<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 6, 1997
ZILA, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-17521 86-0619668
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5227 North 7th Street Phoenix, Arizona 85014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 266-6700
<PAGE> 2
The undersigned hereby amends Item 2 and Item 7(c) of its Current Report on Form
8-K dated November 6, 1997 and filed on November 21, 1997.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) Zila, Inc. (the "Company"), through its wholly owned
subsidiary Zila Pharmaceuticals, Inc., completed its acquisition of the
Peridex(R) product line ("Peridex") from The Procter & Gamble Company ("P&G")
pursuant to the terms of that Asset Sale and Purchase Agreement dated November
5, 1997 (the "Agreement") between The Procter & Gamble Company, The Procter &
Gamble Distributing Company and Zila Pharmaceuticals, Inc. Peridex is a
prescription anti-bacterial oral rinse.
Under the terms of the Agreement, the Company also acquired
certain inventory, technology, contract rights, trademarks and other
intellectual property associated with Peridex. The purchase price of the Peridex
product line, which was determined in arms-length negotiations, was $12 million
plus the value of the inventory acquired at the closing. Under the terms of the
Agreement, the purchase price is to be delivered to P&G as follows: $6 million
was paid at closing, $4 million is payable within 180 days after closing, $1
million is payable within 12 months after closing and $1 million is
payable within 24 months after closing. The initial $6 million payment of the
purchase price was drawn from the funds available pursuant to the terms of that
certain Private Equity Line of Credit Agreement dated as of April 30, 1997
between Deere Park Capital Management and the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description
*10 Form of Asset Purchase and Sale
Agreement dated as of November 5, 1997
between Procter & Gamble Company and
Zila Pharmaceuticals
+99 Press Release dated as of November 7, 1997
* Filed herewith
+ Previously filed
2
<PAGE> 3
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 hereunto duly authorized.
ZILA, INC.
Date: December 8, 1997 By /s/ Joseph Hines
-------------------
Joseph Hines
President
3
<PAGE> 1
EXHIBIT 10
ASSET SALE AND PURCHASE
AGREEMENT
BETWEEN
THE PROCTER & GAMBLE
COMPANY,
THE PROCTER & GAMBLE DISTRIBUTING
COMPANY
AND
ZILA PHARMACEUTICALS, INC.
<PAGE> 2
PREAMBLE
This is an ASSET SALE AND PURCHASE AGREEMENT, made November 5, 1997, between The
Procter & Gamble Company and The Procter & Gamble Distributing Company, Ohio
corporations ("Seller"), and Zila Pharmaceuticals, Inc., a Nevada corporation
("Buyer"). Each of Seller and Buyer may hereafter be referred to as a "Party" or
collectively as "Parties."
This agreement ("Agreement") sets forth the terms and conditions upon which
Seller will sell to Buyer, and Buyer will purchase from Seller and/or its
appropriate Affiliates, the Business (as hereinafter defined).
In consideration of the mutual agreements contained herein, and intending to be
legally bound hereby, the signatories hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, each of the following terms shall have the following
meanings:
1.01 "ACQUIRED ASSETS" means only the following assets:
(a) the Books and Records ;
(b) trademarks (hereinafter "Trademarks") of the Business
specifically as set forth on Schedule 1.01(b), except as set
forth on, or limited by, Schedule 1.01(b)(i).
(c) Intellectual Property;
(d) claims, rights and benefits of Seller arising after Closing
pursuant to the Contracts in Schedule 1.01(d);
(e) the Technology, except as stated in the Technology License
Agreement ;
(f) Product registrations and/or health registrations (federal,
state and/or local) respecting the Products listed in Schedule
1.01(f) (the "Registrations");
(g) molds for the Product bottle and cap;
(h) the Inventory; and
1
<PAGE> 3
(i) goodwill exclusively related to the Business not otherwise
specifically identified herein.
Notwithstanding the above, the Acquired Assets do not include any of
the Excluded Assets.
1.02 "ACTION" means any dispute, controversy, claim, action, litigation,
suit, cause of action, arbitration, mediation, or any proceeding by or
before any court, arbitrator, mediator or Governmental Entity, or any
investigation, subpoena, or demand preliminary to any of the foregoing.
1.03 "AFFILIATE" means, with respect to a Person, another Person that
directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person.
"Control," whether or not capitalized, means, with respect to a Person,
the ownership by another Person of greater than 50% of the income or
voting interests of such Person or such other arrangement as
constitutes the direct or indirect ability to direct the management,
affairs or actions of such Person.
1.04 "ANTITRUST LAWS" means the United States, and relevant foreign
equivalents of the following: the Sherman Act, Clayton Act,
Robinson-Patman Act, Hart-Scott Rodino Antitrust Improvements Act,
Federal Trade Commission Act, and all other statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines,
and other laws (whether foreign, federal, state, provincial, local or
other) that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of
trade.
1.05 "ASSUMED LIABILITIES" means the following liabilities, whether known or
unknown, accrued or contingent, direct or indirect:
(a) all liabilities arising out of or related to the operation of
the Business or ownership of the Acquired Assets after the
Effective Time;
(b) all liabilities for product liability and product warranty for
Products of the Business sold after the Effective Time or
manufactured by or for the Buyer or
2
<PAGE> 4
its successors before and after the Effective Time, except as
set forth in the Transitional Supply Agreement;
(c) all liabilities for Taxes arising out of or relating to the
operation of the Business for periods after the Effective
Time;
(d) all liabilities and obligations of the Buyer as set forth in
the Transaction Documents;
(e) upon termination of the Transitional Supply Agreement,
liabilities to suppliers for materials to the extent
exclusively related to the Business and ordered in the
ordinary course of business prior to the termination of the
Transitional Supply Agreement, but delivered to Buyer or its
designee thereafter;
(f) all liabilities of Seller arising after the Effective Time
pursuant to the Contracts summarized in Schedules 1.01(b)(i)
and 1.01(d), except to the extent that the third party is
willing to release Seller of its obligations under those
Contracts; and
(g) all liabilities for returns (returned in accordance with
Seller's then current returns policy) of Products sold by P&G
prior to the Closing Date ("Returns of Seller's Products") to
the extent that the credits to be granted in response to the
Returns of Seller's Products plus reasonable costs of
destruction of returned goods (the "Returns Amount") exceed
fifty-thousand ($50,000.00) U.S. dollars and to the extent
that the Returns of Seller's Products are first received by
Seller or Buyer on or after the end of the third calendar
month following the Closing Date; and all liabilities for
returns of Products sold on or after the Closing Date without
limitation.
1.06 "ASSUMPTION AGREEMENT" means that agreement in the form attached as
Exhibit 1.06, between Seller and Buyer, to be executed as of Closing,
dealing with the assumption by the Buyer of the Assumed Liabilities and
the assignment by Seller of their interests under the Contracts.
1.07 "AUTHORIZATION" means any legally required consent, authorization,
approval, order, license, certificate or permit of or from, or
declaration or filing with, any Governmental Entity under any Antitrust
Laws, including, without limitation, any legally required filing
3
<PAGE> 5
with any Governmental Entity and the subsequent expiration of any
legally required waiting period under any Antitrust Laws.
1.08 "BOOKS AND RECORDS" means books, records and other documents (including
without limitation customer and supplier lists; distribution lists;
mailing lists; sales materials; operating, production and other
manuals; specifications; process drawings; manufacturing and quality
control records and procedures exclusively used in the Business,
existing at the Effective Time and owned by Seller at the Effective
Time.
