<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
or the transition period from to
Commission file number 0-18443
MEDICIS PHARMACEUTICAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 52-1574808
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4343 East Camelback Road, Suite 250
Phoenix, Arizona 85018-2700
(Address of principal executive offices)
(602) 808-8800
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at April 18, 1997
----- ------------------------------
<S> <C>
Class A Common Stock $.014 Par Value 13,944,750
Class B Common Stock $.014 Par Value 281,974
</TABLE>
<PAGE> 2
MEDICIS PHARMACEUTICAL CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1-- Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1997, and June 30, 1996 3
Condensed Consolidated Statements of
Operations for the Three Months and Nine Months
Ended March 31, 1997, and 1996 5
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended
March 31, 1997, and 1996 6
Notes to the Condensed Consolidated Financial
Statements 7
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6 -- Exhibits and Reports on Form 8-K 14
SIGNATURE 15
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEDICIS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, 1997 June 30, 1996
-------------- -------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 27,823,391 $ 7,956,050
Short-term investments 49,167,969 --
Accounts receivable, net 8,726,545 5,210,704
Inventories, net 2,202,418 2,080,014
Deferred tax assets 5,000,000 3,000,000
Other current assets 2,296,891 738,911
------------- ------------
Total current assets 95,217,214 18,985,679
------------- ------------
Property and equipment:
Furniture and equipment 448,982 336,544
Leasehold improvements 170,000 170,000
Less accumulated depreciation (180,914) (100,897)
------------- ------------
Net property and equipment 438,068 405,647
------------- ------------
Intangible assets:
Intangible assets related to
product acquisitions 37,010,154 9,168,853
Other intangible assets 1,403,326 203,326
Less accumulated amortization (2,912,887) (2,450,705)
------------- ------------
Net intangible assets 35,500,593 6,921,474
------------- ------------
Other non-current assets 1,000,000 --
------------- ------------
$ 132,155,875 $ 26,312,800
============= ============
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE> 4
MEDICIS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 1997 June 30, 1996
-------------- -------------
(unaudited) (audited)
<S> <C> <C>
LIABILITIES
Current liabilities:
Accounts payable $ 4,346,947 $ 3,371,184
Accrued salaries and wages -- 204,750
Notes payable 10,325 10,000
Accrued incentives 702,649 1,184,111
Accrued royalties 571,746 552,952
Other accrued liabilities 2,324,316 1,262,134
------------- ------------
Total current liabilities 7,955,983 6,585,131
------------- ------------
Long-term liabilities:
Notes payable 111,335 116,580
Other non-current liabilities 127,528 151,437
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.01 par value, 5,000,000 -- --
shares authorized; no shares issued
Class A Common Stock, $0.014 par value,
shares authorized: 50,000,000; 13,944,750
and 10,224,543 issued and outstanding at 195,227 143,143
March 31, 1997 and at June 30, 1996,
respectively
Class B Common Stock, $0.014 par value,
1,000,000 shares authorized; 281,974
issued and outstanding at
March 31, 1997 and 3,948 3,948
at June 30, 1996
Additional paid-in capital 137,459,602 44,202,441
Accumulated deficit (13,697,748) (24,889,880)
------------- ------------
Total stockholders' equity 123,961,029 19,459,652
------------- ------------
$ 132,155,875 $ 26,312,800
============= ============
</TABLE>
The accompanying notes are an integral part of this statement.
4
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MEDICIS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 10,976,107 $ 7,016,209 $ 26,752,138 $ 18,038,872
------------ ------------ ------------ ------------
Operating costs and expenses:
Cost of product revenue 2,477,062 1,975,273 6,684,535 5,074,519
Selling, general and administrative 4,435,926 2,965,373 11,199,278 8,067,885
Research and development 360,166 186,660 972,998 607,700
Depreciation and amortization 248,619 146,869 546,846 432,160
------------ ------------ ------------ ------------
Operating costs and expenses 7,521,773 5,274,175 19,403,657 14,182,264
------------ ------------ ------------ ------------
Operating income 3,454,334 1,742,034 7,348,481 3,856,608
Interest income 1,242,190 53,288 2,677,090 85,731
Interest expense (2,844) (28,941) (19,312) (66,755)
Income tax benefit (expense), net (356,729) (7,235) 1,185,873 (66,413)
------------ ------------ ------------ ------------
Net income $ 4,336,951 $ 1,759,146 $ 11,192,132 $ 3,809,171
============ ============ ============ ============
Net income per common and common
equivalent share $ 0.29 $ 0.16 $ 0.81 $ 0.36
============ ============ ============ ============
Shares used in computing net income
per common and common
equivalent share 15,149,944 10,846,818 13,850,304 10,439,318
============ ============ ============ ============
</TABLE>
5
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MEDICIS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Net income $ 11,192,132 $ 3,809,171
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 546,846 432,160
Provision for losses on accounts receivable 255,000 60,000
Deferred income tax benefit (2,000,000) --
Accretion of discount on investments (259,677) --
Non-cash interest -- 13,100
Other non-cash expenses 58,500 5,000
Change in operating assets and liabilities
Inventories (122,404) (342,903)
Accounts receivable (3,770,841) (830,631)
Accounts payable 975,763 81,153
Interest payable -- 23,268
Accrued salaries and wages (204,750) --
Accrued royalty payable 18,794 (2,194)
Accrued incentives (481,462) 138,588
Other current liabilities 259,952 (18,067)
Other current assets (1,057,980) (454,923)
------------ -----------
Net cash provided by operating activities 5,409,873 2,913,722
------------ -----------
Cash flows from investing activities:
Purchase of property and equipment (117,086) (156,730)
Payment for intangible assets (28,239,512) (16,667)
Purchase of available-for-sale investments (56,270,461) --
Sale of available-for-sale investments 7,185,861 --
Increase in other assets (1,500,000) --
------------ -----------
Net cash used in investing activities (78,941,198) (173,397)
------------ -----------
Cash flows from financing activities:
Proceeds from the exercise of stock options 3,308,843 909,020
Payments of notes payable (4,478) (770,463)
Payment of other non-current liabilities (23,909) --
Proceeds from common stock sale 90,118,210 --
Proceeds from the issuance of note payable -- 23,910
------------ -----------
Net cash provided by financing activities 93,398,666 162,467
------------ -----------
Net increase in cash and cash equivalents 19,867,341 2,902,792
Cash and cash equivalents at beginning of period 7,956,050 953,438
------------ -----------
Cash and cash equivalents at end of period $ 27,823,391 $ 3,856,230
------------ -----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 19,312 $ 30,387
Taxes 759,364 136,147
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE> 7
MEDICIS PHARMACEUTICAL CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION
Medicis Pharmaceutical Corporation ("Medicis" or the "Company") is an
independent pharmaceutical company headquartered in Phoenix, Arizona that
develops, markets and sells prescription and non-prescription
(over-the-counter) products exclusively to treat dermatological
conditions. Emphasizing the clinical effectiveness, quality, affordability
and cosmetic elegance of its products, the Company has achieved a leading
position in the treatment of acne and acne-related conditions using
prescription pharmaceuticals, while also offering the leading domestic
over-the-counter ("OTC") fade cream product line. The Company has built
its business through the successful introduction of the DYNACIN(R) and
TRIAZ(R) products for the treatment of acne, and the acquisition of the
ESOTERICA(R) fade cream product line. On February 24, 1997, Medicis
acquired the prescription topical corticosteroid brands LIDEX(R) and
SYNALAR(R). These topical corticosteroids combat inflammatory skin
diseases by reducing swelling and pain, relieving itching and constricting
blood vessels in the skin. The LIDEX(R) and SYNALAR(R) product lines
consist of various potencies and cosmetically elegant formulations,
allowing dermatologists to prescribe the most appropriate product based on
the severity and location of the patients condition. Additionally, Medicis
has formed a new business unit, TX SYSTEMS(TM) by Medicis to market
cosmetic dermatology treatments to dermatologists nationwide for
administration and dispensing to patients. Through the TX SYSTEMS(TM) by
Medicis business unit, two new skin treatments were introduced to improve
the texture and appearance of the skin - AFIRM(TM), a patented retinol
cream, and BETA-LIFTX(TM), a new skin treatment procedure.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted in
the second quarter of fiscal 1998 ended December 31, 1997. At that time,
reporting Company's will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive
effect of stock options will be excluded. The impact is expected to result
in an increase in primary earnings per share for the third quarter ended
March 31, 1997 and March 31, 1996 of $0.02 to $0.31 per share and $0.01 to
$0.17 per share, respectively. The impact of Statement 128 on the
calculation of fully diluted earnings per share for these quarters is not
expected to be material.
Except as otherwise specified herein, all information in this Form 10-Q
has been adjusted to give effect to a 3-for-2 stock split in the form of a
50% stock dividend paid on March 28, 1997 to holders of record on March
17, 1997.
Certain immaterial amounts on the face of the balance sheet have been
reclassified to conform with the current years presentation.
The financial information is unaudited but reflects all adjustments,
consisting only of normal recurring accruals, which are, in the opinion of
the Company's management, necessary to a fair statement of the results for
the interim periods presented. Interim results are not necessarily
indicative of results for a full year. The financial statements should be
read in conjunction with the Company's audited financial statements for
the fiscal year ended June 30, 1996.
7
<PAGE> 8
2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share have been computed by
using the weighted average number of shares outstanding and common
equivalent shares.
3. CONTINGENCIES
The Company and certain of its subsidiaries, from time to time, are
parties to certain actions and proceedings incident to their business.
Liability in the event of final adverse determinations in any of these
matters is either covered by insurance and/or established reserves or, in
the opinion of management, after consultation with counsel, should not, in
the aggregate, have a material adverse effect on the consolidated
financial position or results of operations of the Company and its
subsidiaries.
4. INVENTORIES
Although the Company utilizes third parties to manufacture and package
inventories held for sale, the Company takes title to certain inventories
and records the associated liability once inventories are manufactured.
Inventories are valued at the lower of cost or market as determined by net
realizable value using the first-in-first-out method. Inventories, net of
reserves, at March 31, 1997, and June 30, 1996, consist of the following:
<TABLE>
<CAPTION>
March 31, 1997 June 30, 1996
-------------- -------------
<S> <C> <C>
Raw materials $ 296,177 $ 72,633
Work in process -- 23,749
Finished goods 1,906,241 1,983,632
---------- ----------
Total inventories $2,202,418 $2,080,014
========== ==========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto and with the
Company's audited financial statements, notes to the consolidated
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations relating thereto included or
incorporated by reference in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1996.
The foregoing Form 10-Q contains certain forward-looking statements which
are subject to risks and uncertainties. The Company's actual results could
differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those discussed in
the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1996, which are incorporated by reference herein.
8
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1996
Net Sales
Net sales for the three months ended March 31, 1997 (the "third quarter of
fiscal 1997") increased 56.4%, or $4.0 million, to $11.0 million from $7.0
million for the three months ended March 31, 1996 (the "third quarter of
fiscal 1996"). The Company's net sales increased in the third quarter of
fiscal 1997 primarily as a result of continued unit and dollar growth in
the Company's prescription products primarily the DYNACIN(R) and TRIAZ(R)
products and the contribution from the LIDEX(R) and SYNALAR(R) products
which were acquired on February 24, 1997 from various affiliates of Syntex
Corporation and its parent F. Hoffmann-La Roche, Ltd. The Company has
during the third quarter of Fiscal 1997 increased the full-time equivalent
number of sales personnel and has expanded its clinical testing and
marketing activities in order to facilitate the increased net sales. The
Company's prescription products accounted for 87.9% of net sales in the
third quarter of fiscal 1997 and 84.6% in the third quarter of fiscal
1996. The unit and dollar sales volume of the Company's ESOTERICA(R)
products increased 38.4% primarily due to an increase in use of
promotional vehicles in targeted markets. The over-the-counter products
accounted for 12.1% of net sales in the third quarter of fiscal 1997 and
15.4% in the third quarter of fiscal 1996.
Gross Profit
Gross profit during the third quarter of fiscal 1997 increased 68.6%, or
$3.5 million, to $8.5 million from $5.0 million in the third quarter of
fiscal 1996. As a percentage of net sales, gross profit grew to 77.4% in
the third quarter of fiscal 1997 from 71.8% in the third quarter of fiscal
1996 primarily as a result of higher average sales prices for the
Company's DYNACIN(R) and ESOTERICA(R) products, and additional sales from
the Company's higher margin products primarily TRIAZ(R), LIDEX (R) and
SYNALAR(R) .
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the third quarter of
fiscal 1997 increased 49.9%, or $1.5 million, to $4.4 million from $2.9
million in the third quarter of fiscal 1996, primarily due to the
introduction and administration of the LIDEX(R) and SYNALAR(R) products
which the Company began actively promoting to dermatologists nationwide on
February 24, 1997, the introduction of two new products; BETA-LIFTX(TM)
and AFIRM(TM) through the Company's newly formed business unit TX
SYSTEMS(TM) by Medicis and an increase in promotional costs associated
with the advertising of the ESOTERICA(R) products. Additionally, selling,
general and administrative expenses increased due to personnel costs
attributable to an increase in variable compensation commensurate with
increased sales volume, a rise in full-time equivalent employees and cost
of living salary adjustments. Selling, general and administrative
expenses, decreased 180 basis points as a percentage of sales to 40.5%
from 42.3% in the third quarter of fiscal 1997 relative to the third
quarter of fiscal 1996.
9
<PAGE> 10
Research and Development Expenses
Research and development expenses in the third quarter of fiscal 1997
increased 93.0%, or approximately $174,000, to approximately $360,000 from
approximately $186,000 in the third quarter of fiscal 1996, primarily due
to expansion of new product research and development activities and an
increase in expenses associated with the expanded clinical support of the
Company's existing products.
Operating Income
Operating income during the third quarter of fiscal 1997 increased 98.3%,
or $1.7 million, to $3.4 million from $1.7 million in the third quarter of
fiscal 1996. This increase was primarily a result of a 56.4% increase in
sales volume, coupled with a 560 basis point increase in the Company's
gross profit as a percentage of net sales and a 180 basis point decrease
in selling, general, and administrative cost as a percentage of net sales.
Interest Income (Expense)
Interest income in the third quarter of fiscal 1997 increased to $1.2
million from approximately $53,000 in the third quarter of fiscal 1996,
primarily due to higher cash equivalent and short-term investment balances
in the third quarter of fiscal 1997 as a result of the Company's public
offering which raised $95.7 million before related expenses, funds
received throughout fiscal 1997 as the result of stock option exercises
and the Company's cash flow from operations.
Net Income
Net income during the third quarter of fiscal 1997 increased approximately
146.5%, or $2.6 million, to $4.3 million from $1.7 million from the third
quarter of fiscal 1996. The increase is primarily attributable to a 56.4%
increase in sales volume, a 560 basis point increase in gross profit as a
percentage of net sales and a 180 basis point decrease in selling, general
and administrative costs as a percentage of net sales.
NINE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE NINE MONTHS ENDED MARCH
31, 1996
Net Sales
Net sales for the nine months ended March 31, 1997 (the "1997 nine
months") increased 48.3%, or $8.7 million, to $26.7 million from $18.0
million for the nine months ended March 31, 1996 (the "1996 nine months")
primarily as a result of continued unit and dollar growth in sales of the
Company's prescription products primarily the DYNACIN(R) and TRIAZ(R)
products and the contribution from the LIDEX(R) and SYNALAR(R) products
which were acquired on February 24, 1997 from various affiliates of Syntex
Corporation and its parent F. Hoffmann-La Roche, Ltd. The Company has
during the 1997 nine months increased the full-time equivalent number of
sales personnel and has expanded its clinical testing and marketing
activities in order to facilitate the increase in net sales. The Company's
prescription products accounted for 86.2% of net sales in the 1997 nine
months as compared to 80.4% of net sales in the 1996 nine months.
10
<PAGE> 11
Gross Profit
Gross profit for the 1997 nine months increased 54.8%, or $7.1 million,
to $20.1 million from $13.0 million in the 1996 nine months. As a
percentage of net sales, gross profit grew to 75.0% in the 1997 nine
months from 71.9% in the 1996 nine months primarily due to a higher
average sales price of the DYNACIN(R) products and additional sales from
the Company's higher margin products, primarily TRIAZ(R), LIDEX(R) and
SYNALAR(R).
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the 1997 nine months
increased 38.9%, or $3.1 million, to $11.2 million from $8.1 million in
the 1996 nine months. The increase is primarily due to the introduction
and administration of the LIDEX(R) and SYNALAR(R) products which the
Company acquired in the third quarter of fiscal 1997 and began actively
promoting the products to dermatologists nationwide, the introduction of
two new products; BETA-LIFTX(TM) and AFIRM(TM) through the Company's
formation of the TX SYSTEMS(TM) by Medicis business unit and an increase
in promotional costs associated with advertising of the ESOTERICA(R)
products and the Company's existing prescription products. Selling,
general and administrative expenses also increased due to personnel costs
attributable to an increase in variable compensation commensurate with
increased sales volume, personnel cost attributable to a rise in full-time
equivalent employees, and cost of living salary adjustments. Selling,
general and administrative costs, have decreased 280 basis points as a
percentage of sales to 41.9% from 44.7% in the 1997 nine months compared
to the 1996 nine months.
Research and Development Expenses
Research and development expenses in the 1997 nine months increased 60.1%
or approximately $365,000 to approximately $973,000, from approximately
$608,000 in the 1996 nine months primarily due to expansion of new product
research and development activities and an increase in expenses associated
with the clinical support of the Company's existing products.
Operating Income
Operating income during the 1997 nine months increased 90.5% or, $3.5
million to $7.4 million from $3.9 million in the 1996 nine months. This
increase was primarily a result of a 48.3% increase in sales volume
coupled with an increase of 310 basis points in the Company's gross profit
as a percentage of net sales and decrease of 280 basis points in selling,
general, and administrative costs as a percentage of net sales.
11
<PAGE> 12
Interest Income (Expense)
Interest income in the 1997 nine months increased to $2.7 million from
approximately $86,000 in the 1996 nine months, primarily due to higher
cash equivalent and short-term investment balances in the 1997 nine
months. Cash equivalent and short-term investments balances have increased
primarily due to the Company's public offering which raised $95.7 million
before related expenses, the Company's cash flow from operations and funds
received as a result of stock option exercises. Interest expense in the
1997 nine months decreased 71.1%, or approximately $47,000, to
approximately $19,000 from approximately $66,000 in the 1996 nine months.
Income Tax Benefit (Expense)
Income tax benefit (expense) during the 1997 nine months increased $1.3
million to a benefit of $1.2 million from an expense of approximately
$66,000 in the 1996 nine months. During the first quarter of fiscal 1997,
the Company reassessed the estimated amount of valuation allowance
required in light of the funds received from the public offering to reduce
deferred tax assets in accordance with Statement of Financial Accounting
Standard No. 109, Accounting for Income Taxes ("SFAS No. 109") to an
amount the Company, after consultation with its independent accountants,
believed appropriate. Accordingly, a credit to income tax benefit of $2.0
million was reflected in the first quarter of fiscal 1997's Condensed
Consolidated Statement of Operations and the corresponding deferred tax
asset on the Company's Condensed Consolidated Balance Sheets. The amount
of net deferred tax assets estimated to be recoverable was based upon the
Company's assessment of the likelihood of near term operating income
coupled with uncertainties with respect to the impact of future
competitive and market conditions. No such income tax benefit was recorded
in the 1996 nine months. The income tax benefit was partially offset by
the Company's federal and state tax payments during the 1997 nine months.
Net Income
Net income during the 1997 nine months increased approximately 193.8%, or
$7.4 million, to $11.2 million from $3.8 million in the 1996 nine months.
The increase was primarily attributable to a 48.3% increase in sales
volume, a 310 basis point increase in gross profit as a percentage of net
sales, the decrease in selling, general and administrative as a percentage
of net sales of 280 basis points and the recording of the $2.0 million
income tax benefit in the 1997 nine months.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997 and June 30, 1996, the Company had cash equivalents and
short-term investments of approximately $77.0 million and $8.0 million,
respectively. The Company's working capital was $87.3 million and $12.4
million at March 31, 1997 and June 30, 1996, respectively. The increase in
working capital is primarily attributable to the Company's public offering
of $95.7 million before related expenses, income from operations of $7.3
million, and funds received due to the exercise of stock options of $3.3
million.
12
<PAGE> 13
At March 31, 1997 and June 30, 1996, the Company had accounts receivable
of $8.7 million and $5.2 million, respectively. The increase in the
Company's accounts receivable balance is primarily due to an increase in
sales volume in the third quarter of fiscal 1997 as compared to the
quarter ended June 30, 1996. The Company also began recording sales for
LIDEX(R) and SYNALAR(R) on February 24, 1997 pursuant to a transition
service agreement with F. Hoffman-La Roche, Ltd. The Company will receive
payment for sales recorded during the March 31, 1997 quarter in April,
1997.
At March 31, 1997 and June 30, 1996, the Company had accounts payable
balances of $4.3 million and $3.4 million, respectively. The increase in
the Company's accounts payable balance is primarily due to inventory value
associated with the Company's LIDEX(R), SYNALAR(R), AFIRM(TM) and
BETA-LIFTX(TM) products.
During fiscal 1997, the Company reassessed the estimated amount of
valuation allowance required or necessary to reduce deferred tax assets
available in accordance with SFAS No. 109 to an amount the Company, after
consultation with its independent accounts, believed appropriate.
Accordingly, a deferred tax asset of an additional $2.0 million was
reflected in the consolidated balance sheet and a credit to deferred tax
benefit of $2.0 million in the consolidated income statement. The amount
of net deferred tax assets available that are estimated to be recoverable
was based upon the Company's assessment of the likelihood of near-term
operating income coupled with the uncertainties with respect to the impact
of future competitive and market conditions. The amount of deferred tax
asset available that ultimately will be realized will depend upon future
events which are uncertain.
On October 2, 1996, the Company completed a public offering for 2,775,000
primary shares of the Company's Class A Common Stock at a price of $30.00
per share. The underwriters also exercised the over allotment option of
416,250 shares at a price of $30.00 per share. Gross proceeds from the
offering before related expenses totaled approximately $95,737,500. The
Company anticipates using the proceeds from the offering for marketing
expenses associated with new product introductions, the licensing or
acquisition of formulations, technologies, products or businesses,
research and development, expansion of marketing and sales capabilities
and general corporate purposes.
In November 1996, the Company increased its credit facility with Norwest
Bank Arizona, N.A. from $5 million to $25 million. The credit facility is
secured by principal assets of the Company. The Company is required to
comply with certain covenants and restrictions, including covenants
relating to the Company's financial condition and result of operations.
This credit facility has not been accessed by Medicis.
In January 1997, the Company agreed to acquire the United States and
Canadian dermatology assets of Syntex USA, Inc. from various affiliates of
Syntex and its parent company, F. Hoffmann-La Roche, Ltd. The Company,
using cash reserves, paid $28 million, and will pay an additional $3
million under certain conditions, or less than 2.5 times sales over the
past 12 months, for the purchased products. Medicis entered into four
separate Asset Purchase Agreements with various Roche affiliates (the
"Purchase Agreements") for the acquisition of the intellectual property
rights, know-how and all finished goods inventory specifically associated
with Syntex's topical corticosteroid dermatology products ("the Purchased
Products") in the United States and Canada. The purchased products include
the prescription
13
<PAGE> 14
topical steroid brands LIDEX(R) and SYNALAR(R). These topical
corticosteroids combat inflammatory skin diseases by reducing swelling and
pain, relieving itching, and constricting blood vessels in the skin. The
product lines consist of various potencies and cosmetically elegant
formulations, allowing dermatologists to prescribe the most appropriate
product based on the severity and location of a patient's condition. Prior
to the acquisition, the Company did not market any products in this
category of dermatological care.
On March 7, 1997, the Company announced that its Board of Directors had
approved a 3-for-2 stock split to be effected in the form of a 50% stock
dividend. The dividend was paid to holders of record of the Class A and
Class B Common Stock and all stock option holders on March 17, 1997, i.e.,
the record date. Holders of the Company's Class A and Class B Common Stock
received one additional share of Common Stock for each two shares held.
Similar adjustments will be made under the Company's Rights Agreement,
dated as of August 15, 1995 (as amended from time-to-time) between the
Company and Norwest Bank Minnesota, N.A., so that one additional right
shall be issued to accompany each share of Common Stock issued pursuant to
the dividend.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1b Amendment No. 2 to Rights Agreement dated as of March 17,
1997 between the Company and Norwest Bank Minnesota, N.A.
10.79 Asset Purchase Agreement dated January 21, 1997 between the
Company and Syntex Pharmaceuticals International Limited
10.80 Asset Purchase Agreement dated January 21, 1997 between the
Company and Syntex (U.S.A.) Inc.
10.81 Asset Purchase Agreement dated January 21, 1997 between the
Company and Hoffmann-La Roche Limited
10.82 Asset Purchase Agreement dated January 21, 1997 between the
Company and Syntex Pharmaceuticals International Limited
10.83 Transition Services Agreement dated January 21, 1997 between
the Company and Hoffman-La Roche, Inc.
10.84 Transition Services Agreement dated January 21, 1997 between
the Company and Hoffman-La Roche Limited
10.85 Supply Agreement (Fluocinolone Acetonide and Fluocinonide)
dated January 21, 1997 between the Company and Syntex
Pharmaceuticals International Limited
10.86 License Agreement dated March 28, 1997 between the Company and
Platinum(R) Software Corporation
14
<PAGE> 15
10.87 Master Software License Agreement dated March 28, 1997 between
the Company and FocusSoft, Inc.
11.1 Statements re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
During the third quarter of fiscal 1997, the Company filed the following
report on Form 8-K:
(i) Current report on Form 8-K dated January 22, 1997 reporting under
Item 5, the Company acquired the United States and Canadian assets of
Syntex USA, Inc. ("Syntex") from various affiliates of Syntex and its
parent company, F. Hoffmann-La Roche, Ltd.
(ii) Current report on Form 8-K dated March 28, 1997 reporting under Item
5, the Company effected a three-for-two stock split in the form of a 50%
stock dividend.
SIGNATURE
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.
MEDICIS PHARMACEUTICAL CORPORATION
Date: By: /s/ Jonah Shacknai
------------- ------------------------------------
Jonah Shacknai
Chairman and Chief Executive Officer
Date: By: /s/ Mark A. Prygocki Sr.
------------- ------------------------------------
Mark A. Prygocki, Sr.
Chief Financial Officer
and Assistant Treasurer
15
<PAGE> 16
MEDICIS PHARMACEUTICAL CORPORATION
FORM 10-Q
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1b Amendment No. 2 to Rights Agreement dated as of March
17, 1997 between the Company and Norwest Bank
Minnesota, N.A.
10.79 Asset Purchase Agreement dated January 21, 1997 between
the Company and Syntex Pharmaceuticals International
Limited
10.80 Asset Purchase Agreement dated January 21, 1997 between
the Company and Syntex (U.S.A.) Inc.
10.81 Asset Purchase Agreement dated January 21, 1997 between
the Company and Hoffmann-La Roche Limited
10.82 Asset Purchase Agreement dated January 21, 1997 between
the Company and Syntex Pharmaceuticals International
Limited
10.83 Transition Services Agreement dated January 21, 1997
between the Company and Hoffman-La Roche, Inc.
10.84 Transition Services Agreement dated January 21, 1997
between the Company and Hoffman-La Roche Limited
10.85 Supply Agreement (Fluocinolone Acetonide and
Fluocinonide) dated January 21, 1997 between the
Company and Syntex Pharmaceuticals International
Limited
10.86 License Agreement dated March 28, 1997 between the
Company and Platinum(R) Software Corporation
10.87 Master Software License Agreement dated March 28, 1997
between the Company and FocusSoft, Inc.
11.1 Statements re: Computations of Per Share Earnings
27 Financial Data Schedule
16
<PAGE> 1
Exhibit 4.1b
AMENDMENT NO. 2
TO
RIGHTS AGREEMENT
DATED AS OF MARCH 17, 1997
BETWEEN
MEDICIS PHARMACEUTICAL CORPORATION
AND
NORWEST BANK MINNESOTA, N.A.,
AS SUCCESSOR-IN-INTEREST TO
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Appointment of Rights Agent................................... 1
Section 2. Certain Amendments............................................ 2
Section 3. Successors.................................................... 5
Section 4. Benefits of this Amendment.................................... 5
Section 5. Severability.................................................. 5
Section 6. Governing Law................................................. 5
Section 7. Counterparts.................................................. 5
Section 8. Descriptive Headings.......................................... 5
</TABLE>
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Preference Shares
<PAGE> 3
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 2 TO RIGHTS AGREEMENT, dated as of March
17, 1997 (this "Amendment"), between Medicis Pharmaceutical Corporation, a
Delaware corporation (the "Company"), and Norwest Bank Minnesota, N.A.
("Norwest"), a national banking association, as successor-in-interest to
American Stock Transfer & Trust Company, a New York corporation ("American
Stock"), as rights agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on August 17, 1995, the Board of Directors of the
Company authorized and declared a dividend of one preference share purchase
right (a "Right") for each Class A Common Share (such capitalized term and all
other capitalized terms used herein having the meanings set forth or as provided
in Section 1 of the Rights Agreement, dated as of August 17, 1995 between the
Company and the Rights Agent (the "Rights Agreement")) and Class B Common Share
of the Company outstanding as of the Close of Business on August 30, 1995 (the
"Record Date"), each Right representing the right to purchase one one-hundredth
of a Preference Share, upon the terms and subject to the conditions set forth in
the Rights Agreement, and further authorized and directed the issuance of one
Right with respect to each Class A Common Share and each Class B Common Share
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date; and
WHEREAS, on August 17, 1995, the Company and the Rights Agent
have executed and delivered the Rights Agreement, and
WHEREAS, on April 15, 1996, the Company and the Rights Agent
executed and delivered Amendment No. 1 to the Rights Agreements, which amended
certain terms and provisions of the original Rights Agreement; and
WHEREAS, on December 12, 1996, the majority of the Board of
Directors of the Company determined that it is in the best interest of the
Company to change the rights agent under the Rights Agreement from the American
Stock to Norwest; and
WHEREAS, Norwest has agreed to serve as the successor to
American Stock as rights agent under the Rights Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. APPOINTMENT OF RIGHTS AGENT. The Company does
hereby appoint Norwest as the successor-in-interest to American Stock and as
rights agent under the Rights Agreement, pursuant to Section 21 of the Rights
Agreement, and Norwest hereby accepts the
1
<PAGE> 4
appointment and agrees to undertake the duties and obligations of the rights
agent set forth in the Rights Agreement and be bound by the terms and provisions
of the Rights Agreement.
SECTION 2. CERTAIN AMENDMENTS
(a) The introductory paragraph of the Rights Agreement shall
be amended to state: "THE RIGHTS AGREEMENT, dated as of August 17,
1995, as amended, (this "Agreement"), between Medicis Pharmaceutical
Corporation, a Delaware corporation (the "Company"), and Norwest Bank
Minnesota, N.A., a national banking association, as
successor-in-interest to American Stock Transfer & Trust Company, a New
York corporation, as rights agent (the "Rights Agent")."
(b) The third sentence of Section 3(a) of the Rights Agreement
is hereby amended to read as follows:
As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights
Agent will countersign and the Company will send or
cause to be sent (and the Rights Agent will, if
requested by the Company, send) by first-class,
insured, postage-prepaid mail, to each record holder
of Class A Common Shares and Class B Common Shares as
of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of
the Company, a Right Certificate, in substantially
the form of EXHIBIT A to Amendment No. 2, dated as of
March 17, 1997 ("Amendment No. 2") to this Agreement
(a "Right Certificate"), evidencing one Right for
each Class A Common Share and Class B Common Share so
held.
(c) Section 3(b) of the Rights Agreement is hereby amended by
adding the following at the end thereof:
Upon the effectiveness of Amendment No. 2, the
Summary of Rights to Purchase Preference Shares,
shall be in substantially the form of EXHIBIT B to
Amendment No. 2 and thereafter all references in this
Agreement to the Summary of Rights shall be
references to the Summary of Rights as so amended.
(d) Section 3(c) of the Rights Agreement is hereby amended to
read as follows:
(e) Certificates for Class A Common Shares and Class B Common
Shares which become outstanding (including, without limitation,
reacquired Class A Common
2
<PAGE> 5
Shares and Class B Common Shares referred to in the last sentence of
this paragraph (c)) after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date
shall have impressed on, printed on, written on or otherwise affixed to
them the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement, dated as of August 17, 1995, between
Medicis Pharmaceutical Corporation and Norwest Bank
Minnesota, N.A., as successor-in-interest to American
Stock Transfer & Trust Company, as Rights Agent (as
amended, the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices
of Medicis Pharmaceutical Corporation. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
Medicis Pharmaceutical Corporation will mail to the
holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written
request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person (as defined in
the Rights Agreement) may become null and void.
(f) Certificates for Class A Common Shares and Class B Common
Shares which become outstanding (including, without limitation,
reacquired Class A Common Shares and Class B Common Shares referred to
in the last sentence of this paragraph (c)) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement, dated as of August 17, 1995,
between Medicis Pharmaceutical Corporation and
Norwest Bank Minnesota, N.A., as
successor-in-interest to American Stock Transfer &
Trust Company, as Rights Agent (as amended, the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal executive offices of
Medicis Pharmaceutical Corporation. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
3
<PAGE> 6
certificate. Medicis Pharmaceutical Corporation will
mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a
written request therefor. Under certain
circumstances, as set forth in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring
Person (as defined in the Rights Agreement) may
become null and void.
With respect to such certificates containing either of the foregoing legends,
until the Distribution Date, the Rights associated with the Class A Common
Shares and Class B Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Class A Common Shares and Class B Common Shares represented thereby. In the
event that the Company purchases or otherwise acquires any Class A Common Shares
and Class B Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Class A Common Shares or Class B Common
Shares, as the case may be, shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the Class A
Common Shares or Class B Common Shares, as the case may be, which are no longer
outstanding.
(g) The first sentence of Section 4 of the Rights Agreement is
hereby amended to read as follows:
The Right Certificates (and the forms of election to
purchase Preference Shares and of assignment to be
printed on the reverse thereof) shall be substantially
the same as EXHIBIT A to Amendment No. 2 and may have
such marks of identification or designation and such
legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or
as may be required to comply with any applicable law
or with any rule or regulation made pursuant thereto
or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed,
or to conform to usage.
(h) The second sentence of Section 26 shall be amended to read
as follows:
Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as
follows:
4
<PAGE> 7
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
P.O. Box 738
South St. Paul, Minnesota 55075
Attention: Shareholder Services
SECTION 3. SUCCESSORS. All the covenants and provisions of
this Amendment by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 4. BENEFITS OF THIS AMENDMENT. Nothing in this
Amendment shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Class A Common Shares) any legal or equitable right,
remedy or claim under this Amendment; but this Amendment shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Class A Common Shares).
SECTION 5. SEVERABILITY. If any term, provision, covenant or
restriction of this Amendment is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
SECTION 6. GOVERNING LAW. This Amendment shall be deemed to be
a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
SECTION 7. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 8. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Amendment are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
5
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested by their respective officers
thereunto duly authorized as of the day and year first above written.
Attest: MEDICIS PHARMACEUTICAL
CORPORATION
By By /s/ Jonah Shacknai
----------------------------- -----------------------------
Name: Mark A. Prygocki, Sr. Jonah Shacknai
Title: Secretary Chairman and Chief
Executive Officer
Attest: NORWEST BANK MINNESOTA, N.A., as
successor-in-interest to AMERICAN STOCK
TRANSFER & TRUST COMPANY, as Rights
Agent
By /s/ Barbara M. Novak By /s/ Kenneth P. Swanson
----------------------------- -----------------------------
Name: Barbara M. Novak Name: Kenneth P. Swanson
Title: Vice President Title: Assistant Vice President
6
<PAGE> 9
EXHIBIT A
Form of Right Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER AUGUST 17, 2005 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT S.001 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
MEDICIS PHARMACEUTICAL CORPORATION
This certifies that _____________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of August 17, 1995, between Medicis
Pharmaceutical Corporation, a Delaware corporation (the "Company"), and Norwest
Bank Minnesota, N.A., as successor-in-interest to American Stock Transfer &
Trust Company, as rights agent (the "Rights Agent"), (as amended from time to
time in accordance with its terms, the "Rights Agreement"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 p.m., New York City time, on August 17, 2005
at the office or agency of the Rights Agent designated for such purpose, or of
its successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preference Stock, par value $.01 per
share (the "Preference Shares"), of the Company, at a purchase price of $185.00
per one one-hundredth of a Preference Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preference Share which
may be purchased upon exercise hereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of April 15, 1996, based
on the Preference Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preference Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company and the above-mentioned office or
A-1
<PAGE> 10
agency of the Rights Agent. The Company will mail to the holder of this Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of Preference Shares as the Rights evidenced
by the Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not issued.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.001 per Right or (ii) may be exchanged by the Company in whole or in
part for Preference Shares or shares of the Company's Class A Common Stock, par
value $.001 per share.
No fractional Preference Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Preference Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
the Preference Shares or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of director or upon any matter submitted to stockholders at any
meeting thereof, or to give or to withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
A-2
<PAGE> 11
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ________________
ATTEST: MEDICIS PHARMACEUTICAL
CORPORATION
By ________________________________ By _________________________________
Countersigned:
NORWEST BANK MINNESOTA, N.A.,
as successor-in-interest to AMERICAN
STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By __________________________________
Authorized Signature
A-3
<PAGE> 12
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________ hereby sells,
assigns and transfers unto______________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________________________
_______________________________
_______________________________
Signature(s)
Signature Guaranteed:
Signature(s) must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_______________________________
Signature
- --------------------------------------------------------------------------------
A-4
<PAGE> 13
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To Medicis Pharmaceutical Corporation
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Right Certificate to purchase the
Preference Shares issuable upon the exercise of such Rights and requests that
certificates for such Preference Shares be issued in the name of:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:____________________________
__________________________________
__________________________________
Signature(s)
Signature Guaranteed:
Signature(s) must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
A-5
<PAGE> 14
Form of Reverse Side of Right Certificate -- continued
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
__________________________________
Signature
- --------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certificate set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-6
<PAGE> 15
EXHIBIT B
MEDICIS PHARMACEUTICAL CORPORATION
SUMMARY OF RIGHTS TO PURCHASE SHARES OF
SERIES A JUNIOR PARTICIPATING PREFERENCE STOCK
On August 17, 1995, the Board of Directors of Medicis
Pharmaceutical Corporation, a Delaware corporation (the "Company"), declared a
dividend of one preference share purchase right (a "Right") for each
outstanding share of Class A Common Stock, par value $.014 (formerly $.001) per
share (the "Class A Common Shares"), and Class B Common Stock, par value $.014
(formerly $.001) per share (the "Class B Common Shares" and, together with the
Class A Common Shares, the "Common Shares") of the Company. The dividend is
payable on August 30, 1995 (the "Record Date") to the holders of record of the
Common Shares on that date. Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preference Stock, par value $.01 per share (the "Preference
Shares"), of the Company at a price of $185.00 per one one-hundredth of a
Preference Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement, dated as of August
17, 1995, between the Company and Norwest Bank Minnesota, N.A., as
successor-in-interest to American Stock Transfer & Trust Company, as Rights
Agent (the "Rights Agent"), as amended from time to time in accordance with its
terms (the "Rights Agreement").
Until the earlier to occur of (i) ten days following a public
announcement that a person or group of affiliated or associated person (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Class A Common Shares or (ii) ten business days (or such later date
as may be determined by action of the Board of Directors of the Company prior to
such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the outstanding
Class A Common Shares (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share certificate
with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Class A Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such
B-1
<PAGE> 16
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the Close of Business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on August 17, 2005 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier redeemed
or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Preference
Shares or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (1) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preference Shares, (2) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (3) upon the
distribution to holders of the Preference Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preference Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preference Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Class A Common
Shares or a stock dividend on the Class A Common Shares payable in Class A
Common Shares or subdivisions, consolidations or combinations of the Class A
Common Shares occurring, in any such case, prior to the Distribution Date.
Preference Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preference Shares will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per Class A Common
Share. In the event of liquidation, the holders of the Preference Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per Class
A Common Share. Each Preference Share will have 100 votes, voting together with
the Class A Common Shares, except as otherwise required by law. Finally, in the
event of any merger, consolidation or other transaction in which Class A Common
Shares are exchanged, each Preference Share will be entitled to receive 100
times the amount received per Class A Common Share. These rights are protected
by customary antidilution provisions.
The dividend, liquidation and voting rights, and the
non-redemptive feature of the Preference Shares are designed so that the value
of the one one-hundredth interest in a Preference Share purchasable upon
exercise of each Right should approximate the value of one Class A Common Share.
B-2
<PAGE> 17
In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a Merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. The Rights Agreement also
provides that, in the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of Class A Common Shares having a market value of two times
the exercise price of the Right.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding Class A Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio of one Class A
Common Share, or one one-hundredth of a Preference Share (or of a share of a
class or series of the Company's preferred stock having equivalent rights,
preferences and privileges) per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in the Purchase Price. No fractional Preference Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preference
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preference Shares on the last trading day prior to the date
of exercise.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.001, per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors of the Company in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including an amendment to lower certain thresholds described above to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Class A Common Shares then known to the Company to be beneficially
owned by any person or group of affiliated or associated persons (other than (a)
the Company, (b) any subsidiary of the Company, (c) any employee benefit plan of
the Company or any subsidiary of the Company, or (d) any entity holding Class A
Common Shares for or pursuant to the terms of any such plan) and (ii) 10%,
except that from and after such time as any
B-3
<PAGE> 18
person or group of affiliated or associated person becomes an Acquiring Person
no such amendment may adversely affect the interests of the holders of the
Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the U.S.
Securities and Exchange Commission as an exhibit to a Registration Statement on
Form 8-A, dated August 17, 1995. A copy of Amendment No. 1 to Rights Agreement
has been filed with the U.S. Securities and Exchange Commission as an exhibit to
the Company's Form 10-Q for the period ended June 30, 1996. A copy of Amendment
No. 2 to Rights Agreement has been filed with the U.S. Securities and Exchange
Commission as an exhibit to the Company's Form 10-Q for the period ended March
31, 1997. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
B-4
<PAGE> 1
EXHIBIT 10.79
ASSET PURCHASE AGREEMENT
BETWEEN
SYNTEX PHARMACEUTICALS INTERNATIONAL LIMITED
and
MEDICIS PHARMACEUTICAL CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. ASSETS BEING SOLD . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Trademarks . . . . . . . . . . . . . . . . . . . . . 4
2.2 Registrations . . . . . . . . . . . . . . . . . . . . 4
2.3 Manufacturing Technology and Know-How . . . . . . . . 4
2.4 Trademark Agreements . . . . . . . . . . . . . . . . 4
2.5 Manufacturing Information . . . . . . . . . . . . . . 5
2.6 Data Bank Documents . . . . . . . . . . . . . . . . . 5
2.7 Worldwide Safety Reports . . . . . . . . . . . . . . 5
2.8 Assumption of Liabilities . . . . . . . . . . . . . . 5
3. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . 5
4. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . 5
4.1 Organization . . . . . . . . . . . . . . . . . . . . 5
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Title to Assets . . . . . . . . . . . . . . . . . . . 6
4.4 No Violation or Conflict . . . . . . . . . . . . . . 6
4.5 Registrations . . . . . . . . . . . . . . . . . . . . 6
4.6 Patents . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Financial Information . . . . . . . . . . . . . . . . 7
4.9 Absence of Certain Changes . . . . . . . . . . . . . 7
4.10 Violations of Law . . . . . . . . . . . . . . . . . . 7
4.11 No Government Restrictions . . . . . . . . . . . . . 7
4.12 Litigation . . . . . . . . . . . . . . . . . . . . . 8
4.13 Limitation of Warranty . . . . . . . . . . . . . . . 8
4.14 Trademarks . . . . . . . . . . . . . . . . . . . . . 8
4.15 Additional Representations . . . . . . . . . . . . . 8
5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 8
5.1 Organization . . . . . . . . . . . . . . . . . . . . 8
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . 8
5.3 No Violation or Conflict . . . . . . . . . . . . . . 8
5.4 No Government Restrictions . . . . . . . . . . . . . 9
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . 9
5.6 Financing . . . . . . . . . . . . . . . . . . . . . . 9
6. SELLER'S COVENANTS . . . . . . . . . . . . . . . . . . . . . 9
6.1 Conduct of Business . . . . . . . . . . . . . . . . . 9
6.2 Compliance with Laws . . . . . . . . . . . . . . . . 10
6.3 Disclosure Supplements . . . . . . . . . . . . . . . 10
6.4 Access; Investigation . . . . . . . . . . . . . . . . 10
6.5 Further Assurances . . . . . . . . . . . . . . . . . 10
7. BUYER'S COVENANTS . . . . . . . . . . . . . . . . . . . . . . 11
7.1 Transfer of Products . . . . . . . . . . . . . . . . 11
7.2 Labeling . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Further Assurances . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
8. COVENANTS BY BUYER AND SELLER . . . . . . . . . . . . . . . . 11
8.1 Stability Studies . . . . . . . . . . . . . . . . . . 11
8.2 Supply Agreement . . . . . . . . . . . . . . . . . . 11
8.3 Labeling . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Use of Seller Trademarks . . . . . . . . . . . . . . 11
8.5 Assignment of Trademarks . . . . . . . . . . . . . . 12
8.6 Assignment of Registrations . . . . . . . . . . . . . 12
8.7 Access to Information . . . . . . . . . . . . . . . . 12
8.8 Confidentiality Agreement . . . . . . . . . . . . . . 12
8.9 Press Releases . . . . . . . . . . . . . . . . . . . 12
8.10 Government Filings . . . . . . . . . . . . . . . . . 13
9. CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . 13
9.1 Conditions to Obligation of Buyer . . . . . . . . . . 13
9.1.1 Representations and Warranties . . . . . . . 13
9.1.2 Performance . . . . . . . . . . . . . . . . . 13
9.1.3 HSR Act Approvals . . . . . . . . . . . . . . 14
9.1.4 No Adverse Change . . . . . . . . . . . . . . 14
9.1.5 Officer's Certificate . . . . . . . . . . . . 14
9.1.6 Litigation . . . . . . . . . . . . . . . . . 14
9.1.7 Authorization . . . . . . . . . . . . . . . . 14
9.1.8 Proceedings and Instruments Satisfactory . . 14
9.2 Conditions to Obligations of Seller . . . . . . . . . 14
9.2.1 Representations and Warranties . . . . . . . 14
9.2.2 Performance . . . . . . . . . . . . . . . . . 14
9.2.3 HSR Act Approvals . . . . . . . . . . . . . . 15
9.2.4 Officer's Certificate . . . . . . . . . . . . 15
9.2.5 Litigation . . . . . . . . . . . . . . . . . 15
9.2.6 Authorization . . . . . . . . . . . . . . . . 15
9.2.7 Proceedings and Instruments Satisfactory . . 15
10. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 The Closing . . . . . . . . . . . . . . . . . . . . . 15
10.2 Deliveries by Seller . . . . . . . . . . . . . . . . 15
10.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . 16
11. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.1 Termination . . . . . . . . . . . . . . . . . . . . . 16
11.2 Effect of Termination . . . . . . . . . . . . . . . . 17
12. SURVIVAL; INDEMNIFICATION . . . . . . . . . . . . . . . . . . 17
12.1 Survival of Representations; Remedy for Breach . . . 17
12.2 Indemnification by Seller . . . . . . . . . . . . . . 17
12.3 Indemnification by Buyer . . . . . . . . . . . . . . 18
12.4 Limitations . . . . . . . . . . . . . . . . . . . . . 18
12.5 Notice . . . . . . . . . . . . . . . . . . . . . . . 18
12.6 Participation in Defense . . . . . . . . . . . . . . 18
12.7 Settlements . . . . . . . . . . . . . . . . . . . . . 19
12.8 Set-Off . . . . . . . . . . . . . . . . . . . . . . . 19
13. NON-COMPETITION AND CONFIDENTIALITY . . . . . . . . . . . . . 19
13.1 Non-Compete . . . . . . . . . . . . . . . . . . . . . 19
13.2 Confidentiality . . . . . . . . . . . . . . . . . . . 20
14. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15. SYNACORT . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
16. ARBITRATION AND GOVERNING LAW . . . . . . . . . . . . . . . . 21
16.1 Generally . . . . . . . . . . . . . . . . . . . . . . 21
16.2 Defenses and Bankruptcy . . . . . . . . . . . . . . . 21
16.3 Commencement of Arbitration . . . . . . . . . . . . . 22
16.4 Governing Law and Place of Arbitration . . . . . . . 22
16.5 Discovery and Other Matters . . . . . . . . . . . . . 22
16.6 Hearing . . . . . . . . . . . . . . . . . . . . . . . 22
16.7 Arbitrators Fees . . . . . . . . . . . . . . . . . . 23
17. ADDITIONAL TERMS . . . . . . . . . . . . . . . . . . . . . . 23
17.1 Brokers . . . . . . . . . . . . . . . . . . . . . . . 23
17.2 Injunctive Relief . . . . . . . . . . . . . . . . . . 23
17.3 Expenses . . . . . . . . . . . . . . . . . . . . . . 23
17.4 Attorneys' Fees . . . . . . . . . . . . . . . . . . . 23
17.5 Successors and Assigns . . . . . . . . . . . . . . . 23
17.6 Entire Agreement . . . . . . . . . . . . . . . . . . 24
17.7 Amendments; No Waiver . . . . . . . . . . . . . . . . 24
17.8 Counterparts . . . . . . . . . . . . . . . . . . . . 24
17.9 Severability . . . . . . . . . . . . . . . . . . . . 24
17.10 Captions . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into on January 21, 1997 (the "Effective Date") by and between Syntex
Pharmaceuticals International Limited, a Bermuda corporation ("Seller") and
Medicis Pharmaceutical Corporation, a Delaware corporation ("Buyer").
This Agreement sets forth the terms and conditions upon which Buyer is
purchasing from Seller and Seller is selling to Buyer the Assets (as hereinafter
defined).
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Active Ingredients" mean the pharmaceutical compounds fluocinolone
acetonide, fluocinonide, and hydrocortisone, and all salts and esters thereof.
1.2 "Additional Trademarks" means the trademark/service mark
registrations and applications that are set forth on Schedule 0 together with
all records associated therewith.
1.3 "Affiliate" of a party shall mean any individual, corporation or
other business entity (e.g. limited or general partnership, trust or estate,
joint venture or association) controlling, controlled by or under common control
with such party. "Control" (including "controlling", "controlled by" and "under
common control with") shall mean the direct or indirect ownership of more than
fifty percent (50%) of the voting or income interest in such party, corporation
or other business entity respectively. Notwithstanding the foregoing, Genentech,
Inc. ("Genentech") shall not be considered an Affiliate of Seller for the
purpose of this Agreement for so long as there are material restrictions on the
ability of Seller and its Affiliates to control Genentech.
1.4 "ANDS" means an Abbreviated New Drug Submission, as such term is
defined by the Food and Drug Regulations issued pursuant to the Food and Drugs
Act and as interpreted by the HPB.
1.5 "Assets" has the meaning ascribed to such term in Section 0.
1.6 "Broker" has the meaning ascribed to such term in Section 16.1.
1.7 "Business" means the business as currently conducted by Seller with
respect to manufacture and sale of the Products in the Territory.
1.8 "Buyer Labeling" means the printed labels, labeling and packaging
materials, including printed carton, container label and package inserts, used
by Buyer and bearing Buyer's name for each Product.
1.9 "cGMP's" means the then-current Good Manufacturing Practices
applicable to the manufacture of pharmaceutical products for human use in Canada
in accordance with the Food and Drug Regulations under the Food and Drugs Act.
1.10 "Closing" has the meaning ascribed to such term in Section 0.
<PAGE> 6
1.11 "Closing Date" has the meaning ascribed to such term in Section 0.
