EXHIBIT 2.1
***TEXT OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL TREATMENT REQUESTED UNDER
17 C.F.R. SECTIONS 200.80(b)(4)
AND 240.24b-2
================================================================================
EXECUTION COPY
PRODUCT ACQUISITION AGREEMENT
by and between
VALEANT PHARMACEUTICALS NORTH AMERICA
(as buyer)
and
INTERMUNE, INC.
(as seller)
================================================================================
November 28, 2005
TABLE OF CONTENTS
Section Page
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ARTICLE I - DEFINITIONS 1
SECTION 1.1. DEFINED TERMS 1
SECTION 1.2. CONSTRUCTION 12
ARTICLE II - THE TRANSACTION 12
SECTION 2.1. TRANSFER OF PURCHASED ASSETS AND INVENTORY. 12
SECTION 2.2. EXCLUDED ASSETS. 13
SECTION 2.3. ASSUMED LIABILITIES 14
SECTION 2.4. EXCLUDED LIABILITIES. 14
SECTION 2.5. PURCHASE PRICE AND INVENTORY COST 14
SECTION 2.6. RISK OF LOSS 15
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER 16
SECTION 3.1. ORGANIZATION AND AUTHORITY 16
SECTION 3.2. TITLE TO PURCHASED ASSETS AND INVENTORY 16
SECTION 3.3. CONSENTS; NO VIOLATIONS. 16
SECTION 3.4. REGULATORY APPROVALS. 17
SECTION 3.5. COMPLIANCE WITH LAWS AND LITIGATION. 17
SECTION 3.6. NO MATERIAL ADVERSE CHANGE. 18
SECTION 3.7. CONTRACTS. 18
SECTION 3.8. INVENTORY AND RETURNS. 18
SECTION 3.9. TAX MATTERS 19
SECTION 3.10. INTELLECTUAL PROPERTY. 19
SECTION 3.11. PRODUCT RECORDS 21
SECTION 3.12. BROKERS, FINDERS, ETC 21
SECTION 3.13. FINANCIAL STATEMENTS. 21
SECTION 3.14. INSURANCE. 21
SECTION 3.15. SUFFICIENCY 22
SECTION 3.16. GOVERNMENT MULTI-PRODUCT CONTRACTS. 22
SECTION 3.17. REGULATORY COMPLIANCE 23
SECTION 3.18. PRODUCT REGISTRATIONS. 24
SECTION 3.19. NO OTHER WARRANTIES 25
SECTION 3.20. ADEQUACY OF DISCLOSURE 25
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER 25
SECTION 4.1. ORGANIZATION AND AUTHORITY 25
SECTION 4.2. CONSENTS; NO VIOLATIONS. 26
SECTION 4.3. BROKERS, FINDERS, ETC 26
SECTION 4.4. FINANCING 26
SECTION 4.5. LITIGATION 26
ARTICLE V - COVENANTS OF SELLER PRIOR TO CLOSING 27
SECTION 5.1. ACCESS TO INFORMATION 27
SECTION 5.2. CONDUCT OF THE PRODUCT BUSINESS. 27
SECTION 5.3. REQUIRED APPROVALS AND CONSENTS 27
SECTION 5.4. NOTICE OF DEFAULT 27
SECTION 5.5. NO NEGOTIATION 28
SECTION 5.6. REASONABLE BEST EFFORTS 28
SECTION 5.7. TRANSITION ACTIVITIES. 28
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ARTICLE VI - COVENANTS OF BUYER PRIOR TO CLOSING 28
SECTION 6.1. REQUIRED APPROVALS AND CONSENTS 28
SECTION 6.2. NOTICE OF DEFAULT 28
SECTION 6.3. REASONABLE BEST EFFORTS 29
ARTICLE VII - CLOSING AND TERMINATION 29
SECTION 7.1. CLOSING 29
SECTION 7.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF
BUYER AND SELLER 29
SECTION 7.3. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS 29
SECTION 7.4. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS 30
SECTION 7.5. CLOSING DELIVERIES. 31
SECTION 7.6. TERMINATION 32
SECTION 7.7. PROCEDURE AND EFFECT OF TERMINATION 33
ARTICLE VIII - CERTAIN OTHER COVENANTS 33
SECTION 8.1. HSR FILINGS 33
SECTION 8.2. INVENTORY COST ADJUSTMENT 34
SECTION 8.3. PRODUCT RETURNS, REBATES AND CHARGEBACKS 35
SECTION 8.4. TRANSITIONAL TRADEMARK LICENSE. 38
SECTION 8.5. CUSTOMER BILLING 39
SECTION 8.6. COVENANT NOT TO COMPETE 39
SECTION 8.7. COOPERATION. 39
SECTION 8.8. CLINICAL TRIALS 40
SECTION 8.9. EMPLOYEES 40
SECTION 8.10. TAX MATTERS. 40
SECTION 8.11. NOTICE TO CUSTOMERS 42
SECTION 8.12. ASSISTANCE IN SUPPLY OF PRODUCT 42
SECTION 8.13. ADVERSE EXPERIENCE REPORTS 42
SECTION 8.14. REGULATORY MATTERS. 42
SECTION 8.15. DIFFERENTIATION OF PRODUCT 43
SECTION 8.16. [***] 43
SECTION 8.17. BOOKS AND RECORDS 44
SECTION 8.18. NON-EXCLUSIVE LICENSE 44
SECTION 8.19. ASSISTANCE REGARDING REQUIRED SEC
FINANCIAL DISCLOSURES 44
ARTICLE IX - INDEMNIFICATION 45
SECTION 9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES 45
SECTION 9.2. INDEMNIFICATION. 45
SECTION 9.3. INDEMNIFICATION PROCEDURES. 47
SECTION 9.4. LIMITATIONS. 49
SECTION 9.5. RIGHT OF SETOFF 49
ARTICLE X - MISCELLANEOUS PROVISIONS 49
SECTION 10.1. CONFIDENTIALITY AND PUBLICITY. 49
SECTION 10.2. NOTICES 51
SECTION 10.3. MODIFICATION; WAIVER 52
SECTION 10.4. EXPENSES 52
SECTION 10.5. ENTIRE AGREEMENT 52
SECTION 10.6. ASSIGNMENT 53
SECTION 10.7. THIRD PARTIES 53
SECTION 10.8. WAIVER 53
SECTION 10.9. SEVERABILITY 53
SECTION 10.10. GOVERNING LAW 53
SECTION 10.11. HEADINGS 53
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SECTION 10.12. EXECUTION IN COUNTERPARTS 53
SECTION 10.13. FORCE MAJEURE 53
SECTION 10.14. RELATIONSHIP OF THE PARTIES 54
SECTION 10.15. ARBITRATION 54
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PRODUCT ACQUISITION AGREEMENT
This PRODUCT ACQUISITION AGREEMENT (as amended from time to time, the
"Agreement"), dated November 28, 2005 (the "Execution Date"), is made and
entered into by and between VALEANT PHARMACEUTICALS NORTH AMERICA, a Delaware
corporation (the "Buyer"), and INTERMUNE, INC., a Delaware corporation (the
"Seller"). Buyer and Seller are sometimes collectively referred to herein as the
"Parties" and separately as a "Party."
RECITALS
WHEREAS, Seller is a biopharmaceutical company focused on developing and
commercializing innovative therapies in hepatology and pulmonology;
WHEREAS, Buyer is a global, research-based, specialty pharmaceutical
company that discovers, develops, manufactures and markets pharmaceutical
products, primarily in the areas of neurology, dermatology and infectious
disease;
WHEREAS, Seller has determined that the sale of certain products and
product related rights at this time is consistent with its current business
strategy;
WHEREAS, Buyer has determined that the acquisition of those certain
products and product related rights at this time is consistent with its current
business strategy; and
WHEREAS, Seller desires to sell such products and product related rights to
Buyer, and Buyer desires to purchase such products and product related rights
from Seller, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises, representations,
warranties, covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I -- DEFINITIONS
SECTION 1.1. DEFINED TERMS. For the purposes of this Agreement, the
following words and phrases shall have the following meanings whether in the
singular or the plural:
"Affiliate" shall mean any Person which controls, is controlled by, or is
under common control with the applicable Person. For purposes of this
definition, "control" shall mean: (a) in the case of corporate entities, direct
or indirect ownership of at least fifty percent (50%) of the stock or shares (or
such lesser percentage which is the maximum allowed to be owned by a foreign
corporation in a particular jurisdiction) entitled to vote for the election of
directors or otherwise having the power to vote on or direct the affairs of such
Person; and (b) in the case of
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non-corporate entities, direct or indirect ownership of at least fifty percent
(50%) of the equity interest or the power to direct the management and policies
of such non-corporate entities.
"AGHC Trial" shall mean the AGHC-002 (IND #11,599) Phase 2, randomized,
dose-ranging, open label study of safety and tolerability of consensus
interferon-alpha (CIFN) plus interferon gamma-1b (IFN-y 1b) with or without
Ribavirin (RBV) in the treatment of patients with chronic Hepatitis C who are
nonresponders to pegylated-interferon-a (2a or 2b) plus RBV.
"Agreement" shall have the meaning set forth in the first paragraph of this
Agreement.
"Amgen" means Amgen Inc.
"Amgen Agreements" means the Amgen License Agreement, Amgen Assignment,
Assumption and Consent Agreement, and Amgen Quality Agreement.
"Amgen Assignment, Assumption and Consent Agreement" means the Assignment,
Assumption and Consent Agreement, dated June 15, 2001, by and among Amgen,
InterMune, and Yamanouchi Europe, B.V.
"Amgen Consent" means that certain consent, in the form agreed upon by
Buyer and Seller on or prior to the date hereof, to be executed by Amgen, Buyer
and Seller pursuant to which Amgen consents to Seller assigning to Buyer the
Amgen Agreements.
"Amgen License Agreement" shall mean that certain License and
Commercialization Agreement, dated June 15, 2001, by and between Amgen, Inc. and
Seller, as amended from time to time, including but not limited to that certain
Amendment No. 1, dated April 24, 2002, that certain Amendment Number 2, dated
December 31, 2004, and that certain Amendment No. Three, dated January 13, 2005.
"Amgen License Rights" shall mean all of the rights of Seller, including
but not limited to Seller's rights as licensee and sublicensee, under the Amgen
License Agreement.
"Amgen Quality Agreement" means the Quality Agreement, dated March 22,
2002, between Amgen and Seller.
"Ancillary Agreements" shall have the meaning set forth in Section 7.3(g).
"Applicable Law" shall mean all applicable provisions of all statutes,
laws, rules, regulations, administrative codes, ordinances, decrees, orders,
decisions, guidance documents, injunctions, awards, judgments, and permits and
licenses of or from Governmental Authorities relating to or governing the use or
regulation of the subject item, including, where applicable, Tax Law.
"Asset Acquisition Statement" shall have the meaning set forth in Section
8.10(a).
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"Assumed Liabilities" shall mean the Liabilities set forth in Section 2.3.
"Basket" shall have the meaning set forth in Section 9.4(a).
"BI Austria" means Boehringer Ingelheim Austria GmbH.
"BI Austria Agreement" means that certain Data Transfer, Clinical Trial and
Market Supply Agreement, dated November 3, 2005, by and between BI Austria and
Seller, as amended from time to time
"Bill of Sale" shall have the meaning set forth in Section 7.5(a)(i).
"BLA" means the application for Infergen prepared pursuant to applicable
FDA Regulations and filed with the FDA for authorization to market Infergen
within the United States.
"Business Day" means a day, which is not a Saturday, a Sunday, or a
statutory holiday in the United States.
"Buyer" shall have the meaning set forth in the first paragraph of this
Agreement.
"Buyer Indemnitee" shall have the meaning set forth in Section 9.2(a).
"Buyer Labeling" means the printed labels, labeling and packaging
materials, including printed carton, container labels and package inserts, used
by Buyer and bearing Buyer's name for, or in connection with, packaging of
Infergen.
"Buyer Losses" shall have the meaning set forth in Section 9.2(a).
"Buyer Proprietary Information" shall have the meaning set forth in Section
10.1(b).
"Buyer's Closing Certificate" shall have the meaning set forth in Section
7.4(c).
"Cap" shall have the meaning set forth in Section 9.4(a).
"Cardinal Health Acknowledgement" means that certain written
acknowledgement from Cardinal Health, in form and substance reasonably
acceptable to Buyer, pursuant to which Cardinal Health shall acknowledge and
agree to continue to provide to Seller, for the benefit of Buyer, through ninety
days following the Closing, the same services, including but not limited to
inventory storage, distribution, accounts payable and accounts receivable
services, at the same cost as Cardinal Health is currently providing to Seller
under that certain Distribution Services Agreement, dated January 15, 1999.
"Chargeback Claims" shall have the meaning set forth in Section 8.3(d).
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"Clinical Trials" shall mean, collectively, the IRHC-001 Trial, the
IRHC-002 Trial, the IRHC-003 Trial, and the IST Trials.
"Clinical Trial Inventory" shall mean the pharmaceutical products listed on
Schedule 1.1, being the pharmaceutical products held in inventory, estimated as
of [***], by Seller for use by Seller in the Clinical Trials and transferred to
Buyer on the Closing Date in accordance with Section 2.1(d); provided, however,
that Clinical Trial Inventory shall not include such amounts of pharmaceutical
products as required by Seller to complete the AGHC Trial.
"Closing" shall have the meaning set forth in Section 7.1.
"Closing Date" shall have the meaning set forth in Section 7.1.
"Closing Payment" shall have the meaning set forth in Section 2.5(a).
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall have the meaning set forth in Section
10.1.
"Contract" shall mean any agreement, contract, lease, consensual
obligation, promise, or undertaking (whether written or oral), to which Seller
is a party that relates exclusively to the Product, the Product Business, the
Purchased Assets, or the Assumed Liabilities, or which are necessary for the
conduct of the Product Business as conducted by the Seller.
"Effective Time" shall have the meaning set forth in Section 7.1.
"Encumbrance" shall mean claims, security interests, liens, pledges,
charges, escrows, options, proxies, rights of first refusal, preemptive rights,
mortgages, hypothecations, assessments, prior assignments, title retention
agreements, conditional sales agreements, indentures, deeds of trust, leases,
levys or security agreements of any kind whatsoever imposed upon the subject
property or item.
"Estimated Inventory Cost" shall have the meaning set forth in Section
8.2(b).
"Estimated Inventory Statement" shall have the meaning set forth in Section
8.2(a).
"Execution Date" shall mean the date set forth in the first paragraph of
this Agreement.
"Excluded Assets" shall mean all assets and properties of Seller, other
than the Purchased Assets, Other Intellectual Property, Inventory (subject to
the Inventory Cap), and Clinical Trial Inventory.
"Excluded Intellectual Property" shall mean all Intellectual Property owned
or controlled by Seller other than the Product Intellectual Property and the
Other Intellectual Property.
-4- ***CONFIDENTIAL TREATMENT REQUESTED
"Excluded Liabilities" shall mean all Liabilities or obligations of Seller
(other than the Assumed Liabilities), including any obligation or Liability of
Seller created as a result of this Agreement and those items set forth on
Schedule 2.4(a).
"FDA" means the United States Food and Drug Administration.
"FSS" shall have the meaning set forth in Section 8.3(d).
"Government Multi-Product Contracts" means all written contracts or
agreements by which Seller dispenses Infergen through a government agency,
together with other pharmaceutical products of Seller.
"Governmental Authority" means the government of the applicable country in
the Territory and any state, province, municipality or other political
subdivision thereof or therein, or any court, tribunal, agency, department,
board, instrumentality, authority or commission (including regulatory and
administrative bodies) of any of the foregoing.
"HSR Act" shall mean the U.S. Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnification Claim Notice" shall have the meaning set forth in Section
8.2(b).
"Indemnified Party" shall have the meaning set forth in Section 8.2(b).
"Indemnifying Party" shall have the meaning set forth in Section 8.2(b).
"Indemnitee(s)" shall mean either a Buyer Indemnitee or Seller Indemnitee,
as the case may be.
"Infergen" shall mean the finished pharmaceutical product containing
interferon alfacon-1 in the formulation sold by Seller under the trademark
Infergen(R) prior to the Closing.
"Instruments of Transfer" shall mean such instruments and documents in
addition to the Ancillary Agreements that are necessary pursuant to Applicable
Law to effectuate and consummate the transactions contemplated hereby,
including, bills of sale, assumption agreements, assignment and assumption of
contracts and other conveyance documents in the forms agreed-upon in good faith
by the Parties.
"Intellectual Property" shall mean all domestic and foreign (i) trademarks,
trademark registrations, trademark applications, service marks, service mark
registrations, service mark applications, business marks, brand names, trade
names, trade dress, names, logos and slogans, internet domains and URLs, and all
goodwill associated therewith; (ii) patents, patent rights, provisional patent
applications, patent applications, designs, registered designs, registered
design applications, industrial designs, industrial design applications and
industrial design registrations,
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including any and all divisions, continuations, continuations in part,
extensions, substitutions, renewals, registrations, revalidations,
reexaminations, reissues or additions, including supplementary certificates of
protection, of or to any of the foregoing items; (iii) copyrights, copyright
registrations, copyright applications, original works of authorship fixed in any
tangible medium of expression, including literary works (including all forms and
types of computer software, including all source code, object code, firmware,
development tools, files, records and data, and all documentation related to any
of the foregoing), musical, dramatic, pictorial, graphic and sculptured works;
(iv) trade secrets, technology, discoveries and improvements, know how,
proprietary rights, formulae, confidential and proprietary information,
technical information, techniques, inventions, designs, drawings, procedures,
processes, models, formulations, manuals and systems, whether or not patentable
or copyrightable, including all biological, chemical, biochemical,
toxicological, pharmacological and metabolic material and information and data
relating thereto and formulation, clinical, analytical and stability information
and data which have actual or potential commercial value and are not available
in the public domain; and (v) all other intellectual property or proprietary
rights, in each case whether or not subject to statutory registration or
protection.