1.09 "BUSINESS" means the manufacturing, packaging, distributing, marketing
and selling of the Products under one or more of the Trademarks in the
Geography. The assets and liabilities of the Business consist,
respectively, of the Acquired Assets and the Assumed Liabilities.
1.10 "BUSINESS DAY" means any day on which commercial banks in New York City
are open for business providing substantially all services offered by
such banks.
1.11 "CLOSING" means the closing of the transactions contemplated by this
Agreement in accordance with the terms and upon the conditions set
forth in this Agreement.
1.12 "CLOSING DATE" means the date on which the Closing occurs, as provided
in Section 3.03 of this Agreement.
1.13 "CONTRACTS" means those contracts and agreements (except Intercompany
Contracts) exclusively used in the Business to the extent they are
freely assignable by Seller without the consent of any third party or
such consent has been obtained, or denied, prior to Closing.
1.14 "EFFECTIVE TIME" means 5:00 p.m. EST on the Closing Date.
1.15 EXCLUDED ASSETS" means any and all assets not expressly listed as
Acquired Assets, whether or not used in the Business, including, but
not limited to, the following:
4
<PAGE> 6
(a) cash, cash equivalents (or similar investments) and accounts
receivable of the Business;
(b) insurance policies of Sellers pertaining to the Business and
all rights of Sellers of every nature and description under or
arising out of such insurance policies;
(c) claims for refunds of Taxes paid by Sellers or their
respective Affiliates;
(d) all rights of Sellers by virtue of the Transaction Documents;
(e) All machinery and equipment owned or leased by Sellers, unless
listed as Acquired Assets;
(f) Peridex trademarks not listed on Schedule 1.01(b); and
(g) any and all assets not expressly listed as Acquired Assets,
whether or not used in the Business.
1.16 "EXCLUDED LIABILITIES" means liabilities of Seller that are not Assumed
Liabilities, including Returns Amounts of fifty-thousand ($50,000.00)
U.S. dollars or less for Returns of Seller's Products that are first
received by Seller or Buyer before the end of the third calendar month
following the Closing Date.
1.17 "FINANCIAL INFORMATION" means that information related to inventory
levels described or set forth in Schedule 1.17.
1.18 "GEOGRAPHY" means the United States and Canada.
1.19 "GOVERNMENTAL ENTITY" means any arbitrator, court, judicial,
legislative, administrative or regulatory agency, commission,
department, board or bureau or body or other governmental authority or
instrumentality or any person or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, whether foreign, federal, state, provincial,
local or other.
1.20 "INTELLECTUAL PROPERTY" means the Trademarks and such other trade
names, service marks, brand names, copyrights, advertising and
promotional materials, slogans, rights to trade dress and designs as
are owned as of the date hereof by Seller and are
5
<PAGE> 7
exclusively used in the Business, as well as all the registrations and
applications, if any, for the foregoing.
1.21 "INTERCOMPANY CONTRACTS" means all contracts and agreements between or
among Seller and its Affiliates.
1.22 "INVENTORY" means certain inventory of finished goods of Products.
1.23 "KNOWLEDGE OF" means, whether or not capitalized, in the case of an
entity, the actual knowledge of the officers of such entity or, in the
case of an individual, the actual knowledge of such individual, in
either case as of the date of the representation, warranty or other
statement.
1.24 "MATERIAL" and its variations mean, with respect to an event,
circumstance or condition, that such event, circumstance or condition,
individually or in the aggregate, has an adverse effect upon the
assets, financial condition or earnings of the Business, costing the
aggrieved party more than $100,000 (One Hundred Thousand U.S. Dollars).
1.25 "PERSON" means (as the context requires) an individual, a corporation,
a partnership, an association, a trust, a limited liability company, or
other entity or organization, including a Governmental Entity.
1.26 "PRODUCTS" means the prescription oral rinse containing 0.12%
chlorhexidine gluconate specially formulated to kill bacteria
associated with gum disease bearing the Trademarks.
1.27 "PURCHASE PRICE" means US$ 12,000,000.00 (Twelve Million United States
Dollars), plus the estimated inventory value as set forth in Section
2.01, payable US$ 6,000,000.00 (Six Million United States Dollars) plus
estimated inventory value in cash at Closing; US $4,000,000.00 (Four
Million United States Dollars) due to Seller within 180 days after
Closing; US $1,000,000.00 (One Million United States Dollars)
6
<PAGE> 8
due to Seller twelve months after Closing; and US $1,000,000.00 (One
Million United States Dollars) due twenty-four months after Closing.
1.28 "TAXES" means all foreign, federal, state, provincial, local or other
taxes, fees, levies, duties or other assessments or charges of whatever
kind (including without limitation, income, excise, stamp, transfer,
property, value added, real estate, sales, payroll, gains, gross
receipts, withholding, and franchise taxes imposed by the United States
or any state, county or local government, subdivision or agency
thereof, or any other jurisdiction outside the United States. This
definition shall include any interest, penalties, or additions payable
in connection with such taxes, fees, levies, duties or other
assessments or charges.
1.29 "TECHNOLOGY" means the United States IND and NDA for the Product,
formulation, manufacturing, quality assurance, and packaging procedures
and all the procedures to make and market the Product, safety,
clinical, statistical studies and all other Product-related studies and
their results, published and unpublished studies and their results,
trade secrets exclusively related to the Product, process knowledge and
technological and manufacturing know-how, and developmental studies and
the results, in all cases, including any updates, additions or changes
thereto, and in all cases to the extent these items are exclusively
related to the Product. "Technology License Agreement" means that
Agreement wherein Buyer grants to Seller certain rights related to the
Technology.
1.30 "TRADEMARKS" means those trademarks, registrations and applications
therefor set forth in Schedule 1.01(b), as modified or limited by
Schedule 1.01(b)(i).
1.31 "TRADEMARK ASSIGNMENTS" means the assignments of the Trademarks, which
will be in the form agreed to by Seller and Buyer, to Buyer from
Seller.
1.32 "TRANSACTION DOCUMENTS" means collectively (a) this Agreement; (b) the
Trademark Assignments; (c) the Transition Supply Agreement; (d) the
Assumption Agreement, (e) the Technology License Agreement, and (f) the
Transition Services Agreement. The phrase "the consummation of the
transaction contemplated by this Agreement" or such
7
<PAGE> 9
similar phrases shall include the execution and delivery of the
Transaction Documents.
0.1 "TRANSFER TAXES" means all sales, use, transfer, value added, goods and
services, recording, registration, intangible, documentary, stamp and
similar taxes or fees (including recording fees for deeds, leases,
security interests, bills of sale, assignments and other documents)
imposed or made payable by any Governmental Entity in connection with
the transactions contemplated by the Transaction Documents.
1.34 "TRANSITION SERVICES AGREEMENT" means the agreement, in the form
attached as Schedule 1.34, between Buyer and Seller's appropriate
Affiliate, to be executed as of the Closing, dealing with the
short-term services to be provided by Seller to Buyer.
1.35 "TRANSITION SUPPLY AGREEMENT" means the agreement, in the form attached
as Schedule 1.35, between Buyer and Seller, to be executed as of the
Closing, dealing with the short-term manufacture by Seller or one of
Seller's appropriate Affiliates of Products.
