and each other Acquisition Document
constitutes (or will constitute upon the execution thereof) the
legal, valid and binding obligation of each Purchaser,
enforceable against it in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in
effect relating to creditors' rights generally and subject to
general principles of equity.
5.3. No Violation. Neither the execution and delivery
of this Agreement or any of the other Acquisition Primary
Documents by each Purchaser, the performance by it of its
obligations hereunder or thereunder, nor the consummation by it
of the transactions contemplated hereby or thereby, will
(a) contravene any provision of the memorandum and articles of
association or certificate of incorporation and by-laws of such
Purchaser; (b) with or without the giving of notice or the lapse
of time or both, violate, be in conflict with, constitute a
default under, permit the termination of, cause the acceleration
of the maturity of any debt or obligation of such Purchaser
under, constitute a breach of, create a Liability or loss of a
material benefit under, or result in the creation or imposition
of any Lien upon any of the properties or assets of such
Purchaser under, any contract to which it is a party or by which
it or any of its assets or properties are bound, other than such
violations, conflicts, defaults, terminations, accelerations,
breaches, Liabilities, Liens or loss of benefits which (i) could
not, individually or in the aggregate, reasonably be expected to
have a Purchaser Material Adverse Effect, or (ii) will be cured
or for which waivers will be obtained prior to or concurrently
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with the Closing; (c) violate, conflict with or require any
Approval under, any Law or any judgment, decree or order of any
Governmental Authority to which such Purchaser is subject or by
which it or any of its assets or properties are bound, other than
such violations, conflicts or noncompliance with such
requirements which could not, individually or in the aggregate,
reasonably be expected to have a Purchaser Material Adverse
Effect; or (d) result in the loss of any Approval, other than
such losses which could not, individually or in the aggregate,
reasonably be expected to have a Purchaser Material Adverse
Effect.
5.4. Actions. There is no Action pending, or, to the
knowledge of the Purchaser, threatened, against the Purchaser or
any of its assets, properties or rights before any Governmental
Authority which (a) questions or challenges the validity of this
Agreement or any of the other Acquisition Documents or any action
taken or proposed to be taken by the Purchaser pursuant hereto or
thereto or in connection with the transactions contemplated
hereby or thereby or (b) would, if adversely determined,
reasonably be expected to have a Purchaser Material Adverse
Effect.
5.5. Approvals. Except as contemplated by Section 8.8
hereof and except for any filings under the HSR Act and pursuant
to Article 31-B of the New York State Tax Law, no Approval of any
Governmental Authority or other Person is required to be made,
obtained or given by or with respect to the Purchaser in
connection with the execution or delivery by it of this Agreement
and the other Acquisition Primary Documents, the performance by
it of its obligations hereunder or thereunder or the consummation
by it of the transactions contemplated hereby or thereby, except
where the failure to make, obtain or give such Approvals could
not, individually or in the aggregate, reasonably be expected to
have a Purchaser Material Adverse Effect.
5.6. Broker's or Finder's Fees. Except as provided in
the Placement Agreement, neither the Purchaser nor any of its
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Affiliates has authorized any person to act as broker, finder,
banker, consultant, intermediary or in any other similar capacity
which would entitle such Person to any investment banking,
brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement or any of the other
Acquisition Documents.
5.7. Disclosure. The Purchaser represents and
warrants that, after reasonable inquiry of its employees and
agents listed on Schedule 5.7 hereto, it has no knowledge of any
matter which may constitute a material breach of any
representation, warranty, covenant or condition of the Sellers
contained herein. The Purchaser shall immediately notify the
Sellers in writing if it shall obtain knowledge of any matter
which may constitute a breach of any representation, warranty,
covenant or condition of the Sellers contained herein.
5.8. Financing. Medeva has entered into the Placement
Agreement and a Pound Sterling 125 million Revolving Credit Facility
arranged by NatWest Capital Markets Limited dated 28 February 1996 (the
"Credit Agreement") true and correct copies of which have been
provided to the Sellers. Upon consummation of the transactions
contemplated by the Placement Agreement Medeva shall receive net
proceeds of approximately Pound Sterling 102,000,000, which together
with amounts available to be borrowed under the Credit Agreement is
sufficient to enable the Purchaser to consummate the transactions
contemplated by this Agreement and the License Agreement. As of
the date hereof the Placement Agreement and the Credit Agreement
are in full force and effect and there are no facts or
circumstances that could reasonably be expected to cause any
condition to the Placement or the borrowings under the Credit
Agreement not to be satisfied or to otherwise adversely affect
the Placement or such borrowings. As of the date hereof, the
representations and warranties made by Medeva in the Placement
Agreement and the Credit Agreement are true and correct in all
material respects and Medeva is not in default or breach of any
covenant contained in the Placement Agreement or the Credit
Agreement.
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ARTICLE 6.
CERTAIN OBLIGATIONS OF THE SELLERS PRIOR TO THE CLOSING
The Sellers hereby covenant that, except as otherwise
consented to in writing by the Purchaser (which consent shall not
be unreasonably withheld or delayed) or as otherwise contemplated
by this Agreement, from and after the date hereof until the
Closing:
6.1. Conduct of Business. The Sellers shall:
(i) carry on the Business, except as otherwise permitted or
contemplated herein, in the ordinary course and substantially in
the same manner as the Business previously has been carried on
since December 20, 1995; (ii) not institute any new methods of
purchase, sale, lease, management, accounting or operation that
will vary materially from the methods used by the Sellers as of
the date of this Agreement; and (iii) maintain its books and
records in accordance with its past practices.
6.2. Restricted Activities and Transactions. Except
as may be required by Law, the Sellers shall not engage, or agree
to engage, in any one or more of the following activities or
transactions without the prior written consent of the Purchaser
(which consent shall not be unreasonably withheld or delayed):
(a) except for (i) the sale of Inventory in the ordinary course
of the Business as conducted since December 20, 1995 and (ii) the
Transfer of the Licensed Assets to a U.S. corporation which is a
direct or wholly-owned subsidiary of one of the Sellers and which
will become the Licensor under and as defined in the License
Agreement, Transfer any of the Transferred Assets or Licensed
Assets; (b) consummate any "acquisition proposal" (as defined in
Section 6.4); (c) cause to arise or permit to exist any Lien upon
any of the Transferred Assets or Licensed Assets other than
Permitted Liens; (d) enter into or materially amend, (or, in the
case of the Contract with Lotus Biochemical referred to below,
engage in any discussions with any third party regarding the
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execution or amendment of), any material Contract relating to the
Transferred Assets, the Licensed Assets or the Business (for
purposes of this Section 6.2, each Personal Property Lease, the
Astra Lease, the Astra Cohabitation Agreement, the Commerce Drive
Lease and the Ionamin Co-Promotion Agreement dated 22 December
1992 between Fisons and Lotus Biochemical Corporation shall be
deemed to be material Contracts); (e) increase the compensation
payable or to become payable to the individuals listed on
Sellers' Schedule 10.3(a) who presently earn in excess of $50,000
per annum, except for increases granted in accordance with the
terms of the Contracts disclosed on Schedule 4.7(b) hereto or
periodic salary increases of not more than 10% made in the
ordinary course of business, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, sever
ance or other plan, agreement, trust, fund, policy or arrangement
relating to the Business in any way which would increase or be
for the benefit of, any individual listed on Sellers' Schedule
10.3(a), provided that amendments may be made as may be required
to make it clear that no service of any such individual after the
Closing will be counted for any purpose under any employee bene
fit plan of the Sellers; (f) destroy or remove from the Facility
any Books or Records; (g) layoff or fire any individual listed on
Sellers' Schedule 10.3(a) without prior written notice to the
Purchaser, provided, however, Sellers may remove such individuals
from the Facility; (h) enter into any employment or severance
agreement with any individual listed on Sellers' Schedule
10.3(a); (i) enter into any Real Property Lease or amend, renew,
terminate or consent to the assignment of any presently effective
Real Property Lease; (j) terminate prior to the Closing any
material policies of title, liability, fire, workers'
compensation, property and any other form of insurance covering
the Transferred Assets, Licensed Assets or operations of the
Business; (k) settle any lawsuit or claim if such settlement
imposes any continuing liability or non-monetary obligation on
the Business or any of the Transferred Assets or Licensed Assets;
(l) affirmatively waive any claims or rights relating to the
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Transferred Assets, the Licensed Assets or the Business,
exceeding $50,000 in any individual situation; (m) remove any
item of Equipment or Other Personalty (other than Inventory, the
Excluded Assets and Other Personalty with a value not in excess
of $50,000 in the aggregate) from the Real Property; (n)
intentionally take any action or omit to take any action that
would cause the representations and warranties of the Sellers
contained in Article 4 hereof to be untrue or inaccurate in any
material respect; or (o) permit any of the Sellers' Affiliates to
do or agree to do any of the foregoing.
6.3. Cooperation. The Sellers shall use their reason
able efforts (but without the need to incur any unreasonable or
unusual fees, costs or expenses) to cause the transactions
contemplated by this Agreement to be consummated, including,
without limitation, (a) obtaining, making and causing to become
effective all Approvals of such Governmental Authorities and
other Persons as may be necessary or reasonably requested by the
Purchaser in order to consummate the transactions contemplated by
this Agreement, including, without limitation, under or pursuant
to the HSR Act and all Contracts with respect to which the
obtaining, making and causing to become effective of an Approval
is necessary or advisable, and (b) giving prompt notice to the
Purchaser of (i) any notice of, or other communication relating
to, any default, or any event which, with the giving of notice or
the lapse of time or both, would become a default, under any
Contract, and (ii) any notice or other communication from any
Person alleging that the consent of such Person is or may be
required in connection with the execution and delivery of this
Agreement or the other Acquisition Documents or the consummation
of the transactions contemplated hereby or thereby.
6.4. No Solicitation of Transaction. Until July 3,
1996, the Sellers and their Affiliates shall not, and shall use
their reasonable best efforts to cause their respective officers,
directors, employees, agents or advisers not to, initiate,
solicit or encourage (including by way of furnishing
information), any inquiries or the making of any proposal which
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constitutes, or may reasonably be expected to lead to, any
acquisition proposal (as defined below), or agree to or endorse
any acquisition proposal, or participate in any discussions or
negotiations (other than to express Sellers' lack of interest in
such discussions or negotiations), or provide third parties with
any information, relating to any such inquiry or acquisition
proposal. As used herein, "acquisition proposal" shall mean any
proposal or offer, whether constituting an offer to sell or an
offer to purchase, relating to (i) the acquisition from the
Sellers in any manner of all or any material portion of the
Transferred Assets (other than sales of Inventory in the ordinary
course of business), the Licensed Assets or the Business, or any
equity or other interest in all or any portion of the Transferred
Assets, the Licensed Assets or the Business, or (ii) for an
acquisition of all or any portion of the equity interests of, or
debt interests in, the Sellers or their Affiliates, or any other
extraordinary transaction involving the Sellers or their
Affiliates to the extent such transaction could impede, hinder or
delay the transactions contemplated hereunder; provided, however,
that notwithstanding anything else contained in this Section 6.4,
the Sellers may, without disclosing to the Purchaser, enter into
discussions about transactions of the type described in clause
(ii) above, so long as such transactions would exclude the
Transferred Assets, the Licensed Assets and the Business.
6.5. Access to the Sellers. The Sellers shall afford
Purchaser's Representatives reasonable access, upon reasonable
prior notice and at such scheduled times and places during normal
business hours as shall be reasonably approved by the Sellers
(but without any substantial interference with the business
operations of the Sellers), to all the Books and Records, and the
properties, facilities and employees of the Sellers relating to
the Business; provided, however, that the Sellers shall have the
right to have a representative present at all such times; and
provided, further, that such access shall be at the expense and
risk of the Purchaser, and that the Purchaser shall indemnify and
hold harmless the Sellers and their Affiliates from and against
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any Damages arising from any such Representative's negligence or
misconduct during such access.
6.6. Confidentiality. The Sellers shall, and shall
cause each of their Affiliates and the Representatives of each of
them (collectively, the "Seller Recipients") to, keep
confidential, and not use or disclose to others, any proprietary
information of or obtained from, the Purchaser, any of its
Affiliates or any of the Representatives of any of them, to the
extent that such proprietary information is not or does not
become readily available to the public other than as a result of
disclosure by Purchaser or its Affiliates or Representatives of
any of them or is not required to be disclosed by applicable Law
or court order. Promptly after the Closing or in the event of
the termination of this Agreement without a Closing, the Sellers
shall, and shall cause each of the other Seller Recipients to,
promptly return to the Purchaser all, and not retain any copies
of, such written, recorded, electronically formatted or encoded
proprietary information acquired from the Purchaser, provided,
however, that if the Purchaser does not specify and demand the
return of such proprietary information within sixty (60) days of
the Closing or date of termination of this Agreement, it shall be
rebuttably presumed that no such information was acquired from
the Purchaser. Sellers shall be responsible for any breach of
this Section 6.6 by any of the Seller Recipients and agrees, at
its sole expense, to take all reasonable measures (including,
without limitation, court proceedings) to restrain the Seller
Recipients from prohibited or unauthorized disclosure or use of
such proprietary information.
6.7. Premerger Notification. The Sellers shall as
promptly as reasonably practicable make all filings which are
required of them under the HSR Act. The Sellers shall timely and
promptly provide any additional information or documentation
requested by the Federal Trade Commission (the "FTC"), the
Antitrust Division of the DOJ (the "Antitrust Division") or any
other Governmental Authority with similar jurisdiction in
connection with a second request or otherwise. The Sellers shall
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furnish to the Purchaser such necessary information and
assistance as the Purchaser may reasonably request in connection
with its preparation of necessary filings or submissions to the
FTC, the Antitrust Division or any such other Governmental
Authority. The Sellers shall supply the Purchaser with copies of
all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between the Sellers or their
counsel, and the FTC, the Antitrust Division or any such other
Governmental Authority with respect to this Agreement and the
transactions contemplated hereby, except that any portions
thereof containing Proprietary Information of the Seller not
related to the Business may be redacted by the Sellers.
6.8. Disclosure Supplements. From time to time prior
to the Closing, the Sellers will promptly supplement or amend the
Schedules hereto by written notice of such supplement or
amendment (i) with respect to any matter hereafter arising which
would make any representation or warranty set forth in Article 4
inaccurate if brought down by the Sellers to the Closing without
having been supplemented or amended or (ii) as necessary to
correct any information in such Schedule or in any representation
or warranty of the Sellers in Article 4. For purposes of
determining the fulfillment of the conditions set forth in
Section 8.1 hereof the Schedules hereto shall be deemed to
include only that information contained herein on the date of
this Agreement and shall be deemed to exclude any information
contained in any supplement or amendment thereto. However, for
purposes of determining the accuracy of the representations or
warranties of Seller, contained in Article 4 or the liability of
the Sellers with respect thereto under Section 11.2 should the
Closing occur, the Schedules hereto shall be deemed to include
all information contained in any subsequent supplement or
amendment thereto.
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ARTICLE 7.
CERTAIN OBLIGATIONS OF THE PURCHASER PRIOR TO THE CLOSING
The Purchaser hereby covenants that, except as
otherwise consented to in writing by the Sellers (which consent
shall not be unreasonably withheld or delayed), from and after
the date hereof until the Closing:
7.1. Cooperation. The Purchaser shall use its
reasonable efforts (but without the need to incur any
unreasonable or unusual fees, costs or expenses) to cause the
transactions contemplated by this Agreement to be consummated,
including, without limitation, (a) obtaining, making and causing
to become effective all Approvals of such Governmental
Authorities and other Persons as may be necessary or reasonably
requested by the Sellers in order to consummate the transactions
contemplated by this Agreement, including, without limitation,
under or pursuant to the HSR Act and Article 31-B of the New York
State Tax Law, and (b) giving prompt notice to the Sellers of any
notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with
the execution and delivery of this Agreement or the other
Acquisition Documents or the consummation of the transactions
contemplated hereby.
7.2. Confidentiality. The Purchaser shall, and shall
cause each of its Affiliates and the Representatives of each of
them (collectively, the "Purchaser Recipients") to, keep
confidential, and not use or disclose to others, any Proprietary
Information of or obtained from the Sellers, any of their
Affiliates or any of the Representatives of any of them, to the
extent that such Proprietary Information is not or does not
become readily available to the public other than as a result of
disclosure by Sellers or their Affiliates or the Representatives
of any of them or is not required to be disclosed by applicable
Law or court order; provided that the Purchaser's Representatives
may include any underwriter or other financial institutions that
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participate, or which have been solicited to participate, in the
financing of the transactions contemplated by this Agreement.
Except as provided by Section 10.2 below, promptly after the
Closing or in the event of the termination of this Agreement
without a Closing, the Purchaser shall, and shall cause each of
the other Purchaser Recipients to, promptly return to the Sellers
all, and not retain any copies of, such written, recorded or
encoded Proprietary Information. Purchaser shall be responsible
for any breach of this Section 7.2 by any of the Purchaser
Recipients and agrees, at its sole expense, to take all
reasonable measures (including, without limitation, court
proceedings) to restrain the Purchaser Recipients from prohibited
or unauthorized disclosure or use of such Proprietary
Information.