1.12 "Closing Time" means 12:01 a.m. on the date of Closing.
1.13 "Confidentiality Agreement" has the meaning ascribed to such term
in Section 0.
1.14 "Damages" has the meaning ascribed to such term in Section 0.
1.15 "Data Bank Documents" has the meaning ascribed to such term in
Section 0.
1.16 "Disclosure Schedule" means the disclosure schedule delivered
prior to the Effective Date to Buyer by Seller in connection with this
Agreement. The sections of the Disclosure Schedule correspond to the sections of
this Agreement.
1.17 "DIN" means the drug identification number.
1.18 "DOJ" means the United States Department of Justice.
1.19 "Effective Date" means January 21, 1997.
1.20 "FTC" means the United States Federal Trade Commission.
1.21 "HPB" means the applicable federal Canadian authorities and
agencies including the Health Protection Branch of Health Canada.
1.22 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
1.23 "Indemnifiable Claims" has the meaning ascribed to such term in
Section 0.
1.24 "Indemnified Party" has the meaning ascribed to such term in
Section 0.
1.25 "Indemnifying Party" has the meaning ascribed to such term in
Section 0.
1.26 "Know-How" has the meaning ascribed to such term in Section 0.
1.27 "Law" means any federal, state, province, foreign, local or other
law, ordinance, rule, regulation, or governmental requirement or restriction of
any kind, and any rules, regulations, and orders promulgated thereunder.
1.28 "Material Adverse Effect" means an event that has a material
adverse effect on the Assets, taken as a whole.
1.29 "NDS" means a New Drug Submission, as such term is defined by the
Food and Drug Regulations issued pursuant to the Food and Drugs Act and as
interpreted by the HPB.
1.30 "Net Sales" means the gross invoice amount of Products sold to
third parties, less (a) promotional and trade discounts; (b) sales and excise
taxes, value added and other taxes and insurance premiums and duties which are
billed to customers as separate items on invoices; (c) allowances for short-
<PAGE> 7
shipments and price adjustments; and (d) contract chargebacks and rebates,
government rebates, and returns (e.g., spoiled, damaged or outdated Products).
1.31 "Patheon Agreement" means the agreement between Hoffmann-La Roche
Limited, a Canadian corporation, and Patheon to be entered into on January 31,
1997.
1.32 "Patents" means any patent or patent application and any and all
divisions, continuations, continuations-in-part, reexaminations, reissues,
extensions, pending or granted supplementary protection, certificates,
substitutions, confirmations, registrations, revalidations, revisions, additions
and the like, of or to said patent and patent application.
1.33 "PFC Agreement" means the Supply Agreement between Seller and
Pharmaceutical Fine Chemicals S.A. dated February 13, 1996.
1.34 "Products" means each presentation of those finished
pharmaceutical products set forth in the Registrations.
1.35 "Purchase Price" has the meaning ascribed to such term in Article
0.
1.36 "Registrations" has the meaning ascribed to such term in Section
0.
1.37 "Schedule" means a schedule to the Disclosure Schedule.
1.38 "Supply Agreement" means the agreement referred to in Section 0.
1.39 "Synacort Assets" means the Synacort License, the Synacort
Trademarks, and the Synacort Trademark Agreements.
1.40 "Synacort License" has the meaning ascribed to such term in
Section 0.
1.41 "Synacort NDSs" means the NDSs that are set forth on Schedule 0
and the regulatory records relating exclusively thereto.
1.42 "Synacort Trademark" means the trademark registrations that are
set forth on Schedule 0 together with all records associated therewith.
1.43 "Synacort Trademark Agreements" means those agreements set forth
on Schedule 0 to the extent such agreements relate to the Synacort Trademark.
1.44 "Syntex Labeling" means the printed labels, labeling and packaging
materials, including printed carton, container label and package inserts,
currently used by Syntex for each Product.
1.45 "Territory" means Canada.
1.46 "Trademark Agreements" has the meaning ascribed to such term in
Section 0.
1.47 "Trademarks" has the meaning ascribed to such term in Section 0.
2. ASSETS BEING SOLD
Subject to the terms and conditions of this Agreement, at Closing,
Seller shall sell, transfer, assign, convey and deliver to Buyer, its successors
<PAGE> 8
and assigns forever, to the extent contemplated herein, all of the right, title,
and interest of Seller in the assets listed below in the Territory
(collectively, the "Assets"), the Synacort Assets, and the Additional
Trademarks, and Buyer shall assume all rights, title, and interest of Seller in
the Assets, the Synacort Assets, and the Additional Trademarks.
2.1 Trademarks. The trademark/service mark registrations and
applications that are set forth on Schedule 0 together with all records
associated therewith (the "Trademarks").
2.2 Registrations. The NDSs and the ANDS that are set forth on Schedule
0 (the "Registrations") and the regulatory records relating exclusively thereto.
2.3 Manufacturing Technology and Know-How. The manufacturing technology
and know-how that is exclusively used in manufacturing any Product ("Know-How")
and any documents which relate specifically and exclusively to such Know-How. In
addition, Seller shall grant Buyer a non-exclusive, perpetual, paid-up,
irrevocable, royalty-free, world-wide license, with right to sub-license, to use
any manufacturing technology and know-how that are necessary or used in
manufacturing any Product (but not exclusively used thereto) with such license
or sublicense being restricted to use for the Products, unless Buyer can
demonstrate by written records that such know-how was known prior to any
disclosure of such know-how by Seller or its Affiliates to Buyer or is now
public knowledge or becomes public knowledge in the future other than by breach
of any agreement between Buyer and its Affiliates and Seller and its Affiliates.
2.4 Trademark Agreements. Seller shall assign and Buyer shall assume
all rights and obligations under those agreements set forth on Schedule 0 to the
extent such agreements relate to the Trademarks (the "Trademark Agreements").
2.5 Manufacturing Information. Accurate and complete copies of the
current Manufacturing Worksheets and copies of the Manufacturing Quality
Assurance Notebooks with respect to the Products currently available, including
batch records, development reports (if existing), and other documents and
records embodying manufacturing information.
2.6 Data Bank Documents. Right to obtain copies of and reference the
animal toxicology, animal mutagenicity, human clinical study and final reports,
and drug monograph/investigator brochures, a list of which is set forth on
Schedule 0 (the "Data Bank Documents").
2.7 Worldwide Safety Reports. A hard copy of the Worldwide Safety
Reports with respect to Products.
2.8 Assumption of Liabilities. The parties expressly acknowledge and
agree that (i) Buyer is not assuming or undertaking any liabilities relating to
or arising from the conduct of the Business, the sale or marketing of the
Products and/or the ownership or use of the Assets prior to the Closing; (ii)
Seller retains all such liabilities; and (iii) Buyer shall have no obligation to
Seller or any of its Affiliates or to any third party for any such liabilities.
3. PURCHASE PRICE
Subject to the terms and conditions of this Agreement, in reliance on
the representations, warranties, covenants and agreements of the Seller
contained herein, and in consideration of the sale, conveyance, assignment,
<PAGE> 9
transfer and delivery of the Assets provided for in Article 0 hereof, Buyer
shall deliver to Seller, in full payment for the aforesaid sale, conveyance,
assignment, transfer and delivery, the Purchase Price, consisting of: (i) two
million six hundred thousand United States dollars (US $2,600,000.00) payable to
Seller at Closing by bank wire transfer to Seller at such banking institution,
designated not less than five (5) days prior to Closing by Seller. Additional
payments of one hundred thousand United States dollars (US $100,000.00) shall be
delivered by Buyer to Seller at each of the first, second and third anniversary
of the Closing for a total of three (3) such additional payments ("Additional
Payments"). Each Additional Payment shall be reduced by fifty percent (50%) if
Net Sales in the Territory have decreased by more than twenty percent (20%)
during the twelve (12) months immediately preceding the corresponding
anniversary.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Bermuda, with full corporate
power and authority to consummate the transactions contemplated hereby. Seller
has all requisite power and authority to own and operate the Assets being
conveyed by Seller pursuant to this Agreement and to carry on the activities
constituting the business.
4.2 Authority. The execution and delivery of this Agreement by Seller
and the consummation and performance of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate and other
proceedings, and this Agreement has been duly authorized, executed, and
delivered by Seller and, assuming the enforceability against Buyer, constitutes
the legal, valid and binding obligation of Seller, enforceable in accordance
with its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court. The Supply
Agreement, and all other documents executed by Seller or its Affiliates and
delivered at the Closing, including those delivered pursuant to Section 0,
constitute a valid and binding obligation of Seller or the respective Affiliate
of Seller executing such documents enforceable in accordance with their
respective terms.
4.3 Title to Assets. Except as set forth in Schedule 0, Seller has good
and marketable title to all the Assets and will convey good and marketable title
at Closing, free and clear of any and all liens, encumbrances, claims,
mortgages, leases, security interests, charges or restrictions. Notwithstanding
the foregoing, Seller retains the right to use and to transfer to other buyers
of the products containing any Active Ingredient outside the Territory
information that is similar or identical to that contained in the Registrations
and the Know-How; provided, however, that no such buyer has been expressly
granted by Seller or any Affiliate of Seller the right to sell, transfer or
distribute any of the products containing any Active Ingredient into the
Territory based on such Registrations and Know-How and neither Seller nor any
Affiliate shall expressly grant any buyer such right. Buyer acknowledges that
Seller cannot prevent such a buyer from using such information, including
registrations and know-how that is substantially similar to the Registrations
and Know-How, to sell, transfer or distribute such products in the Territory. In
addition, trademarks that are the same as or similar to the Trademarks may be
registered in other countries and may be either retained by Seller for its use
or sold to other buyers in either case, for use solely outside the Territory.
<PAGE> 10
4.4 No Violation or Conflict. Seller's execution and delivery of this
Agreement and the other related documents delivered by Seller in connection with
transactions contemplated herein and the performance of this Agreement by Seller
(and the transactions contemplated herein) (a) do not and will not conflict
with, violate or constitute or result in a default or an event creating rights
of acceleration, termination, or cancellation, or a loss of right under any Law,
judgment, order, decree, the articles of incorporation or bylaws of Seller or
any mortgage, contract or agreement to which Seller is a party or by which
Seller is bound or (b) will not result in the creation or imposition of any
lien, charge, mortgage, claim, pledge, security interest, restriction or
encumbrance of any kind on, or liability with respect to, the Assets or the
Business except as otherwise provided herein or otherwise disclosed on the
Disclosure Schedule. None of the Trademark Agreements require the consent of any
third party to the assignment of such Trademark Agreement from Seller to Buyer;
provided, however, that with respect to the Patheon Agreement, Seller must give
prior written notice of any assignment to Patheon and Buyer must covenant in
writing with Patheon to be bound by the terms of the Patheon Agreement.
4.5 Registrations. The Registrations are the only registrations
required by the HPB to sell and market the Products in the Territory. All
Products in Schedule 2.2 are registered and eligible for immediate sale without
regulatory limitations.
4.6 Patents. There are no Patents with respect to the Active
Ingredients or Products in the Territory.
4.7 Taxes. There are no liens for taxes upon the Assets except for
liens for current taxes not yet due and payable which shall remain the sole
obligation of the Seller.
4.8 Financial Information. Seller and its Affiliates have no material
liabilities, contingent, absolute, accrued or otherwise, relating to the Assets,
other than as set forth in Schedule 0.
4.9 Absence of Certain Changes.
4.9.1 Except as set forth in Schedule 0 or as otherwise set
forth in this Agreement, since December 16, 1996, there has not been any (i)
Material Adverse Effect or material adverse change in the financial condition or
results of operation of the Business, (ii) damage, destruction or loss which has
or may reasonably be expected to have a Material Adverse Effect, or (iii)
transaction or commitment outside the ordinary course of business with respect
to the Assets or the Business.
4.9.2 As of the date hereof and as of the Closing Date and
except as otherwise disclosed on Schedule 0, Seller is not aware of any facts,
circumstances, or proposed or contemplated events that could reasonably be
expected to have a Material Adverse Effect after Closing.
4.9.3 No default under any lease, agreement, contract or other
material arrangement relating to the Business, including but not limited to the
Patheon Agreement, the Paco Agreements, and the Trademark Agreements has been
declared and is continuing and, to Seller's knowledge, no condition exists
which, with notice or lapse of time or both, would constitute a default under
any such agreement. All of the such agreements are valid and subsisting and are
in full force and effect and, to Seller's knowledge, no claim exists or has been
asserted with respect to such agreements that would adversely effect the
Business. Seller has not received notice that any party to any such agreements
<PAGE> 11
intends to cancel or terminate such agreements or to exercise or not exercise
any options or rights under such agreements, or to resist any effort by Seller
or its successors to exercise or not exercise such options or rights.
4.10 Violations of Law. Except as set forth in Schedule 0, neither the
operation of the Business nor the Assets (i) violates or conflicts with any
Registrations, any Law, governmental specification, authorization, or
requirement, or any decree, judgment, order, or similar restriction in any
material respect, or (ii) to the best of Seller's knowledge, has been the
subject of an investigation or inquiry by any governmental agency or authority
regarding violations or alleged violations, or found by any such agency or
authority to be in violation, of any Law.
4.11 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Seller in connection with the execution and
delivery of this Agreement by Seller or the consummation by it of the
transactions contemplated hereby to be consummated by it.
4.12 Litigation. Except as set forth in Schedule 0 attached hereto or
as set forth on Schedules 0 and 0, neither the Business nor the Assets is the
subject of (i) any outstanding judgment, order, writ, injunction or decree of,
or settlement agreement with, any person, corporation, business entity, court,
arbitrator or administrative or governmental authority or agency, limiting,
restricting or affecting the Business, the Assets, or the Products in a way that
would have a Material Adverse Effect, (ii) any pending or, to the best of
Seller's knowledge, threatened claim (excluding the adverse drug reports set
forth in the Registrations), suit, proceeding, charge, inquiry, investigation or
action of any kind, and (iii) any court suits filed with respect to the Assets
since January 1, 1990.
4.13 Limitation of Warranty. Seller will not warrant that buyers of
products outside the Territory that are substantially similar to or identical
with the Products will not attempt to register such products in the Territory.
4.14 Trademarks. Each of the Trademarks being conveyed by this
Agreement is being conveyed free and clear of any liens, security interests and
other encumbrances and is freely assignable by Seller. Seller is not required,
and Buyer will not be required, to pay any royalty to any person with respect to
use of any of the Trademarks. Except as set forth in the Trademark Agreements,
the Trademarks do not infringe upon or conflict with the trademarks or other
rights of any third party in the Territory.
4.15 Additional Representations. Seller owns no inventory of finished
Products, it does not sell Products to customers, and it has no agreements other
than the Trademark Agreements and the PFC Agreement that are material to the
Business.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to consummate the transactions contemplated
hereby.
5.2 Authority. The execution and delivery of this Agreement by Buyer,
and the consummation and performance of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate and
<PAGE> 12
other proceedings, and this Agreement has been duly authorized, executed, and
delivered by Buyer and, assuming the enforceability against Seller, constitutes
the legal, valid and binding obligation of Buyer, enforceable in accordance with
its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court.
5.3 No Violation or Conflict. The execution and delivery of this
Agreement by Buyer and the performance of this Agreement (and the transactions
contemplated herein) by Buyer do not and will not conflict with, violate or
constitute or result in a default under any Law, judgment, order, decree, the
articles of incorporation or bylaws of Buyer, or any contract or agreement to
which Buyer is a party or by which Buyer is bound.
5.4 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Buyer in connection with the execution and
delivery of this Agreement by Buyer or the consummation by it of the
transactions contemplated hereby to be consummated by it, except with respect to
the filing of a pre-merger notification report under the HSR Act.
5.5 Litigation. To the best knowledge of Buyer, there are no claims,
actions, suits, proceedings or investigations pending or threatened by or
against Buyer with respect to the transactions contemplated hereby, at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, agency, instrumentality or authority.
5.6 Financing. Buyer will have funds sufficient to pay the Purchase
Price on the Closing Date.
6. SELLER'S COVENANTS
6.1 Conduct of Business. Seller agrees that from the date hereof until
the Closing Date that, except as specifically disclosed in Schedule 0 or unless
otherwise consented to by Buyer in writing, Seller shall
6.1.1 maintain the Assets in good status and condition and not
sell or dispose of any Assets except sales of Products in the ordinary course of
business;
6.1.2 cause the Business to be conducted in the ordinary
course consistent with the practice over the past six (6) months and make all
reasonable efforts consistent with practices over the past six (6) months to
preserve the Assets and the reputation of the Business and the Products and to
preserve for Buyer the goodwill of suppliers, customers, distributors, and
others having relations with the Business.
6.1.3 not enter into any new, or amend any existing, contract,
commitment, or agreement relating to the Business, the Products or the Assets or
extend any credit or incur any obligation with respect to the conduct of the
Business or the Assets except (i) for the Patheon Agreement, (ii) or in the
ordinary course of business and consistent with past business practices;
6.1.4 not engage in any special pricing, rebate, allowance,
promotional or marketing programs inconsistent with past practices or for the
purpose of maintaining customer inventory levels of Product in excess of those
levels maintained in the past;
<PAGE> 13
6.1.5 promptly inform Buyer of any change in the Business or
Assets that could reasonably be expected to have a Material Adverse Effect;
6.1.6 not subject any of the Assets or any part thereof to any
mortgage, pledge, security interest, encumbrance, lien or restriction of use or
suffer such to be imposed or license or grant to any other party the right to
use any of the Trademarks or any of the Know-How except for use outside the
Territory;
6.1.7 perform in all material respects all of its obligations
under any agreement with any third party relating to the Business, the Products,
or the Assets unless such third party is in default under such agreement; and
6.1.8 maintain its books of accounts and records relating to
the Business, the Products or the Assets in the usual, regular and ordinary
manner including, but not limited to, the maintenance of any and all documents
required by any federal or state regulatory agency or governmental body.
6.2 Compliance with Laws. Seller shall comply in all material respects
with all Laws and in all respects with all orders of any court or federal,
state, local or other governmental entity applicable to the Business or the
Assets.
6.3 Disclosure Supplements. From time to time following execution of
this Agreement but prior to the Closing Date, Seller will promptly inform Buyer,
in writing, of any matter that may arise hereafter and that, if existing or
occurring prior to the execution of this Agreement, would have been required to
be set forth or described herein or in the Disclosure Schedule.
6.4 Access; Investigation. From and after the date hereof and up to
Closing, Buyer and its authorized agents, officers, and representatives shall
have reasonable access to the Business and the Assets and all records and
information related thereto (except for information that Seller is contractually
obligated not to disclose), during normal business hours upon reasonable prior
notice and at a time and manner mutually agreed upon between Buyer and Seller in
order to conduct such examination and investigation of the Assets and the
Business as Buyer shall reasonably deem necessary, provided that such
examinations shall not unreasonably interfere with Seller's operations and
activities.
6.5 Further Assurances. Seller shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Seller, at the
request of Buyer, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Buyer such deeds,
assignments, bills of sale, consents and other instruments in addition to those
required by this Agreement, in form and substance satisfactory to Buyer, as
Buyer may reasonably deem necessary or desirable to implement any provision of
this Agreement.
7. BUYER'S COVENANTS
7.1 Transfer of Products. Following Closing, Buyer shall use all
reasonable efforts and, except as otherwise set forth herein, at its own expense
to obtain as expeditiously as possible such governmental approvals and
registrations from the HPB, or similar regulatory authorities, as may be
necessary with respect to the manufacture and sale of the Products by Buyer or
its designee.
<PAGE> 14
7.2 Labeling. Following Closing, Buyer shall at its own expense and as
expeditiously as possible use all reasonable efforts to obtain such HPB
approvals necessary for the Buyer Labeling for each Product.
7.3 Further Assurances. Buyer shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Buyer, at the
request of Seller, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Seller such
consents and other instruments in addition to those required by this Agreement,
in form and substance satisfactory to Seller, as Seller may reasonably deem
necessary or desirable to implement any provision of this Agreement.
8. COVENANTS BY BUYER AND SELLER
8.1 Stability Studies. As soon as possible following Closing, Buyer
shall qualify a site as a testing site for stability studies or request Patheon
to continue to conduct such stability studies at Buyer's expense, for Products
not manufactured by Patheon. Seller shall have no responsibility for on-going
stability studies for the Products following Closing.
8.2 Supply Agreement. Buyer and Seller, or their Affiliates, at Closing
shall enter into the Supply Agreement, attached as Exhibit A.
8.3 Labeling. In accordance with Section 7.2, Buyer is responsible for
having the Buyer Labeling approved by the HPB as soon as possible. Buyer may use
the Syntex Labeling on the Inventory until such Inventory is exhausted;
provided, however, that Seller may, at its option, buy-back from Buyer all
inventory labeled with Seller's NDC number upon Buyer having sufficient
inventory, to be determined by Buyer in its sole discretion to be exercised in
good faith, of the applicable Product labeled with Buyer's NDC number. In
addition, Buyer may use the Syntex Labeling on each Product manufactured by
Seller or its Affiliates for Buyer until the earlier of the date (i) the HPB
approves the Buyer Labeling for use on such Product and Buyer, using all
reasonable efforts, has obtained sufficient supplies of materials with Buyer
Labeling for use on such Products, or (ii) twelve (12) months following Closing,
provided, however, if at the end of such twelve (12) month period the HPB has
not yet approved the Buyer Labeling, then such twelve (12) month period shall be
extended for a period of time to be mutually agreed by the parties (such
agreement not to be unreasonably withheld) reasonably required to obtain such
approval.
8.4 Use of Seller Trademarks. Other than the use of the Syntex Labeling
as set forth in Section 0, any use by Buyer of the trademarks, tradenames, or
logos of Seller, other than the use of the Trademarks, the Synacort Trademarks,
and the Additional Trademarks, as provided herein, must be approved by Seller
prior to such use.
8.5 Assignment of Trademarks. By or before Closing, Buyer and Seller
shall prepare in good faith an assignment pursuant to which Seller agrees the
Trademarks, the Synacort Trademarks, and the Additional Trademarks shall be
assigned to Buyer. Following Closing, Buyer shall prepare and Seller shall
execute such documents as Buyer may reasonably request in order to record the
assignment of the Trademarks, the Synacort Trademarks, and the Additional
Trademarks. The responsibility and expense of preparing and filing such
documents and any actions required ancillary thereto, shall be borne solely by
Buyer.
8.6 Assignment of Registrations. At or following Closing, Buyer shall
prepare and Seller shall execute such documents as Buyer may reasonably
<PAGE> 15
request in order to record the assignment of the Registrations. Buyer shall pay
any user fees associated with any Product that accrues after Closing but prior
to transfer of such Registration.
8.7 Access to Information. Buyer and Seller will, upon reasonable prior
notice, make available to the other, to the extent reasonably required for the
purpose of assisting Seller or Buyer in obtaining governmental approvals and
preparation of tax returns or financial statements required by the Securities
and Exchange Commission (to the extent information is available) relating to the
Assets, and prosecuting or defending or preparing for the prosecution or defense
of any action, suit, claim, complaint, proceeding or investigation at any time
brought by or pending against Seller or Buyer relating to the Assets, other than
in the case of litigation between the parties hereto, such information or
records (or copies thereof) in their possession after Closing. Buyer shall also
provide Seller with any adverse drug events simultaneously with notification of
the HPB for so long as Buyer markets the Products for serious or
life-threatening adverse event and for three years following Closing for all
other adverse drug events.
8.8 Confidentiality Agreement. The parties agree that certain letter
agreement dated October 15, 1996 between an Affiliate of Seller and Buyer (the
"Confidentiality Agreement"), shall survive either termination of this Agreement
or Closing as an independent agreement; provided, however, that upon Closing,
the restrictions on use and the confidentiality obligations of the
Confidentiality Agreement shall no longer be in effect with respect to
Evaluation Materials (as defined therein) relating to the transferred Assets.
8.9 Press Releases. Neither the Seller nor the Buyer, nor any Affiliate
thereof, will issue or cause publication of any press release or other
announcement or public communication with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, which consent will not be unreasonably withheld or delayed. Neither party
shall use the name of the other party in any public statement, prospectus,
annual report, or press release without the prior written approval of the other
party, which may not be unreasonably withheld or delayed, provided, however,
that both parties shall give the other party a minimum of five business days to
review such press release, prospectus, annual report, or other public statement.
Notwithstanding the foregoing, Buyer may make any disclosure which Buyer, in the
opinion of its counsel, is obligated to make pursuant to applicable law, in
which case, Buyer shall still endeavor to give Seller an opportunity to review
such disclosure but shall not be obligated to do so if such disclosure must, in
the opinion of its counsel, be made without time for review. The failure of
Buyer to draft such disclosure in a timely fashion shall not be deemed a reason
to avoid submitting such disclosure to Seller.
8.10 Government Filings.
8.10.1 Within three (3) business days after the date hereof,
Buyer will, or will cause the ultimate parent entities of Buyer to, and Seller
will cause the ultimate parent entities of Seller to, make such filings,
together with a request for early termination, as may be required by the HSR Act
with respect to the consummation of the transactions contemplated by this
Agreement. Thereafter, Buyer will or will cause the ultimate parent entities of
Buyer to, and Seller will cause the ultimate parent entities of Seller to, each
file or cause to be filed as promptly as practicable with the FTC and the DOJ
any supplemental information that may be requested pursuant to the HSR Act. All
such filings will comply in all material respects with the requirements of the
respective laws pursuant to which they are filed.
<PAGE> 16
8.10.2 Each of the parties will use its respective reasonable
good faith efforts to obtain, and to cooperate with the others in obtaining, all
authorizations, consents, orders and approvals of any governmental agencies, and
cooperate with making any filings that may be or become necessary in connection
with the consummation of the transactions contemplated by this Agreement prior
to or after Closing, and to take all reasonable actions to avoid the entry of
any order or decree by any governmental agency prohibiting the consummation of
the transactions contemplated hereby.
9. CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions to Obligation of Buyer. The obligation of Buyer to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Buyer):
9.1.1 Representations and Warranties. The representations and
warranties made by Seller in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.1.2 Performance. Seller shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.1.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.1.4 No Adverse Change. During the period from the date of
this Agreement to the Closing Date there shall not have occurred or been
discovered, and there shall not exist on the Closing Date except for that which
has been otherwise disclosed elsewhere in this Agreement or in the Disclosure
Schedule at the time of execution of this Agreement, any condition or fact that
could reasonably be expected to have a Material Adverse Effect.
9.1.5 Officer's Certificate. Seller shall have delivered to
Buyer a certificate, dated the Closing Date and executed by an officer of
Seller, certifying to the fulfillment of all conditions set forth in this
Article 0.
9.1.6 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.1.7 Authorization. Seller shall have furnished to Buyer all
documents Buyer may reasonably request relating to the existence of Seller, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Buyer.
<PAGE> 17
9.1.8 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Buyer and Buyer's counsel, and
Seller shall have made available to Buyer for examination the originals or true
and correct copies of all documents which Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
9.2 Conditions to Obligations of Seller. The obligations of Seller to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Seller):
9.2.1 Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.2.2 Performance. Buyer shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.2.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.2.4 Officer's Certificate. Buyer shall have delivered to
Seller a certificate, dated the date of Closing and executed by an officer of
Buyer, certifying to the fulfillment of all conditions specified in this Article
0.
9.2.5 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.2.6 Authorization. Buyer shall have furnished to Seller all
documents Seller may reasonably request relating to the existence of Buyer, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Seller.
9.2.7 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Seller and Seller's counsel,
and Buyer shall have made available to Seller for examination the originals or
true and correct copies of all documents which Seller may reasonably request in
connection with the transactions contemplated by this Agreement.
10. THE CLOSING
<PAGE> 18
10.1 The Closing. Subject to the satisfaction of all of the conditions
to each party's obligations set forth in Article 0 hereof (or, with respect to
any condition not satisfied, the waiver in writing thereof by the party or
parties for whose benefit the condition exists), the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at 9:00 a.m.
(local time) on the first Monday following the day in which all required waiting
periods under the HSR Act have expired or been terminated (the "Closing Date")
or at such other time, date (but in no event later than March 31, 1997) and
place as the parties hereto may agree in writing. The transfer of the Assets
shall be deemed to have occurred as of the Closing Time.
10.2 Deliveries by Seller. Unless otherwise specified in this Section
0, at Closing, Seller or its Affiliate, as appropriate, shall deliver to Buyer
in form reasonably satisfactory to Buyer, each properly executed and dated as of
the Closing Date, where appropriate:
10.2.1 except as otherwise provided herein, such deeds, bills
of sale, endorsements, assignments, assignment agreements, and other good and
sufficient instruments of conveyance and transfer as shall be effective to vest
in Buyer free and clear title to the Assets as contemplated by this Agreement
10.2.2 Secretary's Certificate certifying that the Board of
Directors of Seller has authorized this Agreement;
10.2.3 the Supply Agreement;
10.2.4 a receipt for the Purchase Price; and
10.2.5 originals of those Trademark Agreements exclusively
related to the Products.
10.3 Deliveries by Buyer. At Closing, Buyer or its Affiliate, as
appropriate, shall deliver or cause to be delivered to Seller:
10.3.1 The Purchase Price payable in accordance with Article
0;
10.3.2 Secretary's Certificate certifying that the Board of
Directors of Buyer has authorized this Agreement; and
10.3.3 the Supply Agreement.
11. TERMINATION
11.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date:
11.1.1 By the mutual written consent of Seller and Buyer;
11.1.2 By either Seller or Buyer if Closing shall not have
occurred on or before March 1, 1997, unless such date has been extended by
mutual agreement in writing (the "Termination Date");
11.1.3 By either Seller or Buyer if consummation of the
transactions contemplated hereby shall violate any final order, decree or
judgment of any court or governmental body having competent jurisdiction.
11.1.4 By Buyer if there has been a material misrepresentation
by Seller or a material breach by Seller of any of the warranties or covenants
<PAGE> 19
of Seller set forth herein that Seller has not cured within fourteen (14) days
after receipt of notice from Buyer requesting such to be cured (but in no event
later than the Termination Date) or that Buyer has not waived in writing; or
11.1.5 By Seller if there has been a material
misrepresentation by Buyer or a material breach by Buyer of any of the
warranties or covenants of Buyer set forth herein that Buyer has not cured
within fourteen (14) days after receipt of notice from Seller requesting such to
be cured (but in no event later than the Termination Date) or that Seller has
not waived in writing.
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 0, all further obligations of Seller and Buyer under this Agreement
shall terminate without further liability of Seller or Buyer except (a) for the
obligations of Buyer and Seller under Sections 0, 0, 0, and 0; and (b) that such
termination shall not constitute a waiver by any party of any claim it may have
for damages caused by reason of a breach by the other party of a representation,
warranty, covenant or agreement.
12. SURVIVAL; INDEMNIFICATION
12.1 Survival of Representations; Remedy for Breach. The
representations, warranties and covenants made by Buyer and Seller under this
Agreement shall survive the Closing for a period of eighteen (18) months. Any
Indemnifiable Claims (as hereinafter defined) or claim for tax reimbursement
that a party may have arising out of the other party's breach of its
representations, warranties, or covenants contained in this Agreement shall be
made by notice to the other party no later than eighteen (18) months following
the Closing Date ("Claim Period") and there shall be no recovery for
indemnification for breach of a representation, warranty, or covenant under this
Agreement for any Indemnifiable Claim or claim for tax reimbursement first
asserted after that date. Seller and Buyer agree to use reasonable efforts to
mitigate any loss or damage for which they may seek indemnification under this
Article 12 or for which they may seek recovery under law or equity.
12.2 Indemnification by Seller. Subject to the limitations set forth in
Section 0, and in addition to any other rights Buyer may have under law or at
equity, Seller shall indemnify and hold harmless Buyer and its Affiliates,
officers, directors, and agents and employees from any and all damages, losses,
liabilities, third party claims, lawsuits, obligations and expenses (including
reasonable attorneys fees and costs) (collectively, "Damages") that Buyer shall
incur or suffer from (a) any breach of a representation, warranty, or covenant
of Seller in this Agreement or in any of the agreements, instruments or
documents executed or delivered by Seller pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Seller, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets prior to the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.2 (a) and (b),
collectively "Buyer's Indemnifiable Claims"); and (c) any taxes associated with,
imposed upon or in respect of the conduct of the Business, the sale of the
Products, or the use or ownership of the Assets prior to the Closing Date; or
(d) taxes imposed with respect to the transfer of the Assets to the Buyer
pursuant to this Agreement, including any assessments against Seller as a member
of a consolidated reporting group with any other entity except for payment of
GST tax which shall be paid by Buyer (Section 12.2 (c) and (d), collectively
"Buyer's Tax Claims").
12.3 Indemnification by Buyer. Subject to the limitations set forth in
Section 0, and in addition to any other rights it may have under law or at
<PAGE> 20
equity, Buyer shall indemnify and hold harmless Seller and its Affiliates,
officers, directors, and agents and employees from any and all Damages that
Seller shall incur or suffer from (a) any breach of a representation, warranty,
or covenant of Buyer in this Agreement or in any of the agreements, instruments
or documents executed or delivered by Buyer pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Buyer, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets following the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.3 (a) and (b),
collectively "Seller's Indemnifiable Claims") (Buyer's Indemnifiable Claims and
Seller's Indemnifiable Claims are hereby collectively referred to as
"Indemnifiable Claims"); or (c) any taxes associated with, imposed upon or in
respect of the conduct of the Business, the sale of the Products, or the use or
ownership of the Assets following the Closing Date; or (d) payment of GST tax
(Section 12.3 (c) and (d), collectively "Seller's Tax Claims").
12.4 Limitations. Notwithstanding anything to the contrary herein,
neither Buyer and its Affiliates nor Seller shall be entitled to seek
indemnification or any recovery under law or at equity with respect to any
Indemnifiable Claim until the aggregate amount of such claims exceeds Two
Hundred Thousand United States Dollars ($200,000) (the "Basket Limitation");
provided, however, that (i) if either party is responsible to the other for any
amount in excess of the Basket Limitation, then the Basket Limitation shall not
be deemed applicable and such party shall be responsible to fully indemnify the
other party for all Damages; (ii) in no event shall either party be required to
indemnify the other for breaches of the representations, warranties, and
covenants made in this Agreement for an amount in excess of the Purchase Price;
and (iii) neither the Basket Limitation nor the limitation in the immediately
preceding clause shall be applicable to (x) third party claims or (y) Buyer's
Tax Claims or Seller's Tax Claims; provided, that Damages shall be limited to
one-third (1/3) of the Purchase Price with respect to the representations and
warranties under Sections 0, 0, 0, and 0; and provided further, that Damages
shall be limited to one-half (1/2) of the Purchase Price with respect to the
representations and warranties under Sections 0 and 0.
12.5 Notice. A party seeking indemnification pursuant to Section 0 or 0
(an "Indemnified Party") shall give prompt notice to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion of any
claim, or the commencement of any action, suit or proceeding, in respect of
which indemnity is or may be sought hereunder (whether or not the limits set
forth in Section 0 have been exceeded) and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request, but no failure to give such notice shall relieve the Indemnifying Party
of any liability hereunder (except to the extent the Indemnifying Party has
suffered actual prejudice thereby).
12.6 Participation in Defense. The Indemnifying Party may, at its
expense, participate in or assume the defense of any such action, suit or
proceeding involving a third party. In such case the Indemnified Party shall
have the right (but not the duty) to participate in the defense thereof, and to
employ counsel, at its own expense, separate from counsel employed by the
Indemnifying Party in any such action and to participate in the defense thereof.
The Indemnifying Party shall be liable for the fees and expenses of one firm as
counsel (and appropriate local counsel) employed by the Indemnified Party if the
Indemnifying Party has not assumed the defense thereof. Whether or not the
Indemnifying Party chooses to defend or prosecute any claim involving a third
party, all the parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and attend
<PAGE> 21
such conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.
12.7 Settlements. The Indemnifying Party shall not be liable under this
Article for any settlement effected without its consent of any claim, litigation
or proceedings in respect of which indemnity may be sought hereunder, unless the
Indemnifying Party refuses to acknowledge liability for indemnification under
this Article 0 and/or declines to defend the Indemnified Party in such claim,
litigation or proceeding.
12.8 Set-Off. In addition to any other remedies that Buyer may have
against Seller for indemnification under the provisions of this Agreement or
under law or at equity, Buyer may set off against any amount otherwise due and
yet unpaid to Seller as part of the Purchase Price or otherwise, any amount owed
by Seller or its Affiliates to Buyer under any provision of this Agreement, any
instrument or agreement delivered pursuant thereto, or otherwise.
13. NON-COMPETITION AND CONFIDENTIALITY
13.1 Non-Compete. Seller acknowledges that in order to assure Buyer
that Buyer will retain the value of the Assets, Buyer wishes assurances that
Seller and its Affiliates shall not utilize their special knowledge of the
Business and their relationship with customers, suppliers, and others to compete
with the Buyer with respect to the Business. For a period of five (5) years
beginning on the Closing Date, neither Seller nor its Affiliates shall engage in
any business that manufactures, packages, distributes or sells finished products
in the Territory whose sole or major active ingredients consist of the Active
Ingredients for topical use in dermatology except for (i) the transactions
involving Buyer, e.g. the sale to Buyer of Active Ingredient pursuant to the
Supply Agreement contemplated herein, (ii) as part of a product whose primary
indication is the treatment of vulvovaginal mycotic infections; provided that,
nothing in this Article shall in any way restrict or preclude the Seller or any
of its Affiliates from acquiring another company, business or line of products
(including by license thereof or through investment therein), in which less than
a twenty percent (20%) of the revenues and/or assets is derived from or
represents finished products whose sole or major active ingredients consist of
the Active Ingredients for topical use in dermatology and to continue to operate
such business following such acquisition. In promoting any such acquired product
or in promoting any other dermatology product that Seller may develop,
manufacture of market in compliance with this Section 13.1, Seller shall not
make use of the history, heritage or brand equity of the Products as part of any
such promotional plan or activity.
13.2 Confidentiality. Seller acknowledges that the Assets and all other
confidential or proprietary information with respect to the Business are
valuable, special and unique. Neither Seller nor any of its Affiliates shall, at
any time after the Closing Date, disclose, directly or indirectly, to any third
party, or use or purport to authorize any third party to use any confidential or
proprietary information with respect to the Business, whether or not for
Seller's or an Affiliate's own benefit, without the prior written consent of
Buyer, including without limitation, information as to the financial condition,
results of operations, customers, suppliers, products, inventions, sources,
leads or methods of obtaining new supplies, marketing strategies or any other
information relating to the Business or Products which could reasonably be
regarded as confidential, but not including information which (i) does not
relate directly and exclusively to the Business or the Products, provided that
Seller and its Affiliates shall not disclose such information to the direct
detriment of the Business; or (ii) is or shall become generally available to the
public other than as a result of an unauthorized disclosure by
<PAGE> 22
Seller or an Affiliate or third party to whom Seller or an Affiliate has
provided such information; or (iii) as may be necessary for Seller or any of its
Affiliates to perform its obligations under this Asset Purchase Agreement or the
transactions or agreements contemplated herein; or (iv) that is required by Law
to be disclosed by Seller or any of its Affiliates.
14. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Seller or Buyer at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.
if to Buyer, to: Medicis Pharmaceutical Corporation
4383 East Camelback Road
Phoenix, Arizona 85018
Attn: Jonah Shacknai
with a copy to: Brown & Bain
2901 North Central Avenue
Phoenix, Arizona 85012-2788
Attn: Frank M. Placenti
if to Seller, to: Syntex Pharmaceuticals International Limited
Ave. Samuel Lewis
Torre Hongkong Bank, Piso No. 18/P.O. Box 7386
Panama 5, Republic of Panama
Attn: General Manager
with a copy to:
F. Hoffmann-La Roche Ltd.
CH-4070 Basel, Switzerland
Attn: Corporate Law Department
and a copy to:
Hoffmann-La Roche Limited
2455 Meadowpine Boulevard
Mississauga, Ontario L5N 6L7
Attention: General Counsel
15. SYNACORT
At Closing, Seller shall grant Buyer an exclusive, fully paid-up
license, with right to sub-license, to manufacture, market and sell products in
the Territory using the Synacort NDSs; provided, however, that Buyer may not
manufacture, market or sell any product for the treatment of vulvovaginal
mycotic infections products using the Synacort NDSs. At Closing, Seller shall
transfer to Buyer and Buyer shall assume all regulatory responsibility for the
Synacort NDSs. In addition, Seller hereby assigns and Buyer shall assume all
rights and obligations under the Synacort Trademarks and the Synacort Trademark
<PAGE> 23
Agreements effective as of Closing.
16. ARBITRATION AND GOVERNING LAW
16.1 Generally. Except for the right of either party to apply to a
court of competent jurisdiction for a Temporary Restraining Order to preserve
the status quo or prevent irreparable harm pending the selection and
confirmation of a panel of arbitrators in accordance herewith, any dispute,
controversy or claim arising out of or relating to this Agreement, to a breach
or termination thereof, or to the rights of any party for indemnification
thereunder ("Claim") shall be settled by final and binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in effect on the day the arbitration is commenced in
accordance with this Agreement ("Rules"). In the event of any inconsistency
between such Rules and the terms of this Agreement, this Agreement shall
supersede the Rules. Any judgment on any award rendered in the arbitration may
be entered in any court having jurisdiction and shall be final,. binding,
non-appealable, and conclusive. The AAA shall have jurisdiction over all parties
to this Agreement for purposes of the arbitration.
16.2 Defenses and Bankruptcy. Any statute of limitations or other
equitable or legal doctrine which would otherwise be applicable to any action
brought by any of the parties shall be applicable in the Arbitration. In the
event any party to this Agreement files a petition under the bankruptcy laws of
the United States or has a petition filed against it which results in an order
for relief or other indicia that a bankruptcy case has commenced, it is the
express intention of the parties to this Agreement that this Agreement shall
control and be enforced in accordance with is terms and conditions that any
Claim shall remain subject to arbitration to the maximum extent permitted by
law.
16.3 Commencement of Arbitration. Any party may commence arbitration by
serving upon all other parties a written demand for arbitration sent by
certified mail, return receipt requested, in accordance with Agreement, with a
copy of the same delivered by certified mail, return receipt requested, to the
AAA regional office in which Palo Alto California is then located. The AAA shall
administer the arbitration. The arbitration panel shall consist of three
members, one being appointed by each party and the third, who shall be the
chairman of the panel, being appointed by mutual agreement of the two
party-appointed arbitrators. In the event of failure of said two arbitrators to
agree within sixty (60) days after the commencement of the arbitration
proceeding upon the appointment of the third arbitrator, the third arbitrator
shall be appointed by the AAA in accordance with the Rules. In the event that
either party shall fail to appoint an arbitrator within thirty (30) days after
the commencement of the arbitration proceeding, such arbitrator and the third
arbitrator shall be appointed by the AAA in accordance with the Rules. The
arbitration award shall be rendered by a majority of the members of the Board of
Arbitration. Except as expressly provided in this Agreement in Section 17.9, the
panel shall not be entitled to modify this Agreement or the transactions
contemplated herein.
16.4 Governing Law and Place of Arbitration. The arbitrators shall
apply the laws of the State of New York (regardless of its or any other
jurisdiction's choice of law principles). The place of arbitration shall be
Phoenix, Arizona.
16.5 Discovery and Other Matters. There shall be no rights of discovery
in connection with the arbitration except as follows:
<PAGE> 24
16.5.1 Each party shall have the right to request the
arbitrators to issue subpoenas for documents in accordance with the rules;
16.5.2 Each party shall have the right to initiate one (1)
deposition of one representative of each party to the arbitration; and each
party shall have the right to initiate one (1) additional oral deposition
pursuant to a subpoena issued by the arbitrators or any court of competent
jurisdiction.
16.5.3 At any time following the tenth day after the
commencement of the arbitration in accordance with this Agreement, a written
notice served upon all parties shall be sufficient to compel the attendance of
any party at a deposition upon not less than sixty (60) days notice and no
subpoena shall be required for that purpose. If a person fails or refuses to
testify at a deposition, that person shall not be permitted to testify at the
hearing, except for good cause shown. The number of depositions that may be
initiated by either party may be varied by agreement of all parties to the
arbitration but not by any action, order or request of the arbitrators or any
court.
16.6 Hearing. Not less than thirty (30) days prior to the scheduled
arbitration proceeding, the arbitrator shall conduct a preliminary hearing in
accordance with the AAA guidelines. Not less than five (5) days prior to the
preliminary hearing, all parties to the arbitrations shall serve upon all other
parties to the arbitration a written list of witnesses and exhibits to be used
at the arbitration hearing. Except for good cause shown, no witness or exhibit
may be utilized at the arbitration hearing other than as set forth on such list.
the arbitrators shall receive evidence at a single hearing. The arbitrators
shall award reasonable attorneys' fees and costs in favor of the prevailing
party or parties. The arbitrator shall issue a final award not more than twenty
(20) days following the conclusion of the hearing. The arbitrators shall have
the power to hear and decide, by documents only or with a hearing (at the
arbitrators sole discretion) any prehearing motions in the nature of a pre-trial
motion to dismiss or for summary judgment.
16.7 Arbitrators Fees. The arbitrators shall be entitled to receive
reasonable compensation at an hourly rate to be established between the
arbitrators and he AAA. If required by the arbitrators, Buyer, on the one hand,
and Seller, on the other, will deposit with the AAA an equal share of the total
anticipated fee of the arbitrators in an amount to be estimated by the AAA. The
non-prevailing party(s) in the proceedings shall be ordered to pay, and shall
have the ultimate responsibility for, all arbitrators fees and the fees of the
AAA and such fees shall be included in the judgment to be entered against the
non-prevailing party or parties.
17. ADDITIONAL TERMS
17.1 Brokers. Buyer represents to Seller that it has not employed any
investment banker, broker, finder or intermediary (a "Broker") in connection
with the transactions contemplated hereby who might be entitled to a fee or any
commission from Seller upon consummation of the transactions contemplated
hereby. Seller represents to Buyer that it has not employed any Broker in such
connection who might be entitled to a fee or any commission from Buyer upon
consummation of the transactions contemplated hereby.
17.2 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to seek
equitable relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies
<PAGE> 25
provided hereunder or available to the parties hereto at law or in equity.
17.3 Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting and other costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
17.4 Attorneys' Fees. If there is any litigation or arbitration with
respect to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.
17.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns; provided that this Agreement may not be assigned by any party without
the written consent of the other party.
17.6 Entire Agreement. This Agreement, the exhibits hereto, the
Disclosure Schedule and the Confidentiality Agreement embody the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede and replace all previous negotiations, understandings,
representations, writings, and contract provisions and rights relating to the
subject matter hereof.
17.7 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.
17.8 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Seller and a counterpart has been signed by Seller and delivered to
Buyer.
17.9 Severability. The parties agree that (a) the provisions of this
Agreement shall be severable and (b) in the event that any of the provisions
hereof are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, (i) such invalid, void or otherwise unenforceable
provisions shall be automatically replaced by other provisions that are as
similar as possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable and (ii) the remaining provisions shall
remain enforceable to the fullest extent permitted by law, provided that the
rights and interests of the parties hereto shall not be materially affected.
17.10 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein to
Articles and Sections are to the articles and sections of this Agreement.
IN WITNESS WHEREOF, this Agreement has been signed by duly authorized
representatives of each of the parties hereto as of the Effective Date.
<PAGE> 26
SYNTEX PHARMACEUTICALS MEDICIS PHARMACEUTICAL
INTERNATIONAL LIMITED CORPORATION
By /s/ John R. Talbot By /s/ Jonah Shacknai
------------------------------- ------------------------------------
Name John R. Talbot Name Jonah Shacknai
----------------------------- ----------------------------------
Title: President Title: Chairman and Chief Executive
--------------------------- Officer
--------------------------------
<PAGE> 1
EXHIBIT 10.80
ASSET PURCHASE AGREEMENT
BETWEEN
SYNTEX (U.S.A.) INC.
and
MEDICIS PHARMACEUTICAL CORPORATION
<PAGE> 2
TABLE OF CONTENTS
1. DEFINITIONS...........................................................1
2. ASSETS BEING SOLD.....................................................5
2.1 Trademarks...................................................5
2.2 Registrations................................................5
2.3 Manufacturing Technology and Know-How........................5
2.4 Inventory....................................................6
2.5 Assumed Agreements...........................................6
2.5.1 Patheon Agreement...................................6
2.5.2 Paco Agreements.....................................6
2.5.3 Trademark Agreements................................6
2.6 Manufacturing Information....................................6
2.7 Data Bank Documents..........................................6
2.8 Worldwide Safety Reports.....................................6
2.9 Assumption of Liabilities....................................6
2.10 Customer Lists...............................................6
2.11 Books and Records............................................6
3. PURCHASE PRICE........................................................7
4. REPRESENTATIONS AND WARRANTIES OF SELLER..............................7
4.1 Organization.................................................7
4.2 Authority....................................................7
4.3 Title to Assets..............................................7
4.4 No Violation or Conflict.....................................8
4.5 Registrations................................................8
4.6 Patents......................................................8
4.7 Inventory....................................................8
4.8 Taxes........................................................8
4.9 Financial Information........................................8
4.10 Absence of Certain Changes...................................9
4.11 Violations of Law............................................9
4.12 No Government Restrictions..................................10
4.13 Litigation..................................................10
4.14 Limitation of Warranty......................................10
4.15 Validation of Products......................................10
4.16 Trademarks..................................................10
4.17 Return Policy...............................................10
4.18 Warranties..................................................10
5. REPRESENTATIONS AND WARRANTIES OF BUYER..............................11
5.1 Organization................................................11
5.2 Authority...................................................11
5.3 No Violation or Conflict....................................11
5.4 No Government Restrictions..................................11
5.5 Litigation..................................................11
5.6 Financing...................................................11
6. SELLER'S COVENANTS...................................................11
6.1 Conduct of Business.........................................11
6.2 Compliance with Laws........................................12
6.3 Disclosure Supplements......................................12
6.4 Access; Investigation.......................................13
6.5 Further Assurances..........................................13
<PAGE> 3
7. BUYER'S COVENANTS....................................................13
7.1 Transfer of Products........................................13
7.2 Labeling....................................................13
7.3 Further Assurances..........................................13
8. COVENANTS BY BUYER AND SELLER........................................13
8.1 Stability Studies...........................................13
8.2 Transition Services Agreement...............................13
8.3 Labeling....................................................14
8.4 Use of Seller Trademarks....................................14
8.5 Assignment of Trademarks....................................14
8.6 Assignment of Registrations.................................14
8.7 Access to Information.......................................14
8.8 Confidentiality Agreement...................................15
8.9 Press Releases..............................................15
8.10 Government Filings..........................................15
8.11 Rebates.....................................................16
8.11.1 Seller's Responsibility............................16
8.11.2 Reimbursement by Buyer.............................16
8.11.3 Rebate Protection..................................16
8.11.4 HCFA Filings.......................................16
8.12 Contract Chargebacks........................................17
8.13 Returns.....................................................17
8.14 Customers...................................................17
8.15 Backorder...................................................18
9. CONDITIONS PRECEDENT TO CLOSING......................................18
9.1 Conditions to Obligation of Buyer...........................18
9.1.1 Representations and Warranties.....................19
9.1.2 Performance........................................19
9.1.3 HSR Act Approvals..................................19
9.1.4 No Adverse Change..................................19
9.1.5 Officer's Certificate..............................19
9.1.6 Litigation.........................................19
9.1.7 Authorization......................................19
9.1.8 Proceedings and Instruments Satisfactory...........19
9.2 Conditions to Obligations of Seller.........................20
9.2.1 Representations and Warranties.....................20
9.2.2 Performance........................................20
9.2.3 HSR Act Approvals..................................20
9.2.4 Officer's Certificate..............................20
9.2.5 Litigation.........................................20
9.2.6 Authorization......................................20
9.2.7 Proceedings and Instruments Satisfactory...........20
10. THE CLOSING..........................................................20
10.1 The Closing.................................................20
10.2 Deliveries by Seller........................................21
10.3 Deliveries by Buyer.........................................21
11. TERMINATION..........................................................22
11.1 Termination.................................................22
11.2 Effect of Termination.......................................22
11.3 Payment of Costs............................................22
<PAGE> 4
12. SURVIVAL; INDEMNIFICATION............................................23
12.1 Survival of Representations; Remedy for Breach..............23
12.2 Indemnification by Seller...................................23
12.3 Indemnification by Buyer....................................23
12.4 Limitations.................................................24
12.5 Notice......................................................24
12.6 Participation in Defense....................................24
12.7 Settlements.................................................25
12.8 Set-Off.....................................................25
13. NON-COMPETITION AND CONFIDENTIALITY..................................25
13.1 Non-Compete.................................................25
13.2 Confidentiality.............................................25
14. NOTICES..............................................................26
15. BULK SALES LAW.......................................................27
16. SYNACORT.............................................................27
17. ARBITRATION AND GOVERNING LAW........................................27
18. ADDITIONAL TERMS.....................................................29
18.1 Brokers.....................................................29
18.2 Injunctive Relief...........................................29
18.3 Expenses....................................................30
18.4 Attorneys' Fees.............................................30
18.5 Successors and Assigns......................................30
18.6 Entire Agreement............................................30
18.7 Amendments; No Waiver.......................................30
18.8 Counterparts................................................30
18.9 Severability................................................30
18.10 Captions....................................................30
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into on January 21, 1997 (the "Effective Date") by and between Syntex (U.S.A.)