1.35 "WESTERN EUROPE" means the territories and countries: United Kingdom,
Ireland, Scotland, France, Spain, Portugal, Italy, Switzerland,
Belgium, Holland, Germany, Denmark, Sweden, Norway, Luxemburg, Greece,
Poland, Finland, Austria, Andorra, Liechtenstein, Monaco and Republic
of San Marino, plus the European Union and its associated states as may
be added from time to time.
1.36 OTHER DEFINITIONS. Other terms defined in this Agreement, and the
location where they are defined, are:
Location
"AAA" Section 9.03(d)
"AGREEMENT" Preamble
"BUYER" Preamble
"BUYER'S ASSERTION" Section 9.01(b)
"CLAIM" Section 9.03(a)
8
<PAGE> 10
"CONFIDENTIALITY AGREEMENT" Section 6.04
"EVALUATION MATERIALS" Section 6.04
"LOSSES" Section 9.01(a)
"RETURNS AMOUNTS" Section 1.05
"RETURNS OF SELLER'S PRODUCTS" Section 1.05
"SELLER" Preamble
"SELLER'S ASSERTION" Section 9.02(b)
"TAX RECORDS" Section 6.11
"TECHNOLOGY LICENSE AGREEMENT" Section 1.29
9
<PAGE> 11
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.01 PURCHASE PRICE. A description of the details of the Purchase Price, as
agreed to by Seller, Seller's appropriate Affiliates and Buyer prior to
the Closing, is set forth in Schedule 2.01. Seller, Seller's
appropriate Affiliates and Buyer and its Affiliates will not take a
position in any forum that is inconsistent with the details set forth
in Schedule 2.01, including without limitation taking an inconsistent
position on any Tax return, before any Governmental Entity charged with
the collection of any Tax, or in any Action relating to any Tax.
2.02 DELIVERY OF PURCHASE PRICE. In accordance with the terms and upon the
conditions of this Agreement, and in consideration of the sale of the
Acquired Assets to Buyer by Seller and its appropriate Affiliates, at
the Closing, Buyer will deliver to Seller the Purchase Price, in
accordance with the payment terms specified in Section 1.27, in
immediately available funds by wire transfer to an account or accounts
specified by Seller.
2.03 SALE AND PURCHASE OF THE BUSINESS. In accordance with the terms and
upon the conditions of this Agreement, at the Closing, Seller and its
appropriate Affiliates will sell, convey, assign, transfer and deliver
to Buyer the Acquired Assets and Assumed Liabilities, and Buyer will
purchase, acquire, accept and assume, the Acquired Assets and Assumed
Liabilities.
10
<PAGE> 12
ARTICLE III
CLOSING
3.01 ACTIONS TO BE TAKEN AT CLOSING. At the Closing, the following actions
will be taken:
(a) Seller and/or Seller's appropriate Affiliates, will deliver to
Buyer, duly executed, the following:
(i) a bill of sale in a form reasonably acceptable to
Seller, Sellers Affiliates and Buyer for those
Acquired Assets that will not be transferred pursuant
to specific documents described elsewhere in this
Section 3.01(a);
(ii) a certificate by an officer of Seller, in a form
reasonably acceptable to Seller and Buyer, to the
effect that, to the Knowledge of such officer, the
warranties and representations set forth in Article
IV of this Agreement are true and correct as of
Closing;
(iii) the Trademark Assignments, except to the extent that
formalities outside the U.S. require more time to
complete these assignments;
(iv) a receipt for the Purchase Price in a form
reasonably acceptable to Seller, Seller's appropriate
Affiliates and Buyer;
(v) certified copies of any resolutions by Seller's board
of directors, or any other necessary corporate
actions of Seller, authorizing the execution and
performance of this Agreement and the consummation of
the transactions contemplated hereby; and
(vi) such other documents as are, in the reasonable
opinion of counsel for Seller and Buyer, necessary or
desirable to transfer the Assumed Liabilities and
Acquired Assets to Buyer.
(b) Buyer will deliver to Seller, duly executed, the following:
(i) a certificate by an officer of Buyer, in a form
reasonably acceptable to Seller, Seller's appropriate
Affiliates and Buyer, to the effect that, to the
Knowledge of such officer, the warranties and
representations set forth in Article V of this
Agreement are true and correct as of the Closing;
(ii) the Purchase Price, delivered as described in Section
2.02;
11
<PAGE> 13
(iii) a receipt for the Acquired Assets in a form
reasonably acceptable to Seller, Seller's appropriate
Affiliates and Buyer;
(iv) certified copies of any resolutions by Buyer's board
of directors, or any other necessary corporate
actions of Buyer and its Affiliates, authorizing the
execution and performance of this Agreement and the
consummation of the transactions contemplated hereby;
and
(v) such other documents as are, in the reasonable
opinion of counsel for Seller and Buyer, necessary or
desirable to transfer the Assumed Liabilities and
Acquired Assets to Buyer.
(c) Seller and Buyer concurrently will duly execute and deliver to
each other:
i) certificates of incumbency for all officers executing
documents in connection with the Transaction
Documents;
ii) the Transition Services Agreement;
iii) the Technology License Agreement;
(iv) the Transition Supply Agreement; and
(v) the Assumption Agreement.
3.02 INTERDEPENDENCE. The transfers and deliveries described in this Article
III are mutually interdependent and are to be regarded as occurring
simultaneously as of the Effective Time. Unless agreed to in writing by
both Seller and Buyer, no such transfer or delivery will become
effective until all other transfers and deliveries provided for in this
Article III have also become effective.
3.03 TIME AND PLACE OF CLOSING. The Closing shall take place on November 5,
1997 at the offices of Buyer.
12
<PAGE> 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and/or Seller's appropriate Affiliates represent and warrant that the
following are true and correct as of the date of this Agreement, and will be
true and correct as of the Closing.
4.01 AUTHORITY. Seller and/or Seller's appropriate Affiliates have full
corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. All corporate
proceedings on the part of Seller and/or Seller's appropriate
Affiliates that are necessary to approve and authorize the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have occurred, and, assuming proper execution and
delivery by Buyer, this Agreement is enforceable against Seller and/or
Seller's appropriate Affiliates in accordance with its terms and the
Transaction Documents will be enforceable upon execution and delivery
to Buyer, in each case, subject to (a) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors rights and remedies generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief.
4.02 FINANCIAL INFORMATION. To the Knowledge of Seller and/or Seller's
appropriate Affiliates, the Financial Information on Schedule 1.17 is
in accordance with the books and records of Seller and/or Seller's
appropriate Affiliates (except for non-Material errors or omissions).
SELLER AND/OR SELLER'S APPROPRIATE AFFILIATES MAKE NO WARRANTIES OF ANY
TYPE WITH RESPECT TO ANY PORTION OF THE FINANCIAL INFORMATION THAT IS A
PROJECTION.
4.03 FINDER'S FEES AND COMMISSIONS. Neither Seller and/or Seller's
appropriate Affiliates has any liability or obligation to pay any fees
or commissions to any broker, finder or other agent with respect to the
transactions contemplated by this Agreement for which Buyer could
become liable or obligated.
4.04 AUTHORIZATIONS. No Authorization is needed by Seller and/or Seller's
appropriate Affiliates for the execution, delivery, or performance of
this Agreement and the
13
<PAGE> 15
consummation of the transactions contemplated hereby, except where the
failure to obtain such Authorization will not have a Material adverse
effect on this Agreement or the consummation of the transactions
contemplated hereby.