7.3. Premerger Notification. The Purchaser shall as
promptly as reasonably practicable make all filings which are
required of it under the HSR Act. Purchaser shall timely and
promptly provide any additional information or documentation
requested by the FTC, the Antitrust Division or any other
Governmental Authority with similar jurisdiction in connection
with a second request or otherwise. The Purchaser shall furnish
to the Sellers such necessary information and assistance as the
Sellers may reasonably request in connection with its preparation
of necessary filings or submissions to the FTC, the Antitrust
Division or any such other Governmental Authority. The Purchaser
shall supply the Sellers with copies of all correspondence,
filings or communications (or memoranda setting forth the
substance thereof) between the Purchaser or its counsel, and the
FTC, the Antitrust Division or any such other Governmental
Authority with respect to this Agreement and the transactions
contemplated hereby except that any portions thereof containing
Proprietary Information of the Purchaser not related to the
Business may be redacted by the Purchaser.
7.4. Shareholder Circular; Shareholder Approvals; Etc.
As promptly as reasonably practicable following execution of this
Agreement, the Purchaser shall prepare a shareholder circular
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(the "Shareholder Circular") for the purpose of obtaining the
Approvals referred to in Section 8.8 hereof. The Purchaser,
acting through its Board of Directors, shall, in accordance with
Law and its memorandum and articles of association (a) promptly
and duly call, give notice of, convene and hold as soon as
reasonably practicable following the date hereof a meeting of its
shareholders for the purpose of voting to approve the
consummation of the transactions contemplated by this Agreement
and the other Acquisition Documents, including the Placement, (b)
recommend approval of the consummation of the transactions
contemplated by this Agreement and the other Acquisition
Documents, including the Placement and shall include in the
Shareholder Circular such recommendation, and (c) use its
commercially reasonable efforts to cause the Placing Agreement to
become unconditional in accordance with its terms.
7.5. Financing. Medeva will use its reasonable best
efforts to cause the transactions contemplated by the Placement
Agreement and the borrowings under the Credit Agreement and the
borrowings under the Credit Agreement to be consummated,
including without limitation taking all such actions as are
reasonably necessary to cause the provisions of the Credit
Agreement, the Placement Agreement and the Placement to be
carried out and given full force and effect. Medeva shall not
intentionally take any action or omit to take any action that
would cause any of the representations, warranties or
undertakings set forth in the Credit Agreement or the Placement
Agreement to become untrue, inaccurate or misleading in any
material respect. Medeva will not agree to extend the Offer
Closing Date (as defined in the Placement Agreement) without the
prior written consent of Sellers. Medeva will promptly provide
to Sellers copies of all notices sent to its lenders under the
Credit Agreement or to Lazard or received from its lenders under
the Credit Agreement or Lazard in connection with the borrowings
under the Credit Agreement, the Placement, the Placement
Agreement or the Credit Agreement.
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ARTICLE 8.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to consummate the
transactions contemplated by this Agreement shall be subject to
the satisfaction, at or prior to the Closing, of each of the
following conditions, unless waived (subject to Law) by the
Purchaser at or prior to the Closing:
8.1. Representations and Warranties True. The
representations and warranties of the Sellers contained in this
Agreement or in any of the other Acquisition Primary Documents
shall have been true and correct in all material respects when
made and in addition shall be true and correct in all material
respects at and as of the Closing and with the same effect as
though made at and as of the Closing (except as otherwise
contemplated by this Agreement).
8.2. Performance. The Sellers shall have performed
and complied in all material respects with all agreements,
covenants, obligations and conditions required by this Agreement
or any of the other Acquisition Primary Documents to be performed
or complied with by them at or prior to the Closing.
8.3. Title Insurance. The Purchaser shall have
received an ALTA 1992 Owner's Title Insurance Policy (or
policies) issued by Chicago Title Insurance Company (or other
title insurers reasonably acceptable to the Purchaser) in the
amount(s) allocated to the Owned Real Estate in Schedule 2.8
showing that the Purchaser has good and marketable title to all
of such Owned Real Property, subject only to such Liens as are
set forth in the title commitment issued by Chicago Title
Insurance Company with respect to the Facility, dated April 9,
1996 or shown on the ALTA survey of the Facility dated May 18,
1996 prepared for the Purchaser by RU-SH GPS Consultants and Land
Surveyors, together with all such endorsements to such title
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insurance policy (or policies) as the Purchaser may reasonably
request, it being agreed that the cost of such title insurance
policy (or policies) and endorsements and such survey shall be
borne by the Purchaser.
8.4. No Material Adverse Change. No change or event
that has had or could reasonably be expected to have,
individually or in the aggregate with other changes or events, a
Seller Material Adverse Effect shall have occurred since the date
of this Agreement.
8.5. Approvals. All Approvals set forth on Schedule
8.5 shall have been obtained or made on terms reasonably
satisfactory to the Purchaser and shall be in full force and
effect.
8.6. Deliveries. The Sellers shall have tendered to
the Purchaser, at or prior to the Closing, and against the
deliveries referred to in Section 9.4, the following:
(a) the executed Acquisition Primary Documents and
other documents and agreements referred to in Section 3.2 hereof;
(b) resolutions, certified as of the Closing Date by
the Secretary or Assistant Secretary of each Seller, adopted by
its Board of Directors, and all other necessary corporate action
similarly certified, authorizing the execution and delivery by
such Seller of this Agreement and the other Acquisition
Documents, the performance by it of its obligations hereunder and
thereunder and the consummation by it of the transactions
contemplated hereby and thereby;
(c) such certificates of the President or Vice
President of each Seller to evidence compliance with the
conditions set forth in Sections 8.1, 8.2 and 8.7 hereof, and any
other certificates to evidence compliance with the conditions set
forth in this Article 8 as may be reasonably requested by the
Purchaser or its counsel;
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(d) the opinions of Richard B. Young, Vice President,
Deputy General Counsel and Secretary of RPR; Skadden, Arps,
Slate, Meagher & Flom, New York; Skadden, Arps, Meagher & Flom,
London; and Nauta Dutilh substantially in the forms of Exhibit E
hereto.
(e) executed and completed transfer Tax returns with
respect to all Owned Real Property;
(f) a statement of No Tax Due or a Tentative
Assessment and Return issued by the New York State Department of
Taxation and Finance or other appropriate Governmental Authority
with respect to each parcel of Owned Real Property located in the
State of New York, the value of which is in excess of $500,000;
(g) certifications from each of the Sellers which own
Real Property that they are not foreign corporations, foreign
partnerships, foreign trusts or foreign estates (as such terms
are defined in the Code);
(h) estoppel certificates from the lessors or the
lessees, as the case may be, with respect to all of the Real
Property Leases for the Leased Property in a form reasonably
acceptable to the Purchaser, it being agreed that the estoppel
certificate from Astra with respect to the Astra Lease and the
Cohabitation Agreement and from the lessor under the Commerce
Avenue Lease with respect thereto shall include, inter alia, the
representations required to be given by such parties under such
agreements, it being further agreed that the Sellers shall
request that such parties include the representations set forth
in Schedule 8.6 hereof in such estoppel certificates; provided,
however, that if Astra will not make all the representations set
forth on Schedule 8.6 then, in lieu of an estoppel certificate
from Astra with respect to such representations, (i) the Sellers
shall have delivered to the Purchaser a certificate representing
and warranting that the representations not so made by Astra are
true and correct in all material respects at the Effective Time
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and (ii) the provisions of Section 11.2(b) (but not Section 11.8)
shall then automatically apply thereto;
(i) copies of the valid certificates of occupancy
listed on Schedule 4.20(e);
(j) [Intentionally omitted]
(k) assignment instruments in a form reasonably
satisfactory to Purchaser with respect to all Real Property
Leases; and
(l) a written notice to the tenant under the Astra
Lease advising such tenant that the Facility has been purchased
by Purchaser and that all future rents and notices shall
thereafter be sent to Purchaser as set forth in such notice.
8.7. Absence of Litigation. There shall be no Action
pending or threatened in writing before any court or other
Governmental Authority which seeks to (a) invalidate or set
aside, in whole or in part, this Agreement or any of the other
Acquisition Documents, (b) restrain, prohibit, invalidate or set
aside, in whole or in part, the consummation of the transactions
contemplated hereby or thereby or (c) obtain substantial Damages
in connection therewith or the Business.
8.8. Shareholder Approval, Etc. (a) Medeva shall
have received all requisite shareholder approvals solicited with
respect to the consummation of the transactions contemplated by
this Agreement and the other Acquisition Documents, including
without limitation the placing and open offer (the "Placement")
by Medeva with respect to not more than Pound Sterling 125 million
worth of Medeva's ordinary shares (the "Ordinary Shares") pursuant to
a Placing and Open Offer Agreement between Medeva and Lazard
Brothers & Co., Limited (the "Placing Agreement").
(b) The Placing Agreement shall have become
unconditional in accordance with its terms.
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(c) The Ordinary Shares shall be admitted to the
Official List on the London Stock Exchange.
ARTICLE 9.
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SELLERS
The obligation of the Sellers to consummate the
transactions contemplated by this Agreement shall be subject to
the satisfaction, at or prior to the Closing, of each of the
following conditions, unless waived (subject to Law) by the
Sellers at or prior to the Closing:
9.1. Representations and Warranties True. The
representations and warranties of the Purchaser contained in this
Agreement or in any of the other Acquisition Primary Documents
shall be true and correct in all material respects when made and
in addition shall be true and correct in all material respects at
and as of the Closing with the same effect as though made at and
as of the Closing (except as otherwise contemplated by this
Agreement).
9.2. Performance. The Purchaser shall have performed
and complied in all material respects with all agreements,
covenants, obligations and conditions required by this Agreement
and the other Acquisition Primary Documents to be performed or
complied with by it at or prior to the Closing.
9.3. Approvals. All consents, approvals,
authorizations and filings set forth on Schedule 9.3 shall have
been obtained on terms reasonably satisfactory to the Sellers and
shall be in full force and effect.
9.4. Deliveries. The Purchaser shall have tendered to
the Sellers, at or prior to the Closing, and against the
deliveries referred to in Section 8.6, the following:
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(a) in accordance with Sections 2.5 and 3.2 hereof,
the Closing Purchase Price and the amounts payable in respect of
the License Agreement as therein provided;
(b) the executed Acquisition Primary Documents and
other documents and agreements referred to in Section 3.2 hereof;
(c) resolutions, certified as of the Closing Date by
the Secretary or Assistant Secretary of each Purchaser, adopted
by its Board of Directors and approved by the requisite numbers
of such Purchaser's outstanding shares of capital stock (if
required), authorizing the execution and delivery by such
Purchaser of this Agreement and the other Acquisition Documents,
the performance by it of its obligations hereunder and thereunder
and the consummation by it of the transactions contemplated
hereby and thereby;
(d) such certificates of the President or Vice
President of each Purchaser to evidence compliance with the
conditions set forth in Sections 9.1, 9.2 and 9.5 hereof and any
other certificates to evidence compliance with the conditions set
forth in this Article 9 as may be reasonably requested by the
Sellers or their counsel;
(e) the opinions of Richards & O'Neil, LLP, counsel
to the Purchaser, and Mark G. Hardy, Company Secretary of Medeva
dated the Closing Date and addressed to the Sellers,
substantially covering the representations set forth in
Sections 5.1 - 5.3 in a manner reasonably satisfactory to the
Sellers;
(f) a guaranty executed by Medeva in favor of the
Sellers with respect to each Acquisition Primary Document (other
than the Bill of Sale and the Deed) to which Medeva is not a
party, such guaranty to have substantially the same terms and
provisions as the Guaranty;
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(g) such other documents or certificates as shall be
reasonably requested by the Sellers or their counsel;
(h) executed and completed transfer tax returns with
respect to all Owned Real Property to the extent required to be
executed and completed by the Purchaser; and
(i) assumption instruments reasonably satisfactory to
Sellers with respect to all Real Property Leases (it being
agreed, however, that the assumption instruments with respect to
the Astra Lease and Cohabitation Agreement shall be delivered to
the Sellers 15 days prior to the Closing Date, but will become
effective only at and as of the Effective Time).
9.5. Absence of Litigation. There shall be no Action
pending or threatened in writing before any court or other
Governmental Authority which seeks to (a) invalidate or set
aside, in whole or in part, this Agreement or any of the other
Acquisition Documents, (b) restrain, prohibit, invalidate or set
aside, in whole or in part, the consummation of the transactions
contemplated hereby or thereby or (c) obtain substantial Damages
in connection therewith.
ARTICLE 10.
ADDITIONAL COVENANTS AND AGREEMENTS
10.1. Books and Records; Access. (a) Promptly
but in no event more than thirty (30) days after the Closing
Date, Representatives of the Purchaser and the Sellers shall
jointly separate all books and records in their or their
Affiliates' control with the aim of delivering all Books and
Records to the custody of the Purchaser and all other books and
records existing on the Closing Date to the custody of the
Sellers. If any books and records relate to the Business, the
Inactive Products in the Territory or the Products in the
Territory, the Transferred Assets, the Licensed Assets or the
Assumed Liabilities are not Transferred to the Purchaser under
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Section 2.1(i) hereof because they do not "primarily" relate the
Business, the Inactive Products in the Territory or the Products
in the Territory, the Transferred Assets, the Licensed Assets or
the Assumed Liabilities, the Sellers will provide the Purchaser
with a copy of the portions thereof that relate to the Business,
the Inactive Products in the Territory or the Products in the
Territory, the Transferred Assets, the Licensed Assets or the
Assumed Liabilities and that are specifically identified by the
Purchaser. Such copies will be provided promptly after a request
for a copy thereof is made by the Purchaser to the Sellers in
writing.
(b) Unless otherwise consented to in writing by the
Sellers, for a period of seven (7) years after the Closing Date,
the Purchaser shall not destroy or otherwise dispose of any
original Books and Records in its possession on the Closing Date
without first offering to surrender such Books and Records to the
Sellers, and shall maintain such Books and Records in good
condition in a reasonably accessible location. Upon reasonable
prior notice, the Purchaser shall afford the Representatives of
the Sellers reasonable access during normal business hours to
examine and copy such Books and Records for any commercially
reasonable purpose.
(c) Unless otherwise consented to in writing by the
Purchaser, for a period of seven (7) years after the Closing
Date, the Sellers shall not destroy or otherwise dispose of any
Books and Records in their possession without first offering to
surrender such Books and Records to the Purchaser, and shall
maintain such Books and Records in good condition in a reasonably
accessible location. Upon reasonable prior notice, the Sellers
shall afford the Representatives of the Purchaser reasonable
access during normal business hours to examine and copy such
Books and Records for any commercially reasonable purpose.
10.2. Confidentiality. From and after the Closing,
the provisions of Sections 6.6 and 7.2 shall continue in effect,
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provided that the Purchaser shall not be restricted with respect
to any Proprietary Information relating to the Transferred
Assets, the Licensed Assets or the Business and the Sellers shall
be restricted with respect to such Proprietary Information as if
it had originally been the property of, and been acquired by the
Sellers from, the Purchaser (except that the Purchaser's failure
to specify and demand the return of such information after the
Closing shall not be required to avoid the rebuttable presumption
that would otherwise arise with respect thereto under Section
6.6); provided, further, that upon the earlier of termination or
expiration of the License Agreement and in the event the
Purchaser does not exercise the Purchase Option, the Purchaser
shall be restricted with respect to any Proprietary Information
relating to the Licensed Assets and the Sellers shall cease to be
so restricted.
10.3. Employment and Employee Benefits
(a) Purchaser shall offer employment in a comparable
position to substantially all, but at least 187 of the
individuals who are listed on Sellers' Schedule 10.3(a) and are
actively employed and actually working on a full time schedule
(or on accrued vacation) at the Facility for the ten (10) weeks
immediately preceding the Closing Date ("Plant Employees");
provided that Purchaser shall not offer employment to the
individuals listed on Sellers' Schedule 10.3(b) without Sellers'
prior written consent. For purposes of this Section 10.3(a)
"comparable position" shall mean a position (i) having duties
which are substantially similar in the aggregate to the duties
associated with the position held by the applicable person
immediately prior to the Closing and (ii) which provides a base
salary at least equal to that paid to the individual immediately
prior to the Closing; provided, however, the Purchaser shall not
be bound by clause (ii) above in respect of not more than five of
the people listed on Schedule 10.3(a) if it shall determine that
such individuals are being paid more than is justified for the
duties performed, so long as such individuals are offered a
salary commensurate with the duties performed. Further,
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Purchaser shall provide compensation, benefits and other terms
and conditions of employment to the Plant Employees who accept
Purchaser's offer, which, in the aggregate, are no less favorable
than the compensation, benefits and other terms and conditions of
employment provided from time to time to other similarly situated
employees of Medeva's U.S. subsidiaries. Subject to compliance
with the foregoing, Purchaser reserves the right to establish,
amend, modify or terminate any terms or conditions of employment
for such employees.
(b) From and after the Closing, Sellers shall be
responsible for COBRA benefits for Plant Employees who are either
not offered or do not accept Purchaser's offer of employment, in
accordance with the terms and conditions of Sellers' health
insurance plans.
(c) From and after the Closing, subject to
Purchaser's compliance with Section 10.3(a), Sellers shall be
responsible for the payment of severance benefits, if any shall
become payable, under and in accordance with the terms and
conditions of the Fisons Corporation Severance Pay Plan or any
other applicable plan of Sellers.
(d) Purchaser shall cooperate with Sellers and
provide Sellers reasonable access to the Plant Employees who
accept Purchaser's offer of employment in defending any
employment related claims brought against Sellers by any
personnel who were employed at the Facility at any time prior to
the Closing. The employment records of Plant Employees who
accept Purchaser's offer of employment will also be made
available to Sellers to the extent legally permissible, in
defending any employment related claims brought against Sellers
by such employees.
