- Definitions.
"Actual Value" has the meaning set forth inSection 2(e)(iii)(C) below.
"Adverse Consequences" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended.
"Affiliated Group" means any affiliated group within the meaning of Code Section1504(a) or any similar group defined under a similar provision of state, or local law.
"Alpharma Credit Agreement" means the Loan and Security Agreement dated as of October 26, 2005 by and among Parent and certain of its Affiliates and Bank of America, N.A., as Administrative Agent, and the lenders party thereto from time to time, as restated, amended, supplemented or otherwise modified from time to time.
"Alpharma Credit Agreement Lien" means any security interest, pledge or other lien in existence immediately prior to the Closing under the Alpharma Credit Agreement with respect to the assets and stock of the Target Company.
"Alpharma Global Insurance Program" means the portfolio of property, casualty and executive liability insurance policies of Parent with respect to the operations of Seller (including the Global Liability, Surety, Global Property, Global Transit, Director's and Officer's Liability and other executive management liabilities policies, and the U.S. Casualty program).
"Basket" has the meaning set forth inSection 8(f) below.
"Bonus Obligations" means any payment due to Employees of the Business under the Executive Bonus Plan of Seller for the 2005 fiscal year not already paid by Target Company prior to the Closing Date.
"Business" means the assets (of every kind and description except as specifically provided elsewhere in this Agreement), liabilities (whether known or unknown, whether asserted or unasserted, whether liquidated or unliquidated, and whether due or to become due; all except as specifically provided elsewhere in this Agreement) and operations of the Target Company as conducted by the Target Company as of the Closing Date.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable securities and short-term investments) calculated in accordance with GAAP applied on a basis consistent with the preparation of the December Financial Statements. For clarification purposes, outstanding checks will be classified as Excluded Liabilities and will reduce accounts payable on the Target Pro Forma Balance Sheet and the Closing Date Pro Forma Balance Sheet.
"CERCLA" has the meaning set forth inSection 8(i) below.
"Closing" has the meaning set forth inSection 2(c)below.
"Closing Date" has the meaning set forth inSection 2(c) below.
"Closing Date Pro Forma Balance Sheet" has the meaning set forth inSection 2(e)(ii) below.
"COBRA" has the meaning set forth inSection 4(k) below.
"Code" means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder by the United States Department of Treasury.
"Confidential Information" means any information concerning the business and affairs of Target Company that is not already generally available to the public.
"Controlled Group Liability" means any and all liabilities under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) SectionSection412 and 4971 of the Code, (iv) the continuation coverage requirements of SectionSection601 et seq. of ERISA and Section4980B of the Code, (v) the portability and nondiscrimination requirements of Section701 et seq. of ERISA and SectionSection9801 et seq. of the Code, (vi) Section4975 of the Code, and (vii) corresponding or similar provisions of foreign laws or regulations.
"Current Assets" means the sum of the dollar amounts reflected on the Target Pro Forma Balance Sheet and the Closing Date Pro Forma Balance Sheet, respectively, for accounts receivable, inventory, prepaid expenses and other items that would be classified as "current assets" in accordance with GAAP; provided, however, that any Excluded Assets shall be excluded from such sum.
"Current Liabilities" means the sum of the dollar amounts reflected on the Target Pro Forma Balance Sheet and the Closing Date Pro Forma Balance Sheet, respectively, for accounts payable, accrued expenses and current non-Income Tax payable and other items that would be classified as "current liabilities" in accordance with GAAP; provided, however, that accruals or reserves with respect to Intercompany Payables, current income taxes payable, Retention Arrangements and any Excluded Liabilities shall be excluded from such sum.
"December Financial Statements" has the meaning set forth inSection 4(d) below.
"Disclosure Schedule" has the meaning set forth inSection 4 below.
"Draft Closing Date Pro Forma Balance Sheet" has the meaning set forth inSection 2(e)(i) below.