Inc., a Delaware corporation ("Seller") and Medicis Pharmaceutical Corporation,
a Delaware corporation ("Buyer").
This Agreement sets forth the terms and conditions upon which Buyer is
purchasing from Seller and Seller is selling to Buyer the Assets (as hereinafter
defined).
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Active Ingredients" mean the pharmaceutical compounds
fluocinolone acetonide, fluocinonide, and hydrocortisone, and all salts and
esters thereof.
1.2 "Additional Trademarks" means the trademark/service mark
registrations and applications that are set forth on Schedule 0 together with
all records associated therewith.
1.3 "Affiliate" of a party shall mean any individual, corporation
or other business entity (e.g. limited or general partnership, trust or estate,
joint venture or association) controlling, controlled by or under common control
with such party. "Control" (including "controlling", "controlled by" and "under
common control with") shall mean the direct or indirect ownership of more than
fifty percent (50%) of the voting or income interest in such party, corporation
or other business entity respectively. Notwithstanding the foregoing, Genentech,
Inc. ("Genentech") shall not be considered an Affiliate of Seller for the
purpose of this Agreement for so long as there are material restrictions on the
ability of Seller and its Affiliates to control Genentech.
1.4 "ANDA" means an Abbreviated New Drug Application, as such term
is defined by the FDA.
1.5 "Assets" has the meaning ascribed to such term in Section 0.
1.6 "Assumed Agreements" means the Patheon Agreement, Paco
Agreements and the Trademark Agreements.
1.7 "Broker" has the meaning ascribed to such term in Section
16.1.
1.8 "Business" means the business as currently conducted by Seller
with respect to manufacture and sale of the Products in the Territory.
1.9 "Buyer Labeling" means the printed labels, labeling and
packaging materials, including printed carton, container label and package
inserts, used by Buyer and bearing Buyer's name for each Product.
1.10 "Canadian Facility" means the manufacturing facility located
at 2100 Syntex Court, Mississauga, Ontario, Canada.
1.11 "cGMP's" means the then-current Good Manufacturing Practices
applicable to the manufacture of pharmaceutical products for human use in the
United States in accordance with FDA regulations.
<PAGE> 6
1.12 "Closing" has the meaning ascribed to such term in Section 0.
1.13 "Closing Date" has the meaning ascribed to such term in
Section 0.
1.14 "Closing Time" means 12:01 a.m. on the date of Closing.
1.15 "Confidentiality Agreement" has the meaning ascribed to such
term in Section 0.
1.16 "Damages" has the meaning ascribed to such term in Section 0.
1.17 "Data Bank Documents" has the meaning ascribed to such term in
Section 0.
1.18 "Disclosure Schedule" means the disclosure schedule delivered
prior to the Effective Date to Buyer by Seller in connection with this
Agreement. The sections of the Disclosure Schedule correspond to the sections of
this Agreement.
1.19 "DOJ" means the United States Department of Justice.
1.20 "Effective Date" means January 21, 1997.
1.21 "FDA" means the United States Food and Drug Administration.
1.22 "FTC" means the United States Federal Trade Commission.
1.23 "HCFA" means the Health Care Financing Administration.
1.24 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
1.25 "Indemnifiable Claims" has the meaning ascribed to such term
in Section 0.
1.26 "Indemnified Party" has the meaning ascribed to such term in
Section 0.
1.27 "Indemnifying Party" has the meaning ascribed to such term in
Section 0.
1.28 "Inventory" has the meaning ascribed to such term in Section
0.
1.29 "Know-How" has the meaning ascribed to such term in Section 0.
1.30 "Law" means any federal, state, foreign, local or other law,
ordinance, rule, regulation, or governmental requirement or restriction of any
kind, and any rules, regulations, and orders promulgated thereunder.
1.31 "Material Adverse Effect" means an event that has a material
adverse effect on the Assets, taken as a whole.
1.32 "NADA" means a New Animal Drug Application, as such term is
defined by the FDA.
1.33 "NDA" means a New Drug Application, as such term is defined by
the FDA.
<PAGE> 7
1.34 "NDC number" means a national drug code number.
1.35 "Net Sales" means the gross invoice amount of Products sold to
third parties, less (a) promotional and trade discounts; (b) sales and excise
taxes, value added and other taxes and insurance premiums and duties which are
billed to customers as separate items on invoices; (c) allowances for
short-shipments and price adjustments; and (d) contract chargebacks and rebates,
government rebates, and returns (e.g., spoiled, damaged or outdated Products).
1.36 "Paco Agreements" means the Indemnification and
Confidentiality Agreement dated April 26, 1985 between PACO Packaging, Inc. and
Seller and the Confidentiality Agreement dated May 1, 1991 between PACO
Packaging, Inc. and Seller.
1.37 "Patents" means any patent or patent application and any and
all divisions, continuations, continuations-in-part, reexaminations, reissues,
extensions, pending or granted supplementary protection, certificates,
substitutions, confirmations, registrations, revalidations, revisions, additions
and the like, of or to said patent and patent application.
1.38 "Patheon Agreement" means the agreement between Hoffmann-La
Roche Inc., a Delaware corporation, and Patheon to be entered into on January
31, 1997.
1.39 "Products" means each presentation of those finished
pharmaceutical products set forth in the Registrations.
1.40 "Purchase Price" has the meaning ascribed to such term in
Article 0.
1.41 "Rebate Protection" has the meaning ascribed to such term in
Section 0.
1.42 "Registrations" has the meaning ascribed to such term in
Section 0.
1.43 "Roche Financial Statement" means the statement of Roche Net
Sales by Product in the Territory in U.S. dollars, on a monthly basis for each
month beginning January 1995 until the end of the month in which Closing occurs
as attached on Schedule 0.
1.44 "Roche Net Sales" means the gross invoice amount of Products
sold to third parties in the Territory, less (a) promotional and trade
discounts; (b) sales and excise taxes, value added and other taxes and insurance
premiums and duties which are billed to customers as separate items on invoices;
(c) allowances for short-shipments and price adjustments; and (d) contract
chargebacks and rebates, government rebates, and returns (e.g., spoiled, damaged
or outdated Products) as attached on Schedule 0.
1.45 "Schedule" means a schedule to the Disclosure Schedule.
1.46 "Synacort Assets" means the Synacort License, the Synacort
Trademarks, and the Synacort Trademark Agreements.
1.47 "Synacort License" has the meaning ascribed to such term in
Section 0.
1.48 "Synacort NDAs" means the NDAs that are set forth on Schedule
0 and the regulatory records relating exclusively thereto.
<PAGE> 8
1.49 "Synacort Trademark" means the trademark registrations that
are set forth on Schedule 0 together with all records associated therewith.
1.50 "Synacort Trademark Agreements" means those agreements set
forth on Schedule 0 to the extent such agreements relate to the Synacort
Trademark.
1.51 "Syntex Financial Statements" mean the statements of Syntex
Net Sales and gross margins for the Territory on a corporate cost basis for the
Product group for the fiscal years ended July 31, 1993 and 1994, and for the
five month period ended December 31, 1994, attached as Schedule 0.
1.52 "Syntex Labeling" means the printed labels, labeling and
packaging materials, including printed carton, container label and package
inserts, currently used by Syntex for each Product.
1.53 "Syntex NADAs" means the NADAs set forth on Schedule 0 and the
regulatory records relating exclusively thereto.
1.54 "Syntex Net Sales" means all trade shipments to customers less
all credits issued to customers during the period reported. Such credits include
wholesaler chargebacks, returned goods, price adjustments, and product lost in
transit. Net sales have also been reduced by the amount of rebates paid to
contract and other customers during the period reported. Net sales do not
include cash discounts given to customers or any accrual adjustments made during
the period reported.
1.55 "Syntex Sales Statement" means the unaudited consolidated
statements of Syntex Net Sales for the Territory on a per Product basis by units
and U.S. dollars for the fiscal years ended July 31, 1993 and 1994 and the five
month period ended December 31, 1994, attached as Schedule 0.
1.56 "Territory" means the United States of America and its
possessions, including the Commonwealth of Puerto Rico.
1.57 "Trademark Agreements" has the meaning ascribed to such term
in Section 0.
1.58 "Trademarks" has the meaning ascribed to such term in Section
0.
1.59 "Transition Services Agreement" means the agreement referred
to in Section 0.
1.60 "Validation Batches" has the meaning ascribed to such term in
Section 0.
2. ASSETS BEING SOLD
Subject to the terms and conditions of this Agreement, at Closing,
Seller shall sell, transfer, assign, convey and deliver to Buyer, its successors
and assigns forever, to the extent contemplated herein, all of the right, title,
and interest of Seller in the assets listed below in the Territory
(collectively, the "Assets"), the Syntex NADAs, the Synacort Assets, and the
Additional Trademarks, and Buyer shall assume all rights, title, and interest of
Seller in the Assets, the Syntex NADAs, the Synacort Assets, and the Additional
Trademarks.
2.1 Trademarks. The trademark/service mark registrations and
applications that are set forth on Schedule 0 together with all records
associated therewith (the "Trademarks").
<PAGE> 9
2.2 Registrations. The NDAs and the ANDA that are set forth on
Schedule 0 (the "Registrations") and the regulatory records relating exclusively
thereto.
2.3 Manufacturing Technology and Know-How. The manufacturing
technology and know-how that is exclusively used in manufacturing any Product or
is exclusively used in manufacturing any finished product set forth in the
Syntex NADAs ("Know-How") and any documents which relate specifically and
exclusively to such Know-How. In addition, Seller shall grant Buyer a
non-exclusive, perpetual, paid-up, irrevocable, royalty-free, world-wide
license, with right to sub-license, to use any manufacturing technology and
know-how that are necessary or used in manufacturing any Product or finished
product set forth in the Syntex NADAs (but not exclusively used thereto) with
such license or sublicense being restricted to use for the Products, unless
Buyer can demonstrate by written records that such know-how was known prior to
any disclosure of such know-how by Seller or its Affiliates to Buyer or is now
public knowledge or becomes public knowledge in the future other than by breach
of any agreement between Buyer and its Affiliates and Seller and its Affiliates.
2.4 Inventory. The inventory consisting of the Products that are
owned by Seller and that have been approved by Seller as meeting specifications
and otherwise saleable in the ordinary and normal course of business as of
Closing (the "Inventory"), the quantity and the location of which shall be set
forth in a document delivered by Seller at Closing. Products that have been
shipped from the plant or a warehouse directly to distributors, wholesalers, or
customers are not Inventory. Subject to the terms of the Transition Services
Agreement, Inventory shall be shipped FOB Seller's location.
2.5 Assumed Agreements.
2.5.1 Patheon Agreement. Seller shall assign and Buyer shall
assume all rights and obligations under the Patheon Agreement.
2.5.2 Paco Agreements. Seller shall assign and Buyer shall
assume all rights and obligations under the Paco Agreements, provided, however,
that Seller shall retain all rights of indemnification for the Products
manufactured prior to Closing.
2.5.3 Trademark Agreements. Seller shall assign and Buyer
shall assume all rights and obligations under those agreements set forth on
Schedule 0 to the extent such agreements relate to the Trademarks (the
"Trademark Agreements").
2.6 Manufacturing Information. Accurate and complete copies of the
current Manufacturing Worksheets and copies of the Manufacturing Quality
Assurance Notebooks with respect to the Products currently available, including
batch records, development reports (if existing), and other documents and
records embodying manufacturing information.
2.7 Data Bank Documents. Right to obtain copies of and reference
the animal toxicology, animal mutagenicity, human clinical study and final
reports, and drug monograph/investigator brochures, a list of which is set forth
on Schedule 0 (the "Data Bank Documents").
2.8 Worldwide Safety Reports. A hard copy of the Worldwide Safety
Reports with respect to Products.
2.9 Assumption of Liabilities. The parties expressly acknowledge
and agree that (i) Buyer is not assuming or undertaking any liabilities relating
<PAGE> 10
to or arising from the conduct of the Business, the sale or marketing of the
Products and/or the ownership or use of the Assets prior to the Closing; (ii)
Seller retains all such liabilities; and (iii) Buyer shall have no obligation to
Seller or any of its Affiliates or to any third party for any such liabilities.
2.10 Customer Lists. The list of customers who have purchased the
Products since January 1, 1996, which list will delivered to Buyer at Closing.
2.11 Books and Records. Copies of the Product Annual Reviews and
Annual Product Reviews relating to the Products for the last two years, and
marketing and advertising materials relating exclusively to the Products, to the
extent available.
3. PURCHASE PRICE
Subject to the terms and conditions of this Agreement, in reliance on
the representations, warranties, covenants and agreements of the Seller
contained herein, and in consideration of the sale, conveyance, assignment,
transfer and delivery of the Assets and the Syntex NADAs provided for in Article
0 hereof, Buyer shall deliver to Seller, in full payment for the aforesaid sale,
conveyance, assignment, transfer and delivery, the Purchase Price, consisting
of: (i) seventeen million four hundred thousand United States dollars (US
$17,400,000.00) payable to Seller at Closing by bank wire transfer to Seller at
such banking institution, designated not less than five (5) days prior to
Closing by Seller. Additional payments of six hundred thousand United States
dollars (US $600,000.00) shall be delivered by Buyer to Seller at each of the
first, second and third anniversary of the Closing for a total of three (3) such
additional payments ("Additional Payments"). Each Additional Payment shall be
reduced by fifty percent (50%) if Net Sales in the Territory have decreased by
more than twenty percent (20%) during the twelve (12) months immediately
preceding the corresponding anniversary.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, with full corporate
power and authority to consummate the transactions contemplated hereby. Seller
has all requisite power and authority to own and operate the Assets being
conveyed by Seller pursuant to this Agreement and to carry on the activities
constituting the business.
4.2 Authority. The execution and delivery of this Agreement by
Seller and the consummation and performance of the transactions contemplated
hereby, have been duly and validly authorized by all necessary corporate and
other proceedings, and this Agreement has been duly authorized, executed, and
delivered by Seller and, assuming the enforceability against Buyer, constitutes
the legal, valid and binding obligation of Seller, enforceable in accordance
with its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court. The Transition
Services Agreement, and all other documents executed by Seller or its Affiliates
and delivered at the Closing, including those delivered pursuant to Section 0,
constitute a valid and binding obligation of Seller or the respective Affiliate
of Seller executing such documents enforceable in accordance with their
respective terms.
<PAGE> 11
4.3 Title to Assets. Except as set forth in Schedule 0, Seller has
good and marketable title to all the Assets and will convey good and marketable
title at Closing, free and clear of any and all liens, encumbrances, claims,
mortgages, leases, security interests, charges or restrictions. Notwithstanding
the foregoing, Seller retains the right to use and to transfer to other buyers
of the products containing any Active Ingredient outside the Territory
information that is similar or identical to that contained in the Registrations
and the Know-How; provided, however, that no such buyer has been expressly
granted by Seller or any Affiliate of Seller the right to sell, transfer or
distribute any of the products containing any Active Ingredient into the
Territory based on such Registrations and Know-How and neither Seller nor any
Affiliate shall expressly grant any buyer such right. Buyer acknowledges that
Seller cannot prevent such a buyer from using such information, including
registrations and know-how that is substantially similar to the Registrations
and Know-How, to sell, transfer or distribute such products in the Territory. In
addition, trademarks that are the same as or similar to the Trademarks may be
registered in other countries and may be either retained by Seller for its use
or sold to other buyers in either case, for use solely outside the Territory.
4.4 No Violation or Conflict. Seller's execution and delivery of
this Agreement and the other related documents delivered by Seller in connection
with transactions contemplated herein and the performance of this Agreement by
Seller (and the transactions contemplated herein) (a) do not and will not
conflict with, violate or constitute or result in a default or an event creating
rights of acceleration, termination, or cancellation, or a loss of right under
any Law, judgment, order, decree, the articles of incorporation or bylaws of
Seller or any mortgage, contract or agreement to which Seller is a party or by
which Seller is bound or (b) will not result in the creation or imposition of
any lien, charge, mortgage, claim, pledge, security interest, restriction or
encumbrance of any kind on, or liability with respect to, the Assets or the
Business except as otherwise provided herein or otherwise disclosed on the
Disclosure Schedule. None of the Assumed Agreements require the consent of any
third party to the assignment of such Assumed Agreement from Seller to Buyer;
provided, however, that with respect to the Patheon Agreement, Affiliates of
Seller must give prior written notice of any assignment to Patheon and Buyer
must covenant in writing with Patheon to be bound by the terms of the Patheon
Agreement.
4.5 Registrations. The Registrations are the only registrations
required by the FDA to sell and market the Products in the Territory. All
Products in Schedule 2.2 are registered and eligible for immediate sale without
regulatory limitations.
4.6 Patents. There are no Patents with respect to the Active
Ingredients or Products in the Territory.
4.7 Inventory. As of Closing, each Product in the Inventory shall
meet the specifications therefor as set forth in the manufacturing documentation
and Registrations for such Product. The Inventory will be in good condition,
properly stored and in compliance with applicable Laws, usable and salable in
the ordinary course of business and shall have, except as set forth in Schedule
0, a minimum remaining shelf life at Closing of not less than thirteen (13)
months.
4.8 Taxes. There are no liens for taxes upon the Assets except for
liens for current taxes not yet due and payable which shall remain the sole
obligation of the Seller.
<PAGE> 12
4.9 Financial Information.
4.9.1 The Syntex Financial Statements and the Syntex Sales
Statements are accurate and complete in all material respects, reflect only
actual bona fide transactions, are consistent with the accounting records of
Seller, and were prepared in accordance with United States generally accepted
accounting principles (GAAP) consistently applied.
4.9.2 The Roche Financial Statements and the Roche Net Sales
are accurate and complete in all material respects, reflect only actual bona
fide transactions, are consistent with the accounting records of Seller and were
prepared in accordance with International Accounting Standards ("IAS")
consistently applied with prior periods.
4.9.3 Seller and its Affiliates have no material liabilities,
contingent, absolute, accrued or otherwise, relating to the Assets, other than
as set forth in Schedule 0.
4.10 Absence of Certain Changes.
4.10.1 Except as set forth in Schedule 0 or as otherwise set
forth in this Agreement, since December 16, 1996, there has not been any (i)
Material Adverse Effect or material adverse change in the financial condition or
results of operation of the Business, (ii) damage, destruction or loss which has
or may reasonably be expected to have a Material Adverse Effect, or (iii)
transaction or commitment outside the ordinary course of business with respect
to the Assets or the Business.
4.10.2 As of the date hereof and as of the Closing Date and
except as otherwise disclosed on Schedule 0, Seller is not aware of any facts,
circumstances, or proposed or contemplated events that could reasonably be
expected to have a Material Adverse Effect after Closing.
4.10.3 No default under any lease, agreement, contract or
other material arrangement relating to the Business, including but not limited
to the Patheon Agreement, the Paco Agreements, and the Trademark Agreements has
been declared and is continuing and, to Seller's knowledge, no condition exists
which, with notice or lapse of time or both, would constitute a default under
any such agreement. All of the such agreements are valid and subsisting and are
in full force and effect and, to Seller's knowledge, no claim exists or has been
asserted with respect to such agreements that would adversely effect the
Business. Seller has not received notice that any party to any such agreements
intends to cancel or terminate such agreements or to exercise or not exercise
any options or rights under such agreements, or to resist any effort by Seller
or its successors to exercise or not exercise such options or rights.
4.11 Violations of Law. Except as set forth in Schedule 0, neither
the operation of the Business nor the Assets (i) violates or conflicts with any
Registrations, any Law, governmental specification, authorization, or
requirement, or any decree, judgment, order, or similar restriction in any
material respect, or (ii) to the best of Seller's knowledge, has been the
subject of an investigation or inquiry by any governmental agency or authority
regarding violations or alleged violations, or found by any such agency or
authority to be in violation, of any Law.
4.12 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Seller in connection with the execution and
<PAGE> 13
delivery of this Agreement by Seller or the consummation by it of the
transactions contemplated hereby to be consummated by it, except with respect to
the filing of a pre-merger notification report under the HSR Act.
4.13 Litigation. Except as set forth in Schedule 0 attached hereto
or as set forth on Schedules 0 and 0, neither the Business nor the Assets is the
subject of (i) any outstanding judgment, order, writ, injunction or decree of,
or settlement agreement with, any person, corporation, business entity, court,
arbitrator or administrative or governmental authority or agency, limiting,
restricting or affecting the Business, the Assets, or the Products in a way that
would have a Material Adverse Effect, (ii) any pending or, to the best of
Seller's knowledge, threatened claim (excluding the adverse drug reports set
forth in the Registrations), suit, proceeding, charge, inquiry, investigation or
action of any kind, and (iii) any court suits filed with respect to the Assets
since January 1, 1990.
4.14 Limitation of Warranty. Seller will not warrant that buyers of
products outside the Territory that are substantially similar to or identical
with the Products will not attempt to register such products in the Territory.
4.15 Validation of Products. Those Products set forth on Schedule 0
have been validated in the Canadian Facility to U.S. standards.
4.16 Trademarks. Each of the Trademarks being conveyed by this
Agreement is being conveyed free and clear of any liens, security interests and
other encumbrances and is freely assignable by Seller. Seller is not required,
and Buyer will not be required, to pay any royalty to any person with respect to
use of any of the Trademarks. Except as set forth in the Trademark Agreements,
the Trademarks do not infringe upon or conflict with the trademarks or other
rights of any third party in the Territory.
4.17 Return Policy. Schedule 4.17 sets forth a complete copy and/or
description of Seller's current return policies with respect to the Products.
Except as noted in Schedule 4.17, Seller has not made or authorized any other
return arrangements with respect to the Products during the three years
immediately preceding the date hereof which would obligate Seller or its
successors to accept Product returns on terms which are materially different
from those set forth in such Schedule 4.17. Except as set forth in Schedule
4.18, Seller has, in general, administered the return policies set forth in
Schedule 4.17 consistently, except for non-material deviations therefrom in the
ordinary course of business.
4.18 Warranties. The FDA approved package insert for each
applicable Product, sets forth a complete copy and/or description of Seller's
current warranties with respect to the Products. Except for implied warranties
arising by operation of law, Seller has not made or authorized any other product
warranty with respect to the Products since January 1, 1995 which would obligate
Seller or its successors on terms which are materially different from those set
forth in the applicable package insert. Seller has, in general, administered its
warranty policies consistently, except for non-material deviations therefrom in
the ordinary course of business since January 1, 1995.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to consummate the transactions contemplated
hereby.
<PAGE> 14
5.2 Authority. The execution and delivery of this Agreement by
Buyer, and the consummation and performance of the transactions contemplated
hereby, have been duly and validly authorized by all necessary corporate and
other proceedings, and this Agreement has been duly authorized, executed, and
delivered by Buyer and, assuming the enforceability against Seller, constitutes
the legal, valid and binding obligation of Buyer, enforceable in accordance with
its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court.
5.3 No Violation or Conflict. The execution and delivery of this
Agreement by Buyer and the performance of this Agreement (and the transactions
contemplated herein) by Buyer do not and will not conflict with, violate or
constitute or result in a default under any Law, judgment, order, decree, the
articles of incorporation or bylaws of Buyer, or any contract or agreement to
which Buyer is a party or by which Buyer is bound.
5.4 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Buyer in connection with the execution and
delivery of this Agreement by Buyer or the consummation by it of the
transactions contemplated hereby to be consummated by it, except with respect to
the filing of a pre-merger notification report under the HSR Act.
5.5 Litigation. To the best knowledge of Buyer, there are no
claims, actions, suits, proceedings or investigations pending or threatened by
or against Buyer with respect to the transactions contemplated hereby, at law or
in equity or before or by any federal, state, municipal or other governmental
department, commission, board, agency, instrumentality or authority.
5.6 Financing. Buyer will have funds sufficient to pay the
Purchase Price on the Closing Date.
6. SELLER'S COVENANTS
6.1 Conduct of Business. Seller agrees that from the date hereof
until the Closing Date that, except as specifically disclosed in Schedule 0 or
unless otherwise consented to by Buyer in writing, Seller shall
6.1.1 maintain the Assets in good status and condition and not
sell or dispose of any Assets except sales of Products in the ordinary course of
business;
6.1.2 cause the Business to be conducted in the ordinary
course consistent with the practice over the past six (6) months and make all
reasonable efforts consistent with practices over the past six (6) months to
preserve the Assets and the reputation of the Business and the Products and to
preserve for Buyer the goodwill of suppliers, customers, distributors, and
others having relations with the Business.
6.1.3 not enter into any new, or amend any existing, contract,
commitment, or agreement relating to the Business, the Products or the Assets or
extend any credit or incur any obligation with respect to the conduct of the
Business or the Assets except (i) for the Patheon Agreement, (ii) or in the
ordinary course of business and consistent with past business practices;
<PAGE> 15
6.1.4 not engage in any special pricing, rebate, allowance,
promotional or marketing programs inconsistent with past practices or for the
purpose of maintaining customer inventory levels of Product in excess of those
levels maintained in the past;
6.1.5 promptly inform Buyer of any change in the Business or
Assets that could reasonably be expected to have a Material Adverse Effect;
6.1.6 not subject any of the Assets or any part thereof to any
mortgage, pledge, security interest, encumbrance, lien or restriction of use or
suffer such to be imposed or license or grant to any other party the right to
use any of the Trademarks or any of the Know-How except for use outside the
Territory;
6.1.7 perform in all material respects all of its obligations
under any agreement with any third party relating to the Business, the Products,
or the Assets unless such third party is in default under such agreement; and
6.1.8 maintain its books of accounts and records relating to
the Business, the Products or the Assets in the usual, regular and ordinary
manner including, but not limited to, the maintenance of any and all documents
required by any federal or state regulatory agency or governmental body.
6.2 Compliance with Laws. Seller shall comply in all material
respects with all Laws and in all respects with all orders of any court or
federal, state, local or other governmental entity applicable to the Business or
the Assets.
6.3 Disclosure Supplements. From time to time following execution
of this Agreement but prior to the Closing Date, Seller will promptly inform
Buyer, in writing, of any matter that may arise hereafter and that, if existing
or occurring prior to the execution of this Agreement, would have been required
to be set forth or described herein or in the Disclosure Schedule. Seller shall
prepare and deliver to Buyer the Roche Financial Statements for a particular
month within fifteen (15) business days following the end of each such month.
6.4 Access; Investigation. From and after the date hereof and up
to Closing, Buyer and its authorized agents, officers, and representatives shall
have reasonable access to the Business and the Assets and all records and
information related thereto (except for information that Seller is contractually
obligated not to disclose), during normal business hours upon reasonable prior
notice and at a time and manner mutually agreed upon between Buyer and Seller in
order to conduct such examination and investigation of the Assets and the
Business as Buyer shall reasonably deem necessary, provided that such
examinations shall not unreasonably interfere with Seller's operations and
activities.
6.5 Further Assurances. Seller shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Seller, at the
request of Buyer, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Buyer such deeds,
assignments, bills of sale, consents and other instruments in addition to those
required by this Agreement, in form and substance satisfactory to Buyer, as
Buyer may reasonably deem necessary or desirable to implement any provision of
this Agreement.
7. BUYER'S COVENANTS
<PAGE> 16
7.1 Transfer of Products. Following Closing, Buyer shall use all
reasonable efforts and, except as otherwise set forth herein, at its own expense
to obtain as expeditiously as possible such governmental approvals and
registrations from the FDA, or similar regulatory authorities, as may be
necessary with respect to the manufacture and sale of the Products by Buyer or
its designee.
7.2 Labeling. Following Closing, Buyer shall at its own expense
and as expeditiously as possible use all reasonable efforts to obtain such FDA
approvals necessary for the Buyer Labeling for each Product.
7.3 Further Assurances. Buyer shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Buyer, at the
request of Seller, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Seller such
consents and other instruments in addition to those required by this Agreement,
in form and substance satisfactory to Seller, as Seller may reasonably deem
necessary or desirable to implement any provision of this Agreement.
8. COVENANTS BY BUYER AND SELLER
8.1 Stability Studies. As soon as possible following Closing,
Buyer shall qualify a site as a testing site for stability studies or request
Patheon to continue to conduct such stability studies at Buyer's expense, for
Products not manufactured by Patheon. Seller shall have no responsibility for
on-going stability studies for the Products following Closing.
8.2 Transition Services Agreement. Buyer and Seller, or their
Affiliates shall at Closing enter into a Transition Services Agreement, attached
as Exhibit A.
8.3 Labeling. In accordance with Section 7.2, Buyer is responsible
for having the Buyer Labeling approved by the FDA as soon as possible. Buyer may
use the Syntex Labeling on the Inventory until such Inventory is exhausted;
provided, however, that Seller may, at its option, buy-back from Buyer all
inventory labeled with Seller's NDC number upon Buyer having sufficient
inventory, to be determined by Buyer in its sole discretion to be exercised in
good faith, of the applicable Product labeled with Buyer's NDC number. In
addition, Buyer may use the Syntex Labeling on each Product manufactured by
Seller or its Affiliates for Buyer until the earlier of the date (i) the FDA
approves the Buyer Labeling for use on such Product and Buyer, using all
reasonable efforts, has obtained sufficient supplies of materials with Buyer
Labeling for use on such Products, or (ii) twelve (12) months following Closing,
provided, however, if at the end of such twelve (12) month period the FDA has
not yet approved the Buyer Labeling, then such twelve (12) month period shall be
extended for a period of time to be mutually agreed by the parties (such
agreement not to be unreasonably withheld) reasonably required to obtain such
approval.
8.4 Use of Seller Trademarks. Other than the use of the Syntex
Labeling as set forth in Section 0, any use by Buyer of the trademarks,
tradenames, or logos of Seller, other than the use of the Trademarks, the
Synacort Trademarks, and the Additional Trademarks, as provided herein, must be
approved by Seller prior to such use.
8.5 Assignment of Trademarks. By or before Closing, Buyer and
Seller shall prepare in good faith an assignment pursuant to which Seller agrees
the Trademarks, the Synacort Trademarks, and the Additional Trademarks shall be
assigned to Buyer. Following Closing, Buyer shall prepare and Seller shall
<PAGE> 17
execute such documents as Buyer may reasonably request in order to record the
assignment of the Trademarks, the Synacort Trademarks, and the Additional
Trademarks. The responsibility and expense of preparing and filing such
documents and any actions required ancillary thereto, shall be borne solely by
Buyer.
8.6 Assignment of Registrations. At or following Closing, Buyer
shall prepare and Seller shall execute such documents as Buyer may reasonably
request in order to record the assignment of the Registrations and the Syntex
NADAs. Buyer shall pay any user fees associated with any Product that accrues
after Closing but prior to transfer of such Registration and the Syntex NADAs.
Seller shall be responsible for preparing and submitting to Buyer all reports
and updates with respect to each of the NDAs for all of the Products, including
but not limited to NDA Annual Reports, in the form required to be filed with FDA
through April 30, 1997. If the next annual filing with respect to any of such
NDAs is scheduled to occur after April 30, 1997 but before April 30, 1998,
Seller shall prepare and submit to Buyer the data necessary for such annual
filing summary report through April 30, 1997 for any such NDA. In addition,
Seller shall make available a regulatory person to answer questions regarding
such data at the time of filing such Annual Report.
8.7 Access to Information. Buyer and Seller will, upon reasonable
prior notice, make available to the other, to the extent reasonably required for
the purpose of assisting Seller or Buyer in obtaining governmental approvals and
preparation of tax returns or financial statements required by the Securities
and Exchange Commission (to the extent information is available) relating to the
Assets, and prosecuting or defending or preparing for the prosecution or defense
of any action, suit, claim, complaint, proceeding or investigation at any time
brought by or pending against Seller or Buyer relating to the Assets, other than
in the case of litigation between the parties hereto, such information or
records (or copies thereof) in their possession after Closing. Buyer shall also
provide Seller with any adverse drug events simultaneously with notification of
the FDA for so long as Buyer markets the Products for serious or
life-threatening adverse event and for three years following Closing for all
other adverse drug events.
8.8 Confidentiality Agreement. The parties agree that certain
letter agreement dated October 15, 1996 between an Affiliate of Seller and Buyer
(the "Confidentiality Agreement"), shall survive either termination of this
Agreement or Closing as an independent agreement; provided, however, that upon
Closing, the restrictions on use and the confidentiality obligations of the
Confidentiality Agreement shall no longer be in effect with respect to
Evaluation Materials (as defined therein) relating to the transferred Assets.
8.9 Press Releases. Neither the Seller nor the Buyer, nor any
Affiliate thereof, will issue or cause publication of any press release or other
announcement or public communication with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, which consent will not be unreasonably withheld or delayed. Neither party
shall use the name of the other party in any public statement, prospectus,
annual report, or press release without the prior written approval of the other
party, which may not be unreasonably withheld or delayed, provided, however,
that both parties shall give the other party a minimum of five business days to
review such press release, prospectus, annual report, or other public statement.
Notwithstanding the foregoing, Buyer may make any disclosure which Buyer, in the
opinion of its counsel, is obligated to make pursuant to applicable law, in
which case, Buyer shall still endeavor to give Seller an opportunity to review
such disclosure but shall not be obligated to do so if such disclosure must, in
the opinion of its counsel, be made without time for
<PAGE> 18
review. The failure of Buyer to draft such disclosure in a timely fashion shall
not be deemed a reason to avoid submitting such disclosure to Seller.
8.10 Government Filings.
8.10.1 Within three (3) business days after the date hereof,
Buyer will, or will cause the ultimate parent entities of Buyer to, and Seller
will cause the ultimate parent entities of Seller to, make such filings,
together with a request for early termination, as may be required by the HSR Act
with respect to the consummation of the transactions contemplated by this
Agreement. Thereafter, Buyer will or will cause the ultimate parent entities of
Buyer to, and Seller will cause the ultimate parent entities of Seller to, each
file or cause to be filed as promptly as practicable with the FTC and the DOJ
any supplemental information that may be requested pursuant to the HSR Act. All
such filings will comply in all material respects with the requirements of the
respective laws pursuant to which they are filed.
8.10.2 Each of the parties will use its respective reasonable
good faith efforts to obtain, and to cooperate with the others in obtaining, all
authorizations, consents, orders and approvals of any governmental agencies, and
cooperate with making any filings that may be or become necessary in connection
with the consummation of the transactions contemplated by this Agreement prior
to or after Closing, and to take all reasonable actions to avoid the entry of
any order or decree by any governmental agency prohibiting the consummation of
the transactions contemplated hereby.
8.11 Rebates.
8.11.1 Seller's Responsibility. Seller shall be responsible
for any rebate payments mandated by the government with respect to the Products,
for all rebate claims dated on or before six (6) weeks after the Closing Date
(the "Rebate Date") and Buyer shall be responsible for any rebate payments with
respect to the Products, for all rebate claims dated on or after the Rebate
Date. With respect to rebate claims during the calendar quarter in which the
Rebate Date occurs, the amount of suc payments shall be prorated between Buyer
and Seller based on the number of days remaining in said quarter through and
following the Rebate Date.
8.11.2 Reimbursement by Buyer. If Seller or an Affiliate makes
payment of rebates in its own name due to governmental requirements (e.g.
Medicaid) pertaining to rebate claims for which Buyer is responsible, Buyer will
reimburse Seller or its Affiliate such amount within thirty (30) days following
the date Seller or its Affiliate notifies Buyer that Seller or its Affiliate has
made such payments and provides written evidence of such payments to Buyer.
8.11.3 Rebate Protection. Following the Rebate Date, Seller
shall be responsible for payment to Buyer of the Rebate Protection Amount for
sales of the Products made under both Seller's NDC numbers and Buyer's NDC
numbers subject to the following terms and conditions. Rebate Protection Amount
means the amount which is the difference between: (a) the Medicaid rebate based
on Buyer's pricing and (b) the Medicaid rebate based on Seller's best price.
Seller shall pay the Rebate Protectio Amount only up to the current rate of
Medicaid sales by Seller (i.e., if Buyer increases its Medicaid sales, Seller is
not liable for Rebate Protection Amount on the increased sales). Buyer shall use
its best efforts to limit the Rebate Protection Amount liability, including but
not limited to (x) ensuring that inventory with the Buyer's new NDC numbers is
available as quickly as possible (and that the largest Medicaid volume SKUs are
produced first providing that if such prioritization conflicts with the
provisions of Section 0, the provisions of Section 0 shall control) and (y)
<PAGE> 19
giving Seller the option to buy back inventory with Seller's NDC numbers at cost
when sufficient inventory, to be determined by Buyer in its sole discretion to
be exercised in good faith, of the applicable Product labeled with Buyer's NDC
number is available. Buyer shall supply Seller with the best price reports filed
with HCFA for any quarter in which there is a claim under this Section 8.13.3.
8.11.4 HCFA Filings. Buyer shall supply Seller and its
Affiliates with all sales transaction data necessary to file best price reports
with HCFA for sales of Products labeled with Seller's NDC numbers for the second
quarter of 1997.
8.12 Contract Chargebacks. Seller shall be responsible for all
costs and expenses with respect to claims under contract chargebacks with
respect to transactions dated on or before three (3) weeks following the Closing
Date, up to a maximum of seven hundred thousand United States dollars
(US $700,000). Buyer shall be responsible for all costs and expenses with
respect to claims under contract chargebacks with respect to transactions
dated after three weeks following the Closing Date.
8.13 Returns. From and after the Closing Date, Buyer and Seller
shall track lot numbers of products distributed, for the purpose of identifying
when Products were sold. Seller shall furnish Buyer with a list of the lot
numbers of lots of the Products distributed in the last three years and Buyer
agrees to furnish to Seller the lot numbers of any lots of the Products
distributed following the Closing Date until the Buyer and Seller mutually agree
to discontinue tracking returns, which shall be no later than four (4) years
following the Closing Date. Seller is responsible for claims pertaining to all
Products sold prior to the Closing Date, provided, however, that Seller is not
responsible for claims which would not have been accepted in accordance with the
Roche Return Goods Policy attached hereto as Schedule 0. In addition, Buyer
shall not engage in any special pricing, rebate allowance, promotional or
marketing program or activities, special returns policy or special restocking
program that would impact the normal course or level of expected returns with
respect to Products sold prior to Closing. Buyer is responsible for all claims
pertaining to all Products sold on or after the Closing Date. For those lots for
which both Buyer and Seller have sold Products, returns shall be pro-rated
between Buyer and Seller based upon the quantity of such lot sold by each party,
as determined by count of finished goods inventory for such lot number at
Closing. Buyer shall not distribute inventory with the Medicis NDC number until
the earlier of (i) May 31, 1997 or (ii) stocking out of Products labeled with
Seller's NDC numbers.
8.14 Customers.
8.14.1 Buyer recognizes that Seller has certain agreements
which Seller will not assign to Buyer at Closing because these contracts are
multi-product contracts. Under these contracts, which are set forth on Schedule
0, Seller must give customers (the "Contract Customers") a certain amount of
notice prior to withdrawing Products from such agreements (the "Withdrawal
Notice"). The parties have agreed that Closing should take place as
expeditiously as possible, which may prevent Seller from giving the Contract
Customers notice that will be effective prior to Closing. Seller represents that
in view of and in reliance upon the transaction contemplated herein, Seller
shall give the Withdrawal Notice to the Contract Customers no later than
Closing. If Seller gives the Withdrawal Notice to such Contract Customers no
later than Closing, Seller may continue to supply the Contract Customers after
Closing using Inventory (to be supplied to Seller by Buyer at no cost) until the
earlier of (i) Buyer entering into an agreement with such Contract Customer or
<PAGE> 20
(ii) expiration of the notice period for such Contract Customer (such period of
time to be called the "Interim Contract Period"). Sales to such Contract
Customers during the Interim Contract Period shall be for the account and
benefit of Buyer. Seller shall use reasonable efforts to avoid backorders to all
customers, including but not limited to extending the term of any Contract
Customer's contract for an additional thirty (30) day period, where possible,
and Buyer shall not object to such extension.
8.14.2 Seller acknowledges that Buyer has not had an
opportunity to review any contracts with the Contract Customers. Seller
represents and warrants that the aggregate contractual discount percentage from
the list price paid by such Contract Customers pursuant to such contracts during
the Interim Contract Period (the "Interim Discount Percentage") shall not exceed
the aggregate discount percentage from the list price currently paid by such
Contract Customers of 82.6% by more than two ( percentage points. In addition to
any payment required by Section 0, if the Interim Discount Percentage exceeds
84.6% during the Interim Contract Period, Seller shall indemnify and hold Buyer
harmless for the full amount of the difference between 84.6% and the Interim
Discount Percentage.
8.14.3 Nothing contained herein shall be deemed to make Buyer
a party to any such Contract Customer contract nor create any contractual right
by any such Contract Customer against Buyer. Seller indemnifies and holds Buyer
harmless from any liability to any Contract Customer or third party under any
such agreements, except for liability based upon Buyer's failure to perform
Buyer's obligations to Seller under this Agreement.
8.15 Backorder. If between Closing and April 30, 1997, any Product set
forth on Schedule 0 (the "Protected Products") goes on backorder with a
wholesaler (other than a wholesaler order on behalf of a Contract Customer) for
longer than five (5) business days, then Seller shall pay Buyer an amount equal
to the gross margin less two percent (2%) cash discount for each unit of such
Protected Product not shipped. For the purpose of this Section, gross margin for
the period ending March 31, 1997 shall be calculated using the historic rate of
gross profit margins based on Net Sales in the last quarter of 1996; for the
period between March 31, 1997 and April 30, 1997, the gross margin shall be
calculated using the actual experience for such period, based on Net Sales.
Buyer shall prioritize production of the Protected Products in order to avoid
backorders. Should Buyer elect to prioritize production of other Products and a
backorder occurs with respect to a Protected Product or if Buyer does not permit
Seller to distribute Products after Closing in accordance with Seller's normal
business practices with respect to Product expiration dating, the payment
provisions of this Section 0 shall not apply. Buyer shall inform Seller on a
regular basis of its production schedule for the Products to facilitate Seller's
managing the inventory of the Products. Certain Products have been manufactured
by Seller's Affiliate, Hoffmann-La Roche Inc., as part of the validation of its
manufacturing facility in Nutley, New Jersey (the "Validation Batches"). If
Seller believes it necessary to avoid a backorder, Seller shall re-label the
Validation Batches with Seller's NDC labeling at Seller's cost and make such
Validation Batches available to Buyer. The decision to re-label the Validation
Batches shall be made by Seller in its sole discretion after consultation with
Buyer.
9. CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions to Obligation of Buyer. The obligation of Buyer to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Buyer):
<PAGE> 21
9.1.1 Representations and Warranties. The representations and
warranties made by Seller in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.1.2 Performance. Seller shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.1.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.1.4 No Adverse Change. During the period from the date of
this Agreement to the Closing Date there shall not have occurred or been
discovered, and there shall not exist on the Closing Date except for that which
has been otherwise disclosed elsewhere in this Agreement or in the Disclosure
Schedule at the time of execution of this Agreement, any condition or fact that
could reasonably be expected to have a Material Adverse Effect.
9.1.5 Officer's Certificate. Seller shall have delivered to
Buyer a certificate, dated the Closing Date and executed by an officer of
Seller, certifying to the fulfillment of all conditions set forth in this
Article 0.
9.1.6 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.1.7 Authorization. Seller shall have furnished to Buyer all
documents Buyer may reasonably request relating to the existence of Seller, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Buyer.
9.1.8 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Buyer and Buyer's counsel, and
Seller shall have made available to Buyer for examination the originals or true
and correct copies of all documents which Buyer may reasonably request in
connection with the transactions contemplated this Agreement.
9.2 Conditions to Obligations of Seller. The obligations of Seller
to complete the transactions contemplated hereby is subject to the satisfaction
on or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Seller):
9.2.1 Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
<PAGE> 22
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.2.2 Performance. Buyer shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.2.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.2.4 Officer's Certificate. Buyer shall have delivered to
Seller a certificate, dated the date of Closing and executed by an officer of
Buyer, certifying to the fulfillment of all conditions specified in this
Article 0.
9.2.5 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.2.6 Authorization. Buyer shall have furnished to Seller all
documents Seller may reasonably request relating to the existence of Buyer, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Seller.
9.2.7 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Seller and Seller's counsel,
and Buyer shall have made available to Seller for examination the originals or
true and correct copies of all documents which Seller may reasonably request in
connection with the transactions contemplated by this Agreement.
10. THE CLOSING
10.1 The Closing. Subject to the satisfaction of all of the
conditions to each party's obligations set forth in Article 0 hereof (or, with
respect to any condition not satisfied, the waiver in writing thereof by the
party or parties for whose benefit the condition exists), the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
9:00 a.m. (local time) on the first Monday following the day in which all
required waiting periods under the HSR Act have expired or been terminated (the
"Closing Date") or at such other time, date (but in no event later than March
31, 1997) and place as the parties hereto may agree in writing. The transfer of
the Assets shall be deemed to have occurred as of the Closing Time.
10.2 Deliveries by Seller. Unless otherwise specified in this
Section 0, at Closing, Seller or its Affiliate, as appropriate, shall deliver to
Buyer in form reasonably satisfactory to Buyer, each properly executed and dated
as of the Closing Date, where appropriate:
10.2.1 except as otherwise provided herein, such deeds, bills
of sale, endorsements, assignments, assignment agreements, and other good and
<PAGE> 23
sufficient instruments of conveyance and transfer as shall be effective to vest
in Buyer free and clear title to the Assets as contemplated by this Agreement
10.2.2 Secretary's Certificate certifying that the Board of
Directors of Seller has authorized this Agreement;
10.2.3 within five (5) business days following the Closing,
the statement of the quantity and location of inventory described in Section 0;
10.2.4 the Transition Services Agreement;
10.2.5 a receipt for the Purchase Price;
10.2.6 originals of those Assumed Agreements exclusively
related to the Products; and
10.2.7 a letter giving written notice to Patheon of the
assignment of the Patheon Agreement to Buyer.
10.3 Deliveries by Buyer. At Closing, Buyer or its Affiliate, as
appropriate, shall deliver or cause to be delivered to Seller:
10.3.1 The Purchase Price payable in accordance with
Article 0;
10.3.2 Secretary's Certificate certifying that the Board of
Directors of Buyer has authorized this Agreement.
10.3.3 the Transition Services Agreement; and
10.3.4 a letter to Patheon covenanting that Buyer agrees to be
bound by the terms of the Patheon Agreement.
11. TERMINATION
11.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date:
11.1.1 By the mutual written consent of Seller and Buyer;
11.1.2 By either Seller or Buyer if Closing shall not have
occurred on or before March 1, 1997, unless such date has been extended by
mutual agreement in writing (the "Termination Date");
11.1.3 By either Seller or Buyer if consummation of the
transactions contemplated hereby shall violate any final order, decree or
judgment of any court or governmental body having competent jurisdiction.
11.1.4 By Buyer if there has been a material misrepresentation
by Seller or a material breach by Seller of any of the warranties or covenants
of Seller set forth herein that Seller has not cured within fourteen (14) days
after receipt of notice from Buyer requesting such to be cured (but in no event
later than the Termination Date) or that Buyer has not waived in writing; or
11.1.5 By Seller if there has been a material
misrepresentation by Buyer or a material breach by Buyer of any of the
warranties or covenants of Buyer set forth herein that Buyer has not cured
within fourteen (14) days after receipt of notice from Seller requesting such to
be cured (but in no event later than the Termination Date) or that Seller has
not waived in writing.
<PAGE> 24
11.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 0, all further obligations of Seller and Buyer under this
Agreement shall terminate without further liability of Seller or Buyer except
(a) for the obligations of Buyer and Seller under Sections 0, 0, 0, and 0; and
(b) that such termination shall not constitute a waiver by any party of any
claim it may have for damages caused by reason of a breach by the other party of
a representation, warranty, covenant or agreement.
11.3 Payment of Costs. If this Agreement is terminated by Buyer due
to a material misrepresentation of Seller that Seller has failed to cure within
the time limits and in accordance with Section 11.1.4, Buyer shall be entitled
to recover from Seller all reasonable attorneys' costs and fees incurred by
Buyer in obtaining the appropriate HSR Act approvals described in Section 9.1.3.
In no event, however, will Seller's obligations under this Section exceed one
hundred thousand United States dollars ($100,000).
11.4 Liquidated Damages. Pursuant to Section 0, Seller may, at its
option, withdraw the Products from the contracts with the Contract Customers
upon notice to Buyer. Buyer acknowledges that if Seller withdraws such Products
and Closing fails to occur, Seller may suffer irreparable damage to its
relationships with these customers and may not be able to re-establish these
customers as customers for the Products. For that reason, Seller and Buyer
acknowledge that it would be difficult to measure the actual, incidental,
special, and consequential damages that would accrue were Closing not to occur
due to a breach of this Agreement by Buyer. For that reason, if Closing fails to
occur due to a breach of this Agreement by Buyer, Buyer shall pay Seller
liquidated damages in a lump sum payment equal to five million United States
dollars (US $5,000,000). In exchange, Seller agrees not to make any claims
against Buyer for any additional actual, incidental, special, or consequential
damages incurred by Seller. Buyer acknowledges that these liquidated damages are
not a penalty, but an attempt to limit Buyer's liability should Closing not
occur due to a breach of this Agreement by Buyer. Should Closing not occur due
to failure to obtain the government approvals required under Section 9.1.3,
Buyer shall have no liability to Seller.
12. SURVIVAL; INDEMNIFICATION
12.1 Survival of Representations; Remedy for Breach. The
representations, warranties and covenants made by Buyer and Seller under this
Agreement shall survive the Closing for a period of eighteen (18) months. Any
Indemnifiable Claims (as hereinafter defined) or claim for tax reimbursement
that a party may have arising out of the other party's breach of its
representations, warranties, or covenants contained in this Agreement shall be
made by notice to the other party no later than eighteen (18) months following
the Closing Date ("Claim Period") and there shall be no recovery for
indemnification for breach of a representation, warranty, or covenant under this
Agreement for any Indemnifiable Claim or claim for tax reimbursement first
asserted after that date. Seller and Buyer agree to use reasonable efforts to
mitigate any loss or damage for which they may seek indemnification under this
Article 12 or for which they may seek recovery under law or equity.