(e) Sellers represent that the accounts of all Plant
Employees under Sellers' defined contribution plans shall be
fully vested on the Closing Date. To the extent permitted by
applicable Law and the existing terms of the relevant plans, with
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respect to each Plant Employee who accepts Purchaser's offer of
employment, Sellers shall, at the option of each such Plant
Employee, transfer the account(s) of such Plant Employee under
Sellers' tax-qualified defined contribution plan(s) to
Purchaser's tax-qualified defined contribution plan, in
accordance with Section 401(a)(31) of the Code. The accounts of
any such Plant Employee shall be adjusted for investment
experience according to the terms of the applicable plan.
10.4. Specific Performance; Injunctive Relief. Each
of the parties hereto acknowledges, understands and agrees that
any breach or threatened breach by it, any of its Affiliates or
any of the Representatives of any of them (as applicable) of Sec
tions 6.6, 7.2, 10.1, 10.2 or 10.5 hereof will cause irreparable
injury to the other party and that money damages will not provide
an adequate remedy therefor. Accordingly, in the event of any
such breach or threatened breach, the non-breaching party shall
have the right and remedy (in addition to any other rights or
remedies available at law or in equity) to have the provisions of
such Sections specifically enforced by, and to seek injunctive
relief and other equitable remedies in, any court having
competent jurisdiction.
10.5. Noncompetition; Nonsolicitation.
(a) The Purchaser agrees that for the five year
period from January 1, 2001 until December 31, 2005 it will not,
and will cause each Affiliate thereof, not to, directly or
indirectly, (i) engage in a Competitive Business, anywhere in the
world; or (ii) acquire an interest in any Person engaged in a
Competitive Business, anywhere in the world directly or indi
rectly, as a proprietor, partner, stockholder, officer, director,
principal, agent, trustee, consultant or in any other relation
ship or capacity.
For purposes of this Agreement, the term "Competitive
Business" shall mean the business of producing, supplying,
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marketing, distributing or selling, directly or indirectly, any
products utilizing the Pennkinetic Process.
The covenant set forth in this Section 10.5(a) shall
become effective if, and only if, (i) the Purchaser does not
exercise the Purchase Option in accordance with Article 8 of the
License Agreement or (ii) the License Agreement is earlier
terminated in accordance with the terms thereof. In the event
the Purchaser does exercise the Purchase Option, such covenant
shall be of no force and effect and shall automatically be null
and void.
(b) The Sellers agree that for the period from the
Effective Time until the earlier of the expiration of the Term
(as defined in the License Agreement) and January 1, 2001 the
Sellers will not, and will cause each of their Affiliates, not
to, directly or indirectly, (i) engage in a Competitive Business,
anywhere in the Territory; or (ii) acquire an interest in any
Person engaged in a Competitive Business, anywhere in the
Territory directly or indirectly, as a proprietor, partner,
stockholder, officer, director, principal, agent, trustee,
consultant or in any other relationship or capacity.
(c) For a period of two (2) years from and after the
date hereof, the Purchaser shall not, and shall cause each of its
Affiliates not to, directly or indirectly on behalf of or through
any Person solicit for employment, employ or otherwise engage any
person who is as of the date hereof an employee of the Sellers
and their Affiliates; provided, however, that (i) the Purchaser
may nonetheless respond to unsolicited applications for
employment from individuals it would be prohibited from
soliciting pursuant to this Section 10.5(c) and employ or
otherwise engage such persons and (ii) Purchaser may solicit for
employment, employ or otherwise engage any Person who is on the
date hereof an employee at the Facility other than those
individuals listed on Schedule 10.3(b).
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(d) The Purchaser and the Sellers agree that the
periods of time and the scope applicable to the covenants of this
Section 10.5 are reasonable. However, if such period or scope
should be adjudged unreasonable in any judicial or other dispute
resolution proceeding, then the parties request that the period
of time or scope be reduced by the extent deemed unreasonable, so
that these covenants may be enforced for the maximum period and
broadest scope as are adjudged to be reasonable.
10.6. Use of Fisons Name; NDC Licenses. (a) The
Sellers hereby grant to the Purchaser effective immediately after
the Closing, the royalty-free nontransferable right and non-
exclusive license to use for a reasonable time (not to exceed six
(6) months after the Closing Date) the corporate names, service
mark or logo of any of the Sellers or any Affiliate of the
Sellers (the "Marks") in the same manner as they are presently
used on all Labelling for the Products, in the ordinary course of
the Business. The Purchaser agrees that the nature and quality
of any Products sold under such Marks shall conform substantially
to the Sellers' past practices, standards and specifications. If
the Sellers at any time during the Purchaser's use of such
materials reasonably determine that the requirements of the fore
going provision have not been complied in all material respects,
Seller shall have the right to terminate the right and license
granted under this Section 10.6 by giving written notice of such
breach to the Purchaser and the opportunity for 30 days to cure
such breach. In addition, the Purchaser shall indemnify and hold
the Sellers harmless for any Damages to the Sellers arising from
the right and license granted hereunder.
(b) Following the Closing the Purchaser will use
commercially reasonable efforts to develop and have approved, if
necessary, its own Labelling so as to eliminate its use of the
Marks, to change the manufacturer code in the NDC numbers for the
Products to a Purchaser NDC number, and to remove the Sellers'
NDC numbers from all Product Labelling as promptly as possible
and in any event within six (6) months.
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10.7. Reconveyance of Intangible Assets. Following
expiration or termination of the License Agreement and if the
Purchaser does not exercise the Purchase Option, the Purchaser
agrees to sell, convey, assign and deliver to the Sellers for no
additional consideration, any Books and Records, Proprietary
Information, Intangible Assets (including the physical
embodiments thereof) or Contracts necessary for the manufacture
and sale of the Products and Inactive Products held by the Pur
chaser or any Affiliates of the Purchaser so long as the Sellers
assume all the Liabilities under such Contracts from and after
the Transfer date. In the event the Purchaser Transfers any of
such Books and Records, Proprietary Information, Intangible
Assets or Contracts after the Closing, such Transfer shall be sub
ject to this Section 10.7. The Purchaser shall take such actions
and execute and deliver such documents and instruments as the
Sellers may reasonably request to effectuate the provisions of
this Section 10.7.
10.8. Expenses. (a) In the event that at the
shareholder meeting contemplated by Section 7.4 hereof the
shareholders of Medeva shall fail to approve the transactions
contemplated by this Agreement and the other Acquisition
Documents as envisioned by Section 8.8(a), then within five (5)
calendar days of the Sellers' demand therefor, the Purchaser
shall pay the Sellers $3 million as provided in Section 2.7.
(b) In the event the Closing Date does not occur by
July 2, 1996 because of the failure of either of the conditions
specified in Section 8.8(b)-(c), the Purchaser shall become
obligated to pay the Sellers $100,000 for each day after July 2,
1996 through and including the earlier to occur of the Closing
Date and July 22, 1996. If the Closing Date shall not occur by
July 22, 1996, then in addition to the amounts payable pursuant
to the preceding sentence, the Purchaser shall become obligated
to pay the Sellers a further $1 million. If the Closing Date
occurs after July 2, 1996 and on or prior to July 22, 1996, then
the payments owing pursuant to the preceding two sentences shall
be satisfied by increasing the Closing Purchase Price by such
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amount. If the Closing does not occur by July 22, 1996, then the
$3 million owing pursuant to this Section 10.8 shall be paid on
July 22, 1996. If the Closing Date shall occur after July 22,
1996, said $3 million will be treated for all purposes hereof as
an increase in the Purchase Price. Any monies payable pursuant
to this Section 10.8 shall be paid as provided in Section 2.7.
10.9. Access. (a) Following the Closing, upon
reasonable prior notice, the Purchaser shall afford the
Representatives of the Sellers reasonable access to the Real
Property during normal business hours to remove therefrom any
Excluded Assets not theretofore removed.
(b) Following the Closing and in perpetuity the
Purchaser shall permit Sellers to reference (and upon request
shall so advise the FDA), and upon Sellers' request shall accord
Sellers access to, and copies of, all data contained in, the
Product Licenses and any Inactive Product Licenses to the extent
Transferred and necessary to permit Sellers to market and
distribute the Products outside the Territory and Inactive
Products outside the Territory and to obtain and maintain
Approvals to market and distribute the Products or Inactive
Products outside the Territory. Purchaser shall promptly advise
Sellers of any changes made in any Product License, Product,
Inactive Product License or Inactive Product that could
reasonably be expected to have an impact on such Approvals of
Sellers outside the Territory.
ARTICLE 11.
SURVIVAL; INDEMNIFICATION
11.1. Survival. The covenants, agreements,
representations and warranties of the parties hereto contained in
this Agreement shall survive the execution and delivery of this
Agreement, any due diligence investigation made by any party in
respect of the transactions contemplated hereby and the Closing
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as follows: (a) the covenants and agreements contained herein
shall survive until performed or for such shorter period as
provided herein with respect thereto; and (b) the representations
and warranties contained in Articles 4 amd 5 of this Agreement
shall survive until the close of business on the 540th day after
the Closing Date. No Action for indemnification pursuant to this
Article 11 may be brought after the applicable expiration date,
provided that, if prior to such date one party hereto has
notified, in writing, another party hereto of a claim for
indemnity hereunder (whether or not formal legal action shall
have been commenced based upon such claim), such claim shall
continue to be subject to indemnification in accordance herewith.
11.2. Indemnification by the Sellers. From and after
the Effective Time, the Sellers and their successors and assigns
shall jointly and severally indemnify and hold harmless and
defend the Purchaser and its Affiliates, successors and permitted
assigns, from and against any and all Damages incurred thereby or
caused thereto based on, arising out of, resulting from, or
relating to:
(a) any Excluded Liability including the Sellers'
failure to pay or satisfy any such Excluded Liability;
(b) the material breach of a representation and
warranty of the Sellers contained herein or in any other
Acquisition Primary Document;
(c) the material breach of any covenant or agreement
of the Sellers contained herein or in any other Acquisition
Primary Document;
(d) any Liability for the Purchaser's failure to
withhold from any payments made to the Sellers hereunder or under
the License Agreement;
(e) any Liability to pay to vendors, contractors and
other providers of goods or services any amounts due after the
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Effective Time with respect to Liabilities incurred on or before
the Effective Time under Contracts assumed by the Purchaser from
the Sellers which amounts payable are in the nature of the
payment of a retention that had been held by the Sellers to
assure adequate completion of such Contracts;
(f) the Sellers' failure to pay or discharge in full
any Permitted Lien of the type described in clauses (a) or (b) of
the definition of Permitted Liens attaching to the Transferred
Assets or Licensed Assets as a result of acts or omissions by
Sellers or their Affiliates prior to the Effective Time;
(g) the failure of the Sellers to have paid in full
any fees payable to the FDA for periods ending prior to the
Effective Time; and
(h) the failure of the Sellers to comply with WARN,
if required, prior to the Effective Time.
11.3. Indemnification by the Sellers for Product
Recalls.
(a) Notwithstanding the indemnification provisions
set forth in Section 11.2 above, the Sellers and their successors
and assigns shall jointly and severally indemnify and hold
harmless the Purchaser and its Affiliates, successors and
assigns, as follows:
(i) If within 540 days from the Closing Date,
the FDA enjoins the sale of, seizes or orders or otherwise
requires in writing under threat of seizure or injunction, the
recall or withdrawal of any one or all of Delsym, Tussionex,
Ionamin, Pediapred or Zaroxolyn (collectively, the "Primary
Products") so as to prevent, for more than thirty (30) days, the
continuation of the sale of such Primary Product (a "Product
Recall") because of non-compliance with regulations attributable
to acts or omissions of Sellers prior to Closing, the Sellers
shall reimburse the Purchaser on the basis set forth in Section
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11.3(c) below for the Purchaser's Lost Operating Profit arising
as a result of such Product Recall; and
(ii) Notwithstanding anything herein to the
contrary, Sellers shall not have any liability for the
Purchaser's Lost Operating Profit until the aggregate of such
Lost Operating Profit in respect of all Product Recalls exceeds
$10 million (the "Special Indemnification Deductible") in which
event the Sellers shall be liable pursuant to this Section 11.3
only in respect of Lost Operating Profit in excess of the Special
Indemnification Deductible and in no event shall Sellers'
liability to make indemnification payments under this Section
11.3 exceed an aggregate of $100 million (the "Special
Indemnification Limit"). The indemnification obligations set
forth in this Section 11.3 shall be satisfied through a refund
from the aggregate prepaid amounts as set forth in Schedule 3.2
to the extent such amounts have not previously been refunded to
the Purchaser pursuant to Sections 3.2(a) or 8.2 of the License
Agreement. Any such refund to satisfy an indemnification
obligation hereunder shall be applied pro rata among such prepaid
amounts not previously refunded and shall be paid as provided in
Section 11.5(b). Any amounts refunded to the Purchaser, pursuant
to Sections 3.2(a) or 8.2 of the License Agreement, shall to the
extent of such refund reduce the Sellers' liability under this
Section 11.3.
(b) The Purchaser shall use commercially reasonable
efforts to manage and resolve all regulatory issues in respect of
the Primary Products in order to mitigate any risks of regulatory
actions by the FDA. In the event of a Product Recall, the
Purchaser will use its commercially reasonable efforts to
mitigate any Damages or Lost Operating Profit arising therefrom.
(c) In the event of a Product Recall, and subject to
Section 11.3(a) above, the Sellers shall reimburse the Purchaser
as follows:
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(i) Seventy percent (70%) of the Purchaser's
Lost Operating Profit, if the Product Recall occurs during the
first six (6) months following the Closing Date;
(ii) Sixty percent (60%) of the Purchaser's
Lost Operating Profit, if the Product Recall occurs during the
period from six (6) to nine (9) months following the Closing
Date;
(iii) Fifty percent (50%) of the Purchaser's
Lost Operating Profit, if the Product Recall occurs during the
period from nine (9) to twelve (12) months following the Closing
Date; and
(iv) Forty percent (40%) of the Purchaser's
Lost Operating Profit, if the Product Recall occurs during the
period from twelve (12) to eighteen (18) months following the
Closing Date.
11.4. Indemnification by the Purchaser. From and
after the Effective Time, the Purchaser and its successors and
assigns shall indemnify, hold harmless and defend the Sellers and
their Affiliates, successors and assigns, and the Representatives
of each of them, from and against any and all Damages incurred
thereby or caused thereto based on, arising out of, resulting
from, or relating to:
(a) any Assumed Liability including the Purchaser's
failure to pay or satisfy any such Liability;
(b) the material breach of a representation and
warranty of the Purchaser contained herein or in any other
Acquisition Primary Document;
(c) the material breach of any covenant or agreement
of the Purchaser contained herein or in any other Acquisition
Primary Document except, however, where the License Agreement
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provides an exclusive remedy is to be applied in the event of a
specified breach;
(d) any Liability arising from the Purchaser's opera
tion of, or any act or omission of the Purchaser occurring in
respect of, the Business or the Transferred Assets after the
Effective Time;
(e) any Liability for expenses incurred by Purchaser
in connection with or resulting from or attributable to the
transactions contemplated by this Agreement;
(f) any Liability for any investment banking,
brokerage, or similar charge or commission payable or incurred by
the Purchaser in connection with this Agreement or the
transactions contemplated hereby; and
(g) the failure of the Purchaser to comply with WARN,
if required, prior to the Effective Time.
11.5. Notice and Payment of Claims.
(a) The Indemnified Party shall notify the
Indemnifying Party within a reasonable period of time after
becoming aware of, and shall provide to the Indemnifying Party as
soon as practicable thereafter all information and documentation
necessary to support and verify, any Damages that the Indemnified
Party shall have determined have given rise to, or could
reasonably be expected to give rise to, a claim for
indemnification hereunder, provided, however, that the right of
the Indemnified Party to indemnification shall be reduced in the
event of its failure to give timely notice only to the extent the
Indemnifying Party is prejudiced thereby. The Indemnifying Party
shall be given reasonable access to all books and records in the
possession or under the control of the Indemnified Party which
the Indemnifying Party reasonably determines to be related to
such claim.
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(b) Any Liability for indemnification under this
Article 11 shall be paid by the Indemnifying Party within fifteen
(15) business days of a request therefor in immediately available
funds in U.S. dollars after such Liability shall have been
finally determined. The Liability for Damages hereunder shall be
deemed to be "finally determined" for purposes of this Article 11
when the parties to such Action have so determined by mutual
agreement or, if disputed, when a final non-appealable order of a
Governmental Authority having competent jurisdiction shall have
been entered.
11.6. Matters Involving Third Parties.
(a) If any third party shall commence an Action
against any Indemnified Party with respect to any matter which
may give rise to a claim for indemnification against any
Indemnifying Party under Sections 11.2 and 11.4 hereof (a "Third
Party Claim") , the Indemnified Party shall notify the
Indemnifying Party thereof in writing as soon as practicable, but
in no event more than ten (10) days after the Indemnified Party
shall have been served, provided, however, that the right of the
Indemnified Party to indemnification shall be reduced in the
event of its failure to give timely notice only to the extent the
Indemnifying Party is prejudiced thereby.