"Employee Benefit Plan" means any "employee benefit plan" (as such term is defined in ERISA Section3(3)) and any other material employee benefit plan, program, arrangement, policies, and practices providing benefits to any Employee of the Business or former employee of the Target Company or beneficiary or dependent thereof, or to present or former directors whether or not written, and whether covering one person or more than one person, sponsored or maintained by the Target Company or any ERISA Affiliate or to which the Target Company or any ERISA Affiliate contributes or is obligated to contribute or under which any Employee of the Business or former employee or director of the Target Company is entitled to any compensation or benefits (whether or not contingent) as a result of service to the Target Company or an ERISA Affiliate. Without limiting the generality of the foregoing, the term "Plans" includes all Employee Welfare Benefit Plans and all Employee Pension Benefit Pl ans, and all employee stock option or stock purchase plans, bonus or incentive plans or programs, severance pay plans, policies, practices or agreements, fringe benefits, and employment agreements.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Section3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section3(1).
"Employees of the Business" means all Persons employed on the Closing Date by the Target Company who are actively at work but also including any employees who are on an approved short-term leave of absence (including medical leave) or vacation provided that any such Person returns to work within 180 days of the earlier of the date the leave began or Closing.
"Environmental, Health, and Safety Requirements" means all federal, state or local statutes, regulations, and ordinances concerning public health and safety, worker health and safety, pollution, or protection of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances, or wastes, as such requirements are enacted and in effect on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means each entity that is treated as a single employer with the Target Company for purposes of Code Section414 or ERISA Section4001(a)(14) or 4001(b)(1).
"Excluded Assets" means (a) any Cash or Intercompany Receivables, (b) any refund, credit or other asset relating to any Income Tax, (c) any rights of Target Company under this Agreement, (d) any insurance policy under the Alpharma Global Insurance Program and all rights thereunder and (e) prepaid insurance amounts related to the Alpharma Global Insurance Program.
"Excluded Liabilities" means (a) any liabilities of the Target Company as of the Closing Date with respect to Bonus Obligations, (b) any liabilities of the Target Company arising out of any personal injury and/or death or damage to property relating to the Products marketed, distributed, sold or otherwise provided by, or on behalf of, the Target Company prior to the Closing to the extent a claim is made during the period beginning on the date of this Agreement and ending on the fourth anniversary of the Closing Date, (c) any Intercompany Payables, (d) Target Company's pension liabilities, (e) any Income Tax liabilities of the Target Company for any Pre-Closing Period, including (but not limited to) those arising in connection with the consummation of the transactions contemplated hereby, (f) accruals for U.S. audit fees related to the audit by BDO Seidman, LLP of Parent's consolidated financial statements for the years ended December 31, 2005 and 2006, and (g) an y liabilities of the Target Company for periods prior to the Closing Date for drug rebates owed by the Target Company pursuant to the Medicaid Drug Rebate Program created under the Omnibus Reconciliation Act of 1990 or any related state program, including any amounts owed to the State of California - Department of Health Services pursuant to such program and/or California's Supplemental Rebate Program.
"FDA" means the United States Food and Drug Administration, and any successor agency or entity thereto that may be established hereafter.
"FDC Act" means the U.S. Food, Drug & Cosmetic Act, 21 U.S.C. Section321, et seq., as amended.
"Final Pro Forma Working Capital" means the Working Capital set forth on the Closing Date Pro Forma Balance Sheet.
"GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied.
"Guaranty" has the meaning set forth inSection 2A(a) below.
"Guarantor" has the meaning set forth in the preface above.
"Home Medical Equipment" means equipment that enables individuals who are elderly, injured or disabled to function in a more normal manner, including mobility, bath safety, incontinence, wound care and respiratory products, compression hosiery and braces/supports.
"High Value" has the meaning set forth inSection 2(e)(iii)(B) below.
"Income Tax" means any U.S. federal, state or local income tax measured by or imposed on net income, including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule, attachment thereto and including any amendment thereof.
"Indemnified Party" has the meaning set forth inSection 8(e)(i) below.
"Indemnifying Party" has the meaning set forth inSection 8(e)(i) below.
"Intellectual Property" means all intellectual property owned or licensed (as licensor or licensee) by the Target Company in which the Target Company has a proprietary interest, including (i) the Target Company's name, all assumed fictional business names, trade names, registered and unregistered trademarks, service marks and applications; (ii) all patents, patent applications and inventions and discoveries that may be patentable; (iii) all registered and unregistered copyrights in both published works and unpublished works; (iv) all rights in mask works; (v) all know-how, trade secrets, confidential or proprietary information, customer lists, ideas, software, technical information, data, process technology, plans, drawings and blue prints; and (vi) all rights in internet web sites and internet domain names presently used by the Target Company.
"Intercompany Payables" means obligations owed by Target Company to Parent or any of its Affiliates.
