<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
July 3, 1996
(Date of Report - earliest event reported)
DURA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 000-19809 95-3645543
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
5880 PACIFIC CENTER BLVD., SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE IS (619) 457-2553
(Total of 40 pages)
Exhibit Index located on page 10
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On June 17, 1996, Dura Pharmaceuticals, Inc. ("Dura" or the "Company")
signed an agreement with Procter & Gamble Pharmaceuticals, Inc. ("P&G") to
acquire the rights to the Entex(R) products, consisting of four prescription
upper respiratory drugs (the "Entex Products"). The acquisition closed on July
3, 1996. The purchase price of $45.0 million in cash consisted of $25.0 million
paid at closing and $20.0 million due on July 3, 1997.
The Entex Products generated U.S. and Canadian sales for P&G in 1993,
1994 and 1995 of approximately $64.8 million, $58.7 million and $42.4 million,
respectively, and direct product cost of sales in 1993, 1994 and 1995 of
approximately $4.4 million, $3.0 million and $3.1 million, respectively. P&G
will manufacture the Entex Products for the Company under a separate supply
agreement. The Company expects the supply agreement with P&G to increase the
Entex products' future cost of sales as a percent of sales revenue by
approximately six percent as compared to its historical percentages. The Entex
Products, which represent an extension of the Company's existing line of
prescription pharmaceuticals, will be promoted primarily through the
distribution of samples to the same respiratory physician specialists currently
targeted by the Company's existing national pharmaceutical sales force. The
Company does not expect future selling, general and administrative expenses,
exclusive of the sample costs and amortization of the acquired rights to the
Entex Products, to be impacted significantly from the selling of the Entex
Products.
P&G, located in Cincinnati, Ohio, is a manufacturer and marketer of
pharmaceutical products.
Item 7. Financial Statements and Exhibits
b. Pro Forma Financial Information:
The following pro forma balance sheet and statements of operations
combine Dura, the current acquisition of the Entex Products, the acquisition of
the Furadantin(R) product rights in May 1996, and the previously reported 1995
acquisitions of Health Script, Dura Delivery Systems, Inc., and the Rondec(R)
products (as reported in prior Current Reports on Form 8-K) as of March 31, 1996
and the results of their operations for the three months ended March 31, 1996
and the year ended December 31, 1995 as if the acquisitions had taken place on
January 1, 1995. The Dura financial information included in the pro forma
balance sheet as of March 31, 1996 and the pro forma statement of operations for
the three months ended March 31, 1996 was previously reported in Dura's Form
10-Q for the quarter ended March 31, 1996. The Dura financial information
included in the pro forma statement of operations for the year ended December
31, 1995 was previously reported in Dura's Form 10-K, as amended, for the year
ended December 31, 1995. In the opinion of management, all pro forma adjustments
necessary to state fairly such pro forma financial information have been made.
The per share data and weighted average number of common and common equivalent
shares have been adjusted to reflect the stock in the form of a 100% stock
dividend effective July 1, 1996. The computations of net income (loss) per share
are unchanged on a fully-diluted basis for all periods presented.
2
<PAGE> 3
The pro forma balance sheet and statements of operations should be
read in conjunction with the notes included in this report. The pro forma
financial information is not necessarily indicative of what the actual financial
results would have been had the acquisitions occurred on January 1, 1995. In
addition, the pro forma financial information does not purport to indicate the
results of future operations or financial position of the Company from the
acquisition date forward.
c. Exhibits:
2.1 Agreement for Purchase and Sale of Entex Assets dated June 17,
1996 between Dura and P&G (the "Purchase Agreement"). The Exhibits and Schedules
referenced in the Purchase Agreement have not been included because they are
either disclosed in such agreement or would not be material to an investment
decision. They will be provided to the Commission upon request.
99.1 Press Release dated June 17, 1996 issued by Dura.
3
<PAGE> 4
<TABLE>
<CAPTION>
DURA PHARMACEUTICALS, INC. ITEM 7b.
PRO FORMA BALANCE SHEET (UNAUDITED)
MARCH 31, 1996
IN THOUSANDS
Pro Forma
Adjustments
Increase Pro Forma
ASSETS Dura (Decrease) Results
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 21,008 $ 21,008
Short-term investments 40,972 (28,500) a.,d. 12,472
Accounts and other receivables 9,227 9,227
Inventory 3,540 3,540
Prepaid and other 527 527
---------- ----------- -----------
Total current assets 75,274 (28,500) 46,774
Property 17,623 17,623
License Agreements and Product Rights 38,639 52,000 a.,d. 90,639
Goodwill 6,970 6,970
Other 8,467 8,467
---------- ----------- -----------
TOTAL $ 146,973 $ 23,500 $ 170,473
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,717 $ 8,717
Accrued wages, taxes and benefits 1,540 1,540
Current portion of long-term obligations 6,311 $ 23,500 a.,d. 29,811
---------- ----------- -----------
Total current liabilities 16,568 23,500 40,068
---------- ----------- -----------
Long-Term Obligations:
Notes payable - bank 6,471 6,471
Other long-term obligations 8,974 8,974
---------- ----------- -----------
Total long-term obligations 15,445 15,445
Other Non-Current Liabilities 828 828
---------- ----------- -----------
Total liabilities 32,841 23,500 40,068
---------- ----------- -----------
Shareholders' Equity:
Common stock 217,354 217,354
Accumulated deficit (99,263) (99,263)
Unrealized loss on investments (38) (38)
Warrant subscriptions receivable (3,921) (3,921)
---------- ----------- -----------
Total shareholders' equity 114,132 114,132
---------- ----------- -----------
TOTAL $ 146,973 $ 23,500 $ 170,473
=========== ========== ==========
</TABLE>
See notes to pro forma financial statements for description of pro forma
adjustments.
4
<PAGE> 5
<TABLE>
<CAPTION>
DURA PHARMACEUTICALS, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996
IN THOUSANDS, EXCEPT PER SHARE DATA
Pro Forma
Adjustments
Increase Pro Forma
Dura (Decrease) Results
<S> <C> <C> <C>
REVENUES:
Sales $ 14,055 $ 8,785 b.,e. $ 22,840
Contract 4,532 4,532
-------- -------- ---------
Total revenues 18,587 8,785 27,372
-------- -------- ---------
OPERATING COSTS AND
EXPENSES:
Cost of sales 3,623 984 b.,e. 4,607
Clinical, development and regulatory 3,399 3,399
Selling, general and administrative 7,740 3,326 b.,c.,f. 11,066
Goodwill amortization 113 113
-------- -------- ---------
Total operating costs and
expenses 14,875 4,310 19,185
-------- -------- ---------
OPERATING INCOME 3,712 4,475 8,187
-------- -------- ---------
OTHER :
Interest income 909 909
Interest expense (294) (294)
-------- -------- ---------
Total other 615 -0- 615
-------- -------- ---------
INCOME BEFORE INCOME TAXES 4,327 4,475 8,802
PROVISION FOR INCOME TAXES 270 433 b.,e. 703
-------- -------- ---------
NET INCOME $ 4,057 $ 4,042 $ 8,099
======== ======== ========
NET INCOME PER SHARE $ 0.11 $ 0.23
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES 35,700 35,700
</TABLE>
See notes to pro forma financial statements for description of pro forma
adjustments.
5
<PAGE> 6
<TABLE>
<CAPTION>
DURA PHARMACEUTICALS, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
IN THOUSANDS, EXCEPT PER SHARE DATA
Pro Forma
Adjustments
Increase Pro Forma
Dura (Decrease) Results
<S> <C> <C> <C>
REVENUES:
Sales $ 39,308 $51,871 b.,e. $91,179
Contract 12,194 (7,762) e. 4,432
------- -------- -------
Total revenues 51,502 44,109 95,611
------- -------- -------
OPERATING COSTS AND
EXPENSES:
Cost of sales 10,618 5,374 b.,e. 15,992
Clinical, development and regulatory 8,408 311 e. 8,719
Selling, general and administrative 25,580 21,422 b.,c.,e.,f. 47,002
Goodwill amortization 375 86 h. 461
Charge for acquired in-process
technology and purchase options 43,773 (30,773) e. 13,000
------- -------- -------
Total operating costs and
expenses 88,754 (3,580) 85,174
------- -------- -------
OPERATING INCOME (LOSS) (37,252) 47,689 10,437
------- -------- -------
OTHER :
Interest income 2,768 345 i. 3,113
Interest expense (906) (1,131) e.,g. (2,037)
Other income 18 18
------- -------- -------
Total other 1,880 (786) 1,094
------- -------- -------
INCOME (LOSS) BEFORE (35,372) 46,903 11,531
INCOME TAXES
PROVISION FOR INCOME TAXES 406 1,574 b.,e. 1,980
------- -------- -------
NET INCOME (LOSS) $(35,778) $ 45,329 $9,551
======== ======== ======
NET INCOME (LOSS) PER SHARE $ (1.53) $ 0.31
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES 23,440 7,711 j.,k. 31,151
</TABLE>
See notes to pro forma financial statements for description of pro forma
adjustments.
6
<PAGE> 7
DURA PHARMACEUTICALS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) IN THOUSANDS
On June 17, 1996, Dura Pharmaceuticals, Inc. ("Dura" or the "Company") signed an
agreement with Procter & Gamble Pharmaceuticals, Inc. ("P&G") to acquire the
rights to the Entex(R) Products, consisting of four prescription upper
respiratory drugs (the "Entex products"). The acquisition closed on July 3,
1996. The following pro forma adjustments reflect the impact from the
acquisition as if it had occurred on January 1, 1995.