(b) The Indemnifying Party shall have the right to
defend the Indemnified Party against the Third Party Claim with
counsel and other Representatives of its choice so long as (i)
the Indemnifying Party shall notify the Indemnified Party in
writing (within the fifteen (15) day period after its receipt of
notice of the Third Party Claim) that it will indemnify the
Indemnified Party from and against any Damages the Indemnified
Party may suffer arising out of the Third Party Claim and
(ii) the Indemnifying Party diligently conducts the defense of
the Third Party Claim. Otherwise, the Indemnified Party may
defend against the Third Party Claim preserving its rights to
indemnification hereunder including without limitation for the
cost of such defense.
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(c) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with Section
11.6(b) above, (i) the Indemnified Party may retain separate co-
counsel, at its sole cost and expense, and participate in the
defense of the Third Party Claim, (ii) the Indemnified Party
shall not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, (iii) the
Indemnified Party shall fully cooperate with the Indemnifying
Party in the investigation and defense of any such Third Party
Claim including without limitation providing required information
and documents and access to all employees of the Indemnified
Party with knowledge of issues relevant to the claim or
litigation (any such activities required to discharge this
obligation to cooperate shall be incurred at the sole expense of
the Indemnified Party) and (iv) the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written
consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed, unless such settlement includes
as a term thereof a general release of the Indemnified Party from
such Third Party Claim. Notwithstanding any other provision of
this Section 11.6, if an Indemnified Party withholds its consent
to a settlement or elects to continue the defense of any claim,
where but for such action the Indemnifying Party could have
settled such claim solely for the payment of money by the
Indemnifying Party as specified in the written request for
consent to the settlement delivered to the Indemnified Party, the
Indemnifying Party shall be required to indemnify the Indemnified
Party only up to a maximum of the bona fide settlement offer for
which the Indemnifying Party could have settled such claim.
11.7. Limitation of Remedies. (a) The exclusive
remedy of the Purchaser and the Sellers for breaches of
representations, warranties and covenants in this Agreement is
the indemnification provided for in this Article 11.
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(b) Notwithstanding anything to the contrary
contained herein, although a party may be entitled to make a
claim for indemnification pursuant to more than one section of
this Article 11, a party shall not be entitled to recover indemni
fication for the same claim under more than one section of this
Article 11.
(c) No indemnification may be claimed for any loss,
liability, claim or damage which was finally reflected in an
adjustment to the Purchase Price made pursuant to Section 2.6.
11.8. Minimum Warranty Claim. Neither the Sellers nor
the Purchaser shall have any liability for indemnification under
Section 11.2(b) or 11.4(b), respectively, for breaches of such
party's representations and warranties contained in this
Agreement and the other Acquisition Documents until the aggregate
amount of Damages based on, arising out of, resulting from or
relating to such breaches exceeds $10 million whereupon the
Indemnified Party may claim indemnification only for the Damages
in excess of such amount.
11.9. Maximum Warranty Claim. Each of the Sellers'
and the Purchaser's aggregate liability for indemnification under
Section 11.2(b) or 11.4(b) respectively, for breaches of
representations and warranties contained in this Agreement and
the other Acquisition Documents shall under no circumstances
exceed an amount equal to $55 million.
11.10. Mitigation of Damages. If any event shall
occur which would otherwise entitle a party to assert a claim for
indemnification under Sections 11.2 or 11.4 hereof, no Damages
shall be deemed to have been sustained by such Indemnified Party
to the extent of (a) any tax savings realized by such party as a
result thereof or (b) any net proceeds received by such
Indemnified Party or its Affiliates from any insurance policy
with respect thereto.
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11.11. Bulk Sales Law. The Purchaser hereby waives
compliance by the Sellers with the provisions of the bulk sales
law of any jurisdiction. Nevertheless, in addition to any other
indemnities herein provided, Sellers shall indemnify and hold
Purchaser harmless against and from any and all Damages to
Purchaser resulting from such noncompliance including any Liens
claimed against the Transferred Assets or Licensed Assets by any
creditor arising from any credit extended to Sellers on or prior
to the Closing Date.
ARTICLE 12.
TERMINATION
12.1. Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by the mutual written consent of the Purchaser
and the Sellers;
(b) by either the Purchaser or the Sellers, upon at
least five (5) days' prior written notice, if there shall have
been a material breach by the other party of any of the
representations, warranties, covenants or other obligations under
this Agreement which shall not have been waived by the
non-breaching party and which breach cannot be cured by the date
set forth in Section 12.1(c) below;
(c) by either the Purchaser or the Sellers, upon
written notice, if the Closing Date shall not have occurred on or
before August 31, 1996 for any reason other than the failure or
refusal of the party seeking to terminate to perform any of its
obligations hereunder;
(d) by either the Purchaser or the Sellers if any
Governmental Authority having competent jurisdiction shall have
issued an order, decree or ruling or taken any other action
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restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement or the other Acquisition
Documents, and such order, decree, ruling or other action shall
have become final and non-appealable; or
(e) by the Sellers if, at the shareholder meeting
contemplated by Section 7.4 hereof, Medeva's shareholders shall
fail to approve the transactions contemplated by this Agreement
and the other Acquisition Documents as envisioned by Section
8.8(a).
12.2. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 12.1 hereof,
such termination shall be the sole remedy, and, except with
respect to Sections 6.6 and 7.2 (Confidentiality), 13.1 (Public
Announcements) and 13.3 (Fees and Expenses) hereof, (a) this
Agreement shall forthwith become void and (b) there shall be no
liability on the part of the Sellers, the Purchaser or any of
their respective Affiliates or any of the Representatives of any
of them; provided, however, any breaching party shall be fully
liable for any and all Damages sustained or incurred by the other
party hereto, as a result of or arising from such breach and such
other party shall be entitled to seek any remedies available to
it at law or in equity.
ARTICLE 13.
MISCELLANEOUS
13.1. Public Announcements. Except as required by Law
or any Governmental Authority with competent jurisdiction or the
applicable rules of a stock exchange, prior to the Closing, none
of the parties hereto, nor any of their respective Affiliates or
any of the Representatives of any of them, shall issue any press
release or make any public announcement or disclosure with
respect to this Agreement or the transactions contemplated hereby
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without the prior written consent of the other parties hereto,
which consent shall not be unreasonably withheld or delayed.
13.2. Amendment; Waiver. Neither this Agreement, nor
any of the terms or provisions hereof, may be amended, modified,
supplemented or waived, except by a written instrument signed by
all of the parties hereto (or, in the case of a waiver, by the
party granting such waiver). No waiver of any of the terms or
provisions of this Agreement shall be deemed to be or shall
constitute a waiver of any other term or provision hereof
(whether or not similar), nor shall such waiver constitute a
continuing waiver. No failure of a party hereto to insist upon
strict compliance by another party hereto with any obligation,
covenant, agreement or condition contained in this Agreement
shall operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of a party hereto, such consent
shall be given in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 13.2.
13.3. Fees and Expenses. Except as otherwise
expressly provided in this Agreement, each of the parties hereto
shall bear and pay all fees, costs and expenses incurred by it or
any of its Affiliates in connection with the origin, preparation,
negotiation, execution and delivery of this Agreement and the
other Acquisition Documents and the transactions contemplated
hereby or thereby (whether or not such transactions are
consummated), including, without limitation, any fees, expenses
or commissions of any of its Representatives.
13.4. Transfer Taxes. (a) The Purchaser shall pay
the full amount of Liabilities for sales and use Taxes, if any,
in connection with the sale of the Transferred Assets herein
provided.
(b) The Sellers shall pay the first $45,000 of
Liabilities for transfer Taxes and recording and filing fees, if
any, in connection with the sale of the Transferred Assets herein
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provided and the Purchaser shall pay all such Liabilities in
excess of such amount.
(c) The Sellers shall pay all Liabilities for
transfer gains Taxes, if any, in connection with the sale of
assets herein provided; provided, however, the Purchaser shall
pay all such Liabilities, if any, in respect of any amounts of
the Purchase Price in excess of $20 million that Purchaser shall
allocate to the Owned Real Property.
(d) Sellers shall prepare and file the required Tax
Returns and other required documents with respect to the Taxes
described in Section 13.4(a), (b) (c) and (d) required to be paid
by Purchaser, Purchaser and Sellers and Sellers, respectively.
Purchaser shall reimburse Sellers for Purchaser's portion of such
Taxes described in Section 13.4(a), (b) and (c) within fifteen
(15) days of receipt of written notice from Sellers.
13.5. Notices.
(a) All notices, requests, demands and other
communications required or permitted under this Agreement shall
be in writing and mailed or facsimiled or delivered by hand or
courier service:
(i) If to the Sellers, to:
c/o Rhone-Poulenc Rorer Inc.
500 Arcola Road
P.O. Box 1200
Collegeville, PA 19426-0107
Facsimile: (610) 454-8985
Attn: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
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New York, New York 10022
Facsimile: (212) 735-2000
Attn: Mark C. Smith, Esq.
(ii) If to the Purchaser, to:
Medeva PLC
10 St. James's Street
London SW1A 1EF England
Facsimile: (011-44) 171-930-1516
Attn: Mark G. Hardy, Esq.
With a copy to:
Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022
Facsimile: (212) 750-9022
Attn: Brian D. Beglin, Esq.
(b) All notices and other communications required or
permitted under this Agreement which are addressed as provided in
this Section 13.5 (i) if delivered personally against proper
receipt or by confirmed facsimile transmission shall be effective
upon delivery and (ii) if delivered (A) by certified or
registered mail with postage prepaid shall be effective five (5)
business days, or (B) by Federal Express or similar courier
service with courier fees paid by the sender, shall be effective
two (2) business days following the date when mailed or
couriered, as the case may be. Any party hereto may from time to
time change its address for the purpose of notices to such party
by a similar notice specifying a new address, but no such change
shall be deemed to have been given until it is actually received
by the party sought to be charged with its contents.
13.6. Assignment. This Agreement and all of the terms
and provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
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permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder of the parties hereto
may be assigned by any of the parties hereto without the prior
written consent of the other parties, which consent shall not be
unreasonably withheld or delayed; provided, that each of Medeva
and Medeva Rochester may at any time and without such prior
consents assign this Agreement or any of its rights, interests or
obligations hereunder to any of its Affiliates; provided,
however, that in such event, the assignor shall remain fully
liable for the fulfillment of all of its obligations hereunder.
13.7. Governing Law; Consent to Jurisdiction.
(a) Each party to this Agreement hereby
irrevocably submits to the exclusive jurisdiction of any New York
State or Federal Court sitting or located in the County of New
York (a "New York Court") in any action or proceeding arising out
of or relating to this Agreement, and each such party hereby
irrevocably agrees that all claims in respect of such action or
proceeding shall be heard and determined in such New York Court.
Each party, to the extent permitted by applicable laws, hereby
expressly waives any defense or objection to jurisdiction or
venue based on the doctrine of Forum Non Conveniens, and
stipulates that any New York Court shall have In Personam
jurisdiction and venue over such party for the purpose of
litigating any dispute or controversy between the parties arising
out of or related to this Agreement. In the event any party
shall commence or maintain any action or proceeding arising out
of or related to this Agreement in a forum other than a New York
Court, the other party shall be entitled to request the dismissal
or stay of such action or proceeding, and each such party
stipulates for itself that such action or proceeding shall be
dismissed or stayed. To the extent that any party to this
Agreement has or hereafter may acquire any immunity from
jurisdiction of any New York Court or from any legal process
(whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to
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itself or its property, each such party hereby irrevocably waives
such immunity.
(b) Each party irrevocably consents to the service of
process of any of the New York Courts in any such action or
proceeding by personal delivery of the copies thereof or by the
mailing of the copies thereof by certified mail, return receipt
requested, postage prepaid, to it as its address specified in
accordance with Section 13.5, such service to become effective
upon the earlier of (i) the date 10 calendar days after such
mailing or (ii) any earlier date permitted by applicable law.
13.8. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which, when taken together, shall constitute
one and the same instrument.
13.9. Headings. The headings contained in this
Agreement and the Schedules hereto are for convenience of
reference only and shall not constitute a part hereof or define,
limit or otherwise affect the meaning of any of the terms or
provisions hereof.
13.10. Entire Agreement. This Agreement and the other
Acquisition Documents embody the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements,
commitments, arrangements, negotiations or understandings,
whether oral or written, between the parties hereto, their
respective Affiliates or any of the Representatives of any of
them with respect thereto. There are no agreements, covenants or
undertakings with respect to the subject matter of this Agreement
and the Acquisition Documents other than those expressly set
forth or referred to herein or therein and no representations or
warranties of any kind or nature whatsoever, express or implied,
are made or shall be deemed to be made herein by the parties
hereto except those expressly made in this Agreement and the
other Acquisition Documents.
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13.11. Severability. Each term and provision of this
Agreement constitutes a separate and distinct undertaking,
covenant, term and/or provision hereof. In the event that any
term or provision of this Agreement shall be determined by a
court of competent jurisdiction to be unenforceable, invalid or
illegal in any respect, such unenforceability, invalidity or
illegality shall, to the fullest extent permitted by Law, not
affect any other term or provision hereof, but this Agreement
shall be construed as if such unenforceable, invalid or illegal
term or provision had never been contained herein. Moreover, if
any term or provision of this Agreement shall for any reason be
held by a court of competent jurisdiction to be excessively broad
as to time, duration, activity, scope or subject, the parties
request that it be construed, by limiting and reducing it, so as
to be enforceable to the fullest extent permitted under
applicable Law.
13.12. No Third Party Beneficiaries. Except as and to
the extent provided in Article 11 hereof, nothing in this
Agreement is intended, nor shall anything herein be construed, to
confer any rights, legal or equitable, in any Person other than
the parties hereto and their respective successors and permitted
assigns.
13.13. Singular and Plural Forms. The use herein of
the singular form shall also denote the plural form, and the use
herein of the plural form shall also denote the singular form, as
in each case the context may require, including with respect to
the terms Seller and Sellers.
13.14. References to Articles, Etc. All references
herein to Articles, Sections, Exhibits and Schedules shall be to
Articles and Sections of and Exhibits and Schedules to this
Agreement.
13.15. References to "Herein," Etc. As used in this
Agreement, the words "herein", "hereof", "hereby" and "hereunder"
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shall refer to this Agreement as a whole, and not to any
particular section, provision or subdivision of this Agreement.
13.16. Effect of Schedules. The Schedules hereto
relate to certain matters concerning the disclosures required and
the transactions contemplated by the Agreement. The inclusion of
or reference to matters in a Schedule does not constitute an
admission of what is material or the materiality of such matter.
Disclosure on any Schedule in respect of any representation or
warranty shall constitute disclosure for purposes of all other
representations and warranties, but only to the extent it is
clear how the substance of the disclosure made would be relevant
to such other representations and warranties.
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IN WITNESS WHEREOF, the parties hereto have caused this
Asset Purchase Agreement to be duly executed as of the day and
year first above written.
FISONS CORPORATION
By: /s/ Timothy G. Rothwell
-----------------------------
Name: Timothy G. Rothwell
Title: President
FISONS INVESTMENTS INC.
By: /s/ Paul Leggieri
--------------------------
Name: Paul Leggieri
Title: President
FISONS PLC
By: /s/ Patrick Langlois
----------------------------
Name: Patrick Langlois
Title: Chairman
FISONS B.V.
By: /s/ Anthony J. Cork
----------------------------
Name: Anthony J. Cork
Title: Director
MEDEVA ROCHESTER INC.
By: /s/ Mark G. Hardy
-----------------------
Name: Mark G. Hardy
Title Vice President
MEDEVA PLC
By: /s/ Mark G. Hardy
-----------------------
Name: Mark G. Hardy
Title: Company Secretary
AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement Amendment No. 1
("Amendment No. 1"), dated July 2, 1996, is entered into
among (i) Medeva PLC, an English corporation ("Medeva")
and Medeva Pharmaceuticals Manufacturing, Inc. formerly
known as Medeva Rochester Inc., a Delaware corporation,
on the one hand ("Medeva Pharmaceuticals" and collective
ly with Medeva, the "Purchaser"), and Fisons Corporation,
a Massachusetts corporation ("Fisons"), Fisons Invest
ments Inc., a Delaware corporation ("FII"), Fisons plc,
an English corporation ("FPLC"), and Fisons B.V., a
company organized under the laws of Holland ("FBV"), on
the other hand (Fisons, FII, FPLC and FBV are collective
ly referred to as the "Sellers").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Sellers and Purchaser have entered
into an Asset Purchase Agreement, dated as of June 6,
1996, (the "Agreement") whereby Sellers have agreed to
transfer, sell, convey, assign and deliver to the Pur
chaser, and the Purchaser has agreed to acquire from the
Sellers, the Business (as defined in the Agreement), in
accordance with the terms and subject to the conditions
of this Agreement.
WHEREAS, the Sellers and the Purchaser now
desire to amend the Agreement.
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements con
tained in the Agreement, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
I. DEFINITIONS. Words used but not defined
herein shall have the meanings ascribed thereto in the
Agreement.
II. GOVERNING LAW. Section 13.7 of the
Agreement is amended to add the following paragraph (c):
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<PAGE>
(c) This Agreement shall be governed
by, and construed in accordance with,
the laws of the State of New York
without giving effect to the princi
ples of conflict of laws thereof, and
any applicable laws of the United
States of America.
III. TRANSFER TAXES. Section 13.4(d) of the
Agreement is amended as necessary to take account of the
following:
(a) Purchaser and Sellers shall joint
ly file the Tax Returns required in respect of
the Taxes and recording fees described in Sec
tion 13.4(b).