"Inventory" shall mean the Infergen owned or controlled by Seller for
Seller's marketing and sale in the Territory, which (i) are in finished dosage
form, including Seller's trade dress, (ii) are of a quality usable and salable
in the ordinary course of business, (iii) comprise unsold lots, and (iv) as of
the Closing Date, have at least two-thirds of their shelf life remaining. For
the avoidance of doubt, for purposes of this Agreement, unless otherwise
expressly stated herein, the term "Inventory" shall not include (and, among
other things, Buyer shall not be required to purchase pursuant hereto) the
Clinical Trial Inventory or any Infergen which does not satisfy all of the
foregoing conditions. For the avoidance of doubt, for purposes of this
Agreement, the term "Inventory" shall include Infergen held in inventory by
Seller and acquired by Seller from Amgen under Purchase Order No. 6273;
provided, that such Infergen otherwise satisfies all of the conditions of
subparagraphs (i)-(iv) above and is subject to the Inventory Cap, all as
otherwise provided in this Agreement.
"Inventory Cap" shall have the meaning set forth in Section 2.1(b).
"Inventory Cost" shall have the meaning set forth in Section 8.2(b).
"Inventory Statement" shall have the meaning set forth in Section 8.2(b).
"IP Assignment" shall have the meaning set forth in Section 7.5(a)(i).
"IRHC-001 Trial" means the randomized, open-label, phase III
investigational research study (identified as IRHC-001) designed by and
initiated by Seller as of the date hereof to evaluate the safety and efficacy of
daily administration of Infergen plus ribavirin versus no treatment in patients
infected with the hepatitis C virus (HCV) who have not responded to previous
combination therapy with pegylated interferon alfa plus ribavirin.
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"IRHC-002 Trial" means the randomized, open-label phase III investigational
research study (identified as IRHC-002) designed by and initiated by Seller as
of the date hereof to evaluate the safety and efficacy of two dose levels of
daily Infergen plus ribavirin in patients infected with the hepatitis C virus
(HCV) who failed to achieve virologic response after previous pegylated
interferon alfa plus ribavirin therapy and during at least 24 weeks of no
treatment in the IRHC-001 Trial.
"IRHC-003 Trial" means the single arm study of daily Infergen plus
ribavirin in patients infected with the hepatitis C virus (HCV) as designed and
presented in the briefing package prepared and submitted to FDA on September 22,
2005 in connection with a meeting with the Division of Antiviral Drug Products
held on October 24, 2005.
"IRS" means the United States Internal Revenue Service.
"IST Trials" means all investigator-sponsored trials with respect to
Infergen as set forth on Section 3.17(j) of the Seller Disclosure Schedule.
"Knowledge of the Buyer" or "to Buyer's Knowledge" or any similar such
statement shall mean that an executive officer or director of Buyer, or a key
employee of Buyer directly involved on behalf of Buyer in the transactions
contemplated herein, either (i) has or had actual knowledge of a fact or matter,
or (ii) could reasonably be expected to have become aware of the fact or matter
had he or she conducted a reasonable investigation regarding the accuracy of the
subject representation or warranty.
"Knowledge of the Seller" or "to Seller's Knowledge" or any similar such
statement shall mean that an executive officer or director of Seller, or a key
employee of Seller directly involved in the Product Business, either (i) has or
had actual knowledge of a fact or matter, or (ii) could reasonably be expected
to have become aware of the fact or matter had he or she conducted a reasonable
investigation regarding the accuracy of the subject representation or warranty.
"Liability" shall mean, collectively, any indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, choate or inchoate,
liquidated or unliquidated, secured or unsecured, direct or indirect, matured or
unmatured, or absolute, contingent or otherwise, including any product
liability.
"Material Adverse Change" means any change, event or occurrence that has,
or has had, or is reasonably likely to have, a Material Adverse Effect;
provided, however, that for purposes hereof, the commencement of, threatened
commencement of, or announced intention to commence any action or investigation
of the Product Business prior to the Closing by the U.S. Department of Justice,
the Office of the Inspector General, or any other Governmental Authority shall
constitute a Material Adverse Change.
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"Material Adverse Effect" means a material adverse effect upon (i) the
business, financial condition or results of operations of the Product Business
or the Purchased Assets, or (ii) the ability of a Party to consummate the
transactions contemplated by this Agreement, other than (a) any change, effect,
event or condition that arises from changes in general economic conditions or
conditions affecting the pharmaceutical industry generally, or (b) such changes,
events or conditions resulting from the announcement of, or the consummation of,
the transactions contemplated hereby.
"Material Consents" shall have the meaning set forth in Section 7.3(c).
"Nektar Agreements" means the (i) Development, Licensing and Manufacturing
Agreement dated as of June 20, 2002 by and between Seller and Nektar
Therapeutics (successor-in-interest to Shearwater Corporation) and (ii)
Collaborative Research Agreement dated as of December 19, 2001 by and between
Seller and Nektar Therapeutics (successor-in-interest to Shearwater
Corporation).
"[***]" shall have the meaning set forth in Section 8.16(a).
"[***]" shall have the meaning set forth in Section 8.16(a).
"[***]" shall have the meaning set forth in Section 8.16(b).
"Other Intellectual Property" shall mean the Intellectual Property listed
on Schedule 2.1(c), being that certain Intellectual Property owned by Seller as
of the Execution Date that is not included within the Purchased Assets but that
will be conveyed to Buyer as of the Effective Time in accordance with Section
2.1(c).
"Party" or "Parties" shall have the meaning set forth in the first
paragraph of this Agreement.
"Permitted Encumbrances" means (i) the Encumbrances and exceptions set
forth in Section 3.2 of the Seller Disclosure Schedule, and (ii) liens imposed
by any Governmental Authority for Taxes not yet due and payable, or for Taxes
that Seller is contesting in good faith.
"Person" shall mean any natural person, corporation, unincorporated
organization, partnership, association, joint stock company, joint venture,
limited liability company, trust or government, or any agency or political
subdivision of any government, or any other entity.
"Prime Rate" shall mean the rate of interest that Citibank N.A. lists as
its prime lending rate on the last day of the applicable calendar quarter, or if
such rate is not available, the prime lending rate listed in the New York City,
USA version of The Wall Street Journal on the last day of the applicable
calendar quarter.
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"Product" shall mean any finished pharmaceutical product containing
interferon alphacon-1, including Infergen.
"Product Business" shall mean the manufacturing, using, developing,
promoting, selling, offering to sell, or importing of Infergen for sale in the
Territory as currently being conducted by Seller; provided, however, that
Product Business shall not include the development of Infergen in combination
with Actimmune.
"Product Copyrights" means, as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the copyrights (whether or not
registered) and registrations and applications for registration or renewals
thereof, including all derivative works, moral rights, renewals, extensions,
reversions or restorations associated with such copyrights, now or hereafter
provided by law, regardless of the medium of fixation or means of expression,
and all goodwill associated therewith listed on Section 3.10(b)(iii) of the
Seller Disclosure Schedule.
"Product Domains" means, as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the internet domains and URLs in
the Territory, listed on Section 3.10(b)(iv) of the Seller Disclosure Schedule.
"Product Intellectual Property" shall mean the Amgen License Rights,
Product Copyrights, Product Domains, Product Know-How, Product Patents, Product
Trademarks, and Product Trade Dress, listed on Sections 3.10(b)(i) to (iv) of
the Seller Disclosure Schedule.
"Product Know How" means, as owned, licensed or controlled by Seller and
exclusively related to the Product Business, including as developed in
connection with the Clinical Trials, the research and development information,
validation methods and procedures, unpatented inventions, know-how, trade
secrets, technical or other data or information, or other materials, methods,
procedures, processes, materials, developments or technology, including all
biological, chemical, clinical, manufacturing and other information or data,
other than such know-how which is or becomes the subject of a patent or of a
provisional or filed patent application.
"Product Patents" means, as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the patents, patent applications,
provisional patent applications and similar instruments (including any and all
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, extensions, reexaminations, patents of addition, supplementary
protection certificates, inventors' certificates, pediatric data package
exclusivity extensions, divisions, re-filings, continuations and
continuations-in-part thereof, or the like) as well as any foreign equivalents
thereof (including certificates of invention and any applications therefor),
listed on Section 3.10(b)(i) of the Seller Disclosure Schedule.
"Product Records" shall mean all files, documents, instruments, papers,
books and records owned or controlled by Seller, whether in electronic or
tangible form, to the extent relating to the Product Business, including any
pricing lists, customer lists, vendor lists, financial
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data, research and development files, marketing materials (if any), regulatory
files, adverse event reports and files, clinical studies and all documentation
relating to the Product Intellectual Property, but excluding any such items to
the extent that any Applicable Law prohibits their transfer. Notwithstanding the
foregoing, prior to delivering or making the Product Records available to Buyer,
Seller shall be entitled to redact from the Product Records any information that
does not relate exclusively to the Product Business.
"Product Registrations" shall mean all applications (including the BLA),
new drug applications, abbreviated new drug applications, new drug submissions,
and any comparable applications and submissions, together with any and all
supplements or modifications or amendments thereto, whether existing, pending,
withdrawn or in draft form, together with all correspondence to or from any
Governmental Authority with respect thereto, prepared and submitted to any
Governmental Authority in the Territory with respect to Infergen.
"Product Returns" shall have the meaning set forth in Section 8.3(a).
"Product Trade Dress" means, as owned, licensed or controlled by Seller,
the trade dress, logos and designs exclusively related to the Product Business,
listed on Section 3.10(b)(ii) of the Seller Disclosure Schedule.
"Product Trademarks" means, as owned, licensed or controlled by Seller and
exclusively related to the Product Business, the trademarks, service marks,
logos, slogans and trade names (whether or not registered), in the Territory,
including all variations, derivations, combinations, registrations and
applications for registration or renewals of the foregoing and all goodwill
associated therewith, listed on Section 3.10(b)(ii) of the Seller Disclosure
Schedule.
"Promotional Materials" shall mean, to the extent exclusively related to
the Product Business, all advertising, promotional, selling and marketing
materials in written or electronic form existing as of the Closing and owned or
controlled and in the possession of Seller.
"Purchased Assets" shall mean, collectively, the Contracts, Regulatory
Approvals, Promotional Materials, Product Records and the Product Intellectual
Property.
"Purchase Price" shall have the meaning set forth in Section 2.5.
"Regulatory Approvals" shall mean, as exclusively related to Infergen in
the Territory and/or Seller's operation of the Product Business, all material
permits, licenses, certificates, approvals, Product Registrations, filings and
authorizations issued by any Governmental Authority to Seller or its
representatives.
"Returns" means all returns (including information returns), declarations,
reports, statements, schedules, notices, forms, declarations and other documents
or information filed with or submitted to, or required under a Tax Law to be
filed with or submitted to a Governmental
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Authority in respect of Taxes or any Tax Law relating to any Tax (and "Return"
means any one of the foregoing Returns).
"Schedules" shall refer to the schedules to this Agreement which are hereby
incorporated by reference into this Agreement.
"Seller" shall have the meaning set forth in the first paragraph of this
Agreement.
"Seller Disclosure Schedule" shall have the meaning set forth in the first
paragraph of Article III.
"Seller Indemnitee" shall have the meaning set forth in Section 9.2(b).
"Seller Losses" shall have the meaning set forth in Section 9.2(b).
"Seller Marks" shall mean all Trademarks and trade dress owned, licensed or
controlled by Seller, aside from the Product Trademarks and Product Trade Dress,
that are used in connection with the Product Business and the Assumed
Liabilities as of the Execution Date.
"Seller Proprietary Information" shall have the meaning set forth in
Section 10.1(c).
"Seller's Closing Certificate" shall have the meaning set forth in Section
7.3(e).
"Statement of Allocation" shall have the meaning set forth in Section
8.10(a).
"[***]" means, in an [***], the [***] with [***] by both [***] at [***].
"Taxes" means, with respect to the Territory, all federal, state, local,
foreign and other income, net income, gross income, gross receipts, sales, use,
ad valorem, transfer, capital stock, franchise, profits, license, service, add
on or alternative minimum tax, occupancy, withholding, payroll, fringe benefits,
employment, employees' income withholding, foreign or domestic withholding,
unemployment, disability, excise, severance, stamp, value added, occupation,
premium, property (including, real property and personal property taxes and any
assessments, special or otherwise), environmental, windfall profits, customs,
duties or other taxes, fees, assessments, levies, tariffs, or charges of any
kind that are in the nature of a tax, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto (and
"Tax" means any one of the foregoing Taxes).
"Tax Law" means, with respect to the Territory, a statute, law, regulation
or administrative rule or judicial opinion enacted, issued or promulgated for
the determination, imposition, assessment or collection of any Tax.
"Termination Notice" shall have the meaning set forth in Section 8.16(c).
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"Territory" means the United States of America, Canada and their respective
territories and possessions.
"Third Party" shall mean any Person other than Buyer or Seller, or an
Affiliate of either of them.
"Trademarks" means all trademarks, service marks, logos, slogans and trade
names (whether or not registered), in the Territory, including all variations,
derivations, combinations, registrations and applications for registration or
renewals of the foregoing and all goodwill associated therewith.
"Transfer Taxes" shall have the meaning set forth in Section 8.10(b).
"Treasury Regulations" shall mean the income tax regulations issued under
the Code.
"Valid Claim" shall mean shall mean a claim in any (i) unexpired and issued
patent in the Product Patents rights that has not been (a) held permanently
revoked, unenforceable or invalid by a final unappealable decision of a court or
government agency of competent jurisdiction over such claim or (b) admitted to
be invalid or unenforceable through disclaimers, consent decrees or otherwise,
or (ii) pending patent application in the Product Patents rights that has been
on file with the applicable patent office for not more than five (5) years and
for which there has been reasonably consistent activity to advance to issuance
of a patent.
SECTION 1.2. CONSTRUCTION. Unless the context of this Agreement otherwise
requires: (a) words of any gender include each other gender; (b) "dollars"
refers to U.S. dollars; (c) words using the singular or plural number also
include the plural or singular number, respectively; (d) the terms "hereof,"
"herein," "hereby" and derivative or similar words refer to this entire
Agreement; (e) the terms "Article," "Section" or "Exhibit" refer to the
specified Article, Section or Exhibit of this Agreement; and (f) the term
"including" or any variation thereof means "including without limitation" or any
variation thereof and shall not be construed to limit any general statement
which it follows to the specific or similar items or matters immediately
following it, unless otherwise expressly stated.
ARTICLE II -- THE TRANSACTION
SECTION 2.1. TRANSFER OF PURCHASED ASSETS, INVENTORY, OTHER INTELLECTUAL
PROPERTY AND CLINICAL TRIAL INVENTORY.
(a) Purchase and Sale of Purchased Assets. At the Effective Time, on
the terms and subject to the conditions hereof and in reliance upon the
representations, warranties and covenants contained herein and in consideration
of the Purchase Price paid to Seller by Buyer, Seller will sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer will purchase, take
delivery of and acquire from Seller, all of Seller's right, title and interest
in and to the Purchased Assets.
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(b) Purchase and Sale of Inventory. At the Effective Time, on the
terms and subject to the conditions hereof and in reliance upon the
representations, warranties and covenants contained herein and in consideration
of the Inventory Cost paid to Seller by Buyer, Seller will sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer will purchase and
acquire from Seller, all of Seller's right, title and interest in and to the
Inventory; provided, however, Buyer shall only be required to purchase up to
$6.5 million of Inventory hereunder (the "Inventory Cap") and Seller shall
retain all Inventory (other than the Clinical Trial Inventory) in excess of the
Inventory Cap.
(c) Transfer of Other Intellectual Property. At the Effective Time, on
the terms and subject to the conditions hereof, Seller shall convey, transfer,
assign and deliver to Buyer, at no additional cost to Buyer, and Buyer shall
acquire from Seller, all of Seller's rights, title, and interest in and to the
Other Intellectual Property. Notwithstanding the foregoing, Buyer hereby grants
Seller a non-exclusive, fully paid-up and royalty free license to the Other
Intellectual Property solely for activities permitted by Section 8.6 of this
Agreement. If Buyer elects to prosecute the Other Intellectual Property, Buyer
will assume responsibility for such prosecution and will promptly provide Seller
with copies of official prosecution correspondence and provide Seller with
reasonable time to consider and comment upon prosecution strategy, such comments
to be considered by Buyer in good faith. In the event Buyer decides to abandon
any patent or patent application included in the Other Intellectual Property,
Buyer will give Seller at least thirty (30) days prior written notice to decide
whether or not Seller wishes to assume responsibility for such patent or patent
application, in which case Buyer shall assign and transfer such patent or patent
application back to Seller.
(d) Transfer of Clinical Trial Inventory. At the Effective Time, on
the terms and subject to the conditions hereof, Seller shall convey, transfer,
assign and deliver to Buyer, at no additional cost to Buyer, and Buyer shall
acquire from Seller, all of Seller's rights, title, and interest in and to the
Clinical Trial Inventory. On the weekend immediately preceding the Closing Date,
Seller shall temporarily halt the use of pharmaceutical products to be used by
Seller in the Clinical Trials, in order to allow Seller to conduct a review of
those of its locations at which pharmaceutical products used by Seller in the
Clinical Trials are located in order to determine the exact quantities of
Clinical Trials Inventory that will be transferred to Buyer hereunder, and
Seller shall provide Buyer with an itemized list of the Clinical Trials
Inventory the next Business Day.
SECTION 2.2. EXCLUDED ASSETS.
(a) Excluded Assets. The Parties acknowledge and agree that Seller is
not selling, conveying, transferring, delivering, assigning any rights
whatsoever to the Excluded Assets to Buyer, and Buyer is not purchasing, taking
delivery of or acquiring any rights whatsoever to the Excluded Assets from
Seller.