4.05 INFRINGEMENT. Except to an extent not Material, Seller and/or Seller's
appropriate Affiliates' use of the Trademarks in the Geography does not
infringe any trademark of any third Person.
4.06 LITIGATION AND CLAIMS. There is no Action pending or, to the Knowledge
of Seller and/or Seller's appropriate Affiliates, threatened against or
involving Seller and/or Seller's appropriate Affiliates arising out of
Seller and/or Seller's appropriate Affiliates' operation of the
Business or affecting the Acquired Assets or which questions or
challenges the validity of this Agreement or any action to be taken
pursuant hereto, except as set forth in Schedule 4.06, or where such
litigation will not have a material adverse effect on this Agreement or
the consummation of the transactions contemplated hereby.
4.07 ORGANIZATION AND GOOD STANDING. Seller and/or Seller's appropriate
Affiliates are corporations duly organized, validly existing, and in
good standing under the laws of its state of Ohio and is duly
authorized to do business therein, with full corporate power to own
their properties and conduct the Business as presently conducted by
them, except where not Material.
4.08 TITLE TO ACQUIRED ASSETS. Seller and/or Seller's appropriate Affiliates
have and will convey to Buyer good and marketable title to all of the
Acquired Assets used in the Business in the Geography free and clear or
any Material security interests, liens, pledges, claims, charges,
options or other encumbrances.
4.09 VIOLATIONS/BREACHES. To the Knowledge of Seller and/or Seller's
appropriate Affiliates, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby do not
violate any law, rule or regulation or order, judgment, or decree
binding on Seller and/or Seller's appropriate Affiliates and will not
14
<PAGE> 16
result in a breach of any term of the certificate of incorporation,
code of regulation or by-laws of Seller and/or Seller's appropriate
Affiliates or of any contract, agreement or other instrument to which
Seller and/or Seller's appropriate Affiliates is a party, except where
not Material.
4.10 INVENTORY. All inventories of the Business to be purchased by Buyer
hereunder are good, usable and of a quality and quantity which are
saleable in the ordinary course of business for the purpose which is
intended.
15
<PAGE> 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants that the following are true and correct as of the
date of this Agreement, and will be true and correct as of the Closing.
5.01 AUTHORITY. Buyer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. All corporate proceedings on the part of Buyer or its
Affiliates that are necessary to approve and authorize the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have occurred, and, assuming proper execution and
delivery by Seller, this Agreement is enforceable against Buyer in
accordance with its terms and the Transaction Documents will be
enforceable upon execution and delivery to Seller, in each case subject
to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to the enforcement of creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief.
5.02 FINDER'S FEES AND COMMISSIONS. Buyer does not have any liability or
obligation to pay any fees or commissions to any broker, finder or
other agent with respect to the transactions contemplated by this
Agreement for which Seller could become liable or obligated.
5.03 FUNDING. Buyer has sufficient unrestricted, non-contingent funding to
enable Buyer to deliver the Purchase Price in the manner required and
specified in Section 2.02.
5.04 AUTHORIZATIONS. No Authorization is needed by Buyer for the execution,
delivery, or performance of this Agreement and the consummation of the
transactions contemplated hereby, except where the failure to obtain
such Authorization will not have a Material adverse effect on this
Agreement or the consummation of the transactions contemplated hereby.
16
<PAGE> 18
5.05 LITIGATION AND CLAIMS. There is no Action pending or, to the Knowledge
of Buyer, threatened against or involving Buyer which questions or
challenges the validity of this Agreement or any action to be taken
pursuant hereto, except as will not have a Material adverse effect on
this Agreement or the consummation of the transactions contemplated
hereby.
5.06 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the state of
Nevada and is duly authorized to do business therein.
5.07 VIOLATIONS/BREACHES. To the Knowledge of Buyer, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby do not violate any law, rule or regulation or
order, judgment, or decree binding on Buyer and will not result in a
breach of any term of the certificate of incorporation or by-laws of
Buyer or its Affiliates or of any contract, agreement or other
instrument to which Buyer or its Affiliates is a party, except such
violations as will not have a material adverse effect on this Agreement
or the consummation of the transactions contemplated hereby.
17
<PAGE> 19
ARTICLE VI
COVENANTS
6.01 OPERATION OF THE BUSINESS PRIOR TO CLOSING. Except for actions taken
pursuant to the prior written consent of Buyer, Seller from the date of
this Agreement until the Closing will:
(a) conduct the Business in the ordinary course;
(b) continue to meet the contractual obligations of, and pay
obligations relating to, the Business as they mature in the
ordinary course; and
(c) maintain in the ordinary course the business relations of
Seller with their suppliers, business customers and other with
whom they have business relations in connection with the
Business.
6.02 EFFORTS TO CLOSE.
(a) Seller and Buyer will use all commercially reasonable efforts
to cause all of the conditions, as specified in Articles VII
and VIII of this Agreement, to the obligations of the others
to consummate the transactions contemplated hereby to be met
as soon as practicable after the date of this Agreement.
(b) Seller and Buyer will each use its best efforts to obtain, as
soon as practicable, the Authorizations that may be or become
necessary for the performance of its obligations under this
Agreement and the consummation of the transactions
contemplated hereby and will cooperate fully with each other
in promptly seeking to obtain such Authorizations.
6.03 BULK TRANSFER LAWS. Buyer waives compliance by Seller with any laws
relating to bulk transfers and bulk sales applicable to the
transactions contemplated by this Agreement.
6.04 CONFIDENTIALITY.
(a) Except to the extent contrary to the terms of this Agreement,
the terms of the Confidentiality Agreement dated June 4, 1997
and May 23, 1997 between Seller and Buyer (the
"Confidentiality Agreement") are hereby incorporated by
18
<PAGE> 20
reference and will continue in full force and effect until the
Closing, at which time such Confidentiality Agreement will
terminate only in respect of that portion of the Evaluation
Material (as defined in the Confidentiality Agreement) which
relates to the Business. If this Agreement is, for any reason,
terminated prior to the Closing, the Confidentiality Agreement
will continue in full force and effect in accordance with its
terms. Under all circumstances, the Confidentiality Agreement
will continue in full force and effect with respect to that
portion of the Evaluation Material not related to the
Business.
(b) Except as otherwise expressly permitted by this Agreement,
Seller, Buyer and their Affiliates will not disclose the terms
of the Transaction Documents to any Person other than such
directors, officers, shareholders, employees and attorneys of
Seller, Buyer, their Affiliates and their financial advisors,
or such other Persons acting on behalf of or in the interests
of Seller, Buyer and their Affiliates to whom disclosure of
the terms of this Agreement is necessary for the consummation
of the transactions contemplated hereby or the operation of
the Business. Any disclosure permitted by this Section 6.04(b)
will be made on a confidential basis.
(c) Notwithstanding anything to the contrary in this Agreement,
Seller, Buyer and their Affiliates may disclose the terms of
this Agreement to any Person, whether by providing such Person
with photocopies of all or portions thereof or otherwise: (i)
to the extent required by applicable laws, rules or
regulations; (ii) as may be required in the reasonable opinion
of Seller, Buyer, or their Affiliates, as the case may be, in
connection with the consummation of the transactions
contemplated by this Agreement; or (iii) as may be required,
in the reasonable opinion of Seller, Buyer, or their
Affiliates, as the case may be, in the defense of Seller,
Buyer, or their Affiliates in any Action.