(b) If Purchaser shall fail to satisfy
its obligation under Section 13.4(a) of the
Agreement when due, then the Sellers may offset
the amount of such default against amounts it
may owe to the Purchaser pursuant to Sec
tions 2.6 or 2.9 of the Agreement.
IV. CLOSING PRORATIONS.
(a) PROPERTY TAXES. The prorationing of
property and local school taxes being contemporaneously
taken into account in connection with the payment of the
Closing Purchase Price, the phrase "prepaid property
taxes in respect of the Real Property" appearing in the
definition of "Adjustment Current Assets" set forth in
Section 1.1(d) of the Agreement is deleted.
(b) ASTRA RECEIPTS. Regardless of which
party is paid by Astra for July 1996, Payments due by
Astra under the Astra Lease and the Astra Cohabitation
Agreement in respect of July 1996 will be payable 2/31 to
Sellers and 29/31 to Purchaser. The party receiving such
funds will pay the portion due to the other by the second
business day after the date of receipt or, if later, July
5, 1996.
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(c) COMMERCE DRIVE LEASE. Regardless of
which party pays the rent due for July 1996 under the
Commerce Drive Lease, the payments due to the landlord
for July 1996 will be payable 2/31 by Sellers and 29/31
by Purchaser. If Sellers shall have paid such rent, then
the portion equal to 29/31 of the rent shall be part of
the Adjustment Current Assets and shall be reimbursed to
Sellers pursuant to Section 2.6 of the Agreement. If the
Purchaser shall pay such rent, then the 2/31 due from
Sellers shall be paid within ten (10) days of being
invoiced therefor by Purchaser. All liabilities under
the Commerce Drive Lease with respect to periods prior to
July 1, 1996 shall remain with Seller.
(d) LEASES OF PERSONAL PROPERTY AND CONTRACTS
FOR THE PROVISION OF SERVICES TO THE BUSINESS. Leases
for personal property and Contracts for the provision of
services to the Business which are Contracts assumed by
the Purchaser pursuant to the Agreement shall be handled
in the same manner as specified for the Commerce Drive
Lease specified in paragraph (c) above.
V. CONFIDENTIALITY. Section 10.2 of the
Agreement is amended to delete the first word ("From") of
such section and to add the following language in lieu
thereof:
Except as necessary to permit Sellers and their
Affiliates to exercise their rights with re
spect to the Licensed Assets, the Products
outside the Territory and the Inactive Products
outside the Territory, from
VI. DEFINITION OF "TERRITORY". Section 1.1
(cp) of the Agreement is amended to add to the following
language to subsections (i) and (iii) after the words
"(prednisolone sodium phosphate, USP)":
and Pediapred Forte and Ped Forte
VII. LOTUS AGREEMENT. Sellers and Purchaser
acknowledge that the conditional consent tendered by
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Lotus Biochemical Corporation ("Lotus") to the assignment
of the Ionamin Co-promotion Agreement effective as of
January 1, 1993, between Lotus and Fisons (the "Lotus
Agreement") is not reasonably acceptable. Notwithstand
ing the foregoing and any provision of the Agreement to
the contrary, Sellers hereby assign the Lotus Agreement
to Medeva and Medeva hereby assumes the Lotus Agreement,
such assignment and assumption to be on the terms and
conditions of the Assignment and Assumption Agreement.
Purchaser hereby waives any condition to its obligation
to consummate the transactions contemplated by the Agree
ment that such consent be obtained. Purchaser agrees to
indemnify, hold harmless and defend the Sellers and their
Affiliates, successors and permitted assigns from and
against any and all Damages arising out of, resulting
from or relating to claims by Lotus that the assignment
of the Lotus Agreement is a breach or violation of the
Lotus Agreement.
As a condition of this Amendment No. 1, Sellers
hereby covenant that they will maintain the confidential
ity of this Section 7 of Amendment No. 1 and the terms
hereof, and will not disclose the fact or substance of
this Section 7 of Amendment No. 1 to any third party
without the prior written consent of Purchaser. It shall
not be a violation of this confidentiality provision if
Sellers are compelled to make such disclosure by court
order or other legal process, provided that Sellers first
give Purchaser a reasonable opportunity to contest or
modify such court order or legal process.
Sellers warrant and represent that after the
Closing they will provide Purchaser with a reasonable
opportunity to interview and, at Purchaser's election,
obtain sworn statements or testimony from Sellers' then
current employees or representatives with respect to the
negotiation and operation of the Lotus Agreement. In the
event any action or proceeding is brought against Sellers
for which indemnification from Purchaser is or may be
sought, such action or proceeding shall be subject to the
provisions of Sections 11.5 and 11.6 and 11.10 of the
Agreement.
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Finally, if after Closing Lotus gives its
unqualified consent to the assignment to Medeva of the
Lotus Agreement, or should Lotus give its consent upon
conditions that are reasonably acceptable to Purchaser
and Sellers, in either case effective as of and from the
Effective Time, then Purchaser and Sellers shall agree to
such consent and then this Section 7 of Amendment No. 1
will terminate.
VIII. INTEGRATION WITH AGREEMENT. Except as
amended hereby, the Agreement shall continue in full
force and effect in accordance with the terms thereof.
The provisions of Sections 13.2, 13.3, 13.5-13.9, 13.11-
13.15 are incorporated herein by reference as if set
forth in full herein.
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IN WITNESS WHEREOF, the parties hereto have
caused this Amendment No. 1 to be duly executed as of the
day and year first above written.
FISONS CORPORATION
By: /s/ Kenneth R. Pina
-----------------------------
Name: Kenneth R. Pina
Title:
FISONS INVESTMENTS INC.
By: /s/ Paul Leggieri
-----------------------------
Name: Paul Leggieri
Title: President
FISONS PLC
By: /s/ Patrick Langlois
-----------------------------
Name: Patrick Langlois
Title: Chairman
FISONS B.V.
By: /s/ Anthony Cork
------------------------------
Name: Anthony Cork
Title: Director
MEDEVA PHARMACEUTICALS
MANUFACTURING, INC. f/k/a MEDEVA
ROCHESTER INC.
By: /s/ Mark G. Hardy
--------------------------------
Name: Mark G. Hardy
Title: Vice President
MEDEVA PLC
By: /s/ Mark G. Hardy
---------------------------------
Name: Mark G. Hardy
Title: Company Secretary
<PAGE>
LICENSE AGREEMENT
dated as of July 2, 1996
between
FISONS CORPORATION
FISONS B.V.
FISONS INVESTMENTS INC.
FISONS PLC
and
MEDEVA PHARMACEUTICALS MANUFACTURING, INC.
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS 2
ARTICLE 2. GRANT 4
ARTICLE 3. PAYMENTS OF LICENSING FEE 6
ARTICLE 4. REPRESENTATIONS, WARRANTIES AND COVENANTS 7
ARTICLE 5. TRANSFER OF ADVERSE DRUG REACTION
INFORMATION 8
ARTICLE 6. TRADEMARK AND PATENT RIGHTS 9
6.1 Prosecution and Maintenance 9
6.2 Infringement or Other Actions 9
ARTICLE 7. THIRD PARTY CLAIMS 11
ARTICLE 8. PURCHASE OPTION 12
ARTICLE 9. QUALITY CONTROL 14
ARTICLE 10. TERMINATION 16
ARTICLE 11. NOTICES 17
ARTICLE 12. FORCE MAJEURE 18
ARTICLE 13. CONFIDENTIALITY 18
ARTICLE 14. PUBLICITY 19
ARTICLE 15. ASSIGNMENT; AMENDMENT; WAIVER 20
ARTICLE 16. GOVERNING LAW 20
ARTICLE 17. SEVERABILITY 20
ARTICLE 18. ENTIRE AGREEMENT 21
ARTICLE 19. CHOICE OF FORUM 21
ARTICLE 20. MISCELLANEOUS 22
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LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of the 2nd day of
July, 1996, between FISONS PLC, an English corporation,
FISONS CORPORATION, a Massachusetts corporation ("Fisons"),
FISONS B.V., a Dutch corporation, and FISONS INVESTMENTS
INC., a Delaware corporation, (each, to the extent of its
rights in the Intellectual Property, the "Licensor") on the
one hand and MEDEVA PHARMACEUTICALS MANUFACTURING, INC.
f/k/a Medeva Rochester Inc., a Delaware corporation
("Licensee") on the other hand.
Preliminary Statement
1. Fisons plc, Fisons, Fisons B.V. and Fisons
Investments Inc. and Licensee have entered into an Asset
Purchase Agreement dated as of June 6, 1996 (the "Asset
Purchase Agreement").
2. The Asset Purchase Agreement contemplates
that this Agreement be executed and delivered by the parties
hereto on the Closing Date (as defined in the Asset Purchase
Agreement).
3. Licensor owns or has the exclusive right to
use and authorize the use of certain of the Intellectual
Property (as defined herein) in the Territory (as defined
herein) relating to the Products, the Inactive Products, and
the Pennkinetic Process (as defined herein).
4. Licensee desires to acquire the exclusive
right to use such Intellectual Property in the Territory as
provided herein.
5. Licensor is willing to grant Licensee an
exclusive right (even as against Licensor) to use and
sublicense such Intellectual Property in the Territory as
provided herein.
In consideration of the premises and of the mutual
covenants and obligations set forth herein, the parties
hereto agree as set out below.
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ARTICLE 1. DEFINITIONS
Capitalized terms used herein but not otherwise
defined herein are used herein as defined in the Asset
Purchase Agreement, provided that the word "Sellers", when
used in the Asset Purchase Agreement, shall be deemed to be
replaced with the word "Licensor." The following terms, as
used in this Agreement, shall have the meanings set forth in
this Article 1:
"Affiliate" shall mean, with respect to any
Person, any Person which, directly or indirectly through one
or more intermediaries, controls, is controlled by, or is
under common control with, such Person; provided, however,
that with respect to the Sellers, only RPR and Persons
directly or indirectly controlled by RPR shall be an
Affiliate of any Seller for any provision of this Agreement.
"Assumed Contracts" shall mean the agreements set
forth on Exhibit A hereto.
"Change of Control" means (i) the direct or
indirect, sale, lease or other transfer of all or
substantially all of the assets of a Person to any other
Person or group of Persons acting in concert as a partner
ship or other group (a "Group of Persons") other than an
Affiliate of such Person, and (ii) a Person or Group of
Persons shall, as a result of a merger or consolidation,
tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, of securities of Licensee
or the entity surviving the merger or consolidation
representing 50% or more of the combined voting power of the
then outstanding securities of the Person in question ordi
narily having the right to vote in the election of direc
tors.
"Event of Default" shall have the meaning ascribed
to such term in the Security Agreement.
"Inactive Products" shall mean the products listed
as such on Exhibit B(ii) hereto.
"Intellectual Property" shall mean (i) the
Trademarks, (ii) the Know-How, and (iii) the Patents.
"Know-How" shall mean all confidential
information, trade secrets, pricing and marketing
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strategies, customer information, business leads, research
and results thereof, technology, know-how, discoveries,
developments, improvements, techniques, data, methods,
processes, instructions, formulae, recipes, drawings and
specifications, including the foregoing to the extent
contained in any Product License, owned by Licensor and used
by Licensor and its Affiliates primarily in connection with
the Licensed Products and the Pennkinetic Process in the
Territory.
"Licensed Products" shall mean the Products and
the Inactive Products.
"Patents" shall mean the patents and patent
appliations owned by Licensor and used by Licensor and its
Affiliates primarily in connection with the Licensed Prod
ucts in the Territory, including those set forth in Exhibit
A hereto, and any continuations, continuations-in-part,
reissues, divisions, or extensions thereof and, with the
exception of Canada, all non-United States equivalents
thereof.
"Pennkinetic Process" means the prolonged release
pharmaceutical preparation process described in United
States Patent Nos. 4,221,778 and 4,762,709.
"Products" shall mean the products listed on
Exhibit B-1 attached hereto.
"Security Agreement" shall mean the Intellectual
Property Security Agreement dated as of the date hereof
between Licensor and Licensee.
"Term" shall mean the period commencing on the
Closing Date and continuing until December 31, 2000, unless
earlier terminated in accordance with Article 10 hereof.
"Territory" shall mean, subject to the territorial
restrictions in the Assumed Contracts and the Contracts
listed on Schedule 4.7 to the Asset Purchase Agreement, (i)
with respect to all of the Products and Inactive Products
except Gastrocrom (cromolyn sodium, USP) Capsules and Oral
Concentrate and Pediapred Oral Solution (prednisolone sodium
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phosphate, USP) and Pediapred Forte and Ped Forte, anywhere
in the world (other than Canada), (ii) with respect to
Gastrocrom (cromolyn sodium, USP) Capsules and Oral
Concentrate, the United States and its commonwealths,
territories and possessions, including without limitation,
Puerto Rico and (iii) with respect to Pediapred Oral
Solution (prednisolone sodium phosphate, USP) and Pediapred
Forte and Ped Forte, the United States and its
commonwealths, territories and possessions, including
without limitations Puerto Rico, Aruba, Bahamas, Barbados,
Curacao/Netherlands Antilles, Denmark, Guatemala, Saipan,
Surinam and Trinidad.
"Trademarks" shall mean the trademarks and all
goodwill associated with such trademarks owned by Licensor
and used by Licensor primarily in connection with the
Licensed Products in the Territory including those Trade
marks listed on Exhibit A hereto and all applications and
registrations therefor, and all trade names and trade dress,
owned by Licensor and used by Licensor primarily in
connection with the Licensed Products in the Territory, but
excluding the name "FISONS" or any variation thereof.
ARTICLE 2. GRANT
2.1 Licensor on behalf of itself and each of its
Affiliates hereby grants to Licensee during the Term, the
exclusive (even as against Licensor) right and license
within the Territory to (i) use and sublicense the use of
the Intellectual Property in connection with the develop
ment, manufacture, distribution, marketing, promotion,
advertising and sale of the Licensed Products and
Improvements (as defined below) and (ii) use all intellectu
al and intangible property relating to the Pennkinetic
Process included in the Intellectual Property for any and
all purposes including without limitation in connection with
the development, manufacture, and sale of pharmaceutical
products, including, but not limited to the Licensed
Products, provided, however, that the rights granted herein
are subject to the third party rights, restrictions, condi
tions and limitations contained in the Assumed Contracts and
the Contracts listed on Schedule 4.7 to the Asset Purchase
Agreement. Without limiting the foregoing, Licensee shall
have the exclusive right and license to use and sublicense
the use of the Trademarks in the Territory, either as
primary brands, subbrands, or otherwise in connection with
the Licensed Products and Improvements in any and all
channels of distribution.
2.2 Licensee shall not use the Intellectual
Property outside the Territory, nor shall it sell Licensed
Products incorporating any of the Intellectual Property to
any Person (other than Licensor or an Affiliate of Licensor)
which Licensee knows or has reason to know will sell such
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Licensed Products outside the Territory, either during the
Term or after the termination hereof notwithstanding
Licensee's exercise of the Purchase Option as hereinafter
defined pursuant to Article 8 hereof.
2.3 [Intentionally Deleted]
2.4 To the extent Licensor has the right to do
so, and without representations and warranties, Licensor on
behalf of itself and each of its Affiliates hereby grants to
Licensee during the Term, a royalty-free, non-exclusive
right and license to use and sublicense the use of all such
intellectual and intangible property of Licensor that would
be included in the definition of Intellectual Property
herein but for the qualifying word "primarily" appearing in
the phrase "primarily in connection with ... " in the
applicable definitions; provided, however, that in the event
Licensee exercises the Purchase Option pursuant to Section
8.1 hereof, such non-exclusive License shall be perpetual.
2.5 Licensor does hereby assign to Licensee all
of Licensor's right, title and interest in and to the
Assumed Contracts except to the extent that the agreement
dated June 2, 1986 between K-V Pharmaceutical Company and
Pennwalt Corporation grants any rights in Canada. Licensee
does hereby accept for itself and its successors and
permitted assigns the assignment of the Assumed Contracts.
Licensee hereby assumes and agrees to pay, perform,
discharge and satisfy when due, and to indemnify Licensor
against and hold it harmless from and against all
Liabilities of Licensor under the Assumed Contracts which
according to such Assumed Contracts relate to periods after
the Effective Time (as defined in the Asset Purchase Agree
ment) and are to be paid, performed, discharged or satisfied
after the Effective Time. Notwithstanding the foregoing,
following expiration of the Term, in the event Licensee does
not exercise the Purchase Option pursuant to Section 8.1,
Licensee shall reassign its right, title and interest in
such Assumed Contracts and Licensor shall accept such
reassignment and shall assume and agree to pay, perform,
discharge and satisfy when due, and to indemnify Licensee
against and hold it harmless from and against all
Liabilities of Licensee under the Assumed Contracts which
according to such Assumed Contracts relate to periods after
the date of such reassignment and are to be paid, performed,
discharged or satisfied after the date of such reassignment.
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ARTICLE 3. PAYMENTS OF LICENSING FEE
3.1 (a) In consideration of the rights granted in
Article 2, Licensee shall pay Licensor annual licensing
fees. Such annual fees shall be paid to Fisons Investments
Inc. as follows:
(i) Payment of non-refundable licensing
fee for the second half of calendar year 1996
of $30 million.
(ii) Pre-payment of licensing fee for
calendar year 1997 of $55 million.