<TABLE>
a. Adjustment to record acquired product rights.
<S> <C> <C>
Product rights $ 45,000
Short-term investments $ 25,000
Other obligations $ 20,000
b. Adjustments to record Entex product sales, cost
of sales and related product activities.
Three Months Ended March 31, 1996
---------------------------------
Cash - net $ 6,300
Cost of sales $ 830
Marketing expenses (SG&A) $ 590
Provision for income taxes $ 402
Sales revenues $ 8,122
Year Ended December 31, 1995
----------------------------
Cash - net $32,791
Cost of sales $ 3,138
Marketing expenses (SG&A) $ 5,104
Provision for income taxes $ 1,366
Sales revenues $ 42,397
c. Adjustments to amortize acquired product rights.
Three Months Ended March 31, 1996
---------------------------------
Amortization expense (SG&A) $ 2,648
Product rights $ 2,648
Year Ended December 31, 1995
----------------------------
Amortization expense (SG&A) $ 13,821
Product rights $ 13,821
</TABLE>
On May 7, 1996, Dura acquired the Furadatin(R) product rights from P&G for $7.0
million. On December 29, 1995, the Company acquired Dura Delivery Systems, Inc.
("DDSI"), and as a result of the acquisition, DDSI is now a wholly-owned
subsidiary of Dura. On June 14, 1995, Dura signed an agreement with the Ross
Products Division of Abbott Laboratories to acquire the U.S. rights to the
Rondec(R) products, consisting of six prescription cough/cold drugs. On March
22, 1995, Dura acquired the common stock of Health Script Pharmacy Services,
Inc. and certain assets of Quintex, Ltd. (collectively "Health Script"). The
following pro forma adjustments reflect the impact from these acquisitions as if
they had occurred on January 1, 1995.
7
<PAGE> 8
d. Adjustment to record acquired product rights.
<TABLE>
<S> <C> <C>
Product rights $ 7,000
Short-term investments $ 3,500
Other obligations $ 3,500
</TABLE>
e. Adjustments to record operating activities of acquired companies and product
rights, and to eliminate the non- recurring charges resulting from the
acquisition of DDSI.
<TABLE>
<S> <C> <C>
Three Months Ended March 31, 1996
---------------------------------
Cash - net $ 478
Cost of sales $ 154
Provision for income taxes $ 31
Sales revenues $ 663
Year Ended December 31, 1995
----------------------------
Cash $ 5,967
Cost of sales $ 2,236
Clinical, development & regulatory $ 311
Marketing expenses (SG&A) $ 1,497
Interest Expense $ 671
Provision for income taxes $ 208
Contract revenue $ 7,762
Accumulated deficit $21,595
Charge for acquired in-process options $ 30,773
Sales revenues $ 9,474
f. Adjustments to amortize acquired product rights.
Three Months Ended March 31, 1996
---------------------------------
Amortization expenses (SG&A) $ 88
Product Rights $ 88
Year Ended December 31, 1995
----------------------------
Amortization expenses (SG&A) $ 1,000
Product Rights $ 1,000
g. Adjustments to amortize discount on long-term
obligations.
Year Ended December 31, 1995
----------------------------
Interest expense $ 460
Discount on long-term obligations $ 460
h. Adjustment to record amortization of acquired
intangibles.
Year Ended December 31, 1995
----------------------------
Goodwill amortization expense $ 86
Goodwill $ 86
i. Adjustment to record interest income on
short-term investments.
Year Ended December 31, 1995
----------------------------
Cash and cash equivalents $ 345
Interest income $ 345
</TABLE>
j. Shares of Dura common stock issued to acquire DDSI.
k. Dilutive effect of common stock equivalents resulting from pro forma net
income versus Dura net loss.
8
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned hereunto duly authorized.
DURA PHARMACEUTICALS, INC.
Date: July 17, 1996 /S/ MITCHELL R. WOODBURY
------------- ----------------------------------
Mitchell R. Woodbury
Vice President and General Counsel
9
<PAGE> 10
DURA PHARMACEUTICALS, INC.
FORM 8-K
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Agreement for Purchase and Sale of Entex Assets dated
June 17, 1996 between Dura and Procter & Gamble (the
"Purchase Agreement").
99.1 Press Release dated June 17, 1996 issued by Dura.
<PAGE> 1
EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF ENTEX ASSETS
BETWEEN
PROCTER & GAMBLE PHARMACEUTICALS, INC.
AND
DURA PHARMACEUTICALS, INC.
<PAGE> 2
TABLE OF CONTENTS
PAGE
Introduction 1
Background 1
Article 1 - Sale and Purchase of Assets 1
1.1 Assets to be Sold or Transferred
1.2 Purchase Price and Payment Schedule
1.3 Assignment of Assets
1.4 Allocation of Purchase Price
1.5 Inventory Purchase
1.6 Liabilities and Obligations of P&G
Article 2 - The Closing Transaction
2.1 Closing Date
2.2 Closing Transactions
2.3 Returns and Allowances
Article 3 - Conditions to Buyer's Obligations
3.1 Authorization of Agreements
3.2 Representations, Warranties, Covenants and Agreements
3.3 Adverse Change or Loss
3.4 Board Approval
3.5 Closing Documents
Article 4 - Conditions of P&G's Obligations
4.1 Authorization of Agreements
4.2 Representations, Warranties and Agreements
4.3 Board Approval
4.4 Closing Documents
<PAGE> 3
Article 5 - Post-Closing Obligations
5.1 Further Assurances
5.2 Trademark Attorney/Agent Expenses
5.3 Post-Closing Access to Books and Records
5.4 Use of Names
5.5 Notification of Customers
5.6 Customer Orders
5.7 Post-Closing Receipts
5.8 Federal and State Rebates
Article 6 - Representations and Warranties of P&G
6.1 Status of P&G
6.2 P&G's Authority to Consummate Transaction
6.3 Compliance with other Instruments
6.4 Binding Obligations
6.5 Brokerage and Finder's Fees
6.6 Title
6.7 Intellectual Property
6.8 Contracts
6.9 Product Registrations
6.10 Asset Warranties
6.11 Customer Lists
6.12 Financial Information
6.13 Conduct of Business
6.14 Governmental Regulations
6.15 Litigation
6.16 Compliance
Article 7 - Representations and Warranties of Buyer
7.1 Status of Buyer
7.2 Buyer's Authority to Consummate Transactions
7.3 Compliance with other Instruments
7.4 Binding Obligations
7.5 Brokerage and Finder's Fees
<PAGE> 4
Article 8 - Conduct and Transactions Relating to Closing
8.1 Access to Records and Property of P&G
8.2 Preservation of Goodwill
8.3 Mutual Cooperation
8.4 ADR Reporting
Article 9 - General Indemnification
9.1 P&G Indemnity
9.2 Buyer's Indemnity
9.3 Indemnification in the Event of Lack of Identification
9.4 Legal Proceedings
9.5 Remedy
Article 10 - Restrictive Covenant
10.1 Restriction
10.2 Other P&G Products
Article 11 - General Provisions
11.1 Investigations and Survival of Representations
11.2 Notices
11.3 Confidentiality of Information
11.4 Amendment and Modification
11.5 Assignment
11.6 Press Releases
11.7 Bulk Sales Statutes
11.8 Expenses
11.9 Interpretation
11.10 Entirety of Agreement
11.11 Benefit of Agreement
11.12 Waiver and Preservation of Remedies
11.13 Exhibits and Schedules
11.14 Severability
11.15 Termination
11.16 Governing Law
11.17 Counterparts
<PAGE> 5
LIST OF ATTACHMENTS
Appendix - List of Defined Terms
Schedules
Schedule of Trademarks 1.1(a)
Schedule of Know-How 1.1(b)
Schedule of Registrations 1.1(d)
Schedule of Purchase Orders 1.1(f)
Schedule of Inventory Purchase Prices 1.5
Intellectual Property Claims Schedule 6.7(4)
List of Contracts 6.8
Schedule of Customers 6.11
Financial Information Schedule 6.12
Litigation Schedule 6.15
Exhibits
Forms of Trademark Assignment A
Form of Bill of Sale B
Form of Contract Manufacturing Agreement C
Form of Note D
Form of Security Agreement E
Form of Assumption Agreement F
<PAGE> 6
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This Agreement for Purchase and Sale of Assets (the "Agreement") is made
this 17th day of June, 1996, by and between Procter & Gamble Pharmaceuticals,
Inc. ("P&G"), an Ohio corporation with a principal place of business at One
Procter & Gamble Plaza, Cincinnati, Ohio 45202, and DURA PHARMACEUTICALS, INC.
("Buyer"), a California corporation, with a principal place of business at 5880
Pacific Center Boulevard, San Diego, CA 92121-4204.
BACKGROUND
0.1 P&G is engaged in the manufacture and sale of decongestant/expectorant
pharmaceutical products under the trademark ENTEX(R) (collectively, the
"Products"). P&G desires to sell to Buyer, and Buyer desires to purchase from
P&G, certain assets of P&G used in connection with the business of
manufacturing, having manufactured, marketing and selling the Products on the
terms and conditions set forth herein.