(d) If this Agreement is, for any reason, terminated prior to the
Closing, Buyer will promptly return to Seller all copies of
Evaluation Material in its possession or in the possession of
any Person acting on behalf of or in the interests of Buyer or
its Affiliates; provided, however, that the portion of the
Evaluation Material which consists of analyses, compilations,
studies or other documents prepared by Buyer or its Affiliates
or any Person acting on their behalf of in their interest will
be destroyed and such destruction will be confirmed in writing
to Seller.
19
<PAGE> 21
(e) Any press releases, public announcements or similar publicity
with respect to this Agreement or the transactions
contemplated hereby must be approved by both Seller and Buyer
in advance, provided that such approval may not be
unreasonably withheld or delayed, and further provided that
nothing herein will prevent Seller or Buyer or their
Affiliates, upon reasonable notice to the other, from making
public announcements to comply with the requirements of law or
any listing agreement with any national securities exchange or
to inform their respective employees of the transactions
contemplated by this Agreement.
6.05 COOPERATION IN LITIGATION. Seller and Buyer will, in the defense of any
third-party Action relating to the Business, make available during
normal business hours, but without unreasonably disrupting their
respective businesses, all personnel and records of the Business
reasonably necessary to permit the effective defense or investigation
of such Action. If information other than that pertaining to the
Business is contained in such records, Seller and Buyer will either
agree that such information may be omitted or redacted by the producing
party, or will enter into appropriate secrecy commitments to protect
such information.
6.06 COOPERATION IN TAX MATTERS. Seller and Buyer will make available during
normal business hours, but without unreasonably disrupting their
respective businesses, all personnel and records of the Business
reasonably necessary in connection with the filing of any Tax return,
amended return or claim for refund; determining a liability for Taxes
or a right to refund for Taxes; or in conducting an audit or other
proceeding in respect of Taxes.
6.07 COOPERATION OF THIRD PERSONS. Where the cooperation of third Persons
such as insurers or trustees would be necessary in order for a party to
completely fulfill its obligations under this Agreement the Transaction
Documents, such party will use all reasonable efforts to cause such
third Persons to provide such cooperation.
6.08 EXPENSES. Buyer shall pay all expenses, including all taxes, relating
to the transfer of the registrations for the Trademarks specified in
Schedule 1.01(b). Buyer shall pay all expenses involved with
preparation of deeds of assignment for the Trademarks and
20
<PAGE> 22
the assignment of the Trademarks. Buyer agrees to pay all Trademark
expenses incurred after the Closing. Buyer will assume management of
the Trademarks at Closing. Seller will cooperate with Buyer in
executing the deeds of assignment, however, in no event shall Seller be
obligated to execute deeds of assignment later than six (6) months
after Closing. Except as otherwise provided in this Agreement, whether
or not the transactions contemplated by this Agreement are consummated,
each of Seller and Buyer shall bear its own costs and expenses, except
that all Taxes and Transfer Taxes in connection with the transactions
contemplated by this Agreement (except Taxes on the income of Seller)
will be borne by Buyer.
6.09 INTELLECTUAL PROPERTY ASSIGNMENT RECORDATION. Seller will, at Buyer's
cost and expense, arrange for the drafting and notarization,
authentication, legalization, and/or consularization (as may be
required) of the Trademark Assignments. It is the Buyer's sole
responsibility to record or cause to be recorded such documents with
the appropriate authorities.
6.10 ADDITIONAL DOCUMENTS. Except as stated elsewhere in this Agreement,
from time to time after the Closing, Seller and Buyer will execute and
deliver, without further consideration, such documents as any of them
may reasonably request, in such form as may be appropriate, if
necessary or advisable in connection with the consummation of the
transactions contemplated by this Agreement.
6.11 TAX RECORDS. Buyer will preserve and keep all Books and Records
received from Seller relating to Tax matters of the Business ("Tax
Records") until the expiration of the appropriate statutes of
limitations with respect to such Tax matters or seven (7) years,
whichever is longer. Until such expiration, representatives of Seller
will, upon reasonable notice, have access to such Tax Records during
normal business hours to, examine, inspect and copy them.
6.12 USE OF SELLER'S NAME OR REPUTATION/PACKAGING MATERIALS. Except as
specifically set forth herein, Buyer will not operate the Business
utilizing, based on or taking advantage of the name, reputation or
corporate goodwill of Seller. Except as
21
<PAGE> 23
otherwise provided in the Transitional Supply Agreement, Buyer will
cease use of packaging, advertising, sales and promotional materials
bearing any of Seller's corporate names, product identification numbers
or consumer information telephone numbers beginning three (3) months
after the Closing, or such shorter period if limited by the
requirements of any law or regulation. Buyer will incur cost for art
work, proofs, plates, stickering and other associated costs. Buyer will
maintain quality standards for Products at least equal to those
maintained by Seller at the time of the Closing for so long as Buyer
continues to use any packaging, advertising, sales or promotional
materials bearing the corporate names, product identification numbers
or consumer information telephone numbers of Seller.
6.13 CONSENT TO ASSIGN. Prior to Closing, Seller will use commercially
reasonable efforts to obtain the consent of any third-party to any
Contract to the extent exclusively related to the Business, which
consent is required for the assignment of any such contract or any
portion thereof from Seller to Buyer. At Closing, Seller will assign
all contracts for which consent has been obtained and Buyer shall
assume all obligations and liabilities related thereto.
6.14 ADDITIONAL RECORDS. Within a reasonable time after Closing, Seller
shall provide to Buyer books, records or other documents, if any, which
are not exclusively related to the Business but which are necessary for
the operation of the Business. Seller may redact from such copies any
information which does not relate to the Business and Buyer shall have
the right to use such copies in connection with its operation and
ownership of the Business.
6.15 PRODUCT RETURNS. Buyer shall not encourage Returns of Seller's Products
out of the ordinary course of Business.
6.16 NOTIFICATION OF CUSTOMERS. Seller agrees to cooperate with Buyer, at
Buyer's request, in the notification to customers of the Business of
the transactions contemplated by this Agreement. Such notification (the
"Joint Notice") shall be in such form as is reasonably satisfactory to
Buyer and Seller. Each Party will prepare a notice for their own use
which is acceptable to the other Party. The Parties shall cooperate
22
<PAGE> 24
in similar written notification to the managed care organizations
referenced in Schedule 1.05(f), and Seller shall undertake reasonable
efforts to identify such organizations and provide Buyer, where
permitted by the Contracts, a summary of the material terms and
conditions of each such Contract.
6.17 FEDERAL AND STATE REBATES. The Parties agree that the rights and
responsibilities created by Section 4401 of the Omnibus Budget
Reconciliation Act of 1990 (Public Law 101-508) (the "Medicaid Law")
and other federal and state rebate programs will be apportioned as
follows:
(a) Reporting. Seller will be responsible for filing with
appropriate state and federal agencies all information
required by the Medicaid Law and the laws of individual states
for Products bearing Seller's NDC Codes. If Buyer enters into
an agreement with HCFA or state authorities, Buyer will bear
the same responsibility for Products sold by Buyer.
(b) Rebates. For a period of 12 months after the Closing Date,
Seller shall pay, and assumes all other responsibility for,
all monies due and owing to applicable federal or state
authorities under the Medicaid and state rebate programs or to
non-wholesaler customers pursuant to Product discounts or
similar agreements for Seller's NDC codes for the Products.
For all such monies which become due and owing more than 12
months after the Closing Date, Buyer shall be liable.