(iii) Pre-payment of licensing fee for
calendar year 1998 of $55 million.
(iv) Pre-payment of licensing fee for
calendar year 1999 of $50 million.
(v) Pre-payment of licensing fee for
calendar year 2000 of $50 million.
The fee referred to in Article 3.1(a)(i) shall be
due and payable and paid on the Closing Date as provided in
Section 3.2 of the Asset Purchase Agreement. The net
present value of the fees referred to in Sections
3.1(a)(ii), (iii), (iv) and (v) as of the Closing Date ($175
million) will be prepaid at Closing in accordance with
Sections 2.7 and 3.2 of the Asset Purchase Agreement. Not
withstanding anything herein to the contrary, in the event
of a Change of Control of Licensee, Licensor shall have the
right within 60 days of such Change of Control of Licensee
to deem any and all licensing fees payable pursuant to
Section 3.1 to be due and payable and nonrefundable.
3.2 (a) Provided that Licensee is not otherwise
in breach of this Agreement, Licensor shall refund to
Licensee the net present value as of the Closing as set
forth on Schedule 3.2 to the Asset Purchase Agreement of the
licensing fee under this Agreement for each of the years
1997 through 2000 (to the extent not previously refunded as
described in Section 3.2(c)) in the event that, Licensee (i)
does not make any use whatsoever of the Intellectual Proper
ty during such year and (ii) gives notice to Licensor that
no use of the Intellectual Property will be made for such
year, provided that, after December 31, 1997, such notice
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must be given between January 1 and January 15 of the year
immediately preceding the year for which such refund is
sought.
(b) Any refund to be made pursuant to
Section 3.2(a) above shall be made to Licensee within 30
days of the end of the calendar year to which the notice
provided by Licensee pursuant to Section 3.2(a) relates.
Such notice shall be given by Licensee in the form of a
certificate executed by its President or Chief Executive
Officer stating that Licensee will not make any use whatso
ever of the Intellectual Property during such year.
(c) Any indemnification payment due to
Licensee pursuant to the provisions of Section 11.3 of the
Asset Purchase Agreement shall be satisfied through a refund
of the net present value as of the Closing as shown on
Schedule 3.2 to the Asset Purchase Agreement of (x) the
licensing fees referred to in Section 3.1(a)(ii), (iii),
(iv) and (v) and (y) the Exercise Price referred to in
Section 8.1(a) (to the extent not previously refunded
pursuant to Section 3.2(a) or Section 8.2). Any such refund
shall be (x) applied pro rata to the fees and exercise price
referred to in the preceding sentence and (y) shall be paid
as provided in Section 11.5(b) of the Asset Purchase Agree
ment. Any refund of such licensing fees or of the Exercise
Price pursuant to Section 3.2(a) or Section 8.2 shall, to
the extent of such refund, reduce Seller's liability under
Section 11.3 of the Asset Purchase Agreement. Any refund of
the licensing fees or of the Exercise Price pursuant to this
Section 3.2(c) shall, to the extent of such refund, satisfy
Licensor's obligations under Section 3.2(a) or Section 8.2.
ARTICLE 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Licensor covenants that it will not voluntari
ly, involuntarily, or by operation of law, Transfer any
portion of the Intellectual Property without the consent of
Licensee except to an Affiliate subject to the terms of this
Agreement or otherwise create or permit to exist any Lien
upon any portion of the Intellectual Property except
pursuant to the Security Agreement.
4.2 Licensor covenants, on behalf of itself and
its Affiliates, not to sell Products within the Territory
nor to sell Products to any other Person (other than to
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Licensee or an Affiliate of Licensee) which Licensor knows
or has reason to know will sell such Products in the
Territory.
4.3 Licensor covenants, on behalf of itself and
its Affiliates, not to use the Trademarks outside the
Territory in any manner that will tarnish or disparage the
Trademarks in the Territory or otherwise have a material
adverse effect upon the Trademarks in the Territory or the
goodwill associated therewith.
4.4 Nothing herein shall be construed to be a
representation by Licensor that it owns or has any rights to
use the Trademarks or Patents outside of those jurisdictions
in which Licensor has a trademark registration or an issued
patent, respectively.
4.5 Subject to rights of third parties, Licensor,
on behalf of itself and its Affiliates, covenants not to
abandon, let lapse or otherwise fail to maintain any issued
Patent or registered Trademark related to the Licensed
Products in Canada without the consent of Licensee, which
consent shall not be unreasonably withheld or delayed. In
the event Licensor wishes to abandon, let lapse or otherwise
fail to maintain any such issued Patent or registered
Trademark, it shall, subject to rights of third parties,
offer such Patent or registered Trademark for sale to
Licensee.
ARTICLE 5. TRANSFER OF ADVERSE DRUG REACTION INFORMATION
5.1 During the Term, each of Licensor and
Licensee shall report to the other as soon as practicable,
and no later than three (3) days following its own
notification, of any information associated with the use of
any Product that pertains to hazards, contraindications,
side effects, precautions, or other information which could
reasonably be expected to be pertinent to the safety of such
Product and that is required to be reported to the FDA or
DEA pursuant to Law. All responsibility for filing any
necessary reports with the FDA and DEA concerning such
events (including individual Drug Experience Reports and
annual review of Drug Experience Reports) during the Term
shall be borne by Licensee. In all cases, Licensee shall be
responsible for interfacing with customers in the Territory.
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ARTICLE 6. TRADEMARK AND PATENT RIGHTS
6.1 Prosecution and Maintenance.
(a) Licensee shall undertake and shall bear
all costs of the prosecution and maintenance of the Patents
and the Trademarks in the Territory; provided, however, that
Licensee shall not abandon, let lapse or otherwise fail to
prosecute or maintain any Patent or Trademark without the
consent of Licensor which consent shall not be unreasonably
withheld or delayed. In connection with Licensee's
prosecution and maintenance of the Patents and Trademarks,
Licensor shall cooperate with Licensee by executing any
necessary documents, supplying Licensee with specimens and
performing other reasonable acts.
(b) Licensee shall not use any variation of
any Trademark, or any new trademark in connection with the
Licensed Products, without the prior written consent of
Fisons Investments Inc. which consent shall not be
unreasonably withheld or delayed. In the event Fisons
Investments Inc. gives its prior written approval for the
use of such a variation or new trademark, Licensee may apply
for a registration of that variation or trademark in the
United States Patent and Trademark Office or trademark of
fice or other appropriate similar office in any foreign
jurisdiction in the Territory ("PTO") in the name of
Licensor or its designee. If such an application is filed
by Licensee, upon the receipt by Licensee of a serial number
for an application from the PTO, the trademark shall become
a Trademark hereunder and be subject to the terms of this
Agreement. All costs of filing and prosecuting any such
application and maintaining any registration resulting
therefrom, shall be paid by Licensee. No additional licens
ing fees shall be owed Licensor for the use by Licensee of
such Trademarks.
6.2 Infringement or Other Actions.
(a) If either party shall become aware of
any infringement or threatened infringement of the
Intellectual Property in the Territory or any unfair
competition, disparagement or other tortious act by any
third party in relation to any of the Intellectual Property,
Licensed Products or Improvements in the Territory, then the
party having such knowledge shall give notice to the other
within ten (10) days of becoming aware of such infringement,
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unfair competition, disparagement or threatened infringe
ment, unfair competition, disparagement or other tortious
act.
(b) Licensee shall have the right to take
such action as it deems appropriate to protect and maintain
the Intellectual Property in the Territory, including but
not limited to bringing an action, suit or other appropriate
proceeding to prevent or eliminate the infringement of such
Intellectual Property, or the unfair competition,
disparagement or other tortious act by any third party in
relation to any Intellectual Property, Licensed Product or
Improvement in the Territory. Licensor agrees to cooperate
with Licensee in any reasonable manner in any such action,
suit or proceeding, at Licensee's expense, including joining
as a party to such action, suit or proceeding, if necessary
to maintain standing.
(c) Licensee agrees to consult with Licensor
with respect to its decision whether to take any action of
the nature specified in Section 6.2(b), giving due
consideration to Licensor's views with respect to the
necessity or desirability of taking such action. Licensee
further agrees that it will take action of the nature
specified in Section 6.2(b) if, in Licensee's reasonable
business judgment, after considering the value of the
Intellectual Property in question and the cost of such
action and giving due consideration to Licensor's right of
reversion under Section 10.2 hereof, such action is commer
cially reasonable; provided, however, that Licensee's rights
under this Section 6.2(c) shall in no way diminish or reduce
Licensee's obligations under Section 9.1(a) hereof.
(d) Licensee shall not enter into any
agreement to settle any action, suit or proceeding specified
in Section 6.2(b) without the express written consent of
Licensor, which consent shall not be unreasonably withheld
or delayed, if such agreement would in any way limit or
reduce the nature or scope of Licensee's use, or any other
Person's use, of the Intellectual Property at the time such
agreement is executed or at a future time.
6.3 Licensee acknowledges that as between
Licensee and Licensor the Intellectual Property belongs to
Licensor.
6.4 During the Term (and after the Term in the
event that Licensee does not exercise the Purchase Option),
Licensee shall not challenge Licensor's ownership in or
right to use the Intellectual Property or attempt to register
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the Intellectual Property in its own name; provided
however, that nothing in this Section 6.4 is intended to
contradict, or prevent Licensee from exercising its rights
pursuant to the Purchase Option or under the Security
Agreement.
ARTICLE 7. THIRD PARTY CLAIMS
7.1 If either party shall become aware of any
action, suit or proceeding or threat of action, suit or
proceeding, by a third party alleging that the use of any
Intellectual Property in the Territory infringes a trademark
or violates any other proprietary rights of any third party,
the party so aware shall promptly notify the other party of
the same and fully disclose the basis therefor.
7.2 Licensee agrees to use its best efforts to
defend such action, suit or proceeding within the Territory
if in Licensee's reasonable business judgment, after
considering the value of the Intellectual Property in
question and the cost of each such action, suit or
proceeding, and giving due consideration to Licensor's right
of reversion under Section 10.2 hereof, such action, suit or
proceeding is commercially reasonable; provided, however,
that nothing in this Section 7.2 shall diminish or reduce
Licensee's obligations under Section 9.1(a) hereof.
Licensee will keep Licensor fully informed with respect to
all significant aspects of such action, suit or proceeding.
Licensor agrees to assist Licensee by providing information
in the possession and control of Licensor and to otherwise
cooperate with Licensee as may be reasonably necessary to
such defense. Licensor shall have the right at any time,
and at its expense, to consult with Licensee with respect to
any such action, suit or proceeding or to take control of
such action, suit or proceeding should Licensee elect not to
defend or settle it. Licensee shall not enter into any
agreement or settle any action, suit or proceeding specified
in this Article 7 without the express written consent of
Licensor, which consent shall not be unreasonably withheld
or delayed, if such agreement would in any way limit or
reduce the nature or scope of Licensee's use or any other
person's use of the Intellectual Property at the time such
agreement is executed or at a future date. All amounts
awarded as damages, profits or otherwise in connection with
any such litigation shall be paid to and become the sole
property of Licensee.
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ARTICLE 8. PURCHASE OPTION
8.1 (a) Licensor on behalf of itself and each
of its Affiliates hereby grants to Licensee the exclusive
right and option, exercisable upon notice to Licensor given
at any time between September 1, 2000 and December 15, 2000,
to purchase in the Territory, subject to the restrictions
and limitations contained in the Assumed Contracts and the
rights of third parties and the restrictions and limitations
under the Contracts listed on Schedule 4.7 to the Asset
Purchase Agreement, all of Licensor's right, title, and
interest in the Intellectual Property on January 1, 2001
(the "Purchase Option"). The exercise price of the Purchase
Option described herein is $90 million (the "Exercise
Price"), the net present value of which ($59 million) will
be prepaid at Closing as provided in Section 3.2 of the
Asset Purchase Agreement.
(b) In consideration of the grant of the Purchase
Option, Licensee shall pay Licensor $45 million which amount
shall be nonrefundable. Such amount shall be due and
payable to Licensor and shall be paid at the Closing as
provided in Section 2.7 and 3.2 of the Asset Purchase Agree
ment.
(c) Notwithstanding anything herein to the
contrary, Licensee shall be unconditionally entitled to
exercise the Purchase Option as provided herein even if at
such time or prior thereto there exist claims by Licensor
with respect to Licensee's use or misuse of the Intellectual
Property pursuant to this Agreement or otherwise or any
other claims of whatsoever nature by Licensor against
Licensee, including, without limitation, any breach or
default by Licensee of this Agreement or the Asset Purchase
Agreement, any agreement contemplated by or executed in
connection herewith or therewith or any other agreement or
arrangement between Licensee and Licensor or their
respective Affiliates.
(d) Notwithstanding anything herein to the
contrary, during the occurrence and continuation of an Event
of Default, Licensee shall have the right to accelerate the
Purchase Option and deem it duly exercised, such right to be
exercised by delivery to Licensor of a written notice
declaring the Purchase Option so accelerated and exercised.
8.2 In the event Licensee does not exercise the
Purchase Option by December 15, 2000 as herein provided, the
net present value at the Closing of the Exercise Price as
set forth in Section 8.1(a) hereof, shall be fully refunded
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to Licensee within 30 days of the end of the Term.
Notwithstanding anything herein to the contrary, in the
event of a Change of Control of Licensee, Licensor shall
have the right within 60 days of such Change of Control of
Licensee to accelerate the Purchase Option and deem it duly
exercised, such right to be exercised by delivery to
Licensee of a written notice declaring the Purchase Option
so accelerated and exercised. In such event any rights
hereunder of Licensee to receive a refund in respect of the
Purchase Option shall terminate.
8.3 In the event Licensee exercises the Purchase
Option, Licensor shall deliver such documents as necessary
to effectuate the Transfer of the Intellectual Property in
the Territory, as set forth in Section 8.1(a) hereof, to
Licensee.
8.4 (a) Licensee shall have the unconditional
right during the Term to make changes to the formulation of
any Licensed Product, provided, however, that with respect
to those Licensed Products for which Licensor does not own
all of the rights in such formulation, Licensee may make
changes to such formulations only to the extent that
Licensor is entitled to do so under the Assumed Contracts
and the Contracts listed on Schedule 4.7 to the Asset
Purchase Agreement. All improvements or modifications of
the formulation of any of the Licensed Products created or
developed pursuant to the terms hereof, by or on behalf of
Licensee during the Term (collectively, "Improvements")
shall, as between Licensor and Licensee, be the property of
Licensee and shall not become a part of the Intellectual
Property, provided, however, that Licensee's rights in such
Improvements do not include any rights to own or use the
underlying formulation separate from the rights granted
hereunder. In the event that Licensee does not exercise the
Purchase Option, Licensee shall, upon termination of this
Agreement, grant Licensor a nonexclusive, worldwide,
perpetual, royalty-free license, with the right to
sublicense and assign such rights, in form and substance
satisfactory to each of the parties hereto, to use the
Improvements and the Research (as hereinafter defined).
(b) Licensee hereby grants to Licensor, for the
Term of this Agreement, a non-exclusive, royalty-free
license, to use any and all Improvements and Research (as
hereinafter defined) in connection with the development,
manufacture, distribution, marketing, promotion, advertising
and sale of the Licensed Products outside the Territory
which may not be sublicensed or assigned without the prior
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written consent of Licensee, which consent shall not be
unreasonably withheld or delayed.
8.5 All marketing research and similar
information developed by Licensee and its Affiliates
relating to the Intellectual Property (the "Research") shall
remain the property of Licensee or its Affiliates.
8.6 In the event Licensee does not exercise the
Purchase Option, Licensee shall enter into a supply
agreement with Licensor pursuant to which Licensee shall
agree to manufacture the Products for Licensor for a term
mutually agreeable to Licensor and Licensee; provided that
Licensor grants to Licensee the rights to use such of the
Intellectual Property as may be required to manufacture the
Products in accordance with such supply agreement, subject
to appropriate quality control provisions to be agreed upon
between the parties.
8.7 Licensor has granted Licensee a security
interest in the Intellectual Property in the Territory to
secure Licensor's obligation under Section 8.3 hereof
pursuant to the Security Agreement.
ARTICLE 9. QUALITY CONTROL
9.1 (a) Subject to Licensor having granted
approval to Licensee to abandon, let lapse or otherwise fail
to prosecute any issued Patent or registered Trademark
pursuant to Section 6.1, Licensee will use commercially
reasonable efforts to advertise and promote the Products and
to use the Trademarks in connection with the distribution,
advertising, marketing and sale of the Products.
(b) Licensee shall not use the Trademarks in any
manner which will tarnish or disparage the Trademarks or
otherwise have a material adverse effect upon the Trademarks
or the goodwill associated therewith.
9.2 The Trademarks shall be used in
substantially the same form as they were heretofore used in
connection with the Licensed Products. In the event
Licensee wishes to use any of the Trademarks in a
substantially different form, Licensee shall submit such
different form to Licensor for approval, which shall not be
unreasonably withheld or delayed.
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9.3 Licensee agrees that the nature and quality
of all Licensed Products, and the advertising, packaging and
other materials associated therewith, sold by Licensee
bearing one or more of the Trademarks shall be of a quality
at least as high as the Licensed Products heretofore sold
under the Trademarks and the advertising, packaging and
other materials heretofore associated therewith, as the case
may be. Licensee shall comply with applicable federal,
state and local laws and regulations in distributing, mar
keting, advertising and selling any Licensed Products.