0.2 The parties have agreed that P&G will manufacture certain of the
Products for Buyer after the closing of the transactions contemplated herein
pursuant to the terms and conditions of a Contract Manufacturing Agreement
between the parties which is to be executed and delivered on the closing date.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Buyer and P&G hereby agree as follows:
ARTICLE 1 - SALE AND PURCHASE OF ASSETS
1.1 Assets to be Sold or Transferred. Upon the basis of the
representations and warranties and on the terms and conditions provided in this
Agreement, P&G agrees to sell, assign, transfer and/or deliver to Buyer or, as
appropriate, to cause P&G's Affiliates to sell, assign, transfer and/or deliver
to Buyer, and Buyer agrees to purchase, all of P&G's (and P&G's Affiliates')
right, title and interest in and to the following assets (the "Assets"):
(a) Trademark. Subject to the terms and conditions of Section 2.2(a)
hereof, the tradename ENTEX, as well as the tradenames CARBOBID and
HYDROBID, and all registrations and applications therefor listed in SCHEDULE
1.1(a) hereto (collectively, the "Trademarks").
(b) Know-How. The technical information, know-how, formulae,
processes, clinical studies, trade secrets, confidential and/or proprietary
information and other know-how, information, documents and/or materials,
customer lists, technology, formulations, specifications, stability protocols
and product impurity data, testing data and analytical methods and other
information relating to the Products, which is owned, developed or possessed by
P&G or P&G's Affiliates and which is identified or otherwise listed in SCHEDULE
1.1(b) hereof or which is otherwise necessary or useful to the manufacture, use
or sale of the Products (collectively, the "Know-How"). P&G shall bear all costs
associated with the transfer of said rights and materials.
<PAGE> 7
(c) Inventory. Certain inventory of finished goods of Products, as
referenced in Section 1.5 hereof (including Canadian finished product, and U.S.
and Canadian finished samples) and Canadian raw and packaging materials for the
Products owned by P&G and wherever located on the Closing Date (the
"Inventory").
(d) Registrations. The Product registrations and/or health
registrations (federal, state and/or local) respecting the Products listed in
SCHEDULE 1.1(d) hereof (the "Registrations").
(e) Books and Records. All files and records of P&G specifically
relating to the Products, whether in hard copy or magnetic form, including
research and development files, United States Food and Drug Administration
("FDA") and other governmental agency or instrumentality files pertaining to the
Products or the Registrations, market studies, copies of consumer complaint
files, response letters, adverse event reports, outlines of production,
production procedures and records, production and sales histories, files,
reports, operating records and quality control histories (collectively, the
"Books and Records"); provided that: (i) P&G may retain any Books and Records
necessary or useful in the performance of P&G's duties hereunder or under the
Contract Manufacturing Agreement for as long as such Books and Records are so
necessary or useful, (ii) P&G may retain any Books and Records which P&G is
required to retain by any applicable law, rule or regulation, (iii) P&G shall
provide to Buyer (during P&G's normal business hours) access to any Books and
Records retained by P&G pursuant to clauses (i) and (ii) hereof as may be
necessary or useful to Buyer in commercializing the Products inside the
Territory (as defined in Section 10.1 hereof), and (iv) Buyer shall provide to
P&G (during Buyer's normal business hours) access to any Books and Records
possessed by Buyer pursuant hereto as may be necessary or useful to P&G in
performing P&G's duties hereunder or under the Contract Manufacturing Agreement
or in commercializing the Other P&G Products (as defined herein). In addition,
Buyer acknowledges that P&G and its related Companies will continue to market
its other products (including its decongestant/expectorant products other than
the Products, for example BRONTEX) (collectively, the "Other P&G Products") in
the Territory and that certain of the information regarding the Products is
contained in documents and files which also relate to the Other P&G Products. To
the extent that any of the information to be provided under this Agreement would
include information regarding the Other P&G Products, P&G will not be required
to provide such other product information, but shall cooperate with Buyer to
enable Buyer to separate and obtain the information specifically related to the
Products.
(f) Purchase Orders. All customer purchase orders (the "Purchase
Orders") for the Products existing as of the Closing Date (as defined in Section
2.1 hereof) which are unfilled, copies of which shall be listed in SCHEDULE
1.1(f) at Closing (as defined in Section 2.1 hereof).
(g) Contract Rights. The contracts and rights set forth in SCHEDULE
6.8 hereto.
(h) Excluded Assets. The following assets are specifically excluded
from this sale of assets: accounts receivable; manufacturing facilities;
machinery and equipment; cash and cash equivalents, all insurance policies of
seller or its related companies; all rights under this Agreement; claims for
refunds of Taxes paid by Seller and/or its respective Affiliates. As used
herein, "Tax" and "Taxes" means all taxes, charges, fees, levies, or other
assessments, including, without limitation, income, excise, property, value
added, real estate, sales, payroll, and franchise taxes imposed by the United
States
<PAGE> 8
or any state, county or local government, subdivision or agency thereof, or any
other jurisdiction outside the United States. Such term shall include any
interest, penalties, or additions payable in connection with such taxes,
charges, fees, levies, or other assessments.
1.2 Purchase Price and Payment Schedule. The aggregate purchase price (the
"Purchase Price") to be paid by Buyer to P&G for the Assets (other than
Inventory) shall be US$45 million. The Purchase Price shall be paid to P&G as
follows:
(a) a total of US$25 million (the "Closing Payment") shall be paid to
P&G at Closing; and
(b) a total of US$20 million (the "Second Payment") shall be paid to
P&G twelve months after Closing; and
(c) Inventory shall be purchased by Buyer following Closing on a
purchase order basis, billed at the time of shipment.
1.3 Assignment of Assets.
(a) Non-Assignability. To the extent that any of the Assets are not
capable of being assigned or transferred to Buyer without the approval, consent
or waiver of any other party thereto or any other person (including a
governmental agency), or if such assignment or transfer would constitute a
breach of any agreement or violation of any law or regulation, this Agreement
shall not constitute an assignment thereof.
(b) Reasonable Efforts. P&G shall use all commercially reasonable
efforts, and Buyer shall cooperate with P&G, to obtain all material approvals,
consents or waivers necessary to convey to Buyer each such Asset as soon as
practicable; provided, however, that neither P&G nor Buyer shall be obligated to
pay any consideration therefor (except P&G shall be obligated to pay filing fees
and other ordinary administrative charges other than recording fees) to the
third party(ies) from whom such approval, consent or waiver is required.
(c) If Waivers or Consent Cannot be Obtained. To the extent that any
of the approvals, consents or waivers referred to above have not been obtained
by P&G by the Closing Date, P&G, after the Closing Date, shall use commercially
reasonable efforts as requested by Buyer to: (i) obtain the consent of any such
third party(ies); (ii) cooperate with Buyer in any reasonable and lawful
arrangements designed to provide the benefits of such asset to Buyer; and (iii)
enforce for the benefit of Buyer any rights of P&G arising from or under such
Asset.
1.4 Allocation of Purchase Price. The Purchase Price shall be allocated by
Buyer among the Assets in accordance with their respective fair market values
and in accordance with the requirements of Section 1060 of the Internal Revenue
Code. Such allocation shall be completed and delivered to Seller, together with
a draft Form 8594, no later than 180 days after Closing for Seller's review and
approval, which approval shall not be unreasonably withheld. In the event that
Seller fails to notify Buyer within 15 days of receipt of such allocation, in
writing and with specificity as to assets and amounts, that it does not
<PAGE> 9
approve of the allocation made by Buyer, Seller shall be deemed conclusively to
have approved such allocation and such Form 8594, and Seller and Buyer shall
thereafter be bound to make all tax filings, including any state and local tax
returns, on a basis consistent with such Purchase Price allocation. In the event
that Seller has not approved and has not been deemed to have approved the
aforementioned allocation in accordance with this Article 1.4, and Buyer and
Seller have not otherwise reached agreement with respect to such matter, Buyer
shall refer the matter to an independent accounting firm reasonably acceptable
to Seller for resolution, and the determination of such accounting firm with
respect to allocation of the Purchase Price shall be final and binding on the
parties. Each party shall pay one-half of the fees and expenses of such
accounting firm. Seller and Buyer agree not to take a position on any income tax
return, or in any judicial proceeding, that is inconsistent with the Purchase
Price allocation made in accordance with this Article 1.4.
1.5 Inventory Purchase. Buyer agrees to buy from P&G, and P&G agrees to
sell to Buyer, Buyer's requirements of Entex products (including Canadian raw
and packaging materials) from the Inventory at the prices shown on Schedule 1.5.
Buyer agrees to take its requirements of Entex products from the Inventory prior
to ordering newly-made products of the same variety under the Contract
Manufacturing Agreement of even date or under other supply contracts. All
remaining Inventory shall be destroyed by P&G at P&G's expense.
1.6 Liabilities and Obligations of P&G. Except as specifically provided
for in this Agreement and the Assumption Agreement (as defined herein), Buyer
does not hereby and will not assume or become liable for, and shall not be
obligated to pay or satisfy any obligation, debt or liability whatsoever,
accrued, contingent or otherwise, of P&G or its Affiliates with respect to the
business, the Assets or otherwise, and P&G shall indemnify, protect and hold
harmless Buyer with respect to any such obligations, debts or liabilities.
ARTICLE 2 - THE CLOSING TRANSACTION
2.1 Closing Date. The consummation of the transaction contemplated herein
(the "Closing") shall take place at the general offices of P&G at 10 a.m.
Eastern time on July 1, 1996, or such other place, time or date as may be
mutually agreed upon by Buyer and P&G (the "Closing Date"). The consummation of
the transaction shall be deemed effective as of the close of business on the
Closing Date.
2.2 Closing Transactions. At the Closing, the parties shall make the
following deliveries and take the following actions, which shall be deemed
simultaneous when taken.
(a) P&G's Deliveries and Actions. P&G shall deliver to Buyer:
(1) The Trademark Assignment for the Trademarks in the form of
EXHIBIT A.
(2) The Bill of Sale in the form of EXHIBIT B.