"Intercompany Receivables" means obligations owed to Target Company by Parent or any of its Affiliates.
"Inventory" means all finished goods of Target Company.
"Knowledge of Seller" means the actual knowledge of Dom Palmo (VP/GM), James Hillman (VP - Sales/Mkt), Robert Vaccaro (Director - Finance), Paul Santoro (Director IT), Colleen Greiner (Director - Sales), Kathleen Hillman (Director - Ops), and Jeff Campbell (VP/Finance for Parent) after reasonable inquiry.
"Leased Real Property" means all of Target Company's leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures, or other interest in real property.
"Leases" means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto, pursuant to which Target Company holds any Leased Real Property.
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (b) purchase money liens and liens securing rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.
"Low Value" has the meaning set forth inSection 2(e)(iii)(A) below.
"Material Adverse Effect" or "Material Adverse Change" means any effect or change that would be materially adverse to the business, results of operations or condition of the Business, taken as a whole; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect or Material Adverse Change: (a) any adverse change, event, development, or effect arising from or relating to (1) general business or economic conditions, including such conditions related to the Business, (2) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installat ion, equipment or personnel of the United States, (3) financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (4) changes in United States generally accepted accounting principles, (5) changes in laws, rules, regulations, orders, or other binding directives issued by any governmental entity, (6) any recall order issued by the FDA or a voluntary recall reasonably undertaken by Target Company or a third party manufacturer with respect to any Product, or (7) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby; or (b) any adverse change in or effect on the Business that is cured by Target Company before the earlier of (1) the Closing Date and (2) the date on which this Agreement is terminated pursuant toSection 10(a) hereof. Without limiting the generality of the forgoing, the Parties agree that the loss of Warner-Chilcott as a custome r of the Target Company, and the Warner-Chilcott business, generally, shall not constitute a Material Adverse Effect or Material Adverse Change.
"Multiemployer Plan" has the meaning set forth in ERISA Section3(37).
"Obligations" has the meaning set forth inSection 2A(a) below.
"Ordinary Course of Business" means the ordinary course of business of the Business consistent with past custom and practice (including with respect to quantity and frequency).
"Owned Real Property" means all land, together with all buildings, structures, improvements, and fixtures located thereon, and all easements and other rights and interests appurtenant thereto, owned by Target Company.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" means with respect to each parcel of Owned Real Property: (a) real estate taxes, assessments and other governmental levies, fees, or charges imposed with respect to such Owned Real Property that are (i) not due and payable as of the Closing Date or (ii) being contested by appropriate proceedings; (b) mechanics liens and similar liens for labor, materials, or supplies provided with respect to such Owned Real Property incurred in the Ordinary Course of Business for amounts that are (i) not delinquent and do not exceed $100,000 or (ii) being contested by appropriate proceedings; (c) zoning, building codes, and other land use laws regulating the use or occupancy of such Owned Real Property or the activities conducted thereon that are imposed by any governmental authority having jurisdiction over such Owned Real Property; and (d) easements, covenants, conditions, restrictions, and other similar matters affecting title to su ch Owned Real Property and other title defects that do not or would not materially impair the use or occupancy of such Owned Real Property in the operation of the Business taken as a whole.
"Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a governmental entity (or any department, agency, or political subdivision thereof).
"Post-Closing Period" means any taxable period or portion thereof that is not a Pre-Closing Period.
"Pre-Closing Period" means any taxable period or portion thereof ending on or before the Closing Date or, as the context may require, all such periods. If a taxable period begins on or before the Closing Date and ends after the Closing Date, then the portion of the taxable period to the end of the Closing Date shall constitute a Pre-Closing Period.
"Preliminary Purchase Price" has the meaning set forth inSection 2(b)below.
"Premier Group Rebates" means the rebates due to the Target Company from The Premier Group and certain participating vendors which will be identified in account #2001040 entitled "AP Vendor Credits Due Us" on the Target Company's balance sheet on the date of Closing. For information purposes only, the Premier Group Rebates as of December 31, 2005 totaled $1,441,905 in the aggregate.
"Products" means the products sold and distributed by the Business.
"Purchase Price" has the meaning set forth inSection 2(f) below.
"Retention Arrangements" means those letter agreements issued to Employees of the Business listed inSection 6(e)(ii)of the Disclosure Schedule.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the preface above.