9.4 Licensor shall have the following rights to
exercise quality control over Licensee's use of the
Trademarks to assure itself of Licensee's adherence to the
standards set forth in Sections 9.1(b), 9.2 and 9.3:
(a) Licensee shall upon request by Licensor,
from time to time, submit to Licensor a reasonable number of
samples of any Licensed Product and any packaging,
advertising and other materials which bear or are used with
one or more of the Trademarks, provided however, that
nothing herein shall be deemed to give Licensor the right to
preapprove, prior to the initial dissemination thereof, the
advertising, packaging, and other materials used by Licensee
in connection with the Licensed Products; and
(b) Licensor shall have the right, during
regular business hours, after reasonable advance written
notice to Licensee, to undertake up to two (2) inspections
per annum of the facilities used by Licensee to manufacture
or store such Licensed Products.
9.5 Fisons B.V., Fisons and Fisons PLC each
appoint Fisons Investments Inc. its agent for the purpose of
exercising the rights herein granted to control the quality
of the Licensed Products and any packaging, advertising and
other materials which bear or are used with one or more of
the Trademarks and for otherwise exercising the rights of
Licensor under Articles 9 and 10 hereunder.
9.6 In the event of a material breach of any of
the quality control provisions set forth in this Article 9
by Licensee, Licensor shall provide Licensee with written
notice specifying in detail the nature of the alleged
breach. Licensee shall then have 60 business days, from its
receipt of such notice, to cure the breach. If Licensee
fails to do so by the end of such 60-business day period,
15
<PAGE>
<PAGE>
Licensor shall provide Licensee with additional written
notice of such failure and the parties shall then endeavor
to cooperate and negotiate in good faith, for a period of 20
business days, their dispute concerning Licensee's alleged
breach of the Agreement. If the parties do not resolve
their dispute at the expiration of the foregoing negotiation
period, Licensor shall be entitled to bring suit against
Licensee in accordance with Article 19 hereof seeking a
declaratory judgment that Licensee has materially breached
this Agreement and injunctive relief as appropriate to
prevent Licensee's further breaches of the quality control
provisions. Licensee agrees that a material breach of the
quality control provisions set forth in this Article 9 would
constitute irreparable harm to Licensor, entitling Licensor
to such injunctive relief appropriate under the
circumstances.
9.7 In the event that Licensee breaches the
covenant set forth in Section 9.1(a), such breach shall be
deemed to be an irreparable material breach hereof and
Licensee shall forfeit all claims to obtain a refund of any
amount pursuant to Sections 3.2 or 8.2 hereof, it being
agreed that Licensor's damages in the event of such a breach
might be impossible to ascertain and that the refund amount
so forfeited constitutes a fair and reasonable amount of
damages under the circumstances and is not a penalty;
provided that such forfeiture shall in no way prejudice or
diminish Licensee's right to exercise the Purchase Option
pursuant to Section 8.1 hereof.
9.8 The parties agree that an award of injunctive
relief as contemplated by Section 9.6 and the forfeiture of
Licensee's refund rights contemplated by Section 9.7, shall
be Licensor's sole and exclusive remedy for any breach by
Licensee of (i) Sections 9.1(b) through 9.6 and (ii) Section
9.1(a), respectively.
ARTICLE 10. TERMINATION.
10.1 This Agreement can be terminated at any time
prior to the expiration of the Term by mutual agreement of
the parties.
10.2 Upon the termination or expiration of this
Agreement and at a time when Licensee shall not therefore
have exercised the Purchase Option, all rights granted
hereunder to Licensee in the Intellectual Property shall
revert to Licensor.
16
<PAGE>
<PAGE>
10.3 Upon the termination or expiration of this
Agreement and at a time when Licensee shall not therefore
have exercised the Purchase Option, Licensee shall have a
period of three (3) months in which to cease all use of the
Intellectual Property and to return all written or other
materials containing or describing such Intellectual
Property to Licensor.
ARTICLE 11. NOTICES
11.1 All notices or other communications given
pursuant hereto by one party hereto to the other party shall
be in writing and deemed given when (a) delivered by
messenger, (b) sent by telecopier (with receipt confirmed),
(c) received by the addressee, if sent by Express Mail,
Federal Express or other express delivery service (receipt
requested), or (d) mailed, seven days after being mailed in
the U.S. first-class postage prepaid, registered or
certified, in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate as
to itself by notice to the other party):
If to Licensor, to it at:
Fisons Corporation
c/o Rhone-Poulenc Rorer Inc.
500 Arcola Road
Collegeville, Pennsylvania 19426-0107
Attention: General Counsel
Telecopier No.: (610) 454-3807
Copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Mark C. Smith, Esq.
Telecopier No.: (212) 735-2000
17
<PAGE>
<PAGE>
If to Licensee, to it at:
Medeva Pharmaceuticals Manufacturing, Inc.
c/o Medeva PLC
10 St. James's Street
London, SWIA 1EF
United Kingdom
Attention: Mark G. Hardy, Esq.
Telecopier No.: 011-44-171-930-1516
Copies to:
Richards & O'Neil
885 Third Avenue
New York, New York 10022
Attention: Brian D. Beglin, Esq.
Telecopier No.: (212) 750-9022
ARTICLE 12. FORCE MAJEURE
12.1 Neither party shall be responsible or liable
to the other hereunder for failure or delay in performance
of this Agreement due to any war, fire, accident or other
casualty, or any labor disturbance or act of God or the
public enemy, or any other contingency beyond such party's
reasonable control. In the event of the applicability of
this Article, the party affected by such force majeure shall
use reasonable efforts, consistent with good business
judgment, to eliminate, cure and overcome any of such causes
and resume performance of its obligations.
ARTICLE 13. CONFIDENTIALITY
13.1 Licensee and Licensor each agrees to:
(a) not disclose any confidential and
proprietary information relating to the Intellectual
Property to third parties except to: (i) the FDA and any
other Governmental Authority, or their foreign equivalents;
or (ii) Affiliates, and consultants of Licensee or Licensor
or actual or potential contract manufacturers, sublicensees,
distributors, purchasers, joint venturers or others having
bona fide business relations with Licensee or Licensor, and
18
<PAGE>
<PAGE>
clinical investigators, in each case pursuant to a non-
disclosure commitment; and
(b) take such precautions as it normally
takes with its own confidential and proprietary information
to prevent disclosure of any Intellectual Property that is
confidential and proprietary to third parties (except as
contemplated above).
13.2 The obligation of maintaining confidentialty
under this Article shall not, in any event, apply to any
information which:
(a) at the time of disclosure is or
thereafter becomes available to the general public through
no fault of the recipient party;
(b) was lawfully known to, or otherwise was
lawfully in the possession of, the recipient party, prior to
the receipt of such information from the disclosing party;
(c) is obtained by the recipient party from
a source other than the disclosing party who would not be
breaching a commitment of confidentiality to the disclosing
party by disclosing such information to the recipient party;
or
(d) is required to be disclosed pursuant to
law to protect the recipient party's interest or in
connection with any litigation, investigation or regulatory
proceeding, or as otherwise required by law.
13.3 The confidentiality obligations set forth in
this Article 13 shall survive the expiration of this
Agreement.
ARTICLE 14. PUBLICITY
14.1 Licensor and Licensee agree not to issue any
press release or other public statement disclosing the
existence of or relating to this Agreement without the prior
written consent, which consent shall not be unreasonably
withheld or delayed, of the other party, provided, however,
that Licensor or Licensee shall not be prevented from
complying with any duty of disclosure it may have pursuant
to law (including regulatory requirements), subject to noti
fying the other party and giving such other party reasonable
time to comment on the same prior to disclosure.
19
<PAGE>
<PAGE>
ARTICLE 15. ASSIGNMENT; AMENDMENT; WAIVER
15.1 (a) All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respec
tive successors and permitted assigns. This Agreement shall
not be assignable or transferable by any party hereto with
out the prior written consent of the other(s) (which consent
shall not be unreasonably withheld or delayed), except that
Licensee may assign this Agreement and all its rights
hereunder to any Affiliate without consent, provided that no
such assignment shall relieve Licensee of any of its
obligations hereunder, including without limitation, those
of Article 9.
(b) This Agreement may be amended only by
written agreement of the parties hereto.
(c) The failure of a party to insist upon
strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver of that or any
other term hereof or deprive that party of the right
thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in
writing.
ARTICLE 16. GOVERNING LAW
16.1 This Agreement shall be governed by, and con
strued in accordance with, the laws of the State of New York
and the United States, as though made and to be fully per
formed therein without regard to conflicts of laws
principles thereof.
ARTICLE 17. SEVERABILITY
17.1 To the extent permitted by applicable Law,
any term or provision of this Agreement which is invalid or
unenforceable will be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining rights of the Person intended to
be benefitted by such term or provision or any other
provisions of this Agreement.
20
<PAGE>
<PAGE>
ARTICLE 18. ENTIRE AGREEMENT
18.1 This Agreement, together with the Asset
Purchase Agreement, constitutes the entire understanding
between the parties relating to the subject matter hereof
and supersedes all prior agreements or negotiations with
respect thereto, and no amendment or modification to this
Agreement shall be valid or binding upon the parties unless
made in writing and signed by the representatives of such
parties.
ARTICLE 19. CHOICE OF FORUM
19.1 Each party to this Agreement hereby
irrevocably submits to the exclusive jurisdiction of any New
York State or Federal Court sitting or located in the County
of New York (a "New York Court") in any action or proceeding
arising out of or relating to this Agreement, and each such
party hereby irrevocably agrees that all claims in respect
of such action or proceeding shall be heard and determined
in such New York Court. Each party, to the extent permitted
by applicable laws, hereby expressly waives any defense or
objection to jurisdiction or venue based on the doctrine of
Forum Non Conveniens, and stipulates that any New York Court
shall have In Personam jurisdiction and venue over such
party for the purpose of litigating any dispute or controver
sy between the parties arising out of or related to this
Agreement. In the event any party shall commence or
maintain any action or proceeding arising out of or related
to this Agreement in a forum other than a New York Court,
the other party shall be entitled to request the dismissal
or stay of such action or proceeding, and each such party
stipulates for itself that such action or proceeding shall
be dismissed or stayed. To the extent that any party to
this Agreement has or hereafter may acquire any immunity
from jurisdiction of any New York Court or from any legal
process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution or otherwise)
with respect to itself or its property, each such party
hereby irrevocably waives such immunity.
19.2 Each party irrevocably consents to the
service of process of any of the New York Courts in any such
action or proceeding by personal delivery of the copies
thereof or by the mailing of the copies thereof by certified
mail, return receipt requested, postage prepaid, to it at
its address specified in accordance with Section 11.1, such
21
<PAGE>
<PAGE>
service to become effective upon the earlier of (i) the date
10 calendar days after such mailing or (ii) any earlier date
permitted by applicable law.
ARTICLE 20. MISCELLANEOUS
20.1 Consents. For all purposes of this
Agreement, whenever a party requests the consent of another
pursuant to this Agreement, the phrase "which consent shall
not be unreasonably withheld or delayed" shall mean consent
may be withheld only on the basis that the proposed action
subject to such consent is not in the reasonable commercial
interests of the party whose consent is being sought.
22
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have caused
this Agreement to be executed by their duly authorized
representatives as of the day and year first indicated
above.
FISONS PLC
By: /s/ Patrick Langlois
--------------------------------
Name: Patrick Langlois
Title: Chairman
FISONS CORPORATION
By: /s/ Timothy G. Rothwell
--------------------------------
Name: Timothy G. Rothwell
Title: President
FISONS B.V.
By: /s/ Anthony Cork
--------------------------------
Name: Anthony Cork
Title: Director
FISONS INVESTMENTS INC.
By: /s/ Paul Leggieri
---------------------------------
Name: Paul Leggieri
Title: President
MEDEVA PHARMACEUTICALS MANUFACTURING,
INC. f/k/a MEDEVA ROCHESTER INC.
By: /s/ Mark G. Hardy
---------------------------------
Name: Mark G. Hardy
Title: Vice President
23
<PAGE>
<PAGE>
EXHIBIT A
PATENTS
PATENT NUMBER COUNTRY OWNER
4,221,778 UNITED STATES FISONS INVESTMENTS
4,448,774 UNITED STATES FISONS INVESTMENTS
4,517,179 UNITED STATES FISONS INVESTMENTS
4,522,818 UNITED STATES FISONS INVESTMENTS
4,762,709 UNITED STATES FISONS INVESTMENTS
5,124,152 UNITED STATES FISONS INVESTMENTS
PATENT/APPLICATION COUNTRY OWNER
NUMBER
124027 EUROPEAN NATION FISONS INVESTMENTS
8426434 AUSTRALIA FISONS INVESTMENTS
8402110 DENMARK FISONS INVESTMENTS
78395 PORTUGAL FISONS INVESTMENTS
8401696 FINLAND FISONS INVESTMENTS
60004124 JAPAN FISONS INVESTMENTS
8403141 SOUTH AFRICA FISONS INVESTMENTS
8602418 SPAIN FISONS INVESTMENTS
71506 ISRAEL FISONS INVESTMENTS
662947 SWITZERLAND FISONS INVESTMENTS
124027 EUROPEAN NATION FISONS INVESTMENTS
3482402 GERMANY FISONS INVESTMENTS
8304926 SOUTH AFRICA FISONS INVESTMENTS
8303733 FINLAND FISONS INVESTMENTS
8316435 AUSTRALIA FISONS INVESTMENTS
<PAGE>
<PAGE>
59070617 JAPAN FISONS INVESTMENTS
69139 ISRAEL FISONS INVESTMENTS
8303675 AUSTRIA FISONS INVESTMENTS
TRADEMARKS RELATING TO PRODUCTS
TRADEMARK REGISTRATION COUNTRY OWNER
NUMBER
DELSYM 1931234 ARGENTINA FISONS INVESTMENTS
(Application No.)
DELSYM A403304 AUSTRALIA FISONS INVESTMENTS
DELSYM 396548 BENELUX FISONS INVESTMENTS
DELSYM 439997 CHILE FISONS INVESTMENTS
DELSYM 30717 COLOMBIA FISONS INVESTMENTS
(Application No.)
DELSYM 64577 COSTA RICA FISONS INVESTMENTS
DELSYM 34875 DOMINICAN FISONS INVESTMENTS
REPUBLIC
DELSYM 676 ECUADOR FISONS INVESTMENTS
DELSYM 66217 EGYPT FISONS INVESTMENTS
DELSYM 1264967 FRANCE FISONS INVESTMENTS
DELSYM 1194040 GREAT BRITAIN FISONS INVESTMENTS
DELSYM 76519 GREECE FISONS INVESTMENTS
DELSYM 49157 GUATEMALA FISONS INVESTMENTS
DELSYM 41135 HONDURAS FISONS INVESTMENTS
DELSYM 286338 INDONESIA FISONS INVESTMENTS
DELSYM 108182 IRELAND FISONS INVESTMENTS
DELSYM 58080 ISRAEL FISONS INVESTMENTS
DELSYM 391496 MEXICO FISONS INVESTMENTS
2
<PAGE>
<PAGE>
DELSYM 12942 NETHERLANDS FISONS INVESTMENTS
ANTILLES
DELSYM 151112 NEW ZEALAND FISONS INVESTMENTS
DELSYM 14985CC NICARAGUA FISONS INVESTMENTS
DELSYM 033307 PANAMA FISONS INVESTMENTS
DELSYM 84/0981 SOUTH AFRICA FISONS INVESTMENTS
DELSYM 86/110 SALVADOR FISONS INVESTMENTS
DELSYM 530097 TAIWAN FISONS INVESTMENTS
DELSYM 145771 THAILAND FISONS INVESTMENTS
DELSYM 271970 URUGUAY FISONS INVESTMENTS
(Application No.)
DELSYM 1267664 UNITED FISONS INVESTMENTS
STATES
DELSYM 139986F VENEZUELA FISONS INVESTMENTS
DELSYM 570236 TAIWAN FISONS INVESTMENTS
(CHINESE
SCRIPT)
DELSYM 150871 THAILAND FISONS INVESTMENTS
(THAILAND
SCRIPT)
DIMINEX 363015 MEXICO FISONS INVESTMENTS
GASTROCROM 1173875 UNITED FISONS INVESTMENTS
STATES
HYLOREL 19426 CYPRUS FISONS INVESTMENTS
HYLOREL 1161/79 HONG KONG FISONS INVESTMENTS
HYLOREL 366845 ITALY FISONS INVESTMENTS
HYLOREL M/81394 MALAYSIA FISONS INVESTMENTS
HYLOREL 298496 SWITZERLAND FISONS INVESTMENTS
HYLOREL 1066577 UNITED FISONS INVESTMENTS
STATES
HYLOREL 99797-F VENEZUELA FISONS INVESTMENTS
3
<PAGE>
<PAGE>
HYLOREL 26604 YUGOSLAVIA FISONS INVESTMENTS
IONAMIN 1931236 ARGENTINA FISONS INVESTMENTS
(Application No.)
IONAMIN 91544 BENELUX FISONS INVESTMENTS
IONAMIN 279130 CHILE FISONS INVESTMENTS
(Application No.)