(3) An Assumption Agreement in the form set forth in EXHIBIT F.
<PAGE> 10
(4) Possession of or the right to take possession of
the remaining Assets to be sold to Buyer on the Closing Date pursuant to this
Agreement.
(5) The executed Contract Manufacturing Agreement in
the form attached hereto as EXHIBIT C.
(6) An executed Security Agreement securing the
second payment in the form attached hereto as Exhibit E.
(7) Such other items as are reasonably requested by
Buyer so as to accomplish the transactions set forth herein, including
consents to assignment of material contracts, where required.
(b) Buyer's Deliveries and Actions. Buyer shall deliver to
P&G:
(1) The Closing Payment, payment of each of which
shall be by the wire transfer of immediately available funds to P&G's account as
directed by P&G prior to the Closing.
(2) The executed Contract Manufacturing Agreement.
(3) An executed note for the Second Payment in the
form attached hereto as EXHIBIT D.
(4) An executed Security Agreement securing the
Second Payment in the form attached hereto as EXHIBIT E.
(5) An executed Assumption Agreement in the form
attached hereto as EXHIBIT F.
(6) Such other items as are reasonably requested by
P&G so as to accomplish the transactions set forth herein.
2.3 Returns and Allowances. P&G shall accept returns of Products sold
by P&G prior to Closing ("Returns of P&G's Products") in accordance with P&G's
then current returns policy provided that: (i) the total dollar value of all
credits granted by P&G in response to the Returns of P&G's Products plus
reasonable costs of destruction of returned goods (the "Returns Amount") does
not exceed US $1,000,000 and (ii) the Returns of P&G's Products are first
requested of P&G or Buyer prior to the end of the sixth calendar month following
the Closing Date (as defined herein). Returns Amounts exceeding US $1,000,000
and all Returns of P&G's Products first received by P&G or Buyer on or after the
end of the sixth calendar month following the Closing Date and all returns of
Products sold on or after the Closing shall be for Buyer's account. P&G shall
not issue any credit for Buyer's account for any returns made after the end of
the sixth calendar month following the Closing Date. Buyer shall not encourage
Returns of P&G's Products out of the ordinary course of business. P&G shall not
encourage excessive stocking of Product out of the ordinary course of business
prior to the Closing.
ARTICLE 3 - CONDITIONS TO BUYER'S OBLIGATIONS
<PAGE> 11
The obligations of Buyer to consummate at the Closing the transactions
contemplated herein are subject to the fulfillment at or prior to the Closing of
each of the following conditions, the fulfillment of any of which may be waived
by Buyer:
3.1 Authorization of Agreements; Hart-Scott-Rodino. All actions on the
part of P&G necessary to authorize the execution, delivery and performance of
this Agreement and the other agreements provided for herein and the consummation
of the transactions contemplated herein and therein shall have been duly and
validly taken by P&G. The applicable waiting period under the Hart-Scott-Rodino
Act shall have expired or early termination shall have been granted thereunder.
Buyer shall have been furnished with a certificate of the Secretary or an
Assistant Secretary of P&G setting forth copies of the resolutions or other
instruments authorizing this Agreement and the transactions contemplated herein.
3.2 Representations, Warranties, Covenants and Agreements. On the
Closing Date, all the representations and warranties of P&G contained in this
Agreement shall be true and correct in all material respects as of that date.
All of the covenants and agreements of P&G which are provided in this Agreement
to be performed at or prior to the Closing shall have been performed.
3.3 Adverse Change or Loss. During the period from the date of
execution of this Agreement to the Closing Date, there shall not have been any
material loss of, or any material damage to, the Assets or P&G's business
relating to the manufacture or sale of the Products and there shall not have
been any adverse change materially limiting the use of the Assets.
3.4 Board Approval. On or before the Closing Date, execution and
performance of this Agreement and all the transactions contemplated herein shall
have been duly and properly approved by P&G's board of directors.
3.5 Closing Documents. All of the documents required to be executed and
delivered by P&G pursuant to Section 2.2(a) hereof and as otherwise required
herein shall have been executed and delivered to Buyer.
ARTICLE 4 - CONDITIONS TO P&G'S OBLIGATIONS
The obligations of P&G to consummate at the Closing the transactions
contemplated herein are subject to the fulfillment at or prior to the Closing of
each of the following conditions, the fulfillment of any of which may be waived
by P&G:
4.1 Authorization of Agreements; HSR. All actions on the part of Buyer
necessary to authorize the execution, delivery and performance of this Agreement
and the other agreements provided for herein, and the consummation of the
transactions contemplated herein and therein, shall have been duly and validly
taken by Buyer. The applicable waiting period under the Hart-Scott-Rodino Act
shall have expired or early termination shall have been granted thereunder, P&G
shall have been furnished with a certificate of the Secretary or an Assistant
Secretary of Buyer setting forth copies of the resolutions or other instruments
authorizing this Agreement and the transactions contemplated herein.
<PAGE> 12
4.2 Representations, Warranties and Agreements. On the Closing Date,
all the representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects as of that date. All of the
agreements of Buyer which are provided in this Agreement to be performed at or
prior to the Closing shall have been performed.
4.3 Board Approval. On the Closing Date, execution and performance of
this Agreement and all the transactions contemplated herein shall have been duly
and properly approved by Buyer's board of directors.
4.4 Closing Documents. All of the documents required to be executed and
delivered by Buyer pursuant to Section 2.2(b) hereof and as otherwise required
herein shall have been executed and delivered to P&G.
ARTICLE 5 - POST-CLOSING OBLIGATIONS
5.1 Further Assurances. At the request of Buyer, on or after the
Closing Date, P&G will promptly execute and deliver, or cause to be executed and
delivered, such bills of sale, consents and other instruments of conveyance and
transfer in addition to those otherwise required by this Agreement and will take
such other action as Buyer may reasonably request to more effectively convey,
transfer to and vest in Buyer ownership of the Assets being purchased pursuant
to this Agreement. P&G will provide Buyer with documents necessary to record the
assignment of the registrations and applications for the Trademarks and Buyer
will be responsible for filing said documents as well as the costs of any such
filings.
5.2 Trademark Attorney/Agent Expenses. For a period of six (6) months
after the date of P&G's delivery to Buyer of the Trademark Assignment pursuant
to Section 2.2(a) hereof, P&G shall pay, and assumes all other responsibility
for, any and all bills and/or statements relating to the registration,
maintenance and/or assignment of the Trademarks which bills and/or statements
are received by P&G or Buyer after the Closing Date, provided, however, that
such bills and/or statements do not relate to the recording of the Trademark
Assignment hereunder or to any other work requested or commissioned by Buyer.
Buyer shall pay, and assumes all other responsibility for, any and all such
bills and/or statements which: (i) relate to the recording of the Trademark
Assignment hereunder or to any other work requested or commissioned by Buyer, or
(ii) are received by P&G or Buyer more than six (6) months after the date of
P&G's delivery to Buyer of the Trademark Assignment pursuant to Section 2.2(a)
hereof.
5.3 Post Closing Access to Books and Records. Buyer and P&G agree that,
subsequent to the Closing Date, they will grant to each other and each other's
agents reasonable access during normal business hours upon reasonable notice to
any books and records then in their possession or in the possession of their
respective Affiliates to the extent of information contained in such books or
records that relates to P&G's operation of the Assets prior to the Closing Date
and is shown to be needed for tax, operations, regulatory, accounting or other
reasonable purposes.
5.4 Use of Names. While manufacturing Products for Buyer pursuant to
the Contract Manufacturing Agreement, P&G (as Manufacturer thereunder) agrees to
use Buyer's name on all labels as soon as possible after the Closing through the
use of label stickers and in any event in compliance with
<PAGE> 13
applicable laws; provided that, as soon as practicable following the Closing and
not later than twelve (12) months after the Closing Date, Buyer shall make the
transition to labels not containing the name "Procter & Gamble" (or any name or
names confusingly similar thereto) other than to show P&G as the Manufacturer,
if required. Buyer will incur cost for art work, proofs, plates, stickering and
other assorted costs.
5.5 Notification of Customers. P&G agrees to cooperate with Buyer, at
Buyer's request, in the notification to customers of the transactions
contemplated by this Agreement and P&G agrees not to notify any customer of such
transactions without the prior written consent of Buyer. Such notification (the
"Joint Notice") shall be in such form as is reasonably satisfactory to Buyer and
P&G. Each party will prepare a notice for their own use which is acceptable to
the other party. The parties shall cooperate in similar written notification to
the managed care organizations referenced in Schedule 6.8, and P&G shall
undertake best efforts to (i) identify such organizations, and (ii) provide
Buyer, where permitted by the contracts, with a summary of the material terms
and conditions of each such contract.
5.6 Customer Orders. P&G agrees to take such steps as may be reasonably
required to insure that all customer orders for Products received after the
Closing Date are faxed to Buyer as soon as practicable after receipt by P&G but
in any event within five (5) business days after such receipt. P&G agrees that
any customer ordering Products or requesting any information with respect to
Products shall: (i) for a period of twelve (12) months following Closing, be
informed that Buyer is now supplying the Products, and (ii) for a period of six
(6) months following Closing, be forwarded a copy of the Joint Notice, if any In
addition, P&G shall immediately notify Buyer of said orders or requests for
information. The services provided by P&G pursuant to this Section 5.6 shall be
provided free and without charge to Buyer.
