EXHIBIT 10.2
FIRST AMENDMENT
DATED AS OF JUNE 9, 2004
TO
STOCK PURCHASE AGREEMENT
DATED AS OF APRIL 2, 2004
This FIRST AMEMDMENT, dated as of June 9, 2004 (this "Amendment"), to the
STOCK PURCHASE AGREEMENT, dated as of April 2, 2004 (the "Agreement"), by and
among Pharmaceutical Resources, Inc., a Delaware corporation ("PRI"), Kali
Laboratories, Inc., a New Jersey corporation ("Kali"), VGS Holdings, Inc., a New
Jersey corporation ("VGS"), and the Kali Shareholders (as defined in the
Agreement). Each of PRI, Kali, VGS and the Kali Shareholders is referred to
herein individually, as a "Party" and collectively, as the "Parties."
Capitalized terms used and not defined herein have the meanings set forth in the
Agreement.
WITNESSETH:
WHEREAS, the Parties desire to amend the Agreement as provided in this
Amendment; and
WHEREAS, Section 12.10 of the Agreement permits such an amendment with the
written consent of PRI and the Kali Shareholders' Rep.
NOW, THEREFORE, the Parties hereby agree as follows:
SECTION 1. DEFINITIONS.
(a) The following definitions are hereby deleted from Section 1 of
the Agreement: "Market Price Payment(s)" and "Market Value".
(b) The definition of "Initial ANDA Threshold" is hereby amended by
(i) replacing the term "drug technology substantially developed by Kali" with
the term "drug technology substantially developed by Kali (or its successor(s),
by merger, consolidation or otherwise)" and (ii) adding the following sentence
at the end of such definition:
"Notwithstanding the forgoing, the date by which the Initial ANDA
Threshold is to be achieved shall be extended, on a day-by-day basis, for
any days during such period as to which the FDA or any other Governmental
Authority prohibits or materially restricts the operation of the business
of Kali (other than as a result of an act or omission of Mr.
Subramanian)."
(c) The definition of "Second ANDA Threshold" is hereby amended by
(i) deleting the words "at least" that precede the words "twenty (20) ANDAs" in
such definition, (ii) replacing the term "drug technology substantially
developed by Kali" with the term "drug technology substantially developed by
Kali (or its successor(s), by merger, consolidation or otherwise)" and (iii)
adding the following sentence at the end of such definition:
"Notwithstanding the forgoing, the date by which the Second ANDA Threshold
is to be achieved shall be extended, on a day-by-day basis, for any days
during such period as to which the FDA or any other Governmental Authority
prohibits or materially restricts the operation of the business of Kali
(other than as a result of an act or omission of Mr. Subramanian)."
(d) The following definitions are hereby added, in the appropriate
alphabetical order, to Section 1 of the Agreement:
"Third ANDA Payment" shall have the meaning set forth in Section
2.2(iii) hereof.
"Third ANDA Threshold" means the filing (irrespective of whether
accepted for filing by the FDA), in good faith, with the FDA by Kali, PRI
(or any of its Affiliates) or any Kali Development Partner, in each case,
with respect to a drug technology substantially developed by Kali (or its
successor(s), by merger, consolidation or otherwise), of at least
twenty-seven (27) ANDAs (including the ANDAs required in accordance with
the achievement of the Initial ANDA Threshold and the Second ANDA
Threshold) during the period from January 1, 2004 until the fourth (4th)
anniversary of the Closing Date; provided, however, that if at least
twenty-four (24) of such ANDAs have been filed with the FDA prior to the
date that is forth-eight (48) months from the Closing Date, any new drug
product that Kali has completed, or is actively conducting, a Biostudy in
respect thereof as of such period shall count as an ANDA filed with the
FDA if such new drug product is in fact later filed with the FDA on or
prior to the later of (i) fifty-four (54) month-anniversary of the Closing
Date or (ii) the Subramanian Termination Date. Notwithstanding the
forgoing, the date by which the Third ANDA Threshold is to be achieved
shall be extended, on a day-by-day basis, for any days during such period
as to which the FDA or any other Governmental Authority prohibits or
materially restricts the operation of the business of Kali (other than as
a result of an act or omission of Mr. Subramanian).