12.2 Indemnification by Seller. Subject to the limitations set
forth in Section 0, and in addition to any other rights Buyer may have under law
or at equity, Seller shall indemnify and hold harmless Buyer and its Affiliates,
officers, directors, and agents and employees from any and all damages, losses,
liabilities, third party claims, lawsuits, obligations and expenses (including
reasonable attorneys fees and costs) (collectively, "Damages") that Buyer shall
incur or suffer from (a) any breach of a representation, warranty, or covenant
of Seller in this Agreement or in any of the agreements, instruments or
<PAGE> 25
documents executed or delivered by Seller pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Seller, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets prior to the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.2 (a) and (b),
collectively "Buyer's Indemnifiable Claims"); and (c) any taxes associated with,
imposed upon or in respect of the conduct of the Business, the sale of the
Products, or the use or ownership of the Assets prior to the Closing Date; or
(d) taxes imposed with respect to the transfer of the Assets to the Buyer
pursuant to this Agreement, including any assessments against Seller as a member
of a consolidated reporting group with any other entity (Section 12.2 (c) and
(d), collectively "Buyer's Tax Claims").
12.3 Indemnification by Buyer. Subject to the limitations set forth
in Section 0, and in addition to any other rights it may have under law or at
equity, Buyer shall indemnify and hold harmless Seller and its Affiliates,
officers, directors, and agents and employees from any and all Damages that
Seller shall incur or suffer from (a) any breach of a representation, warranty,
or covenant of Buyer in this Agreement or in any of the agreements, instruments
or documents executed or delivered by Buyer pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Buyer, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets following the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.3 (a) and (b),
collectively "Seller's Indemnifiable Claims") (Buyer's Indemnifiable Claims and
Seller's Indemnifiable Claims are hereby collectively referred to as
"Indemnifiable Claims"); or (c) any taxes associated with, imposed upon or in
respect of the conduct of the Business, the sale of the Products, or the use or
ownership of the Assets following the Closing Date ("Seller's Tax Claims").
12.4 Limitations. Notwithstanding anything to the contrary herein,
neither Buyer and its Affiliates nor Seller shall be entitled to seek
indemnification or any recovery under law or at equity with respect to any
Indemnifiable Claim until the aggregate amount of such claims exceeds Two
Hundred Thousand United States Dollars ($200,000) (the "Basket Limitation");
provided, however, that (i) if either party is responsible to the other for any
amount in excess of the Basket Limitation, then the Basket Limitation shall not
be deemed applicable and such party shall be responsible to fully indemnify the
other party for all Damages; (ii) in no event shall either party be required to
indemnify the other for breaches of the representations, warranties, and
covenants made in this Agreement for an amount in excess of the Purchase Price;
and (iii) neither the Basket Limitation nor the limitation in the immediately
preceding clause shall be applicable to (x) third party claims, (y) Buyer's Tax
Claims or Seller's Tax Claims, or (z) Rebate Protection Amount; provided, that
Damages shall be limited to one-third (1/3) of the Purchase Price with respect
to the representations and warranties under Sections 4.6, 4.7, 4.8, 4.14, 4.17,
and 4.18; and provided further, that Damages shall be limited to one-half (1/2)
of the Purchase Price with respect to the representations and warranties under
Sections 4.9, 4.10 and 4.15.
12.5 Notice. A party seeking indemnification pursuant to Section 0
or 0 (an "Indemnified Party") shall give prompt notice to the party from whom
such indemnification is sought (the "Indemnifying Party") of the assertion of
any claim, or the commencement of any action, suit or proceeding, in respect of
which indemnity is or may be sought hereunder (whether or not the limits set
forth in Section 0 have been exceeded) and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
<PAGE> 26
request, but no failure to give such notice shall relieve the Indemnifying Party
of any liability hereunder (except to the extent the Indemnifying Party has
suffered actual prejudice thereby).
12.6 Participation in Defense. The Indemnifying Party may, at its
expense, participate in or assume the defense of any such action, suit or
proceeding involving a third party. In such case the Indemnified Party shall
have the right (but not the duty) to participate in the defense thereof, and to
employ counsel, at its own expense, separate from counsel employed by the
Indemnifying Party in any such action and to participate in the defense thereof.
The Indemnifying Party shall be liable for the fees and expenses of one firm as
counsel (and appropriate local counsel) employed by the Indemnified Party if the
Indemnifying Party has not assumed the defense thereof. Whether or not the
Indemnifying Party chooses to defend or prosecute any claim involving a third
party, all the parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.
12.7 Settlements. The Indemnifying Party shall not be liable under
this Article for any settlement effected without its consent of any claim,
litigation or proceedings in respect of which indemnity may be sought hereunder,
unless the Indemnifying Party refuses to acknowledge liability for
indemnification under this Article 0 and/or declines to defend the Indemnified
Party in such claim, litigation or proceeding.
12.8 Set-Off. In addition to any other remedies that Buyer may have
against Seller for indemnification under the provisions of this Agreement or
under law or at equity, Buyer may set off against any amount otherwise due and
yet unpaid to Seller as part of the Purchase Price or otherwise, any amount owed
by Seller or its Affiliates to Buyer under any provision of this Agreement, any
instrument or agreement delivered pursuant thereto, or otherwise.
13. NON-COMPETITION AND CONFIDENTIALITY
13.1 Non-Compete. Seller acknowledges that in order to assure Buyer
that Buyer will retain the value of the Assets, Buyer wishes assurances that
Seller and its Affiliates shall not utilize their special knowledge of the
Business and their relationship with customers, suppliers, and others to compete
with the Buyer with respect to the Business. For a period of five (5) years
beginning on the Closing Date, neither Seller nor its Affiliates shall engage in
any business that manufactures, packages, distributes or sells finished products
in the Territory whose sole or major active ingredients consist of the Active
Ingredients for topical use in dermatology except for (i) the transactions
involving Buyer, (ii) as provided in Section 0 hereof or (iii) as part of a
product whose primary indication is the treatment of vulvovaginal mycotic
infections; provided that, nothing in this Article shall in any way restrict or
preclude the Seller or any of its Affiliates from acquiring another company,
business or line of products (including by license thereof or through investment
therein), in which less than a twenty percent (20%) of the revenues and/or
assets is derived from or represents finished products whose sole or major
active ingredients consist of the Active Ingredients for topical use in
dermatology and to continue to operate such business following such acquisition.
In promoting any such acquired product or in promoting any other dermatology
product that Seller may develop, manufacture of market in compliance with this
Section 13.1, Seller shall not make use of the history, heritage or brand equity
of the Products as part of any such promotional plan or activity.
<PAGE> 27
13.2 Confidentiality. Seller acknowledges that the Assets and all
other confidential or proprietary information with respect to the Business are
valuable, special and unique. Neither Seller nor any of its Affiliates shall, at
any time after the Closing Date, disclose, directly or indirectly, to any third
party, or use or purport to authorize any third party to use any confidential or
proprietary information with respect to the Business, whether or not for
Seller's or an Affiliate's own benefit, without the prior written consent of
Buyer, including without limitation, information as to the financial condition,
results of operations, customers, suppliers, products, inventions, sources,
leads or methods of obtaining new supplies, marketing strategies or any other
information relating to the Business or Products which could reasonably be
regarded as confidential, but not including information which (i) does not
relate directly and exclusively to the Business or the Products, provided that
Seller and its Affiliates shall not disclose such information to the direct
detriment of the Business; or (ii) is or shall become generally available to the
public other than as a result of an unauthorized disclosure by Seller or an
Affiliate or third party to whom Seller or an Affiliate has provided such
information; or (iii) as may be necessary for Seller or any of its Affiliates to
perform its obligations under this Asset Purchase Agreement or the transactions
or agreements contemplated herein; or (iv) that is required by Law to be
disclosed by Seller or any of its Affiliates.
14. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Seller or Buyer at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.
if to Buyer, to:
Medicis Pharmaceutical Corporation
4383 East Camelback Road
Phoenix, Arizona 85018
Attn: Jonah Shacknai
Fax Number: 602-808-3875
with a copy to:
Brown & Bain
2901 North Central Avenue
Phoenix, Arizona 85012-2788
Attn: Frank M. Placenti
Fax Number: 1-602-351-8516
if to Seller, to:
<PAGE> 28
Syntex (U.S.A.) Inc.
3401 Hillview Avenue
Palo Alto, California 94304 USA
Attn: President
Fax Number: 1-415-354-2595
with a copy to:
Syntex (U.S.A.) Inc.
3401 Hillview Avenue
Palo Alto, California 94304
Attn: General Counsel
Fax Number: 415-852-1338
15. BULK SALES LAW
The parties hereto each waive compliance by the others with the
provisions of any statute or any state or jurisdiction regulating bulk sales or
transfers which may be applicable to the sale of the Assets. Seller hereby
jointly and severally agrees to indemnify and hold Buyer and its officers,
directors, employees, agents, representatives, successors and assigns harmless
from and against any and all losses, claims, damages, expenses and liabilities
(including legal fees and expenses) to which Buyer may become subject pursuant
to the bulk transfer provisions of the Uniform Commercial Code or any applicable
state or any other applicable bulk transfer or sale statute with regard to the
sale of the Assets contemplated by this Agreement.
16. SYNACORT
At Closing, Seller shall grant Buyer an exclusive, fully paid-up
license, with right to sub-license, to manufacture, market and sell products in
the Territory using the Synacort NDAs; provided, however, that Buyer may not
manufacture, market or sell any product for the treatment of vulvovaginal
mycotic infections products using the Synacort NDAs. At Closing, Seller shall
transfer to Buyer and Buyer shall assume all regulatory responsibility for the
Synacort NDAs. In addition, (i) Seller hereby conveys all common law rights
Seller has in the Territory in the trademark "Synacort", if any, to Buyer, and
(ii) Seller shall not oppose the registration in the Territory by Buyer of the
trademark "Synacort."
17. ARBITRATION AND GOVERNING LAW
17.1 Generally. Except for the right of either party to apply to a
court of competent jurisdiction for a Temporary Restraining Order to preserve
the status quo or prevent irreparable harm pending the selection and
confirmation of a panel of arbitrators in accordance herewith, any dispute,
controversy or claim arising out of or relating to this Agreement, to a breach
or termination thereof, or to the rights of any party for indemnification
thereunder ("Claim") shall be settled by final and binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in effect on the day the arbitration is commenced in
accordance with this Agreement ("Rules"). In the event of any inconsistency
between such Rules and the terms of this Agreement, this Agreement shall
supersede the Rules. Any judgment on any award rendered in the arbitration may
be entered in any court having jurisdiction and shall be final,. binding,
non-appealable, and conclusive. The AAA shall have jurisdiction over all parties
to this Agreement for purposes of the arbitration.
<PAGE> 29
17.2 Defenses and Bankruptcy. Any statute of limitations or other
equitable or legal doctrine which would otherwise be applicable to any action
brought by any of the parties shall be applicable in the Arbitration. In the
event any party to this Agreement files a petition under the bankruptcy laws of
the United States or has a petition filed against it which results in an order
for relief or other indicia that a bankruptcy case has commenced, it is the
express intention of the parties to this Agreement that this Agreement shall
control and be enforced in accordance with is terms and conditions that any
Claim shall remain subject to arbitration to the maximum extent permitted by
law.
17.3 Commencement of Arbitration. Any party may commence
arbitration by serving upon all other parties a written demand for arbitration
sent by certified mail, return receipt requested, in accordance with Agreement,
with a copy of the same delivered by certified mail, return receipt requested,
to the AAA regional office in which Palo Alto California is then located. The
AAA shall administer the arbitration. The arbitration panel shall consist of
three members, one being appointed by each party and the third, who shall be the
chairman of the panel, being appointed by mutual agreement of the two
party-appointed arbitrators. In the event of failure of said two arbitrators to
agree within sixty (60) days after the commencement of the arbitration
proceeding upon the appointment of the third arbitrator, the third arbitrator
shall be appointed by the AAA in accordance with the Rules. In the event that
either party shall fail to appoint an arbitrator within thirty (30) days after
the commencement of the arbitration proceeding, such arbitrator and the third
arbitrator shall be appointed by the AAA in accordance with the Rules. The
arbitration award shall be rendered by a majority of the members of the Board of
Arbitration. Except as expressly provided in this Agreement in Section 17.9, the
panel shall not be entitled to modify this Agreement or the transactions
contemplated herein.
17.4 Governing Law and Place of Arbitration. The arbitrators shall
apply the laws of the State of New York (regardless of its or any other
jurisdiction's choice of law principles). The place of arbitration shall be
Phoenix, Arizona.
17.5 Discovery and Other Matters. There shall be no rights of
discovery in connection with the arbitration except as follows:
17.5.1 Each party shall have the right to request the
arbitrators to issue subpoenas for documents in accordance with the rules;
17.5.2 Each party shall have the right to initiate one (1)
deposition of one representative of each party to the arbitration; and each
party shall have the right to initiate one (1) additional oral deposition
pursuant to a subpoena issued by the arbitrators or any court of competent
jurisdiction.
17.5.3 At any time following the tenth day after the
commencement of the arbitration in accordance with this Agreement, a written
notice served upon all parties shall be sufficient to compel the attendance of
any party at a deposition upon not less than sixty (60) days notice and no
subpoena shall be required for that purpose. If a person fails or refuses to
testify at a deposition, that person shall not be permitted to testify at the
hearing, except for good cause shown. The number of depositions that may be
initiated by either party may be varied by agreement of all parties to the
arbitration but not by any action, order or request of the arbitrators or any
court.
<PAGE> 30
17.6 Hearing. Not less than thirty (30) days prior to the scheduled
arbitration proceeding, the arbitrator shall conduct a preliminary hearing in
accordance with the AAA guidelines. Not less than five (5) days prior to the
preliminary hearing, all parties to the arbitrations shall serve upon all other
parties to the arbitration a written list of witnesses and exhibits to be used
at the arbitration hearing. Except for good cause shown, no witness or exhibit
may be utilized at the arbitration hearing other than as set forth on such list.
the arbitrators shall receive evidence at a single hearing. The arbitrators
shall award reasonable attorneys' fees and costs in favor of the prevailing
party or parties. The arbitrator shall issue a final award not more than twenty
(20) days following the conclusion of the hearing. The arbitrators shall have
the power to hear and decide, by documents only or with a hearing (at the
arbitrators sole discretion) any prehearing motions in the nature of a pre-trial
motion to dismiss or for summary judgment.
17.7 Arbitrators Fees. The arbitrators shall be entitled to receive
reasonable compensation at an hourly rate to be established between the
arbitrators and he AAA. If required by the arbitrators, Buyer, on the one hand,
and Seller, on the other, will deposit with the AAA an equal share of the total
anticipated fee of the arbitrators in an amount to be estimated by the AAA. The
non-prevailing party(s) in the proceedings shall be ordered to pay, and shall
have the ultimate responsibility for, all arbitrators fees and the fees of the
AAA and such fees shall be included in the judgment to be entered against the
non-prevailing party or parties.
18. ADDITIONAL TERMS
18.1 Brokers. Buyer represents to Seller that it has not employed
any investment banker, broker, finder or intermediary (a "Broker") in connection
with the transactions contemplated hereby who might be entitled to a fee or any
commission from Seller upon consummation of the transactions contemplated
hereby. Seller represents to Buyer that it has not employed any Broker in such
connection who might be entitled to a fee or any commission from Buyer upon
consummation of the transactions contemplated hereby.
18.2 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to seek
equitable relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies
provided hereunder or available to the parties hereto at law or in equity.
18.3 Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting and other costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
18.4 Attorneys' Fees. If there is any litigation or arbitration
with respect to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party and the non-prevailing party shall pay
upon demand all reasonable fees and expenses of counsel for the prevailing
party.
18.5 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and assigns; provided that this Agreement may not be assigned by any party
without the written consent of the other party.
18.6 Entire Agreement. This Agreement, the exhibits hereto, the
Disclosure Schedule and the Confidentiality Agreement embody the entire
agreement of the parties hereto with respect to the subject matter hereof and
<PAGE> 31
supersede and replace all previous negotiations, understandings,
representations, writings, and contract provisions and rights relating to the
subject matter hereof.
18.7 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.
18.8 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Seller and a counterpart has been signed by Seller and delivered to
Buyer.
18.9 Severability. The parties agree that (a) the provisions of
this Agreement shall be severable and (b) in the event that any of the
provisions hereof are held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable, (i) such invalid, void or otherwise
unenforceable provisions shall be automatically replaced by other provisions
that are as similar as possible in terms to such invalid, void or otherwise
unenforceable provisions but are valid and enforceable and (ii) the remaining
provisions shall remain enforceable to the fullest extent permitted by law,
provided that the rights and interests of the parties hereto shall not be
materially affected.
18.10 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein to
Articles and Sections are to the articles and sections of this Agreement.
IN WITNESS WHEREOF, this Agreement has been signed by duly authorized
representatives of each of the parties hereto as of the Effective Date.
SYNTEX (U.S.A.) INC. MEDICIS PHARMACEUTICAL
CORPORATION
By /s/ Carole L. Nuechterlein By /s/ Jonah Shacknai
-------------------------------- --------------------------------
Name Carole L. Nuechterlein Name Jonah Shacknai
------------------------------ ------------------------------
Title: Title: Chairman and Chief
Assistant Secretary Executive Officer
---------------------------- ----------------------------
<PAGE> 1
EXHIBIT 10.81
ASSET PURCHASE AGREEMENT
BETWEEN
HOFFMANN-LA ROCHE LIMITED
and
MEDICIS PHARMACEUTICAL CORPORATION
<PAGE> 2
TABLE OF CONTENTS
1. DEFINITIONS ....................................................... 1
2. ASSETS BEING SOLD ........................................... 5
2.1 Trademarks ......................................... 5
2.2 Registrations ...................................... 5
2.3 Manufacturing Technology and Know-How .............. 5
2.4 Inventory .......................................... 5
2.5 Assumed Agreements ................................. 5
2.5.1 Patheon Agreement ......................... 5
2.5.2 Trademark Agreements ...................... 5
2.6 Manufacturing Information .......................... 5
2.7 Data Bank Documents ................................ 6
2.8 Worldwide Safety Reports ........................... 6
2.9 Assumption of Liabilities .......................... 6
2.10 Customer Lists ..................................... 6
2.11 Books and Records .................................. 6
3. PURCHASE PRICE .............................................. 6
4. REPRESENTATIONS AND WARRANTIES OF SELLER .................... 6
4.1 Organization ....................................... 6
4.2 Authority .......................................... 7
4.3 Title to Assets .................................... 7
4.4 No Violation or Conflict ........................... 7
4.5 Registrations ...................................... 8
4.6 Patents ............................................ 8
4.7 Inventory .......................................... 8
4.8 Taxes .............................................. 8
4.9 Financial Information .............................. 8
4.10 Absence of Certain Changes ......................... 8
4.11 Violations of Law .................................. 9
4.12 No Government Restrictions ......................... 9
4.13 Litigation ......................................... 9
4.14 Limitation of Warranty. ............................ 9
4.15 Trademarks ......................................... 9
4.16 Return Policy ......................................10
4.17 Warranties .........................................10
4.18 Customer Contracts .................................10
5. REPRESENTATIONS AND WARRANTIES OF BUYER .....................10
5.1 Organization .......................................10
5.2 Authority ..........................................10
5.3 No Violation or Conflict ...........................10
5.4 No Government Restrictions .........................11
5.5 Litigation .........................................11
5.6 Financing ..........................................11
6. SELLER'S COVENANTS ..........................................11
6.1 Conduct of Business ................................11
6.2 Compliance with Laws ...............................12
6.3 Disclosure Supplements .............................12
6.4 Access; Investigation ..............................12
6.5 Further Assurances .................................12
7. BUYER'S COVENANTS ...........................................12
7.1 Transfer of Products ...............................12
7.2 Labeling ...........................................13
7.3 Further Assurances .................................13
<PAGE> 3
8. COVENANTS BY BUYER AND SELLER ...............................13
8.1 Stability Studies ..................................13
8.2 Transition Services Agreement ......................13
8.3 Labeling ...........................................13
8.4 Use of Seller Trademarks ...........................13
8.5 Assignment of Trademarks ...........................14
8.6 Assignment of Registrations. .......................14
8.7 Access to Information ..............................14
8.8 Confidentiality Agreement ..........................14
8.9 Press Releases .....................................14
8.10 Government Filings .................................15
8.11 Returns ............................................15
8.12 Backorder ..........................................15
9. CONDITIONS PRECEDENT TO CLOSING .............................16
9.1 Conditions to Obligation of Buyer ..................16
9.1.1 Representations and Warranties ............16
9.1.2 Performance ...............................16
9.1.3 HSR Act Approvals .........................16
9.1.4 No Adverse Change .........................16
9.1.5 Officer's Certificate .....................16
9.1.6 Litigation ................................16
9.1.7 Authorization .............................17
9.1.8 Proceedings and Instruments Satisfactory ..17
9.2 Conditions to Obligations of Seller ................17
9.2.1 Representations and Warranties ............17
9.2.2 Performance ...............................17
9.2.3 HSR Act Approvals .........................17
9.2.4 Officer's Certificate .....................17
9.2.5 Litigation ................................17
9.2.6 Authorization .............................17
9.2.7 Proceedings and Instruments Satisfactory ..18
10. THE CLOSING .................................................18
10.1 The Closing ........................................18
10.2 Deliveries by Seller ...............................18
10.3 Deliveries by Buyer ................................18
11. TERMINATION .................................................19
11.1 Termination ........................................19
11.2 Effect of Termination ..............................19
12. SURVIVAL; INDEMNIFICATION ...................................19
12.1 Survival of Representations; Remedy for Breach .....19
12.2 Indemnification by Seller ..........................20
12.3 Indemnification by Buyer ...........................20
12.4 Limitations ........................................21
12.5 Notice .............................................21
12.6 Participation in Defense ...........................21
12.7 Settlements ........................................21
12.8 Set-Off ............................................22
13. NON-COMPETITION AND CONFIDENTIALITY .........................22
13.1 Non-Compete ........................................22
13.2 Confidentiality ....................................22
14. NOTICES .....................................................23
15. BULK SALES LAW ..............................................23
<PAGE> 4
16. SYNACORT ....................................................24
17. ARBITRATION AND GOVERNING LAW ...............................24
17.1 Generally ..........................................24
17.2 Defenses and Bankruptcy ............................24
17.3 Commencement of Arbitration ........................24
17.4 Governing Law and Place of Arbitration .............25
17.5 Discovery and Other Matters ........................25
17.6 Hearing ............................................25
17.7 Arbitrators Fees ...................................26
18. ADDITIONAL TERMS ............................................26
18.1 Brokers ............................................26
18.2 Injunctive Relief. .................................26
18.3 Expenses ...........................................26
18.4 Attorneys' Fees. ...................................26
18.5 Successors and Assigns .............................26
18.6 Entire Agreement ...................................26
18.7 Amendments; No Waiver ..............................27
18.8 Counterparts .......................................27
18.9 Severability .......................................27
18.10 Captions ...........................................27
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into on January 21, 1997 (the "Effective Date") by and between Hoffmann-La Roche
Limited, a Canadian corporation ("Seller") and Medicis Pharmaceutical
Corporation, a Delaware corporation ("Buyer").
This Agreement sets forth the terms and conditions upon which Buyer is
purchasing from Seller and Seller is selling to Buyer the Assets (as hereinafter
defined).
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Active Ingredients" mean the pharmaceutical compounds fluocinolone
acetonide, fluocinonide, and hydrocortisone, and all salts and esters thereof.
1.2 "Additional Trademarks" means the trademark/service mark
registrations and applications that are set forth on Schedule 0 together with
all records associated therewith.
1.3 "Affiliate" of a party shall mean any individual, corporation or
other business entity (e.g. limited or general partnership, trust or estate,
joint venture or association) controlling, controlled by or under common control
with such party. "Control" (including "controlling", "controlled by" and "under
common control with") shall mean the direct or indirect ownership of more than
fifty percent (50%) of the voting or income interest in such party, corporation
or other business entity respectively. Notwithstanding the foregoing, Genentech,
Inc. ("Genentech") shall not be considered an Affiliate of Seller for the
purpose of this Agreement for so long as there are material restrictions on the
ability of Seller and its Affiliates to control Genentech.
1.4 "ANDS" means an Abbreviated New Drug Submission, as such term is
defined by the Food and Drug Regulations issued pursuant to the Food and Drugs
Act and as interpretated by the HPB.
1.5 "Assets" has the meaning ascribed to such term in Section 0.
1.6 "Assumed Agreements" means the Patheon Agreement and the Trademark
Agreements.
1.7 "Broker" has the meaning ascribed to such term in Section 16.1.
1.8 "Business" means the business as currently conducted by Seller with
respect to manufacture and sale of the Products in the Territory.
1.9 "Buyer Labeling" means the printed labels, labeling and packaging
materials, including printed carton, container label and package inserts, used
by Buyer and bearing Buyer's name for each Product.
1.10 "cGMP's" means the then-current Good Manufacturing Practices
applicable to the manufacture of pharmaceutical products for human use in Canada
in accordance with the Food and Drug Regulations under the Food and Drugs Act.
1.11 "Closing" has the meaning ascribed to such term in Section 0.
<PAGE> 6
1.12 "Closing Date" has the meaning ascribed to such term in Section 0.
1.13 "Closing Time" means 12:01 a.m. on the date of Closing.
1.14 "Confidentiality Agreement" has the meaning ascribed to such term
in Section 0.
1.15 "Damages" has the meaning ascribed to such term in Section 0.
1.16 "Data Bank Documents" has the meaning ascribed to such term in
Section 0.
1.17 "Disclosure Schedule" means the disclosure schedule delivered
prior to the Effective Date to Buyer by Seller in connection with this
Agreement. The sections of the Disclosure Schedule correspond to the sections of
this Agreement.
1.18 "DIN" means the drug identification number.
1.19 "DOJ" means the United States Department of Justice.
1.20 "Effective Date" means January 21, 1997.
1.21 "FTC" means the United States Federal Trade Commission.
1.22 "HPB" means the applicable federal Canadian authorities and
agencies including the Health Protection Branch of Health Canada.
1.23 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
1.24 "Indemnifiable Claims" has the meaning ascribed to such term in
Section 0.
1.25 "Indemnified Party" has the meaning ascribed to such term in
Section 0.
1.26 "Indemnifying Party" has the meaning ascribed to such term in
Section 0.
1.27 "Inventory" has the meaning ascribed to such term in Section 0.
1.28 "Know-How" has the meaning ascribed to such term in Section 0.
1.29 "Law" means any federal, state, province, foreign, local or other
law, ordinance, rule, regulation, or governmental requirement or restriction of
any kind, and any rules, regulations, and orders promulgated thereunder.
1.30 "Material Adverse Effect" means an event that has a material
adverse effect on the Assets, taken as a whole.
1.31 "NDS" means a New Drug Submission, as such term is defined by the
Food and Drug Regulations issued pursuant to the Food and Drugs Act and as
interpretated by the HPB.
<PAGE> 7
1.32 "Net Sales" means the gross invoice amount of Products sold to
third parties, less (a) promotional and trade discounts; (b) sales and excise
taxes, value added and other taxes and insurance premiums and duties which are
billed to customers as separate items on invoices; (c) allowances for
short-shipments and price adjustments; and (d) contract chargebacks and rebates,
government rebates, and returns (e.g., spoiled, damaged or outdated Products).
1.33 "Patheon Agreement" means the agreement between Seller and Patheon
to be entered into on January 31, 1997.
1.34 "Patents" means any patent or patent application and any and all
divisions, continuations, continuations-in-part, reexaminations, reissues,
extensions, pending or granted supplementary protection, certificates,
substitutions, confirmations, registrations, revalidations, revisions, additions
and the like, of or to said patent and patent application.
1.35 "Products" means each presentation of those finished
pharmaceutical products set forth in the Registrations.
1.36 "Purchase Price" has the meaning ascribed to such term in Article
0.
1.37 "Registrations" has the meaning ascribed to such term in Section
0.
1.38 "Roche Financial Statement" means the statement of Roche Net Sales
by Product in the Territory in Canadian dollars, on a monthly basis for each
month beginning January 1995 until the end of the month in which Closing occurs
as attached on Schedule 0.
1.39 "Roche Net Sales" means the gross invoice amount of Products sold
to third parties in the Territory, less (a) promotional and trade discounts; (b)
sales and excise taxes, value added and other taxes and insurance premiums and
duties which are billed to customers as separate items on invoices; (c)
allowances for short-shipments and price adjustments; and (d) contract
chargebacks and rebates, government rebates, and returns (e.g., spoiled, damaged
or outdated Products).
1.40 "Schedule" means a schedule to the Disclosure Schedule.
1.41 "Seller Labeling" means the printed labels, labeling and packaging
materials, including printed carton, container label and package inserts,
currently used by Seller for each Product.
1.42 "Synacort Assets" means the Synacort License, the Synacort
Trademarks, and the Synacort Trademark Agreements.
1.43 "Synacort License" has the meaning ascribed to such term in
Section 0.
1.44 "Synacort NDSs" means the NDSs that are set forth on Schedule 0
and the regulatory records relating exclusively thereto.
1.45 "Synacort Trademark" means the trademark registrations that are
set forth on Schedule 0 together with all records associated therewith.
1.46 "Synacort Trademark Agreements" means those agreements set forth
on Schedule 0 to the extent such agreements relate to the Synacort Trademark.
<PAGE> 8
1.47 "Syntex Financial Statements" mean the statements of Syntex Net
Sales and gross margins for the Territory on a corporate cost basis for the
Product group for the fiscal years ended July 31, 1993 and 1994, and for the
five month period ended December 31, 1994, attached as Schedule 0.
1.48 "Syntex Net Sales" means all trade shipments to customers less all
credits issued to customers during the period reported. Such credits include
wholesaler chargebacks, returned goods, price adjustments, and product lost in
transit. Net sales have also been reduced by the amount of rebates paid to
contract and other customers during the period reported. Net sales do not
include cash discounts given to customers or any accrual adjustments made during
the period reported.
1.49 "Syntex Sales Statement" means the unaudited consolidated
statements of Syntex Net Sales for the Territory on a per Product basis by units
and Canadian dollars for the fiscal years ended July 31, 1993 and 1994 and the
five month period ended December 31, 1994, attached as Schedule 0.
1.50 "Territory" means Canada.
1.51 "Trademark Agreements" has the meaning ascribed to such term in
Section 0.
1.52 "Trademarks" has the meaning ascribed to such term in Section 0.
1.53 "Transition Services Agreement" means the agreement referred to in
Section 0.
2. ASSETS BEING SOLD
Subject to the terms and conditions of this Agreement, at Closing,
Seller shall sell, transfer, assign, convey and deliver to Buyer, its successors
and assigns forever, to the extent contemplated herein, all of the right, title,
and interest of Seller in the assets listed below in the Territory
(collectively, the "Assets"), the Synacort Assets, and the Additional
Trademarks, and Buyer shall assume all rights, title, and interest of Seller in
the Assets, the Synacort Assets, and the Additional Trademarks.
2.1 Trademarks. The trademark/service mark registrations and
applications that are set forth on Schedule 0 together with all records
associated therewith (the "Trademarks").
2.2 Registrations. The NDSs and the ANDS that are set forth on Schedule
0 (the "Registrations") and the regulatory records relating exclusively thereto.
2.3 Manufacturing Technology and Know-How. The manufacturing technology
and know-how that is exclusively used in manufacturing any Product ("Know-How")
and any documents which relate specifically and exclusively to such Know-How. In
addition, Seller shall grant Buyer a non-exclusive, perpetual, paid-up,
irrevocable, royalty-free, world-wide license, with right to sub-license, to use
any manufacturing technology and know-how that are necessary or used in
manufacturing any Product (but not exclusively used thereto) with such license
or sublicense being restricted to use for the Products, unless Buyer can
demonstrate by written records that such know-how was known prior to any
disclosure of such know-how by Seller or its Affiliates to Buyer or is now
public knowledge or becomes public knowledge in the future other than by breach
of any agreement between Buyer and its Affiliates and Seller and its Affiliates.
<PAGE> 9
2.4 Inventory. The inventory consisting of the Products that are owned
by Seller and that have been approved by Seller as meeting specifications and
otherwise saleable in the ordinary and normal course of business as of Closing
(the "Inventory"), the quantity and the location of which shall be set forth in
a document delivered by Seller at Closing. Products that have been shipped from
the plant or a warehouse directly to distributors, wholesalers, or customers are
not Inventory. Subject to the terms of the Transition Services Agreement,
Inventory shall be shipped FOB Seller's location.
2.5 Assumed Agreements.
2.5.1 Patheon Agreement. Seller shall assign and Buyer shall
assume all rights and obligations under the Patheon Agreement.
2.5.2 Trademark Agreements. Seller shall assign and Buyer
shall assume all rights and obligations under those agreements set forth on
Schedule 0 to the extent such agreements relate to the Trademarks (the
"Trademark Agreements").
2.6 Manufacturing Information. Accurate and complete copies of the
current Manufacturing Worksheets and copies of the Manufacturing Quality
Assurance Notebooks with respect to the Products currently available, including
batch records, development reports (if existing), and other documents and
records embodying manufacturing information.
2.7 Data Bank Documents. Right to obtain copies of and reference the
animal toxicology, animal mutagenicity, human clinical study and final reports,
and drug monograph/investigator brochures, a list of which is set forth on
Schedule 0 (the "Data Bank Documents").
2.8 Worldwide Safety Reports. A hard copy of the Worldwide Safety
Reports with respect to Products.
2.9 Assumption of Liabilities. The parties expressly acknowledge and
agree that (i) Buyer is not assuming or undertaking any liabilities relating to
or arising from the conduct of the Business, the sale or marketing of the
Products and/or the ownership or use of the Assets prior to the Closing; (ii)
Seller retains all such liabilities; and (iii) Buyer shall have no obligation to
Seller or any of its Affiliates or to any third party for any such liabilities.
2.10 Customer Lists. The list of customers who have purchased the
Products since January 1, 1996, which list will be delivered to Buyer at
Closing.
2.11 Books and Records. Copies of the Product Annual Reviews and Annual
Product Reviews relating to the Products for the last five (5) years, and
marketing and advertising materials relating exclusively to the Products, all of
which shall be to the extent available.
3. PURCHASE PRICE
Subject to the terms and conditions of this Agreement, in reliance on
the representations, warranties, covenants and agreements of the Seller
contained herein, and in consideration of the sale, conveyance, assignment,
transfer and delivery of the Assets, Buyer shall deliver to Seller, in full
payment for the aforesaid sale, conveyance, assignment, transfer and delivery,
the Purchase Price, consisting of: (i) six hundred thousand United States
dollars (US $600,000.00) payable to Seller at Closing by bank wire transfer
<PAGE> 10
to Seller at such banking institution, designated not less than five (5) days
prior to Closing by Seller. Additional payments of thirty-three thousand, three
hundred thirty-three United States dollars (US $33,333.00) shall be delivered by
Buyer to Seller at each of the first, second and third anniversary of the
Closing for a total of three (3) such additional payments ("Additional
Payments"). Each Additional Payment shall be reduced by fifty percent (50%) if
Net Sales in the Territory have decreased by more than twenty percent (20%)
during the twelve (12) months immediately preceding the corresponding
anniversary.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Canada, with full corporate
power and authority to consummate the transactions contemplated hereby. Seller
has all requisite power and authority to own and operate the Assets being
conveyed by Seller pursuant to this Agreement and to carry on the activities
constituting the business.
4.2 Authority. The execution and delivery of this Agreement by Seller
and the consummation and performance of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate and other
proceedings, and this Agreement has been duly authorized, executed, and
delivered by Seller and, assuming the enforceability against Buyer, constitutes
the legal, valid and binding obligation of Seller, enforceable in accordance
with its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court. The Transition
Services Agreement, and all other documents executed by Seller or its Affiliates
and delivered at the Closing, including those delivered pursuant to Section 0,
constitute a valid and binding obligation of Seller or the respective Affiliate
of Seller executing such documents enforceable in accordance with their
respective terms.
4.3 Title to Assets. Except as set forth in Schedule 0, Seller has good
and marketable title to all the Assets and will convey good and marketable title
at Closing, free and clear of any and all liens, encumbrances, claims,
mortgages, leases, security interests, charges or restrictions. Notwithstanding
the foregoing, Seller retains the right to use and to transfer to other buyers
of the products containing any Active Ingredient outside the Territory
information that is similar or identical to that contained in the Registrations
and the Know-How; provided, however, that no such buyer has been expressly
granted by Seller or any Affiliate of Seller the right to sell, transfer or
distribute any of the products containing any Active Ingredient into the
Territory based on such Registrations and Know-How and neither Seller nor any
Affiliate shall expressly grant any buyer such right. Buyer acknowledges that
Seller cannot prevent such a buyer from using such information, including
registrations and know-how that is substantially similar to the Registrations
and Know-How, to sell, transfer or distribute such products in the Territory. In
addition, trademarks that are the same as or similar to the Trademarks may be
registered in other countries and may be either retained by Seller for its use
or sold to other buyers in either case, for use solely outside the Territory.
4.4 No Violation or Conflict. Seller's execution and delivery of this
Agreement and the other related documents delivered by Seller in connection with
transactions contemplated herein and the performance of this Agreement by Seller
(and the transactions contemplated herein) (a) do not and will not
<PAGE> 11
conflict with, violate or constitute or result in a default or an event creating
rights of acceleration, termination, or cancellation, or a loss of right under
any Law, judgment, order, decree, the articles of incorporation or bylaws of
Seller or any mortgage, contract or agreement to which Seller is a party or by
which Seller is bound or (b) will not result in the creation or imposition of
any lien, charge, mortgage, claim, pledge, security interest, restriction or
encumbrance of any kind on, or liability with respect to, the Assets or the
Business except as otherwise provided herein or otherwise disclosed on the
Disclosure Schedule. None of the Assumed Agreements require the consent of any
third party to the assignment of such Assumed Agreement from Seller to Buyer;
provided, however, that with respect to the Patheon Agreement, Seller must give
prior written notice of any assignment to Patheon and Buyer must covenant in
writing with Patheon to be bound by the terms of the Patheon Agreement.
4.5 Registrations. The Registrations are the only registrations
required by the HPB to sell and market the Products in the Territory. All
Products in Schedule 2.2 are registered and eligible for immediate sale without
regulatory limitations.
4.6 Patents. There are no Patents with respect to the Active
Ingredients or Products in the Territory.
4.7 Inventory. As of Closing, each Product in the Inventory shall meet
the specifications therefor as set forth in the manufacturing documentation and
Registrations for such Product. The Inventory will be in good condition,
properly stored and in compliance with applicable Laws, usable and salable in
the ordinary course of business and shall have, except as set forth in Schedule
0, a minimum remaining shelf life at Closing of not less than thirteen (13)
months.
4.8 Taxes. There are no liens for taxes upon the Assets except for
liens for current taxes not yet due and payable which shall remain the sole
obligation of the Seller.
4.9 Financial Information.
4.9.1 The Syntex Financial Statements and the Syntex Sales
Statements are accurate and complete in all material respects, reflect only
actual bona fide transactions, are consistent with the accounting records of
Seller, and were prepared in accordance with Canadian generally accepted
accounting principles (GAAP) consistently applied.
4.9.2 The Roche Financial Statements are accurate and complete
in all material respects, reflect only actual bona fide transactions, are
consistent with the accounting records of Seller and were prepared in accordance
with International Accounting Standards ("IAS") consistently applied with prior
periods.
4.9.3 Seller and its Affiliates have no material liabilities,
contingent, absolute, accrued or otherwise, relating to the Assets, other than
as set forth in Schedule 0.
4.10 Absence of Certain Changes.
4.10.1 Except as set forth in Schedule 0 or as otherwise set
forth in this Agreement, since December 16, 1996, there has not been any (i)
Material Adverse Effect or material adverse change in the financial condition or
results of operation of the Business, (ii) damage, destruction or loss which has
or may reasonably be expected to have a Material Adverse
<PAGE> 12
Effect, or (iii) transaction or commitment outside the ordinary course of
business with respect to the Assets or the Business.
4.10.2 As of the date hereof and as of the Closing Date and
except as otherwise disclosed on Schedule 0, Seller is not aware of any facts,
circumstances, or proposed or contemplated events that could reasonably be
expected to have a Material Adverse Effect after Closing.
4.10.3 No default under any lease, agreement, contract or
other material arrangement relating to the Business, including but not limited
to the Patheon Agreement and the Trademark Agreements has been declared and is
continuing and, to Seller's knowledge, no condition exists which, with notice or
lapse of time or both, would constitute a default under any such agreement. All
of the such agreements are valid and subsisting and are in full force and effect
and, to Seller's knowledge, no claim exists or has been asserted with respect to
such agreements that would adversely effect the Business. Seller has not
received notice that any party to any such agreements intends to cancel or
terminate such agreements or to exercise or not exercise any options or rights
under such agreements, or to resist any effort by Seller or its successors to
exercise or not exercise such options or rights.
4.11 Violations of Law. Except as set forth in Schedule 0, neither the
operation of the Business nor the Assets (i) violates or conflicts with any
Registrations, any Law, governmental specification, authorization, or
requirement, or any decree, judgment, order, or similar restriction in any
material respect, or (ii) to the best of Seller's knowledge, has been the
subject of an investigation or inquiry by any governmental agency or authority
regarding violations or alleged violations, or found by any such agency or
authority to be in violation, of any Law.
4.12 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Seller in connection with the execution and
delivery of this Agreement by Seller or the consummation by it of the
transactions contemplated hereby to be consummated by it.
4.13 Litigation. Except as set forth in Schedule 0 attached hereto or
as set forth on Schedules 0 and 0, neither the Business nor the Assets is the
subject of (i) any outstanding judgment, order, writ, injunction or decree of,
or settlement agreement with, any person, corporation, business entity, court,
arbitrator or administrative or governmental authority or agency, limiting,
restricting or affecting the Business, the Assets, or the Products in a way that
would have a Material Adverse Effect, (ii) any pending or, to the best of
Seller's knowledge, threatened claim (excluding the adverse drug reports set
forth in the Registrations), suit, proceeding, charge, inquiry, investigation or
action of any kind, and (iii) any court suits filed with respect to the Assets
since January 1, 1990.
4.14 Limitation of Warranty. Seller will not warrant that buyers of
products outside the Territory that are substantially similar to or identical
with the Products will not attempt to register such products in the Territory.
4.15 Trademarks. Each of the Trademarks being conveyed by this
Agreement is being conveyed free and clear of any liens, security interests and
other encumbrances and is freely assignable by Seller. Seller is not required,
and Buyer will not be required, to pay any royalty to any person with respect to
use of any of the Trademarks. Except as set forth in the Trademark
<PAGE> 13
Agreements, the Trademarks do not infringe upon or conflict with the trademarks
or other rights of any third party in the Territory.
4.16 Return Policy. Schedule 0 sets forth a complete copy and/or
description of Seller's current return policies with respect to the Products.
Except as noted in Schedule 0, Seller has not made or authorized any other
return arrangements with respect to the Products during the three years
immediately preceding the date hereof which would obligate Seller or its
successors to accept Product returns on terms which are materially different
from those set forth in such Schedule 0. Except as set forth in Schedule 0,
Seller has, in general, administered the return policies set forth in Schedule 0
consistently, except for non-material deviations therefrom in the ordinary
course of business.
4.17 Warranties. The HPB approved package insert for each applicable
Product, sets forth a complete copy and/or description of Seller's current
warranties with respect to the Products. Except for implied warranties arising
by operation of law, Seller has not made or authorized any other product
warranty with respect to the Products since January 1, 1995 which would obligate
Seller or its successors on terms which are materially different from those set
forth in the applicable package insert. Seller has, in general, administered its
warranty policies consistently, except for non-material deviations therefrom in
the ordinary course of business since January 1, 1995.
4.18 Customer Contracts. Seller has no contracts with customers for
Products that provide for rebates, chargebacks, or other discounts, other than
cash discounts based on payment terms.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to consummate the transactions contemplated
hereby.
5.2 Authority. The execution and delivery of this Agreement by Buyer,
and the consummation and performance of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate and other
proceedings, and this Agreement has been duly authorized, executed, and
delivered by Buyer and, assuming the enforceability against Seller, constitutes
the legal, valid and binding obligation of Buyer, enforceable in accordance with
its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court.
5.3 No Violation or Conflict. The execution and delivery of this
Agreement by Buyer and the performance of this Agreement (and the transactions
contemplated herein) by Buyer do not and will not conflict with, violate or
constitute or result in a default under any Law, judgment, order, decree, the
articles of incorporation or bylaws of Buyer, or any contract or agreement to
which Buyer is a party or by which Buyer is bound.
5.4 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Buyer in connection with the execution and
delivery of this Agreement by Buyer or the consummation by it of the
<PAGE> 14
transactions contemplated hereby to be consummated by it, except with respect to
the filing of a pre-merger notification report under the HSR Act.
5.5 Litigation. To the best knowledge of Buyer, there are no claims,
actions, suits, proceedings or investigations pending or threatened by or
against Buyer with respect to the transactions contemplated hereby, at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, agency, instrumentality or authority.
5.6 Financing. Buyer will have funds sufficient to pay the Purchase
Price on the Closing Date.
6. SELLER'S COVENANTS
6.1 Conduct of Business. Seller agrees that from the date hereof until
the Closing Date that, except as specifically disclosed in Schedule 0 or unless
otherwise consented to by Buyer in writing, Seller shall
6.1.1 maintain the Assets in good status and condition and not
sell or dispose of any Assets except sales of Products in the ordinary course of
business;
6.1.2 cause the Business to be conducted in the ordinary
course consistent with the practice over the past six (6) months and make all
reasonable efforts consistent with practices over the past six (6) months to
preserve the Assets and the reputation of the Business and the Products and to
preserve for Buyer the goodwill of suppliers, customers, distributors, and
others having relations with the Business.
6.1.3 not enter into any new, or amend any existing, contract,
commitment, or agreement relating to the Business, the Products or the Assets or
extend any credit or incur any obligation with respect to the conduct of the
Business or the Assets except (i) for the Patheon Agreement, (ii) or in the
ordinary course of business and consistent with past business practices;
6.1.4 not engage in any special pricing, rebate, allowance,
promotional or marketing programs inconsistent with past practices or for the
purpose of maintaining customer inventory levels of Product in excess of those
levels maintained in the past;
6.1.5 promptly inform Buyer of any change in the Business or
Assets that could reasonably be expected to have a Material Adverse Effect;
6.1.6 not subject any of the Assets or any part thereof to any
mortgage, pledge, security interest, encumbrance, lien or restriction of use or
suffer such to be imposed or license or grant to any other party the right to
use any of the Trademarks or any of the Know-How except for use outside the
Territory;
6.1.7 perform in all material respects all of its obligations
under any agreement with any third party relating to the Business, the Products,
or the Assets unless such third party is in default under such agreement; and
6.1.8 maintain its books of accounts and records relating to
the Business, the Products or the Assets in the usual, regular and ordinary
manner including, but not limited to, the maintenance of any and all documents
required by any federal or state regulatory agency or governmental body.
<PAGE> 15
6.2 Compliance with Laws. Seller shall comply in all material respects
with all Laws and in all respects with all orders of any court or federal,
state, local or other governmental entity applicable to the Business or the
Assets.
6.3 Disclosure Supplements. From time to time following execution of
this Agreement but prior to the Closing Date, Seller will promptly inform Buyer,
in writing, of any matter that may arise hereafter and that, if existing or
occurring prior to the execution of this Agreement, would have been required to
be set forth or described herein or in the Disclosure Schedule. Seller shall
prepare and deliver to Buyer the Roche Financial Statements for a particular
month within fifteen (15) business days following the end of each such month.
6.4 Access; Investigation. From and after the date hereof and up to
Closing, Buyer and its authorized agents, officers, and representatives shall
have reasonable access to the Business and the Assets and all records and
information related thereto (except for information that Seller is contractually
obligated not to disclose), during normal business hours upon reasonable prior
notice and at a time and manner mutually agreed upon between Buyer and Seller in
order to conduct such examination and investigation of the Assets and the
Business as Buyer shall reasonably deem necessary, provided that such
examinations shall not unreasonably interfere with Seller's operations and
activities.
6.5 Further Assurances. Seller shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Seller, at the
request of Buyer, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Buyer such deeds,
assignments, bills of sale, consents and other instruments in addition to those
required by this Agreement, in form and substance satisfactory to Buyer, as
Buyer may reasonably deem necessary or desirable to implement any provision of
this Agreement.
7. BUYER'S COVENANTS
7.1 Transfer of Products. Following Closing, Buyer shall use all
reasonable efforts and, except as otherwise set forth herein, at its own expense
to obtain as expeditiously as possible such governmental approvals and
registrations from the HPB, or similar regulatory authorities, as may be
necessary with respect to the manufacture and sale of the Products by Buyer or
its designee.
7.2 Labeling. Following Closing, Buyer shall at its own expense and as
expeditiously as possible use all reasonable efforts to obtain such HPB
approvals necessary for the Buyer Labeling for each Product.
7.3 Further Assurances. Buyer shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Buyer, at the
request of Seller, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Seller such
consents and other instruments in addition to those required by this Agreement,
in form and substance satisfactory to Seller, as Seller may reasonably deem
necessary or desirable to implement any provision of this Agreement.
8. COVENANTS BY BUYER AND SELLER
<PAGE> 16
8.1 Stability Studies. As soon as possible following Closing, Buyer
shall qualify a site as a testing site for stability studies or request Patheon
to continue to conduct such stability studies at Buyer's expense, for Products
not manufactured by Patheon. Seller shall have no responsibility for on-going
stability studies for the Products following Closing.
8.2 Transition Services Agreement. Buyer and Seller, or their
Affiliates shall at Closing enter into a Transition Services Agreement, attached
as Exhibit A.
8.3 Labeling. In accordance with Section 7.2, Buyer is responsible for
having the Buyer Labeling approved by the HPB as soon as possible. Buyer may use
the Seller Labeling on the Inventory until such Inventory is exhausted;
provided, however, that Seller may, at its option, buy-back from Buyer all
inventory labeled with Seller's DIN number upon Buyer having sufficient
inventory, to be determined by Buyer in its sole discretion to be exercised in
good faith, of the applicable Product labeled with Buyer's DIN number. In
addition, Buyer may use the Seller Labeling on each Product manufactured by
Seller or its Affiliates for Buyer until the earlier of the date (i) the HPB
approves the Buyer Labeling for use on such Product and Buyer, using all
reasonable efforts, has obtained sufficient supplies of materials with Buyer
Labeling for use on such Products, or (ii) twelve (12) months following Closing,
provided, however, if at the end of such twelve (12) month period the HPB has
not yet approved the Buyer Labeling, then such twelve (12) month period shall be
extended for a period of time to be mutually agreed by the parties (such
agreement not to be unreasonably withheld) reasonably required to obtain such
approval.
8.4 Use of Seller Trademarks. Other than the use of the Seller Labeling
as set forth in Section 0, any use by Buyer of the trademarks, tradenames, or
logos of Seller, other than the use of the Trademarks, the Synacort Trademarks,
and the Additional Trademarks, as provided herein, must be approved by Seller
prior to such use.
8.5 Assignment of Trademarks. By or before Closing, Buyer and Seller
shall prepare in good faith an assignment pursuant to which Seller agrees the
Trademarks, the Synacort Trademarks, and the Additional Trademarks shall be
assigned to Buyer. Following Closing, Buyer shall prepare and Seller shall
execute such documents as Buyer may reasonably request in order to record the
assignment of the Trademarks, the Synacort Trademarks, and the Additional
Trademarks. The responsibility and expense of preparing and filing such
documents and any actions required ancillary thereto, shall be borne solely by
Buyer.
8.6 Assignment of Registrations. At or following Closing, Buyer shall
prepare and Seller shall execute such documents as Buyer may reasonably request
in order to record the assignment of the Registrations. Buyer shall pay any user
fees associated with any Product that accrues after Closing but prior to
transfer of such Registration. Seller shall be responsible for preparing and
submitting to Buyer all reports and updates with respect to each of the NDSs for
all of the Products, including but not limited to NDS Annual Reports, in the
form required to be filed with HPB through April 30, 1997. If the next annual
filing with respect to any of such NDSs is scheduled to occur after April 30,
1997 but before April 30, 1998, Seller shall prepare and submit to Buyer the
data necessary for such annual filing summary report through April 30, 1997 for
any such NDS. In addition, Seller shall make available a regulatory person to
answer questions regarding such data at the time of filing such Annual Report.