5.7 Post-Closing Receipts. If, at any time after the Closing, P&G
receives any payment for any Products sold after the Closing, such payments
shall be received in trust for Buyer and paid to Buyer by P&G within forty-five
days after receipt thereof. Upon reasonable notice and during normal business
hours, Buyer shall have the right to inspect P&G's books and records to the
extent necessary to verify the accuracy of such payments.
5.8 Federal and State Rebates. The parties agree that the rights and
responsibilities created by Section 4401 of the Omnibus Budget Reconciliation
Act of 1990 (Public Law 101-508) (the "Medicaid Law") and other federal and
state rebate programs (including but not limited to the New York Home Relief
Program, the New York E.P.I.C. Program, the Pennsylvania P.A.C.E. Program and
the like) will be apportioned as follows:
(a) Reporting. P&G will be responsible for filing with
appropriate state and federal agencies all information required by the Medicaid
Law and the laws of individual states for Products bearing P&G's NDC Codes. If
Buyer enters into an agreement with HCFA or state authorities, Buyer will bear
the same responsibility for Products sold by Buyer.
(b) Rebates. For a period of six (6) months after the Closing
Date, P&G shall pay, and assumes all other responsibility for, all monies due
and owing to applicable federal or state authorities under the Medicaid and
state rebate programs or to non-wholesaler customers pursuant to product
discount
<PAGE> 14
or similar agreements for P&G's NDC codes for the Products. For all
such monies which become due and owing more than six (6) months after the
Closing Date, Buyer shall reimburse P&G in the amount of such monies actually
paid by P&G within thirty (30) days of P&G's billing of such monies.
(c) Chargebacks For a period of three (3) months after the
Closing Date, P&G shall pay, and assumes all other responsibility for, all
monies due and owing to wholesalers arising from product discount or similar
agreements or federal and state government contracts under applicable programs
for P&G's NDC codes for the Products. For all such monies which become due and
owing more the three (3) months after the Closing Date, Buyer shall reimburse
P&G in the amount of such monies actually paid by P&G within thirty (30) days of
P&G's billing of such monies.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF P&G
Except as otherwise set forth in the Schedules hereto, P&G hereby represents,
warrants and covenants to Buyer that as of the date hereof and as of Closing:
6.1 Status of P&G. P&G: (i) is a corporation duly organized and validly
existing and in good standing under the laws of the State of Ohio, (ii) has all
necessary corporate power and authority to own its properties and to conduct its
business as presently conducted, and (iii) is duly qualified as a foreign
corporation and is in good standing in those jurisdictions where the failure to
so qualify would have a material adverse effect on the Assets or the
manufacture, distribution and sale of the Products as conducted by P&G
immediately prior to the date hereof.
6.2 P&G's Authority to Consummate Transaction. The execution, delivery
and performance of this Agreement and the Trademark Assignment, the Bill of
Sale, the Security Agreement and all other documents provided for herein to
which P&G is a party (the "Related Agreements"), and the consummation of the
transactions contemplated herein and therein, are within the corporate power of
P&G, have been or will be duly authorized by all necessary corporate proceedings
and such agreements have been or will be, on or prior to the Closing Date, duly
executed and delivered by P&G.
6.3 Compliance with Other Instruments. Neither the execution, delivery
nor performance of this Agreement or the Related Agreements nor the consummation
of the transactions contemplated herein and therein: (i) requires any material
approval, consent or withholding of objections on the part of any federal, state
or local regulatory or governmental body, or any Affiliate of P&G, except as may
be required to effectuate the assignment of Registrations and the Trademarks
(other than reporting requirements relating to Hart-Scott-Rodino reporting
requirements), (ii) will result in any violation or breach of any term or
provision of P&G's Certificate of Incorporation or Bylaws or any other
organizational documents of P&G or its Affiliates; or (iii) will constitute a
default under any indenture, mortgage, deed of trust, license agreement or other
contract or agreement to which P&G or its Affiliates is a party or to which it
or any of its properties may be subject; or (iv) materially violates any
provision of any judicial, governmental or administrative order, writ,
injunction, award, judgment or decree applicable to P&G, its Affiliates or the
Products.
6.4 Binding Obligations. This Agreement and the Related P&G Agreements
have been duly and validly authorized, executed and delivered by P&G and/or its
Affiliates and, when executed and
<PAGE> 15
delivered by Buyer, will constitute valid and binding obligations of P&G and its
Affiliates, enforceable in accordance with their respective terms.
6.5 Brokerage and Finder's Fees. Except for P&G's employment of
Goldman, Sachs & Co., (the fees of which P&G is solely responsible for) neither
P&G nor any officer, director or agent of P&G has employed any broker, finder or
agent with respect to this Agreement or the transactions contemplated hereby and
no such broker, finder or agent is entitled to any commission or fee with
respect to this Agreement or any such transaction. P&G shall indemnify Buyer
against any claim or loss incurred or suffered as a result of any broker's
commission of finder's fee payable or alleged to be payable because of any
statement, act or omission of P&G or any of P&G's Affiliates.
6.6 Title. P&G or its Affiliates: (i) is the true and lawful owner of
each of the Assets and has all necessary power and authority to sell and
transfer each of the Assets to Buyer, free and clear of all claims, liens,
security interests, licenses and other encumbrances and no party other than P&G
and Buyer has any interest in, or right to, any of the Assets; (ii) except as
set forth herein, there exists no material condition, restriction or reservation
affecting the title to or the utility of any of the Assets which would prevent
Buyer from utilizing the Assets or any part thereof; (iii) upon execution and
delivery to Buyer of the Trademark Assignment and Bill of Sale, Buyer will
acquire good and valid title to each of the Assets, free and clear of all
material claims, liens, security interests, licenses and other encumbrances;
(iv) upon execution and delivery of this Agreement, and subject to the terms and
conditions of this Agreement and the Contract Manufacturing Agreement, Buyer
will have the right to use the Know-How without material limitation so as to
enable Buyer or its assignee to manufacture or have manufactured and sell the
Products; and (v) P&G has all requisite power and lawful authority to own each
of the Assets and to carry on its business of the manufacture and sale of the
Products as now being conducted.
6.7 Intellectual Property.
(1) The Trademarks and the Know-How listed in SCHEDULE 1.1(a)
and SCHEDULE 1.1(b) respectively constitute, as of the Closing Date,
all of the intellectual property reasonably necessary to enable the
manufacture and sale of the Products by Buyer in compliance with all
applicable laws, rules and regulations in the countries where the
Products are sold as of the Closing Date.
(2) The United States registrations of the Trademarks and the
Canadian registration of ENTEX are valid and in full force and effect.
To P&G's knowledge, P&G has the right in the United States and its
territories to use the Trademarks, and the right in Canada to use
ENTEX, free and clear of any liens, restrictions or encumbrances. P&G
has granted no third-party licenses to use the Trademarks that are now
in effect.
(3) P&G has not received actual notice that its use of the
Trademarks infringes the trademark rights of any third party in the
United States or Canada.
(4) Except as set forth in this Agreement, to P&G's knowledge,
there is no restriction or prohibition which would prevent or
materially restrict the disclosure and sale of the Know-How to Buyer
hereunder or the sale of the Assets to Buyer.
<PAGE> 16
(5) Except with respect to the proposed monograph covering
cough and cold products, P&G has no notice of a violation which might
result in the withdrawal or material restriction by the FDA of P&G's
right to manufacture, use and sell the Products in the United States.
6.8 Contracts. Except for this Agreement, the Related Agreements and
the contracts listed in SCHEDULE 6.8:
(1) There are no material contracts currently in effect or
currently being negotiated between P&G and/or any of its Affiliates and
third parties and involving any of the Assets.
(2) There are no material sales representative agreements,
distributor agreements, broker agreements, manufacturer representation
agreements or license agreements affecting the Assets or the Products.
(3) There are no material contracts which are necessary for
P&G's or P&G's Affiliates manufacture and sale of the Products as of
the Closing Date.
(4) There are no material contracts necessary for manufacture,
use, of sale of the Products rights to which have not been assigned to
Buyer on or prior to the Closing Date
(5) Neither P&G nor any of P&G's Affiliates is in default
under any contract which default would have a material adverse effect
upon Buyer's manufacture, use and sale of the Products, no other party
to any such contract is in material default under any of such contracts
as of the Closing Date, there is no condition which exists that, with
notice or lapse of time or both, would constitute a material default
thereunder, and no notice of default under any such contract has been
given or received and not resolved by P&G as of the Closing Date.
(6) There is no such contract as to which P&G or any of its
Affiliates has received notice of termination.
(7) As used in this Section 6.8, the term "contracts" means
any and all oral and written contracts, agreements, licenses, royalty
agreements, territorial or agency agreements, sales representative
agreements, distribution or distributor agreements, manufacture's
representatives agreements, royalty agreements, commitments or other
arrangements of any kind.
6.9 Product Registrations. The Schedule of Registrations attached
hereto as SCHEDULE 1.1(d) hereof sets forth all of P&G's and P&G's Affiliates'
Registrations specific to the Products in the United States and Canada. Each of
such Registrations is current and in full force and effect. To P&G's knowledge,
no proceeding is pending or threatened to revoke or limit any Registration in
any material fashion. Except as set forth on SCHEDULE 1.1(d), all of such
Registrations are assignable to Buyer and, subject to Section 1.3, shall be
assigned to Buyer as of the Closing Date.