"Target Company" has the meaning set forth in the preface above.
"Target Pro Forma Balance Sheet" means the pro forma balance sheet of the Business as of December 31, 2005 attached hereto asExhibit A.
"Target Working Capital" means the Working Capital of the Business as of December 31, 2005 set forth on the Target Pro Forma Balance Sheet.
"Tax" or "Taxes" means any U.S. federal, state or local income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax, including any interest, penalty, or addition thereto.
"Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
"Third-Party Claim" has the meaning set forth inSection 8(e)(i)below.
"WARN Act" has the meaning set forth inSection 4(m)(i) below.
"Working Capital" means Current Assets less Current Liabilities.
- Purchase and Sale of Stock of TargetCompany.
- Basic Transaction. On and subject to the terms and conditions of this Agreement, for the consideration specified below in thisSection 2, Buyer agrees to purchase from Seller, and Seller agrees to sell to Buyer all of the issued and outstanding capital stock of the Target Company; provided that, prior to such purchase and sale Seller shall take all action necessary to effect the (i) transfer from Target Company to Seller of all of the Excluded Assets, and (ii) assumption by Seller from Target Company of all of the Excluded Liabilities. The Parties agree that Parent and/or Seller shall be entitled to conduct and control, in their sole discretion, the defense of any claim or matter which is an "Excluded Liability" hereunder provided, however, that Parent and/or Seller will not consent to the entry of any judgment or enter into any settlement with respect to any such Excluded Liability without th e prior written consent of Buyer (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Seller or the Target Company or establish any judicial or other legally binding precedent potentially adverse to the Business.
(b)Preliminary Purchase Price. Buyer agrees to pay to Seller at the Closing, $40,100,000 (the "Preliminary Purchase Price"), by delivery of cash payable by wire transfer or delivery of other immediately available funds. The Preliminary Purchase Price shall be subject to post-Closing adjustment as set forth below in thisSection 2.
- The Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Parent in Fort Lee, New Jersey commencing at 10:00 a.m. local time on the third business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date as Buyer and Seller may mutually determine (the "Closing Date").
- Deliveries at Closing. At the Closing, (i) Seller will deliver to Buyer the various certificates, instruments, and documents referred to inSection 7(a) below, (ii) Buyer will deliver to Seller the various certificates, instruments, and documents referred to inSection 7(b) below, (iii) Seller shall execute and acknowledge (if appropriate) (A) an assignment of Excluded Assets and assumption of Excluded Liabilities in forms to be reasonably agreed upon by the Parties, and (B) such other instruments of sale, transfer, conveyance, and assignment as Buyer and its counsel may reasonably request and (iv) Buyer will deliver to Seller the consideration specified inSection 2(b) above.
- Preparation of Closing Date Pro Forma Balance Sheet.
- Within 60 days after the Closing Date, Buyer will prepare and deliver to Seller a draft consolidated balance sheet (the "Draft Closing Date Pro Forma Balance Sheet") for the Business as of the close of business on the Closing Date. Buyer will prepare the Draft Closing Date Pro Forma Balance Sheet in accordance with GAAP applied on a basis consistent with the preparation of the Target Pro Forma Balance Sheet and the Target Working Capital derived therefrom.
- If Seller has any objections to the Draft Closing Date Pro Forma Balance Sheet, Seller shall deliver a detailed statement describing its objections to Buyer within 45 days after receiving the Draft Closing Date Pro Forma Balance Sheet. Buyer and Seller shall use reasonable efforts to resolve any such objections themselves. If the Parties do not obtain a final resolution within 30 days after Buyer has received the statement of objections, Buyer and Seller shall select an accounting firm mutually acceptable to them to resolve any remaining objections. If Buyer and Seller are unable to agree on the choice of an accounting firm, they will select a nationally-recognized accounting firm by lot (after excluding their respective regular outside accounting firms and PricewaterhouseCoopers LLP). The determination of any accounting firm so selected shall be set forth in writing and shall be conclusive and binding upon the Parties. Buyer shall revise the Draft Closing Date Pro Forma Balance Sheet as appropriate to reflect the resolution of any objections thereto pursuant to thisSection 2(e)(ii). The "Closing Date Pro Forma Balance Sheet" shall mean the Draft Closing Date Pro Forma Balance Sheet together with any revisions thereto pursuant to thisSection 2(e)(ii).