IONAMIN 160580 CHINA FISONS INVESTMENTS
IONAMIN 175601 COLOMBIA FISONS INVESTMENTS
IONAMIN 22300 COSTA RICA FISONS INVESTMENTS
IONAMIN 8876 CYPRUS FISONS INVESTMENTS
IONAMIN 66219 EGYPT FISONS INVESTMENTS
IONAMIN 785063 GREAT BRITAIN FISONS INVESTMENTS
IONAMIN 31261 GREECE FISONS INVESTMENTS
IONAMIN 17517 GUATEMALA FISONS INVESTMENTS
IONAMIN 15005 HONDURAS FISONS INVESTMENTS
IONAMIN 2874/91 HONG KONG FISONS INVESTMENTS
IONAMIN 80696 IRELAND FISONS INVESTMENTS
IONAMIN 61716 ISRAEL FISONS INVESTMENTS
IONAMIN M/92653 MALAYSIA FISONS INVESTMENTS
IONAMIN 26373CC NICARAGUA FISONS INVESTMENTS
IONAMIN 105526 PAKISTAN FISONS INVESTMENTS
(Application No.)
IONAMIN 11575 PANAMA FISONS INVESTMENTS
IONAMIN 012301 PERU FISONS INVESTMENTS
IONAMIN 15651 PHILIPPINES FISONS INVESTMENTS
IONAMIN 176460 PORTUGAL FISONS INVESTMENTS
IONAMIN 21426 PUERTO RICO FISONS INVESTMENTS
4
<PAGE>
<PAGE>
IONAMIN 366/30 SALVADOR FISONS INVESTMENTS
(Application No.)
IONAMIN S/5109/81 SINGAPORE FISONS INVESTMENTS
IONAMIN 310915 SWITZERLAND FISONS INVESTMENTS
IONAMIN 499478 TAIWAN FISONS INVESTMENTS
IONAMIN KOR28396 THAILAND FISONS INVESTMENTS
IONAMIN 682108 UNITED FISONS INVESTMENTS
STATES
IONAMIN 12350/94 VENEZUELA FISONS INVESTMENTS
(Application No.)
IONAMIN 129043 MEXICO FISONS INVESTMENTS
(CL1/CL3/CL5)
IONAMINA 36762-A BOLIVIA FISONS INVESTMENTS
IONAMINA 15934 NICARAGUA FISONS INVESTMENTS
IONAMINA 14799 PUERTO RICO FISONS INVESTMENTS
IONAMINA 13985/36 SALVADOR FISONS INVESTMENTS
IONAMINA 46135 VENEZUELA FISONS INVESTMENTS
IONAMINE 410296 SWITZERLAND FISONS INVESTMENTS
K-NORM 1467950 UNITED FISONS INVESTMENTS
STATES
MICROX 474782 ITALY FISONS INVESTMENTS
MYKROX A527165 AUSTRALIA FISONS INVESTMENTS
MYKROX 131176 AUSTRIA FISONS INVESTMENTS
MYKROX 460368 BENELUX FISONS INVESTMENTS
MYKROX 73688 COSTA RICA FISONS INVESTMENTS
MYKROX 48195 DOMINICAN FISONS INVESTMENTS
REPUBLIC
MYKROX 1571157 FRANCE FISONS INVESTMENTS
MYKROX 63116 GUATEMALA FISONS INVESTMENTS
MYKROX 52493 HONDURAS FISONS INVESTMENTS
5
<PAGE>
<PAGE>
MYKROX 290514 INDONESIA FISONS INVESTMENTS
MYKROX 199114 NEW ZEALAND FISONS INVESTMENTS
(Application No.)
MYKROX 053074 PANAMA FISONS INVESTMENTS
MYKROX (Application SALVADOR FISONS INVESTMENTS
filed 4/6/90)
MYKROX 243693 SWEDEN FISONS INVESTMENTS
MYKROX 378519 SWITZERLAND FISONS INVESTMENTS
MYKROX 145772 THAILAND FISONS INVESTMENTS
MYKROX 1595998 UNITED FISONS INVESTMENTS
STATES
MYKROX 153174 THAILAND FISONS INVESTMENTS
(THAILAND
SCRIPT)
PEDIAPRED 991/90 GUATEMALA FISONS INVESTMENTS
(Application No.)
PEDIAPRED 1457972 UNITED FISONS INVESTMENTS
STATES
PENNKINETIC 1321729 UNITED FISONS INVESTMENTS
STATES
PENNKINETIC 1411963 UNITED FISONS INVESTMENTS
STATES
TUSS-IONEX 83263 IRELAND FISONS INVESTMENTS
TUSSIONEX A138064 AUSTRALIA FISONS INVESTMENTS
TUSSIONEX 91546 BENELUX FISONS INVESTMENTS
TUSSIONEX 36607-A BOLIVIA FISONS INVESTMENTS
TUSSIONEX 34454 COSTA RICA FISONS INVESTMENTS
TUSSIONEX 17748 GUATEMALA FISONS INVESTMENTS
TUSSIONEX 14997 HONDURAS FISONS INVESTMENTS
TUSSIONEX M/92657 MALAYSIA FISONS INVESTMENTS
TUSSIONEX 15933 NICARAGUA FISONS INVESTMENTS
TUSSIONEX 11576 PANAMA FISONS INVESTMENTS
6
<PAGE>
<PAGE>
TUSSIONEX 14802 PUERTO RICO FISONS INVESTMENTS
TUSSIONEX 13982/36 SALVADOR FISONS INVESTMENTS
TUSSIONEX S/5113/81 SINGAPORE FISONS INVESTMENTS
TUSSIONEX 535873 TAIWAN FISONS INVESTMENTS
TUSSIONEX 149296 THAILAND FISONS INVESTMENTS
TUSSIONEX 205653 URUGUAY FISONS INVESTMENTS
TUSSIONEX 656009 UNITED FISONS INVESTMENTS
STATES
TUSSIONEX 44292 VENEZUELA FISONS INVESTMENTS
TUSSIONEX 150077 THAILAND FISONS INVESTMENTS
(THAILAND
SCRIPT)
TUSSIONEX-P 65306 COSTA RICA FISONS INVESTMENTS
ZAROXOLYN 67430 AUSTRIA FISONS INVESTMENTS
ZAROXOLYN 10983 BANGLADESH FISONS INVESTMENTS
ZAROXOLYN 91553 BENELUX FISONS INVESTMENTS
ZAROXOLYN 609207504 BRAZIL FISONS INVESTMENTS
ZAROXOLYN 125198 COLOMBIA FISONS INVESTMENTS
ZAROXOLYN 41375 COSTA RICA FISONS INVESTMENTS
ZAROXOLYN 18595 DOMINICAN FISONS INVESTMENTS
REPUBLIC
ZAROXOLYN 66221 EGYPT FISONS INVESTMENTS
ZAROXOLYN 1574117 FRANCE FISONS INVESTMENTS
ZAROXOLYN 931927 GREAT BRITAIN FISONS INVESTMENTS
ZAROXOLYN 880712 GERMANY FISONS INVESTMENTS
ZAROXOLYN 45066 GREECE FISONS INVESTMENTS
ZAROXOLYN 25757 GUATEMALA FISONS INVESTMENTS
ZAROXOLYN 17471 HONDURAS FISONS INVESTMENTS
7
<PAGE>
<PAGE>
ZAROXOLYN 445/71 HONG KONG FISONS INVESTMENTS
ZAROXOLYN 75989 IRELAND FISONS INVESTMENTS
ZAROXOLYN MI95C004246 ITALY FISONS INVESTMENTS
(Application No.)
ZAROXOLYN 47926 LEBANON FISONS INVESTMENTS
ZAROXOLYN 60975 PAKISTAN FISONS INVESTMENTS
ZAROXOLYN 16554 PANAMA FISONS INVESTMENTS
ZAROXOLYN SAB/14175 SABA FISONS INVESTMENTS
ZAROXOLYN 206/58 SALVADOR FISONS INVESTMENTS
ZAROXOLYN SAR/9528 SARAWAK FISONS INVESTMENTS
ZAROXOLYN S/49970 SINGAPORE FISONS INVESTMENTS
ZAROXOLYN 384838 SWITZERLAND FISONS INVESTMENTS
ZAROXOLYN 40220 THAILAND FISONS INVESTMENTS
ZAROXOLYN 891484 UNITED FISONS INVESTMENTS
STATES
ZAROXOLYN 149878 MEXICO FISONS INVESTMENTS
(CL1/2/3/
4/5/17/29)
TRADEMARKS RELATING TO INACTIVE PRODUCTS
TRADEMARK REGISTRA COUNTRY OWNER
TION NUMBER
BIFETAMINA 13984/36 SALVADOR FISONS INVESTMENTS
BIPHETAMINE 91547 BENELUX FISONS INVESTMENTS
BIPHETAMINE 8874 CYPRUS FISONS INVESTMENTS
BIPHETAMINE 31260 GREECE FISONS INVESTMENTS
BIPHETAMINE 15007 HONDURAS FISONS INVESTMENTS
BIPHETAMINE 372893 ITALY FISONS INVESTMENTS
8
<PAGE>
<PAGE>
BIPHETAMINE 631189 UNITED FISONS INVESTMENTS
STATES
CORSYM A582810 AUSTRALIA FISONS INVESTMENTS
CORSYM 110156 IRELAND FISONS INVESTMENTS
CORSYM 1812370 JAPAN FISONS INVESTMENTS
CORSYM 105283 PAKISTAN FISONS INVESTMENTS
CORSYM 597547 TAIWAN FISONS INVESTMENTS
(CHINESE
SCRIPT)
CORSYM 357997 MEXICO FISONS INVESTMENTS
(CL1/3/5)
CORSYM 535934 TAIWAN FISONS INVESTMENTS
(ROMAN AND
CHINESE SCRIPT)
9
<PAGE>
<PAGE>
EXHIBIT B
(i) PRODUCTS
Product Dosage Product Strength(s) NDA/ Approval
Form Code ANDA Date
Americaine Ointment 0376- 20% None
Anesthetic 16,-62
Lubricant
(benzocaine)
Americaine Solution 0377- 20% None
Otic (benzo 51
caine) Topi
cal Anesthet
ic Ear Drops
Delsym Suspen- 0842- 30mg/5ml 18-658 08 Oct 82
(dextrometho sion 61
rphanpolistr
ex) Extended-
Release Sus
pension
Gastrocrom Capsules 0677- 100mg 19-188 22 Dec 89
Capsules 01
(cromolyn
sodium, USP)
Gastrocrom Plastic 0678- 100mg/5mL 20-479 29 Feb 96
(cromolyn Ampule 70
sodium, USP)
Oral Concen
trate
Hylorel Tab Tablet 0787- 10,25mg 18-104 29 Dec 82
lets 71 (Upjohn)
(guanadrel 0788-
sulfate) 71
Ionamin Cap Capsule 0903- 15,30mg 11-613 14 May 59
sules 71,-84
(phentermine 0904-
resin) 71,-84
K-Norm Ex Capsule 0010- 10mg 70-980 17 Feb 87
tended-Re 71,- (KV)
lease Cap 85
sules (potas
sium chloride
extended-re
lease cap
sules, USP)
Mykrox Tab Tablet 0847- 0.5mg 19-532 30 Oct 87
lets 71
(metolazone
tablets,
USP)
<PAGE>
<PAGE>
Pediapred Solution 2250- 5mg/5ml 19-157 28 May 86
Oral 01,-99
Solution
(predniso
lone sodium
phosphate,
USP)
Tussionex Suspens- 0548- 8mg 19-111 31 Dec 87
Pennkinetic ion 67, - chlorphen-
(hydrocodone 91 iramine,
polistirex/ 10mg
chlorpheniramine hydrocod-
polistirex) one/5ml
Extended-Re
lease Suspension
Zaroxolyn Tablet 0975- 2.5,5,10 17-386 27 Nov 73
Tablets 96, - mg
(metolazone 71, -
tablets, 72, -
USP) 90
0850-
96, -
71, -
72, -
90
0835-
71,
72, -
90
(ii) INACTIVE PRODUCTS
o Biphetamine(R) (amphetamine)
NDA 10-093
o Corsym(R) (phenylpropanolamine polistirex and
chlorpheniramine polistrex) Extended-Release Suspension
NDA 18-050
IND 27,986 (Put on Inactive status May 20, 1993)
o Metolazone i.v.
o Pediapred(R) Forte
o Pennkinetic methylphenidate*
o Penntuss(R)
NDA 18-928 (Withdrawn February 17, 1994)
IND 19,964 (Withdrawn January 10, 1991)
11
<PAGE>
<PAGE>
o Pseudo-12 (pseudoephedrine polistirex)
NDA 19-401
IND 22,161 (Put on Inactive status September 23, 1993)
o PedForte
o Zaroxolyn Injectable
o Hydralazine Extended Release Capsules
o CR Pseudoephedrine Capsules
o Hydrocortisone 1% Cream
* Product concept only. No actual development work
has been performed.
12
<PAGE>
EXHIBIT 11
RHONE-POULENC RORER INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
(Unaudited-dollars and shares in millions except per share data)
Three Months Ended
June 30,
--------------------
1996 1995
-------- --------
Net income per common share as reported:
Net income before preferred dividends and
remuneration $ 102.2 $ 91.4
Less: Dividends on preferred stock and
remuneration on capital equity notes (10.3) (5.7)
------- --------
Net income available to common shareholders $ 91.9 $ 85.7
======= ========
Average shares outstanding 135.7 134.2
======= ========
Net income available to common shareholders
per share $ .68 $ .64
======= ========
Net income per common share assuming full
dilution:
Net income before preferred dividends and
remuneration $ 102.2 $ 91.4
Less: Dividends on preferred stock and
remuneration on capital equity notes (10.3) (5.7)
------- --------
Net income available to common shareholders $ 91.9 $ 85.7
Average shares outstanding 135.7 134.2
Shares contingently issuable for stock plan 2.0 .5
------- --------
Average shares outstanding, assuming full
dilution 137.7 134.7
======= ========
Net income available to common shareholders
per share, assuming full dilution $ .67 $ .64
======= ========
This calculation is submitted in accordance with the regulations
of the Securities and Exchange Commission although not required
by APB Opinion No. 15 because it results in dilution of less than 3%.
<PAGE>
<PAGE>
EXHIBIT 11
RHONE-POULENC RORER INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
(Unaudited-dollars and shares in millions except per share data)
Six Months Ended
June 30,
------------------
1996 1995
-------- -------
Net income per common share as reported:
Net income before preferred dividends and
remuneration $ 187.2 $ 186.6
Less: Dividends on preferred stock and
remuneration on capital equity notes (21.3) (11.4)
-------- -------
Net income available to common shareholders $ 165.9 175.2
========
Pro forma adjustments for interest and
preferred dividends, net of tax effects (1.6)
-------
Net income available to common shareholders,
pro forma $ 173.6
=======
Average shares outstanding 135.3 134.1
======= =======
Net income available to common shareholders
per share $ 1.23
=======
Net income available to common shareholders
per share, pro forma $ 1.29
=======
Net income per common share assuming full
dilution:
Net income before preferred dividends and
remuneration $ 187.2 $ 186.6
Less: Dividends on preferred stock and
remuneration on capital equity notes (21.3) (11.4)
------- -------
Net income available to common shareholders $ 165.9 175.2
Pro forma adjustments for interest and
preferred dividends, net of tax effects (1.6)
-------
Net income available to common shareholders,
pro forma $ 173.6
=======
Average shares outstanding 135.3 134.1
Shares contingently issuable for stock plan 2.0 .6
------- -------
Average shares outstanding, assuming full
dilution 137.3 134.7
======= =======
Net income available to common shareholders
per share, assuming full dilution $ 1.21
=======
Net income available to common shareholders
per share, pro forma, assuming full dilution $ 1.29
=======
This calculation is submitted in accordance with the regulations of
the Securities and Exchange Commission although not required by APB
Opinion No. 15 because it results in dilution of less than 3%.
<PAGE>
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Rhone-Poulenc Rorer Inc.
Quarterly Report on Form 10-Q
We are aware that our report dated July 22, 1996, on our
review of interim financial information of Rhone-Poulenc
Rorer Inc. ("the Company"), for the period ended June 30,
1996, and included in the Company's quarterly report on Form
10-Q for the quarter then ended is incorporated by reference
in the registration statements of the Company on Form S-3
(Registration No. 33-58229, Registration No. 33-62052,
Registration No. 33-36558, Registration No. 33-30795,
Registration No. 33-23754, Registration No. 33-15671,
Registration No. 33-53378 and Registration No. 33-55694) and
on Form S-8 (Registration No. 33-58998, Registration No. 33-
24537 and Registration No. 33-21902). Pursuant to Rule
436(c) under the Securities Act of 1933, this report should
not be considered a part of the registration statements
prepared or certified by us within the meaning of Sections 7
and 11 of that Act.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
August 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE RELATED CONDENSED CONSOLIDATED
STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 71
<SECURITIES> 67
<RECEIVABLES> 966
<ALLOWANCES> 96
<INVENTORY> 833
<CURRENT-ASSETS> 2,639
<PP&E> 3,004
<DEPRECIATION> 1,447
<TOTAL-ASSETS> 8,733
<CURRENT-LIABILITIES> 2,088
<BONDS> 0
0
175
<COMMON> 141
<OTHER-SE> 2,100
<TOTAL-LIABILITY-AND-EQUITY> 8,733
<SALES> 2,619
<TOTAL-REVENUES> 2,619
<CGS> 878
<TOTAL-COSTS> 2,339
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85
<INCOME-PRETAX> 272
<INCOME-TAX> 85
<INCOME-CONTINUING> 187
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.21
</TABLE>