6.10 Asset Warranties. Except as may be otherwise set forth in this
Agreement or in the Schedules or Exhibits hereto, P&G is selling and/or
otherwise transferring all of the Assets to Buyer hereunder "as is-where is" and
without any warranty. P&G warrants that the Inventory sold or transferred
<PAGE> 17
to Buyer shall: (i) not be adulterated within the meaning of any applicable food
and/or drug law or regulation (U.S. federal, state or local); (ii) comply with
all federal, state and local laws, rules and regulations (including without
limitation) CGMP (as defined in the Contract Manufacturing Agreement) applicable
to the manufacture of the Inventory; and (iii) not be the subject of any notice
directed specifically to P&G from any court or other competent governmental body
with respect to the Products that P&G is in violation of any law, regulation,
order, decree or ruling of or restriction imposed by any judicial, governmental
or regulatory body or agency, whether local, state or Federal, applicable and in
effect as of the Closing Date. P&G MAKES NO OTHER WARRANTIES WITH RESPECT TO THE
ASSETS OTHER THAN AS SET FORTH IN THIS AGREEMENT. NO OTHER WARRANTY IS EXPRESSED
OR IMPLIED BY P&G INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND NONE SHALL BE IMPLIED. P&G shall not be liable for
Buyer's consequential, special or indirect damages.
6.11 Customer Lists. The Schedule of Customers attached hereto as
SCHEDULE 6.11 hereof lists, by location and dollar volume (for the twelve (12)
complete calendar months prior to the Closing Date) all of the parties (the
"Customers") in the United States and Canada to whom P&G sold amounts of any of
the Products in excess of Five Thousand U.S. Dollars (US$ 5,000) in any fiscal
year or part thereof during such period. P&G has no outstanding orders in excess
of Ten Thousand U.S. Dollars (US$ 10,000) for Products from any of the Customers
except as may be set forth in Section 2 of the Schedule of Customers. P&G has no
knowledge that any Customer intends to cancel or otherwise modify its
relationship with P&G or, except for Customers which are Affiliates of P&G as
set forth on SCHEDULE 6.11, to materially decrease or limit its usage or
purchase of Products. SCHEDULE 6.11 sets forth all purchase orders for Products
which are unfilled as of the Closing Date.
6.12 Financial Information. The financial information set forth in
SCHEDULE 6.12 is in accordance with the books and records of P&G. P&G believes
such information to be substantially accurate and to fairly present the business
according to the knowledge of P&G as of the period covered by such information.
6.13 Conduct of Business. Since January 1, 1996, P&G has carried on the
business of manufacturing and selling the Products in the ordinary course. Until
the Closing, P&G will carry on the business of manufacturing and selling the
Products in substantially the same manner as conducted immediately prior to the
execution of this Agreement and will not enter into any contract or commitment
or engage in any transaction not in the ordinary or normal course of business
nor will P&G sell, dispose of or encumber any of the Assets in any way. There
will be no price increase nor special buy-in terms offered to customers.
6.14 Governmental Regulations. As of the Closing Date, P&G has no
knowledge that there is, nor has P&G received any notice of, any alleged
violation of any applicable federal, state, local or foreign law, ordinance,
regulation, order, judgment, injunction, award, decree or other requirement of
any governmental or regulatory body, court or arbitrator, which violation could
have a material adverse effect on the manufacturing or sale of the Products. P&G
holds, and at all times has held, all licenses, permits, registrations and
authorizations necessary for the lawful manufacture and sale of the Products in
the United States and Canada pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over P&G.
All
<PAGE> 18
reports required by law have been filed with the regulatory agency having
jurisdiction and, to P&G's knowledge, there is no action pending or threatened
by any regulatory agency which would affect: (i) the Assets being transferred
hereunder, or (ii) Buyer's ability to sell the Products, except for the proposed
FDA monograph regarding cough and cold products.
6.15 Litigation. Except as set forth in SCHEDULE 6.15 hereof, there are
no: (i) outstanding orders, judgments, injunctions, awards or decrees of any
court or arbitrator or (to P&G's knowledge) other governmental regulatory body,
or (ii) actions, suits, personal injury or product liability claims, legal,
administrative or arbitral proceedings or (to P&G's knowledge) investigations
(whether or not the defense thereof or liabilities in respect thereto are
covered by insurance) that are either pending, in effect or (to P&G's knowledge)
threatened against or relating to the Assets or the Products in the United
States or Canada. Except as set forth in SCHEDULE 6.15, in the last five (5)
years prior to the Closing Date, there have been no lawsuits or claims
(including, without limitation, any insurance and product liability claims)
involving P&G and relating to the Products in the United States, Puerto Rico, or
any other country where P&G or its Affiliates market the Product. There are no
letters of adverse finding, Form 483's, regulatory actions relating specifically
to the Products received by P&G in the United States or Canada within the last
five (5) years. P&G is self-insured with regard to the Products.
6.16 Compliance. To P&G's knowledge, there are no decisions or pending
decisions by any United States governmental or regulatory body stating that any
of the Products are defective or unsafe for use in accordance with their
labeling. There have been no recalls ordered by any such governmental or
regulatory body with respect to the Products within the five (5) years prior to
the Closing Date.
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to P&G that as of the date hereof and as of
Closing:
7.1 Status of Buyer. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Buyer has all necessary corporate power and authority to own its properties and
to conduct its business as presently conducted.
7.2 Buyer's Authority to Consummate Transactions. The execution,
delivery and performance of this Agreement and the Note, the Security Agreement,
the Assumption Agreement and all other documents provided for herein to which
Buyer is a Party (the "Related Buyer Agreements") and the consummation of the
transactions contemplated herein and therein, are within the corporate power of
Buyer, have been or will be duly authorized by all necessary corporate
proceedings and such agreements have been or will be, on or prior to the Closing
Date, duly executed and delivered by Buyer.
7.3 Compliance with Other Instruments. Neither the execution, delivery
or performance of this Agreement or the Related Buyer Agreements, nor the
consummation of the transactions contemplated herein and therein: (i) requires
Buyer to obtain the consent of any governmental agency, except as may be
provided for under Section 1.3 hereof; (ii) will result in any violation or
breach of any term or provision of Buyer's Articles of Incorporation or By-Laws;
or (iii) will constitute a default under any indenture, mortgage, deed of trust
or other contract or agreement to which Buyer is a party or to which it or any
of its properties may be subject.
<PAGE> 19
7.4 Binding Obligations. This Agreement and the Related Buyer
Agreements have been duly and validly authorized, executed and delivered by
Buyer and, when executed and delivered by P&G, will constitute valid and binding
obligations of Buyer, enforceable in accordance with their terms, except as
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally.
7.5 Brokerage and Finder's Fees. Neither Buyer nor any officer,
director or agent of Buyer has employed any broker, finder or agent with respect
to this Agreement or the transactions contemplated hereby and no such broker,
finder or agent is entitled to any commission or fee with respect to this
Agreement or any such transaction. Buyer shall indemnify P&G against any claim
or loss incurred or suffered as a result of any broker's commission or finder's
fee payable or alleged to be payable because of any statement, act or omission
of Buyer or any of Buyer's Affiliates.
ARTICLE 8 - CONDUCT AND TRANSACTIONS RELATING TO CLOSING
8.1 Access to Records and Property of P&G. From the date of this
Agreement until the Closing Date, P&G shall give Buyer and its authorized
representatives reasonable access to the Assets including documents,
manufacturing facilities, technical and manufacturing information and data,
quality assurance procedures and data, marketing and advertising information,
data and materials and clinical research to the extent available and relating to
the Assets. P&G shall, at P&G's cost, provide Buyer with copies of any such
documents, information or data.
8.2 Preservation of Goodwill. Prior to the Closing Date, P&G shall use
commercially reasonable efforts to preserve for Buyer the goodwill of P&G with
its suppliers, agents and customers as such goodwill relates to the Assets.
8.3 Mutual Cooperation. The parties agree to mutually cooperate with
respect to closing the transaction herein and fulfilling the purposes of this
Agreement prior to and following Closing, including providing and executing such
additional documentation and communications as may be appropriate for such
purposes.
8.4 ADR Reporting.
(1) P&G shall notify the Buyer of any serious adverse
reactions occurring in the United States or in Canada and reported to
it in respect of the Products within two (2) working days of receipt of
the report and thereafter shall promptly supply Buyer with all further
details which become available to P&G with respect to any such
reactions. A "serious adverse reaction" shall have the same definition
as provided in 21 C.F.R. Section 314.80 as may be amended from time to
time.
(2) P&G shall keep the Buyer informed on a quarterly basis of
all other adverse reactions occurring in the United States or in Canada
reported to it in respect of the Products.
ARTICLE 9 - GENERAL INDEMNIFICATION
<PAGE> 20
9.1 P&G's Indemnity. P&G agrees to indemnify, defend and hold harmless
Buyer (and its directors, officers, employees, Affiliates, successors and
assigns) from and against all losses, personal injuries, liabilities, damages,
deficiencies, costs or expenses (including, without limitation, interest,
penalties and reasonable attorneys fees and disbursements) ("Losses") based
upon, arising out of or otherwise in respect of:
(1) any inaccuracy in or breach of any representation,
warranty, covenant or agreement of P&G contained in this Agreement;
provided, however, that any such Loss shall have been first asserted in
writing by a third party against P&G or Buyer (or any Affiliate
thereof) within eighteen (18) months after the Closing Date, and
provided further that P&G's total obligation under this Section 9.1(1)
shall not exceed US$15,000,000;
(2) the operations of P&G or the manufacturing, packaging or
distribution of Products by or on behalf of P&G prior to the Closing
Date (including without limitation product liability claims); provided,
however, that any such Loss shall have been first asserted in writing
by a third party against P&G or Buyer (or any Affiliate thereof) within
eighteen (18) months after the Closing Date; or
(3) failure of P&G to comply with any of its material
obligations under this Agreement; provided, however, that any such Loss
shall have been first asserted in writing against P&G within eighteen
(18) months after the Closing Date (for obligations to be performed on
or before the Closing Date) or within eighteen (18) months after the
date due (for obligations to be performed after the Closing Date).