(c) Chargebacks. For a period of 12 months after the Closing Date,
Seller shall pay, and assumes all other responsibility for,
all monies due and owing to wholesalers arising from Product
discount or similar agreements or federal and state government
contracts under applicable programs for Seller's NDC codes for
the Products. For all such monies which become due and owing
more than 12 months after the Closing Date, Buyer shall be
liable.
1. SELLER'S RIGHT TO HAVE ACCESS TO THE TECHNOLOGY. Buyer shall give
Seller and/or Seller's appropriate Affiliates access to the Technology
for Seller's use in Western Europe.
23
<PAGE> 25
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
All obligations of Seller to sell the Acquired Assets, to transfer the Business,
and to perform any other action at the Closing are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions, any of which
may be waived by Seller in whole or in part without written or oral notice of
such waiver to Buyer.
7.01 AUTHORIZATIONS/WAITING PERIODS. All Authorizations legally required for
the Closing will have been obtained, except where failure to obtain
such Authorizations will not have a Material adverse effect on this
Agreement or the consummation of the transactions contemplated hereby.
7.02 NO INJUNCTION/ORDER. No preliminary or permanent injunction or other
order will have been issued that would make unlawful the consummation
of the transactions contemplated by this Agreement.
7.03 PERFORMANCE OF BUYER'S OBLIGATIONS. Buyer will have fully performed all
commitments required by this Agreement to be performed prior to Closing
(except for those which, in the aggregate, will not have a material
adverse effect on this Agreement or the consummation of the
transactions contemplated hereby) and will have tendered at the Closing
the Purchase Price and the documents required in Section 3.01(b) and
(c).
7.04 BUYER'S REPRESENTATIONS AND WARRANTIES TRUE. All representations and
warranties of Buyer contained in this Agreement will be true and
correct as of the Closing, except for those which, in the aggregate,
will not have a material adverse effect on this Agreement or the
consummation of the transactions contemplated hereby.
24
<PAGE> 26
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
All obligations of Buyer to purchase the Acquired Assets, to assume the Assumed
Liabilities, and to perform any other action at the Closing are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any of which may be waived by Buyer in whole or in part without written or oral
notice of such waiver to Seller.
8.01 AUTHORIZATIONS/WAITING PERIODS. All Authorizations legally required for
the Closing will have been obtained, except where failure to obtain
such Authorizations will not have a material adverse effect on this
Agreement or the consummation of the transactions contemplated hereby.
8.02 NO INJUNCTION/ORDER. No preliminary or permanent injunction or other
order will have been issued that would make unlawful the consummation
of the transactions contemplated by this Agreement.
8.03 PERFORMANCE OF SELLER'S OBLIGATIONS. Seller will have fully performed
all commitments required by this Agreement to be performed prior to
Closing, except for those which, in the aggregate are not Material, and
will have tendered at the Closing the documents required in Section
3.01(a) and (c).
8.04 SELLER'S REPRESENTATIONS AND WARRANTIES TRUE. All representations and
warranties of Seller contained in this Agreement will be true and
correct as of the Closing, except for those which, in the aggregate,
are not Material.
25
<PAGE> 27
ARTICLE IX
INDEMNIFICATION AND ARBITRATION
9.01 INDEMNIFICATION BY SELLER.
(a) Subject to the terms and conditions of this Agreement, Seller
will defend, indemnify and hold Buyer harmless from and
against: (i) all claims, losses, liabilities, damages, costs
and expenses (including without limitation reasonable fees and
expenses of attorneys incurred in investigation or defense) of
any third-party Action arising out of or related to an
Excluded Liability or breach of a representation and warranty
or covenant of Seller in this Agreement (collectively called
"Losses"); and (ii) all costs and expenses of Buyer (including
without limitation reasonable fees and expenses of attorneys)
incurred in connection with the successful enforcement of any
rights of Buyer under the indemnity provided in this Section
9.01.
(b) Promptly after receipt by Buyer of notice of any Action in
respect of which indemnity may be sought against Seller
hereunder (for purposes of this Section 9.01, a "Buyer's
Assertion"), Buyer will notify Seller in writing of the
Buyer's Assertion, but the failure to so notify Seller will
not relieve Seller of any liability it may have to Buyer,
except to the extent Seller has suffered actual prejudice
thereby. Seller will be entitled to participate in and, to the
extent Seller elects by written notice to Buyer within thirty
(30) days after receipt by Seller of notice of such Buyer's
Assertion, to assume the defense of such Buyer's Assertion, at
its own expense, with counsel chosen by it which will be
reasonably satisfactory to Buyer. With respect to any such
Buyer's Assertion, Buyer will promptly provide Seller with:
(i) notice and copies of any documents served upon Buyer; and
(ii) all reasonable cooperation which Seller deems necessary
to defend such Buyer's Assertion, including without limitation
providing Seller and its outside attorneys access to any
potentially-relevant documents, information, or individuals
within the control of Buyer, other than any privileged
documents. If business information of Buyer other than that
pertaining to the Business is contained in such documents or
information, Seller and Buyer will enter into
26
<PAGE> 28
appropriate secrecy commitments to protect such documents or
information. Notwithstanding that Seller may have elected by
written notice to assume the defense of any Buyer's Assertion,
Buyer will have the right to participate in the investigation
and defense thereof, with separate counsel chosen by Buyer,
but in such event the fees and expenses of Buyer (above those
which would otherwise have been incurred) and such separate
counsel will be paid by Buyer.
(c) Notwithstanding anything in this Section 9.01 to the contrary:
(i) Seller will have no obligation with respect to any Buyer's
Assertion if, in connection therewith, Buyer, without the
written consent of Seller, settles or compromises any Action
or consents to the entry of any judgment; and (ii) Seller will
not, without the written consent of Buyer with respect to any
Buyer's Assertion: (A) settle or compromise any Action or
consent to the entry of any judgment which does not include as
an unconditional term thereof the delivery by the claimant or
plaintiff to Buyer of a duly executed written release of Buyer
from all liability in respect of such Action, which release
will be reasonably satisfactory in form and substance to
counsel for Buyer; or (B) settle or compromise any Action in
any manner that, in the sole judgment of Buyer or its counsel,
may materially adversely affect Buyer other than as a result
of money damages or other money payments.
(d) Upon the payment of any settlement or judgment pursuant to
this Section 9.01 with respect to any Buyer's Assertion,
Seller will be subrogated to all rights and remedies of Buyer
against any third party in respect of such Buyer's Assertion
to the extent of the amount so paid by Seller.
(e) The indemnity provided for by this Section 9.01 will be
Buyer's exclusive source of recovery against Seller with
respect to matters covered hereby.
9.02 INDEMNIFICATION BY BUYER.
(a) Subject to the terms and conditions of this Agreement, Buyer
will defend, indemnify and hold Seller harmless from and
against: (i) all claims, losses, liabilities, damages, costs
and expenses (including without limitation reasonable fees and
expenses of attorneys incurred in investigation or defense) of
any third-party Action arising out of or related to an Assumed
Liability or breach of
27
<PAGE> 29
a representation and warranty or covenant of Buyer in this
Agreement (collectively called "Losses"); and (ii) all costs
and expenses of Seller (including without limitation
reasonable fees and expenses of attorneys) incurred in
connection with the successful enforcement of any rights of
Seller under the indemnity provided in this Section 9.02.