(b) Excluded Intellectual Property. Buyer expressly acknowledges it is
not acquiring any rights whatsoever to the Excluded Intellectual Property,
including the "InterMune" name or any variations and derivatives thereof and any
other logos or trademarks of Seller not included in the Product Intellectual
Property, or the Other Intellectual Property, other than the
-13-
limited rights to use the Seller Marks for the limited transition period
pursuant to the provisions of Section 8.4 and other than as specifically
provided in Section 8.18.
SECTION 2.3. ASSUMED LIABILITIES. As of the Effective Time, Buyer shall
assume and agree to pay, perform or otherwise discharge, in accordance with
their respective terms and subject to the respective conditions thereof, only
the following Liabilities (collectively, the "Assumed Liabilities"):
(a) Any Liability arising after the Effective Time under any Contract
listed on Schedule 2.3(a) (other than any Liability arising out of or relating
to a breach of such Contract which occurred prior to the Effective Time);
(b) Any Liability arising after the Effective Time under any Contract
which was entered into by Seller after the Execution Date in accordance with the
provisions of Section 5.2 (other than any Liability arising out of or relating
to a breach of such Contract which occurred prior to the Effective Time); and
(c) Any other Liability specifically set forth on Schedule 2.3(c)
hereto.
For avoidance of doubt, nothing in this Section 2.3 is intended to, or shall be
interpreted to, limit or otherwise reduce the Liabilities of Buyer as they may
occur and/or exist after the Effective Time solely by virtue of Buyer's
ownership of the Purchased Assets or operation of the Product Business, but
rather, this Section 2.3 is solely intended to identify and provide for the
assumption by Buyer of those Liabilities of Seller that are specifically assumed
by Buyer hereunder and which, but for such assumption, would remain Liabilities
of Seller.
SECTION 2.4. EXCLUDED LIABILITIES.
(a) The Parties hereby acknowledge and agree that, other than the
Assumed Liabilities, Buyer shall not be responsible for, assume, or be obligated
to pay, perform or otherwise discharge any Liabilities of Seller, whether or not
related to the Product Business, including any Excluded Liabilities as set forth
on Schedule 2.4(a). The Parties acknowledge that in no event shall the foregoing
sentence be construed to limit Buyer's obligations under Article IX.
(b) The Parties hereby acknowledge and agree Seller shall not be
responsible for, assume, or be obligated to pay, perform or otherwise discharge
any obligations or liabilities of Buyer. The Parties acknowledge that in no
event shall the foregoing sentence be construed to limit Seller's obligations
under Article IX.
SECTION 2.5. PURCHASE PRICE AND INVENTORY COST. In addition to the
assumption by Buyer of the Assumed Liabilities pursuant to Section 2.3, Buyer
will pay to Seller (x) the payments set forth in Section 2.5(a) to 2.5(e) below
for the Purchased Assets (the "Purchase Price"), and (y) the Inventory Cost for
the Inventory, as follows:
(a) On the Closing Date, Buyer (or its Affiliates) will transfer to
Seller in accordance with the written instructions provided to Buyer by Seller,
(i) One Hundred Thirteen
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Million Five Hundred Thousand Dollars ($113,500,000) (the "Closing Payment"),
plus (ii) the Estimated Inventory Cost for the Inventory. Thereafter, the final
Inventory Cost will be determined and a final reconciliation payment with
respect thereto will be made in accordance with Section 8.2;
(b) Buyer will transfer to Seller in accordance with the written
instructions provided to Buyer by Seller, a one time cash milestone payment of
Five Million Dollars ($5,000,000) within five (5) Business Days of the
completion of the key tables and listings generated from the locked clinical
database following the last patient visit in the IRHC-001 Trial;
(c) Buyer will transfer to Seller in accordance with the written
instructions provided to Buyer by Seller, a one time cash milestone payment of
Ten Million Dollars ($10,000,000) within five (5) Business Days of [***] of a
[***] to the [***] of [***] in [***] with [***]; provided, however, that if
[***] has not [***], in lieu of such $10 million milestone payment, a one-time
cash milestone payment will be paid no later than January 15, 2010 as follows:
(i) if, upon completion of the IRHC-001 Trial, the [***] in [***] of
the IRHC-001 Trial is [***] or [***] ([***]%), Buyer will have no
obligation to pay a milestone payment pursuant to this Section 2.5(c);
(ii) if, upon completion of the IRHC-001 Trial, the [***] the [***] of
[***] of the IRHC-001 Trial is [***] or [***] ([***]%) but [***] ([***]%),
the cash milestone payment will equal Five Million Dollars ($5,000,000);
(iii) if, upon completion of the IRHC-001 Trial, the [***] the [***]
of [***] of the IRHC-001 Trial is [***] or [***] ([***]%) but [***]
([***]%), the cash milestone payment will equal Ten Million Dollars
($10,000,000); and
(iv) if, upon completion of the IRHC-001 Trial, [***] the [***] of
[***] of the IRHC-001 Trial is [***] or [***] ([***]%), the cash milestone
payment will equal Fifteen Million Dollars ($15,000,000).
(d) Buyer will transfer to Seller in accordance with the written
instructions provided to Buyer by Seller, a one time cash milestone payment of
Two Million Euros (E2,000,000) on January 15, 2007 in connection with the [***]
of the [***].
SECTION 2.6. RISK OF LOSS. Until the Effective Time, any loss of or damage
to the Purchased Assets, and Inventory from fire, flood, casualty or any other
similar occurrence shall be the sole responsibility of Seller. As of the
Effective Time, title to the Purchased Assets, and Inventory shall be
transferred to Buyer. After the Effective Time, Buyer shall bear all risk of
loss associated with the Purchased Assets and Inventory and shall be solely
responsible for
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procuring adequate insurance to protect the Purchased Assets and Inventory
against any such loss.
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the following representations
and warranties are true and correct as of the Execution Date and shall be
reaffirmed at Closing pursuant to Section 7.3(a), subject in each case to the
attached disclosure schedules supplied by Seller to Buyer and dated as of the
date hereof (the "Seller Disclosure Schedule ") and provided that each exception
set forth in such Seller Disclosure Schedule shall be deemed to qualify only
such representation and warranty that is specifically identified (by cross
reference or otherwise) in any specific section of the Seller Disclosure
Schedule.
SECTION 3.1. ORGANIZATION AND AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has full corporate power and corporate authority to execute and
deliver this Agreement and the Ancillary Agreements, and the transactions
contemplated hereby and thereby, and effect the transactions contemplated hereby
and thereby and has duly authorized the execution, delivery and performance of
this Agreement and the Ancillary Agreements and transactions or documents
contemplated thereby by all necessary corporate action. Seller has all corporate
power and corporate authority necessary to own its assets and carry on the
Product Business as currently being conducted by Seller. This Agreement and the
Ancillary Agreements are the valid and legally binding obligations of Seller,
enforceable against it in accordance with their terms, subject to applicable
bankruptcy moratorium, reorganization, insolvency and similar laws of general
application relating to or affecting the rights and remedies of creditors
generally and to general equitable principles (regardless of whether in equity
or at law).
SECTION 3.2. TITLE TO PURCHASED ASSETS AND INVENTORY. Seller has good and
marketable title to the Purchased Assets and Inventory free and clear of any
Encumbrances, except for the Permitted Encumbrances. Seller has not received any
notice of any adverse claims of ownership to or right to use the Purchased
Assets or Inventory, and to Seller's Knowledge, no facts or circumstances exist
which would provide a reasonable basis for any such adverse claim of ownership
or right to use any of the Purchased Assets or Inventory.
SECTION 3.3. CONSENTS; NO VIOLATIONS.
(a) Except for the requisite filings under the HSR Act and the
expiration or termination of the waiting period thereunder, and except for all
filings and other actions contemplated by this Agreement and the Ancillary
Agreements (including the necessary transfer of filings, notices and approvals
required to transfer the Regulatory Approvals from Seller to Buyer) (the
"Consents"), the execution, delivery and performance by Seller of this Agreement
and the Ancillary Agreements and the consummation by Seller of the transactions
contemplated hereby and thereby will not require any notice to, filing with, or
the consent, approval or authorization of, any Person or Governmental Authority.
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(b) Neither the execution and delivery of this Agreement or the
Ancillary Agreements nor the consummation of the transactions contemplated
hereby or thereby will (i) violate or result in a breach or result in the
acceleration or termination of, or the creation in any Third Party of the right
to accelerate, terminate, modify or cancel, any Contract listed on Section 3.7
of the Seller Disclosure Schedule, (ii) conflict with, violate or result in a
breach of any provision of the certificate of incorporation or by-laws of
Seller, or (iii) conflict with or violate in any material respect Applicable
Law.
SECTION 3.4. REGULATORY APPROVALS.
(a) Section 3.4(a) of the Seller Disclosure Schedule sets forth a
complete and correct list of all applications (including the BLA), new drug
applications, abbreviated new drug applications, new drug submissions and any
comparable applications and submissions in the Territory with respect to the
Product. Seller has provided to Buyer complete and correct copies of the
Regulatory Approvals or Buyer has had access to such copies of the Regulatory
Approvals. The Regulatory Approvals are in full force and effect and have been
duly and validly issued.
(b) Seller has all Regulatory Approvals necessary for or used to carry
on the Product Business as being conducted by Seller as of the Execution Date
and which are required by Applicable Law.
(c) Seller is in compliance with all of the Regulatory Approvals
listed on Section 3.4(a) of the Seller Disclosure Schedule, and, since the time
Seller acquired its rights in the Product, Seller has not received any
notification, written or oral, from any Third Party with respect to any alleged
or possible violation with respect to any such Regulatory Approvals, and to
Seller's Knowledge, there are no facts or circumstances that would form a
reasonable basis for any such violation.
SECTION 3.5. COMPLIANCE WITH LAWS AND LITIGATION.
(a) Except with respect to any matter relating to or arising from
Regulatory Approvals (which is addressed in Section 3.4), with respect to the
Product Business, the Purchased Assets, the Inventory and the Assumed
Liabilities, Seller is in compliance with all Applicable Law, except where such
noncompliance would not reasonably be expected to have a Material Adverse
Effect.
(b) There are no lawsuits, claims or any civil, administrative or
criminal actions, suits, or proceedings or governmental investigations,
including any action or investigation by the U.S. Department of Justice, Office
of the Inspector General, or any Governmental Authority, existing, pending, or
to the Knowledge of Seller, threatened, with respect to the Product Business,
the Purchased Assets or the Assumed Liabilities or with respect to this
Agreement or the transactions contemplated hereby. Seller is not subject to any
decree or order of any Governmental Authority that would reasonably be expected
to impair or delay its ability to perform its obligations under this Agreement.
SECTION 3.6. NO MATERIAL ADVERSE CHANGE.
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(a) Since January 1, 2005, there has not been any Material Adverse
Change and no event has occurred or circumstance exists that would reasonably be
expected to result in such a Material Adverse Change.
(b) Since January 1, 2005, Seller has, consistent with the conduct of
the Product Business during the two (2) years prior to the Execution Date: (i)
continued and conducted the Product Business in Seller's ordinary and usual
course of business, and (ii) maintained its relationships with suppliers,
distributors, customers and others having material business relationships with
Seller related to the Product Business.
SECTION 3.7. CONTRACTS.
(a) Section 3.7 of the Seller Disclosure Schedule sets forth a
complete and correct list of each of the Contracts (i) which involve payments
totaling $50,000 or more, or (ii) which are otherwise material to the Product
Business. Such Contracts are all of the Contracts necessary to conduct the
Product Business. Seller has delivered to or made available to Buyer true and
complete copies of all such Contracts and any other contracts or agreements
identified in Section 3.7 of the Seller Disclosure Schedule. All such Contracts
to which Seller is a party are, as to Seller (and, as to the other parties
thereto, to the Knowledge of Seller), legal, valid and binding agreements in
full force and effect and enforceable in accordance with its terms (subject to
applicable bankruptcy moratorium, reorganization, insolvency and similar laws of
general application relating to or affecting the rights and remedies of
creditors generally and to general equitable principles (regardless of whether
in equity or at law)).
(b) Seller is not in material breach or default, and no event has
occurred that with notice or lapse of time would constitute a material breach or
default by Seller permitting termination, modification, or acceleration, under
any Contract set forth on Section 3.7 of the Seller Disclosure Schedule. To the
Knowledge of Seller, no other party to any Contract is in material breach or
default under, or has repudiated any material provision of, any Contract set
forth on Section 3.7 of the Seller Disclosure Schedule.
(c) The Amgen Agreements are all of the Contracts between Seller and
Amgen that pertain to the Product.
SECTION 3.8. INVENTORY AND RETURNS.
(a) Section 3.8(a) of the Seller Disclosure Schedule sets forth a
complete and correct list of Seller's Inventory as of November 4, 2005. The
Inventory consists of finished goods usable and salable by Seller in the
ordinary course of business. The Inventory has been produced or manufactured in
accordance with all Applicable Law and Product Registrations.
(b) Since January 1, 2005, other than entering into the Contracts with
specialty pharmacies for the direct sales by Seller to such pharmacies of
Infergen and entering into distribution Contracts or amendments to existing
distribution Contracts with two wholesalers, Seller has not (i) materially
altered its distribution practices or terms with respect to
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Infergen, or (ii) materially altered its activities and practices with respect
to inventory levels of Infergen maintained at the wholesale, chain,
institutional or retail levels in any material respect.
(c) As of the Closing Date, the aggregate dollar value of the
inventory of Infergen (the "Aggregate Inventory Value") maintained by (a)
Cardinal Health, McKesson, and AmeriSource Bergen (collectively, "Seller's
Principal Wholesalers"), and (b) the specialty pharmacies with which Seller has
a contractual relationship, will not exceed the Maximum Inventory Amount. For
purposes hereof, (i) the "Aggregate Inventory Value" shall be calculated by
multiplying the number of units of inventory of Infergen maintained by Seller's
Principal Wholesalers and the specialty pharmacies as of the Closing Date by the
wholesale acquisition cost ("WAC") for such units as of the Closing Date, and
(ii) the "Maximum Inventory Amount" shall mean the amount equal to: (x) the
weekly average of the aggregate number of units of each SKU shipped by all of
Seller's Principal Wholesalers in the previous [***] ([***])[***], multiplied by
(y) [***] ([***])[***], multiplied by (z) the WAC for each unit.
(d) Section 3.8(d) of the Seller Disclosure Schedule sets forth, on a
[***] basis, the returns of Infergen for [***] ([***])[***].
SECTION 3.9. TAX MATTERS. There are no Encumbrances on any of the Purchased
Assets or the Inventory that arose in connection with any failure (or alleged
failure) to pay any Tax, and Seller has no Knowledge of any basis for assertion
of any claims attributable to Taxes which, if adversely determined, would
reasonably be expected to result in any such Encumbrance.
SECTION 3.10. INTELLECTUAL PROPERTY.
(a) Seller is the owner, licensee or sub licensee (as applicable),
free and clear of any Encumbrance, except for the Permitted Encumbrances, of all
right, title and interest in and to the Product Intellectual Property.
(b) Sections 3.10(b)(i)-(iv) of the Seller Disclosure Schedule set
forth a true and complete list of the Intellectual Property owned, licensed or
controlled by Seller covering the Product Business.
(c) The activities of Seller, if any, relating to the development,
manufacture, marketing, use, sale, distribution, import, export or other
commercial exploitation of Infergen by Seller, in each case in connection with
the operation of the Product Business, do not infringe upon, misappropriate,
violate, dilute (with respect to any trademarks, trade names, brand names and
service marks) or otherwise constitute the unauthorized use of, the Intellectual
Property rights of any third party; (ii) no claim is pending or, to the
Knowledge of Seller, threatened against Seller alleging any of the foregoing;
and (iii) to the Knowledge of Seller, no right, license, lease, consent or other
agreement is required with respect to any Product Intellectual Property for the
conduct of the Product Business other than those included in the Purchased
Assets.
(d) To the actual knowledge of an executive officer or director of
Seller, or a key employee of Seller directly involved on behalf of Seller in the
transactions contemplated
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herein (the "Actual Knowledge of Seller"), none of the Product Patents is
involved in any litigation, reissue, interference, reexamination, or opposition,
and there has been no threat or other indication that any such proceeding will
hereafter be commenced. To the Actual Knowledge of Seller, the Product Patents
(excluding patent applications) (i) are in good standing, (ii) are all without
challenge of any kind, (iii) are valid and enforceable, and (iv) have not been
adjudged invalid or unenforceable in whole or in part.
(e) To the Actual Knowledge of Seller, none of the Product Trademarks,
Product Copyrights or Product Domains or registrations or applications to use or
register such items are involved in any cancellation, nullification,
interference, conflict, concurrent use or opposition proceeding, and there has
been no threat or other indication that any such proceeding will hereafter be
commenced.
(f) No legal proceedings are pending, or to the Actual Knowledge of
Seller are threatened, against Seller (i) based upon, challenging or seeking to
deny or restrict the use of any of the Product Intellectual Property, (ii)
alleging that any services provided by, processes used by, or products
manufactured or sold or to be manufactured or sold by Seller in relation to the
Product Business infringe or misappropriate any Intellectual Property right of
any third party, or (iii) alleging that the Amgen License Rights conflict with
the terms of any third party license or other agreement.
(g) To the Actual Knowledge of Seller, all maintenance fees, annuity
fees or renewal fee payment for each jurisdiction in which each patent, patent
application, trademark, trademark application, trade name, trade name
registration, brand name, brand name registration, service mark, service mark
registration, copyright, copyright application, domain name or domain name
application included within the Product Intellectual Property has issued or is
pending have been timely paid.
(h) To the Knowledge of Seller, no third party is engaging in any
activity that infringes or misappropriates the Product Intellectual Property.
Seller is not a party to any agreement granting rights by Seller to any third
party with respect to the Product Intellectual Property.
(i) Seller has, with respect to the Product Business, used
commercially reasonable efforts to maintain its trade secrets in confidence.