Notwithstanding anything herein to the contrary, neither P&G nor any Affiliate
of P&G shall have any liability hereunder unless and until the aggregate Losses
alleged by Buyer hereunder shall exceed US $600,000, and neither P&G nor any of
its related companies shall have any liability for the first $200,000 in the
aggregate amount of such losses.
9.2 Buyer's Indemnity. Buyer agrees to indemnify, defend and hold
harmless P&G (and its directors, officers, employees, Affiliates, successors and
assigns) from and against all Losses based upon, arising out of or otherwise in
respect of:
(1) any inaccuracy in or breach of any representation,
warranty, covenant or agreement of Buyer contained in this Agreement;
provided, however, that any such Loss shall have been first asserted in
writing against Buyer (or its Affiliates) within eighteen (18) months
after the Closing Date;
(2) the operations of Buyer or the manufacturing or
distributing of Products by or on behalf of Buyer (other than by P&G
pursuant to the Contract Manufacturing Agreement, the terms of which
shall govern P&G's liability for manufacturing done thereunder), after
the Closing Date; or
<PAGE> 21
(3) failure of Buyer to comply with any of its material
obligations under this Agreement; provided, however, that any such Loss
shall have been first asserted in writing against Buyer (or its
Affiliates) within eighteen (18) months after the Closing Date (for
obligations to be performed on or before the Closing Date) or within
eighteen (18) months after the date due (for obligations to be
performed after the Closing Date);
(4) any liability assumed under the Assumption Agreement.
9.3 Legal Proceedings.
(a) Notice of Claim. If any legal proceeding shall be
instituted, or any claim or demand made, against an indemnified party in respect
of which an indemnifying party may be liable hereunder, or if either party
hereto for any reason shall believe that it has a claim against the other
pursuant to this Article 9, then the indemnified party or the party believing it
has a claim against the other, as the case may be, (in either case, the
"Indemnified Party") shall give prompt written notice hereunder to the
indemnifying party or the party against whom the party giving notice believes it
has a claim, as the case may be (in either case, the "Indemnifying Party"). Such
notice shall specify in reasonable detail the date such underlying claim or
belief first was asserted or arose, the nature of the loss(es) for which payment
is claimed, the Section or Sections of this Agreement upon which such claim is
based and the amount alleged to be payable in respect thereto.
(b) Opportunity to Defend. If an Indemnifying Party shall
receive notice pursuant to Section 9.3(a) hereof, the Indemnifying Party shall
defend against the claims, liabilities and/or losses which are the subject of
such notice. The Indemnified Party shall have the right to participate in such
defense, trial counsel shall be chosen by the Indemnifying Party and such trial
counsel shall be reasonably satisfactory to the Indemnified Party. If the
Indemnifying Party provides notice to Indemnified Party that it shall defend
such claim, then the Indemnified Party may do so by counsel of its choice, and
the Indemnifying Party agrees to cooperate with the Indemnified Party in such
defense.
(c) Reimbursement. If the amount of any actual loss
indemnified against hereunder shall at any time subsequent to the payment of any
indemnity payable hereunder, be reduced by any recovery, settlement or other
payment (including without limitation tax benefits obtained), then the amount of
such reduction, less any expense incurred by the party receiving such recovery,
settlement or other payment in connection therewith, shall be repaid promptly to
the Indemnifying Party. In calculating the amount of the Indemnifying Party's
indemnification obligation with respect to any Loss, due regard shall be given
to any tax consequences of the Loss and any indemnification hereunder so that
after indemnification the Indemnified Party shall, as nearly as possible, be in
the same position (but no better than) that it would have been had the Loss not
occurred.
9.4 Remedy. The parties' sole and exclusive remedy for Losses under
this Agreement shall be those set forth in this Article 9. Except as
specifically set forth in this Agreement, the parties and their Affiliates
hereby waive all contribution or other rights of recovery that either party or
its Affiliates might have by statute or otherwise with respect to any Loss
hereunder.
ARTICLE 10 - RESTRICTIVE COVENANT
<PAGE> 22
10.1 Restriction. For a period of five (5) years from the Closing Date,
neither P&G nor P&G's Affiliates will Engage (as defined herein) in the
Restricted Business (as defined herein) in the United States, its territories
and Canada (the "Territory"); provided that nothing herein shall restrain or
prevent P&G or any Affiliate of P&G from purchasing or otherwise acquiring any
person or business (or part thereof) which is Engaged in the Restricted Business
in the Territory (i) if the portion of such person or business (or part thereof)
is a minor part (i.e., less than 10% of the outside sales) of the acquired
business, and (ii) P&G uses best efforts to divest itself of such minor part of
the acquired business within a commercially reasonable time.
(a) Engage. As used herein, the term "Engage" (together with
any and all variations thereof) means taking part or participating in, directly
or indirectly, as owner, partner, agent, shareholder, advisor, lender of funds
or credit or otherwise, for its own account or benefit or for the account or
benefit of any other person, firm, corporation, limited liability company,
partnership, business, entity or party.
(b) Restricted Business. As used herein, the term "Restricted
Business" means the manufacture, distribution or sale in the Territory of
prescription human pharmaceutical products with the same active ingredients (and
no other active ingredients), promoted for the same indications as the Products.
Restricted Business shall not be defined to include those activities which P&G
may perform pursuant to the Contract Manufacturing Agreement.
10.2 Other P&G Products. Buyer and P&G acknowledge that P&G Engages and
intends to continue to Engage in the business of making, using and selling the
Other P&G Products as well as other products containing the same active
ingredients (and other active ingredients) as the Products both in the Territory
and outside the Territory. Nothing contained in this Agreement, including this
Article 10, shall act to prevent or restrict P&G from making, using or selling
such products either in the Territory or outside the Territory.
ARTICLE 11 - GENERAL PROVISIONS
11.1 Investigations and Survival of Representations. The respective
representations and warranties of Buyer and P&G shall not be deemed waived or
otherwise affected by any investigation made by any party hereto. All
representations, warranties, covenants and agreements set forth herein shall
survive the execution and delivery of this Agreement and the transfer of Assets
hereunder for the periods set forth in Article 9; such covenants and agreements
including without limitation the provisions of Sections 1.1(e), 1.2, 1.3, 1.4,
and 2.3 and Articles 5, 8, 9 and 10. In the event of the termination of this
Agreement pursuant to Section 11.15 hereof, then thereafter neither Buyer nor
P&G nor any officer or director of either of them shall be under any liability
whatsoever with respect to any such representation or warranty.
11.2 Notices. All communications under the Agreement shall be in
writing and shall be either faxed, sent by courier (Federal Express or
equivalent) or mailed by first class mail, postage prepaid to the fax number
and/or address specified below. If faxed, such communication shall be deemed to
be given when sent; provided, however, that such fax shall be confirmed by
sending a hard copy by courier (by the methods specified herein) within one (1)
working day of the sending of such fax. If sent by courier or
<PAGE> 23
mailed by first class mail as specified herein, such communication shall be
deemed to be given either two (2) business days after sending (for
communications sent by courier) or five (5) business days after mailing (for
communications sent by mail). All communications hereunder shall be sent:
(1) if to P&G, at its address shown below or such other address as it
may give to Buyer by notice hereunder:
Procter & Gamble Pharmaceuticals, Inc.
One P&G Plaza
Cincinnati, Ohio 45202
Attention: Vice President & General Manager
Fax: (513) 626-6403
with a copy to:
Associate General Counsel
Legal Department
Procter & Gamble Pharmaceuticals, Inc.
One P&G Plaza
Cincinnati, Ohio 45202
Fax: (513) 626-6415
(2) if to Buyer, at its address shown below or such other address as it
may give to P&G by notice hereunder:
Dura Pharmaceuticals, Inc.
5880 Pacific Center Boulevard
San Diego, California 92121-4204
Attn: President
Fax: (619) 457-8009
Dura Pharmaceuticals, Inc.
5880 Pacific Center Boulevard
with a copy to: San Diego, California 92121-4204
Attn: Vice President and General Counsel
Fax: (619) 457-8009
11.3 Confidentiality of Information. Pursuant to the terms of the
Confidential Disclosure Agreement between the parties dated February 28, 1996,
Buyer and P&G shall each hold in confidence all documents and information
received by it in connection with the transactions contemplated by this
Agreement and, if for any reason the transactions contemplated by this Agreement
shall not be consummated, Buyer and P&G shall refrain from disclosing or
otherwise using such documents and information, in accordance with the terms of
the Confidential Disclosure Agreement.
11.4 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of the parties hereto.
<PAGE> 24
11.5 Assignment. The rights and obligations of Buyer and P&G under
this Agreement the Related P&G Agreements and the Related Buyer Agreements shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, but may not be assigned by either party
without the prior written consent of the other party or except as specifically
provided. Nothing set forth herein shall prevent either party from assigning its
rights or obligations hereunder to an Affiliate of said party provided that no
such assignment shall relieve said party of its obligations hereunder. For
purposes of this Agreement, an "Affiliate" of a party shall refer to any person
controlling, controlled by or under common control with said party with control
(together with its correlative meaning "controlled by") meaning the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such person or entity whether through ownership of
voting securities by agreement or otherwise.