<PAGE> 17
8.7 Access to Information. Buyer and Seller will, upon reasonable prior
notice, make available to the other, to the extent reasonably required for the
purpose of assisting Seller or Buyer in obtaining governmental approvals and
preparation of tax returns or financial statements required by the Securities
and Exchange Commission (to the extent information is available) relating to the
Assets, and prosecuting or defending or preparing for the prosecution or defense
of any action, suit, claim, complaint, proceeding or investigation at any time
brought by or pending against Seller or Buyer relating to the Assets, other than
in the case of litigation between the parties hereto, such information or
records (or copies thereof) in their possession after Closing. Buyer shall also
provide Seller with any adverse drug events simultaneously with notification of
the HPB for so long as Buyer markets the Products for serious or
life-threatening adverse event and for three years following Closing for all
other adverse drug events.
8.8 Confidentiality Agreement. The parties agree that certain letter
agreement dated October 15, 1996 between an Affiliate of Seller and Buyer (the
"Confidentiality Agreement"), shall survive either termination of this Agreement
or Closing as an independent agreement; provided, however, that upon Closing,
the restrictions on use and the confidentiality obligations of the
Confidentiality Agreement shall no longer be in effect with respect to
Evaluation Materials (as defined therein) relating to the transferred Assets.
8.9 Press Releases. Neither the Seller nor the Buyer, nor any Affiliate
thereof, will issue or cause publication of any press release or other
announcement or public communication with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, which consent will not be unreasonably withheld or delayed. Neither party
shall use the name of the other party in any public statement, prospectus,
annual report, or press release without the prior written approval of the other
party, which may not be unreasonably withheld or delayed, provided, however,
that both parties shall give the other party a minimum of five business days to
review such press release, prospectus, annual report, or other public statement.
Notwithstanding the foregoing, Buyer may make any disclosure which Buyer, in the
opinion of its counsel, is obligated to make pursuant to applicable law, in
which case, Buyer shall still endeavor to give Seller an opportunity to review
such disclosure but shall not be obligated to do so if such disclosure must, in
the opinion of its counsel, be made without time for review. The failure of
Buyer to draft such disclosure in a timely fashion shall not be deemed a reason
to avoid submitting such disclosure to Seller.
8.10 Government Filings. Each of the parties will use its respective
reasonable good faith efforts to obtain, and to cooperate with the others in
obtaining, all authorizations, consents, orders and approvals of any
governmental agencies, and cooperate with making any filings that may be or
become necessary in connection with the consummation of the transactions
contemplated by this Agreement prior to or after Closing, and to take all
reasonable actions to avoid the entry of any order or decree by any governmental
agency prohibiting the consummation of the transactions contemplated hereby.
8.11 Returns. From and after the Closing Date, Buyer and Seller shall
track lot numbers of products distributed, for the purpose of identifying when
Products were sold. Seller shall furnish Buyer with a list of the lot numbers of
lots of the Products distributed in the last three years and Buyer agrees to
furnish to Seller the lot numbers of any lots of the Products distributed
following the Closing Date until the Buyer and Seller mutually agree to
discontinue tracking returns, which shall be no later than four (4) years
following the Closing Date. Seller is responsible for claims pertaining to all
Products sold prior to the Closing Date, provided, however, that Seller is not
<PAGE> 18
responsible for claims which would not have been accepted in accordance with the
Roche Return Goods Policy attached hereto as Schedule 0. In addition, Buyer
shall not engage in any special pricing, rebate allowance, promotional or
marketing program or activities, special returns policy or special restocking
program that would impact the normal course or level of expected returns with
respect to Products sold prior to Closing. Buyer is responsible for all claims
pertaining to all Products sold on or after the Closing Date. For those lots for
which both Buyer and Seller have sold Products, returns shall be pro-rated
between Buyer and Seller based upon the quantity of such lot sold by each party,
as determined by count of finished goods inventory for such lot number at
Closing.
8.12 Backorder. If between Closing and April 30, 1997, any Product set
forth on Schedule 8.12 (the "Protected Products") goes on backorder with a
customer for longer than five (5) business days, then Seller shall pay Buyer an
amount equal to the gross margin less two percent (2%) cash discount for each
unit of such Protected Product not shipped. For the purpose of this Section,
gross margin for the period ending March 31, 1997 shall be calculated using the
historic rate of gross profit margins based on Net Sales in the last quarter of
1996; for the period between March 31, 1997 and April 30, 1997, the gross margin
shall be calculated using the actual experience for such period, based on Net
Sales. Buyer shall prioritize production of the Protected Products in order to
avoid backorders. Should Buyer elect to prioritize production of other Products
and a backorder occurs with respect to a Protected Product or if Buyer does not
permit Seller to distribute Products after Closing in accordance with Seller's
normal business practices with respect to Product expiration dating, the payment
provisions of this Section 8.12 shall not apply. Buyer shall inform Seller on a
regular basis of its production schedule for the Products to facilitate Seller's
managing the inventory of the Products.
9. CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions to Obligation of Buyer. The obligation of Buyer to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Buyer):
9.1.1 Representations and Warranties. The representations and
warranties made by Seller in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.1.2 Performance. Seller shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.1.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.1.4 No Adverse Change. During the period from the date of
this Agreement to the Closing Date there shall not have occurred or been
discovered, and there shall not exist on the Closing Date except for that which
<PAGE> 19
has been otherwise disclosed elsewhere in this Agreement or in the Disclosure
Schedule at the time of execution of this Agreement, any condition or fact that
could reasonably be expected to have a Material Adverse Effect.
9.1.5 Officer's Certificate. Seller shall have delivered to
Buyer a certificate, dated the Closing Date and executed by an officer of
Seller, certifying to the fulfillment of all conditions set forth in this
Article 0.
9.1.6 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.1.7 Authorization. Seller shall have furnished to Buyer all
documents Buyer may reasonably request relating to the existence of Seller, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Buyer.
9.1.8 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Buyer and Buyer's counsel, and
Seller shall have made available to Buyer for examination the originals or true
and correct copies of all documents which Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
9.2 Conditions to Obligations of Seller. The obligations of Seller to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Seller):
9.2.1 Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.2.2 Performance. Buyer shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.2.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.2.4 Officer's Certificate. Buyer shall have delivered to
Seller a certificate, dated the date of Closing and executed by an officer of
Buyer, certifying to the fulfillment of all conditions specified in this
Article 0.
<PAGE> 20
9.2.5 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.2.6 Authorization. Buyer shall have furnished to Seller all
documents Seller may reasonably request relating to the existence of Buyer, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Seller.
9.2.7 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Seller and Seller's counsel,
and Buyer shall have made available to Seller for examination the originals or
true and correct copies of all documents which Seller may reasonably request in
connection with the transactions contemplated by this Agreement.
10. THE CLOSING
10.1 The Closing. Subject to the satisfaction of all of the conditions
to each party's obligations set forth in Article 0 hereof (or, with respect to
any condition not satisfied, the waiver in writing thereof by the party or
parties for whose benefit the condition exists), the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at 9:00 a.m.
(local time) on the first Monday following the day in which all required waiting
periods under the HSR Act have expired or been terminated (the "Closing Date")
or at such other time, date (but in no event later than March 1, 1997) and place
as the parties hereto may agree in writing. The transfer of the Assets shall be
deemed to have occurred as of the Closing Time.
10.2 Deliveries by Seller. Unless otherwise specified in this
Section 0, at Closing, Seller or its Affiliate, as appropriate, shall deliver
to Buyer in form reasonably satisfactory to Buyer, each properly executed and
dated as of the Closing Date, where appropriate:
10.2.1 except as otherwise provided herein, such deeds, bills
of sale, endorsements, assignments, assignment agreements, and other good and
sufficient instruments of conveyance and transfer as shall be effective to vest
in Buyer free and clear title to the Assets as contemplated by this Agreement
10.2.2 within five (5) business days following the Closing,
the statement of the quantity and location of inventory described in Section 0;
10.2.3 the Transition Services Agreement;
10.2.4 a receipt for the Purchase Price;
10.2.5 originals of those Assumed Agreements exclusively
related to the Products; and
10.2.6 a letter giving written notice to Patheon of the
assignment of the Patheon Agreement to Buyer.
10.3 Deliveries by Buyer. At Closing, Buyer or its Affiliate, as
appropriate, shall deliver or cause to be delivered to Seller:
10.3.1 The Purchase Price payable in accordance with
Article 0;
<PAGE> 21
10.3.2 Secretary's Certificate certifying that the Board of
Directors of Buyer has authorized this Agreement.
10.3.3 the Transition Services Agreement; and
10.3.4 a letter to Patheon covenanting that Buyer agrees to be
bound by the terms of the Patheon Agreement.
11. TERMINATION
11.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date:
11.1.1 By the mutual written consent of Seller and Buyer;
11.1.2 By either Seller or Buyer if Closing shall not have
occurred on or before March 1, 1997, unless such date has been extended by
mutual agreement in writing (the "Termination Date");
11.1.3 By either Seller or Buyer if consummation of the
transactions contemplated hereby shall violate any final order, decree or
judgment of any court or governmental body having competent jurisdiction.
11.1.4 By Buyer if there has been a material misrepresentation
by Seller or a material breach by Seller of any of the warranties or covenants
of Seller set forth herein that Seller has not cured within fourteen (14) days
after receipt of notice from Buyer requesting such to be cured (but in no event
later than the Termination Date) or that Buyer has not waived in writing; or
11.1.5 By Seller if there has been a material
misrepresentation by Buyer or a material breach by Buyer of any of the
warranties or covenants of Buyer set forth herein that Buyer has not cured
within fourteen (14) days after receipt of notice from Seller requesting such to
be cured (but in no event later than the Termination Date) or that Seller has
not waived in writing.
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 0, all further obligations of Seller and Buyer under this Agreement
shall terminate without further liability of Seller or Buyer except (a) for the
obligations of Buyer and Seller under Sections 0, 0, 0, and 0; and (b) that such
termination shall not constitute a waiver by any party of any claim it may have
for damages caused by reason of a breach by the other party of a representation,
warranty, covenant or agreement.
12. SURVIVAL; INDEMNIFICATION
12.1 Survival of Representations; Remedy for Breach. The
representations, warranties and covenants made by Buyer and Seller under this
Agreement shall survive the Closing for a period of eighteen (18) months. Any
Indemnifiable Claims (as hereinafter defined) or claim for tax reimbursement
that a party may have arising out of the other party's breach of its
representations, warranties, or covenants contained in this Agreement shall be
made by notice to the other party no later than eighteen (18) months following
the Closing Date ("Claim Period") and there shall be no recovery for
indemnification for breach of a representation, warranty, or covenant under this
Agreement for any Indemnifiable Claim or claim for tax reimbursement first
asserted after that date. Seller and Buyer agree to use reasonable efforts to
mitigate any loss or damage for which they may seek indemnification under this
Article 12 or for which they may seek recovery under law or equity.
<PAGE> 22
12.2 Indemnification by Seller. Subject to the limitations set forth in
Section 0, and in addition to any other rights Buyer may have under law or at
equity, Seller shall indemnify and hold harmless Buyer and its Affiliates,
officers, directors, and agents and employees from any and all damages, losses,
liabilities, third party claims, lawsuits, obligations and expenses (including
reasonable attorneys fees and costs) (collectively, "Damages") that Buyer shall
incur or suffer from (a) any breach of a representation, warranty, or covenant
of Seller in this Agreement or in any of the agreements, instruments or
documents executed or delivered by Seller pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Seller, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets prior to the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.2 (a) and (b),
collectively "Buyer's Indemnifiable Claims"); and (c) any taxes associated with,
imposed upon or in respect of the conduct of the Business, the sale of the
Products, or the use or ownership of the Assets prior to the Closing Date; or
(d) taxes imposed with respect to the transfer of the Assets to the Buyer
pursuant to this Agreement, including any assessments against Seller as a member
of a consolidated reporting group with any other entity except for payment of
GST tax which shall be paid by Buyer (Section 12.2 (c) and (d), collectively
"Buyer's Tax Claims").
12.3 Indemnification by Buyer. Subject to the limitations set forth in
Section 0, and in addition to any other rights it may have under law or at
equity, Buyer shall indemnify and hold harmless Seller and its Affiliates,
officers, directors, and agents and employees from any and all Damages that
Seller shall incur or suffer from (a) any breach of a representation, warranty,
or covenant of Buyer in this Agreement or in any of the agreements, instruments
or documents executed or delivered by Buyer pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Buyer, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets following the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.3 (a) and (b),
collectively "Seller's Indemnifiable Claims") (Buyer's Indemnifiable Claims and
Seller's Indemnifiable Claims are hereby collectively referred to as
"Indemnifiable Claims"); or (c) any taxes associated with, imposed upon or in
respect of the conduct of the Business, the sale of the Products, or the use or
ownership of the Assets following the Closing Date; or (d) payment of GST tax
(Section 12.3 (c) and (d), collectively "Seller's Tax Claims").
12.4 Limitations. Notwithstanding anything to the contrary herein,
neither Buyer and its Affiliates nor Seller shall be entitled to seek
indemnification or any recovery under law or at equity with respect to any
Indemnifiable Claim until the aggregate amount of such claims exceeds Two
Hundred Thousand United States Dollars ($200,000) (the "Basket Limitation");
provided, however, that (i) if either party is responsible to the other for any
amount in excess of the Basket Limitation, then the Basket Limitation shall not
be deemed applicable and such party shall be responsible to fully indemnify the
other party for all Damages; (ii) in no event shall either party be required to
indemnify the other for breaches of the representations, warranties, and
covenants made in this Agreement for an amount in excess of the Purchase Price;
and (iii) neither the Basket Limitation nor the limitation in the immediately
preceding clause shall be applicable to (x) third party claims, (y) Buyer's Tax
Claims or Seller's Tax Claims; provided, that Damages shall be limited to
one-third (1/3) of the Purchase Price with respect to the representations and
warranties under Sections 0, 0, 0, 0, 0, 0, and 0; and provided further, that
<PAGE> 23
Damages shall be limited to one-half (1/2) of the Purchase Price with respect to
the representations and warranties under Sections 0 and 0.
12.5 Notice. A party seeking indemnification pursuant to Section 0 or 0
(an "Indemnified Party") shall give prompt notice to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion of any
claim, or the commencement of any action, suit or proceeding, in respect of
which indemnity is or may be sought hereunder (whether or not the limits set
forth in Section 0 have been exceeded) and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request, but no failure to give such notice shall relieve the Indemnifying Party
of any liability hereunder (except to the extent the Indemnifying Party has
suffered actual prejudice thereby).
12.6 Participation in Defense. The Indemnifying Party may, at its
expense, participate in or assume the defense of any such action, suit or
proceeding involving a third party. In such case the Indemnified Party shall
have the right (but not the duty) to participate in the defense thereof, and to
employ counsel, at its own expense, separate from counsel employed by the
Indemnifying Party in any such action and to participate in the defense thereof.
The Indemnifying Party shall be liable for the fees and expenses of one firm as
counsel (and appropriate local counsel) employed by the Indemnified Party if the
Indemnifying Party has not assumed the defense thereof. Whether or not the
Indemnifying Party chooses to defend or prosecute any claim involving a third
party, all the parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.
12.7 Settlements. The Indemnifying Party shall not be liable under this
Article for any settlement effected without its consent of any claim, litigation
or proceedings in respect of which indemnity may be sought hereunder, unless the
Indemnifying Party refuses to acknowledge liability for indemnification under
this Article 0 and/or declines to defend the Indemnified Party in such claim,
litigation or proceeding.
12.8 Set-Off. In addition to any other remedies that Buyer may have
against Seller for indemnification under the provisions of this Agreement or
under law or at equity, Buyer may set off against any amount otherwise due and
yet unpaid to Seller as part of the Purchase Price or otherwise, any amount owed
by Seller or its Affiliates to Buyer under any provision of this Agreement, any
instrument or agreement delivered pursuant thereto, or otherwise.
13. NON-COMPETITION AND CONFIDENTIALITY
13.1 Non-Compete. Seller acknowledges that in order to assure Buyer
that Buyer will retain the value of the Assets, Buyer wishes assurances that
Seller and its Affiliates shall not utilize their special knowledge of the
Business and their relationship with customers, suppliers, and others to compete
with the Buyer with respect to the Business. For a period of five (5) years
beginning on the Closing Date, neither Seller nor its Affiliates shall engage in
any business that manufactures, packages, distributes or sells finished products
in the Territory whose sole or major active ingredients consist of the Active
Ingredients for topical use in dermatology except for (i) the transactions
involving Buyer, (ii) as part of a product whose primary indication is the
treatment of vulvovaginal mycotic infections; provided that, nothing in this
Article shall in any way restrict or preclude the Seller or any of its
Affiliates from acquiring another company, business or line of products
(including by license thereof or through investment therein), in which less than
<PAGE> 24
a twenty percent (20%) of the revenues and/or assets is derived from or
represents finished products whose sole or major active ingredients consist of
the Active xIngredients for topical use in dermatology and to continue to
operate such business following such acquisition. In promoting any such acquired
product or in promoting any other dermatology product that Seller may develop,
manufacture of market in compliance with this Section 13.1, Seller shall not
make use of the history, heritage or brand equity of the Products as part of any
such promotional plan or activity.
13.2 Confidentiality. Seller acknowledges that the Assets and all other
confidential or proprietary information with respect to the Business are
valuable, special and unique. Neither Seller nor any of its Affiliates shall, at
any time after the Closing Date, disclose, directly or indirectly, to any third
party, or use or purport to authorize any third party to use any confidential or
proprietary information with respect to the Business, whether or not for
Seller's or an Affiliate's own benefit, without the prior written consent of
Buyer, including without limitation, information as to the financial condition,
results of operations, customers, suppliers, products, inventions, sources,
leads or methods of obtaining new supplies, marketing strategies or any other
information relating to the Business or Products which could reasonably be
regarded as confidential, but not including information which (i) does not
relate directly and exclusively to the Business or the Products, provided that
Seller and its Affiliates shall not disclose such information to the direct
detriment of the Business; or (ii) is or shall become generally available to the
public other than as a result of an unauthorized disclosure by Seller or an
Affiliate or third party to whom Seller or an Affiliate has provided such
information; or (iii) as may be necessary for Seller or any of its Affiliates to
perform its obligations under this Asset Purchase Agreement or the transactions
or agreements contemplated herein; or (iv) that is required by Law to be
disclosed by Seller or any of its Affiliates.
14. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Seller or Buyer at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.
if to Buyer, to:
Medicis Pharmaceutical Corporation
4383 East Camelback Road
Phoenix, Arizona 85018
Attn: Jonah Shacknai
with a copy to:
Brown & Bain
2901 North Central Avenue
Phoenix, Arizona 85012-2788
Attn: Frank M. Placenti
<PAGE> 25
if to Seller, to:
Hoffmann-La Roche Limited
2455 Meadowpine Boulevard
Mississauga, Ontario L5N 6L7
Attention: General Manager
with a copy to:
Hoffmann-La Roche Limited
2455 Meadowpine Boulevard
Mississauga, Ontario L5N 6L7
Attention: General Counsel
15. BULK SALES LAW
The parties hereto each waive compliance by the others with the
provisions of any statute or any state or jurisdiction regulating bulk sales or
transfers which may be applicable to the sale of the Assets. Seller hereby
jointly and severally agrees to indemnify and hold Buyer and its officers,
directors, employees, agents, representatives, successors and assigns harmless
from and against any and all losses, claims, damages, expenses and liabilities
(including legal fees and expenses) to which Buyer may become subject pursuant
to the bulk transfer provisions of the Uniform Commercial Code or any applicable
state or any other applicable bulk transfer or sale statute with regard to the
sale of the Assets contemplated by this Agreement.
16. SYNACORT
At Closing, Seller shall grant Buyer an exclusive, fully paid-up
license, with right to sub-license, to manufacture, market and sell products in
the Territory using the Synacort NDSs; provided, however, that Buyer may not
manufacture, market or sell any product for the treatment of vulvovaginal
mycotic infections products using the Synacort NDSs. At Closing, Seller shall
transfer to Buyer and Buyer shall assume all regulatory responsibility for the
Synacort NDSs. In addition, Seller shall assign and Buyer shall assume all
rights and obligations under the Synacort Trademarks and the Synacort Trademark
Agreements effective as of Closing.
17. ARBITRATION AND GOVERNING LAW
17.1 Generally. Except for the right of either party to apply to a
court of competent jurisdiction for a Temporary Restraining Order to preserve
the status quo or prevent irreparable harm pending the selection and
confirmation of a panel of arbitrators in accordance herewith, any dispute,
controversy or claim arising out of or relating to this Agreement, to a breach
or termination thereof, or to the rights of any party for indemnification
thereunder ("Claim") shall be settled by final and binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in effect on the day the arbitration is commenced in
accordance with this Agreement ("Rules"). In the event of any inconsistency
between such Rules and the terms of this Agreement, this Agreement shall
supersede the Rules. Any judgment on any award rendered in the arbitration may
be entered in any court having jurisdiction and shall be final, binding,
non-appealable, and conclusive. The AAA shall have jurisdiction over all parties
to this Agreement for purposes of the arbitration.
<PAGE> 26
17.2 Defenses and Bankruptcy. Any statute of limitations or other
equitable or legal doctrine which would otherwise be applicable to any action
brought by any of the parties shall be applicable in the Arbitration. In the
event any party to this Agreement files a petition under the bankruptcy laws of
the United States or has a petition filed against it which results in an order
for relief or other indicia that a bankruptcy case has commenced, it is the
express intention of the parties to this Agreement that this Agreement shall
control and be enforced in accordance with is terms and conditions that any
Claim shall remain subject to arbitration to the maximum extent permitted by
law.
17.3 Commencement of Arbitration. Any party may commence arbitration by
serving upon all other parties a written demand for arbitration sent by
certified mail, return receipt requested, in accordance with Agreement, with a
copy of the same delivered by certified mail, return receipt requested, to the
AAA regional office in which Palo Alto California is then located. The AAA shall
administer the arbitration. The arbitration panel shall consist of three
members, one being appointed by each party and the third, who shall be the
chairman of the panel, being appointed by mutual agreement of the two
party-appointed arbitrators. In the event of failure of said two arbitrators to
agree within sixty (60) days after the commencement of the arbitration
proceeding upon the appointment of the third arbitrator, the third arbitrator
shall be appointed by the AAA in accordance with the Rules. In the event that
either party shall fail to appoint an arbitrator within thirty (30) days after
the commencement of the arbitration proceeding, such arbitrator and the third
arbitrator shall be appointed by the AAA in accordance with the Rules. The
arbitration award shall be rendered by a majority of the members of the Board of
Arbitration. Except as expressly provided in this Agreement in Section 17.9, the
panel shall not be entitled to modify this Agreement or the transactions
contemplated herein.
17.4 Governing Law and Place of Arbitration. The arbitrators shall
apply the laws of the State of New York (regardless of its or any other
jurisdiction's choice of law principles). The place of arbitration shall be
Phoenix, Arizona.
17.5 Discovery and Other Matters. There shall be no rights of discovery
in connection with the arbitration except as follows:
17.5.1 Each party shall have the right to request the
arbitrators to issue subpoenas for documents in accordance with the rules;
17.5.2 Each party shall have the right to initiate one (1)
deposition of one representative of each party to the arbitration; and each
party shall have the right to initiate one (1) additional oral deposition
pursuant to a subpoena issued by the arbitrators or any court of competent
jurisdiction.
17.5.3 At any time following the tenth day after the
commencement of the arbitration in accordance with this Agreement, a written
notice served upon all parties shall be sufficient to compel the attendance of
any party at a deposition upon not less than sixty (60) days notice and no
subpoena shall be required for that purpose. If a person fails or refuses to
testify at a deposition, that person shall not be permitted to testify at the
hearing, except for good cause shown. The number of depositions that may be
initiated by either party may be varied by agreement of all parties to the
arbitration but not by any action, order or request of the arbitrators or any
court.
<PAGE> 27
17.6 Hearing. Not less than thirty (30) days prior to the scheduled
arbitration proceeding, the arbitrator shall conduct a preliminary hearing in
accordance with the AAA guidelines. Not less than five (5) days prior to the
preliminary hearing, all parties to the arbitrations shall serve upon all other
parties to the arbitration a written list of witnesses and exhibits to be used
at the arbitration hearing. Except for good cause shown, no witness or exhibit
may be utilized at the arbitration hearing other than as set forth on such list.
the arbitrators shall receive evidence at a single hearing. The arbitrators
shall award reasonable attorneys' fees and costs in favor of the prevailing
party or parties. The arbitrator shall issue a final award not more than twenty
(20) days following the conclusion of the hearing. The arbitrators shall have
the power to hear and decide, by documents only or with a hearing (at the
arbitrators sole discretion) any prehearing motions in the nature of a pre-trial
motion to dismiss or for summary judgment.
17.7 Arbitrators Fees. The arbitrators shall be entitled to receive
reasonable compensation at an hourly rate to be established between the
arbitrators and the AAA. If required by the arbitrators, Buyer, on the one hand,
and Seller, on the other, will deposit with the AAA an equal share of the total
anticipated fee of the arbitrators in an amount to be estimated by the AAA. The
non-prevailing party(s) in the proceedings shall be ordered to pay, and shall
have the ultimate responsibility for, all arbitrators fees and the fees of the
AAA and such fees shall be included in the judgment to be entered against the
non-prevailing party or parties.
18. ADDITIONAL TERMS
18.1 Brokers. Buyer represents to Seller that it has not employed any
investment banker, broker, finder or intermediary (a "Broker") in connection
with the transactions contemplated hereby who might be entitled to a fee or any
commission from Seller upon consummation of the transactions contemplated
hereby. Seller represents to Buyer that it has not employed any Broker in such
connection who might be entitled to a fee or any commission from Buyer upon
consummation of the transactions contemplated hereby.
18.2 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to seek
equitable relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies
provided hereunder or available to the parties hereto at law or in equity.
18.3 Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting and other costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
18.4 Attorneys' Fees. If there is any litigation or arbitration with
respect to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.
18.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns; provided that this Agreement may not be assigned by any party without
the written consent of the other party.
<PAGE> 28
18.6 Entire Agreement. This Agreement, the exhibits hereto, the
Disclosure Schedule and the Confidentiality Agreement embody the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede and replace all previous negotiations, understandings,
representations, writings, and contract provisions and rights relating to the
subject matter hereof.
18.7 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.
18.8 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Seller and a counterpart has been signed by Seller and delivered to
Buyer.
18.9 Severability. The parties agree that (a) the provisions of this
Agreement shall be severable and (b) in the event that any of the provisions
hereof are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, (i) such invalid, void or otherwise unenforceable
provisions shall be automatically replaced by other provisions that are as
similar as possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable and (ii) the remaining provisions shall
remain enforceable to the fullest extent permitted by law, provided that the
rights and interests of the parties hereto shall not be materially affected.
18.10 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein to
Articles and Sections are to the articles and sections of this Agreement.
IN WITNESS WHEREOF, this Agreement has been signed by duly authorized
representatives of each of the parties hereto as of the Effective Date.
HOFFMANN-LA ROCHE LIMITED MEDICIS PHARMACEUTICAL CORPORATION
By /s/ Susan Griswold By /s/ Jonah Shacknai
----------------------- ----------------------------
Name Susan Griswold Name Jonah Shacknai
--------------------- --------------------------
Title: Title: Chairman and Chief
Attorney in Fact Executive Officer
------------------- ------------------------
<PAGE> 1
EXHIBIT 10.82
ASSET PURCHASE AGREEMENT
BETWEEN
SYNTEX PHARMACEUTICALS INTERNATIONAL LIMITED
and
MEDICIS PHARMACEUTICAL CORPORATION
<PAGE> 2
TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
2. ASSETS BEING SOLD . . . . . . . . . . . . . . . . . . . . . 4
2.1 Trademarks . . . . . . . . . . . . . . . . . . . . . 4
2.2 Registrations . . . . . . . . . . . . . . . . . . . 4
2.3 Manufacturing Technology and Know-How . . . . . . . 4
2.4 Trademark Agreements . . . . . . . . . . . . . . . . 5
2.5 Manufacturing Information . . . . . . . . . . . . . 5
2.6 Data Bank Documents . . . . . . . . . . . . . . . . 5
2.7 Worldwide Safety Reports . . . . . . . . . . . . . . 5
2.8 Assumption of Liabilities . . . . . . . . . . . . . 5
3. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . 5
4. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . 5
4.1 Organization . . . . . . . . . . . . . . . . . . . . 5
4.2 Authority . . . . . . . . . . . . . . . . . . . . . 6
4.3 Title to Assets . . . . . . . . . . . . . . . . . . 6
4.4 No Violation or Conflict . . . . . . . . . . . . . . 6
4.5 Registrations . . . . . . . . . . . . . . . . . . . 7
4.6 Patents . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Financial Information . . . . . . . . . . . . . . . 7
4.9 Absence of Certain Changes . . . . . . . . . . . . . 7
4.10 Violations of Law . . . . . . . . . . . . . . . . . 7
4.11 No Government Restrictions . . . . . . . . . . . . . 8
4.12 Litigation . . . . . . . . . . . . . . . . . . . . . 8
4.13 Limitation of Warranty . . . . . . . . . . . . . . . 8
4.14 Trademarks . . . . . . . . . . . . . . . . . . . . . 8
4.15 Additional Representations . . . . . . . . . . . . . 8
5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . 8
5.1 Organization . . . . . . . . . . . . . . . . . . . . 8
5.2 Authority . . . . . . . . . . . . . . . . . . . . . 8
5.3 No Violation or Conflict . . . . . . . . . . . . . . 9
5.4 No Government Restrictions . . . . . . . . . . . . . 9
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . 9
5.6 Financing . . . . . . . . . . . . . . . . . . . . . 9
6. SELLER'S COVENANTS . . . . . . . . . . . . . . . . . . . . . 9
6.1 Conduct of Business . . . . . . . . . . . . . . . . 9
6.2 Compliance with Laws . . . . . . . . . . . . . . . . 10
6.3 Disclosure Supplements . . . . . . . . . . . . . . . 10
6.4 Access; Investigation . . . . . . . . . . . . . . . 10
6.5 Further Assurances . . . . . . . . . . . . . . . . . 10
7. BUYER'S COVENANTS . . . . . . . . . . . . . . . . . . . . . 11
7.1 Transfer of Products . . . . . . . . . . . . . . . . 11
7.2 Labeling . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Further Assurances . . . . . . . . . . . . . . . . . 11
<PAGE> 3
8. COVENANTS BY BUYER AND SELLER . . . . . . . . . . . . . . . 11
8.1 Stability Studies . . . . . . . . . . . . . . . . . 11
8.2 Supply Agreement . . . . . . . . . . . . . . . . . . 11
8.3 Labeling . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Use of Seller Trademarks . . . . . . . . . . . . . . 11
8.5 Assignment of Trademarks . . . . . . . . . . . . . . 12
8.6 Assignment of Registrations . . . . . . . . . . . . 12
8.7 Access to Information . . . . . . . . . . . . . . . 12
8.8 Confidentiality Agreement . . . . . . . . . . . . . 12
8.9 Press Releases . . . . . . . . . . . . . . . . . . . 12
8.10 Government Filings . . . . . . . . . . . . . . . . . 13
9. CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . 13
9.1 Conditions to Obligation of Buyer . . . . . . . . . 13
9.1.1 Representations and Warranties . . . . . . . 13
9.1.2 Performance . . . . . . . . . . . . . . . . 13
9.1.3 HSR Act Approvals . . . . . . . . . . . . . 14
9.1.4 No Adverse Change . . . . . . . . . . . . . 14
9.1.5 Officer's Certificate . . . . . . . . . . . 14
9.1.6 Litigation . . . . . . . . . . . . . . . . . 14
9.1.7 Authorization . . . . . . . . . . . . . . . 14
9.1.8 Proceedings and Instruments Satisfactory . . 14
9.2 Conditions to Obligations of Seller . . . . . . . . 14
9.2.1 Representations and Warranties . . . . . . . 14
9.2.2 Performance . . . . . . . . . . . . . . . . 14
9.2.3 HSR Act Approvals . . . . . . . . . . . . . 15
9.2.4 Officer's Certificate . . . . . . . . . . . 15
9.2.5 Litigation . . . . . . . . . . . . . . . . . 15
9.2.6 Authorization . . . . . . . . . . . . . . . 15
9.2.7 Proceedings and Instruments Satisfactory . . 15
10. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 The Closing . . . . . . . . . . . . . . . . . . . . 15
10.2 Deliveries by Seller . . . . . . . . . . . . . . . . 15
10.3 Deliveries by Buyer . . . . . . . . . . . . . . . . 16
11. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 16
11.1 Termination . . . . . . . . . . . . . . . . . . . . 16
11.2 Effect of Termination . . . . . . . . . . . . . . . 17
12. SURVIVAL; INDEMNIFICATION . . . . . . . . . . . . . . . . . 17
12.1 Survival of Representations; Remedy for Breach . . . 17
12.2 Indemnification by Seller . . . . . . . . . . . . . 17
12.3 Indemnification by Buyer . . . . . . . . . . . . . . 18
12.4 Limitations . . . . . . . . . . . . . . . . . . . . 18
12.5 Notice . . . . . . . . . . . . . . . . . . . . . . . 18
12.6 Participation in Defense . . . . . . . . . . . . . . 18
12.7 Settlements . . . . . . . . . . . . . . . . . . . . 19
12.8 Set-Off . . . . . . . . . . . . . . . . . . . . . . 19
13. NON-COMPETITION AND CONFIDENTIALITY . . . . . . . . . . . . 19
13.1 Non-Compete . . . . . . . . . . . . . . . . . . . . 19
13.2 Confidentiality . . . . . . . . . . . . . . . . . . 19
14. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15. SYNACORT . . . . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE> 4
16. ARBITRATION AND GOVERNING LAW . . . . . . . . . . . . . . . 21
16.1 Generally . . . . . . . . . . . . . . . . . . . . . 21
16.2 Defenses and Bankruptcy . . . . . . . . . . . . . . 21
16.3 Commencement of Arbitration . . . . . . . . . . . . 22
16.4 Governing Law and Place of Arbitration . . . . . . . 22
16.5 Discovery and Other Matters . . . . . . . . . . . . 22
16.6 Hearing . . . . . . . . . . . . . . . . . . . . . . 22
16.7 Arbitrators Fees . . . . . . . . . . . . . . . . . . 23
17. ADDITIONAL TERMS . . . . . . . . . . . . . . . . . . . . . . 23
17.1 Brokers . . . . . . . . . . . . . . . . . . . . . . 23
17.2 Injunctive Relief . . . . . . . . . . . . . . . . . 23
17.3 Expenses . . . . . . . . . . . . . . . . . . . . . . 23
17.4 Attorneys' Fees . . . . . . . . . . . . . . . . . . 23
17.5 Successors and Assigns . . . . . . . . . . . . . . . 23
17.6 Entire Agreement . . . . . . . . . . . . . . . . . . 24
17.7 Amendments; No Waiver . . . . . . . . . . . . . . . 24
17.8 Counterparts . . . . . . . . . . . . . . . . . . . . 24
17.9 Severability . . . . . . . . . . . . . . . . . . . . 24
17.10 Captions . . . . . . . . . . . . . . . . . . . . . . 24
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into on January 21, 1997 (the "Effective Date") by and between Syntex
Pharmaceuticals International Limited, a Bermuda corporation ("Seller") and
Medicis Pharmaceutical Corporation, a Delaware corporation ("Buyer").
This Agreement sets forth the terms and conditions upon which Buyer is
purchasing from Seller and Seller is selling to Buyer the Assets (as hereinafter
defined).
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Active Ingredients" mean the pharmaceutical compounds
fluocinolone acetonide, fluocinonide, and hydrocortisone, and all salts and
esters thereof.
1.2 "Additional Trademarks" means the trademark/service mark
registrations and applications that are set forth on Schedule 0 together with
all records associated therewith.
1.3 "Affiliate" of a party shall mean any individual, corporation
or other business entity (e.g. limited or general partnership, trust or estate,
joint venture or association) controlling, controlled by or under common control
with such party. "Control" (including "controlling", "controlled by" and "under
common control with") shall mean the direct or indirect ownership of more than
fifty percent (50%) of the voting or income interest in such party, corporation
or other business entity respectively. Notwithstanding the foregoing, Genentech,
Inc. ("Genentech") shall not be considered an Affiliate of Seller for the
purpose of this Agreement for so long as there are material restrictions on the
ability of Seller and its Affiliates to control Genentech.
1.4 "ANDA" means an Abbreviated New Drug Application, as such term
is defined by the FDA.
1.5 "Assets" has the meaning ascribed to such term in Section 0.
1.6 "Broker" has the meaning ascribed to such term in Section 16.1.
1.7 "Business" means the business as currently conducted by Seller
with respect to manufacture and sale of the Products in the Territory.
1.8 "Buyer Labeling" means the printed labels, labeling and
packaging materials, including printed carton, container label and package
inserts, used by Buyer and bearing Buyer's name for each Product.
1.9 "cGMP's" means the then-current Good Manufacturing Practices
applicable to the manufacture of pharmaceutical products for human use in the
United States in accordance with FDA regulations.
1.10 "Closing" has the meaning ascribed to such term in Section 0.
1.11 "Closing Date" has the meaning ascribed to such term in Section
0.
<PAGE> 6
1.12 "Closing Time" means 12:01 a.m. on the date of Closing.
1.13 "Confidentiality Agreement" has the meaning ascribed to such
term in Section 0.
1.14 "Damages" has the meaning ascribed to such term in Section 0.
1.15 "Data Bank Documents" has the meaning ascribed to such term in
Section 0.
1.16 "Disclosure Schedule" means the disclosure schedule delivered
prior to the Effective Date to Buyer by Seller in connection with this
Agreement. The sections of the Disclosure Schedule correspond to the sections of
this Agreement.
1.17 "DOJ" means the United States Department of Justice.
1.18 "Effective Date" means January 21, 1997.
1.19 "FDA" means the United States Food and Drug Administration.
1.20 "FTC" means the United States Federal Trade Commission.
1.21 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
1.22 "Indemnifiable Claims" has the meaning ascribed to such term in
Section 0.
1.23 "Indemnified Party" has the meaning ascribed to such term in
Section 0.
1.24 "Indemnifying Party" has the meaning ascribed to such term in
Section 0.
1.25 "Know-How" has the meaning ascribed to such term in Section 0.
1.26 "Law" means any federal, state, foreign, local or other law,
ordinance, rule, regulation, or governmental requirement or restriction of any
kind, and any rules, regulations, and orders promulgated thereunder.
1.27 "Material Adverse Effect" means an event that has a material
adverse effect on the Assets, taken as a whole.
1.28 "NADA" means a New Animal Drug Application, as such term is
defined by the FDA.
1.29 "NDA" means a New Drug Application, as such term is defined by
the FDA.
1.30 "Net Sales" means the gross invoice amount of Products sold to
third parties, less (a) promotional and trade discounts; (b) sales and excise
taxes, value added and other taxes and insurance premiums and duties which are
billed to customers as separate items on invoices; (c) allowances for
short-shipments and price adjustments; and (d) contract chargebacks and rebates,
government rebates, and returns (e.g., spoiled, damaged or outdated Products).
<PAGE> 7
1.31 "Patents" means any patent or patent application and any and
all divisions, continuations, continuations-in-part, reexaminations, reissues,
extensions, pending or granted supplementary protection, certificates,
substitutions, confirmations, registrations, revalidations, revisions, additions
and the like, of or to said patent and patent application.
1.32 "Patheon Agreement" means the agreement between Hoffmann-
LaRoche Inc., a Delaware corporation, and Patheon to be entered into on January
31, 1997.
1.33 "PFC Agreement" means the Supply Agreement between Seller and
Pharmaceutical Fine Chemicals S.A. dated February 13, 1996.
1.34 "Products" means each presentation of those finished
pharmaceutical products set forth in the Registrations.
1.35 "Purchase Price" has the meaning ascribed to such term in
Article 0.
1.36 "Registrations" has the meaning ascribed to such term in
Section 0.
1.37 "Schedule" means a schedule to the Disclosure Schedule.
1.38 "Supply Agreement" means the agreement referred to in Section
0.
1.39 "Synacort Assets" means the Synacort License, the Synacort
Trademarks, and the Synacort Trademark Agreements.
1.40 "Synacort License" has the meaning ascribed to such term in
Section 0.
1.41 "Synacort NDAs" means the NDAs that are set forth on Schedule 0
and the regulatory records relating exclusively thereto.
1.42 "Synacort Trademark" means the trademark registrations that are
set forth on Schedule 0 together with all records associated therewith.
1.43 "Synacort Trademark Agreements" means those agreements set
forth on Schedule 0 to the extent such agreements relate to the Synacort
Trademark.
1.44 "Syntex Labeling" means the printed labels, labeling and
packaging materials, including printed carton, container label and package
inserts, currently used by Syntex for each Product.
1.45 "Syntex NADAs" means the NADAs set forth on Schedule 0 and the
regulatory records relating exclusively thereto.
1.46 "Territory" means the United States of America and its
possessions, including the Commonwealth of Puerto Rico.
1.47 "Trademark Agreements" has the meaning ascribed to such term in
Section 0.
1.48 "Trademarks" has the meaning ascribed to such term in Section
0.
<PAGE> 8
2. ASSETS BEING SOLD
Subject to the terms and conditions of this Agreement, at Closing,
Seller shall sell, transfer, assign, convey and deliver to Buyer, its successors
and assigns forever, to the extent contemplated herein, all of the right, title,
and interest of Seller in the assets listed below in the Territory
(collectively, the "Assets"), the Syntex NADAs, the Synacort Assets, and the
Additional Trademarks, and Buyer shall assume all rights, title, and interest of
Seller in the Assets, the Syntex NADAs, the Synacort Assets, and the Additional
Trademarks.
2.1 Trademarks. The trademark/service mark registrations and
applications that are set forth on Schedule 0 together with all records
associated therewith (the "Trademarks").
2.2 Registrations. The NDAs and the ANDA that are set forth on
Schedule 0 (the "Registrations") and the regulatory records relating exclusively
thereto.
2.3 Manufacturing Technology and Know-How. The manufacturing
technology and know-how that is exclusively used in manufacturing any Product or
is exclusively used in manufacturing any finished product set forth in the
Syntex NADAs ("Know-How") and any documents which relate specifically and
exclusively to such Know-How. In addition, Seller shall grant Buyer a
non-exclusive, perpetual, paid-up, irrevocable, royalty-free, world-wide
license, with right to sub-license, to use any manufacturing technology and
know-how that are necessary or used in manufacturing any Product or finished
product set forth in the Syntex NADAs (but not exclusively used thereto) with
such license or sublicense being restricted to use for the Products, unless
Buyer can demonstrate by written records that such know-how was known prior to
any disclosure of such know-how by Seller or its Affiliates to Buyer or is now
public knowledge or becomes public knowledge in the future other than by breach
of any agreement between Buyer and its Affiliates and Seller and its Affiliates.
2.4 Trademark Agreements. Seller shall assign and Buyer shall
assume all rights and obligations under those agreements set forth on Schedule 0
to the extent such agreements relate to the Trademarks (the "Trademark
Agreements").
2.5 Manufacturing Information. Accurate and complete copies of the
current Manufacturing Worksheets and copies of the Manufacturing Quality
Assurance Notebooks with respect to the Products currently available, including
batch records, development reports (if existing), and other documents and
records embodying manufacturing information.
2.6 Data Bank Documents. Right to obtain copies of and reference
the animal toxicology, animal mutagenicity, human clinical study and final
reports, and drug monograph/investigator brochures, a list of which is set forth
on Schedule 0 (the "Data Bank Documents").
2.7 Worldwide Safety Reports. A hard copy of the Worldwide Safety
Reports with respect to Products.
<PAGE> 9
2.8 Assumption of Liabilities. The parties expressly acknowledge
and agree that (i) Buyer is not assuming or undertaking any liabilities relating
to or arising from the conduct of the Business, the sale or marketing of the
Products and/or the ownership or use of the Assets prior to the Closing; (ii)
Seller retains all such liabilities; and (iii) Buyer shall have no obligation to
Seller or any of its Affiliates or to any third party for any such liabilities.
3. PURCHASE PRICE
Subject to the terms and conditions of this Agreement, in reliance on
the representations, warranties, covenants and agreements of the Seller
contained herein, and in consideration of the sale, conveyance, assignment,
transfer and delivery of the Assets and the Syntex NADAs provided for in Article
0 hereof, Buyer shall deliver to Seller, in full payment for the aforesaid sale,
conveyance, assignment, transfer and delivery, the Purchase Price, consisting
of: (i) seven million four hundred thousand United States dollars (US
$7,400,000.00) payable to Seller at Closing by bank wire transfer to Seller at
such banking institution, designated not less than five (5) days prior to
Closing by Seller. Additional payments of two hundred sixty-six thousand, six
hundred sixty-seven United States dollars (US $266,667.00) shall be delivered by
Buyer to Seller at each of the first, second and third anniversary of the
Closing for a total of three (3) such additional payments ("Additional
Payments"). Each Additional Payment shall be reduced by fifty percent (50%) if
Net Sales in the Territory have decreased by more than twenty percent (20%)
during the twelve (12) months immediately preceding the corresponding
anniversary.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Bermuda, with full corporate
power and authority to consummate the transactions contemplated hereby. Seller
has all requisite power and authority to own and operate the Assets being
conveyed by Seller pursuant to this Agreement and to carry on the activities
constituting the business.
4.2 Authority. The execution and delivery of this Agreement by
Seller and the consummation and performance of the transactions contemplated
hereby, have been duly and validly authorized by all necessary corporate and
other proceedings, and this Agreement has been duly authorized, executed, and
delivered by Seller and, assuming the enforceability against Buyer, constitutes
the legal, valid and binding obligation of Seller, enforceable in accordance
with its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court. The Supply
Agreement, and all other documents executed by Seller or its Affiliates and
delivered at the Closing, including those delivered pursuant to Section 0,
constitute a valid and binding obligation of Seller or the respective Affiliate
of Seller executing such documents enforceable in accordance with their
respective terms.
4.3 Title to Assets. Except as set forth in Schedule 0, Seller has
good and marketable title to all the Assets and will convey good and marketable
title at Closing, free and clear of any and all liens, encumbrances, claims,
mortgages, leases, security interests, charges or restrictions. Notwithstanding
the foregoing, Seller retains the right to use and to transfer to other buyers
of the products containing any Active Ingredient outside the Territory
<PAGE> 10
information that is similar or identical to that contained in the Registrations
and the Know-How; provided, however, that no such buyer has been expressly
granted by Seller or any Affiliate of Seller the right to sell, transfer or
distribute any of the products containing any Active Ingredient into the
Territory based on such Registrations and Know-How and neither Seller nor any
Affiliate shall expressly grant any buyer such right. Buyer acknowledges that
Seller cannot prevent such a buyer from using such information, including
registrations and know-how that is substantially similar to the Registrations
and Know-How, to sell, transfer or distribute such products in the Territory.
In addition, trademarks that are the same as or similar to the Trademarks may
be registered in other countries and may be either retained by Seller for its
use or sold to other buyers in either case, for use solely outside the
Territory.
4.4 No Violation or Conflict. Seller's execution and delivery of
this Agreement and the other related documents delivered by Seller in connection
with transactions contemplated herein and the performance of this Agreement by
Seller (and the transactions contemplated herein) (a) do not and will not
conflict with, violate or constitute or result in a default or an event creating
rights of acceleration, termination, or cancellation, or a loss of right under
any Law, judgment, order, decree, the articles of incorporation or bylaws of
Seller or any mortgage, contract or agreement to which Seller is a party or by
which Seller is bound or (b) will not result in the creation or imposition of
any lien, charge, mortgage, claim, pledge, security interest, restriction or
encumbrance of any kind on, or liability with respect to, the Assets or the
Business except as otherwise provided herein or otherwise disclosed on the
Disclosure Schedule. None of the Trademark Agreements require the consent of any
third party to the assignment of such Trademark Agreement from Seller to Buyer.
4.5 Registrations. The Registrations are the only registrations
required by the FDA to sell and market the Products in the Territory. All
Products in Schedule 2.2 are registered and eligible for immediate sale without
regulatory limitations.
4.6 Patents. There are no Patents with respect to the Active
Ingredients or Products in the Territory.
4.7 Taxes. There are no liens for taxes upon the Assets except for
liens for current taxes not yet due and payable which shall remain the sole
obligation of the Seller.
4.8 Financial Information. Seller and its Affiliates have no
material liabilities, contingent, absolute, accrued or otherwise, relating to
the Assets, other than as set forth in Schedule 0.
4.9 Absence of Certain Changes.
4.9.1 Except as set forth in Schedule 0 or as otherwise set
forth in this Agreement, since December 16, 1996, there has not been any (i)
Material Adverse Effect or material adverse change in the financial condition or
results of operation of the Business, (ii) damage, destruction or loss which has
or may reasonably be expected to have a Material Adverse Effect, or (iii)
transaction or commitment outside the ordinary course of business with respect
to the Assets or the Business.
<PAGE> 11
4.9.2 As of the date hereof and as of the Closing Date and
except as otherwise disclosed on Schedule 0, Seller is not aware of any facts,
circumstances, or proposed or contemplated events that could reasonably be
expected to have a Material Adverse Effect after Closing.
4.9.3 No default under any lease, agreement, contract or other
material arrangement relating to the Business, including but not limited to the
Trademark Agreements has been declared and is continuing and, to Seller's
knowledge, no condition exists which, with notice or lapse of time or both,
would constitute a default under any such agreement. All of the such agreements
are valid and subsisting and are in full force and effect and, to Seller's
knowledge, no claim exists or has been asserted with respect to such agreements
that would adversely effect the Business. Seller has not received notice that
any party to any such agreements intends to cancel or terminate such agreements
or to exercise or not exercise any options or rights under such agreements, or
to resist any effort by Seller or its successors to exercise or not exercise
such options or rights.
4.10 Violations of Law. Except as set forth in Schedule 0, neither
the operation of the Business nor the Assets (i) violates or conflicts with any
Registrations, any Law, governmental specification, authorization, or
requirement, or any decree, judgment, order, or similar restriction in any
material respect, or (ii) to the best of Seller's knowledge, has been the
subject of an investigation or inquiry by any governmental agency or authority
regarding violations or alleged violations, or found by any such agency or
authority to be in violation, of any Law.
4.11 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Seller in connection with the execution and
delivery of this Agreement by Seller or the consummation by it of the
transactions contemplated hereby to be consummated by it, except with respect to
the filing of a pre-merger notification report under the HSR Act.
4.12 Litigation. Except as set forth in Schedule 0 attached hereto
or as set forth on Schedules 0 and 0, neither the Business nor the Assets is the
subject of (i) any outstanding judgment, order, writ, injunction or decree of,
or settlement agreement with, any person, corporation, business entity, court,
arbitrator or administrative or governmental authority or agency, limiting,
restricting or affecting the Business, the Assets, or the Products in a way that
would have a Material Adverse Effect, (ii) any pending or, to the best of
Seller's knowledge, threatened claim (excluding the adverse drug reports set
forth in the Registrations), suit, proceeding, charge, inquiry, investigation or
action of any kind, and (iii) any court suits filed with respect to the Assets
since January 1, 1990.
4.13 Limitation of Warranty. Seller will not warrant that buyers of
products outside the Territory that are substantially similar to or identical
with the Products will not attempt to register such products in the Territory.
4.14 Trademarks. Each of the Trademarks being conveyed by this
Agreement is being conveyed free and clear of any liens, security interests and
other encumbrances and is freely assignable by Seller. Seller is not required,
and Buyer will not be required, to pay any royalty to any person with respect to
use of any of the Trademarks. Except as set forth in the Trademark Agreements,
the Trademarks do not infringe upon or conflict with the trademarks or other
rights of any third party in the Territory.