(j) To the Knowledge of Seller, there has been no misappropriation of
any trade secrets or other confidential information of Seller with respect to
the Product Business.
(k) All employees of, consultants to or vendors of Seller with access
to confidential information with respect to the Product Business are parties to
written agreements under which each such employee, consultant or vendor is
obligated to maintain the confidentiality of confidential information of Seller.
To the Knowledge of Seller, none of the employees, consultants or vendors of
Seller or any of its subsidiaries is in violation of such agreements.
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(l) The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, will not result in or give
rise to any right of termination or other right to impair or limit, or otherwise
result in a breach of, any of Seller's rights to own or retain a license to any
of the Product Intellectual Property.
SECTION 3.11. PRODUCT RECORDS. All of the Product Records have been made
available by Seller to Buyer for examination, are complete and correct in all
material respects and have been maintained in accordance with sound business
practices.
SECTION 3.12. BROKERS, FINDERS, ETC. Seller has not employed any broker,
finder, consultant or other intermediary in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements who would have a
valid claim for a fee or commission from Buyer in connection with such
transactions by reason of any action taken by or on behalf of Seller.
SECTION 3.13. FINANCIAL STATEMENTS.
(a) Each form, report, schedule and document required to be filed by
Seller under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") since January 1, 2003 (collectively, the "Seller SEC Filings" and
individually, a "Seller SEC Filing"), solely with respect to the Product
Business, (i) did, as of its date, comply in all material respects with the
requirements of the Exchange Act and (ii) did not, at the time it was filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including in each
case, any notes thereto) contained in any Seller SEC Filing, solely to the
extent each relates to the Product Business, (i) was prepared in accordance with
GAAP applied (except as may be indicated in the notes thereto and, in the case
of unaudited quarterly financial statements, as permitted by Form 10-Q under the
Exchange Act) on a consistent basis throughout the periods indicated, and (ii)
presented fairly the consolidated financial position, results of operations and
cash flows of Seller as of the respective dates thereof and for the respective
periods indicated therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments which did not result in a Material
Adverse Effect).
SECTION 3.14. INSURANCE.
(a) Seller maintains, and shall continue to maintain at its sole cost
and expense on an uninterrupted basis for a period of at least [***] following
the Effective Time, product liability and other insurance on a primary and
non-contributory basis for itself in amounts, respectively, which are reasonable
and customary in the United States consumer healthcare industry for companies of
comparable size and activities at the place of business of Seller, provided that
the product liability insurance amounts are not, and shall not at any time be
allowed to be, less than [***] ($[***]) per occurrence (or per claim) and [***]
($[***]) in the aggregate limit of liability per year. Such insurance
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insures against, and at all times shall insure against, all liability, including
personal injury, product liability, physical injury, clinical development
liabilities, and property damage arising out of the development, manufacture,
sale, distribution, or marketing of the Product.
(b) There are no material claims currently made against any of the
insurance policies of Seller relating to the Product Business, no material
impairment of the amounts of coverage required thereunder, and Seller has no
Knowledge of any reasonable basis for any such claims.
SECTION 3.15. SUFFICIENCY. The Purchased Assets together with the Assumed
Liabilities, the Inventory, and Buyer's rights under this Agreement, and the
other Ancillary Agreements, constitute all of the material assets that are
necessary for Buyer to operate the Product Business as of and after the Closing
in a substantially similar manner as the Product Business was operated by Seller
for the two (2) years prior to the Effective Time; provided, however, for the
avoidance of doubt, such representation and warranty shall exclude any and all
assets and capabilities that a comparable company in the global pharmaceutical
business should customarily be capable of providing in connection with the
operation of a business such as the Product Business, including internal and
external infrastructure, manufacturing equipment and facilities, business
permits and licenses, professional services, trade and distribution networks,
personnel, facilities, factories and other property, promotional and brand
strategies, and financing.
SECTION 3.16. GOVERNMENT MULTI-PRODUCT CONTRACTS.
(a) Seller is not a party to any managed care contracts or other sales
contracts pursuant to which Seller is required to provide or honor discounts,
rebates, charge backs, or similar price breaks in connection with selling
Infergen.
(b) Seller has made available to Buyer copies of all Government
Multi-Product Contracts; provided that such copies may have been redacted to
prevent disclosure of information not related to Infergen. After the Effective
Time, Buyer shall honor and perform all Liabilities of Seller arising after the
Effective Time under and pursuant to each Government Multi-Product Contract
(other than any Liability arising out of or relating to a breach of such
Government Multi-Product Contract which occurred prior to the Effective Time)
with respect to supplying Infergen to the applicable party pursuant to such
Government Multi-Product Contract until such time as Seller has terminated each
such Government Multi-Product Contract as provided below. Seller agrees that
after the Effective Time it will not take any action with respect to any
Government Multi-Product Contract that would extend the term of such Government
Multi-Product contract with respect to Infergen, create or agree to any
additional obligations with respect to Infergen, or otherwise adversely affect
Buyer or the Product Business, without the prior written consent of Buyer,
although Seller may enter into a separate agreement with such government party,
provided that such agreements do not contain any provisions relating to Infergen
or the Product Business. Seller further agrees that Seller shall terminate the
rights and obligations of Seller with respect to the Product under each such
Government Multi-Product Contract, to the extent permitted by the terms thereof,
as soon as practicable after the Effective Time.
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SECTION 3.17. REGULATORY COMPLIANCE. To the extent applicable to Infergen
in the Territory:
(a) To the Knowledge of Seller, Infergen has been developed, labeled,
stored, tested and distributed in compliance with all applicable requirements
under the Federal Food Drug and Cosmetic Act 21 U.S.C. Sections 301 et. seq.,
its implementing regulations, and all similar Applicable Laws, including those
relating to investigational use, premarket clearance and applications or
abbreviated applications to market a new product, except for noncompliance
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
(b) All preclinical trials and clinical trials conducted by or, to the
Knowledge of Seller, on behalf of Seller with respect to Infergen have been, and
are being, conducted in compliance with the applicable requirements of Good
Laboratory Practice and Good Clinical Practice requirements contained in 21
C.F.R. Part 58 and Part 312 and all applicable requirements relating to
protection of human subjects contained in 21 C.F.R. Parts 50, 54, and 56, and
all similar Applicable Laws, except for noncompliance which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(c) To the Knowledge of Seller, with respect to Infergen (i) all
manufacturing operations conducted for the benefit of Seller have been and are
being conducted in compliance with the FDA's current Good Manufacturing Practice
regulations for drug products, including 21 C.F.R. Parts 210 and 211, and all
similar Applicable Laws, except for noncompliance which, individually or in the
aggregate, would not have, or be reasonably likely to have, a Material Adverse
Effect; and (ii) Seller is in compliance with all registration and listing
requirements set forth in 21 U.S.C. Section 360 and 21 C.F.R. Part 207, and all
similar Applicable Laws, except for noncompliance which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(d) Since the date of acquisition of Infergen (or rights thereto) by
Seller, Infergen has not been recalled, suspended or discontinued as a result of
any action by the FDA or any other foreign Governmental Authority within the
Territory, by Seller or by any licensee, distributor or marketer of Infergen, in
the United States or, to the Knowledge of Seller, outside of the United States
and within the Territory.
(e) Seller has not received any notice that the FDA or any other
Governmental Authority has commenced, or threatened to initiate, any action to
withdraw approval or request the recall of Infergen, or commenced, or threatened
to initiate, any action to enjoin or place restrictions on the production of
Infergen.
(f) To the Knowledge of Seller, there are no facts, circumstances or
conditions that would be sufficient to presently, or solely with the passage of
time in the ordinary course of business, provide a reasonable basis for a
recall, suspension or discontinuance of Infergen.
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(g) With respect to any new drug application, investigational new drug
application or similar state or foreign regulatory application with respect to
Infergen, Seller is in compliance with 21 U.S.C. Sections 355 or 21 C.F.R. Parts
312 or 314, respectively (and all similar Applicable Laws), and all terms and
conditions of such licenses or applications, except for any such failure or
failures to be in compliance which individually or in the aggregate has not had
and would not reasonably be expected to have a Material Adverse Effect. As to
Infergen, Seller and its officers, employees or agents have included in each
applicable application, where required, the certification described in 21 U.S.C.
Section 335a(k)(l) and each such certification was true, complete and correct in
all material respects when made.
(h) With respect to Infergen or the Product Business, Seller has not
committed any act, made any statement or failed to make any statement that would
reasonably be expected to provide a basis for the FDA to invoke its policy with
respect to "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities" set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any
amendments thereto. Additionally, none of Seller or any of its officers, key
employees or agents have been convicted of any crime or engaged in any conduct
that has resulted, or would reasonably be expected to result, in debarment under
21 U.S.C. Section 335a or any similar state law or regulation under 42 U.S.C.
Section 1320a-7.
(i) Seller has delivered to Buyer or made available to Buyer copies of
all adverse experience reports received by Seller with respect to Infergen.
(j) Section 3.17(j) of the Seller Disclosure Schedule sets forth a
true and correct list of all IST Trials conducted by or on behalf of Seller as
of the date hereof.
(k) Seller has not received any notice from the U.S. Department of
Justice, the Office of the Inspector General or any other Governmental Authority
that such Governmental Authority has commenced, threatened or intends to
commence any action or investigation with respect to the Product Business, and
there are no facts, circumstances or conditions that would be sufficient to
presently, or solely with the passage of time in the ordinary course of
business, provide a reasonable basis for any such action or investigation.
SECTION 3.18. PRODUCT REGISTRATIONS.
(a) Section 3.4(a) of the Seller Disclosure Schedule sets forth a
complete and correct list of all applications (including the BLA), new drug
applications, abbreviated new drug applications, new drug submissions and any
comparable applications and submissions in the Territory with respect to
Infergen. Seller owns the Product Registrations and no other party has any
rights thereto. The FDA approval for Infergen is in good standing, has not been
revoked, rescinded, amended or modified, and to Seller's Knowledge, no event has
occurred or notification been received by Seller from the FDA, a notified body
or any other party that would materially adversely affect or otherwise
jeopardize the FDA approval status of Infergen. To the Knowledge of Seller, no
applications made or other materials submitted by Seller to the FDA or a
notified body with respect to Infergen contained an untrue statement of material
fact when submitted, or omitted to state a material fact within Seller's
Knowledge when submitted which was required to
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be stated therein or necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(b) The Product Registration files of Seller have been maintained in
accordance with reasonable industry standards. Seller has in its possession or
control, or has access to, copies of all the material documentation filed in
connection with filings made by Seller for regulatory approval or registration
of Infergen, including the complete regulatory chronology for each Product
Registration (if applicable).
(c) Seller has not received any Paragraph IV Notification under U.S.C.
355(j)(2)(B) relative to any patents listed in any Product Registration held by
Seller. In addition, Seller has not received any notice regarding, and otherwise
has no Knowledge of, any plans by any third party to file product registration
relative to Product Registration held by Seller.
SECTION 3.19. NO OTHER WARRANTIES. Except as expressly provided in this
Agreement and the Ancillary Agreements, Seller does not make any representation
or warranty about the Product, the Purchased Assets, the Inventory, the Clinical
Trial Inventory, the Other Intellectual Property, the Assumed Liabilities or the
Product Business, whatsoever. WITHOUT LIMITING THE FOREGOING, BUYER ACKNOWLEDGES
THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE ANCILLARY
AGREEMENTS, (A) THE PURCHASED ASSETS, INVENTORY, CLINICAL TRIAL INVENTORY AND
OTHER INTELLECTUAL PROPERTY, ARE BEING TRANSFERRED "AS IS", (B) SELLER MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND OR AS BY OPERATION OF LAW, BY STATUTE OR
OTHERWISE, AND (C) SELLER SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR
STATUTORY WARRANTIES, INCLUDING ANY WARRANTY OF MERCHANTABILITY, WARRANT OF
FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF NONINFRINGEMENT.
SECTION 3.20. ADEQUACY OF DISCLOSURE. To the Knowledge of Seller, there are
no material facts that have specific application to the Product Business, the
Purchased Assets, the Inventory, or the Assumed Liabilities that would
reasonably be expected to have a Material Adverse Effect that have not been set
forth in this Agreement or the Seller Disclosure Schedules.
ARTICLE IV --
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the following representations
and warranties are true and correct as of the Execution Date to be reaffirmed at
Closing pursuant to Section 7.4(a), subject in each case to the attached
Schedules of Buyer and provided that each exception set forth in such Schedules
shall be deemed to qualify only such representation and warranty that is
specifically identified (by cross reference or otherwise) in any specific
schedule.
SECTION 4.1. ORGANIZATION AND AUTHORITY. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has full corporate power and corporate authority to execute and
deliver this Agreement and the Ancillary
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Agreements, and the transactions contemplated hereby and thereby, and effect the
transactions contemplated hereby and thereby and has duly authorized the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and transactions or documents contemplated thereby by all necessary
corporate action. Buyer has all corporate power and corporate authority
necessary to carry on its business as is currently being conducted. This
Agreement and the Ancillary Agreements are the valid and legally binding
obligations of Buyer, enforceable against it in accordance with their terms,
subject to applicable bankruptcy moratorium, reorganization, insolvency and
similar laws of general application relating to or affecting the rights and
remedies of creditors generally and to general equitable principles (regardless
of whether in equity or at law).
SECTION 4.2. CONSENTS; NO VIOLATIONS.
(a) Except for the requisite filings under the HSR Act and the
expiration or termination of the waiting period thereunder, and except for all
filings and other actions contemplated by this Agreement and the Ancillary
Agreements (including the necessary transfer of filings, notices and approvals
required to transfer the Regulatory Approvals from Seller to Buyer), the
execution, delivery and performance by Buyer of this Agreement and the Ancillary
Agreements and the consummation by Buyer of the transactions contemplated hereby
and thereby will not require any notice to, filing with, or the consent,
approval or authorization of, any Person or Governmental Authority.
(b) Neither the execution and delivery of this Agreement or the
Ancillary Agreements nor the consummation of the transactions contemplated
hereby or thereby will (i) violate or result in a breach or result in the
acceleration or termination of, or the creation in any Third Party of the right
to accelerate, terminate, modify or cancel, any indenture, contract, lease,
sublease, loan agreement, note or other obligation or liability to which Buyer
is a party or is bound, (ii) conflict with, violate or result in a breach of any
provision of the articles of incorporation or by-laws of Buyer, or (iii)
conflict with or violate in any material respect Applicable Law.
SECTION 4.3. BROKERS, FINDERS, ETC. Buyer and its Affiliates have not
employed any broker, finder, consultant or other intermediary in connection with
the transactions contemplated by this Agreement and the Ancillary Agreements who
would have a valid claim for a fee or commission from Seller in connection with
such transactions by reason of any action taken by or on behalf of Buyer.
SECTION 4.4. FINANCING. Buyer will have funds sufficient to pay the
Purchase Price and the Estimated Inventory Cost on the dates that such payments
are due under this Agreement.
SECTION 4.5. LITIGATION. There are no lawsuits, claims or any civil,
administrative or criminal actions, suits, or proceedings or governmental
investigations existing, pending, or to the Knowledge of Buyer, threatened, with
respect to this Agreement or the transactions contemplated hereby. Buyer is not
subject to any decree or order of any Governmental Authority that would impair
or delay its ability to perform its obligations under this Agreement or the
Ancillary Agreements.
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ARTICLE V -- COVENANTS OF SELLER PRIOR TO CLOSING
SECTION 5.1. ACCESS TO INFORMATION. Between the Execution Date and the
Effective Time, Seller shall, subject to any Applicable Law, (i) afford Buyer
and its representatives access, during regular business hours and upon
reasonable agreed upon times, to Seller's personnel, properties, Contracts,
Regulatory Approvals, the Product Records and all other information and
materials pertaining to the Product Business (with the ability to photocopy such
materials), provided that such access shall not unreasonably interfere with
Seller's business and operations; and (ii) otherwise cooperate with and assist
Buyer in its review and assessment of the Product and the Product Business.
SECTION 5.2. CONDUCT OF THE PRODUCT BUSINESS.
(a) Between the Execution Date and the Effective Time, except as
otherwise set forth on Schedule 5.2 or as contemplated by this Agreement or
consented to in writing by the Buyer, Seller shall, consistent with its conduct
of the Product Business during the twelve (12) months prior to the Execution
Date: (i) continue and conduct the Product Business in Seller's ordinary and
usual course of business, (ii) preserve intact the market for Infergen and the
goodwill associated with Infergen and the Product Intellectual Property, (iii)
preserve in full force and effect all material Contracts, and (iv) continue to
maintain its relationships with suppliers, distributors, customers and others
having material business relationships with it related to the Product Business.
(b) Between the Execution Date and the Effective Time, Seller shall
not (i) take any affirmative action, or fail to take any reasonable action
within its control, which would resonably be expected to (A) cause Seller to
violate Section 5.2(a), or (B) have a Material Adverse Effect; (ii) make any
modifications to any material Contract; or (iii) allow the levels of raw
materials, supplies, or other materials instrumental in the manufacture of
Infergen or the Inventory to vary materially from the levels thereof customarily
maintained.
SECTION 5.3. REQUIRED APPROVALS AND CONSENTS. As soon as practicable after
the Execution Date, Seller shall make all filings required to be made in order
to consummate the transactions contemplated herein, including all filings under
the HSR Act in accordance with Section 8.1. Seller shall also cooperate with
Buyer with respect to all filings that Buyer elects to make. Seller shall use
its commercially reasonable efforts to obtain all required Third Party Consents,
including all Material Consents required to effect the assignment of the
Contracts to Buyer.
SECTION 5.4. NOTICE OF DEFAULT. Between the Execution Date and the
Effective Time, Seller shall promptly notify Buyer in writing if Seller becomes
aware of any fact or condition that constitutes, or could reasonably be expected
to cause, a breach of a representation, warranty or covenant of Seller under
this Agreement. Any such notice or disclosure shall not be deemed to amend or
supplement Seller's disclosure under Article III or any schedule hereto, or to
correct or cure any misrepresentation, breach of warranty or breach of covenant.