- In the event the Parties submit any unresolved objections to an accounting firm for resolution as provided inSection 2(e)(ii) above, Buyer and Seller shall share responsibility for the fees and expenses of the accounting firm as follows:
- if the accounting firm resolves all of the remaining objections in favor of Buyer (the Final Pro Forma Working Capital so determined is referred to herein as the "Low Value"), Seller shall be responsible for all of the fees and expenses of the accounting firm;
- if the accounting firm resolves all of the remaining objections in favor of Seller (the Final Pro Forma Working Capital so determined is referred to herein as the "High Value"), Buyer shall be responsible for all of the fees and expenses of the accounting firm; and
- if the accounting firm resolves some of the remaining objections in favor of Buyer and some objections in favor of Seller (the Final Pro Forma Working Capital so determined is referred to herein as the "Actual Value"), Seller shall be responsible for that fraction of the fees and expenses of the accounting firm equal to (x) the difference between the High Value and the Actual Value over (y) the difference between the High Value and the Low Value, and Buyer shall be responsible for the remainder of the fees and expenses.
- Buyer will make the work papers and back-up materials used in preparing the Draft Closing Date Pro Forma Balance Sheet, and the books, records, and financial staff of the Business available to Seller and Parent and their accountants and other representatives at reasonable times and upon reasonable notice at any time during (A) the preparation by Buyer of the Draft Closing Date Pro Forma Balance Sheet, (B) the review by Seller of the Draft Closing Date Pro Forma Balance Sheet, and (C) the resolution by the Parties of any objections thereto.
- Adjustment to Preliminary Purchase Price.
(a) The Preliminary Purchase Price shall be adjusted as follows:
- If the Final Pro Forma Working Capital exceeds the Target Working Capital by an amount greater than $250,000, Buyer will pay to Seller an amount equal to the full amount of such excess by wire transfer or delivery of other immediately available funds within 3 business days after the date on which the Final Pro Forma Working Capital finally is determined pursuant toSection 2(e) above.
- If the Final Pro Forma Working Capital is less than the Target Working Capital by an amount greater than $250,000, Seller shall pay to Buyer an amount equal to the full amount of such deficiency by wire transfer or delivery of other immediately available funds within 3 business days after the date on which the Final Pro Forma Working Capital finally is determined pursuant toSection 2(e) above.
- If the Final Pro Forma Working Capital is equal to the Target Working Capital, or greater than or less than the Target Working Capital by an amount equal to or less than $250,000, then the Preliminary Purchase Price shall not be adjusted.
(b) In addition to the adjustment for Working Capital contemplated above, if any, Seller shall pay to Buyer the net proceeds from the sale of any fixed asset of the Target Company listed on the Schedule of Fixed Assets dated December 31, 2005, but only to the extent such sale is consummated after December 31, 2005 and prior to the Closing. Any such payments shall be considered adjustments to the Preliminary Purchase Price.
The Preliminary Purchase Price as so adjusted, if at all, is referred to herein as the "Purchase Price."
Section 2A.Guaranty.
(a)Guaranty. Guarantor hereby unconditionally and absolutely guarantees (this "Guaranty"), as a primary obligor and not merely as surety, the full and punctual payment and performance of all debts, obligations and liabilities, whether such obligations are direct or indirect, absolute or contingent, now existing or subsequently arising, primary or secondary, now due or hereafter falling due, monetary or otherwise, of Buyer under this Agreement, together with all costs of collection, compromise or enforcement, including reasonable attorneys' fees, incurred with respect to any such debt, obligations or liabilities, or with respect to this or any other guaranty of any of them, or with respect to a proceeding under the federal bankruptcy laws or any moratorium, insolvency, receivership, arrangement or reorganization law or an assignment for the benefit of creditors concerningBuyer, together with interest on all such costs of collection, compromise or enforcement from the date arising (collectively, the "Obligations"). Guarantor further agrees that its liability under this Guaranty shall not be discharged, impaired, diminished or otherwise affected by any (i) extension, settlement, modification, compromise, waiver, release or renewal of any Obligation, in whole or in part or (ii) any modification or amendment or supplement to this Agreement. This Guaranty is a continuing guarantee, which shall apply to all Obligations which now exist or subsequently arise, whether or not notice of such Obligations is given to Guarantor, whether or not any or all prior Obligations had been fully paid, performed and observed before any such Obligation arose, and notwithstandingGuarantor's dissolution.