<PAGE> 12
4.15 Additional Representations. Seller owns no inventory of
finished Products, it does not sell Products to customers, and it has no
agreements other than the Trademark Agreements and the PFC Agreement that are
material to the Business.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to consummate the transactions contemplated
hereby.
5.2 Authority. The execution and delivery of this Agreement by
Buyer, and the consummation and performance of the transactions contemplated
hereby, have been duly and validly authorized by all necessary corporate and
other proceedings, and this Agreement has been duly authorized, executed, and
delivered by Buyer and, assuming the enforceability against Seller, constitutes
the legal, valid and binding obligation of Buyer, enforceable in accordance with
its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court.
5.3 No Violation or Conflict. The execution and delivery of this
Agreement by Buyer and the performance of this Agreement (and the transactions
contemplated herein) by Buyer do not and will not conflict with, violate or
constitute or result in a default under any Law, judgment, order, decree, the
articles of incorporation or bylaws of Buyer, or any contract or agreement to
which Buyer is a party or by which Buyer is bound.
5.4 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Buyer in connection with the execution and
delivery of this Agreement by Buyer or the consummation by it of the
transactions contemplated hereby to be consummated by it, except with respect to
the filing of a pre-merger notification report under the HSR Act.
5.5 Litigation. To the best knowledge of Buyer, there are no
claims, actions, suits, proceedings or investigations pending or threatened by
or against Buyer with respect to the transactions contemplated hereby, at law or
in equity or before or by any federal, state, municipal or other governmental
department, commission, board, agency, instrumentality or authority.
5.6 Financing. Buyer will have funds sufficient to pay the Purchase
Price on the Closing Date.
6. SELLER'S COVENANTS
6.1 Conduct of Business. Seller agrees that from the date hereof
until the Closing Date that, except as specifically disclosed in Schedule 0 or
unless otherwise consented to by Buyer in writing, Seller shall
6.1.1 maintain the Assets in good status and condition and not
sell or dispose of any Assets except sales of Products in the ordinary course of
business;
<PAGE> 13
6.1.2 cause the Business to be conducted in the ordinary
course consistent with the practice over the past six (6) months and make all
reasonable efforts consistent with practices over the past six (6) months to
preserve the Assets and the reputation of the Business and the Products and to
preserve for Buyer the goodwill of suppliers, customers, distributors, and
others having relations with the Business.
6.1.3 not enter into any new, or amend any existing, contract,
commitment, or agreement relating to the Business, the Products or the Assets or
extend any credit or incur any obligation with respect to the conduct of the
Business or the Assets except in the ordinary course of business and consistent
with past business practices;
6.1.4 not engage in any special pricing, rebate, allowance,
promotional or marketing programs inconsistent with past practices or for the
purpose of maintaining customer inventory levels of Product in excess of those
levels maintained in the past;
6.1.5 promptly inform Buyer of any change in the Business or
Assets that could reasonably be expected to have a Material Adverse Effect;
6.1.6 not subject any of the Assets or any part thereof to any
mortgage, pledge, security interest, encumbrance, lien or restriction of use or
suffer such to be imposed or license or grant to any other party the right to
use any of the Trademarks or any of the Know-How except for use outside the
Territory;
6.1.7 perform in all material respects all of its obligations
under any agreement with any third party relating to the Business, the Products,
or the Assets unless such third party is in default under such agreement; and
6.1.8 maintain its books of accounts and records relating to
the Business, the Products or the Assets in the usual, regular and ordinary
manner including, but not limited to, the maintenance of any and all documents
required by any federal or state regulatory agency or governmental body.
6.2 Compliance with Laws. Seller shall comply in all material
respects with all Laws and in all respects with all orders of any court or
federal, state, local or other governmental entity applicable to the Business or
the Assets.
6.3 Disclosure Supplements. From time to time following execution
of this Agreement but prior to the Closing Date, Seller will promptly inform
Buyer, in writing, of any matter that may arise hereafter and that, if existing
or occurring prior to the execution of this Agreement, would have been required
to be set forth or described herein or in the Disclosure Schedule.
6.4 Access; Investigation. From and after the date hereof and up to
Closing, Buyer and its authorized agents, officers, and representatives shall
have reasonable access to the Business and the Assets and all records and
information related thereto (except for information that Seller is contractually
obligated not to disclose), during normal business hours upon reasonable prior
notice and at a time and manner mutually agreed upon between Buyer and Seller in
order to conduct such examination and investigation of the Assets and the
Business as Buyer shall reasonably deem necessary, provided that such
examinations shall not unreasonably interfere with Seller's operations and
activities.
<PAGE> 14
6.5 Further Assurances. Seller shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Seller, at the
request of Buyer, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Buyer such deeds,
assignments, bills of sale, consents and other instruments in addition to those
required by this Agreement, in form and substance satisfactory to Buyer, as
Buyer may reasonably deem necessary or desirable to implement any provision of
this Agreement.
7. BUYER'S COVENANTS
7.1 Transfer of Products. Following Closing, Buyer shall use all
reasonable efforts and, except as otherwise set forth herein, at its own expense
to obtain as expeditiously as possible such governmental approvals and
registrations from the FDA, or similar regulatory authorities, as may be
necessary with respect to the manufacture and sale of the Products by Buyer or
its designee.
7.2 Labeling. Following Closing, Buyer shall at its own expense and
as expeditiously as possible use all reasonable efforts to obtain such FDA
approvals necessary for the Buyer Labeling for each Product.
7.3 Further Assurances. Buyer shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Buyer, at the
request of Seller, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Seller such
consents and other instruments in addition to those required by this Agreement,
in form and substance satisfactory to Seller, as Seller may reasonably deem
necessary or desirable to implement any provision of this Agreement.
8. COVENANTS BY BUYER AND SELLER
8.1 Stability Studies. As soon as possible following Closing, Buyer
shall qualify a site as a testing site for stability studies or request Patheon
to continue to conduct such stability studies at Buyer's expense, for Products
not manufactured by Patheon. Seller shall have no responsibility for on-going
stability studies for the Products following Closing.
8.2 Supply Agreement. Buyer and Seller, or their Affiliates, at
Closing shall enter into the Supply Agreement, attached as Exhibit A.
8.3 Labeling. In accordance with Section 7.2, Buyer is responsible
for having the Buyer Labeling approved by the FDA as soon as possible. Buyer may
use the Syntex Labeling on the Inventory until such Inventory is exhausted;
provided, however, that Seller may, at its option, buy-back from Buyer all
inventory labeled with Seller's NDC number upon Buyer having sufficient
inventory, to be determined by Buyer in its sole discretion to be exercised in
good faith, of the applicable Product labeled with Buyer's NDC number. In
addition, Buyer may use the Syntex Labeling on each Product manufactured by
Seller or its Affiliates for Buyer until the earlier of the date (i) the FDA
approves the Buyer Labeling for use on such Product and Buyer, using all
reasonable efforts, has obtained sufficient supplies of materials with Buyer
Labeling for use on such Products, or (ii) twelve (12) months following Closing,
provided, however, if at the end of such twelve (12) month period the FDA has
not yet approved the Buyer Labeling, then such twelve (12) month period shall be
extended for a period of time to be mutually agreed by the parties (such
agreement not to be unreasonably withheld) reasonably required to obtain such
approval.
<PAGE> 15
8.4 Use of Seller Trademarks. Other than the use of the Syntex
Labeling as set forth in Section 0, any use by Buyer of the trademarks,
tradenames, or logos of Seller, other than the use of the Trademarks, the
Synacort Trademarks, and the Additional Trademarks, as provided herein, must be
approved by Seller prior to such use.
8.5 Assignment of Trademarks. By or before Closing, Buyer and
Seller shall prepare in good faith an assignment pursuant to which Seller agrees
the Trademarks, the Synacort Trademarks, and the Additional Trademarks shall be
assigned to Buyer. Following Closing, Buyer shall prepare and Seller shall
execute such documents as Buyer may reasonably request in order to record the
assignment of the Trademarks, the Synacort Trademarks, and the Additional
Trademarks. The responsibility and expense of preparing and filing such
documents and any actions required ancillary thereto, shall be borne solely by
Buyer.
8.6 Assignment of Registrations. At or following Closing, Buyer
shall prepare and Seller shall execute such documents as Buyer may reasonably
request in order to record the assignment of the Registrations and the Syntex
NADAs. Buyer shall pay any user fees associated with any Product that accrues
after Closing but prior to transfer of such Registration and the Syntex NADAs.
8.7 Access to Information. Buyer and Seller will, upon reasonable
prior notice, make available to the other, to the extent reasonably required for
the purpose of assisting Seller or Buyer in obtaining governmental approvals and
preparation of tax returns or financial statements required by the Securities
and Exchange Commission (to the extent information is available) relating to the
Assets, and prosecuting or defending or preparing for the prosecution or defense
of any action, suit, claim, complaint, proceeding or investigation at any time
brought by or pending against Seller or Buyer relating to the Assets, other than
in the case of litigation between the parties hereto, such information or
records (or copies thereof) in their possession after Closing. Buyer shall also
provide Seller with any adverse drug events simultaneously with notification of
the FDA for so long as Buyer markets the Products for serious or
life-threatening adverse event and for three years following Closing for all
other adverse drug events.
8.8 Confidentiality Agreement. The parties agree that certain
letter agreement dated October 15, 1996 between an Affiliate of Seller and Buyer
(the "Confidentiality Agreement"), shall survive either termination of this
Agreement or Closing as an independent agreement; provided, however, that upon
Closing, the restrictions on use and the confidentiality obligations of the
Confidentiality Agreement shall no longer be in effect with respect to
Evaluation Materials (as defined therein) relating to the transferred Assets.
8.9 Press Releases. Neither the Seller nor the Buyer, nor any
Affiliate thereof, will issue or cause publication of any press release or other
announcement or public communication with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, which consent will not be unreasonably withheld or delayed. Neither party
shall use the name of the other party in any public statement, prospectus,
annual report, or press release without the prior written approval of the other
party, which may not be unreasonably withheld or delayed, provided, however,
that both parties shall give the other party a minimum of five business days to
review such press release, prospectus, annual report, or other public statement.
Notwithstanding the foregoing, Buyer may make any disclosure which Buyer, in the
opinion of its counsel, is obligated to make pursuant to applicable law, in
which case, Buyer shall still endeavor to give Seller an opportunity to review
such disclosure but shall not be obligated to do so if such disclosure must, in
<PAGE> 16
the opinion of its counsel, be made without time for review. The failure of
Buyer to draft such disclosure in a timely fashion shall not be deemed a reason
to avoid submitting such disclosure to Seller.
8.10 Government Filings.
8.10.1 Within three (3) business days after the date hereof,
Buyer will, or will cause the ultimate parent entities of Buyer to, and Seller
will cause the ultimate parent entities of Seller to, make such filings,
together with a request for early termination, as may be required by the HSR Act
with respect to the consummation of the transactions contemplated by this
Agreement. Thereafter, Buyer will or will cause the ultimate parent entities of
Buyer to, and Seller will cause the ultimate parent entities of Seller to, each
file or cause to be filed as promptly as practicable with the FTC and the DOJ
any supplemental information that may be requested pursuant to the HSR Act. All
such filings will comply in all material respects with the requirements of the
respective laws pursuant to which they are filed.
8.10.2 Each of the parties will use its respective reasonable
good faith efforts to obtain, and to cooperate with the others in obtaining, all
authorizations, consents, orders and approvals of any governmental agencies, and
cooperate with making any filings that may be or become necessary in connection
with the consummation of the transactions contemplated by this Agreement prior
to or after Closing, and to take all reasonable actions to avoid the entry of
any order or decree by any governmental agency prohibiting the consummation of
the transactions contemplated hereby.
9. CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions to Obligation of Buyer. The obligation of Buyer to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Buyer):
9.1.1 Representations and Warranties. The representations and
warranties made by Seller in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.1.2 Performance. Seller shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.1.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.1.4 No Adverse Change. During the period from the date of
this Agreement to the Closing Date there shall not have occurred or been
discovered, and there shall not exist on the Closing Date except for that which
has been otherwise disclosed elsewhere in this Agreement or in the Disclosure
Schedule at the time of execution of this Agreement, any condition or fact that
could reasonably be expected to have a Material Adverse Effect.
<PAGE> 17
9.1.5 Officer's Certificate. Seller shall have delivered to
Buyer a certificate, dated the Closing Date and executed by an officer of
Seller, certifying to the fulfillment of all conditions set forth in this
Article 0.
9.1.6 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.1.7 Authorization. Seller shall have furnished to Buyer all
documents Buyer may reasonably request relating to the existence of Seller, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Buyer.
9.1.8 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Buyer and Buyer's counsel, and
Seller shall have made available to Buyer for examination the originals or true
and correct copies of all documents which Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
9.2 Conditions to Obligations of Seller. The obligations of Seller
to complete the transactions contemplated hereby is subject to the satisfaction
on or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Seller):
9.2.1 Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).
9.2.2 Performance. Buyer shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.
9.2.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.
9.2.4 Officer's Certificate. Buyer shall have delivered to
Seller a certificate, dated the date of Closing and executed by an officer of
Buyer, certifying to the fulfillment of all conditions specified in this Article
0.
9.2.5 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
<PAGE> 18
9.2.6 Authorization. Buyer shall have furnished to Seller all
documents Seller may reasonably request relating to the existence of Buyer, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Seller.
9.2.7 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Seller and Seller's counsel,
and Buyer shall have made available to Seller for examination the originals or
true and correct copies of all documents which Seller may reasonably request in
connection with the transactions contemplated by this Agreement.
10. THE CLOSING
10.1 The Closing. Subject to the satisfaction of all of the
conditions to each party's obligations set forth in Article 0 hereof (or, with
respect to any condition not satisfied, the waiver in writing thereof by the
party or parties for whose benefit the condition exists), the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
9:00 a.m. (local time) on the first Monday following the day in which all
required waiting periods under the HSR Act have expired or been terminated (the
"Closing Date") or at such other time, date (but in no event later than March 1,
1997) and place as the parties hereto may agree in writing. The transfer of the
Assets shall be deemed to have occurred as of the Closing Time.
10.2 Deliveries by Seller. Unless otherwise specified in this
Section 0, at Closing, Seller or its Affiliate, as appropriate, shall deliver to
Buyer in form reasonably satisfactory to Buyer, each properly executed and dated
as of the Closing Date, where appropriate:
10.2.1 except as otherwise provided herein, such deeds, bills
of sale, endorsements, assignments, assignment agreements, and other good and
sufficient instruments of conveyance and transfer as shall be effective to vest
in Buyer free and clear title to the Assets as contemplated by this Agreement
10.2.2 Secretary's Certificate certifying that the Board of
Directors of Seller has authorized this Agreement;
10.2.3 the Supply Agreement;
10.2.4 a receipt for the Purchase Price; and
10.2.5 originals of those Trademark Agreements exclusively
related to the Products.
10.3 Deliveries by Buyer. At Closing, Buyer or its Affiliate, as
appropriate, shall deliver or cause to be delivered to Seller:
10.3.1 The Purchase Price payable in accordance with Article 0;
10.3.2 Secretary's Certificate certifying that the Board of
Directors of Buyer has authorized this Agreement.
10.3.3 the Supply Agreement.
11. TERMINATION
<PAGE> 19
11.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date:
11.1.1 By the mutual written consent of Seller and Buyer;
11.1.2 By either Seller or Buyer if Closing shall not have
occurred on or before March 1, 1997, unless such date has been extended by
mutual agreement in writing (the "Termination Date");
11.1.3 By either Seller or Buyer if consummation of the
transactions contemplated hereby shall violate any final order, decree or
judgment of any court or governmental body having competent jurisdiction.
11.1.4 By Buyer if there has been a material misrepresentation
by Seller or a material breach by Seller of any of the warranties or covenants
of Seller set forth herein that Seller has not cured within fourteen (14) days
after receipt of notice from Buyer requesting such to be cured (but in no event
later than the Termination Date) or that Buyer has not waived in writing; or
11.1.5 By Seller if there has been a material misrepresentation
by Buyer or a material breach by Buyer of any of the warranties or covenants of
Buyer set forth herein that Buyer has not cured within fourteen (14) days after
receipt of notice from Seller requesting such to be cured (but in no event later
than the Termination Date) or that Seller has not waived in writing.
11.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 0, all further obligations of Seller and Buyer under this Agreement
shall terminate without further liability of Seller or Buyer except (a) for the
obligations of Buyer and Seller under Sections 0, 0, 0, and 0; and (b) that such
termination shall not constitute a waiver by any party of any claim it may have
for damages caused by reason of a breach by the other party of a representation,
warranty, covenant or agreement.
12. SURVIVAL; INDEMNIFICATION
12.1 Survival of Representations; Remedy for Breach. The
representations, warranties and covenants made by Buyer and Seller under this
Agreement shall survive the Closing for a period of eighteen (18) months. Any
Indemnifiable Claims (as hereinafter defined) or claim for tax reimbursement
that a party may have arising out of the other party's breach of its
representations, warranties, or covenants contained in this Agreement shall be
made by notice to the other party no later than eighteen (18) months following
the Closing Date ("Claim Period") and there shall be no recovery for
indemnification for breach of a representation, warranty, or covenant under this
Agreement for any Indemnifiable Claim or claim for tax reimbursement first
asserted after that date. Seller and Buyer agree to use reasonable efforts to
mitigate any loss or damage for which they may seek indemnification under this
Article 12 or for which they may seek recovery under law or equity.
12.2 Indemnification by Seller. Subject to the limitations set forth
in Section 0, and in addition to any other rights Buyer may have under law or at
equity, Seller shall indemnify and hold harmless Buyer and its Affiliates,
officers, directors, and agents and employees from any and all damages, losses,
liabilities, third party claims, lawsuits, obligations and expenses (including
reasonable attorneys fees and costs) (collectively, "Damages") that Buyer shall
incur or suffer from (a) any breach of a representation, warranty, or covenant
of Seller in this Agreement or in any of the agreements, instruments or
documents executed or delivered by Seller pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
<PAGE> 20
Business by the Seller, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets prior to the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.2 (a) and (b),
collectively "Buyer's Indemnifiable Claims"); and (c) any taxes associated with,
imposed upon or in respect of the conduct of the Business, the sale of the
Products, or the use or ownership of the Assets prior to the Closing Date; or
(d) taxes imposed with respect to the transfer of the Assets to the Buyer
pursuant to this Agreement, including any assessments against Seller as a member
of a consolidated reporting group with any other entity (Section 12.2 (c) and
(d), collectively "Buyer's Tax Claims").
12.3 Indemnification by Buyer. Subject to the limitations set forth
in Section 0, and in addition to any other rights it may have under law or at
equity, Buyer shall indemnify and hold harmless Seller and its Affiliates,
officers, directors, and agents and employees from any and all Damages that
Seller shall incur or suffer from (a) any breach of a representation, warranty,
or covenant of Buyer in this Agreement or in any of the agreements, instruments
or documents executed or delivered by Buyer pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Buyer, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets following the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.3 (a) and (b),
collectively "Seller's Indemnifiable Claims") (Buyer's Indemnifiable Claims and
Seller's Indemnifiable Claims are hereby collectively referred to as
"Indemnifiable Claims"); or (c) any taxes associated with, imposed upon or in
respect of the conduct of the Business, the sale of the Products, or the use or
ownership of the Assets following the Closing Date ("Seller's Tax Claims").
12.4 Limitations. Notwithstanding anything to the contrary herein,
neither Buyer and its Affiliates nor Seller shall be entitled to seek
indemnification or any recovery under law or at equity with respect to any
Indemnifiable Claim until the aggregate amount of such claims exceeds Two
Hundred Thousand United States Dollars ($200,000) (the "Basket Limitation");
provided, however, that (i) if either party is responsible to the other for any
amount in excess of the Basket Limitation, then the Basket Limitation shall not
be deemed applicable and such party shall be responsible to fully indemnify the
other party for all Damages; (ii) in no event shall either party be required to
indemnify the other for breaches of the representations, warranties, and
covenants made in this Agreement for an amount in excess of the Purchase Price;
and (iii) neither the Basket Limitation nor the limitation in the immediately
preceding clause shall be applicable to (x) third party claims, or (y) Buyer's
Tax Claims or Seller's Tax Claims; provided, that Damages shall be limited to
one-third (1/3) of the Purchase Price with respect to the representations and
warranties under Sections 0, 0, 0, and 0; and provided further, that Damages
shall be limited to one-half (1/2) of the Purchase Price with respect to the
representations and warranties under Sections 0 and 0.
12.5 Notice. A party seeking indemnification pursuant to Section 0
or 0 (an "Indemnified Party") shall give prompt notice to the party from whom
such indemnification is sought (the "Indemnifying Party") of the assertion of
any claim, or the commencement of any action, suit or proceeding, in respect of
which indemnity is or may be sought hereunder (whether or not the limits set
forth in Section 0 have been exceeded) and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request, but no failure to give such notice shall relieve the Indemnifying Party
of any liability hereunder (except to the extent the Indemnifying Party has
suffered actual prejudice thereby).
<PAGE> 21
12.6 Participation in Defense. The Indemnifying Party may, at its
expense, participate in or assume the defense of any such action, suit or
proceeding involving a third party. In such case the Indemnified Party shall
have the right (but not the duty) to participate in the defense thereof, and to
employ counsel, at its own expense, separate from counsel employed by the
Indemnifying Party in any such action and to participate in the defense thereof.
The Indemnifying Party shall be liable for the fees and expenses of one firm as
counsel (and appropriate local counsel) employed by the Indemnified Party if the
Indemnifying Party has not assumed the defense thereof. Whether or not the
Indemnifying Party chooses to defend or prosecute any claim involving a third
party, all the parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.
12.7 Settlements. The Indemnifying Party shall not be liable under
this Article for any settlement effected without its consent of any claim,
litigation or proceedings in respect of which indemnity may be sought hereunder,
unless the Indemnifying Party refuses to acknowledge liability for
indemnification under this Article 0 and/or declines to defend the Indemnified
Party in such claim, litigation or proceeding.
12.8 Set-Off. In addition to any other remedies that Buyer may have
against Seller for indemnification under the provisions of this Agreement or
under law or at equity, Buyer may set off against any amount otherwise due and
yet unpaid to Seller as part of the Purchase Price or otherwise, any amount owed
by Seller or its Affiliates to Buyer under any provision of this Agreement, any
instrument or agreement delivered pursuant thereto, or otherwise.
13. NON-COMPETITION AND CONFIDENTIALITY
13.1 Non-Compete. Seller acknowledges that in order to assure Buyer
that Buyer will retain the value of the Assets, Buyer wishes assurances that
Seller and its Affiliates shall not utilize their special knowledge of the
Business and their relationship with customers, suppliers, and others to compete
with the Buyer with respect to the Business. For a period of five (5) years
beginning on the Closing Date, neither Seller nor its Affiliates shall engage in
any business that manufactures, packages, distributes or sells finished products
in the Territory whose sole or major active ingredients consist of the Active
Ingredients for topical use in dermatology except for (i) the transactions
involving Buyer, e.g. the sale to Buyer of Active Ingredient pursuant to the
Supply Agreement contemplated herein, (ii) as part of a product whose primary
indication is the treatment of vulvovaginal mycotic infections; provided that,
nothing in this Article shall in any way restrict or preclude the Seller or any
of its Affiliates from acquiring another company, business or line of products
(including by license thereof or through investment therein), in which less than
a twenty percent (20%) of the revenues and/or assets is derived from or
represents finished products whose sole or major active ingredients consist of
the Active Ingredients for topical use in dermatology and to continue to operate
such business following such acquisition. In promoting any such acquired product
or in promoting any other dermatology product that Seller may develop,
manufacture of market in compliance with this Section 13.1, Seller shall not
make use of the history, heritage or brand equity of the Products as part of any
such promotional plan or activity.
13.2 Confidentiality. Seller acknowledges that the Assets and all
other confidential or proprietary information with respect to the Business are
valuable, special and unique. Neither Seller nor any of its Affiliates shall, at
any time after the Closing Date, disclose, directly or indirectly, to any
<PAGE> 22
third party, or use or purport to authorize any third party to use any
confidential or proprietary information with respect to the Business, whether or
not for Seller's or an Affiliate's own benefit, without the prior written
consent of Buyer, including without limitation, information as to the financial
condition, results of operations, customers, suppliers, products, inventions,
sources, leads or methods of obtaining new supplies, marketing strategies or any
other information relating to the Business or Products which could reasonably be
regarded as confidential, but not including information which (i) does not
relate directly and exclusively to the Business or the Products, provided that
Seller and its Affiliates shall not disclose such information to the direct
detriment of the Business; or (ii) is or shall become generally available to the
public other than as a result of an unauthorized disclosure by Seller or an
Affiliate or third party to whom Seller or an Affiliate has provided such
information; or (iii) as may be necessary for Seller or any of its Affiliates to
perform its obligations under this Asset Purchase Agreement or the transactions
or agreements contemplated herein; or (iv) that is required by Law to be
disclosed by Seller or any of its Affiliates.
14. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Seller or Buyer at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.
if to Buyer, to: Medicis Pharmaceutical Corporation
4383 East Camelback Road
Phoenix, Arizona 85018
Attn: Jonah Shacknai
with a copy to: Brown & Bain
2901 North Central Avenue
Phoenix, Arizona 85012-2788
Attn: Frank M. Placenti
if to Seller, to: Syntex Pharmaceuticals International Limited
Ave. Samuel Lewis
Torre Hongkong Bank, Piso No. 18/P.O. Box 7386
Panama 5, Republic of Panama
Attn: General Manager
with a copy to:
F. Hoffmann-La Roche Ltd.
CH-4070 Basel, Switzerland
Attn: Corporate Law Department
and a copy to:
Syntex (U.S.A.) Inc.
3401 Hillview Avenue
Palo Alto, California 94304
<PAGE> 23
Attn: General Counsel
15. SYNACORT
At Closing, Seller shall grant Buyer an exclusive, fully paid-up
license, with right to sub-license, to manufacture, market and sell products in
the Territory using the Synacort NDAs; provided, however, that Buyer may not
manufacture, market or sell any product for the treatment of vulvovaginal
mycotic infections products using the Synacort NDAs. At Closing, Seller shall
transfer to Buyer and Buyer shall assume all regulatory responsibility for the
Synacort NDAs. In addition, (i) Seller hereby conveys all common law rights
Seller has in the Territory in the trademark "Synacort", if any, to Buyer, and
(ii) Seller shall not oppose the registration in the Territory by Buyer of the
trademark "Synacort."
16. ARBITRATION AND GOVERNING LAW
16.1 Generally. Except for the right of either party to apply to a
court of competent jurisdiction for a Temporary Restraining Order to preserve
the status quo or prevent irreparable harm pending the selection and
confirmation of a panel of arbitrators in accordance herewith, any dispute,
controversy or claim arising out of or relating to this Agreement, to a breach
or termination thereof, or to the rights of any party for indemnification
thereunder ("Claim") shall be settled by final and binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in effect on the day the arbitration is commenced in
accordance with this Agreement ("Rules"). In the event of any inconsistency
between such Rules and the terms of this Agreement, this Agreement shall
supersede the Rules. Any judgment on any award rendered in the arbitration may
be entered in any court having jurisdiction and shall be final, binding,
non-appealable, and conclusive. The AAA shall have jurisdiction over all parties
to this Agreement for purposes of the arbitration.
16.2 Defenses and Bankruptcy. Any statute of limitations or other
equitable or legal doctrine which would otherwise be applicable to any action
brought by any of the parties shall be applicable in the Arbitration. In the
event any party to this Agreement files a petition under the bankruptcy laws of
the United States or has a petition filed against it which results in an order
for relief or other indicia that a bankruptcy case has commenced, it is the
express intention of the parties to this Agreement that this Agreement shall
control and be enforced in accordance with is terms and conditions that any
Claim shall remain subject to arbitration to the maximum extent permitted by
law.
16.3 Commencement of Arbitration. Any party may commence arbitration
by serving upon all other parties a written demand for arbitration sent by
certified mail, return receipt requested, in accordance with Agreement, with a
copy of the same delivered by certified mail, return receipt requested, to the
AAA regional office in which Palo Alto California is then located. The AAA shall
administer the arbitration. The arbitration panel shall consist of three
members, one being appointed by each party and the third, who shall be the
chairman of the panel, being appointed by mutual agreement of the two
party-appointed arbitrators. In the event of failure of said two arbitrators to
agree within sixty (60) days after the commencement of the arbitration
proceeding upon the appointment of the third arbitrator, the third arbitrator
shall be appointed by the AAA in accordance with the Rules. In the event that
either party shall fail to appoint an arbitrator within thirty (30) days after
the commencement of the arbitration proceeding, such arbitrator and the third
arbitrator shall be appointed by the AAA in accordance with the Rules. The
<PAGE> 24
arbitration award shall be rendered by a majority of the members of the Board of
Arbitration. Except as expressly provided in this Agreement in Section 17.9, the
panel shall not be entitled to modify this Agreement or the transactions
contemplated herein.
16.4 Governing Law and Place of Arbitration. The arbitrators shall
apply the laws of the State of New York (regardless of its or any other
jurisdiction's choice of law principles). The place of arbitration shall be
Phoenix, Arizona.
16.5 Discovery and Other Matters. There shall be no rights of
discovery in connection with the arbitration except as follows:
16.5.1 Each party shall have the right to request the
arbitrators to issue subpoenas for documents in accordance with the rules;
16.5.2 Each party shall have the right to initiate one (1)
deposition of one representative of each party to the arbitration; and each
party shall have the right to initiate one (1) additional oral deposition
pursuant to a subpoena issued by the arbitrators or any court of competent
jurisdiction.
16.5.3 At any time following the tenth day after the
commencement of the arbitration in accordance with this Agreement, a written
notice served upon all parties shall be sufficient to compel the attendance of
any party at a deposition upon not less than sixty (60) days notice and no
subpoena shall be required for that purpose. If a person fails or refuses to
testify at a deposition, that person shall not be permitted to testify at the
hearing, except for good cause shown. The number of depositions that may be
initiated by either party may be varied by agreement of all parties to the
arbitration but not by any action, order or request of the arbitrators or any
court.
16.6 Hearing. Not less than thirty (30) days prior to the scheduled
arbitration proceeding, the arbitrator shall conduct a preliminary hearing in
accordance with the AAA guidelines. Not less than five (5) days prior to the
preliminary hearing, all parties to the arbitrations shall serve upon all other
parties to the arbitration a written list of witnesses and exhibits to be used
at the arbitration hearing. Except for good cause shown, no witness or exhibit
may be utilized at the arbitration hearing other than as set forth on such list.
the arbitrators shall receive evidence at a single hearing. The arbitrators
shall award reasonable attorneys' fees and costs in favor of the prevailing
party or parties. The arbitrator shall issue a final award not more than twenty
(20) days following the conclusion of the hearing. The arbitrators shall have
the power to hear and decide, by documents only or with a hearing (at the
arbitrators sole discretion) any prehearing motions in the nature of a pre-trial
motion to dismiss or for summary judgment.
16.7 Arbitrators Fees. The arbitrators shall be entitled to receive
reasonable compensation at an hourly rate to be established between the
arbitrators and he AAA. If required by the arbitrators, Buyer, on the one hand,
and Seller, on the other, will deposit with the AAA an equal share of the total
anticipated fee of the arbitrators in an amount to be estimated by the AAA. The
non-prevailing party(s) in the proceedings shall be ordered to pay, and shall
have the ultimate responsibility for, all arbitrators fees and the fees of the
AAA and such fees shall be included in the judgment to be entered against the
non-prevailing party or parties.
17. ADDITIONAL TERMS
<PAGE> 25
17.1 Brokers. Buyer represents to Seller that it has not employed
any investment banker, broker, finder or intermediary (a "Broker") in connection
with the transactions contemplated hereby who might be entitled to a fee or any
commission from Seller upon consummation of the transactions contemplated
hereby. Seller represents to Buyer that it has not employed any Broker in such
connection who might be entitled to a fee or any commission from Buyer upon
consummation of the transactions contemplated hereby.
17.2 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to seek
equitable relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies
provided hereunder or available to the parties hereto at law or in equity.
17.3 Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting and other costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
17.4 Attorneys' Fees. If there is any litigation or arbitration with
respect to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.
17.5 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and assigns; provided that this Agreement may not be assigned by any party
without the written consent of the other party.
17.6 Entire Agreement. This Agreement, the exhibits hereto, the
Disclosure Schedule and the Confidentiality Agreement embody the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede and replace all previous negotiations, understandings,
representations, writings, and contract provisions and rights relating to the
subject matter hereof.
17.7 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.
17.8 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Seller and a counterpart has been signed by Seller and delivered to
Buyer.
17.9 Severability. The parties agree that (a) the provisions of this
Agreement shall be severable and (b) in the event that any of the provisions
hereof are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, (i) such invalid, void or otherwise unenforceable
provisions shall be automatically replaced by other provisions that are as
similar as possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable and (ii) the remaining provisions shall
remain enforceable to the fullest extent permitted by law, provided that the
rights and interests of the parties hereto shall not be materially affected.
<PAGE> 26
17.10 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein to
Articles and Sections are to the articles and sections of this Agreement.
IN WITNESS WHEREOF, this Agreement has been signed by duly authorized
representatives of each of the parties hereto as of the Effective Date.
SYNTEX PHARMACEUTICALS MEDICIS PHARMACEUTICAL
INTERNATIONAL LIMITED CORPORATION
By /s/ John R. Talbot By /s/ Jonah Shacknai
------------------------- -------------------------
Name John R. Talbot Name Jonah Shacknai
----------------------- -----------------------
Title: President Title: Chairman and Chief
--------------------- Executive
---------------------
<PAGE> 1
EXHIBIT 10.83
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (the "Agreement") is entered into as
of February 24, 1997 by Hoffmann-La Roche Inc., a corporation organized and
existing under the laws of New Jersey, Roche Laboratories Inc., a corporation
organized and existing under the laws of Delaware (both collectively referred
to herein as "Roche") and Medicis Pharmaceuticals, Inc. a Delaware corporation
("Buyer").
WHEREAS, pursuant to an Asset Purchase Agreement dated January 21, 1997
between Roche's Affiliate, Syntex (U.S.A.) Inc. ("Syntex"), and Buyer (the
"Asset Purchase Agreement"), Buyer has purchased from Syntex certain assets
relating to certain dermatology products; and
WHEREAS, Buyer desires to retain Roche, and Roche is willing to be
retained by Buyer, to provide certain sales, finance and distribution services
during the period of transition of the Products from Syntex to Buyer.
NOW, THEREFORE, in consideration of the above and of the mutual
covenants contained herein and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 "Net Sales" means the gross invoice amount of Products sold to
third parties in the Territory from and after the Closing Date, less:
(a) promotional and trade discounts; (b) sales and excise taxes, value added
and other taxes and insurance premiums and duties which are billed to customers
as separate items on invoices; (c) allowances for short-shipments and price
adjustments; and (d) those contract chargebacks, government rebates, and
returns (e.g., of spoiled, damaged or outdated Products) which are the
responsibility of Buyer under the Asset Purchase Agreement.
1.2 "Fully Loaded Costs" means all direct expenses and, with respect
to time spent on a project by employees, an hourly rate which equals salary plus
benefits plus fifty percent (50%) allocated overhead.
1.3 "Sales" means the gross invoice amount of Products sold to third
parties in the Territory on behalf of Buyer from and after the Closing Date.
1.4 "Services" means any and all services with respect to the
Products provided by Roche to Buyer pursuant to this Agreement.
1.5 "Territory" means the United States of America and its
possessions, including the Commonwealth of Puerto Rico.
1.6 The term "Products" as well as other capitalized terms used
herein and not defined above shall have the respective meanings assigned to such
terms in the Asset Purchase Agreement.
2. RESPONSIBILITIES OF PARTIES
2.1 Provision of Services. Subject to the terms hereof, Roche shall
(a) cooperate with Buyer and assist in the orderly transition of the Products to
Buyer, and (b) provide the Services described herein that are requested by
Buyer.
<PAGE> 2
2.2 Cooperation and Assistance. Roche and Buyer shall make
available the individuals identified on Exhibit A, or their qualified designees,
for consultation with the other party's representatives via telephone,
correspondence or in person at Roche's facilities for the purpose of conveying
and transferring information relating to the operation of the Products. Such
consultation shall occur for reasonable periods of time, upon reasonable notice
during normal business hours. Either party may appoint substitutes for the
individuals listed on Exhibit A. Notwithstanding any other provision of this
Agreement, the individuals listed on Exhibit A (or their substitutes) shall be
available for minimal consultation for a period of six (6) months following
Closing.
2.3 Distribution Agency Services. With respect to the Products,
Roche, or subcontractors used by Roche in the ordinary course of conducting its
business, shall provide all services (including storing, delivering and
distributing Products and filling orders) requested by Buyer and customarily
performed by a distribution agent in connection with the sale of ethical
pharmaceutical products in the Territory, including the following: (a) accepting
orders and invoicing purchasers on behalf of Buyer; (b) processing all Products
returned by customers in accordance with Article 3 of this Agreement; (c) order
entry and billing services; (d) recording sales and collecting amounts due;
(e) making appropriate payments for chargebacks and rebates subject to the Asset
Purchase Agreement; and (f) customer complaint and inquiry services. Roche
further covenants and represents to Buyer that it shall comply with all laws,
rules, regulations and requirements of any governmental body which may be
applicable to the distribution or sale of the Products under this Agreement,
provided, however, that it shall not be deemed a breach of this Section 2.3 if
Roche can demonstrate that such non-compliance was directly caused by following
the written instructions of Buyer. Roche shall charge customers and pay Buyer
for Products sold only on the basis of list prices for each unit of the Product.
The current list prices for Products are set forth on Exhibit B. Buyer may
change the list prices from time to time by written notice to Roche, which price
changes shall be effective within seven (7) days of receipt of such notice.
2.4 Marketing Support Services. In order to inform customers of the
sale of the Products to Buyer, and otherwise transition the Products, the
parties shall: (a) notify all contracted customers, trade customers, and
wholesalers of the transfer of the Products to Buyer by a method and at a time
mutually agreed to by the parties in the form substantially as set forth on
Exhibit C, and (b) provide notice to wholesalers at mutually agreed to times
which allows adequate transition time for the wholesalers. In providing
marketing support services hereunder, Roche shall provide Buyer with necessary
pricing information concerning the Products, but shall not be required to
disclose copies of customer contracts. The parties hereto acknowledge and agree
that Roche shall not be responsible for providing the Buyer with any sales or
promotional support.
2.5 Reports. Roche shall submit in writing to Buyer (a) within seven
(7) business days after the end of each calendar month a report setting forth
total Net Sales by SKU for the period ending the last Sunday in the preceding
calendar month, (b) within seven (7) business days after the end of each
calendar month a report setting forth inventory on-hand by SKU as of the last
Sunday in the preceding calendar month, and (c) within fifteen (15) days after
the end of each calendar month a report as set forth on Schedule I and such
other information as Buyer shall reasonably request that is agreed to by Roche.
Roche shall also submit in writing to Buyer weekly reports setting forth gross
invoice sales in units and dollars by SKU. Roche shall also provide to Buyer,
no later than April 5, 1997, (i) the report referred to in Section 2.5(a) above
<PAGE> 3
for the period ended March 30, 1997; and (ii) a report indicating gross invoice
sales in units and dollars for March 31, 1997.
2.6 NDC Numbers. Immediately following the Closing, Buyer shall take
any and all action necessary to change the National Drug Code number for the
Products, which change shall be implemented pursuant to the terms of the Asset
Purchase Agreement with Syntex.
2.7 Payment of Net Sales. On the twentieth calendar day of each
calendar month, Roche will wire transfer to Buyer the amount equal to total Net
Sales for the prior month, less (i) a one-half percent (.50%) reserve for
uncollected Sales based on Net Sales; (ii) a two percent (2%) deduction from
Sales for cash discount based on payment terms of two percent (2%) thirty net
thirty-one (31) days; and (iii) the amount of the fee, if any, calculated for
such prior month under Section 4.1.
2.8 Government Contracts. The parties shall mutually agree on the
timing and method of notifying applicable federal agency customers and the
Health Care Financing Administration ("HCFA") of the sale of the Products to
Buyer, and shall take whatever action is necessary to simultaneously add the
Products to Buyer's federal supply schedule and Medicaid rebate agreement, if
applicable, and delete the Products from the federal supply schedule and
Medicaid rebate agreement of Roche or Syntex as applicable.
2.9 Orders Following Termination or Expiration. For a period of
two (2) weeks following the termination or expiration of this Agreement, Roche
shall forward to Buyer as soon as practicable via facsimile any orders for
Products received by Roche. For a period of six (6) weeks following the end of
the two (2) week period in the preceding sentence, Roche shall forward to Buyer
via facsimile at least every three (3) days any orders for Products received by
Roche. At the end of such six (6) week period, Roche shall reject all orders
for Products received by Roche, but shall notify any such orderer that future
orders should be placed directly with Buyer.
3. PRODUCT RETURNS
Roche shall process and pay all claims received by it for returns of
Products in accordance with the provision of the return goods policy attached
hereto as Exhibit D. Buyer shall not engage in any special pricing, rebate
allowance, promotional or marketing program or activities, special returns
policy or special restocking program that would impact the normal course or
level of expected returns with respect to Products sold prior to Closing.
Returned goods will be destroyed in accordance with the provisions of the
disposition of returned goods policy of Roche, a copy of which is attached
hereto as Exhibit E.
4. PAYMENTS
4.1 Fees. In consideration of Roche's Services under this
Agreement, Buyer shall pay to Roche a fee equal to six per cent (6%) of Buyer's
Net Sales of Products for any month during which Roche provides Services to
Buyer. In addition, Roche shall be reimbursed its Fully Loaded Costs for any
special services or expenses, provided that Buyer has given its prior written
approval for such special services or expenses, including without limitation
the cost of destruction of returned goods other than pursuant to on-going,
normal business operations, the participation of Roche in any recall of
Products, "scrap" charges incurred due to labeling or packaging changes
requested by Buyer, and any components with Syntex's or Roche's NDC number
ordered on or after January 21, 1997 with the prior written approval of Buyer,
<PAGE> 4
transportation costs associated with the delivery of inventory and records upon
termination of this Agreement, and any other expenses incurred by Roche
specifically as a result of this Agreement. Buyer will reimburse Roche with
respect to the foregoing costs, if any, within thirty (30) days of receipt of
Roche's statement.
4.2 Records: Audit. Roche shall keep records relating to the
calculation of Net Sales and the fees under Section 4.1 in accordance with
generally accepted accounting principles in the United States and provide copies
of such records to Buyer within ninety (90) days of termination of this
Agreement. During and at any time within six (6) months following termination
of this Agreement, Buyer, at its expense, shall have the right to conduct one
examination or audit of said records of Roche which relate solely to the
services provided hereunder and costs and expenses incurred hereunder, for the
sole purpose of verifying information provided by Roche and payments made to
Roche hereunder. Roche shall cooperate fully with the auditor and provide all
reasonable access to records and employees necessary to promptly complete this
audit. During and at any time within six (6) months following termination of
this Agreement, Buyer, at its expense, shall have the right to appoint an
independent certified public accounting firm reasonably acceptable to Roche who
will be bound by confidentiality terms reasonable to Roche, to conduct one
audit of customer invoices for the Products for the sole purpose of verifying
the information provided by Roche and payments made to Roche hereunder. Such
auditor shall not disclose any information to Medicis relating to Roche's
products or business other than information which pertains directly to the
purpose of the audit. If any such examination or audit discloses an
underpayment or overpayment hereunder, written notice of such fact, specifying
the amount and basis of the underpayment or overpayment shall promptly be
furnished to Roche. Subject to Roche's right to dispute the amount of any
overpayment or underpayment, the amount of any overpayment upon resolution of
such dispute, if any, shall be credited against future amounts owed to Roche
hereunder, or if there will be no such future amounts, Roche shall refund the
overpayment to Buyer within thirty (30) days of such notice; and the amount of
any underpayment shall be paid to Roche within thirty (30) days after such
disclosure. If the audit determines that Roche has overcharged Buyer by five
percent (5%) or more for the fee under Section 5.1 for the period audited, Roche
shall promptly reimburse Buyer for all reasonable expenses incurred in
conducting said audit.
5. STANDARD FOR SERVICES
Roche shall meet the standards of the applicable profession in
performing Services hereunder; provided that except as otherwise set forth
herein, neither Roche nor its employees shall have any liability to Buyer in
connection with such performance absent bad faith, gross negligence or willful
misconduct. In performing its duties hereunder, the quality and quantity of
Services provided hereunder by Roche to Buyer (including without limitation the
substance, timeliness and diligence thereof) shall be substantially the same as
the quality and quantity of services rendered in relation to Roche's other
products by Roche personnel. Nothing contained in this Agreement shall require
Roche to alter its operations, policies, procedures, method of doing business,
reporting mechanisms or formats or information technology systems in order to
provide Services hereunder or otherwise engage in any extraordinary activities,
except as set forth in this Agreement. If Buyer suffers any loss or damage
caused by Roche's bad faith, gross negligence or willful misconduct, Roche shall
pay all direct costs incurred as a result thereof. Under no circumstances shall
Roche have any liability to Buyer for consequential or incidental damages.
<PAGE> 5
6. TERM AND TERMINATION
6.1 Term. This Agreement shall commence as of the Closing Date and
shall continue in effect for a period of three (3) months.
6.2 Termination. Either party may terminate this Agreement upon
immediate written notice if the other party is in material breach or default
with respect to any term or provision hereof and fails to cure the same within
twenty-one (21) days of receipt of notice of said breach or default. Buyer may
terminate this Agreement at any time upon not less than thirty days written
notice, provided any transition issues that will require cooperation after
termination are mutually agreed to by the parties; provided further that Buyer
may not terminate this Agreement prior to April 30, 1997.
6.3 Rights and Duties of Parties Upon Termination. Upon expiration
or other termination of this Agreement in accordance with the terms hereof, the
parties shall cooperate in the orderly termination of the Services hereunder,
including without limitation the transfer of Products to Buyer; and the transfer
of other information relating solely to the Products, including customer
information.
7. CONFIDENTIALITY
7.1 Roche acknowledges that confidential and proprietary information
with respect to the Business is valuable, special and unique. Neither Roche nor
any of its Affiliates shall at any time after the Closing Date disclose,
directly or indirectly, to any third party, or use or purport to authorize any
third party to use any confidential or proprietary information with respect to
the Business, whether or not for Roche's or an Affiliate's own benefit, without
the prior written consent of Buyer, including without limitation, information
as to the financial condition, results of operations, customers, suppliers,
products, inventions, sources, leads or methods of obtaining new supplies,
marketing strategies or any other information relating to the Business or
Products which could reasonably be regarded as confidential, but not including
information which (i) does not relate directly and exclusively to the Business
or the Products, provided that Roche and its Affiliates shall not disclose such
information to the direct detriment of the Business; or (ii) is or shall become
generally available to the public other than as a result of an unauthorized
disclosure by Roche or an Affiliate or third party to whom Roche or an Affiliate
has provided such information; or (iii) as may be necessary for Roche or any of
its Affiliates to perform its obligations under this Transition Services
Agreement or the Asset Purchase Agreement or the transactions or agreements
contemplated therein; or (iv) that is required by Law to be disclosed by Roche
or any of its Affiliates. Should Roche provide Buyer with any confidential
information relating to Roche's products or business, other than information
which pertains to the Products, Buyer shall be subject to the confidentiality
provisions of the Confidentiality Agreement dated October 15, 1996 between
F. Hoffmann-La Roche A.G. and Buyer.
8. INDEPENDENT CONTRACTOR
Each party shall act solely as an independent contractor and nothing in
this Agreement shall be construed to give either the power or authority to enter
into or incur, any commitments, expenses or liabilities whatsoever on behalf of
the other party. Nothing herein shall be construed to create the relationship
of a partnership, principal and agent, or joint venture between Buyer and Roche,
other than as expressly set forth herein and Roche shall not represent itself to
be an agent of Buyer or incur any obligations for or on behalf of Buyer other
than is expressly contemplated by this Agreement.
<PAGE> 6
9. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Buyer or Roche at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.
All correspondence to Roche shall be addressed as follows:
Hoffmann-La Roche, Inc.
340 Kingsland Street
Nutley, New Jersey 07110
Attention: President
Fax Number: 201-235-8855
With a copy to: General Counsel
Fax Number: 201-235-3500
and with copy to:
F. Hoffmann-La Roche Ltd.
Grenzacherstrasse 124
CH-4002 Basel Switzerland
Attention: Dr. Andreas Knierzinger
Fax Number: 011-41-61-688-4169
All correspondence to Buyer shall be addressed as follows:
Medicis Pharmaceuticals Inc.
4383 East Camelback Road
Phoenix, Arizona 85018
Attn: Jonah Shacknai
with a copy to:
Brown & Bain
2901 North Central Avenue
Phoenix, Arizona 85012-2788
Attn: Frank M. Placenti
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns; provided that this
Agreement may not be assigned by any party without the written consent of the
other party.
11. SURVIVAL OF TERMS
The provisions of Sections 2.2, 2.5, 2.6, 2.7 (to the extent payments
due remain outstanding thereunder), 2.9, 6.3 and 12.1 and Articles 4, 5, 7, and
8 shall survive the termination or expiration of this Agreement.
<PAGE> 7
12. ADDITIONAL TERMS
12.1 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement shall be settled by final and binding arbitration in
accordance with the arbitration provisions of the Asset Purchase Agreement.
12.2 Entire Agreement. This Agreement and the exhibits hereto embody
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersede and replace all previous negotiations, understandings,
representations, writings, and contract provisions and rights relating to the
subject matter hereof. If there is any conflict between this Agreement and the
terms and conditions contained on any purchase order or invoice, the terms and
conditions of this Agreement shall prevail.
12.3 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.
12.4 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Roche and a counterpart has been signed by Roche and delivered to
Buyer.
12.5 Severability. The parties agree that (a) the provisions of this
Agreement shall be severable and (b) in the event that any of the provisions
hereof are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, (i) such invalid, void or otherwise unenforceable
provisions shall be automatically replaced by other provisions that are as
similar as possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable and (ii) the remaining provisions shall
remain enforceable to the fullest extent permitted by law, provided that the
rights and interests of the parties hereto shall not be materially affected.
12.6 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein
to Articles and Sections are to the articles and sections of this Agreement.
12.7 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to seek
equitable relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies
provided hereunder or available to the parties hereto at law or in equity.
12.8 Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting and other costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid
by the party incurring such expenses.
12.9 Attorneys' Fees. If there is any litigation or arbitration with
respect to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first hereinabove written.
ROCHE BUYER
By /s/ Stephen Sudovar By /s/ Mark A. Prygocki Sr.
------------------------------ ------------------------------
Name Stephen Sudovar Name Mark A. Prygocki Sr.
---------------------------- ----------------------------
Title Vice President Title Secretary
--------------------------- ---------------------------
<PAGE> 9
EXHIBIT A:
ROCHE CONTACTS
Linda Seyffarth, General Operations, Accounting and Finance
Lorraine Giermanski, Contracts/Medicaid
Allen Perry, Inventory
Pat Cofone, Distribution
Tony Corrado, Regulatory
MEDICIS CONTACTS
Mark Prygocki, Sr., Finance and Accounting
Joe Cooper, Manufacturing, Distribution, and Regulatory
<PAGE> 10
EXHIBIT B: CURRENT LIST PRICES FOR PRODUCTS
To be attached at or prior to Closing
<PAGE> 11
EXHIBIT C: FORM OF NOTICE LETTER TO CUSTOMERS
To be attached at or prior to Closing
<PAGE> 12
EXHIBIT D: ROCHE RETURNED GOODS POLICY
<PAGE> 13
EXHIBIT E: ROCHE DISPOSITION OF RETURNED GOODS POLICY
To be provided at Closing
<PAGE> 14
SCHEDULE I: FORM OF MONTHLY REPORT
<PAGE> 1
EXHIBIT 10.84
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (the "Agreement") is entered into as
of February 24, 1997 by Hoffmann-La Roche Limited, a corporation organized and
existing under the laws of Canada ("Roche") and Medicis Pharmaceuticals, Inc. a
Delaware corporation ("Buyer").