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SECTION 5.5. NO NEGOTIATION. Between the Execution Date and the Effective
Time, Seller shall not directly or indirectly solicit, initiate, encourage or
entertain any inquiries or proposals, discuss or negotiate with, provide any
information to, or consider the merits of any inquiries or proposals from any
Person (other than Buyer) relating to any transaction involving, in whole or in
part, the Product Business or the Product, or that would otherwise compromise
Seller's ability to consummate the transactions contemplated in this Agreement
and the Ancillary Agreements. Seller shall immediately notify Buyer in the event
Seller receives any inquiries regarding any such transactions.
SECTION 5.6. REASONABLE BEST EFFORTS. Seller shall use its reasonable best
efforts to cause the conditions in Section 7.2 and 7.3 to be satisfied.
SECTION 5.7. TRANSITION ACTIVITIES.
(a) Between the Execution Date and the Effective Time, Seller shall
promptly furnish Buyer with such reasonable sample quantities of any Promotional
Materials that Seller may have utilized in connection with the Product Business
during the twelve (12) month period prior to the Execution Date, for use by
Buyer in preparing its own Promotional Materials. In that regard, Seller shall
and hereby does grant Buyer a non-exclusive, non-transferable,
non-sublicensable, royalty free, paid-up license in the Territory to use
Seller's Promotional Materials in connection with creating Buyer's Promotional
Materials. All costs and expenses incurred by Buyer with respect to creating its
own Promotional Materials shall be borne by Buyer.
(b) No later than five (5) Business Days prior to Closing, the Parties
shall enter into a Transition Services Agreement, to be effective immediately
after the Effective Time, substantially in the form attached hereto as Exhibit
5.7 providing for the services specified therein pursuant to which Seller shall
perform certain transitional services for Buyer in accordance with the terms
thereof.
SECTION 5.8. NOTICE OF GOVERNMENT INVESTIGATIONS. Between the Execution
Date and the Effective Time, Seller shall promptly notify Buyer in writing if
Seller has received any notice from the U.S. Department of Justice, the Office
of the Inspector General or any other Governmental Authority that such
Governmental Authority has commenced, threatened or intends to commence any
action or investigation with respect to the Product Business.
ARTICLE VI -- COVENANTS OF BUYER PRIOR TO CLOSING
SECTION 6.1. REQUIRED APPROVALS AND CONSENTS. As soon as practicable after
the Execution Date, Buyer shall make all filings required to be made in order to
consummate the transactions contemplated herein, including all filings under the
HSR Act in accordance with Section 8.1. Buyer shall also cooperate with Seller
with respect to all filings that Seller is required to make.
SECTION 6.2. NOTICE OF DEFAULT. Between the Execution Date and the
Effective Time, Buyer shall promptly notify Seller in writing if Buyer becomes
aware of any fact or condition that constitutes, or could reasonably be expected
to cause, a breach of a representation, warranty
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or covenant of Buyer under this Agreement. Any such notice or disclosure shall
not be deemed to amend or supplement Seller's disclosure under Article IV or any
schedule hereto, or to correct or cure any misrepresentation, breach of warranty
or breach of covenant.
SECTION 6.3. REASONABLE BEST EFFORTS. Buyer shall use its reasonable best
efforts to cause the conditions in Section 7.2 and 7.4 to be satisfied.
ARTICLE VII -- CLOSING AND TERMINATION
SECTION 7.1. CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place commencing at 10:00 a.m., Pacific
Standard Time, on the later of (i) December 30, 2005, or (ii) the date that is
two (2) Business Days following the termination of the applicable waiting period
under the HSR Act, unless another time or date is agreed to by the Parties (the
"Closing Date"). The Closing shall be deemed to have occurred at 11:59 PM (EST)
on the Closing Date (the "Effective Time".)
SECTION 7.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLER. The
respective obligations of Buyer and Seller to consummate the transactions
contemplated by this Agreement on the Closing Date are subject to the
satisfaction or waiver at or prior to the Closing Date of the following
condition:
(a) Litigation. No preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory agency,
body or authority which enjoins, restrains, prohibits or makes illegal pursuant
to Applicable Law the transactions contemplated by this Agreement on the Closing
Date; and
(b) HSR Clearance. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions contemplated by this Agreement
shall have expired or been terminated.
SECTION 7.3. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. Buyer's
obligations to consummate the transactions contemplated by this Agreement and
the Ancillary Agreements shall be subject to the fulfillment of each of the
following additional conditions, any one or more of which may be waived, at
Buyer's sole discretion, in writing by the Buyer:
(a) Representations and Warranties. The representations and warranties
of Seller contained in Article III that are qualified as to materiality shall be
true and correct as of the Execution Date and as of the Effective Time, and the
representations and warranties of Seller contained in Article III that are not
qualified as to materiality, shall be true and correct in all material respects
as of the Execution Date and as of the Effective Time.
(b) Performance. Seller shall have performed and complied in all
material respects with each of the covenants, agreements and obligations Seller
is required to perform under this Agreement on or before the Closing.
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(c) Material Consents. Each of the consents, including the Amgen
Consent, listed on Schedule 7.3(c) (the "Material Consents") shall have been
obtained and shall be in full force and effect.
(d) Audited Financial Statements. Seller shall have caused to be
prepared and delivered to Buyer on or before the Closing (i) an audited income
statement, statement of cash flow, and balance sheet for the Product Business as
of and for the twelve months ended December 31, 2004 (the "2004 Audited
Financials") and (ii) an income statement, statement of cash flow and balance
sheet for the Product Business as of and for the nine months ended September 30,
2005 (the "2005 Stub Financials").
(e) No Material Adverse Change. At any time after the Execution Date,
there has not been any Material Adverse Change, and no event has occurred or
circumstance exists that would reasonably be expected to result in such a
Material Adverse Change.
(f) Closing Certificate. Seller shall have delivered to Buyer a
certificate ("Seller's Closing Certificate"), dated as of the Closing Date and
executed by a duly elected, qualified and acting officer of Seller certifying:
(i) attached thereto is a complete and correct copy of resolutions
adopted by the board of directors of Seller authorizing the execution,
delivery and performance of this Agreement and the Ancillary Agreements
executed in connection herewith by Seller, and that such resolutions,
approvals and consents have not been amended or modified in any respect and
remain in full force and effect as of the date thereof (or, in the
alternative, a statement to the effect that no such board of directors
approval is necessary regarding the execution, delivery and performance of
this Agreement and the Ancillary Agreements); and
(ii) the due organization and good standing of Seller; and
(iii) the conditions specified in Section 7.2 and this Section 7.3
have been fulfilled.
(g) Ancillary Agreements. Seller shall have duly executed and
delivered to Buyer the ancillary agreements listed on Schedule 7.3(g) in the
form agreed by the Parties (together with any additional Instruments of
Transfer, the "Ancillary Agreements").
SECTION 7.4. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. Seller's
obligation to consummate the transactions contemplated hereby shall be subject
to the fulfillment of each of the following additional conditions, any one or
more of which may be waived, at Seller's sole discretion, in writing by Seller:
(a) Representations and Warranties. The representations and warranties
of Buyer contained in Article IV that are qualified as to materiality shall be
true and correct as of the Execution Date and as of the Effective Time, and the
representations and warranties of Buyer contained in Article IV that are not
qualified as to materiality, shall be true and correct in all material respects
as of the Execution Date and as of the Effective Time.
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(b) Performance. Buyer shall have performed and complied in all
material respects with each of the covenants, agreements and obligations Buyer
is required to perform under this Agreement on or before the Closing.
(c) Closing Certificate. Buyer shall have delivered to Seller a
certificate ("Buyer's Closing Certificate"), dated as of the Closing Date and
executed by a duly elected, qualified and acting officer of Buyer certifying:
(i) attached thereto is a complete and correct copy of resolutions
adopted by the board of directors of Buyer authorizing the execution,
delivery and performance of this Agreement and the Ancillary Agreements
executed in connection herewith by Buyer, and that such resolutions,
approvals and consents have not been amended or modified in any respect and
remain in full force and effect as of the date thereof (or, in the
alternative, a statement to the effect that no such board of directors
approval is necessary regarding the execution, delivery and performance of
this Agreement and the Ancillary Agreements); and
(ii) the due organization and good standing of Buyer; and
(iii) the conditions specified in Section 7.2 and this Section 7.4
have been fulfilled.
(d) Ancillary Agreements. Buyer shall have duly executed and delivered
the Ancillary Agreements to Seller.
SECTION 7.5. CLOSING DELIVERIES.
(a) At the Closing, Seller shall deliver or cause to be delivered to
Buyer executed copies of the following:
(i) Executed copies of the bill of sale, assignment and assumption
agreement with respect to the Purchased Assets and the Inventory and
Assumed Liabilities substantially in the form attached hereto as Exhibit
7.5(a)(i) (the "Bill of Sale");
(ii) Executed copies of the intellectual property assignment
documentation necessary to transfer to Buyer the Product Intellectual
Property, substantially in the form attached hereto as Exhibit 7.5(a)(ii)
(the "IP Assignments");
(iii) Executed copies of the Material Consents (including the Amgen
Consent and the Cardinal Health Acknowledgment);
(iv) A copy of the 2004 Audited Financials and 2005 Stub Financials.
(v) Executed copies of the Ancillary Agreements;
(vi) Executed copies of any other Instruments of Transfer reasonably
requested by Buyer; and
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(vii) Executed copies of such other documents as may be reasonably
necessary or appropriate to consummate the transactions contemplated
hereby.
(b) At the Closing, Buyer shall deliver or cause to be delivered to
Seller the following:
(i) The Closing Payment;
(ii) The Estimated Inventory Cost;
(iii) Executed copies of the Ancillary Agreements;
(iv) Executed copies of any other Instruments of Transfer reasonably
requested by Seller;
(v) To the extent required, executed copies of any of the Material
Consents (including the Amgen Consent); and
(vi) Executed copies of such other documents as may be reasonably
necessary or appropriate to consummate the transactions contemplated
hereby.
SECTION 7.6. TERMINATION. This Agreement may be terminated:
(a) at any time before the Closing Date by mutual written consent of
Buyer and Seller; or
(b) by either Buyer or Seller, in writing, if the transactions
contemplated hereby have not been consummated on or before January 31, 2006 (as
such date may be extended pursuant to Section 7.1), provided that such failure
is not due to the failure of the Party seeking to terminate this Agreement to
comply in all material respects with its obligations under this Agreement,
including the failure of the Party seeking to terminate this Agreement to
satisfy its closing conditions set forth in this Article VII; or
(c) by Seller, in writing, if:
(i) any of the conditions set forth in Section 7.2 or 7.4 has not been
satisfied as of the Closing Date, or shall become impossible to fulfill,
other than for reasons within the reasonable control of Seller, and such
conditions shall not have been waived by Seller (in its sole discretion);
or
(ii) a material breach of any provision of this Agreement has been
committed by Buyer, such breach has not been waived by Seller and such
breach is not cured by Buyer within ten (10) days after written notice
thereof or, in the reasonable determination of Seller, is incapable of
being cured by Buyer; or
(d) by Buyer, in writing, if:
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(i) any of the conditions set forth in Section 7.2 or 7.3 has not been
satisfied as of the Closing Date, or shall become impossible to fulfill,
other than for reasons within the reasonable control of the Buyer, and such
conditions shall not have been waived by Buyer (in its sole discretion); or
(ii) a material breach of any provision of this Agreement has been
committed by Seller, such breach has not been waived by Buyer and such
breach is not cured by Seller within ten (10) days after written notice
thereof or, in the reasonable determination of Buyer, is incapable of being
cured by Seller.
SECTION 7.7. PROCEDURE AND EFFECT OF TERMINATION. Upon termination of this
Agreement by Seller or Buyer pursuant to Section 7.5, written notice thereof
shall forthwith be given to the other Party and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned without further
action by any of the Parties. Termination of this Agreement shall terminate all
outstanding obligations and liabilities between the Parties arising from this
Agreement except those described in: (i) this Section 7.7, ARTICLE IX, and
Section 10.1; (ii) the Confidentiality Agreement; and (iii) any other provisions
of this Agreement which by their nature are intended to survive any such
termination.
ARTICLE VIII -- CERTAIN OTHER COVENANTS
SECTION 8.1. HSR FILINGS. If required pursuant to Applicable Law, each of
Seller and Buyer undertakes and agrees to file as soon as practicable, and in
any event no later than ten (10) business days after the Execution Date, a
Notification and Report Form under the HSR Act with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice. As deemed advisable, each of Seller and Buyer shall respond as promptly
as practicable to any inquiries or requests received from any Governmental
Authority in the Territory for additional information or documentation. Each
Party shall (a) promptly notify the other Party of any written communication to
that Party or its Affiliates from any Governmental Authority and, subject to
Applicable Law, permit the other Party or the other Party's counsel to review in
advance any proposed written communication to any of the foregoing; (b) not
participate, or permit its Affiliates to participate, in any substantive meeting
or discussion with any Governmental Authority in respect of any filings,
investigation or inquiry concerning this Agreement unless it consults with the
other Party in advance and, to the extent permitted by such Governmental
Authority in the Territory, gives the other Party the opportunity to attend and
participate thereat; and (c) with the exception of business documents deemed
confidential by the Buyer (including documents submitted as attachments to each
of the Buyer's Notification and Report Form under the HSR Act), furnish Seller
with copies of all correspondence, filings, and communication (and memoranda
setting forth the substance thereof) between Buyer (its affiliates, and its
respective representatives) on the one hand, and any Governmental Authority or
members of their respective staffs on the other hand, with respect to this
Agreement. Buyer and Seller shall share equally any required HSR Act filing fees
related to this transaction.
SECTION 8.2. INVENTORY COST ADJUSTMENT.
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(a) On the weekend immediately preceding the Closing Date, Seller
shall temporarily halt all shipments of Infergen in the Territory, in order to
allow Seller to conduct a review of those of its locations at which Inventory is
located in order to derive a reasonably accurate estimate of the quantities of
Inventory that will be outstanding at such locations as of the Closing Date, and
Seller shall provide Buyer with such good faith written estimate (the "Estimated
Inventory Statement") by Midnight (PST) of the next Business Day. Seller shall
be entitled to resume shipments of Infergen in the Territory starting on such
next Business Day and continue such shipments through the day immediately
preceding the Closing Date.
(b) Seller shall also deliver to Buyer, together with the Estimated
Inventory Statement, a good faith written estimate of the Inventory Cost (the
"Estimated Inventory Cost") as determined pursuant to Schedule 8.2(b) (which
details the per-unit Inventory purchase price), and Buyer shall pay an amount
equal to the Estimated Inventory Cost to Seller on the Closing Date pursuant to
the terms of this Agreement. Thereafter, the Inventory Cost shall be finally
determined as described below:
(i) On the Closing Date, Seller shall deliver the Inventory to Buyer
at the locations set forth in the Inventory Statement (as such term is
defined below).
(ii) Within thirty (30) days after the Closing Date, Seller shall
deliver a written statement (the "Inventory Statement") of the amount,
location, lot and batch numbers of the Inventory provided to Buyer on the
Closing Date and Seller shall calculate the actual cost of the Inventory
(the "Inventory Cost") provided to Buyer on the Closing Date pursuant to
Schedule 8.2(b) which details the per-unit Inventory cost.
(iii) If Buyer agrees with the Inventory Statement, it shall within
thirty (30) days after receipt thereof, so notify Seller; however, if Buyer
disputes the amounts or Inventory Cost (or the calculation thereof)
reflected in the Inventory Statement, Buyer shall notify Seller in writing
of its dispute, setting forth in reasonable detail, the basis for such
dispute, within thirty (30) days after Seller's delivery of the Inventory
Statement to Buyer. The Parties shall, for a period not to exceed one (1)
week, negotiate in good faith to resolve such dispute, and, in the event a
resolution is not reached, within 2 Business Days after the end of such one
(1) week period Seller and Buyer shall submit the items remaining in
dispute for resolution to a mutually acceptable independent accounting firm
of international reputation for resolution by such firm within a one (1)
week period. Such accounting firm's decision shall be binding upon the
Parties and the resulting Inventory Statement and Inventory Cost shall be
final and binding upon the Parties. The Parties shall equally split the
reasonable fees and expenses of such accounting firm associated with the
resolution of such dispute.
(iv) The Inventory Statement and the Inventory Cost shall be deemed
final upon the earlier of (A) Buyer's notice to Seller that it accepts the
Inventory Statement, (B) thirty (30) days after delivery of the Inventory
Statement if Buyer fails to notify Seller of a dispute within thirty (30)
days after Seller's delivery of the Inventory Statement to Buyer or (C) the
resolution of any disputes as described in Section 8.2(c).
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(v) Within five (5) Business Days after the Inventory Statement and
the Inventory Cost are deemed final, a payment shall be made as follows:
(A) In the event the amount of the final Inventory Cost reflected
on the Inventory Statement is less than the Estimated Inventory Cost,
then Seller shall remit payment of the amount equal to such difference
to Buyer; or
(B) In the event the amount of the final Inventory Cost reflected
on the Inventory Statement exceeds the Estimated Inventory Cost, then
Buyer shall remit payment of the amount equal to such difference to
Seller.
(c) Notwithstanding anything herein to the contrary, Buyer shall not
be required to purchase any Inventory in excess of the Inventory Cap. For
avoidance of doubt, any Inventory (other than the Clinical Trials Inventory)
held by Seller at the Effective Time in excess of the Inventory Cap shall
constitute an Excluded Asset.
(d) Seller shall not sell any Inventory in the Territory after the
Effective Time, and Buyer shall be entitled to sell the Inventory in the
Territory as of and after the Effective Time.
SECTION 8.3. PRODUCT RETURNS, REBATES AND CHARGEBACKS.