11.6 Press Releases. Buyer and P&G agree to jointly approve the
text of an initial press release announcing the execution of this Agreement or
the consummation of the transactions contemplated hereby and to not use the name
of the other party in any press information, marketing or advertising materials
or other communication to the public without prior written approval (which
approval shall not be unreasonably withheld) of the other party; provided that
the foregoing shall not be deemed to prevent either party from making any public
announcement which may be required by the Securities Exchange Act of 1934 and
the regulations promulgated thereunder or by the rules and regulations of any
national securities exchange upon which the securities of either party are
traded.
11.7 Bulk Sales Statutes. Buyer waives compliance with any
applicable bulk sales statutes including the provisions of the Uniform
Commercial Code and P&G shall indemnify, defend and hold harmless Buyer with
respect to any claims made or losses incurred (including, without limitation,
attorney's fees) as a result of such waiver.
11.8 Expenses. Except as otherwise provided herein, Buyer and P&G
agree that each of the parties hereto shall bear its own expenses incurred in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. P&G will pay all sales,
use and transfer taxes payable in connection with the sale, transfer, delivery
and assignment to be made to Buyer hereunder. Buyer will pay all recording fees
payable in connection with the transactions contemplated herein.
11.9 Interpretation. All headings in this Agreement are for
convenience only and shall not affect the interpretation or meaning of any
provision hereof. All pronouns and any variations thereof refer to the
masculine, feminine, neuter, singular or plural, as the context may require.
11.10 Entirety of Agreement. This Agreement, together with the
other agreements provided for herein, and the Exhibits and Schedules hereto, set
forth the entire agreement of the parties, merge all prior negotiations,
agreements and understandings concerning the subject matter hereof and state in
full all representations and warranties which have induced this Agreement, there
being no representation or warranties other than those herein stated. To the
extent there are any inconsistencies between the provisions of this Agreement,
the Exhibits, the Schedules and any of the other agreements provided for herein,
this Agreement shall govern.
<PAGE> 25
11.11 Benefit of Agreement. This Agreement is for the benefit of
the parties hereto only and there is no intent to create benefits, rights, or
remedies in any other persons or entities.
11.12 Waiver and Preservation of Remedies. Except as otherwise set
forth herein, no delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof; nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies of any party based on, arising out of or otherwise in
respect of any inaccuracy in or breach of any representation, warranty, covenant
or agreement contained in this Agreement shall in no way be limited by the fact
that the act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject matter of any
other representation, warranty, covenant or agreement contained in this
Agreement (or in any other agreement between the parties) as to which there is
no inaccuracy or breach.
11.13 Exhibits and Schedules. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein. All references herein to
sections, subsections, clauses, exhibits and schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
11.14 Severability. If any provision of this Agreement is found or
declared to be invalid or unenforceable by any court or other competent
authority having jurisdiction, such finding or declaration shall not invalidate
any other material provision hereof, and this Agreement shall thereafter
continue in full force and effect except that such invalid or unenforceable
provision, and (if necessary) other provisions thereof, shall be reformed by a
court of competent jurisdiction so as to effect insofar as is practicable, the
intention of the parties as set forth in this Agreement, provided that if such
court is unable or unwilling to effect such reformation, the invalid or
unenforceable provision shall be deemed deleted to the same extent as if it had
never existed.
11.15 Termination.
(a) Both Parties. This Agreement may be terminated at any time
prior to the Closing: (i) by the mutual consent of P&G and Buyer; or (ii) by P&G
or Buyer if the Closing shall not have occurred on or prior to July 31, 1996,
through no fault of the party seeking to terminate.
(b) By Buyer. This Agreement may be terminated by Buyer: (i)
at any time prior to the Closing if P&G shall have failed to comply in any
material respect with any of its covenants or agreements contained in this
Agreement and such failure shall be continuing, or if any one or more of the
representations or warranties of P&G contained in this Agreement shall prove to
have been inaccurate in any material respect when made, provided that, Buyer
shall give P&G a reasonable opportunity to cure any default under this Agreement
by the payment of compensation (if the matter is reasonably capable of
rectification by that means) or by the rectification of the matter before
Closing; or (ii) at the Closing, if any of the conditions precedent to the
performance of its obligations at the Closing shall not have been fulfilled.
<PAGE> 26
(c) By P&G. This Agreement may be terminated by P&G: (i) at
any time prior to the Closing, if Buyer shall have failed to comply in any
material respect with any of its covenants or agreements contained in this
Agreement and such failure shall be continuing, or if any one or more of the
representations or warranties of Buyer contained in this Agreement shall prove
to have been inaccurate in any material respect when made; or (ii) at the
Closing, if any of the conditions precedent to the performance of its
obligations at the Closing shall not have been fulfilled.
11.16 Governing Law. This Agreement shall be governed by the laws
of the State of Ohio (regardless of the laws that might otherwise govern under
applicable Ohio principles of conflict of laws) as to all matters, including but
not limited to matters of validity, construction, effect, performance and
remedies.
11.17 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
for Purchase and Sale of Assets as of the date first set forth above.
Procter & Gamble Pharmaceuticals, Inc. Dura Pharmaceuticals, Inc.
(P&G) (Buyer)
By: /s/ MARK COLLAR By: /s/ CAM L. GARNER
---------------------------- -------------------------------
Title: V.P. Title: Chairman, President and CEO
------------------------ ----------------------------
<PAGE> 28
LIST OF SCHEDULES AND EXHIBITS
TO THE AGREEMENT FOR PURCHASE AND SALE OF ENTEX ASSETS
DATED JUNE 17, 1996 BETWEEN DURA AND PROCTER & GAMBLE
NUMBER DESCRIPTION
Schedule 1.1(a) Trademarks
Schedule 1.1(b) Know-How
Schedule 1.1(d) Registrations
Schedule 1.1(f) Purchase Orders
Schedule 1.5 Inventory Purchase Price
Schedule 6.7(4) Intellectual Property Claims
Schedule 6.8 Contracts
Schedule 6.11 Customers
Schedule 6.12 Financial Information
Schedule 6.15 Litigation
Exhibit A Trademark Assignment
Exhibit B Bill of Sale
Exhibit C Contract Manufacturing Agreement
Exhibit D Note
Exhibit E Security Agreement
Exhibit F Assumption Agreement
Appendix List of Defined Terms
<PAGE> 1
EXHIBIT 99.1
Contact: Ms. Julia Brown
Vice President, Business Development
Dura Pharmaceuticals, Inc.
(619) 457-2553
DURA PHARMACEUTICALS ANNOUNCES ACQUISITION OF ENTEX(R) PRODUCT LINE FROM
PROCTER & GAMBLE
SAN DIEGO, CA -- June 17, 1996 -- Dura Pharmaceuticals, Inc.
(NASDAQ NNM: DURA) today announced that it has signed an agreement with Procter
& Gamble Pharmaceuticals, Inc. (P&G) to acquire the entire Entex(R) brand
product line of prescription upper respiratory drugs for a total purchase price
of $45 million.
The brand commands the number one written prescription market share
position in the U.S. in the upper respiratory market with over 11 million
prescriptions written in 1995. Entex represented approximately three-quarters of
all prescriptions written for decongestant/expectorants and more than one-fourth
of the total U.S. prescriptions written for sinusitis in 1995. The four acquired
products which comprise the line are expected to make a significant contribution
to Dura's revenues and earnings in the second half of 1996. The transaction is
expected to close in early July 1996, and is subject to the review of the
Hart-Scott-Rodino filings made by the parties.
The Entex brand product line complements Dura's existing line of
prescription products marketed to the cough/cold segment of the U.S. respiratory
market. The acquired products are prescribed by the same respiratory physician
specialists and generalists currently targeted by Dura's existing national
pharmaceutical sales force. The Entex brand product line are Entex LA, Entex
PSE, Entex Caps and Entex Liquid.
<PAGE> 2
Commenting on the announcement, Dura's Chairman, President and
Chief Executive Officer, Cam L. Garner stated, "Last month we completed a
follow-on public offering of common stock in which we raised approximately $150
million, to be used to acquire additional products targeting our existing
physician base, and for other purposes. The acquisition of the well-recognized
and highly respected Entex product line represents continued execution of our
strategy to broaden our product line. Although the acquisition of Entex will
have a significant positive impact on the remainder of Dura's 1996 financial
results, it uses a small portion of the cash available for acquistitions. The
Company is continuing to actively pursue other product acquisition
opportunities."
P&G said that Entex is an excellent product line that has performed
well historically. However, it is sold mainly in the U.S. and no longer fits
well in P&G's sharper focus on investing in new, proprietary technologies where
global growth opportunities are greatest.
Dura Pharmaceuticals is a San Diego based developer and marketer of
prescription pharmaceutical products for the treatment of allergies, asthma, and
related respiratory conditions. Dura's mission is to be the leading niche
pharmaceutical and drug delivery company in the high-growth U.S. respiratory
market. The Company is pursuing that goal through two major strategies: (1)
acquiring late-stage prescription pharmaceuticals for marketing to
high-prescribing respiratory physicians and (2) developing Spiros(TM), a
proprietary pulmonary drug delivery system.
Except for the historical and factual information contained herein,
the matters discussed in this press release contain forward-looking statements
which involve risks and uncertainties, including competitive products and
pricing, and other risks detailed from time to time in the Dura's filings with
the Securities and Exchange Commission. Actual results may differ materially
from those projected. These forward-looking statements represent the Company's
judgment as of the date of this release. The Company disclaims, however, any
intent or obligation to update these forward-looking statements.
News releases from Dura Pharmaceuticals are available at no charge
through PR Newswire's On-Call fax service. For a menu of available news releases
or to retrieve a specific release made by Dura, please call (800) 758-5804,
extension 197051.
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