(b) Promptly after receipt by Seller of notice of any Action in
respect of which indemnity may be sought against Buyer
hereunder (for purposes of this Section 9.02, a "Seller's
Assertion"), Seller will notify Buyer in writing of the
Seller's Assertion, but the failure to so notify Buyer will
not relieve Buyer of any liability it may have to Seller,
except to the extent Buyer has suffered actual prejudice
thereby. Buyer will be entitled to participate in and, to the
extent Buyer elects by written notice to Seller within thirty
(30) days after receipt by Buyer of notice of such Seller's
Assertion, to assume the defense of such Seller's Assertion,
at its own expense, with counsel chosen by it which will be
reasonably satisfactory to Seller. With respect to any such
Seller's Assertion, Seller will promptly provide Buyer with:
(i) notice and copies of any documents served upon Seller; and
(ii) all reasonable cooperation which Buyer deems necessary to
defend such Seller's Assertion, including without limitation
providing Buyer and its outside attorneys access to any
potentially-relevant documents, information, or individuals
within the control of Seller, other than any privileged
documents. If business information of Seller other than that
pertaining to the Business is contained in such documents or
information, Seller and Buyer will enter into appropriate
secrecy commitments to protect such documents or information.
Notwithstanding that Buyer may have elected by written notice
to assume the defense of any Seller's Assertion, Seller will
have the right to participate in the investigation and defense
thereof, with separate counsel chosen by Seller, but in such
event the fees and expenses of Seller (above those which would
otherwise have been incurred) and such separate counsel will
be paid by Seller.
(c) Notwithstanding anything in this Section 9.02 to the contrary:
(i) Buyer will have no obligation with respect to any Seller's
Assertion if, in connection therewith, Seller, without the
written consent of Buyer, settle or compromise any Action or
consent to the entry of any judgment; and (ii) Buyer will not,
without the written consent of Seller with respect to any
Seller's Assertion: (A) settle or
28
<PAGE> 30
compromise any Action or consent to the entry of any judgment
which does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to Seller of a duly
executed written release of Seller from all liability in
respect of such Action, which release will be reasonably
satisfactory in form and substance to counsel for Seller; or
(B) settle or compromise any Action in any manner that, in the
sole judgment of Seller or their counsel, may materially
adversely affect Seller other than as a result of money
damages or other money payments.
(d) Upon the payment of any settlement or judgment pursuant to
this Section 9.02 with respect to any Seller's Assertion,
Buyer will be subrogated to all rights and remedies of Seller
against any third party in respect of such Seller's Assertion
to the extent of the amount so paid by Buyer.
(e) The indemnity provided for by this Section 9.02 will be
Seller's and Seller's appropriate Affiliates' exclusive source
of recovery against Buyer with respect to matters covered
hereby.
9.03 DISPUTE RESOLUTION.
(a) Any dispute, controversy, claim, action, litigation, suit or
cause of action asserted by Seller against Buyer or by Buyer
against Seller (a "Claim") arising out of or related to the
Transaction Documents, including without limitation any Claim
for indemnification pursuant to Article IX hereof or any issue
as to whether or not a Claim is arbitrable, will be resolved
pursuant to the procedures described in this Section 9.03.
(b) Should any Claim arise, Seller, Seller's appropriate
Affiliates and Buyer will first attempt to resolve such Claim
by entering into good faith negotiations by or among their
appropriate employees or officers. Such negotiations will
commence as soon as practicable after Seller, Seller's
appropriate Affiliates and Buyer have each received notice of
such Claim, but no later than ten (10) days after such
receipt, and will terminate thirty (30) calendar days after
such commencement. During negotiations, Seller, Seller's
appropriate Affiliates and Buyer will not have the right to
any discovery unless agreed to by each of Seller, Seller's
appropriate Affiliates and Buyer.
29
<PAGE> 31
(c) Any Claim which has not been resolved pursuant to Section
9.03(b) of this Agreement will be referred to good faith
negotiations by or among one or more Vice Presidents of
Seller, Seller's appropriate Affiliates and Buyer. Such
negotiations will commence as soon as practicable after
termination of the negotiations described in Section 9.03(b),
but not later than ten (10) business days thereafter, and will
terminate thirty (30) calendar days after such commencement.
During the negotiations, Seller, Seller's appropriate
Affiliates and Buyer will not have the right to any discovery
unless agreed to by each of Seller, Seller's appropriate
Affiliates and Buyer.
a. Any Claim which has not been resolved pursuant to Section
9.03(c) of this Agreement will be determined by arbitration.
The arbitration will be conducted by one arbitrator, who will
be appointed pursuant to the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). The arbitration
will be held in Cincinnati, Ohio and will be conducted in
accordance with the Commercial Arbitration Rules of the AAA,
except that the rules set forth in this Section 9.03(d) will
govern such arbitration to the extent they conflict with the
rules of the AAA. Seller, Seller's appropriate Affiliates and
Buyer will use their best efforts to cause the arbitration to
be conducted in an expeditious manner. Seller, Seller's
appropriate Affiliates and Buyer will use their best efforts
to cause the arbitration to be completed within sixty (60)
days after selection of the arbitrator. In the arbitration,
Ohio law will govern, except to the extent that those laws
conflict with the Commercial Arbitration Rules of the AAA and
the provisions of this Section 9.03(d). There will be no
discovery except as the arbitrator will permit following a
determination by the arbitrator that the person seeking such
discovery has a substantial demonstrable need. All other
procedural matters will be within the discretion of the
arbitrator. In the event a person fails to comply with the
procedures in any arbitration in a manner deemed material by
the arbitrator, the arbitrator will fix a reasonable period of
time for compliance and, if the person does not comply within
said period, a remedy deemed just by the arbitrator, including
an award of default, may be imposed. The determination of the
arbitrator will be final and binding on the Seller, Seller's
appropriate Affiliates and Buyer. Judgment upon the award
30
<PAGE> 32
rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
9.04 DAMAGE LIMITATIONS.
(a) Notwithstanding anything to the contrary in the Transaction
Documents, none of Seller, Seller's Affiliates nor Buyer will
be permitted to recover any consequential, indirect, or
punitive damages arising out of or related to the Transaction
Documents, regardless of the form of the Claim, including
without limitation Claims for indemnification, tort, breach of
contract, warranty, representation or covenant.
(b) Seller's and Seller's Affiliates' aggregate liability arising
out of or related to the Transaction Documents, except for
Excluded Liabilities (Seller's and Seller's Affiliates'
liability for which will not be subject to any limitation
pursuant to this Section 9.04(b)), regardless of the form of
the Claim or Action, including, without limitation, Claims or
Actions for indemnification, tort, breach of contract,
warranty, representation or covenant, is limited to the amount
by which all liabilities exceed US$ 100,000, and in no event
will Seller's and Seller's Affiliates' aggregate liability
exceed a total of US $ 800,000.
(c) Buyer's aggregate liability arising out of or related to this
Agreement the Transaction Documents, excluding any liability
for the payment of any portion of the Purchase Price, any Tax
matters, the purchase price of any Products of the Business
purchased by Buyer pursuant to the Transition Supply Agreement
and any Assumed Liabilities (Buyer's liability for which will
not be subject to any limitation pursuant to this Section
9.04(b)), regardless of the form of the Claim or Action,
including without limitation Claims or Actions for
indemnification, tort, breach of contract, warranty,
representation or covenant, is limited to the amount by which
all liabilities exceed US$ 100,000, and in no event will
Buyer's aggregate liability exceed a total of US$ 800,000.