(a) Product Returns.
(i) For a three (3) year period following the Closing, Seller shall be
financially responsible for all costs associated with any customer or
wholesaler returns of expired, damaged, defective, or other unsalable
Infergen ("Product Returns") for any Infergen that was shipped on or before
the Closing Date. Buyer shall be financially responsible for all costs
associated with any Product Returns of any Infergen shipped after the
Closing Date. Seller shall have delivered to Buyer at and as of the Closing
Date a schedule containing the lot number and units per lot of Infergen
that were distributed by Seller prior to Closing. Any Product Returns will
be made in accordance with Buyer's returned goods policy at the time of
such Product Return, unless otherwise mutually agreed by Buyer and Seller.
By agreeing to process the Product Returns for the benefit of Seller, Buyer
does not agree to assume any liability associated with such Product
Returns, but is providing a service as an accommodation to Seller and to
minimize confusion on the part of customers.
(ii) Except as set forth herein, Buyer shall be responsible for
processing all Product Returns received after the Closing Date irrespective
of when and by whom the returned Infergen was shipped. Product Return
processing shall include the destruction of all returned Infergen by Buyer,
or the customer, as applicable. Buyer agrees to only issue return credits
for Infergen shipped by Seller prior to the Closing Date at such time that
Buyer has received the returned Infergen from the customer, unless Seller
agrees to waive the customer return of Infergen.
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(iii) Each Party agrees it will not take, directly or indirectly, any
action that would provide any incentive or otherwise induce or motivate
customers to return Infergen, except as the parties may otherwise mutually
agree.
(b) Government Rebates.
(i) Seller shall be responsible for all rebates pursuant to any
government rebate programs with respect to government claims for Infergen
indicating Seller's NDC numbers and sold by Seller prior to the Effective
Time including, but not limited to, rebates related to Infergen dispensed
within [***] ([***])[***] following the Effective Date (the "Government
Rebate Tail Period") (it being understood and agreed that the dispense date
contained in any report from a state rebate program shall be used for
purposes of determining the date of such claim).
(ii) Buyer shall be responsible for all rebates pursuant to any
government rebate programs with respect to government claims for Infergen
indicating Seller's or Buyer's NDC numbers and sold subsequent to the
Effective Time, excluding rebates relating to Infergen dispensed during the
Government Rebate Tail Period (it being understood and agreed that the
dispense date contained in any report from a state rebate program shall be
used for purposes of determining the date of such claim).
(c) Commercial Rebates.
(i) Seller shall be responsible for all commercial rebates with
respect to Infergen sold prior to the Effective Time. Notwithstanding the
foregoing, Buyer and Seller agree that (a) Seller's financial liability for
the commercial rebates during the period from the Effective Time through
[***] ([***])[***] thereafter shall be limited to those commercial
customers with which Seller has a rebate obligation as of the Effective
Time and (b) any such payments by Seller shall be made on the terms and
conditions comparable to Seller's rebate obligations as of the Effective
Time with respect to each commercial customer and shall be based on
Seller's terms of agreement with the respective contract, as such terms of
agreement existed as of the Effective Time. Seller shall utilize records
from third party rebate administrators to demonstrate which rebates relate
to Infergen sold prior to the Effective Time for purposes of determining
Seller's obligation.
(ii) Any rebates for Infergen sold subsequent to the Effective Time
will be the liability of Buyer. To the extent that Seller processes such
claims, Buyer shall reimburse Seller within thirty (30) days of receipt of
invoices that describe the requested payments in reasonable detail.
(d) Chargeback Claims.
(i) Seller shall be financially responsible for all chargeback claims
related to Infergen sold prior to the Effective Time (the "Chargeback
Claims"). Buyer shall process and be financially liable for all Chargeback
Claims related to Infergen sold subsequent to
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the Effective Time. Notwithstanding the foregoing, the parties acknowledge
that the VA National Acquisition Center must approve the removal of
Infergen from Seller's Federal Supply Schedule ("FSS") before the
responsibility of processing such rebates is transferred from Seller to
Buyer. Until such approval is obtained, Seller shall continue to be
responsible for processing the FSS chargebacks on Buyer's behalf, and Buyer
shall reimburse Seller for same. Buyer and Seller agree that (i) Seller's
financial liability for the Chargeback Claims shall be limited to those
commercial customers with which Seller has chargeback obligations as of the
Effective Time, and (ii) any such chargebacks issued by Seller shall be
made on terms and conditions comparable to Seller's obligations as of the
Closing with respect to each customer and shall be based on Seller's terms
of respective agreements as of the Effective Time. Seller shall utilize
records from third party rebate administrators to demonstrate which
chargebacks relate to Infergen sold prior to the Effective Time for
purposes of determining Seller's obligation.
(ii) To the extent that Seller processes Chargeback Claims which are
the responsibility of Buyer, Buyer shall reimburse Seller within thirty
(30) days of receipt of invoices that describe the requested payments in
reasonable detail.
(e) Procedures. Within fifteen (15) days after the end of each
calendar quarter, Buyer shall submit to Seller an invoice and supporting
documentation relative to all Product Returns, Government Rebates, Commercial
Rebates and Chargeback Claims received during the preceding calendar quarter for
which Seller is financially responsible. Such invoice and the supporting
documentation shall set forth the following detail: (i) where applicable, the
stock-keeping-unit number and lot code of returned Infergen (the "Returned
Product") and the date the Returned Product or claim for applicable rebate or
chargeback was received by Buyer, if applicable; (ii) the name and address of
the customer returning such Returned Product or making such claim; (iii) the
reason given by such customer for the return or claim if applicable; (iv) the
cost of performing such return or processing and paying such claim, provided,
however, with respect to returns, such cost shall include only the cost of
replacing, or refunding the allegedly defective Infergen, plus any reasonable
shipping costs associated with such return, plus a [***] ([***]%) processing and
destruction fee. Unless Seller contests such invoice in accordance herewith,
Seller shall remit the total invoiced amount to Buyer within ten (10) days after
its receipt of such invoice. In the event Seller in good faith disagrees with
such invoice, the Parties shall, for a period not to exceed one (1) month,
negotiate in good faith to resolve such dispute, and, in the event a resolution
is not reached, within two (2) Business Days after the end of such one (1) month
period Seller and Buyer shall submit the items remaining in dispute for
resolution to a mutually acceptable independent arbitrator for resolution by
such arbitrator with a one (1) month period. In the event the Parties cannot
mutually agree on an independent arbitrator, Buyer and Seller shall each select
an independent arbitrator. These independent arbitrators shall then select a
third arbitrator to resolve the dispute. The decision of the arbitrator shall be
binding upon the Parties and the resulting determination shall be final and
binding upon the Parties. The Parties shall equally split the reasonable fees
and expenses of any arbitrator associated with the resolution of such dispute.
SECTION 8.4. TRANSITIONAL TRADEMARK LICENSE.
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(a) As of the Effective Time and for a period of up to twenty four
months (24) months after the Closing Date, Seller hereby grants to Buyer (or its
Affiliates responsible for operating the Product Business after Closing or any
third-party manufacturers utilized by Buyer in connection with the Product
Business after the Closing Date), and Buyer hereby accepts, a non-exclusive,
non-transferable, non-sublicensable (except with respect to such third-party
manufacturers or Buyer's Affiliates), royalty-free, paid-up, license in the
Territory under the Seller Marks, for use solely in connection with (i) Buyer's
sale of the Inventory in the Territory, and (ii) Buyer's use of the Promotional
Materials existing as of the Closing Date and transferred to Buyer as part of
the Purchased Assets, and (iii) the labeling on the Infergen manufactured by or
on behalf on Buyer as of and after the Effective Time; provided, however, that
such license is being granted solely for transitional purposes and Buyer shall
therefore, notwithstanding the time period provided for above, use its
commercially reasonable efforts to as quickly as is reasonably possible cease
its use of the Seller Marks after the Effective Time, but in no event later than
twenty four months (24) months after the Closing Date, or such later date (not
to exceed an additional three (3) months) as may be agreed-to by Seller, in its
sole discretion, in the event Buyer is unable to revise the labeling on the
Infergen to remove the applicable Seller Marks due to governmental and
regulatory laws and regulations.
(b) To the extent that Buyer is utilizing the transitional trademark
license of this Section 8.4, Buyer shall not (i) add any other labels or marks
to, or otherwise alter, the Seller Marks as used in the Product Business as of
the Closing Date (except as required by law); (ii) change in any way the style
of the Seller Marks as used in the Product Business as of the Closing Date; or
(iii) otherwise use the Seller Marks in any manner other than as specifically
provided in this Section 8.4.
(c) Buyer acknowledges Seller's ownership of the Seller Marks, shall
do nothing inconsistent with such ownership, agrees that all use of the Seller
Marks by Buyer shall inure to the benefit and be on behalf of Seller, and agrees
not to challenge Seller's title to the Seller Marks. Nothing in this Agreement
shall give Buyer any right, title or interest in the Seller Marks other than the
right to use the Seller Marks strictly in accordance with this Section 8.4. All
use of the Seller Marks by Buyer under this Section 8.4 shall conform to the
standards followed by Seller in operating the Product Business prior to the
Closing Date, and Seller shall have the right to review the standards used by
Buyer to operate the Product Business after the Closing Date to ensure Buyer's
compliance with this requirement related to the Seller Marks.
(d) Buyer shall not have the right to, and shall not, sublicense,
assign, pledge, grant or otherwise encumber or transfer to any Third Party any
rights licensed by Seller to Buyer under this Section 8.4 without Seller's prior
written consent. The Parties understand and agree that, in addition to all other
legal remedies, Seller shall be entitled to immediate injunctive relief in order
to enforce the terms of this Section 8.4.
(e) Nothing in this Section 8.4, or any other provision of this
Agreement or any provision of the Ancillary Agreements, shall grant the Buyer
any rights in any of Seller's Internet domain names, registrations or
applications for registration, or renewals thereof, registered in the United
States or any other country or jurisdiction throughout the world, except
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as such Internet domain names, registrations or applications for registration,
or renewals thereof are included as part of the Purchased Assets.
(f) Following the Closing, Buyer shall promptly and at its own expense
use commercially reasonable efforts to obtain such FDA approvals necessary for
Buyer Labeling for the Infergen to be manufactured after the Closing and,
promptly comply with such FDA approvals upon receipt thereof.
SECTION 8.5. CUSTOMER BILLING. In the event that Seller or any of its
Affiliates receives payment after the Closing Date on invoices relating to the
Product Business operated by the Buyer or sales of products or services rendered
by Buyer on or after the Effective Time, Seller will promptly notify Buyer of
such receipt and will promptly remit, or will cause such Affiliate to promptly
remit, such payment to Buyer without depositing such payment in an account of
Seller, or such Affiliate, unless in error, and Seller, or such Affiliate, shall
not be entitled to offset such payment against any payments due Seller from
Buyer. In the event Seller receives an invoice or request for payment relating
to the operation of the Product Business on or after the Effective Time, or with
respect to any Assumed Liability, Seller will promptly notify Buyer of such
request or invoice and forward the invoice and all other appropriate information
to Buyer for payment. In the event Buyer or any of its Affiliates receive
payment after the Effective Time on invoices issued by Seller relating to an
Excluded Asset (such as Seller's accounts receivable as of the Effective Time)
or relating to product sold or services rendered by businesses other than the
Product Business or the Purchased Assets, Buyer will promptly notify Seller of
such receipt and will promptly remit, or will cause such Affiliate to promptly
remit, such payment to Seller without depositing such payment in an account of
Buyer, or such Affiliate, unless in error, and Buyer, or such Affiliate, shall
not be entitled to offset such payment against any payments due Buyer from
Seller.
SECTION 8.6. COVENANT NOT TO COMPETE. Seller hereby agrees that for a
period ending on the later of (a) [***] ([***])[***] after the Closing Date and
(b) the [***] the [***], Seller shall not, directly or indirectly, alone, as a
licensor, or otherwise in conjunction with other Persons, develop, manufacture,
license-in, market, sell or otherwise distribute in the Territory for human use,
or assist any other Person in developing, manufacturing, licensing-in,
marketing, selling or otherwise distributing in the Territory for human use, any
Competing Product, either alone or in combination, whether such Competing
Product is available with or without a prescription. For purposes hereof,
"Competing Product" means any product containing interferon alfacon-1 as an
active ingredient, [***] that [***] is [***] the [***]. Notwithstanding this
Section 8.6, Seller shall have the right to conclude its ongoing clinical trials
with respect to the combination of the Product with the pharmaceutical product
currently marketed by Seller under the trademark Actimmune(R).
SECTION 8.7. COOPERATION.
(a) After the Execution Date, the Parties shall cooperate reasonably
with each other in connection with any reasonable actions required to be taken
with respect to their respective obligations under this Agreement and the
Ancillary Agreements, and shall (i) furnish
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upon reasonable request to each other such further information, and (ii) execute
and deliver to each other such other reasonable documents, and (iii) do such
other acts, all as the other Party may reasonably request for the purpose of
carrying out the provisions of this Agreement (and the Ancillary Agreements) and
the transactions contemplated hereby and thereby.
(b) Seller will promptly notify Buyer, and Buyer will notify Seller,
as applicable and in writing, of any event or fact which represents a material
breach of any of their respective representations, warranties, covenants or
agreements hereunder.
SECTION 8.8. CLINICAL TRIALS. As of the Effective Time, Buyer shall take
over and assume, from and after the Effective Time, (a) all of Seller's duties
and responsibilities relative to the ongoing conduct of the Clinical Trials from
and after the Effective Time, in accordance with the protocols therefore (other
than such duties and responsibilities which Seller agrees to perform on behalf
of and as Buyer's agent from and after the Effective Time) and (b) all costs,
expenses and Liabilities associated with conducting the Clinical Trials from and
after the Effective Time (other than any Liability arising out of or relating to
the conduct of the Clinical Trials by Seller prior to the Effective Time), all
as described in more detail in the Transition Services Agreement.
SECTION 8.9. EMPLOYEES. Buyer anticipates it will offer employment to
certain personnel of Seller directly related to the Product Business.
Notwithstanding the foregoing, Buyer shall not be obligated to offer employment
to any employees of Seller nor to offer employment to or hire any specific
number of Seller's employees, and any such offer of employment shall be on terms
and conditions as Buyer, in its sole discretion, shall determine, without regard
to the terms and conditions under which any employees of Seller have been
employed prior to the Closing Date. Buyer shall have no obligation of any kind
or nature for any compensation or benefits of any kind or nature with respect to
the employees or consultants of Seller for any services rendered or otherwise
arising on or before the Closing Date, including, any Liability and cost
associated with the termination by Seller of any employee or consultant of
Seller.
SECTION 8.10. TAX MATTERS.
(a) U.S. Statement of Allocation. Buyer and Seller acknowledge their
mutual obligations pursuant to Section 1060 of the Code to timely file IRS Form
8594 with each of their respective federal income tax returns (the "Asset
Acquisition Statement"). Accordingly, Buyer and Seller agree to cooperate in the
preparation of the Asset Acquisition Statement for timely filing in each of
their respective U.S. federal income tax returns in accordance with a written
statement (the "Statement of Allocation"), in form and substance reasonably
acceptable to Buyer and Seller, setting forth an allocation of the Purchase
Price (which for such purpose shall be increased by the amount of the Assumed
Liabilities) among the Purchased Assets (as applicable for each Statement of
Allocation) and the Inventory Cost among the Inventory in accordance with the
provisions of Section 1060 of the Code and the Treasury Regulations. No later
than ten (10) days prior to the Closing Date, Buyer shall prepare and deliver to
Seller a proposed Statement of Allocation. If Seller approves the Statement of
Allocation, then, unless otherwise prohibited by law, all federal, state and
local income Tax returns of Buyer and Seller shall be filed consistently with
the allocations made pursuant to the Statement of Allocation. If Seller
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does not approve the Statement of Allocation, Buyer and Seller shall make good
faith efforts to agree on the allocation of the consideration among the
Purchased Assets. If Buyer and Seller, after good faith negotiations, cannot
agree on the allocation of the consideration within one hundred twenty (120)
days following the Closing Date, then no Statement of Allocation shall be
prepared, and each Party shall prepare and file its returns in accordance with
its own allocations.
(b) Seller and Buyer shall provide reasonable cooperation and
information to each other in connection with (i) the preparation or filing of
any Return, amended Return, Tax election, Tax consent or certification, or any
claim for a Tax refund, (ii) any determination of liability for Taxes, and (iii)
any audit, examination or other proceeding in respect of Taxes exclusively
related to the Product Business. Any information obtained under this Section
8.10 shall be kept confidential pursuant to Section 10.1, except as may be
otherwise necessary in connection with the filing of Returns, claims for a Tax
refund or in conducting any audit, examination or other proceeding in respect of
Taxes. In addition, upon request, Seller shall provide Buyer with an income tax
withholding statement in a form reasonably acceptable to Buyer.
(c) Buyer shall be solely responsible for all sales, use, transfer,
value added and other related Taxes (the "Transfer Taxes"), if any, arising out
of the transfer by Seller of the Purchased Assets, Inventory, Clinical Trial
Inventory and Other Intellectual Property to Buyer pursuant to this Agreement,
it being acknowledged and specifically agreed, however, that Buyer shall have no
responsibility for, and Seller will be solely responsible for, any Tax payable
on any income or gain of Seller arising from the sale of the Purchased Assets
and Inventory or otherwise arising under this Agreement. Notwithstanding the
foregoing, Seller hereby agrees to indemnify, pursuant to the terms of Article
IX hereof, and hold Buyer harmless against any Liability resulting from any
noncompliance by Seller with the provisions of any applicable bulk sale or bulk
transfer laws. Each Party shall make all commercially reasonable efforts and
take such commercially reasonable actions to avail itself of all available
exemptions to or reductions of such Transfer Taxes as reasonably requested by
the other Party, and shall otherwise cooperate with the other Party to avail
itself of such exemptions to or reductions available pursuant to Applicable Law.