(b)Waiver of Notices, Etc. Guarantor agrees that Seller shall not be required to giveGuarantor any notice pursuant to this Guarantee, and that no failure to give any notice shall discharge, impair, diminish or otherwise affect the liability which Guarantor would have had under this Guaranty if notice had been given.Guarantor waives: (i) notice of acceptance of this Guaranty, (ii) notice of the incurring of additional or increased Obligations, (iii) notice of the application of any payment, transfer or recovery from security, (iv) presentment, demand and protest of any instrument, and notice thereof, (v) notice of nonpayment or other default under this Guaranty or under any Obligation, (vi) any right to demand public foreclosure sale of any security, (vii) notice of foreclosure, (viii) notice of any release, discharge, modification or failure to obtain any security for any of the Obligations, (ix) no tice of any waiver by Seller of any of the terms, covenants or conditions of any of the Obligations, (x) notice of the granting of any indulgence or extension of time to Buyer, (xi) notice of any modification, supplement or extension of any of the Obligations, (xii) notice of any agreement or arrangement with Buyer or any other Person, (xiii) any right to exoneration or to require election of remedies, (xiv) all suretyship defenses and (xv) any other defenses or notice requirements which may exist at law or in equity. The obligations ofGuarantor hereunder shall not be affected by (A) the failure of Seller to assert any claim or demand or to enforce any right or remedy against Buyer or under the provisions of this Agreement or (B) any rescission, waiver, amendment or modification of any of the terms or provisions of this Agreement. Guarantor further agrees that this Guaranty constitutes a guarantee of payment and performance when due and not of collection and waives an y right to require that any resort be had by Seller to any other guarantee or any security held for payment or performance of the Obligations.
(c)Reinstatement.Guarantor agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time payment or performance, or any part thereof, on any Obligation (including any payment pursuant to this Guaranty) is rescinded or must otherwise be restored by Seller upon the bankruptcy or reorganization of Buyer or otherwise.
(d)Waiver of Subrogation; Subordination.Guarantor shall have no right of subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to security for the Obligations, except when and so long as all of the Obligations have been fully paid, performed and observed, and have not been reinstated by reason of the avoidance of any transfer, the return of any payment, or otherwise. All present and future debts, obligations and liabilities of Buyer to Guarantor are hereby waived and postponed in favor of and subordinated to the full payment, performance and observance of the Obligations, andGuarantor agrees to assign and deliver to Seller on request, as security for this Guarantee, (a) any such debts, obligations or liabilities, (b) any instruments or documents evidencing the same, (c) any security therefore and (d) any payments or transfers with respect thereto, or recoveries on security therefore, received by Guarantor after default under any of the Obligations.
(e)Successors and Assigns. The benefit of this Guaranty shall run to Seller and its heirs, personal representatives, successors and assigns. The burden of this Guaranty shall bind Guarantor and its heirs, personal representatives, successors and assigns. This Guaranty shall apply to the Obligations of Buyer and of Buyer's successors and assigns, including the successor to any such Person upon any merger, consolidation, liquidation or dissolution of such Person and, including any transferee of all or substantially all of the assets of Buyer to any Person which carries on the business of Buyer.
- Representations and Warranties Concerning Transaction.
- Seller's and Parent's Representations and Warranties. Seller and Parent jointly and severally represent and warrant to Buyer and Guarantor that the statements contained in thisSection 3(a) are correct and complete as of the date of this Agreement, except as set forth in Annex I attached hereto.
- Organization of Seller and Parent. Seller and Parent are duly organized, validly existing, and in good standing under the laws of the State of Delaware. Seller is duly authorized to conduct business and is in good standing under the laws of each jurisdiction in which it conducts a material portion of its business and where such qualification is required. Seller has full corporate power and authority to carry on the business in which it is currently engaged and to own and use the material properties owned and used by it.
- Authorization of Transaction. Seller and Parent have full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform their respective obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Seller and Parent, enforceable in accordance with its terms and conditions. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Seller and Parent. Neither Seller nor Parent need give any notice to, make any filing with, or obtain any authorization, consent or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement.
- Brokers' Fees. Except for Banc of America Securities LLC, whose fees and commissions will be paid by Parent, none of Target Company, Seller or Parent has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.