WHEREAS, pursuant to an Asset Purchase Agreement dated January 21, 1997
between Roche's Affiliate, Syntex (U.S.A.) Inc. ("Syntex"), and Buyer (the
"Asset Purchase Agreement"), Buyer has purchased from Syntex certain assets
relating to certain dermatology products; and
WHEREAS, Buyer desires to retain Roche, and Roche is willing to be
retained by Buyer, to provide certain warehousing of inventory, order taking,
distribution, billing and collection, and processing of returns services during
the period of transition of the Products from Syntex to Buyer.
NOW, THEREFORE, in consideration of the above and of the mutual
covenants contained herein and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 "Net Sales" means the gross invoice amount of Products sold to
third parties in the Territory from and after the Closing Date, less:
(a) promotional and trade discounts; (b) sales and excise taxes, value added and
other taxes and insurance premiums and duties which are billed to customers as
separate items on invoices; (c) allowances for short-shipments and price
adjustments; and (d) those contract chargebacks, government rebates, and returns
(e.g., of spoiled, damaged or outdated Products) which are the responsibility of
Buyer under the Asset Purchase Agreement.
1.2 "Fully Loaded Costs" means all direct expenses and, with respect
to time spent on a project by employees, an hourly rate which equals salary plus
benefits plus fifty percent (50%) allocated overhead.
1.3 "Sales" means the gross invoice amount of Products sold to third
parties in the Territory on behalf of Buyer from and after the Closing Date.
1.4 "Services" means any and all services with respect to the
Products provided by Roche to Buyer pursuant to this Agreement.
1.5 "Territory" means Canada.
1.6 The term "Products" as well as other capitalized terms used
herein and not defined above shall have the respective meanings assigned to such
terms in the Asset Purchase Agreement.
2. RESPONSIBILITIES OF PARTIES
2.1 Provision of Services. Subject to the terms hereof, Roche shall
(a) cooperate with Buyer and assist in the orderly transition of the Products to
Buyer, and (b) provide the Services described herein that are requested by
Buyer.
2.2 Cooperation and Assistance. Roche and Buyer shall make
available the individuals identified on Exhibit A, or their qualified designees,
for consultation with the other party's representatives via telephone,
<PAGE> 2
correspondence or in person at Roche's facilities for the purpose of conveying
and transferring information relating to the operation of the Products. Such
consultation shall occur for reasonable periods of time, upon reasonable notice
during normal business hours. Either party may appoint substitutes for the
individuals listed on Exhibit A. Notwithstanding any other provision of this
Agreement, the individuals listed on Exhibit A (or their substitutes) shall be
available for minimal consultation for a period of six (6) months following
Closing.
2.3 Distribution Agency Services. With respect to the Products,
Roche, or subcontractors used by Roche in the ordinary course of conducting its
business, shall provide all services (including storing, delivering and
distributing Products and filling orders) requested by Buyer and customarily
performed by a distribution agent in connection with the sale of ethical
pharmaceutical products in the Territory, including the following: (a) accepting
orders and invoicing purchasers on behalf of Buyer; (b) processing all Products
returned by customers in accordance with Article 3 of this Agreement; (c) order
entry and billing services; (d) recording sales and collecting amounts due;
(e) making appropriate payments for chargebacks and rebates subject to the Asset
Purchase Agreement; and (f) customer complaint and inquiry services. Roche
further covenants and represents to Buyer that it shall comply with all laws,
rules, regulations and requirements of any governmental body which may be
applicable to the distribution or sale of the Products under this Agreement,
provided, however, that it shall not be deemed a breach of this Section 2.3 if
Roche can demonstrate that such non-compliance was directly caused by following
the written instructions of Buyer. Roche shall charge customers and pay Buyer
for Products sold only on the basis of list prices for each unit of the Product.
The current list prices for Products are set forth on Exhibit B. Buyer may
change the list prices from time to time by written notice to Roche, which price
changes shall be effective within seven (7) days of receipt of such notice.
2.4 Marketing Support Services. In order to inform customers of the
sale of the Products to Buyer, and otherwise transition the Products, the
parties shall: (a) notify all contracted customers, trade customers, and
wholesalers of the transfer of the Products to Buyer by a method and at a time
mutually agreed to by the parties in the form substantially as set forth on
Exhibit C, and (b) provide notice to wholesalers at mutually agreed to times
which allows adequate transition time for the wholesalers. In providing
marketing support services hereunder, Roche shall provide Buyer with necessary
pricing information concerning the Products, but shall not be required to
disclose copies of customer contracts. The parties hereto acknowledge and agree
that Roche shall not be responsible for providing the Buyer with any sales or
promotional support.
2.5 Reports. Roche shall submit in writing to Buyer: (a) within
seven (7) business days after the end of each calendar month a report as set
forth on Schedule 1; (b) within seven (7) business days after the end of each
calendar month a report setting forth inventory on-hand by SKU as of the end of
the preceding calendar month; and (c) such other information as Buyer shall
reasonably request that is agreed to by Roche. Roche shall also submit to Buyer
weekly reports setting forth Net Sales in dollars by Product family.
2.6 DIN Numbers. Immediately following the Closing, Buyer shall take
any and all action necessary to change the Drug Identification Number for the
Products, which change shall be implemented pursuant to the terms of the Asset
Purchase Agreement with Syntex.
2.7 Payment of Net Sales. On the twentieth calendar day of each
calendar month, Roche will wire transfer to Buyer the amount equal to total Net
<PAGE> 3
Sales for the prior month, less (i) a one-half percent (.50%) reserve for
uncollected Sales based on Net Sales; (ii) a two percent (2%) deduction from
Sales for cash discount based on payment terms of two percent (2%) thirty net
thirty-one (31) days; and (iii) the amount of the fee, if any, calculated for
such prior month under Section 4.1.
2.8 Orders Following Termination or Expiration. For a period of two
(2) weeks following the termination or expiration of this Agreement, Roche shall
forward to Buyer as soon as practicable via facsimile any orders for Products
received by Roche. For a period of six (6) weeks following the end of the two
(2) week period in the preceding sentence, Roche shall forward to Buyer via
facsimile at least every three (3) days any orders for Products received by
Roche. At the end of such six (6) week period, Roche shall reject all orders
for Products received by Roche, but shall notify any such orderer that future
orders should be placed directly with Buyer.
3. PRODUCT RETURNS
Roche shall process and pay all claims received by it for returns of
Products in accordance with the provision of the return goods policy attached
hereto as Exhibit D. Buyer shall not engage in any special pricing, rebate
allowance, promotional or marketing program or activities, special returns
policy or special restocking program that would impact the normal course or
level of expected returns with respect to Products sold prior to Closing.
Returned goods will be destroyed in accordance with the provisions of the
disposition of returned goods policy of Roche, a copy of which is attached
hereto as Exhibit E.
4. PAYMENTS
4.1 Fees. In consideration of Roche's Services under this
Agreement, Buyer shall pay to Roche a fee equal to six per cent (6%) of Buyer's
Net Sales of Products for any month during which Roche provides Services to
Buyer. In addition, Roche shall be reimbursed its Fully Loaded Costs for any
special services or expenses, provided that Buyer has given its prior written
approval for such special services or expenses, including without limitation the
cost of destruction of returned goods other than pursuant to on-going, normal
business operations, the participation of Roche in any recall of Products,
"scrap" charges incurred due to labeling or packaging changes requested by
Buyer, and any components with Syntex's or Roche's DIN number ordered on or
after January 21, 1997 with the prior written approval of Buyer, transportation
costs associated with the delivery of inventory and records upon termination of
this Agreement, and any other expenses incurred by Roche specifically as a
result of this Agreement. Buyer will reimburse Roche with respect to the
foregoing costs, if any, within thirty (30) days of receipt of Roche's
statement.
4.2 Records: Audit. Roche shall keep records relating to the
calculation of Net Sales and the fees under Section 4.1 in accordance with
generally accepted accounting principles in Canada and provide copies of such
records to Buyer within ninety (90) days of termination of this Agreement.
During and at any time within six (6) months following termination of this
Agreement, Buyer, at its expense, shall have the right to conduct one
examination or audit of said records of Roche which relate solely to the
services provided hereunder and costs and expenses incurred hereunder, for the
sole purpose of verifying information provided by Roche and payments made to
Roche hereunder. Roche shall cooperate fully with the auditor and provide all
reasonable access to records and employees necessary to promptly complete this
audit. During and at any time within six (6) months following termination of
<PAGE> 4
this Agreement, Buyer, at its expense, shall have the right to appoint an
independent certified public accounting firm reasonably acceptable to Roche who
will be bound by confidentiality terms reasonable to Roche, to conduct one audit
of customer invoices for the Products for the sole purpose of verifying the
information provided by Roche and payments made to Roche hereunder. Such auditor
shall not disclose any information to Medicis relating to Roche's products or
business other than information which pertains directly to the purpose of the
audit. If any such examination or audit discloses an underpayment or
overpayment hereunder, written notice of such fact, specifying the amount and
basis of the underpayment or overpayment shall promptly be furnished to Roche.
Subject to Roche's right to dispute the amount of any overpayment or
underpayment, the amount of any overpayment upon resolution of such dispute,
if any, shall be credited against future amounts owed to Roche hereunder, or if
there will be no such future amounts, Roche shall refund the overpayment to
Buyer within thirty (30) days of such notice; and the amount of any underpayment
shall be paid to Roche within thirty (30) days after such disclosure. If the
audit determines that Roche has overcharged Buyer by five percent (5%) or more
for the fee under Section 5.1 for the period audited, Roche shall promptly
reimburse Buyer for all reasonable expenses incurred in conducting said audit.
5. STANDARD FOR SERVICES
Roche shall meet the standards of the applicable profession in
performing Services hereunder; provided that except as otherwise set forth
herein, neither Roche nor its employees shall have any liability to Buyer in
connection with such performance absent bad faith, gross negligence or willful
misconduct. In performing its duties hereunder, the quality and quantity of
Services provided hereunder by Roche to Buyer (including without limitation the
substance, timeliness and diligence thereof) shall be substantially the same as
the quality and quantity of services rendered in relation to Roche's other
products by Roche personnel. Nothing contained in this Agreement shall require
Roche to alter its operations, policies, procedures, method of doing business,
reporting mechanisms or formats or information technology systems in order to
provide Services hereunder or otherwise engage in any extraordinary activities,
except as set forth in this Agreement. If Buyer suffers any loss or damage
caused by Roche's bad faith, gross negligence or willful misconduct, Roche shall
pay all direct costs incurred as a result thereof. Under no circumstances shall
Roche have any liability to Buyer for consequential or incidental damages.
6. TERM AND TERMINATION
6.1 Term. This Agreement shall commence as of the Closing Date and
shall continue in effect for a period of one (1) year.
6.2 Termination. Either party may terminate this Agreement upon
immediate written notice if the other party is in material breach or default
with respect to any term or provision hereof and fails to cure the same within
twenty-one (21) days of receipt of notice of said breach or default. Buyer may
terminate this Agreement at any time upon not less than thirty days written
notice, provided any transition issues that will require cooperation after
termination are mutually agreed to by the parties; provided further that Buyer
may not terminate this Agreement prior to April 30, 1997.
6.3 Rights and Duties of Parties Upon Termination. Upon expiration
or other termination of this Agreement in accordance with the terms hereof, the
parties shall cooperate in the orderly termination of the Services hereunder,
including without limitation the transfer of Products to Buyer; and the transfer
of other information relating solely to the Products, including customer
information.
<PAGE> 5
7. CONFIDENTIALITY
7.1 Roche acknowledges that confidential and proprietary information
with respect to the Business is valuable, special and unique. Neither Roche nor
any of its Affiliates shall at any time after the Closing Date disclose,
directly or indirectly, to any third party, or use or purport to authorize any
third party to use any confidential or proprietary information with respect to
the Business, whether or not for Roche's or an Affiliate's own benefit, without
the prior written consent of Buyer, including without limitation, information as
to the financial condition, results of operations, customers, suppliers,
products, inventions, sources, leads or methods of obtaining new supplies,
marketing strategies or any other information relating to the Business or
Products which could reasonably be regarded as confidential, but not including
information which (i) does not relate directly and exclusively to the Business
or the Products, provided that Roche and its Affiliates shall not disclose such
information to the direct detriment of the Business; or (ii) is or shall become
generally available to the public other than as a result of an unauthorized
disclosure by Roche or an Affiliate or third party to whom Roche or an Affiliate
has provided such information; or (iii) as may be necessary for Roche or any of
its Affiliates to perform its obligations under this Transition Services
Agreement or the Asset Purchase Agreement or the transactions or agreements
contemplated therein; or (iv) that is required by Law to be disclosed by Roche
or any of its Affiliates. Should Roche provide Buyer with any confidential
information relating to Roche's products or business, other than information
which pertains to the Products, Buyer shall be subject to the confidentiality
provisions of the Confidentiality Agreement dated October 15, 1996 between
F. Hoffmann-La Roche A.G. and Buyer.
8. INDEPENDENT CONTRACTOR
Each party shall act solely as an independent contractor and nothing in
this Agreement shall be construed to give either the power or authority to enter
into or incur, any commitments, expenses or liabilities whatsoever on behalf of
the other party. Nothing herein shall be construed to create the relationship
of a partnership, principal and agent, or joint venture between Buyer and Roche,
other than as expressly set forth herein and Roche shall not represent itself to
be an agent of Buyer or incur any obligations for or on behalf of Buyer other
than is expressly contemplated by this Agreement.
9. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Buyer or Roche at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.
All correspondence to Roche shall be addressed as follows:
Hoffmann-La Roche Limited
2455 Meadowpine Blvd.
Mississauga Ontario L5N67L
Attention: President
<PAGE> 6
Fax Number: 905-542-5507
With a copy to: General Counsel
Fax Number: 905-542-5689
and with copy to:
F. Hoffmann-La Roche Ltd.
Grenzacherstrasse 124
CH-4002 Basel Switzerland
Attention: Dr. Andreas Knierzinger
Fax Number: 011-41-61-688-4169
All correspondence to Buyer shall be addressed as follows:
Medicis Pharmaceuticals Inc.
4383 East Camelback Road
Phoenix, Arizona 85018
Attn: Jonah Shacknai
with a copy to:
Brown & Bain
2901 North Central Avenue
Phoenix, Arizona 85012-2788
Attn: Frank M. Placenti
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns; provided that this
Agreement may not be assigned by any party without the written consent of the
other party.
11. SURVIVAL OF TERMS
The provisions of Sections 2.2, 2.5, 2.6, 2.7 (to the extent payments
due remain outstanding thereunder), 2.8, 6.3 and 12.1 and Articles 4, 5, 7,
and 8 shall survive the termination or expiration of this Agreement.
12. ADDITIONAL TERMS
12.1 Arbitration. Any dispute, controversy or claim arising out of
or relating to this Agreement shall be settled by final and binding arbitration
in accordance with the arbitration provisions of the Asset Purchase Agreement.
12.2 Entire Agreement. This Agreement and the exhibits hereto embody
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersede and replace all previous negotiations, understandings,
representations, writings, and contract provisions and rights relating to the
subject matter hereof. If there is any conflict between this Agreement and the
terms and conditions contained on any purchase order or invoice, the terms and
conditions of this Agreement shall prevail.
12.3 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
<PAGE> 7
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.
12.4 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Roche and a counterpart has been signed by Roche and delivered to
Buyer.
12.5 Severability. The parties agree that (a) the provisions of this
Agreement shall be severable and (b) in the event that any of the provisions
hereof are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, (i) such invalid, void or otherwise unenforceable
provisions shall be automatically replaced by other provisions that are as
similar as possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable and (ii) the remaining provisions shall
remain enforceable to the fullest extent permitted by law, provided that the
rights and interests of the parties hereto shall not be materially affected.
12.6 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein
to Articles and Sections are to the articles and sections of this Agreement.
12.7 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to seek
equitable relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies
provided hereunder or available to the parties hereto at law or in equity.
12.8 Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting and other costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
12.9 Attorneys' Fees. If there is any litigation or arbitration with
respect to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first hereinabove written.
HOFFMANN-LA ROCHE LIMITED MEDICIS PHARMACEUTICALS, INC.
By /s/ Susan Griswold By /s/ Mark A. Prygocki Sr.
------------------------------ ------------------------------
Name Susan Griswold Name Mark A. Prygocki Sr.
---------------------------- ----------------------------
Title Power of Attorney Title Secretary
--------------------------- ---------------------------
I have authority to bind the I have authority to bind the
corporation. corporation.
<PAGE> 8
EXHIBIT A: ROCHE CONTACTS
Bill Hammond, Director of Logistics and Distribution
Ralph Wallace, Regulatory Affairs
Peter Schaafsma, QA/QC
Anthony Maricotti, Finance
Dr. Andreas Knierzinger
MEDICIS CONTACTS
Mark Prygocki, Sr., Finance and Accounting
Joe Cooper, Manufacturing, Distribution, and Regulatory
<PAGE> 9
EXHIBIT B: CURRENT LIST PRICES FOR PRODUCTS
To be attached at or prior to Closing
<PAGE> 10
EXHIBIT C: FORM OF NOTICE LETTER TO CUSTOMERS
To be attached at or prior to Closing
<PAGE> 11
EXHIBIT D: ROCHE RETURNED GOODS POLICY
<PAGE> 12
EXHIBIT E: ROCHE DISPOSITION OF RETURNED GOODS POLICY
<PAGE> 13
SCHEDULE I: FORM OF MONTHLY REPORT
<PAGE> 1
EX-10.85
SUPPLY AGREEMENT
(Fluocinolone Acetonide and Fluocinonide)
THIS AGREEMENT is made and entered into by and between Medicis
Pharmaceutical Corporation, a Delaware corporation ("Buyer"), and Syntex
Pharmaceuticals International Limited, a Bermuda corporation ("Seller").
WHEREAS, Pharmaceutical Fine Chemicals S.A. ("PFC"), a Luxembourg
corporation, acquired from Seller certain assets relating to Seller's chemical
manufacturing plant at West Sunrise Highway, Freeport, Grand Bahama Island, The
Bahamas (the "PFC Plant"); and
WHEREAS, PFC manufactures and supplies to Seller the Active Ingredients
(as defined herein) upon the terms and conditions set forth in a Supply
Agreement effective February 13, 1996 between Seller and PFC (the "PFC
Agreement"); and
WHEREAS, pursuant to Asset Purchase Agreements dated January 21, 1997
between Buyer and its Affiliates and Seller or its Affiliates (the "Asset
Purchase Agreements"), Buyer and its Affiliates have purchased from Seller and
its Affiliates certain assets relating to the Syntex Dermatological Business;
and
WHEREAS, Buyer wishes to purchase Active Ingredients from Seller that
Manufacturer will be manufacturing for Seller.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Active Ingredient" shall mean the compounds known by the
following generic names fluocinolone acetonide and fluocinonide, in each and all
of the forms set forth on Schedule A attached hereto and incorporated herein.
1.2 "Affiliate" of a party shall mean any individual, corporation
or other business entity (e.g. limited or general partnership, trust or estate,
joint venture or association) controlling, controlled by or under common control
with such party. "Control" (including "controlling", "controlled by" and "under
common control with") shall mean the direct or indirect ownership of more than
fifty percent (50%) of the voting or income interest in such party, corporation
or other business entity respectively. Notwithstanding the foregoing, Genentech,
Inc. ("Genentech") shall not be considered an Affiliate of Seller for the
purpose of this Agreement for so long as there are material restrictions on the
ability of Seller and its Affiliates to control Genentech.
1.3 "Contract Year" shall mean the twelve (12) month period
commencing on the Effective Date and ending on the first anniversary of the
Effective Date and each consecutive twelve (12) month period thereafter during
the term hereof commencing on an anniversary of the Effective Date; provided,
however, that the third Contract Year shall terminate February 13, 1999.
1.4 "DMFs", shall mean the Type 2 Drug Master File filed by Seller
or an Affiliate of Seller with the FDA.
1.5 "Effective Date" shall mean the Closing Date as defined in the
Asset Purchase Agreements.
<PAGE> 2
1.6 "FDA" shall mean the United States Food and Drug
Administration.
1.7 "Manufacturer" shall mean PFC, or any other manufacturer
designated pursuant to the terms of Article 10.
1.8 "NADA" shall mean New Animal Drug Application.
1.9 "NDA" shall mean New Drug Application.
1.10 "Plant" shall mean the PFC Plant, or, if applicable, the plant
of any other Manufacturer.
1.11 "Quarter" shall mean each of the three (3)-month periods
commencing with the first, fourth, seventh and tenth months of a calendar year.
1.12 "Requirements" means all quantities of the Active Ingredient
required by Buyer and its Affiliates for their own use in manufacturing the
Products or having the Products manufactured by a third party for sale in the
Territory.
1.13 "Safety Stock" shall have the meaning set forth in Section
5.4.
1.14 "Territory" means the United States, Canada and Puerto Rico.
2. SUPPLY AND PURCHASE
Subject to the terms and conditions of this Agreement, during the term
of this Agreement, Manufacturer shall manufacture and Seller shall supply the
Active Ingredient to Buyer in bulk form and Buyer (or an Affiliate of Buyer)
shall purchase Buyer's Requirements of the Active Ingredient exclusively from
Seller; provided that Buyer's obligation to purchase its Requirements from
Seller shall terminate on February 13, 1999. Seller shall use all reasonable
efforts to induce PFC to enter into an agreement with Buyer to manufacture and
sell to Buyer the Active Ingredients following February 13, 1999, on terms not
substantially less favorable than those currently being provided by PFC to
Seller (giving due regard to the volume of Buyer's purchases). Notwithstanding
Buyer's obligations to purchase its requirements of Active Ingredients
exclusively from the Seller, Buyer may purchase the Active Ingredient from
third parties during any time period in which Seller (i) is in material breach
of this agreement and such breach results in Seller's failure to supply Active
Ingredients to Buyer or (ii) contends that its performance is excused pursuant
to the provisions of Section 15.1. Nothing in this Agreement shall prohibit
Buyer from taking such actions as Buyer in its sole and exclusive discretion,
deems necessary and appropriate to qualify with the FDA or other regulatory
agencies one or more additional facilities to manufacture the Active
Ingredients.
3. GOVERNMENTAL AUTHORIZATIONS
Seller shall manufacture or shall cause to be manufactured the Active
Ingredient in accordance with the detailed processes and procedures described
in all currently approved product license applications for the Active Ingredient
in the Territory (including without limitation, as applicable, the DMFs, NDAs
and NADAs pertaining thereto). No changes will be made to the manufacturing
process(es), testing procedures, or packaging and labeling and storage
conditions used to manufacture and store such Active Ingredient, and/or prepare
such Active Ingredient for shipment, that are outside the scope of, and thus not
permitted by, such currently approved product license applications without the
prior written notice to and consent of Buyer, which consent may not be
<PAGE> 3
unreasonably withheld or delayed.
4. ACCESS TO FACILITIES AND RECORDS
4.1 Plant. Seller shall exercise all rights it has under the PFC
Agreement to procure the same access rights for Buyer to the Plant. On a
periodic basis, but no more frequently than twice per calendar year, Seller
shall endeavor in good faith to procure access, on reasonable notice during
regular business hours, for representatives of Buyer to have access to the
facilities at the Plant utilized in the manufacture, analysis, packaging, and
storage of the Active Ingredients (and any raw materials and intermediates
pertaining thereto). Seller also shall endeavor in good faith to procure access
on such visits to the written records relating to the manufacture, analysis,
packaging, storage, and stability and regulatory compliance procedures for the
Active Ingredients (and any raw materials and intermediates pertaining thereto).
Notwithstanding the foregoing, if additional visits are required because of a
particular problem or concern, Seller shall endeavor to arrange such additional
visits on reasonable notice during regular business hours. Without limiting the
foregoing, Seller shall provide Buyer with copies of, or oral notification of if
not in writing, any notice, communication or other information received by
Seller pursuant to Article 4 of the PFC Agreement and any comparable notice,
communication or other information received by Seller from a Manufacturer other
than PFC. Seller shall endeavor in good faith to have an individual at PFC
appointed with whom Buyer may directly communicate concerning the Active
Ingredient and will inform Buyer in writing upon such appointment.
4.2 Records. Seller will supply to Buyer copies of any documents
(e.g., batch records, stability data) received from Manufacturer relating to
the Good Manufacturing Practice ("GMP") compliance of the Plant and the
manufacture of the Active Ingredients and will, upon the reasonable request of
Buyer, request such documents and information from Manufacturer and forward them
to Buyer. Seller will promptly notify Buyer of any significant changes in
manufacturing, including changes in the manufacturing process, synthesis,
packaging, and test methods (unless compendial) and will provide Buyer with the
necessary DMF and NDA authorization documents. Additionally, Seller will
promptly notify Buyer of and provide Buyer with copies of any correspondence
relating to regulatory actions concerning the DMFs for the Active Ingredients
and any regulatory activities concerning the Plant which materially affect the
Active Ingredients.
5. ORDERING PROCEDURES
5.1 Orders and Forecasts. Buyer shall place orders for the Active
Ingredients in a manner as to allow for the efficient scheduling of production
and, subject to the provisions hereof, Seller shall fill such orders received
in writing from Buyer. At least ninety (90) days prior to the start of each
Quarter, Buyer shall provide Seller in writing with (a) its firm order of the
total amount of the Active Ingredients to be ordered for shipment during such
Quarter and (b) its non-binding estimate of the total amount of the Active
Ingredients that may be ordered for shipment during each of the next three (3)
Quarters (each such estimate after the first estimate containing an updating of
the estimates for the last two (2) Quarters of the preceding estimate and adding
an estimate for the next succeeding Quarter). The first such estimate shall be
made by Buyer concurrently with the execution and delivery of this Agreement and
shall cover the period from the Effective Date through June 30, 1997. In any
event, Buyer shall submit its firm orders for the Active Ingredients at least
ninety (90) days prior to the desired shipment date and Seller shall endeavor
to ship such Active Ingredients in the quantity listed in such firm order by
the specified shipment date. To the extent Buyer's total orders for shipment
<PAGE> 4
during a Quarter exceed one hundred twenty-five percent (125%) of Buyer's last
estimate for such Quarter, Seller may extend the shipment date for such excess
by such reasonable period as is required for the manufacture thereof.
5.2 Minimum Order Size. During the term hereof, individual orders
for Active Ingredient shall be not less than one (1) kilogram for fluocinolone
acetonide (milled or micronized), one hundred fifty (150) grams for fluocinolone
acetonide dihydrate (micronized), and five hundred (500) grams for fluocinonide
(milled or micronized).
5.3 Shipping. Title and risk of loss to each quantity of each
Active Ingredient supplied by Seller to Buyer hereunder shall pass to Buyer upon
delivery by Seller or its agent to Buyer's designated receiving site. The costs
of freight and insurance for each such shipment shall be borne by Seller.
5.4 Safety Stock. Buyer wishes to maintain quantities of Active
Ingredient equal to one year's supply of the Active Ingredients, in their
various forms, based upon the most recent four (4) quarters of orders and
forecasts provided to Seller pursuant to Section 5.1 of this Agreement ("Safety
Stock"). Seller shall endeavor in good faith to provide the Safety Stock to
Buyer within six (6) months of the Effective Date. The amount of Safety Stock
to be ordered and the timing of delivery of such Safety Stock shall be
determined by the Buyer in accordance with the ordering provisions of this
Article 5.
6. PRICING OF THE ACTIVE INGREDIENTS
6.1 Price. Buyer shall purchase the Active Ingredients from Seller
at the same prices as Seller or its Affiliate is purchasing such Active
Ingredients from PFC (including any discounts taken by Seller under the PFC
Agreement). Seller shall pay for all costs, insurance and freight charges for
the shipment of the Active Ingredients from Seller's point of origin to Buyer's
designated receiving site. Buyer shall be responsible and pay for any and all
customs duties, value added, excise and other taxes (excluding those paid by PFC
with respect to the Products), clearances and/or levies of any type whatsoever
with regard to the supply of the Active Ingredients from Seller hereunder. The
current prices are set forth on Schedule A. The prices for each Active
Ingredient may be changed by Seller at such time as Seller's acquisition cost is
changed pursuant to Article 6.2 of the PFC Agreement; provided that Seller
shall, upon Buyer's request, provide evidence reasonably acceptable to Buyer of
any such change.
6.2 Payment. All prices set forth herein are in United States
Dollars. Each payment due Seller for the Active Ingredients supplied hereunder
shall be made by Buyer to a bank account designated by Seller in United States
Dollars by bank transfer no later than thirty (30) days after the date of
Seller's invoice, unless such Buyer specifically designates a portion of any
shipment as Safety Stock, in which case payment due Seller for such Safety Stock
shall be made by Buyer to a bank account designated by Seller in United States
Dollars by bank transfer no later than one-hundred eighty (180) days after the
date of Seller's invoice. Seller shall invoice Buyer for the Active Ingredients
upon shipment of the Active Ingredients.
7. SPECIFICATIONS, WARRANTIES AND REMEDIES
7.1 Methods and Analysis. The analytical methods to be used in
testing for compliance with the applicable Specifications are attached hereto
as Schedule C ("Methods of Analysis"), as the same may be amended from time to
time by Seller upon the prior written notice to and consent of Buyer, which
<PAGE> 5
consent may not be unreasonably withheld or delayed.
7.2 Specifications. The specifications for each Active Ingredient
are attached hereto as Schedule B (the "Specifications"), as the same may be
amended from time to time by Seller upon the prior written notice to and consent
of Buyer, which consent may not be unreasonably withheld or delayed.
7.3 Reference Standards. Buyer shall receive from Seller
reasonable amounts of reference standards for the Active Ingredients as well as
for certain known degradation products and foreign related substances. Buyer
shall also receive from Seller as soon as possible after the Effective Date the
safety data sheets for the Active Ingredients. If Seller changes the
Specifications or the Methods of Analysis pursuant to Article 7.1 above, Seller
shall immediately furnish the changed Specifications or Methods of Analysis to
Buyer, so as to enable Buyer to comply with any regulatory requirements as a
result of such change.
7.4 Warranty.
7.4.1 PFC Agreement Warranties. Seller warrants that the
PFC Agreement is valid and in force as of the Effective Date. Seller shall use
all reasonable efforts to maintain the PFC Agreement valid and in force through
February 13, 1999.
7.4.2 Warranty with respect to Active Ingredient. Seller
warrants (i) that all quantities of each Active Ingredient supplied hereunder
shall meet the applicable Specifications at the time such Active Ingredient is
delivered to the manufacturing facility referred to in Section 5.3, or, failing
to meet such Specifications pursuant to Sections 7.5, 7.6, and 7.7 within the
time period set forth in Section 0, shall be replaced by Seller at Seller's sole
expense, and (ii) that such Active Ingredient will be manufactured in accordance
with the applicable DMF (and the process and equipment referred to therein), the
applicable GMPs and the governmental authorization(s) referred to in Section 3
and shall not be adulterated as that term is defined by the United States Food,
Drug and Cosmetic Act and the regulations promulgated pursuant thereto. No
change in the manufacturing process and/or equipment used with respect thereto
shall be made or authorized to be made by Seller unless and until approved by
Buyer in writing, which approval shall not be unreasonably withheld or delayed,
if such change would result in such Active Ingredient not being manufactured by
Seller in accordance with the applicable Drug Master File (and the process and
equipment referred to therein), the applicable GMPs and the governmental
authorization(s) referred to in Section 0.
7.5 Certificate of Analysis. For each shipment of Active
Ingredient supplied hereunder, either Seller or Manufacturer shall forward from
Manufacturer a Certificate of Analysis specifying, inter alia, the results of
each of the determinations required to show conformance of such shipment of
Active Ingredient with the applicable Specifications. The figures set forth in
such Certificate of Analysis shall be accepted as accurate for the purposes of
this Agreement unless Buyer within thirty (30) days after the first receipt of
the Active Ingredient (at Buyer's facility where the Active Ingredient will be
analyzed for compliance with the applicable Specifications) notifies Seller in
writing (facsimile notification will be satisfactory if a confirmation of such
notification is provided by the facsimile machine) that it has analyzed
representative samples from such shipment in accordance with the applicable
Methods of Analysis and has determined that such samples do not conform to such
Specifications.
<PAGE> 6
7.6 Independent Analysis. If there is a difference of opinion
concerning the conformance of any shipment of an Active Ingredient with the
Specifications for such Active Ingredient, Buyer and Seller agree to consult
with each other in order to explain and resolve the discrepancy between each
other's determinations. If, after good faith attempt by the parties to do so,
such consultation does not resolve the discrepancy, Buyer and Seller agree to
nominate an independent, reputable laboratory, acceptable to both parties, that
shall repeat the applicable Methods of Analysis on representative samples from
such shipment provided by both Buyer and Seller, and the resulting
determinations shall be binding on Buyer and Seller for the purposes hereof.
7.7 Replacement Shipment. Any shipment of Active Ingredient
alleged by Buyer not to meet such applicable Specifications therefor shall be
held without use thereof by Buyer pending the outcome of the analysis referred
to in Section 0. If so requested by Buyer in writing, Seller shall endeavor to
promptly send a new shipment of Active Ingredient (of similar quantity as to the
amount of such Active Ingredient being analyzed pursuant to Section 0) to Buyer
(at the selling price and on such other terms and conditions as set forth
herein) so as to enable Buyer to continue to manufacture the Products.
7.8 Expenses. The costs of the independent laboratory referred to
in Section 0 shall be borne by (i) Buyer if the Active Ingredient is determined
to conform to applicable Specifications, or (ii) Seller if the Active Ingredient
is determined not to conform to the applicable Specifications. Buyer shall not
be obligated to pay for any Active Ingredient that does not conform to the
applicable Specifications (and is returned to Seller after determined to be
non-conforming), but shall be obligated to pay for any new shipment of Active
Ingredient that is sent pursuant to Section 0.
8. OPERATING PROCEDURES
8.1 Seller shall report to Buyer any information or any findings
associated with the use of the Active Ingredients received from Manufacturer
that may suggest significant or unexpected hazards, adverse reactions,
contraindications, side effects or precautions pertinent to the safety of the
Active Ingredients, as soon as any such information is received or findings are
made. If either party learns of any serious adverse event that suggests a
hazard, adverse reaction, contraindication, side effect or precaution
attributable to, or associated with, any Active Ingredient supplied hereunder,
such party shall inform the other immediately. Other information about less
serious events shall be reported promptly by Seller to Buyer upon receipt of
such information from Manufacturer.
8.2 If either party reports any significant or unexpected hazard
concerning any Active Ingredient that has met the applicable Active Ingredient
Specifications, the parties shall meet in good faith to discuss if there have
been any changes in the manufacturing process and/or storage conditions therefor
that could have led to any such hazard and immediately act to take all necessary
remedial measures.
9. RECALL
9.1 Buyer may, in its sole discretion, effect a recall of products
containing any Active Ingredient supplied by Seller hereunder (whether such
recall is voluntarily or governmentally imposed), and, to the extent necessary
or needed, Seller shall cooperate and will use all reasonable efforts to require
Manufacturer to cooperate with Buyer in carrying out any such recall. Upon
either party's request, the other party shall procure for the requesting party
or its representatives access to any information in the non-requesting party's,
<PAGE> 7
possession or control relating to any Active Ingredient supplied hereunder and
contained in the products recalled as is reasonably necessary to effect such
recall and/or to correct any problems that may be associated with the
manufacture of such Active Ingredient being recalled, and shall allow the
requesting party or its representatives to make copies thereof. If, pursuant
to the preceding sentence, Buyer is the non-requesting party, Seller shall use
all reasonable efforts to procure for Buyer or its representatives access to any
information in the Manufacturer's, possession or control relating to any Active
Ingredient supplied hereunder and contained in the products recalled as is
reasonably necessary to effect such recall and/or to correct any problems that
may be associated with the manufacture of such Active Ingredient being recalled,
and shall allow the requesting party or its representatives to make copies
thereof.
9.2 If a recall is caused as a result of, directly or indirectly,
any act or omission of Buyer, Buyer shall reimburse Seller for the out-of-pocket
costs incurred by Seller as a result of such recall, including without
limitation any costs reasonably expended by Seller at Buyer's request in
assisting with such recall, and shall make any payments required hereby for any
Active Ingredient that has been manufactured or supplied by Seller in
conformance herewith, but cannot be sold due to such recall, and any affected
work-in-process.
9.3 If a recall is caused as a result of, directly or indirectly,
any act or omission of Seller or Manufacturer, Seller shall reimburse Buyer for
the out-of-pocket costs incurred by Buyer as a result of such recall, including
without limitation any out-of-pocket costs reasonably expended by Buyer to
effect the recall and any payment made by Buyer for Active Ingredient previously
purchased from Seller that is subject to the recall and cannot be sold.
10. ALTERNATIVE MANUFACTURING SITE
Buyer and Seller understand that Buyer wishes to purchase Active
Ingredients from Seller that PFC will be manufacturing for Seller. Buyer and
Seller also understand that it may become necessary for a Manufacturer other
than PFC to manufacture the Active Ingredients. In the event that Seller wishes
to designate a Manufacturer other than PFC, Seller shall notify Buyer
immediately and shall appoint with Buyer's consent, not to be unreasonably
withheld, a Manufacturer other than PFC to manufacture all or a portion of the
Active Ingredients. Seller hereby warrants than any Manufacturer other than PFC
selected in accordance with this Article 10, shall be capable of manufacturing
the Active Ingredients in accordance with the provisions of Section 7.4.2.
11. TERM OF AGREEMENT AND TERMINATION
11.1 Term. The term of this Agreement shall commence on the
Effective Date and terminate February 13, 1999.
11.2 Termination for Breach. Either party shall have the right to
terminate this Agreement by written notice to the other in the event that the
other shall commit any material breach of its obligations hereunder and shall
fail to cure such material breach within ninety (90) days after being called
upon in writing to do so, such termination to be effective only upon the
non-breaching party giving written notice of termination to the breaching party
after failure of the breaching party to cure such material breach within such
ninety (90)-day period.
11.3 Termination Due to Insolvency. Either party shall have the
right to terminate this Agreement effective upon written notice to the other
<PAGE> 8
party in the event: (a) the non-notifying party becomes insolvent or makes an
assignment for the benefit of creditors, (b) a receiver is appointed for the
non-notifying party, or (c) bankruptcy proceedings are instituted against the
non-notifying party or on the non-notifying party's behalf.
11.4 Results of Termination. The proper use by either party hereto
of a termination right provided for under this Agreement shall not give rise to
the payment of damages or any other form of compensation or relief to the other
party with respect thereto. Subject to the foregoing, termination of this
Agreement shall not preclude either party from claiming any other damages,
compensation or relief that it may be entitled to upon such termination.
Termination of this Agreement in whole or in part shall not relieve Buyer of any
amounts owed Seller, nor shall it relieve the parties of their obligations with
respect to the Active Ingredients supplied prior to such termination by Seller
hereunder.
12. INDEMNIFICATION
12.1 Buyer agrees to defend, indemnify and hold Seller and its
Affiliates and their respective directors, officers, agents and employees
harmless from and against any and all losses, damages, liabilities, costs and
expenses (including without limitation reasonable attorneys' fees and other
litigation costs, regardless of outcome) arising out of any and all governmental
or private actions (or their insurers under rights of subrogation or otherwise)
that are related in any way to: (a) the storage, formulation, use, transfer or
sale by Buyer and its Affiliates of the Active Ingredients supplied by Seller
to Buyer hereunder; (b) any claim of failure by Buyer and its Affiliates to
comply with any governmental authorizations relating to the use of such Active
Ingredients by Buyer and its Affiliates; (c) Buyer's negligence (or the
negligence of Buyer's Affiliates) or any acts by Buyer (or its Affiliates) in
violation of this Agreement.
12.2 Seller agrees to defend, indemnify and hold Buyer and its
Affiliates and their respective directors, officers, agents and employees
harmless from and against any and all losses, damages, liabilities, costs and
expenses (including without limitation reasonable attorneys' fees and other
litigation costs, regardless of outcome) arising out of any and all governmental
or private actions (or their insurers under rights of subrogation or otherwise)
that are related in any way to: (a) the manufacture, transfer and handling
(including the quality control testing, packaging and storage) of any Active
Ingredient supplied by Seller to Buyer hereunder; (b) any claim of failure by
Seller to comply with governmental authorizations relating to the manufacture
or handling of such Active Ingredient, including, without limitation, Seller's
obligations under Section 0; (c) any claim of failure to comply with
governmental laws or regulations pertaining to the manufacture or handling of
such Active Ingredient,including, without limitation, any laws or regulations
pertaining to the disposal of waste materials resulting from such manufacture
(including any non-conforming material); or (d) Seller's negligence (or the
negligence of Seller's Affiliates) or any acts by Seller (or its Affiliates)
in violation of this Agreement.
12.3 All claims under this Section 11 shall be asserted and resolved
as follows:
12.3.1 In the event that a third party asserts a claim or
demand for which a party (the "First Party") believes the other party (the
"Second Party") is liable hereunder, the First Party shall promptly notify the
Second Party of the nature and extent of such claim or demand in writing.
<PAGE> 9
12.3.2 The Second Party shall have the right (but not the
obligation) to defend any claim or demand by appropriate proceedings. The First
Party will cooperate with the Second Party at the Second Party's request in the
defense against such claim or demand. The First Party may participate in, but
not control, any such defense or settlement, but only at its sole cost and
expense.
13. DISCLAIMER
EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER
MAKES NO REPRESENTATIONS TO BUYER, DISCLAIMS ANY WARRANTIES, EXPRESS OR IMPLIED,
WITH REGARD TO THE ACTIVE INGREDIENTS SUPPLIED BY SELLER TO BUYER HEREUNDER,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND/OR
FITNESS FOR A PARTICULAR PURPOSE, AND SELLER ASSUMES NO RESPONSIBILITIES
WHATSOEVER WITH RESPECT TO THE FORMULATION, USE, SALE OR OTHER DISPOSITION BY
BUYER OR ITS AFFILIATES, CUSTOMERS OR OTHER TRANSFEREES OF ANY ACTIVE INGREDIENT
SUPPLIED BY SELLER HEREUNDER.
14. INDEPENDENT PARTIES
Each party shall act solely as an independent contractor and nothing in
this Agreement shall be construed to give either party the power or authority
to act for, bind or commit the other party in any way. Nothing herein shall be
construed to create the relationship of partnership, principal and agent or
joint venture between the parties. Accordingly, neither party shall use or
refer to the name or logo of the other party or its Affiliates (or use any name
or logo confusingly similar thereto) in any public statements, whether oral or
written, including but not limited to, shareholder reports, communications with
stock market analysts, press releases or other communications with the media, or
prospectuses, without the prior written consent of the other party.
15. FORCE MAJEURE
15.1 Each party shall be excused from the performance of its
obligations hereunder in the event such performance is prevented by force
majeure, and such excuse shall continue as long as the condition constituting
such force majeure continues plus thirty (30) days after the termination of such
condition. For the purposes of this Agreement, force majeure is defined as
follows: causes beyond the reasonable control of Buyer or Seller (as the case
may be), including without limitation, acts of God, acts, regulations, orders,
decrees or laws of any government or agency thereof, war, civil commotion,
damage to or destruction of production facilities or materials, labor
disturbances (whether or not any such labor disturbance is within the power of
the affected party to settle), epidemic, and failure of suppliers (excluding the
inability of Manufacturer to supply to Seller for any reason other than force
majeure), public utilities or common carriers.
15.2 In the event of force majeure lasting more than three (3)
months (or which the parties acknowledge will last more than three (3) months),
the parties agree to meet and discuss how this Agreement can be justly and
fairly implemented under the circumstances provided that, with respect to force
majeure on the part of Buyer, Seller shall not be obligated to supply any Active
Ingredient hereunder if Buyer cannot make prompt payment therefor (consistent
with the terms and conditions hereof) to Seller.
16. GOVERNING LAW AND ARBITRATION
16.1 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York U.S.A. (regardless of the
choice of law principles of the State of New York or any other jurisdiction).
<PAGE> 10
16.2 Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by final and binding
arbitration in New York, New York in accordance with the Commercial Rules of the
American Arbitration Association in effect on the Effective Date (hereinafter
referred to as the "Rules"), and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
16.3 In any arbitration pursuant to this Article 17 the award shall
be rendered by a majority of three arbitrators, one (1) of whom shall be
appointed by each party and the third of whom shall be appointed by mutual
agreement of the two (2) party-appointed arbitrators. In the event of failure
of a party to appoint an arbitrator within thirty (30) days after commencement
of the arbitration proceeding or in the event of failure of the two (2) party-
appointed arbitrators to agree upon the appointment of the third arbitrator
within sixty (60) days after commencement of the arbitration proceeding, such
arbitrator shall be appointed by the American Arbitration Association in
accordance with the Rules. The arbitrators shall apply the governing law set
forth in Section 16.1. In no event shall either party be entitled to an award
of punitive damages pursuant to any arbitration hereunder.
16.4 At Buyer's request, Seller shall join PFC and shall use all
reasonable efforts to require any Manufacturer other than PFC to join any
proceeding under this Article 16. If Seller desires to join Manufacturer in
any proceeding under this Article 16, Buyer shall not object to or in any way
attempt to preclude Seller from joining PFC or any Manufacturer in such
proceeding.
17. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns; provided that this
Agreement may not be assigned by any party without the written consent of the
other party; provided, further, either party may assign this Agreement to one
of its Affiliates, whether such Affiliate currently exists or is formed in the
future, without such written consent.
18. NOTICES
Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Seller or Buyer at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.
if to Buyer, to:
Medicis Pharmaceutical Corporation
4383 East Camelback Road
Phoenix, Arizona 85018
Attn: Jonah Shacknai
<PAGE> 11
with a copy to:
Brown & Bain
2901 North Central Avenue
Phoenix, Arizona 85012-2788
Attn: Frank M. Placenti
if to Seller, to:
Syntex Pharmaceuticals International Limited
Ave. Samuel Lewis
Torre Hongkong Bank, Piso No. 18/P.O. Box 7386
Panama 5, Republic of Panama
Attn: General Manager
with a copy to:
F. Hoffmann-La Roche Ltd.
CH-4070 Basel, Switzerland
Attn: Corporate Law Department
and a copy to
Syntex (U.S.A.) Inc.
3401 Hillview Avenue
Palo Alto, California 94304
Attn: Corporate Law Department
19. SURVIVAL
Section 7.4 and 10.4 and Articles 2, 9, 11, 12, 13 and 15 shall be in
force during the term of this Agreement and shall survive expiration or
termination, as the case may be, of this Agreement.
20. ADDITIONAL TERMS
20.1 Entire Agreement. This Agreement and the exhibits hereto
embody the entire agreement of the parties hereto with respect to the subject
matter hereof and supersede and replace all previous negotiations,
understandings, representations, writings, and contract provisions and rights
relating to the subject matter hereof.
20.2 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.
20.3 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Seller and a counterpart has been signed by Seller and delivered
to Buyer.
<PAGE> 12
20.4 Severability. The parties agree that (a) the provisions of
this Agreement shall be severable and (b) in the event that any of the
provisions hereof are held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable, (i) such invalid, void or otherwise
unenforceable provisions shall be automatically replaced by other provisions
that are as similar as possible in terms to such invalid, void or otherwise
unenforceable provisions but are valid and enforceable and (ii) the remaining
provisions shall remain enforceable to the fullest extent permitted by law,
provided that the rights and interests of the parties hereto shall not be
materially affected.
20.5 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein
to Articles and Sections are to the articles and sections of this Agreement.
IN WITNESS HEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives to be effective as of the
Effective Date.
SYNTEX PHARMACEUTICALS MEDICIS PHARMACEUTICAL
INTERNATIONAL LIMITED CORPORATION
By /s/ John R. Talbot By /s/ Mark A. Prygocki Sr.
------------------------- -------------------------
Name John R. Talbot Name Mark A. Prygocki Sr.
----------------------- -----------------------
Title: President Title: Secretary
--------------------- ---------------------
<PAGE> 13
SCHEDULE A
CURRENT PRICES
PER KILOGRAM IN UNITED STATES DOLLARS
Fluocinolone acetonide milled $12,495.21
Fluocinolone acetonide micronized $14,110.92
Fluocinonide milled $12,433.70
Fluocinonide micronized $14,183.03
Fluocinolone Acetonide
dihydrate micronized $15,580.00
All prices CIF, Buyer's Designated Manufacturing Facility
<PAGE> 14
SCHEDULE B
ACTIVE INGREDIENT SPECIFICATIONS
To be supplied three days prior to Closing
<PAGE> 15
SCHEDULE C
METHODS OF ANALYSIS FOR THE ACTIVE INGREDIENT
To be supplied three days prior to Closing
<PAGE> 1
EXHIBIT 10.86
PLATINUM(R) SOFTWARE CORPORATION LICENSE AGREEMENT
This License Agreement (the "Agreement") is made between Platinum
Software Corporation, a corporation formed under the laws of the State of
Delaware, with its principal place of business at 195 Technology Drive, Irvine,
California 92718 ("Licensor") and the Licensee whose name appears on the
signature page of this Agreement, ("Licensee"). Licensor and Licensee agree that
the provisions of the Agreement apply to the license of the Licensed Software
under this Agreement and any Order placed under this Agreement.
1. Definitions.
"Affiliate": An affiliate of, or person "affiliated" with a specified person, is
a person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the specified
person. Control means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or otherwise.
"Application Software": All modules of the Licensed Software, excluding the
Customization Workbench.
"Authorized User(s)": Any employee of Licensee or its Affiliates, together with
authorized agents or subcontractors of Licensee who shall require access to or
use of the Licensed Software solely in connection with the business of Licensee.
"Concurrent User": Concurrent users are the number of users logged on to the
system manager module or any other module of the Licensed Software.
"Customization Workbench": A series of software tools developed by Licensor
utilized in the design and development of the Licensed Software which enable
Licensee to obtain custom forms, reports and documents.
"Documentation": The user guides, manuals and associated documentation supplied
by Licensor in connection with the Licensed Software.
"Licensed Software": That certain series of computer software programs which is
described on the Order.
"Order": Licensor's standard form for ordering licenses of the Licensed
Software, a copy of which is attached hereto.
"Subsidiaries": A corporation at least a majority of the voting capital stock of
which is owned directly or indirectly by Licensee.
2. License.
(a) Subject to the terms and conditions of this Agreement, Licensor grants to
Licensee, a non-exclusive and non-transferable license with respect to the
Application Software to: (i) install, the server portion of the Application
Software on a single computer acting as a network server ("Server") at its
facilities in support of its internal business activities; (ii) install the
client portion of the Application Software, which includes client interface
libraries and client utilities on workstations or computers which are operating
on a single network and are connected to one Server; (iii) use the Documentation
only in conjunction with the installation and use of the Application Software.
The License granted to Licensee hereunder shall be a license to use the
machine-readable object code only, excluding any source code. As part of this
license, only the number of Concurrent Users specified on the Order may access
the network and use the services of the Application Software on the Server. In
order to authorize additional Concurrent Users the Licensee must purchase
additional user blocks. The license granted in this Section 2 is a license to
use the Application Software on one Server. In addition, the Application
Software may be used on an additional non-production server at no additional
charge, subject to the concurrent user limitation for the purpose of testing and
for training Licensee's employees on the use of the Application Software,
provided that if the Application Software is loaded on another server for
training, the Application Software is removed from the second Server once the
training session
<PAGE> 2
is completed. The magnetic media, disk or CD-ROM on which the Licensed Software
is recorded may contain modules or applications for which Licensee does not have
a fully paid license to use. Licensee agrees to use only those applications or
modules of the Licensed Software for which it has a fully paid license.