(d) Each Party shall be responsible for and shall pay all Taxes
payable on any payments made to such Party by the other Party, except as is
otherwise set forth in Section 8.9(b).
(e) If subsequent to the payment by the Buyer to Seller any amounts
paid hereunder are determined to be subject to withholding taxes by any taxing
jurisdiction and payment of such taxes is required by the Buyer, Seller agrees
to reimburse Buyer for such amounts assessed and paid plus interest.
(f) Seller shall promptly after the Closing prepare and file all
reports and Returns required by Tax Law relating to the Product Business, the
Purchased Assets, the Inventory and the Product as owned or operated by Seller
prior to and including the Effective Time.
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SECTION 8.11. NOTICE TO CUSTOMERS. Seller agrees to cooperate with Buyer,
at Buyer's reasonable request, in the notification to customers of the
transactions contemplated by this Agreement and Seller agrees not to notify any
customer of such transactions without the consent of Buyer. Such notification
shall be in such form as is reasonably satisfactory to both Buyer and Seller as
agreed to prior to Closing.
SECTION 8.12. ASSISTANCE IN SUPPLY OF INFERGEN. From and after the
Effective Time, Buyer shall supply to Seller any amount of Infergen reasonably
requested by Seller solely for purposes of Seller's completion of its ongoing
clinical trials with respect to the combination of Infergen with the
pharmaceutical product currently marketed by Seller under the trademark
Actimmune(R); provided, however, Seller shall pay Buyer for all such Infergen.
SECTION 8.13. ADVERSE EXPERIENCE REPORTS. At a mutually agreed upon time
after the Effective Time, Seller shall provide Buyer with information relating
to the investigation and reporting of all adverse experiences regarding
Infergen, including with respect to the use of Infergen in both clinical
studies, as well as spontaneous reports, prior to the Effective Time and all
other information which is materially relevant to the safe use of Infergen in
Seller's possession as of the Effective Time. After the Effective Time, Seller
shall promptly submit to Buyer all adverse drug experience information or
customer complaints brought to the attention of Seller in respect of Infergen,
as well as any material events and matters concerning or affecting the safety or
efficacy of Infergen. After the Effective Time, Buyer shall have all
responsibility for required reporting of adverse experiences for Infergen.
SECTION 8.14. REGULATORY MATTERS.
(a) Except as expressly set forth in Section 8.7, from and after the
Effective Time, Buyer, at its cost, shall be solely responsible and liable for
(i) taking all actions, paying all fees and conducting all communication with
the appropriate Governmental or Regulatory Authority required by Law in respect
of the Regulatory Approvals, including preparing and filing all reports
(including adverse drug experience reports) with the appropriate Governmental or
Regulatory Authority (whether Infergen is sold before or after transfer of such
Regulatory Approval), (ii) taking all actions and conducting all communication
with third parties in respect of Infergen sold pursuant to such Regulatory
Approval (whether sold before or after transfer of such Regulatory Approval),
including responding to all complaints in respect thereof, including complaints
related to tampering or contamination, and (iii) investigating all complaints
and adverse drug experiences in respect of Infergen sold pursuant to such
Regulatory Approval (whether sold before or after transfer of such Regulatory
Approval).
(b) From and after the Effective Time, Seller promptly (and in any
event within the time periods required by Law) shall notify Buyer within three
(3) Business Days if Seller receives a complaint or a report of an adverse drug
experience in respect of Infergen. In addition, Seller shall cooperate with
Buyer's reasonable requests and use commercially reasonable efforts to assist
Buyer in connection with the investigation of and response to any complaint or
adverse drug experience related to Infergen sold by Seller.
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(c) From and after the Effective Time, Buyer, at its cost, shall be
solely responsible and liable for conducting all voluntary and involuntary
recalls of units of Infergen sold pursuant to such Regulatory Approval (whether
sold before or after transfer of such Regulatory Approval), including recalls
required by any Governmental or Regulatory Authority and recalls of units of
Infergen sold by Seller deemed necessary by Seller in its reasonable discretion;
provided, however, that Seller shall reimburse Buyer for the reasonable expenses
and costs of conducting recalls relating to Infergen sold by or on behalf of
Seller prior to the Closing, including the costs of notifying customers, the
costs associated with shipment of such recalled Infergen, the price paid for
such Inventory, and reasonable credits extended to customers in connection with
the recall. Seller promptly shall notify Buyer in the event that a recall of
Infergen sold by Seller is necessary.
(d) Seller shall, within fifteen (15) days of the Closing, notify the
FDA of the transfer of the Regulatory Approvals to Buyer in accordance with all
Applicable Laws.
SECTION 8.15. DIFFERENTIATION OF PRODUCT. From and after the Effective
Time, Buyer shall institute appropriate procedures to ensure that products and
goods of the Product Business manufactured, finished or sold by, or on behalf
of, Buyer can be distinguished from products and goods of the Business
manufactured, finished or sold by, or on behalf of, Seller.
SECTION 8.16. [***]. Seller hereby grants to Buyer the [***] with respect
to the Nektar Agreements:
(a) At any time prior to the commencement of the [***], provided that
Seller shall have incurred documented expenses of at least [***] in connection
with its continued clinical development of a pegylated formulation of alfacon-1
as contemplated under the Nektar Agreements, Seller may [***] ("[***]") to
Buyer. Buyer will have [***] ([***]) [***] following receipt of the [***] to
inform Seller in writing whether it intends to [***] (the "[***]") to [***] and
[***] (the "[***]") and to [***] for [***] as listed in [***]. If Buyer elects
to [***], Buyer shall pay Seller an amount equal to [***]% of Seller's
documented expenses directly incurred in connection with the development of the
pegylated formulation of Infergen between the time of Closing and the [***]
date. Such expenses will not include any allocation of overhead of Seller.
During such [***] ([***])-[***] period, Seller will cooperate with Buyer in
connection with any reasonable inquiries Buyer may have with respect to the
clinical development program or the [***] of the [***]. In the event Buyer
determines to [***] the [***], the parties will cooperate to close the [***] and
[***] as soon as practicable following delivery of the [***]. Buyer shall be
responsible for any and all obligations arising [***] after the [***].
(b) If Seller determines to [***] from a [***] to [***] any of the
[***], Seller shall, promptly after making such determination, [***] (an
"[***]") [***]. The
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[***] shall disclose in reasonable detail the proposed [***] and will [***],
[***] on [***] to those contained in the [***]. Buyer may elect to [***] on the
[***] contained in the [***] by delivering [***] of such [***] to Seller within
sixty (60) Business Days after delivery of the [***]. If Buyer elects to [***],
the [***] of such [***] shall be consummated as soon as practicable following
Buyer's [***] of the [***]. Seller will afford Buyer with reasonable access to
all necessary information for Buyer to conduct any due diligence investigation
Buyer reasonably determines to be necessary or appropriate in [***]. In the
event Buyer determines [***] to [***] the [***], Seller may [***] with the [***]
identified in the [***] on the terms and conditions specified in the [***] set
forth in this Section 8.16 shall be of no further force or effect.
(c) If Seller in good faith determines to terminate its rights under
the Nektar Agreements, Seller shall, promptly after making such determination,
deliver a written notice to Buyer.
SECTION 8.17. BOOKS AND RECORDS. At the Closing, or as soon as possible
thereafter, Seller shall transfer to Buyer the original copies of the Product
Records. Seller may retain one archival copy of the Product Records and
Contracts solely for archival purposes or as required by Applicable Law.
SECTION 8.18. NON-EXCLUSIVE LICENSE. In the event Seller receives approval
from the FDA of a product with labeling providing for combination use of
Infergen and Actimmune, Seller hereby grants to Buyer an irrevocable, fully
paid-up, royalty-free, perpetual, transferable, non-exclusive license in the
Territory to any Intellectual Property covering such combination therapy.
Furthermore, Seller hereby grants to Buyer an irrevocable, fully paid-up,
royalty-free, perpetual, transferable, non-exclusive license to any Intellectual
Property owned or controlled by Seller related to the Product which is not
derived from the Amgen Agreements, and which is not assigned, transferred or
exclusively licensed to Buyer under this Agreement, if any; provided, however,
that any such license shall be limited to such rights as are necessary to make,
use, practice, market, sell or otherwise commercialize the Product in the
Territory for any purpose or approved indication, including any future approved
indication, or as are necessary to exercise or practice any rights, obligations
or other licenses under this Agreement.
SECTION 8.19. ASSISTANCE REGARDING REQUIRED SEC FINANCIAL DISCLOSURES.
(a) Seller shall cause to be prepared and delivered to Buyer, on or
before forty five (45) days following the Closing, an audited income statement,
statement of cash flow and balance sheet for the Product Business as of and for
the twelve month period ending December 31, 2005 (the "2005 Audited
Financials"). Buyer hereby agrees to reimburse Seller for one-half of Seller's
costs and expenses associated with preparing the 2005 Audited Financials.
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(b) In addition to the foregoing, upon Buyer's request, Seller shall
from time to time prior to and after Closing provide Buyer with such financial
information relative to Seller, Infergen and/or the Product Business as Buyer
may reasonably require in order for Buyer to comply with Buyer's financial
disclosure obligations under the rules and regulations of the Securities and
Exchange Commission relative to Buyer's acquisition of the Product.
Notwithstanding the foregoing, Seller shall not be required to generate new
financial reports or analysis, or reformat existing reports or analysis, but
rather shall only be required to provide the required financial information to
Buyer in the form currently maintained by Seller.
ARTICLE IX -- INDEMNIFICATION
SECTION 9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Other than the
representations and warranties contained in Section 3.2, which shall survive
indefinitely, and those in Section 3.9 and Section 3.10, which shall survive for
any applicable statute of limitations, all representations and warranties made
in this Agreement or any Ancillary Agreement by Buyer or Seller shall survive
the execution and delivery of this Agreement or the applicable Ancillary
Agreement and shall remain in full force and effect for a period of eighteen
(18) months following the Closing Date (unless a different applicable time
period is set forth in such representation, warranty or covenant), and shall be
deemed to have been relied upon by each other party hereto, notwithstanding any
investigation made by or on behalf of such party; provided that if notice of any
claim for indemnification is given pursuant to Section 9.3 prior to such time
and such notice describes with specificity the circumstances with respect to
which such indemnification relates, such indemnification claim shall survive
until such time as such claim is finally resolved.
SECTION 9.2. INDEMNIFICATION.
(a) Seller's Indemnification Obligations. Seller shall indemnify,
defend and hold harmless Buyer and its Affiliates and their respective officers,
directors, agents, and employees (collectively, the "Buyer Indemnitees") from
and against any and all losses, liabilities, claims, damages (including
consequential damages), expenses (including costs of investigation and defense
and reasonable attorneys' fees and expenses) or diminution of value
(collectively, "Buyer Losses") to the extent that such Buyer Losses are based
on, result from or arise in connection with:
(i) the breach of any representation or warranty made by Seller or a
Seller Indemnitee in this Agreement or any Ancillary Agreement;
(ii) any failure of Seller or a Seller Indemnitee to duly to perform
or observe any provision, obligation, covenant or agreement to be performed
or observed by Seller or a Seller Indemnitee pursuant to this Agreement or
any Ancillary Agreement;
(iii) the Excluded Liabilities;
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(iv) the operation of Seller's business, including the Product
Business prior to the Closing (except with respect to Assumed Liabilities
relating to such pre-Closing operation); or
(v) any Liability of Seller under the Amgen Agreements arising prior
to the Effective Time (including any Liability arising out of Seller's
operations prior to the Effective Time irrespective of when such Liability
is first asserted).
provided, however, that Seller shall not be obligated to indemnify, defend or
hold harmless any Buyer Indemnitee under this Section 9.2(a) for any Buyer
Losses incurred by a Buyer Indemnitee to the extent arising out of or
principally attributable to: (A) any act or omission by a Buyer Indemnitee,
which constitutes negligence, recklessness, gross negligence, or willful
misconduct on the part of such Buyer Indemnitee, or (B) the breach of any
representation or warranty made by Buyer or a Buyer Indemnitee in this Agreement
or any Ancillary Agreement, or (C) any failure of Buyer or a Buyer Indemnitee
duly to perform or observe any provision, obligation, covenant or agreement to
be performed or observed by Buyer or a Buyer Indemnitee pursuant to this
Agreement or any Ancillary Agreement, or (D) the Assumed Liabilities.
(b) Buyer's Indemnification Obligations. Buyer shall indemnify, defend
and hold harmless Seller and its Affiliates and their respective officers,
directors, agents and employees (collectively, the "Seller Indemnitees") from
and against any and all losses, liabilities, claims, damages, expenses
(including costs of investigation and defense and reasonable attorneys' fees and
expenses), or diminution of value (collectively, "Seller Losses") to the extent
that such Seller Losses are based on, result from, or arise in connection with:
(i) the breach of any representation or warranty made by Buyer or a
Buyer Indemnitee in this Agreement or any Ancillary Agreement;
(ii) any failure of Buyer or a Buyer Indemnitee duly to perform or
observe any provision, obligation, covenant or agreement to be performed or
observed by Buyer or a Buyer Indemnitee pursuant to this Agreement or any
Ancillary Agreement;
(iii) the Assumed Liabilities;
(iv) the operation by Buyer of the Product Business following the
Closing; or
(v) any Liability of Buyer under the Amgen Agreements arising from and
after the Effective Time.
provided, however, that Buyer shall not be obligated to indemnify, defend or
hold harmless any Seller Indemnitee under this Section 9.2(b) from any Seller
Claim or for any Seller Losses incurred by a Seller Indemnitee to the extent
arising out of or principally attributable to: (A) any act or omission by a
Seller Indemnitee, which constitutes negligence, recklessness, gross negligence,
or willful misconduct on the part of such Seller Indemnitee, or (B) the breach
of any representation or warranty made by Seller or a Seller Indemnitee in this
Agreement or any
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Ancillary Agreement, or (C) any failure of Seller or a Seller Indemnitee to duly
to perform or observe any provision, obligation, covenant or agreement to be
performed or observed by Seller or a Seller Indemnitee pursuant to this
Agreement or any Ancillary Agreement, or (D) the Excluded Liabilities.
SECTION 9.3. INDEMNIFICATION PROCEDURES.
(a) In the event a Party's right to indemnification hereunder arises
out of or results from a Third Party claim (a "Third Party Claim"), each
indemnified Party (the "Indemnified Party") shall notify the indemnifying Party
(the "Indemnifying Party") in writing (and in reasonable detail) of the Third
Party Claim within twenty (20) Business Days after receipt by such Indemnified
Party of notice of the Third Party Claim (the "Indemnification Claim Notice"),
or otherwise becoming aware of the existence or threatened existence thereof.
Failure to give such notice shall not constitute a defense, in whole or in part,
to any claim by an Indemnified Party hereunder except to the extent the rights
of the Indemnifying Party are materially prejudiced by such failure to give
notice.
(b) At its option, the Indemnifying Party may assume the defense of
any Third Party Claim by giving written notice to the Indemnified Party within
thirty (30) days after the Indemnifying Party's receipt of an Indemnification
Claim Notice. The assumption of the defense of a Third Party Claim by the
Indemnifying Party shall not be construed as an acknowledgment that the
Indemnifying Party is liable to indemnify any Indemnitee in respect of the Third
Party Claim, nor shall it constitute a waiver by the Indemnifying Party of any
defenses it may assert against any Indemnitee's claim for indemnification. Upon
assuming the defense of a Third Party Claim, the Indemnifying Party may appoint
as lead counsel in the defense of the Third Party Claim any legal counsel
selected by the Indemnifying Party that is reasonably acceptable to the
Indemnified Party. In the event the Indemnifying Party assumes the defense of a
Third Party Claim, the Indemnified Party shall promptly deliver to the
Indemnifying Party all original notices and documents (including court papers)
received by any Indemnitee in connection with the Third Party Claim. Should the
Indemnifying Party assume the defense of a Third Party Claim, except as provided
in Section 9.3(c) below, the Indemnifying Party shall not be liable to the
Indemnified Party or any other Indemnitee for any legal expenses subsequently
incurred by such Indemnified Party or other Indemnitee in connection with the
analysis, defense or settlement of the Third Party Claim. In the event that it
is ultimately determined that the Indemnifying Party is not obligated to
indemnify, defend or hold harmless an Indemnitee from and against the Third
Party Claim, the Indemnified Party shall reimburse the Indemnifying Party for
any and all costs and expenses (including attorneys' fees and costs of suit) and
any Damages incurred by the Indemnifying Party in its defense of the Third Party
Claim with respect to such Indemnitee.
(c) Without limiting Section 9.3(b), any Indemnitee shall be entitled
to participate in, but not control, the defense of such Third Party Claim and to
employ counsel of its choice for such purpose; provided, however, that such
employment shall be at the Indemnitee's own expense unless (A) the employment
thereof has been specifically authorized in advance by the Indemnifying Party in
writing, (B) the Indemnifying Party has failed to assume the defense and employ
counsel in accordance with Section 9.3(b) (in which case the Indemnified Party
shall control the defense) or (C) if the Indemnified Party and the Indemnifying
Party are both named
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parties to the proceeding and the Indemnified Party has reasonably concluded
that there may be one or more legal defenses that are different from or in
addition to those available to the Indemnifying Party (in which case the
Indemnifying Party shall not have the right to assume the defense of such action
on behalf of the Indemnified Party and the Indemnifying Party shall be liable
for all legal expenses incurred by the Indemnified Party in furtherance
thereof).