(d) In the event any Claim or Action hereunder results in a Tax
benefit or is an insured loss to the indemnified Person, the
indemnifying Person will be entitled to a credit against any
liability thereunder in the amount by which any Taxes of the
indemnified Person will be reduced by reason of any deduction
or adjustment allowed the indemnified Person for any payment,
settlement or
31
<PAGE> 33
satisfaction of such claim, as well as in the amount of and to
the extent of any insurance proceeds to which the indemnified
Person is entitled. For the purposes hereof, it will be
presumed that the maximum possible Tax benefit is derived in
the shortest time period possible.
ARTICLE X
TERMINATION AND ABANDONMENT
10.01 TERMINATION. This Agreement may be terminated at any time prior to
closing:
(a) by consent of Seller and Buyer;
(b) by any of Seller or Buyer if the Closing has not occurred by
November 30, 1997, provided that the terminating Person is not
then in default hereunder; or
(c) by any of Seller or Buyer if any Governmental Entity has
issued a final, non-appealable order, decree or ruling
permanently enjoining or prohibiting the consummation of the
transactions contemplated by this Agreement.
10.02 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination of
this Agreement and abandonment of the transactions contemplated hereby
pursuant to Section 10.01 hereof, written notice thereof will promptly
be given to all appropriate entities and this Agreement will terminate
and the transactions contemplated hereby will be abandoned, without
further action by any of the Seller or Buyer, and without additional
liability of the part of any of them or their Affiliates, directors,
officers, shareholders, employees, contractors and agents, except for
Sections 6.03, 6.04, 6.05, 6.06, 6.08, and 9.03, and any definitions
pertaining thereto, which sections will continue to bind the parties as
necessary to effectuate their purpose. Nothing contained in this
Section 10.02 will release any of Seller or Buyer from liability for
any breach of this Agreement prior to its termination.
32
<PAGE> 34
ARTICLE XI
MISCELLANEOUS
11.01 AMENDMENT AND MODIFICATION. The Transaction Documents may be amended,
modified, or supplemented only by the written agreement of Seller and
Buyer. Seller and Buyer explicitly agree amendments, modifications and
supplements to the Transaction Documents need not be executed by any of
Seller's appropriate Affiliates, unless their written consent or
authorization is considered reasonably necessary by Buyer.
11.02 WAIVER OF COMPLIANCE. Except as otherwise provided in the Transaction
Documents, the failure by any Person to comply with any obligation,
covenant, agreement or condition under such agreements may be waived by
the Person entitled to the benefit thereof only by a written instrument
signed by the Person granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant,
agreement or condition will not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. The failure of any
Person to enforce at any time any of the provisions of such agreements
will in no way be construed to be a waiver of any such provision, nor
in any way to affect the validity of such agreements or any part
thereof or the right of any person thereafter to enforce each and every
such provision. No waiver of any breach of such provisions will be held
to be waiver of any other or subsequent breach.
11.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; OTHER MATTERS. Each and
every representation and warranty and covenant of Seller or Buyer
contained in this Agreement will survive any investigation and will not
be extinguished by the Closing, but will survive for a period of six
(6) months from the Closing Date, except that the Representation and
Warranties and covenants as stated in Sections 5.03, 6.04, 6.05, 6.06,
6.08, 6.09, 6.11 and 6.18 shall continue in perpetuity. No party may
initiate any Claim nor will any party be responsible for any Action
arising out of or related to a breach of a representation or warranty
under this Agreement, regardless of the form of the Claim or Action,
including, without limitation, indemnification, tort, breach of
33
<PAGE> 35
contract, warranty or representation, unless such Claim or Action is
initiated prior to the expiration of the relevant representation or
warranty.
11.04 NOTICES. All notices required or permitted pursuant to this Agreement
will be in writing and will be deemed to be properly given when
actually received by the person entitled to receive the notice at the
address stated below, or at such other address as a party may provide
by notice to the other:
Seller:
Mailing Delivery
The Procter & Gamble Company The Procter & Gamble Company
P.O. Box 599 One Procter & Gamble Plaza
Cincinnati, OH 45201 Cincinnati, OH 45202
ATTENTION: Legal Division, Associate General Counsel-Health Care
WITH A COPY TO: Corporate Acquisitions & Divestitures, Director
Zila Pharmaceuticals, Inc.:
Mailing Delivery
5227 North 7th Street 5227 North 7th Street
Phoenix, Arizona 85014-2800 Phoenix, Arizona 85014-2800
ATTENTION: Rocco J. Anselmo, President
WITH A COPY TO: Brad Anderson, Vice-President, Treasurer
11.05 EXHIBITS AND SCHEDULES; INCORPORATION BY REFERENCE. The Schedules
attached to this Agreement, each when executed and delivered, are
incorporated by reference into and made a part of this Agreement. The
fact that any document, asset, item, action, entity, event, condition,
claim, agreement, or other matter (hereinafter collectively referred to
as "Matter") is set forth or described or referred to in any one or
more exhibits or schedules will not be construed as a representation,
warranty, acknowledgment or admission by any person or as evidence that
such Matter is, or
34
<PAGE> 36
may at any time be or have been, Material or in any way significant to
the transactions contemplated by this Agreement.
11.06 SUCCESSORS AND ASSIGNS. The Transaction Documents will be binding upon
and will inure to the benefit of the signatories hereto and their
respective successors and permitted assigns. Neither Seller, Seller's
appropriate Affiliates nor Buyer may assign any of the Transaction
Documents, or any of their rights or liabilities thereunder, without
the prior written consent of the other signatories thereto, provided
that Seller, Seller's appropriate Affiliates and Buyer may so assign in
whole or in part, to one or more of their Affiliates. Any such
assignment will not relieve the Person making the assignment from any
liability under such agreements.
11.07 ENTIRE AGREEMENT. The Transaction Documents constitute the entire
agreement between the signatories hereto with respect to the subject
matter thereof and will supersede all previous negotiations,
commitments, and writings with respect to such subject matter.
11.08 SEVERABILITY. The illegality or partial illegality of any or all of the
Transaction Documents, or any provision thereof, will not affect the
validity of the remainder of the such agreements, or any provision
thereof, and the illegality or partial illegality of any such
agreements will not affect the validity of any such agreement in any
jurisdiction in which such determination of illegality or partial
illegality has not been made, except in either case to the extent such
illegality or partial illegality causes such agreements to no longer
contain all of the material provisions reasonably expected by the
signatories to be contained therein.
11.09 CAPTIONS. The captions appearing in the Transaction Documents are
inserted only as a matter of convenience and as a reference and in no
way define, limit or describe the scope or intent of such agreements or
any of the provisions thereof.
11.10 COUNTERPARTS. This Transaction Documents may be executed in one or more
counterparts, each of which will be deemed to be an original, but all
of which will constitute one agreement.
35
<PAGE> 37
11.11 GOVERNING LAW. The Transaction Documents will be governed by and
construed in accordance with the laws of Ohio, whether common law or
statutory, without reference to the choice of law provisions thereof.
IN WITNESS WHEREOF, each of the signatories hereto has caused this
Agreement to be signed by their respective duly authorized officers as
of the date first above written.
THE PROCTER & GAMBLE COMPANY ZILA PHARMACEUTICALS, INC.
By: /s/ Bruce Byrnes By: /s/ Rocco Anselmo
Name Printed: BRUCE BYRNES Name Printed: ROCCO ANSELMO
Title: Title: PRESIDENT
36