(b) [Customization Workbench License] If Licensee licensed the Customization
Workbench, Licensor grants Licensee as an individual, a personal, non-exclusive
license to use one copy of the Customization Workbench on a single computer for
modification and enhancement of the Application Software. If Licensee is an
entity, Licensor grants to Licensee the right to designate one individual within
Licensee's organization to have the right to use the Customization Workbench.
The Customization Workbench may also be used by a third party consultant to
modify or enhance the Application Software, provided the Customization Workbench
is loaded on Licensee's computer. Licensee may not modify the Application
Software or have a third party modify the Application Software unless Licensee
has a valid license for the Customization Workbench. The Customization Workbench
may also be used to design, develop or test software products which operate with
the Application Software.
(c) In addition to the rights granted in Section 2(b), Licensor grants to
Licensee the right to use and modify the source code version of those portions
of the Customization Workbench designated as "Sample Code" or "Templates"
("Sample Code") for the sole purposes of designing, developing and testing
Licensee's software product(s), and to reproduce and distribute the Sample Code,
along with any modifications thereof, only in object code form provided that
Licensee complies with Section 2(d) below.
(d) In addition to the rights granted above, Licensor grants Licensee a
nonexclusive royalty-free right to reproduce and distribute the object code
version of any portion of the Customization Workbench listed in the following
Customization Workbench files: Object Data Definition Files (*.odd), Platinum
Publisher Report Files (*.rpt) and Platinum Basic P-code Files (*.SBX)
("Redistributable Software"), provided you comply with the following. If
Licensee redistributes the Sample Code or Redistributable Software
(collectively, "Redistributables") Licensee agrees to (i) distribute the
Redistributables in object code only in conjunction with and as a part of a
software application product developed by Licensee which adds significant and
primary functionality to the Application Software and which is developed to
operate with the Application Software; (ii) not use Licensor's name, logo, or
trademarks to market your software application product; (iii) include a valid
copyright notice on Licensee's software product; (iv) indemnify, hold harmless
and defend Licensor from and against any claims or lawsuits, including
attorney's fees that arise or result from the use or distribution of Licensee's
software application product; (v) not permit further distribution of the
Redistributables by Licensee's end user.
3. Delivery.
Within thirty (30) days after the date of this Agreement or such other date as
specified on the Order, Licensor will deliver to Licensee the Licensed Software
and all Documentation. Licensee shall be solely responsible for acquiring and
installing computer hardware and the appropriate environment for the network.
The Licensed Software shall be deemed to have been accepted by Licensee
following delivery.
4. License Fees, Shipping Charges and Payment.
Licensee agrees to pay Licensor the license fees specified on the Order in
installments as specified on the Order plus all shipping and freight charges in
connection with the delivery of the Licensed Software.
5. Ownership; Copies.
(a) All right, title and interest in and to the Licensed Software,
Documentation, enhancements or updates developed by Licensor and furnished to
<PAGE> 3
Licensee and the media on which the same are furnished to Licensee, and all
copyrights, patents, trademarks, service marks or other intellectual property or
proprietary rights relating thereto, are and shall remain with Licensor.
Licensee acknowledges that no such right, title or interest in these items is
granted under this Agreement, and that no such assertion shall be made by
Licensee. Licensee is granted only a limited right of use as set forth herein,
which right of use is subject to termination in accordance with Section 11 of
this Agreement.
(b) Except as provided in Section 13(f) below, Licensee is prohibited from
distributing, transferring possession of, or otherwise making available the
Licensed Software, Documentation, enhancements or updates to any person other
than Authorized Users under the terms of this Agreement and from installing the
Licensed Software, enhancements or updates for use on any workstation or
computer not within the property owned or leased by Licensee. Licensee shall
advise all Authorized Users that they are prohibited from reproducing,
distributing, transferring possession of or otherwise making available copies of
the Licensed Software, Documentation, enhancements or updates and from using or
installing the Licensed Software, enhancements or updates on any computer at any
other location.
(c) Licensee shall not make any copies of any of the Documentation. Should
Licensee require any additional copies of the Documentation, it shall obtain
such copies from Licensor pursuant to the then current terms and conditions of
Licensor relating thereto. Licensee shall not make any additional copies of the
Licensed Software, enhancements or updates; provided, however, that Licensee may
make up to two (2) additional copies of the Licensed Software for back-up or
archival purposes and a reasonable number of copies for training purposes in
accordance with Section 2 of this Agreement. All authorized copies of the
Licensed Software shall contain all copyright notices or proprietary legends
specified by Licensor.
6. Confidentiality.
(a) Because of this Agreement, the parties may have access to information that
is confidential to one another ("Confidential Information"). Confidential
Information shall include the Licensed Software and updates, including all
source and object code and Documentation related to such software and the terms
and pricing under this Agreement. Confidential Information also includes
information relating to the disclosing party's business or financial affairs,
such as financial results, business methods, pricing, competitor and product
information and all other information designated as confidential. A party's
Confidential Information shall not include any information which (i) becomes
part of the public domain through no act or omission of the other party; (ii) is
lawfully acquired by the other party from a third party without any breach of
confidentiality; or (iii) is disclosed by a party to a third party without any
obligation of confidentiality. The parties agree to maintain the confidentiality
of the Confidential Information and to protect as a trade secret any portion of
the other party's Confidential Information by preventing any unauthorized
copying, use, distribution, installation or transfer of possession of such
information. Each party agrees to maintain at least the same procedures
regarding Confidential Information that it maintains with respect to its own
Confidential Information. Without limiting the generality of the foregoing,
Licensee shall not permit any personnel or Authorized User to remove any
proprietary or other legend or restrictive notice contained or included in any
material provided by Licensor.
(b) Both parties acknowledge that any use or disclosure of the other party's
Confidential Information in a manner inconsistent with the provisions of this
Agreement may cause the non-disclosing party irreparable damage for which
remedies other than injunctive relief may be inadequate, and both parties agree
that the non-disclosing party shall be entitled to receive from a court of
competent jurisdiction injunctive or other equitable relief to restrain such
<PAGE> 4
use or disclosure in addition to other appropriate remedies. (c) The terms and
provisions of this Section 6 shall survive any termination of this Agreement for
any reason for a period of five years. (d) Licensee and Authorized Users shall
not attempt to decompile or disassemble the object code of the Licensed Software
and Licensee agrees to use its best efforts to prevent decompilation and
disassembly of the object code of the Licensed Software by Authorized Users.
7. Warranties. (a) Licensor represents that it is the lawful owner or licensee
of the Licensed Software and has the full right and authority to grant the
licenses hereunder.
(b) Licensor warrants that the magnetic media on which the Licensed Software or
an update is recorded and any Documentation provided under the terms of this
Agreement will be free from defects in material and workmanship under normal use
for a period of ninety (90) days. Licensor further warrants that the Licensed
Software will perform substantially in accordance with the specifications set
forth in the Documentation for a period of ninety (90) days from the date it is
delivered.
(c) Licensor does not warrant that the functions contained in the Licensed
Software or in any update will meet the requirements of Licensee or Authorized
Users or that the operation of the Licensed Software or update will be
uninterrupted or error-free. The warranties set forth in this Section do not
cover any copy of the Licensed Software, update or any Documentation which has
been altered or changed in any way by the Licensee or any Authorized User.
Licensor is not responsible for problems caused by changes in, or modifications
to, the operating characteristics of any computer hardware or operating system
for which the Licensed Software or any update is procured, nor is Licensor
responsible for problems which occur as a result of the use of the Licensed
Software in conjunction with software of third parties or with hardware which is
incompatible with the operating system for which the Licensed Software is being
procured.
(d) As an accommodation to Licensee, Licensor may supply Licensee with
pre-production releases of software programs ("Beta Releases"). These products
are not suitable for production use. Licensor does not warrant that their
operation will be uninterrupted or error free. Beta Releases, are distributed
"AS IS".
(e) ANY IMPLIED WARRANTIES, TERMS OR CONDITIONS, INCLUDING WARRANTIES, TERMS OR
CONDITIONS OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE EXPRESSLY
EXCLUDED. The warranties, terms and conditions contained in this section are
made in lieu of all other express warranties, terms or conditions, whether oral
or written. Only an authorized officer of the Licensor may make modifications to
this warranty or additional warranties binding on the Licensor, and such
modifications or additional warranties must be in writing.
8. Limitation of Remedies.
(a) Subject to Section 12 of this Agreement, Licensor's entire liability and
Licensee's exclusive remedy for the breach of Licensor's warranty obligations in
Section 7 shall be (i) in the case of defects in media the replacement by
Licensor of any magnetic media or Documentation not meeting Licensor's Limited
Warranty, and (ii) in case of any nonconformity or defect in the Licensed
Software, Licensor shall use commercially reasonable efforts to provide
maintenance modifications or fixes with respect to any such error in a timely
manner or at its option replace the Licensed Software. Licensor, however, shall
not be obligated to correct, cure or otherwise remedy any error or defect in the
Licensed Software resulting from any (i) modification of the Licensed Software
by Licensee, (ii) misuse or damage of the Licensed Software or (iii) failure of
Licensee to notify Licensor of the existence and nature of such nonconformity or
defect promptly upon its discovery.
(b) LICENSOR DISCLAIMS ANY AND ALL LIABILITY FOR SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS) ARISING OUT OF THIS AGREEMENT
<PAGE> 5
OR WITH RESPECT TO THE INSTALLATION, USE, OPERATION OR SUPPORT OF THE LICENSED
SOFTWARE OR ANY UPDATE OF THE LICENSED SOFTWARE, EVEN IF LICENSOR HAS BEEN
APPRISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
(c) Subject to Section 12 of this Agreement, Licensee specifically agrees that
any liability on the part of Licensor arising from breach of warranty, breach of
contract, negligence, strict liability in tort or any other legal theory shall
not exceed the aggregate amounts paid by Licensee in software license fees for
the Licensed Software, prorated over a 5 year period from the date of this
Agreement, notwithstanding any failure of essential purpose of any limited
remedy.
9. Software Maintenance and Support.
(a) Upon execution of this Agreement,Licensee shall pay to Licensor the annual
maintenance and support fee specified on the Order. Payment of the maintenance
and support fee entitles Licensee to receive the maintenance described in
Schedule 1 attached hereto for a period of one (1) year following the date of
this Agreement. Licensee will be invoiced for annual maintenance and support for
subsequent years 30-60 days prior to the expiration of an annual maintenance and
support period unless Licensee notifies Licensor in writing of its desire not to
renew maintenance and support 60 days prior to the end of the existing
maintenance and support period.
(b) Updates to the Licensed Software consist of new releases of a version of the
Licensed Software which provide functional enhancements or error corrections.
Upgrades to the Licensed Software consist of new releases of the Licensed
Software with a higher Platinum version number such as from version 1.0 to 2.0.
For the first year following the payment of the initial annual maintenance and
support fee by Licensee and upon payment of the annual maintenance and support
fee every year thereafter, Licensee will receive for its use without payment of
any additional license fees all updates and upgrades issued by Licensor. Use of
any update or upgrade with or in place of the Licensed Software shall be fully
governed by and subject to the terms of this Agreement relating to the use of
the Licensed Software. Any portion of the Licensed Software replaced by an
update or upgrade shall be destroyed. Licensee may obtain updates or upgrades to
the Licensed Software only by subscribing for annual maintenance and support.
Updates and upgrades are not separately available.
10. Taxes.
Licensee shall, besides other amounts payable under this Agreement, pay all
local, state and federal taxes (but excluding taxes imposed on Licensor's
income) levied or imposed by reason of the transactions contemplated in this
Agreement. Licensee shall promptly pay to Licensor any such taxes actually paid
or required to be collected or paid by Licensor.
11. Term, Default and Termination.
(a) This Agreement is effective from the date of its execution until terminated
by either party as provided below. In the event either party defaults in any
material obligation in this Agreement, the other party shall give written notice
of such default, and, if the party in default has not cured the default within
thirty (30) days of the notice, the other party shall have the right to
terminate this Agreement.
(b) Upon termination of this Agreement, regardless of the cause of termination,
the license granted under this Agreement to use the Licensed Software is
immediately revoked. Within ten (10) business days after the termination of this
Agreement, for whatever reason, Licensee shall return to Licensor all copies of
the Licensed Software, and/or updates and Documentation in Licensee's
possession, including all copies of the Licensed Software, and/or updates and
Documentation under the supervision and control of Licensee and Authorized
<PAGE> 6
Users. In the alternative, upon request of Licensor, Licensee shall destroy all
such copies of the Licensed Software and/or updates and/or Documentation and
certify in writing that they have been destroyed. TERMINATION SHALL NOT RELIEVE
LICENSEE AND AUTHORIZED USERS OF THEIR OBLIGATIONS REGARDING THE CONFIDENTIALITY
OF THE LICENSED SOFTWARE, UPDATES AND DOCUMENTATION OR LICENSOR OF ITS
CONFIDENTIALITY OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION OF LICENSEE IT
RECEIVED. In the event of termination as a result of Licensee's failure to
comply with any of its obligations under this Agreement, Licensee shall continue
to be obligated for any payments due as of the date of termination. Termination
of the license shall be in addition to, and not in lieu of, any other remedies
available to Licensor.
12. Infringement Indemnity
Licensor, at its own expense, will indemnify and defend any action brought
against Licensee to the extent that it is based on a claim that the Licensed
Software or any update of the Licensed Software used within the scope of this
Agreement infringes any United States patent or copyright provided that Licensor
is promptly notified in writing of such claim. Licensor shall have the right to
control the defense of all such claims, lawsuits, and other proceedings. In no
event shall Licensee settle any such claim, lawsuit, or proceeding without
Licensor's prior written approval. Licensor shall have no liability for any
claim under this section if a claim for a United States patent or copyright
infringement is based on the use of a superseded or altered version of the
Licensed Software if such infringement would have been avoided by use of the
latest unaltered version of the Licensed Software available as an update, or in
the event such claim is based upon any modification or enhancement to the
Licensed Software made by Licensee or Authorized Users. In the event a third
party infringement claim is sustained in a final judgment from which no further
appeal is taken or possible, or if Licensee's use of the Licensed Software is
enjoined by a court, then Licensor shall, in its sole election and at its
expense either (i) procure for Licensee the right to continue to use the
Licensed Software pursuant to this Agreement; (ii) replace or modify the
Licensed Software to make it non-infringing; or (iii) terminate this Agreement
and refund to Licensee the depreciated value of the Licensed Software, based on
straight line depreciation over a period of 5 years. Licensor shall have no
other liability or obligation to Licensee except as expressly set forth above.
13. Miscellaneous.
(a) Each party acknowledges that it has read this Agreement and the maintenance
and product support schedule attached to this Agreement, understands them, and
agrees to be bound by their terms, and further agrees that they are the complete
and exclusive statement of the agreement between the parties which supersedes
and merges all prior proposals, understandings, and all other agreements, oral
and written, between the parties relating to the subject matter of this
Agreement, including without limitation the terms of any Licensee request for
proposal or Licensor response or the standard printed terms on any Licensee
purchase order. This Agreement may not be modified or altered except by written
instrument duly executed by both parties.
(b) Any notice or other communication required or permitted in this Agreement
shall be in writing and shall be deemed to have been duly given on the day of
service if served personally or by facsimile transmission with confirmation, or
three (3) days after mailing if mailed by First Class mail, registered or
certified, postage prepaid, and addressed to the respective parties at the
addresses set forth above, or at such other addresses as may be specified by
either party pursuant to the terms and provisions of this paragraph.
(c) This Agreement and performance under this Agreement shall be governed by the
laws of the State of California.
(d) No action, regardless of form, arising out of this Agreement may be brought
by either party more than two years after the cause of action has arisen.
<PAGE> 7
(e) If any provision of this Agreement is invalid under any applicable statute
or rule of law, it is to that extent to be deemed omitted. The remainder of the
Agreement shall be valid and enforceable to the maximum extent possible.
(f) Licensee may not assign or sub-license, without the prior written consent of
Licensor, its rights, duties, or obligations under this Agreement to any person
or entity, in whole or in part, provided, however, that this Agreement may be
assigned by Licensee without the consent of Licensor to any successor
corporation or entity whether by purchase of all or substantially all of the
assets or outstanding capital stock of Licensee or by merger or consolidation,
provided that the transferee of the Licensed Software or this Agreement agrees
in writing to be bound by and subject to all of the terms and provisions of this
Agreement.
(g) The waiver or failure of either party to exercise in any respect any right
provided for in this Agreement shall not be deemed a waiver of any further right
under this Agreement.
(h) This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original and each of which together shall constitute a
single instrument.
(i) Neither party shall be responsible for failure to perform in a timely manner
under this Agreement when its failure results from any of the following causes;
Acts of God or public enemies, civil war, insurrection or riot, fire, flood,
explosion, earthquake or serious accident, strike, labor trouble or work
interruption or any cause beyond its reasonable control.
(j) Licensee agrees to comply with all export and re-export restrictions and
regulations ("Export Restrictions") imposed by the government of the United
States. Licensee will not commit any act or omission which will result in a
breach of any such Export Restrictions. Licensee agrees that it will comply in
all respects with any governmental laws, orders or other restrictions on the
export of the Licensed Software (and related information and Documentation)
which may be imposed from time to time by the governments of the United States
and Canada ("Export Requirements"). Licensee will take all actions which may be
reasonably necessary to assure that it does not contravene the Export
Requirements. This Section shall survive the expiration or termination of this
Agreement.
(k) For purposes of this Agreement, Licensee is not an agent of Licensor, and
Licensee has no express or implied authority to act on behalf of, or make any
representations whatsoever on behalf of, Licensor. Licensor has no right to
control any activities of Licensee outside the terms of this Agreement. Licensor
is an independent contractor and neither party shall have the power or authority
to bind the other party to any contract or obligation.
(l) Any action arising out of or relating to this Agreement or to its breach
shall be brought in any federal or state court sitting in Orange County,
California and both parties hereby submit to the exclusive jurisdiction of the
state and federal courts in Orange County, California. The parties hereto
consent to service of process by any means authorized by California or federal
law. The prevailing party shall be entitled to receive from the other party its
reasonable attorneys' fees and costs incurred in connection with any action or
proceeding hereunder.
(m) On Licensor's request, no more frequently than annually, Licensee shall
furnish Licensor with a signed certification (i) verifying that the Licensed
Software is being used pursuant to the terms of this Agreement, including any
user limitations and (ii) listing the locations, types and serial numbers of the
Clients which the Licensed Software is being used. Licensee agrees to grant
Licensor reasonable access to Licensee's site, upon prior written notice during
normal business hours to audit the use of the Licensed Software.
(n) Any amounts payable by Licensee which are not paid within thirty (30) days
after they are due shall bear interest at a rate of 1% per month from the due
date until such amount is paid.
(o) Licensee acknowledges that it has been advised by Licensor's personnel that:
<PAGE> 8
(i) the Licensed Software is client/server application software which is
sophisticated financial accounting software; and (ii) the successful
implementation of the Licensed Software requires the formulation of a detailed
workplan which includes an implementation plan, a user education plan, and data
migration plan and associated consulting and education services. The consulting
and education services are offered by Licensor and other third party
consultants.
Each party has caused this Agreement to be executed by its duly authorized
representative.
LICENSOR: LICENSEE:
Medicis Pharmaceutical Corp.
------------------------------
Platinum Software Corporation [Licensee Name]
By: /s/ Perry Tarnofsky By: /s/ Mark A. Prygocki Sr.
------------------------------ -------------------------
Name: Perry Tarnofsky Name: Mark A. Prygocki Sr.
---------------------------- ------------------------
Title: Assistant Secretary Title: Chief Financial Officer
-------------------------- -----------------------
Date: March 31, 1997 Date: March 31, 1997
---------------------------- ------------------------
Schedule 1
Maintenance and Support
Upon payment of the annual maintenance and support services fee listed in this
Agreement and the Order, Licensor will provide the following maintenance and
support services for the Licensed Software:
PLATINUM(R) SQL SOFTWARE
Unlimited Telephone or Facsimile Support
The hours of operation are 6:00 AM to 5:00 PM, Pacific Standard Time, during
normal business hours (Monday through Friday), excluding holidays. Licensee
shall appoint three (3) individuals within Licensee's organization to serve as
the primary contacts between Licensee and Licensor and to receive support
through the telephone support center.
Maintenance Updates/Upgrades
Licensor shall provide to Licensee without additional charge, all updates to the
Application Software (including related documentation) commercially released by
Licensor during the term of the maintenance agreement. Updates consist of new
releases of a particular software version which provide functional enhancements
and error corrections. Licensor shall provide to Licensee without additional
charge, all upgrades to the Application Software commercially released by
Licensor during the term of the agreement. Upgrades consist of new releases with
a higher Licensor version number.
Remote Diagnostics
<PAGE> 9
Licensor may provide remote access software to facilitate remote diagnostics. In
order to take advantage of remote diagnostics, Licensee may be required to
purchase a compatible modem.
Cost
The Maintenance and Support Plan is priced at 18% of the then current list price
for the Licensed Software. There is a penalty for lapsed coverage of software
maintenance. Users who wish to purchase a software maintenance agreement after a
lapse of coverage will be charged for all of the time that they were not
covered, as follows:
The charge for the time the user was not covered will be prorated based upon an
annual cost of 18% of the then current list price for the Licensed Software.
Thus, if the user had a lapse of nine months, they would be charged for the
lapsed period at a rate of 9/12 x 18% of the then current list price for the
Licensed Software. To resume coverage, the user must sign up for at least one
full year beyond the lapsed period. Each year will be charged at a rate of 18%
of the then current list price.
Term
The term of the maintenance and support plan is one (1) year commencing on the
date of the attached License Agreement.
Conditions
Program maintenance and telephone and other support for previous versions of the
Application Software may be discontinued by Licensor upon ninety (90) days
advance notice. Licensor only provides support and maintenance for the current
and immediately prior release of the Application Software. For example, if
version 1.3 is the current release, Licensor will provide support and
maintenance for version 1.3 and 1.2 and will cease supporting version 1.1 ninety
(90) days following the release of version 1.3. If an end user cancels its
subscription anytime during a subscription period, no refund, pro-rated or
otherwise, will be given.
PLATINUM(R) SQL CUSTOMIZATION WORKBENCH
Standard Developer Support
The hours of operation are 6:00 AM to 5:00 PM, Pacific Standard Time, during
normal business hours (Monday through Friday), excluding holidays. Only one
registered user per copy of the Customization Workbench licensed is entitled to
receive support through the telephone support center. If Licensee is an entity,
it must designate one individual to have the right to obtain developer support.
Licensor reserves the right to withhold support to anyone who has not satisfied
Licensor's Developer Support training requirements. The present training
requirements include attendance at required Licensor Customization Workbench
training courses. Licensor reserves the right to modify training requirements
from time to time. Standard Developer Support includes consultation via
telephone, facsimile or electronic mail concerning the use of the tools,
utilities and documentation provided with the Customization Workbench. Standard
Developer Support does not include the coding or development of customizations
or integration projects.
Remote Development Services
Remote Development Services, including the design and development of
<PAGE> 10
customizations is available under separate contract through Licensor's Developer
Support Organization. Such support may include designing, developing and
debugging custom software and/or support of third party products. To obtain
Remote Developer Services, a registered user should contact Developer Support
for further information at (800) 285-7877.
Software Updates/Upgrades
Licensor shall provide to the registered user without additional charge, all
updates to the Customization Workbench (including related documentation)
commercially released by Licensor during the term of the maintenance agreement.
Updates consist of new releases of the Customization Workbench which provide
functional enhancements and error corrections.
Electronic Mail and Web Site Access
Answers to questions, software code examples and other technical documentation
which may constitute the resolution to inquiries may be provided by Licensor to
registered users via electronic mail or registered users may be directed to
information available on the Platinum Software Corporation Web site
(http:/www.platsoft.com). In order to access this information registered users
may be required to obtain additional software, equipment and Internet access.
Cost and Conditions
The Maintenance and Support Plan for the Customization Workbench is priced at
18% of the then current list price for the Customization Workbench. If Licensee
allows its maintenance and developer support plan for the Customization
Workbench to expire and desires to resume maintenance and developer support,
there is a penalty for lapsed coverage of software maintenance and developer
support. Users who wish to purchase a software maintenance and developer support
agreement after a lapse of coverage will be charged for all of the time that
they were not covered, as follows: The charge for the time the user was not
covered will be prorated based upon the then current list price for
Customization Workbench Developer Support. Thus, if the user had a lapse of nine
months, they would be charged for the lapsed period at a rate of 9 /12 x the
then current list price for Customization Workbench maintenance and developer
support. To resume coverage, the user must sign up for at least one full year
beyond the lapsed period. Each year will be charged at a rate equal to the then
current list price for maintenance and support for the Customization Workbench.
Program maintenance and telephone and other support for previous versions of the
Customization Workbench may be discontinued by Licensor upon ninety (90) days
advance notice. Licensor only provides support and maintenance for the current
and immediately prior release of the Customization Workbench. For example, if
version 1.3 is the current release, Licensor will provide support and
maintenance for version 1.3 and 1.2 and will cease supporting version 1.1 ninety
(90) days following the release of version 1.3. If an end user cancels its
subscription anytime during a subscription period, no refund, pro-rated or
otherwise, will be given. This maintenance and developer support agreement is
for one plan, per registered user, for the Customization Workbench.
Term
The term of the maintenance and developer support plan is one (1) year
commencing on the date of the attached License Agreement.
<PAGE> 11
SUPPLEMENT TO LICENSE AGREEMENT
This Supplement to License Agreement ("Supplement") is made and entered
into as of this 28th day of March, 1997 by and between Platinum Software
Corporation ("Licensor") and Medicis Pharmaceutical Corporation ("Licensee").
R E C I T A L S
A. Licensee and Licensor are entering into a license agreement (the "License
Agreement") pursuant to which Licensee will license from Licensor certain
software developed by Licensor known as "Platinum(R) SQL."
B. Licensor and Licensee desire to amend and supplement the License Agreement as
provided herein.
NOW THEREFORE, in consideration of the above recitals and the mutual
covenants and conditions contained below, Licensor and Licensee hereby agree as
follows:
1. The definition of Application Software shall be revised to read as follows:
"All modules of the Licensed Software, including upgrades, updates and new
versions provided by Licensor, excluding the Customization Workbench." Add "as
defined under applicable federal securities laws" to the end of the definition
of Affiliate in Section 1.
2. Add the following to the end of the definition of Authorized Users: "but
excluding Licensor and its agents."
3. Add the phrase "and use" after the word "install" in the third and sixth
lines of Section 2(a).
4. In the first sentence of Section 2(b) delete "as an individual, a personal,"
and replace with "a." Revise the second sentence of Section 2(b) to read: "If
Licensee is an entity, Licensor grants to Licensee the right to designate one
individual (which may change from time to time) within Licensee's organization
to have the right to use the Customization Workbench."
5. Revise clause (iv) of Section 2(d) to read as follows: "indemnify, hold
harmless and defend Licensor from and against any claims or lawsuits including
attorneys fees and expenses that arise or result from the use or distribution of
Licensee's software application product, excluding any use or distribution by
the Licensor;"
6. In Section 4 add the word "reasonable" before the word "shipping" in the
second line.
<PAGE> 12
7. Revise the third sentence of Section 5(a) to read as follows: "Except for the
license granted to Licensee in this Agreement, Licensee acknowledges that no
such right, title or interest in these items is granted under this Agreement,
and that no such assertion shall be made by Licensee."
8. Licensor and Licensee acknowledge that from time to time Licensee may engage
Licensor's professional consultants to make certain modifications to the
Licensed Software. Licensee may request that such modifications be done on a
confidential basis and that the modifications not be made available to other
parties in the same industry as Licensee, and Licensor will assess such request
and not unreasonably withhold its agreement to such request.
9. Revise the final line of Section 7(b) to read "ninety (90) days from the date
it is installed." Also, add "after installation" at the end of the first
sentence in Section 7(b).
10. Add the following to the end of Section 7(a): "and that the Licensed
Software will not infringe any United States, Canadian, UK, Australian or New
Zealand patent or copyright or similar intellectual property right."
11. In the tenth line of Section 7(c) add "done by Licensee or contractors of
Licensee" after the word "system." Add the following to the end of Section 7(d):
"Licensor will not provide Licensee Beta Releases for production purposes unless
requested by Licensee."
12. In Section 8 revise clause (iii) at the end of this section to read:
"failure of Licensee to notify Licensor of the existence and nature of such
non-conformity or defect within a reasonable amount of time following its
discovery by Licensee or its Authorized Users." Also, add "caused by Licensee or
its Authorized Users" after the word Software in the second clause (ii) in
Section 8(a).
13. Add the following to the end of Section 8(b): "This Section 8(b) as well as
Section 8(c) shall not apply to violations of Section 6 of this Agreement caused
by Licensor or its authorized agents. For purposes of clarification, Focus Soft
is not an authorized agent of Licensor." In Section 8(c), delete the last three
lines and place a period after the word "Software" at the end of the fifth line.
14. Notwithstanding Section 9(a) and Schedule 1 to the Agreement, payment of the
maintenance and support fee specified on the Order entitles Licensee to receive
the maintenance and support described on Schedule 1 for the period commencing
upon the date of this Agreement and ending on June 1, 1998.
15. Notwithstanding the terms of Schedule 1 to the Agreement, after the first
period of maintenance and support (through June 1998) the annual maintenance and
support fee for subsequent years shall not increase by more than the amount
determined by multiplying the previous year's maintenance and support fee by a
fraction, the numerator of which is the Consumer Price Index for the month two
months prior to the adjustment and the
2
<PAGE> 13
denominator of which shall be the Consumer Price Index for the same month for
the prior year, plus five percent (5%). So long as Licensee is subscribing for
maintenance from Licensor, in no event shall the maintenance fee be reduced
below the prior year. The Consumer Price Index to be used is the CPI For All
Urban Consumers, - All Items, for the United States, published monthly by the US
Department of Labor in which 1982-1984 equals 100.
16. In Section 9(b) delete the word "license" from the end of the ninth line. In
addition, delete the following sentence: "Any portion of the Licensed Software
replaced by an update or upgrade shall be destroyed."
17. Revise the first two sentences of Section 11(b) to read as follows: "Upon
the termination of this Agreement by Licensor pursuant to Section 11(a) above
due to an uncured material breach by Licensee, the license granted under this
Agreement to use the Licensed Software is immediately revoked. Within ten (10)
business days after such termination of this Agreement, Licensee shall return to
Licensor all copies of the Licensed Software, and/or updates and Documentation
in Licensee's possession, including all copies of the Licensed Software, and/or
updates and Documentation under the supervision and control of Licensee and
Authorized Users."
18. Add the word "material" before the word "obligations" in the fourth line
from the bottom of Section 11(b). Add the following to the end of Section 11(b):
"Termination of this Agreement shall not relieve the parties of their
confidentiality obligations under Section 6 or their obligation under Section
8."
19. Revise the first sentence of Section 12 to read as follows: "Licensor, at
its own expense, will indemnify and defend (including reasonable attorneys fees
and expenses) any action brought against Licensee to the extent that it is based
on a claim that the Licensed Software or any update of the Licensed Software
used within the scope of this Agreement infringes any United States, Canada,
United Kingdom, Australia, or New Zealand patent or copyright. Licensee agrees
to promptly notify Licensor in writing of any potential infringement claim."
20. In the eleventh line of Section 12 after the word "States" add ", Canada,
United Kingdom, Australia or New Zealand".
21. Revise Section 12(ii) to read as follows: "replace or modify the Licensed
Software to make it non-infringing without materially affecting the
functionality of the Licensed Software."
22. In the twentieth line of Section 12, after the word "election" add "after
consultation with Licensee".
23. Revise clause 12(iii) to read as follows: "terminate this Agreement and
refund to Licensee the software license fees paid by Licensee to Licensor for
the Licensed
3
<PAGE> 14
Software." In addition, revise the final sentence of Section 12 to read as
follows: "Licensor shall have no other liability or obligation to Licensee for
intellectual property infringement except as expressly set forth above."
24. In the third line of Section 13(b) delete "or by facsimile transmission with
confirmation".
25. In Section 13(d) delete the word "arisen" and replace with "been
discovered."
26. On Schedule 1 under the section headings Maintenance Updates/Upgrades, and
Customization Workbench Software Updates/Upgrades add the word "and upgrades"
after the word "updates" in the first sentence. In addition, add the following
to the end of the final sentence of both of these paragraphs: "as well
subsequent versions of the Application Software or a replacement version if
Platinum SQL is discontinued and replaced with another product." Under the
heading Cost, delete the second sentence and replace with the following: "There
is a penalty for lapsed coverage of software maintenance, which penalty will
apply only if Licensee elects to allow its software maintenance and support
subscription to lapse."
27. Under the heading Standard Developer Support on Schedule 1, delete the third
sentence and in the second line after the word "individual" add "at any time".
28. Licensor and Licensee acknowledge that concurrent with Licensee's purchase
of the Licensed Software, Licensee is also purchasing certain manufacturing
software from Focus Soft, Inc. Licensee will be engaging Licensor's professional
consulting staff to assist in the implementation of the Licensed Software.
Licensor agrees to serve as the single point of contact for issues on the
implementation of both the Licensed Software and the Focus Soft software.
Licensor is aware of several customers that have implemented the Licensed
Software and the Focus Soft software and used both packages together. In this
regard, Licensor is not aware of any material difficulties incurred by such
customers in using the Licensed Software and the Focus Soft software together.
If Focus Soft fails to perform its obligations to implement the Focus Soft
software, Licensor will assist in the implementation of such software on a time
and materials basis, and reserves the right to subcontract such services. If
Focus Soft fails to provide an integration to subsequent releases of the
Licensed Software within six (6) months following the subsequent release,
Licensor will assist in completing an interface between the Focus Soft software
and the subsequent version of the Licensed Software on a time and materials
basis. If Focus Soft fails to provide maintenance and support for the Focus Soft
software, Licensor will use its reasonable best efforts to assist Licensee in
locating a third party to provide such maintenance and support.
29. Licensor agrees that Licensee may withhold and not pay up to $7,800 of
consulting invoices until such time as the implementation project for the
Licensed Software is complete.
4
<PAGE> 15
IN WITNESS WHEREOF, the undersigned parties have executed this
Supplement as of the date first above written.
Platinum Software Corporation Medicis Pharmaceutical Corporation
By: /s/ Perry Tarnofsky By: /s/ Mark A. Prygocki Sr.
-------------------------- ----------------------------
Its: Assistant Secretary Its: Chief Financial Officer
------------------------- ---------------------------
Date: March 31, 1997 Date: March 31, 1997
------------------------ --------------------------
5
<PAGE> 1
Confidential information indicated by [*] is information omitted pursuant to
application for confidential treatment and is filed separately with the
Commission.
EXHIBIT 10.87
Focus Soft, Inc.
MASTER SOFTWARE LICENSE (#F-122)
This Master Software License Agreement (this "Agreement") is made as of the last
date written below, by and between FocusSoft Inc., a corporation having a
principal place of business at 304 Whittington Parkway Louisville, Kentucky
40222, USA ("FocusSoft") and Medicis, a corporation having a place of business
at 4343 East Camelback Rd, Phoenix, AZ 85018 ("CUSTOMER").
GENERAL TERMS AND CONDITIONS
1. LICENSE GRANTED.
Subject to all of the limitations and conditions contained in this Agreement,
FocusSoft hereby grants to CUSTOMER a non-transferable and non-exclusive license
to (i) use the software system(s) (the "Software System(s)") described in the
schedule(s) attached hereto (the "Software Schedule(s)") and any corrections,
enhancements, updates and new versions provided by FocusSoft to CUSTOMER under
this Agreement, within North America, in the ordinary business activities of
CUSTOMER for its internal operations only, on the production computers specified
in the Software Schedule(s) at the locations specified in the Software
Schedule(s), and (ii) use the system documentation provided by Focus Soft to
CUSTOMER in connection with CUSTOMER's permitted use of the Software System(s).
This license does not include the right to use the Software System(s) or the
system documentation to process the data of any third parties, whether any such
third parties are related to CUSTOMER or not.
2. TERM.
This Agreement shall remain in effect until terminated pursuant to the
provisions of this Agreement.
3. PAYMENT.
For each Software System, CUSTOMER shall pay FocusSoft or its agent or designee,
license and service fees in accordance with the payment terms specified in the
Software Schedule(s). CUSTOMER shall pay FocusSoft, within thirty (30) days of
billing by FocusSoft, all charges for travel and out-of-pocket expenses incurred
by FocusSoft, in connection with training, maintenance, implementation and
support for the Software Systems(s) and, if CUSTOMER elects to continue
maintenance for the Software Systems(s), for ongoing maintenance fees.
4. TAXES.
CUSTOMER shall pay all taxes or duties, fees and governmental charges, however
designated, (including personal property taxes, sales taxes, use taxes and
customs duties), but not including any income or corporate excise taxes accessed
against Focus Soft, arising from, or based upon, the Software System(s) licensed
hereunder, the license fee for the Software System(s), other amounts payable
under this Agreement, any services provided under this Agreement or the
operation and use of the Software Systems(s).
5. DELIVERY.
Within thirty (30) days after the date of this Agreement, or such later date
specified in a Software Schedule, FocusSoft will deliver to CUSTOMER the
Software System(s) and all related documentation.
<PAGE> 2
6. MODIFICATIONS.
CUSTOMER may modify the Software Systems(s) only in order to adapt the Software
Systems(s) for CUSTOMER's permitted use hereunder, provided, however, FocusSoft
maintenance and support and warranty obligations set forth in Paragraphs 10 and
11 shall apply only to the unmodified Software System(s) and to corrections,
enhancements, updates and new versions provided by FocusSoft relating thereto.
If modifications are made by CUSTOMER that result in Focus Soft being relieved
of its obligation to provide maintenance and support services, Focus Soft shall
not be required to reimburse CUSTOMER for any prepaid maintenance and support.
7. WARRANTY OF TITLE.
FocusSoft represents and warrants that it is the lawful owner or licensee of the
Software System(s) and has full legal power and authority to license the
Software Systems(s) to CUSTOMER as provided in this Agreement.
8. OWNERSHIP, NON-DISCLOSURE AND COPIES.
(a) CUSTOMER acknowledges that the Software System(s); all source code, object
code and algorithms relating thereto; all user interface screens generated by
the Software System(s); all updates, upgrades modifications and enhancements
thereto, provided by FocusSoft, client or third party, any copies of the
foregoing, in whole or in part; as well as all copyright, patent, trade secret
and other proprietary rights therein, are and shall remain the sole and
exclusive confidential property of FocusSoft or Focus Soft licensor. CUSTOMER
AGREES THAT IT WILL NOT DISCLOSE OR OTHERWISE MAKE AVAILABLE TO THIRD PARTIES
THE SOFTWARE SYSTEMS(S) EXCEPT WHEN SUCH DISCLOSURE IS NECESSARY TO THE
CUSTOMER's PERMITTED USE HEREUNDER OF THE SOFTWARE SYSTEMS(S) AND SUCH THIRD
PARTY AGREES TO BE BOUND BY THE TERMS CONTAINED IN THIS PARAGRAPH 8. CUSTOMER
shall hold as FocusSoft confidential property, and shall further safeguard
against disclosure, all copies of the Software System(s) and all other
information furnished by FocusSoft to CUSTOMER in connection with the Software
System(s), including, but not limited to, all source and object code, all system
documentation relating to the Software System(s), and the terms and conditions
of this Agreement, in the same manner as it safeguards its own confidential
property against disclosure, provided that such safeguards are at least equal to
industry standards, and shall take such steps as are reasonably necessary to
ensure that the provisions of this Agreement relating to confidentiality and
non-disclosure are not violated by any employee, agent or other representative
of CUSTOMER. CUSTOMER shall not decompile, disassemble, or reverse engineer any
portion of the Software System(s). CUSTOMER shall indemnify and save FocusSoft
harmless from any and all damages arising out of or in connection with a breach
of this Paragraph 8, including but not limited to the legal fees and
disbursements of FocusSoft incurred in connection with any breach or threatened
breach of the Paragraph 8. CUSTOMER agrees that if it learns of any breach of
the non-disclosure provisions contained herein, it shall, within ten (10)
business days of learning of any such breach, notify FocusSoft in writing of the
breach, specifying fully the nature and manner of the breach. CUSTOMER further
agrees to cooperate fully with FocusSoft in any investigations and legal actions
relating to such breach, including legal actions for injunctive or other
equitable relief, that FocusSoft may take in order to eliminate and cure the
breach.
<PAGE> 3
(b) CUSTOMER may not copy the Software Systems(s) without the prior written
permission of FocusSoft except (i) to make a copy of any program which is
required as an essential step in its utilization or (ii) to make an archival or
back-up copy of the Software System(s) and related documentation. CUSTOMER may
copy the system documentation provided by FocusSoft to CUSTOMER in connection
with CUSTOMER's permitted use of the Software System(s). CUSTOMER shall not
alter or remove any FocusSoft or other copyright notice from the Software
System(s), the system documentation or any permitted copied thereof.
(c) The Source Code Escrow Package may be released from escrow to CUSTOMER, upon
the occurrence of one or more of the following "Escrow Release Events", defined
as (i) if LICENSOR becomes insolvent or admits insolvency or admits a general
inability to pay its debts as they become due; (ii) if LICENSOR files a petition
for protection under the Bankruptcy Code of the United States, or an involuntary
petition in bankruptcy is filed against LICENSOR and is not dismissed with sixty
(60) days thereafter. The current Source Code Escrow holder is Howard S. Strum,
Attorney. Any change in holder of the account will be forwarded to CUSTOMER.
9. USE/CHANGE OF LOCATION.
CUSTOMER may redesignate the location of the production computers on which the
Software System(s) may be used by giving advance written notice to FocusSoft
stating the reason(s) for the proposed change of location. The Software
Systems(s) may also be used on a back-up computer located at the designated
location if the designated computer is inoperative because of (i) a malfunction,
(ii) the performance of preventive maintenance or (iii) engineering changes to
the designated computer. Any such computer shall be located within North
America.
10. MAINTENANCE AND SUPPORT.
An initial period of maintenance for the Software Systems(s) as provided in the
Software Schedule(s) is included in the license fee.
11. WARRANTY.
(a) FocusSoft warrants that, as long as CUSTOMER is on active maintenance for
the Software System(s), the Software System(s) will operate in substantial
conformity with the Functional Documentation supplied by FocusSoft within the
Software System(s) when used in strict compliance therewith. ("Functional
Documentation" is the "help text" and/or the "how to" text provided within the
Software System(s).) This warranty is contingent upon (a) CUSTOMER's
installation of all corrections, enhancements, updates and new versions provided
by FocusSoft to CUSTOMER under this Agreement and (b) the absence of damage or
abuse to the Software System(s). Notwithstanding the foregoing, CUSTOMER
acknowledges that since the Software System(s) is complex and, therefore, may
have defects, CUSTOMER's sole and exclusive remedy for any such defects shall be
as follows: If the Software System(s) fails to perform as warranted, FocusSoft
shall, within a reasonable period of time, provide all reasonable programming
services to correct programming errors in the Software System(s) or, at its
option, replace the Software System(s).
(b) FOCUSSOFT MAKES NO OTHER WARRANTY, EITHER EXPRESS OR IMPLIED, WITH RESPECT
TO THE SOFTWARE SYSTEM(S), ITS (THEIR) MERCHANTABILITY OR ITS (THEIR) FITNESS
FOR ANY PARTICULAR PURPOSE. FOCUSSOFT SHALL NOT BE LIABLE IN ANY EVENT FOR LOSS
OF PROFITS, BUSINESS, USE OR DATA NOR FOR INTERRUPTION OF BUSINESS NOR FOR ANY
OTHER DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY
DEFECT IN THE SOFTWARE SYSTEM(S) OR FROM ITS (THEIR) USE. THE LIMITATIONS ON
FOCUSSOFT LIABILITY STATED HEREIN SHALL NOT BE WAIVED OR ALTERED ON ACCOUNT OF
FOCUSSOFT PROVIDING OR RENDERING OF TECHNICAL, PROGRAMMING OR OTHER ADVICE OR
SERVICE IN CONNECTION WITH THE SOFTWARE SYSTEM(S). SHOULD ANY OF THE FOREGOING
DISCLAIMERS BE HELD INVALID, IN WHOLE OR IN PART, FOR ANY REASON, IN NO EVENT
SHALL FOCUSSOFT BE LIABLE FOR DAMAGES IN EXCESS OF THE LICENSE FEE(S) ACTUALLY
PAID BY CUSTOMER TO FOCUSSOFT.
12. TRANSFER.
CUSTOMER shall not, voluntarily, sublicense, sell, assign, give or otherwise
transfer the license granted hereunder, or any copies of the Software System(s)
or any other information furnished by FocusSoft to CUSTOMER, to any person or
entity or permit any person or entity other than CUSTOMER to use the Software
System(s).
<PAGE> 4
13. TERMINATION
(a) FocusSoft may terminate this Agreement and the license to use the Software
System(s) granted hereunder by giving written notice to CUSTOMER if CUSTOMER (i)
fails to pay any amount due hereunder within thirty (30) days of the date such
amount is due, (ii) breaches any of its obligations under Paragraphs 8 or 12;
(iii) fails to perform any other material obligation hereunder if such failure
has not been cured within thirty (30) days after FocusSoft has given CUSTOMER
notice of such failure; or (iv) causes or permits the winding up or liquidation
of its affairs, voluntarily, or by order of a court adjudging CUSTOMER bankrupt
or insolvent or approving as properly filed a petition seeking reorganization of
CUSTOMER.
(b) Upon any termination of this Agreement, CUSTOMER shall cease to use the
Software System(s) and shall return to FocusSoft the Software System(s) and all
copies thereof and all proprietary and confidential property of FocusSoft,
including, without limitation, all source code, object code and system
documentation. CUSTOMER shall expunge all copies of the source code or object
code from its designated single production computer or any other computer
containing such codes and shall provide a certificate of an officer of CUSTOMER
stating respect to CUSTOMER's failure to comply with the provisions of this
Agreement. CUSTOMER agrees that Paragraphs 4, 8, 11, 12, 13 and 15 of this
Agreement shall survive any termination of this Agreement and shall remain in
full force and effect.
14. ARBITRATION
Any dispute relating to the interpretation or performance of this Agreement
shall be resolved through binding arbitration conducted in Louisville, Kentucky,
in accordance with the then-existing rules of the American Arbitration
Association in Accordance with Kentucky law, and judgment upon any arbitration
award may be entered by the state or federal court of appropriate jurisdiction.
15. GENERAL.
This Agreement, which shall include all schedules and addenda attached hereto,
may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. This
Agreement shall be governed by and interpreted under the laws of the
Commonwealth of Kentucky. This Agreement sets forth the entire understanding
between the parties, is binding upon and inures to the benefit of the parties
hereto and their respective successors and may be amended only by a written
instrument executed by both an officer of FocusSoft and by CUSTOMER. If two or
more entities are named herein as CUSTOMER, their obligations shall be joint and
several. This Agreement supersedes any and all prior and contemporaneous
conversations, understandings and agreements between the parties, including any
request for proposal or similar document and any responses thereto, all of which
are of no further force and effect, and supersedes the terms of any and all
purchase orders or invoices. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof. No claim or action, regardless of
form, arising out of this Agreement may be brought by either party more than one
(1) year after the cause of action has arisen.
EACH PARTY HAS CAUSED THIS AGREEMENT TO BE EXECUTED BY ITS DULY AUTHORIZED
OFFICIAL(S).
FocusSoft, Inc. Medicis Corporation
By: /s/ John V. Lococo By: /s/ Mark A. Prygocki Sr.
Name: John V. Lococo Name: Mark A. Prygocki Sr.
Title: President Title: Chief Financial Officer
Date: April 2, 1997 Date: March 31, 1997
<PAGE> 5
MEDICIS
-------
SOFTWARE PROPOSAL
MARCH 31, 1997
SCHEDULE A
CONFIDENTIAL
MILLENIA PROPOSAL
- -----------------
MILLENIA SOFTWARE
- -----------------
Customer Service, Purchasing, Inventory, Manufacturing, Scheduler II, Quality
Control, Receiving, Shipping
Proposal for [*] users
FocusSoft Millenia software ([*] users) $[*]
Additional users [*] are [*] each ([*] users) ([*] users [*]) $[*]
users [*] are $[*] each ([*] users [*]) $[*]
Millenia Tool Kit (front end source code) $[*]
--------
TOTAL FOR FOCUSSOFT MILLENIA SOFTWARE $[*]
([*] price for [*] users and Millenia Tool Kit is [*]. The [*]
of [*] which provides [*] users at [*], is only valid if the Millenia
Tool Kit is purchased and the Software License Agreement is signed by
March 31st, 1997.)
MILLENIA SERVICES (ESTIMATE)
- ----------------------------
Millenia Training [*] hours at $[*] hour $[*]
Millenia Project Management [*] hours at $[*] hour $[*]
Millenia setup [*] hours at $[*] hour $[*]
--------
TOTAL FOCUSSOFT SERVICES (ESTIMATE) $[*]
TOTAL FOR FOCUSSOFT SOLUTION (ESTIMATE) $150,500
- ---------------------------------------
OPTIONAL
- --------
Source Code Escrow Package $[*]
- - [*] months period of maintenance on FocusSoft software commencing on the date
of delivery of the software is included in the license fee. After the first
[*] month period the current annual software maintenance price is [*] percent
([*]) of the software price.
- - Price quote includes FocusSoft's standard interface between Millenia and
Platinum SQL Server software. An updated interface from FocusSoft will be
provided within [*] months of Platinum issuing a new release. The updated
interface is included in the [*] maintenance fee.
- - Price quote is valid under the condition that the Software License Agreement
is signed by March 31, 1997.
- - Travel expenses not included.
- - Payment terms: [*] with Agreement, [*] net 30 days from Agreement, [*] by
June 30, 1997.
[FocusSoft, Inc. Logo]
*[Confidential Information Extracted]
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF PER SHARE EARNINGS
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 14,159 10,259 12,843 10,212
Net effect of dilutive stock options -
based on the treasury stock method
using average market price 991 588 1,007 227
------ ------ ------ ------
TOTAL 15,150 10,847 13,850 10,439
------ ------ ------ ------
Net income 4,337 1,759 11,192 3,809
------ ------ ------ ------
Per share amount $ 0.29 $ 0.16 $ 0.81 $ 0.36
------ ------ ------ ------
FULLY DILUTED
Average shares outstanding 14,159 10,259 12,843 10,212
Net effect of dilutive stock options -
based on the treasury stock method
using the quarter-end market price,
if higher than the average market price 991 588 1,007 567
------ ------ ------ ------
TOTAL 15,150 10,847 13,850 10,779
------ ------ ------ ------
Net income 4,337 1,759 11,192 3,809
------ ------ ------ ------
Per share amount $ 0.29 $ 0.16 $ 0.81 $ 0.35
------ ------ ------ ------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1997, AND THE RELATED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997,
AND THE NOTES THERETO, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 27,823,391
<SECURITIES> 49,167,969
<RECEIVABLES> 9,661,545
<ALLOWANCES> 935,000
<INVENTORY> 2,202,418
<CURRENT-ASSETS> 95,217,214
<PP&E> 618,982
<DEPRECIATION> 180,914
<TOTAL-ASSETS> 132,155,875
<CURRENT-LIABILITIES> 7,955,983
<BONDS> 0
0
0
<COMMON> 199,175
<OTHER-SE> 123,761,854
<TOTAL-LIABILITY-AND-EQUITY> 132,155,875
<SALES> 26,752,138
<TOTAL-REVENUES> 26,752,138
<CGS> 6,684,535
<TOTAL-COSTS> 12,719,122
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,657,778)
<INCOME-PRETAX> 10,006,259
<INCOME-TAX> (1,185,873)
<INCOME-CONTINUING> 11,192,132
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,192,132
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