(d) With respect to any Buyer Losses or Seller Losses, as the case may
be, relating solely to the payment of money damages in connection with a Third
Party Claim and that will not result in the Indemnitee's becoming subject to
injunctive or other relief or otherwise materially adversely affect the business
of the Indemnitee in any manner, and as to which the Indemnifying Party shall
have acknowledged in writing the obligation to indemnify the Indemnitee
hereunder, the Indemnifying Party shall have the sole right to consent to the
entry of any judgment, enter into any settlement or otherwise dispose of such
Buyer Losses or Seller Losses, as the case may be, on such terms as the
Indemnifying Party, in its reasonable discretion, shall deem appropriate;
provided, however, that the Indemnifying Party shall have obtained a full
release from such Third Party in connection with any such settlement or
disposition. With respect to all other Buyer Losses or Seller Losses, as the
case may be, in connection with Third Party Claims, where the Indemnifying Party
has assumed the defense of the Third Party Claim in accordance with Section
9.3(b), the Indemnifying Party shall have authority to consent to the entry of
any judgment, enter into any settlement or otherwise dispose of such Buyer
Losses or Seller Losses, as the case may be; provided that it obtains the prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnifying Party shall not be liable
for any settlement or other disposition of Buyer Losses or Seller Losses, as the
case may be, by an Indemnitee that is reached without the written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld or
delayed). Regardless of whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, no Indemnitee shall admit any liability with
respect to, or settle, compromise or discharge, any Third Party Claim without
the prior written consent of the Indemnifying Party which consent shall not be
unreasonably withheld or delayed.
(e) Regardless of whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, the Indemnified Party shall, and shall cause
each other Indemnitee to, cooperate in the defense or prosecution thereof and
shall furnish such records, information and testimony, provide such witnesses
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested in connection therewith. Such cooperation shall
include access during normal business hours afforded to the Indemnifying Party
to, and reasonable retention by the Indemnified Party of, records and
information that are reasonably relevant to such Third Party Claim, and making
Indemnitees and other employees and agents available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder, and the Indemnifying Party shall reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith. If the
Indemnified Party controls the defense of the claim, the Indemnifying Party
shall cooperate with the Indemnified Party on the terms described above.
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SECTION 9.4. LIMITATIONS.
(a) The indemnification provided for in Section 9.2(a)(i) and Section
9.2(a)(ii) shall not apply unless and until the aggregate Buyer Losses for which
Buyer seeks or has sought indemnification hereunder, as stated in one or more
claim notices, exceed a cumulative aggregate of $[***] (the "Basket"), in which
case the right to recover Buyer Losses shall apply to the full amount of the
Basket, and in no event shall the aggregate liability of Seller for Buyer Losses
pursuant to Sections 9.1(a)(i) and (ii) exceed $[***] (the "Buyer's Cap");
provided, however, that neither the Basket, nor the Buyer's Cap, shall apply to
any indemnification claim (i) involving fraud or willful misrepresentation on
the part of Seller, (ii) based upon a breach of Sections [***], or (iii) under
Section [***].
(b) The indemnification provided for in Section 9.2(b)(i) and (ii)
shall not apply unless and until the aggregate Seller Losses for which Seller
seeks or has sought indemnification hereunder, as stated in one or more claim
notices, exceed the Basket, in which case the right to recover Seller Losses
shall apply to the full amount of the Basket, and in no event shall the
aggregate liability of Buyer for Seller Losses pursuant to Sections 9.2(b)(i)
and (ii) exceed $[***] ("Seller's Cap"); provided, however, that neither the
Basket nor the Seller's Cap shall apply to any indemnification claim (i)
involving fraud or willful misrepresentation on the part of Buyer, (ii) based
upon a breach of Sections [***], or (iii) under Section [***].
(c) Nothing in this Agreement shall (i) limit the right of any Party
to seek specific performance of, or equitable relief with respect to, another
Party with respect to a breachof any covenant or agreement set forth in this
Agreement or (ii) be deemed a waiver by any Party to this Agreement of any right
or remedy which such Party may have at law or in equity based on any claim of
fraud.
SECTION 9.5. RIGHT OF SETOFF. Buyer may setoff any amount to which it is
entitled under this Article IX against amounts otherwise payable to Seller
hereunder or under the Ancillary Agreements, provided that any amount to be
setoff is reasonably determined in good faith and is no greater than any amount
to which Buyer is entitled to under this Article IX. Neither the exercise nor
the failure to exercise such right of setoff shall constitute an election of
remedies or limit Buyer in any manner in the enforcement of any other remedies
that may be available to it.
ARTICLE X -- MISCELLANEOUS PROVISIONS
SECTION 10.1. CONFIDENTIALITY AND PUBLICITY.
(a) The Mutual Confidential Disclosure between Seller and Buyer, dated
July 14, 2005 (the "Confidentiality Agreement") is hereby incorporated in this
Agreement as though fully set forth herein. All Information provided to
Recipient (or its representatives or Affiliates) by the Discloser (or its
representatives or Affiliates), as the case may be, shall be shall be subject to
and treated in accordance with the terms of the Confidentiality Agreement. As
used in this Section 10.1, the terms "Information", "Recipient" and "Discloser"
shall have the meanings
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assigned to such terms in the Confidentiality Agreement. Upon the Effective
Time, the Confidentiality Agreement shall expire and be of no further force and
effect with respect to all Information relating to the Product Business, the
Purchased Assets or the Assumed Liabilities; provided, however, such expiration
of the Confidentiality Agreement shall in no way prejudice or adversely affect
Seller's or Buyer's ability to seek damages, or any other remedy available to
Seller or Buyer, as appropriate, with respect to a violation by such other Party
(or its Affiliates or representatives) of the Confidentiality Agreement prior to
or after the Effective Time. Upon and after the Effective Time, the
Confidentiality Agreement shall remain in full force and effect pursuant to its
terms with respect to all other Information that does not relate to the Product
Business, the Purchased Assets or the Assumed Liabilities.
(b) From and after the Effective Time, all Information exclusively
concerning the Product Business, the Purchased Assets and the Assumed
Liabilities (the "Buyer Proprietary Information") shall be used by Seller solely
as required to perform its obligations, exercise or enforce its rights under
this Agreement (or any Ancillary Agreement), or comply with Applicable Law, and
for no other purpose. Seller shall not disclose, or permit the disclosure of,
any of the Buyer Proprietary Information to any Person except those Persons to
whom such disclosure is necessary to permit Seller to perform its obligations,
exercise or enforce its rights under this Agreement (or any Ancillary
Agreement), or comply with Applicable Law. Seller shall treat, and will cause
its Affiliates and the directors, officers, employees, agents, representatives
and advisors of Seller or any of their Affiliates to treat, the Buyer
Proprietary Information as confidential, using the same degree of care as Seller
normally employ to safeguard its own confidential information from unauthorized
use or disclosure, but in no event less than a reasonable degree of care.
(c) All Information obtained by Buyer (or its Affiliates or
Representatives) from Seller (or its Affiliates or Representatives) other than
the Buyer Proprietary Information (the "Seller Proprietary Information") shall
be used by Buyer solely as required to perform its obligations, exercise or
enforce its rights under this Agreement (or any Ancillary Agreement), or comply
with Applicable Law, and for no other purpose. Buyer shall not disclose, or
permit the disclosure of, any of Seller Proprietary Information to any person
except those persons to whom such disclosure is necessary to permit Buyer's
perform its obligations, exercise or enforce its rights under this Agreement (or
any Ancillary Agreement), or comply with Applicable Law. Buyer shall treat, and
will cause its Affiliates and the directors, officers, employees, agents,
representatives and advisors of Buyer or any of their Affiliates to treat,
Seller Proprietary Information as confidential, using the same degree of care as
Buyer normally employ to safeguard its own confidential information from
unauthorized use or disclosure, but in no event less than a reasonable degree of
care.
(d) In the event either Party is requested pursuant to, or required
by, Applicable Law to disclose any of the other Party's proprietary information
(i.e., Seller Proprietary Information or Buyer Proprietary Information, as
applicable), it will notify the other Party in a timely manner so that such
Party may seek a protective order or other appropriate remedy or, in such
Party's sole discretion, waive compliance with the confidentiality provisions of
this Agreement. Each Party will co-operate in all reasonable respects, in
connection with any reasonable actions to be taken for the foregoing purpose. In
any event, the Party requested or
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required to disclose such proprietary information may furnish it as requested or
required pursuant to Applicable Law (subject to any such protective order or
other appropriate remedy) without liability hereunder, provided that such Party
furnishes only that portion of the Confidential Information which such Party is
advised by a reasoned opinion of its counsel is legally required, and such Party
exercises reasonable efforts to obtain reliable assurances that confidential
treatment will be accorded such proprietary information.
(e) No public announcement or other disclosure concerning the
existence of, terms, or subject matter of this Agreement (and any Ancillary
Agreement) and the transactions contemplated hereby and thereby shall be made,
either directly or indirectly, by any Party, without first obtaining the
approval of the other Party and agreement upon the nature and text of such
public announcement or other disclosure which such agreement and approval shall
not be unreasonably withheld. The Party desiring to make any such public
announcement or other disclosure (including those which are legally required)
shall inform the other Party of the proposed announcement or disclosure in
reasonably sufficient time prior to public release, which shall be not less than
fifteen (15) days (or such shorter period as the Parties may agree upon in
writing, or such shorter period applicable to those public announcements or
other disclosure which are legally required) prior to release of such proposed
public announcement or other disclosure, and shall provide the other Party with
a written copy thereof in order to allow such other Party to comment upon such
public announcement or other disclosure. Each Party agrees that it shall
co-operate fully with the other with respect to all disclosures regarding this
Agreement and any Ancillary Agreement to any governmental or regulatory
agencies, including requests for confidential treatment of proprietary
information of either Party included in any such disclosure.
(f) Nothing in this Section 10.1 shall be construed as preventing or
in any way inhibiting either Party from complying with Applicable Law governing
activities and obligations undertaken pursuant to this Agreement, in any manner
which it reasonably deems appropriate, including, for example, by disclosing to
regulatory authorities confidential or other information received from the other
Party, subject to Section 10.1(e).
SECTION 10.2. NOTICES. Notices required or permitted under this Agreement
shall be in writing and sent by overnight express mail (e.g., FedEx), or by
facsimile confirmed by overnight express mail (e.g., FedEx), (failure of such
confirmation shall not affect the validity of such notice by facsimile to the
extent the receipt of such notice is confirmed by the act of the receiving Party
(e.g., a facsimile of the receiving Party submitting its receipt of such
notice)) and shall be deemed to have been properly served to the addressee upon
receipt of such written communication, to the following addresses of the
Parties:
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If to the Seller:
InterMune, Inc.
3280 Bayshore Boulevard
Brisbane, California 94005
Attention: General Counsel
Fax: (415) 466-2364
with a copy to:
Latham & Watkins LLP
12636 High Bluff Drive, Suite 400
San Diego, California 92130
Attention: Faye H. Russell, Esq.
Fax: (858) 523-5450
If to the Buyer:
Valeant Pharmaceuticals North America
3300 Hyland Avenue
Costa Mesa, California 92626
Attention: General Counsel
Fax: (714) 641-7206
with a copy to:
Winstead Sechrest & Minick P.C.
1201 Elm, 5400 Renaissance Tower
Dallas, Texas 75270
Attention: Mark G. Johnson, Esq.
Fax: (214) 745-5390
SECTION 10.3. MODIFICATION; WAIVER. This Agreement may be modified only by
a written instrument executed by the Parties hereto specifically referencing
this Agreement.
SECTION 10.4. EXPENSES. All expenses, including the fees of any attorneys,
accountants, investment bankers or others engaged by a Party, incurred in
connection with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby, shall be paid by the Party incurring such
expenses.
SECTION 10.5. ENTIRE AGREEMENT. The agreement of the Parties, which is
comprised of this Agreement, the Ancillary Agreements, the Confidentiality
Agreement, the schedules and the documents referred to herein, sets forth the
entire agreement and understanding between the Parties and supersedes any prior
agreement or understanding, written or oral, relating to the subject matter of
this Agreement. All Schedules, appendices, and exhibits referred to in this
Agreement are incorporated herein by reference.
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SECTION 10.6. ASSIGNMENT. This Agreement may not be assigned by either
Party without the prior written consent of the other Party; provided, however,
that either Party shall have the right to assign its rights and obligations
under this Agreement to any of its Affiliates or to any Third Party successor to
all or substantially all of (i) its entire business, or (ii) its consumer
healthcare or pharmaceuticals business. In no event shall any assignment hereof
to any Affiliate or Third Party be deemed to relieve the assigning Party of its
liabilities or obligations to the other Party under this Agreement, and the
assigning Party expressly acknowledges and agrees that it shall remain fully and
unconditionally obligated and responsible for the full and complete performance
of all of its obligations under the terms and conditions of this Agreement.
SECTION 10.7. THIRD PARTIES. None of the provisions of this Agreement shall
be for the benefit of, or enforceable by, any Third Party.
SECTION 10.8. WAIVER. The waiver by either Party of a breach or a default
of any provision of this Agreement by the other Party shall not be construed as
a waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of either Party to exercise or avail itself of
any right, power or privilege that it has or may have hereunder operate as a
waiver of any right, power or privilege by such Party.
SECTION 10.9. SEVERABILITY. If any part of this Agreement is declared
invalid by any legally governing authority having jurisdiction over either
Party, then such declaration shall not affect the remainder of the Agreement and
the Parties shall revise the invalidated part in a manner that will render such
provision valid without impairing the Parties' original intent.
SECTION 10.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its conflicts of laws principles.
SECTION 10.11. HEADINGS. The headings are placed herein merely as a matter
of convenience and shall not affect the construction or interpretation of any of
the provisions of this Agreement.
SECTION 10.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement. Each of the Parties
agrees to accept and be bound by facsimile signatures hereto.
SECTION 10.13. FORCE MAJEURE. Neither Party shall lose any rights hereunder
or be liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, terrorism, fire, explosion, flood, strike, lockout, embargo,
shortage of materials or utilities, vendor failure to supply, act of God, or any
other cause beyond the control and without the fault or negligence of the
defaulting Party, provided that the Party claiming force majeure has exerted all
reasonable efforts to avoid or remedy such force majeure; provided, however,
that in no event shall a Party be required to settle any labor dispute or
disturbance. Such excuse shall continue as long as the condition preventing the
performance continues. Upon cessation of such condition, the affected Party
shall
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promptly resume performance hereunder. Each Party agrees to give the other Party
prompt written notice of the occurrence of any such condition, the nature
thereof, and the extent to which the affected Party will be unable to perform
its obligations hereunder. Each Party further agrees to use all reasonable
efforts to correct the condition as quickly as possible and to give the other
Party prompt written notice when it is again fully able to perform its
obligations.
SECTION 10.14. RELATIONSHIP OF THE PARTIES. In making and performing this
Agreement, the Parties are acting, and intend to be treated, as independent
entities and nothing contained in this Agreement shall be construed or implied
to create an agency, partnership, joint venture, or employer and employee
relationship between Buyer and Seller. Except as otherwise expressly provided
herein, neither Party may make any representation, warranty or commitment,
whether express or implied, on behalf of or incur any charges or expenses for or
in the name of the other Party. No Party shall be liable for the act of any
other Party unless such act is expressly authorized in writing by both Parties
hereto.
SECTION 10.15. ARBITRATION. Notwithstanding anything herein to the
contrary, in the event that there shall be a dispute among the Parties arising
out of or relating to this Agreement, including, without limitation, the
indemnities provided in Article IX hereof, or the breach thereof, the Parties
agree that such dispute shall be finally resolved by binding arbitration in
accordance with the Commercial Arbitration Rules and Supplementary Procedures
for Large Complex Disputes of the American Arbitration Association ("AAA"), and
judgment on the arbitration award may be entered in any court having
jurisdiction thereof. The arbitration shall be conducted by a panel of three
persons experienced in the pharmaceutical business: within thirty (30) days
after initiation of arbitration, each Party shall select one person to act as
arbitrator and the two Party-selected arbitrators shall select a third
arbitrator within thirty (30) days of their appointment. If the arbitrators
selected by the Parties are unable or fail to agree upon the third arbitrator,
the third arbitrator shall be appointed by the AAA. Within 45 days of initiation
of arbitration, the Parties shall reach agreement upon and thereafter follow
procedures assuring that the arbitration will be concluded and the award
rendered within no more than six months from selection of the arbitrators.
Failing such agreement, the AAA will design and the Parties will follow
procedures that meet such a time schedule. The arbitrators (i) shall not have
any power or authority to add to, alter, amend or modify the terms of this
Agreement but shall specify rules sufficient to allow reasonable discovery by
the Parties; (ii) shall establish and enforce appropriate rules to ensure that
the proceedings, including the decision, be kept confidential and that all
confidential information of the Parties be kept confidential and be used for no
purpose other than the arbitration; (iii) shall have the power to enforce
specifically this Agreement and the terms and conditions hereof in addition to
any other remedies at law or in equity; and (iv) shall issue all decisions in
writing. The place of arbitration shall be San Francisco, California, and all
proceedings and communications shall be in English. Either Party may apply to
the arbitrators for interim injunctive relief until the arbitration award is
rendered or the controversy is otherwise resolved. Either Party also may,
without waiving any remedy under this Agreement, seek from any court having
jurisdiction any injunctive or provisional relief necessary to protect the
rights or property of that Party pending the arbitration award. The arbitrators
shall have no authority to award punitive or any other type of damages not
measured by a Party's compensatory damages. Each Party shall bear its own costs
and expenses and attorneys' fees and an equal share of the arbitrators' fees and
any administrative fees of
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arbitration. Except to the extent necessary to confirm an award or as may be
required by law, neither a Party nor an arbitrator may disclose the existence,
content, or results of an arbitration without the prior written consent of both
Parties. In no event shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the dispute,
controversy or claim would be barred by the applicable California statute of
limitations.
[Signatures appear on the following page]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date first above written.
INTERMUNE, INC.
/s/ Daniel G. Welch
- -------------------------------------
By: Daniel G. Welch
Title: President and
Chief Executive Officer
VALEANT PHARMACEUTICALS NORTH AMERICA
/s/ Timothy C. Tyson
- -------------------------------------
By: Timothy C. Tyson
Title: President