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SECTION 2. AMENDMENTS.
(a) Section 2.2(a)(iii) of the Agreement shall be deleted in its
entirety and replaced with the following:
"(iii) pay to the Kali Shareholders an additional $5,000,000 in
cash (the "Third ANDA Payment") if, following the Closing, Kali shall
achieve the Third ANDA Threshold."
(b) Section 2.2(a)(iv) of the Agreement shall be amended to delete
the reference to $57.92 and to replace it with "$47.00".
(c) Section 2.2(b) of the Agreement shall be amended by deleting the
first sentence of such Section in its entirety and replacing it with the
following:
"The Cash Purchase Price, as such may be adjusted pursuant to
Sections 2.2(d) and 2.4 hereof, the Warrants, the Initial ANDA Payment (if
any), the Second ANDA Payment (if any) and the Third ANDA Payment (if any)
shall be allocated among the Kali Shareholders in the manner set forth on
Schedule 2.2(b) hereto."
(d) Section 2.2(e) of the Agreement shall be deleted in its entirety
and replaced with the following:
"(e) ANDA Payments. The Initial ANDA Payment shall be paid by wire
transfer to the Kali Shareholders within ten (10) Business Days of, and subject
to, the achievement of the Initial ANDA Threshold. The Second ANDA Payment (if
any) shall be paid by wire transfer to the Kali Shareholders within ten (10)
Business Days of, and subject to, the achievement of the Second ANDA Threshold.
The Third ANDA Payment (if any) shall be paid by wire transfer to the Kali
Shareholders within five (5) Business Days of, and subject to, the achievement
of the Third ANDA Threshold, the later of (i) the achievement of the Third ANDA
Threshold and (ii) the second (2nd) anniversary of the Closing Date.
Notwithstanding the foregoing, neither the Initial ANDA Payment, the Second ANDA
Payment nor the Third ANDA Payment shall be due and payable if, at or prior to
the time that the applicable condition to such payment shall have otherwise been
achieved, a material breach of Sections 6.4, 6.5, 6.9 or 6.10 hereof shall have
occurred.
(f) The second sentence of Section 2.5(b) of the Agreement shall be
amended by deleting the term "Market Price Payment" and replacing it with the
term "Third ANDA Payment".
(g) The first sentence of Section 6.20 of the Agreement shall be
amended by deleting the reference to "thirty (30) months" and replacing it with
"forty-eight (48) months".
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(h) The ninth sentence of Section 7.4 of the Agreement shall be
amended by deleting the term "Market Price Payment(s)" and replacing it with the
term "Third ANDA Payment".
(i) The requirement that each Kali shareholder execute and deliver
certificates of Non-Foreign Status certifying that such Shareholders are not
foreign Persons subject to withholding under Code Section 1445, shall be deleted
from Section 2.3(c)(i).
SECTION 3. EFFECT OF AMENDMENT. Upon execution of this Amendment, the
Agreement shall be, and be deemed to be, amended in accordance herewith and the
respective rights, limitations, obligations, duties, liabilities and immunities
of the Parties shall hereafter be determined, exercised and enforced subject in
all respects to such amendments, and all the terms of this Amendment shall be
and be deemed to be part of the terms of the Agreement for any and all purposes.
Except as expressly amended by this Amendment, the Agreement is in all respects
ratified and confirmed, and all the terms, provisions and conditions thereof
shall be and remain in full force and effect.
SECTION 4. BINDING EFFECT. The provisions of this Amendment shall be
binding upon and inure to the benefit of the respective successors and permitted
assigns of the Parties.
SECTION 5. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Amendment. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
[NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, each of PRI and the Kali Shareholders' Rep, on behalf
of Kali, VGS and the Kali Shareholders, has caused this Amendment to be duly
executed and delivered as of the date hereof.
PHARMACEUTICAL RESOURCES, INC.
By: /s/ Scott Tarriff
--------------------------------------------
Name: Scott Tarriff
Title: President and Chief Executive Officer
Kali Shareholders' Rep:
/s/ Veerappan Subramanian, Ph.D
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Veerappan Subramanian, Ph.D.
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