- Target Shares. Except for the Alpharma Credit Agreement Lien, all of the shares of issued and outstanding capital stock of the Target Company is held of record and owned beneficially by Seller free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. Except for the Alpharma Credit Agreement Lien, Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that could require Seller to sell, transfer, or otherwise dispose of any capital stock of the Target Company. Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Target Company.
- Buyer's and Guarantor's Representations and Warranties. Each of Buyer and Guarantor represents and warrants to Seller and Parent that the statements contained in thisSection 3(b) are correct and complete as of the date of this Agreement, except as set forth in Annex II attached hereto.
- Organization of Buyer and Guarantor. Each of Buyer and Guarantor is a corporation (or other entity) duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation (or other formation).
- Authorization of Transaction. Each of Buyer and Guarantor has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Buyer and Guarantor, enforceable in accordance with its terms and conditions. Neither Buyer nor Guarantor need give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by each of Buyer and Guarantor.
- Non-contravention. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Buyer or Guarantor is subject or any provision of its charter, bylaws, or other governing documents or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Buyer or Guarantor is a party or by which Buyer or Guarantor is bound or to which any of the assets of Buyer or Guarantor is subject.
- Brokers' Fees. Neither Buyer nor Guarantor has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.
- Financing. Buyer has cash on hand or access under existing credit facilities to funds sufficient to pay the Preliminary Purchase Price on the Closing Date.
- Representations and Warranties Concerning the Target Company. Seller and Parent jointly and severally represent and warrant to Buyer that the statements contained in thisSection 4 are correct and complete as of the date of this Agreement, except as set forth in the disclosure schedule delivered by Seller to Buyer on the date hereof (the "Disclosure Schedule").
- Non-contravention. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller, Target Company or Parent are subject or any provision of the charter or bylaws of Seller, Target Company or Parent, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, or create in any party the right to accelerate, terminate, modify, or cancel any material agreement, contract, lease, license, instrument, or other arrangement to which Seller, Target Company or Parent (to the extent related to the Business) is a party or by which either of them is bound or to which any of their assets is subject (or result i n the imposition of any Lien (other than a Permitted Encumbrance) upon any of Target Company's assets), or (iii) result in the imposition or creation of a Lien (other than a Permitted Encumbrance) upon or with respect to any material assets of the Target Company. Neither Seller nor Parent need give any material notice to, make any material filing with, or obtain any material authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.
- Brokers' Fees. Target Company has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.
- Title to Tangible Assets. Target Company has good title to, or a valid leasehold interest in, the material tangible assets it uses regularly in the conduct of the Business, located on its premises or shown on the December Financial Statements, free and clear of any Liens (other than Permitted Encumbrances), except for properties and assets disposed of in the Ordinary Course of Business since the date of the December Financial Statements. The assets of the Target Company constitute all of the material assets that are used in the Business.
- Financial Statements. (i) Attached hereto asExhibit D are the following financial statements: an unaudited balance sheet, statement of operations, and statement of cash flows as of and for the fiscal year ended December 31, 2005, and note thereto, with respect to the Business (collectively, the "December Financial Statements"). The December Financial Statements have been prepared in accordance with GAAP throughout the period covered thereby and present fairly the financial condition of the Business as of such date and the results of operations and cash flow of the Business, for such period; provided, however, that (1) an income tax provision and related income tax balance sheet accounts are excluded from December Financial Statements, (2) the December Financial Statements do not includ e allocations for the corporate expenses noted inExhibit D and (3) the December Financial Statements lack footnotes and other presentation items.
(ii) The Target Pro Forma Balance Sheet has been prepared on a basis consistent with the December Financial Statements and has been adjusted as noted on Part A.1 ofExhibit A.
- Events Subsequent to December 31, 2005. Since December 31, 2005, there has not been any Material Adverse Change in or to the Business. Without limiting the generality of the foregoing, other than as set forth onSection 4(e) of the Disclosure Schedule, since that date Target Company has not (and no other party has in the name of Target Company):
- sold, leased, transferred, or assigned any material assets, tangible or intangible, outside the Ordinary Course of Business;
- entered into any material agreement, contract, lease, or license, outside the Ordinary Course of Business;
- accelerated, terminated, made material modifications to, or canceled any material agreement, contract, lease, or license to which Target Company is a party or by which it is bound outside the Ordinary Course of Business;
- imposed any Liens (other than Permitted Encumbrances) upon any of its material assets, tangible or intangible;
- made any capital expenditures in an amount exceeding $100,000;
- made any capital investment in, or any loan to, any other Person in an amount exceeding $100,000;
- other than under Alpharma Credit Agreement, created, incurred, assumed or guaranteed any indebtedness for borrowed money or more than $100,000 in aggregate for capitalized lease obligations;
- granted any license or sublicense of any material rights under or with respect to any Intellectual Property;
- made any material change in the charter or bylaws of Target Company;
- experienced any material damage, destruction, or loss (whether or not covered by insurance) to its material property;
- made any loan to, or entered into any other transaction with, any of its directors, officers, and employees, other than for immaterial amounts in the Ordinary Course of Business;
- made any loans or advances of money outside the Ordinary Course of Business, except any such loans or advances that are Intercompany Receivables;
- issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;
- declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in Cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;
- adopted or terminated, or amended or modified in any material respect, any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors or officers or Employees of the Business (or taken any such action with respect to any other Employee Benefit Plan);
- received written notice from any material customer or supplier of an intention to discontinue or change the terms of its relationship with the Target Company;
- made a material change in the accounting methods used by the Target Company; and
- made a binding commitment to do any of the foregoing to the extent prohibited bySections 4(e)(i)-(xvii).
- Legal Compliance. Target Company has complied in all material respects with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges under such laws) of federal, state, local governments (and all agencies thereof), including any laws relating to telemarketing (e.g., fax blaster restrictions). Without limiting the generality of the foregoing, Target Company has complied in all material respects with the Prescription Drug Marketing Act, Medicare/Medicaid Anti-Kickback Statute, Drug Enforcement Act and any state controlling substances act.
- Tax Matters.
- Target Company or Parent has filed all material Tax Returns required to be filed with respect to the Business, and has paid all material Taxes owed.
- The aggregate unpaid non-Income Taxes of Target Company (A) did not, as of December 31, 2005, materially exceed the reserve for non-Income Tax liability shown in the December Financial Statements and (B) will not materially exceed that reserve for non-Income Taxes as adjusted for operations and transactions with respect to the Business through the Closing in accordance with past custom and practice.
- Target Company is not a party to any Tax allocation or sharing agreement.
- Target Company does not have any liability for the Taxes of any Person other than the members of the Affiliated Group, the parent of which is Parent under Reg. Section1.1502-6.
- Section 4(g) of the Disclosure Schedule (A) lists all Income Tax Returns filed with respect to the Target Company for taxable periods beginning on or after January 1, 2002 and ending on or before December 31, 2004, (B) indicates those Income Tax Returns that have been audited, (C) indicates those Income Tax Returns that currently are the subject of audit, and (D) indicates any administrative or court proceeding with respect to material Taxes of the Target Company that is pending or in process.
- Except as set forth on Section 4(g)(vi) of the Disclosure Schedule, neither the Target Company, nor Parent or any of its Affiliates on behalf of Target Company, has waived any statute of limitations in respect of Income Taxes or agreed to any extension of time with respect to an Income Tax assessment or deficiency.
- Target Company has not been a member of an Affiliated Group filing a consolidated federal income Tax Return other than a group the common parent of which is Parent.
- Real Property.
- Section 4(h)(i) of the Disclosure Schedule sets forth the address and description of each parcel of Owned Real Property. With respect to each parcel of Owned Real Property:
- Target Company has good and marketable fee simple title, free and clear of Liens, except for Permitted Encumbrances and the Alpharma Credit Agreement Lien;
- Target Company has not leased or otherwise granted to any Person any material right to use or occupy such Owned Real Property or any material portion thereof; and
- there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any material portion thereof or interest therein.
- Section 4(h)(ii) of the Disclosure Schedule sets forth the address of each parcel of Leased Real Property, and a true and complete list of all Leases for each such parcel of Leased Real Property. Seller has delivered to Buyer a true and complete copy of each Lease document. With respect to each of the Leases: (A) such Lease is legal, valid, binding, enforceable and in full force and effect, subject to proper authorization and execution of such Lease by the other party thereto and the application of any bankruptcy or other creditor's rights laws; and (B) Target Company is not in material breach or default under such Lease, and to Knowledge of Seller, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a material breach or default .
- Contracts.Section 4(i) of the Disclosure Schedule lists the following contracts and other agreements to which Target is a party:
