CANADIAN ASSET PURCHASE AGREEMENT
THIS CANADIAN ASSET PURCHASE AGREEMENT (this "Agreement") is made as of
the 19th day of December 1997 between Connetics Corporation, a Delaware
corporation ("Connetics") and Pharmascience, Inc., a Canadian corporation
("Pharmascience").
Recitals
A. Connetics sells certain prescription pharmaceutical products,
specifically Ridaura(R) capsules (auranofin 3 mg) (the "Products") in the United
States and Canada;
B. Pharmascience desires to purchase and Connetics desires to sell the
rights to sell the Products in Canada and the Intellectual Property (as defined
below).
Agreement
Therefore, in consideration of the premises and the mutual covenants,
agreements and representations herein contained and intending to be legally
bound, Connetics and Pharmascience agree as follows:
SECTION 1
INTERPRETATION
1.1 Definitions. Where used in this Agreement the following words or
phrases shall have the meanings set forth below unless the context specifically
indicates:
(a) "Affiliate" of an entity means, for so long as one of the
following relationships is maintained, any corporation or other business entity
controlled by, controlling, or under common control with another entity; with
"control" meaning direct or indirect beneficial ownership of more than fifty
percent (50%) of the voting stock of such corporation, or more than fifty
percent (50%) interest in the decision-making authority of such other
unincorporated business entity;
(b) "Business Day" means any day excluding Saturday, Sunday
and any other day which in the United States is a national legal holiday or any
day on which U.S. national banking institutions are authorized by law to close;
(c) "Intellectual Property" means all trademarks (whether
registered or unregistered), trade names and applications therefor, brand names,
logotypes and symbols unique to the Products to the extent owned by or licensed
to and used by Connetics in the Territory in the sale of Products, all renewals,
modifications and extensions thereof, together with the goodwill associated
therewith, including, without limitation, such of the foregoing as are listed or
described in Exhibit A, all copyrights (whether registered or unregistered),
trade secrets, trade dress relating to the size, shape and color of packaging
and capsules, formulations, designs, discoveries, processes, manufacturing
techniques, improvements, ideas, or copyrightable works, to the extent owned by
or licensed to and used by Connetics uniquely in the sale of the Products in the
Territory, including, without limitation, those that are listed in Exhibit A;
provided, however, that "Intellectual Property" does not include the Connetics
name or any variation thereof, the SmithKline Beecham name or any variation
thereof, or the corresponding logos of the Products (except for the trademarks
listed in Exhibit A);
(d) "NDS" means Canadian NDS File No. 9427-S1376/4-27, Control
No. 7HN906405, issued on September 12, 1985;
(e) "Purchase Price" means the purchase price payable to
Connetics for the Purchased Assets provided for in Section 3;
(f) "Purchased Assets" means the property and assets described
in Section 2.1;
(g) "SmithKline" means SmithKline Beecham Corporation, a
Pennsylvania corporation;
(h) "Supply Agreement" means the agreement between Connetics
and Pharmascience substantially in the form of Exhibit B hereto;
(i) "Territory" means Canada; and
(j) "Time of Closing" means 1:00 o'clock in the afternoon
(California time) on December 17, 1997 or such other date as the parties shall
mutually agree at which time the parties are to deliver the closing documents
described in Section 9.
1.2 Currency. All dollar amounts referred to in this Agreement are in
U.S. Dollars.
1.3 Headings, etc. The division of this Agreement into Sections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation hereof.
SECTION 2
PURCHASED ASSETS
2.1 Assets to be Sold and Purchased. Subject to the terms and
conditions of this Agreement, Connetics shall sell, assign and transfer to
Pharmascience and Pharmascience shall purchase from Connetics, at the Time of
Closing, all rights, title and interest of Connetics in the Purchased Assets.
The "Purchased Assets" shall consist of:
(a) the Intellectual Property and the NDS;
(b) Connetics' existing lists of current, past and prospective
customers in the Territory for the Products, records of volumes of sales and
actual selling price by customer by month in the Territory for the eleven months
ending November 30, 1997 and written contracts and documentation in Connetics'
possession pertaining to the same; provided, however, that Connetics retains its
rights to such information with respect to sales of Connetics' other products;
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(c) Connetics' existing files pertaining to the Products
(whether in written or machine readable form) and unique to the Territory
including, without limitation, Canadian regulatory files pertaining to the
Products (including applications and registrations, as applicable), market
studies, marketing plans, key physician records, copies of consumer complaint
files, sales histories, quality control histories, and all other information and
data pertaining to the Products owned by Connetics and unique to the Territory,
which is in the possession of Connetics and is accessible by Connetics with
reasonable efforts;
(d) all work in progress with respect to the improvement,
planning, promotion, production, development and distribution of the Products in
the Territory, including, without limitation, all papers and promotional
materials on hand, all original art mechanicals and artwork for the production
of packaging components, television masters, agreements with advertising
agencies and other materials associated with the Products and unique to the
Territory; and
(e) all unfilled customer orders for the Products in the
Territory as of the Time of Closing (a list of such orders to be provided to
Pharmascience promptly after the Time of Closing).
In addition, at the Time of Closing, Connetics shall provide
to Pharmascience (i) copies of all existing information in its possession
relating to the stability and shelf life of the Products and (ii) fifty (50)
copies of each item of printed marketing or promotional materials currently used
by Connetics for the Products.
2.2 Liabilities.
(a) Subject to the provisions of Section 13.1 below,
Pharmascience shall be liable for all liabilities relating to actions taken or
omissions to act from and after the Time of Closing related to the Purchased
Assets, including any cost, claim, expense, loss or liability arising from any
product liability claim or lawsuit or any governmental agency action or
notification relating to actions taken or omissions to act from and after the
Time of Closing (the foregoing liabilities being assumed by Pharmascience
hereinafter referred to as the "Assumed Liabilities"); provided, however, that
in the event the Closing does not occur and Pharmascience does not acquire the
Purchased Assets as contemplated by this Agreement, then Pharmascience shall not
assume, and shall not be liable for, the Assumed Liabilities for any period of
time.
(b) Prior to and after the Time of Closing, Connetics shall
promptly pay and discharge all liabilities arising prior to the Time of Closing
in respect of the Purchased Assets as such liabilities come due.
(c) Except for the Assumed Liabilities and subject to the
provisions of Section 13.1 below, Pharmascience shall not assume or be liable
for any liabilities whatsoever, including, without limitation, product
liability, liability in tort (including unripened liabilities due to past
actions or sales), indebtedness for money borrowed, tax liabilities, obligations
to employees, and liabilities for trade promotions related to the Purchased
Assets and to acts or omissions occurring prior to the Time of Closing.
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(d) Pharmascience shall assume all responsibilities with
regard to protecting and maintaining the Intellectual Property and the NDS in
the Territory after the Time of Closing. Without limiting the foregoing,
Pharmascience shall be responsible for the maintenance of trademarks in the
Territory from the Time of Closing, including all costs associated therewith.
2.3 No Rights Outside the Territory. No rights are granted to
Pharmascience by this Agreement to use, promote, sell or otherwise distribute
the Products, directly or indirectly, outside the Territory. Notwithstanding the
sale of the Purchased Assets, Connetics retains the right to utilize the
Intellectual Property (other than trademarks unique to the Territory) with
respect to the marketing and sale outside the Territory of Products.
SECTION 3
PURCHASE PRICE
3.1 Purchase Price. The Purchase Price payable to Connetics for the
Purchased Assets shall be $1,000 and shall be payable to Connetics by check or
wire transfer at the Closing.
3.2 Transfer Taxes. Pharmascience shall be liable for and shall pay all
Canadian, provincial and local sales, use, and international withholding taxes
imposed by law on Pharmascience in connection with the conveyance and transfer
of the Purchased Assets by Connetics to Pharmascience.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF CONNETICS
Connetics hereby represents and warrants to Pharmascience as follows
and acknowledges that Pharmascience is relying on such representations and
warranties in connection with the transactions contemplated by this Agreement:
4.1 Incorporation, Organization and Qualification. Connetics is a
corporation duly incorporated, validly existing and in good standing under the
law of the jurisdiction of its incorporation, and has the corporate power to own
or lease its property and to carry on its business as now being conducted by it.
Connetics is duly qualified to do business as a foreign corporation and is in
good standing in every jurisdiction where the nature of the business conducted
by it with respect to the Purchased Assets or the Products makes such
qualification necessary, except in such jurisdictions where the failure to so
qualify does not in the aggregate have a material adverse effect on Connetics'
business taken as a whole.
4.2 Authorization and Validity of Agreement. Connetics has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and any other agreements
or instruments executed in connection herewith and the performance of its
obligations hereunder has been duly authorized by all necessary corporate action
by the Board of Directors of Connetics, and no other corporate proceedings on
the part of Connetics are necessary to authorize such execution, delivery and
performance. The Agreement has been duly executed by Connetics and constitutes
the valid and binding obligation of Connetics, enforceable against Connetics in
accordance with its terms. Execution of this
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Agreement and consummation of the transactions contemplated hereby, will not
result in the violation of, or conflict with, any of the terms and provisions of
the certificate of incorporation or by-laws of Connetics or of any law or
regulation or any applicable order of any court, arbitrator or governmental
authority having jurisdiction over Connetics, the Products or the Purchased
Assets or of any indenture or other written agreement to which Connetics may be
a party.
4.3 Title to Purchased Assets. Connetics is the sole owner of the
Purchased Assets with good title thereto free and clear of any mortgage, lien,
charge, security interest (except for the security interests presently held by
SmithKline and Silicon Valley Bank, which must be released prior to the
Closing), adverse claim or other encumbrance whatsoever (collectively,
"Encumbrances"), and at the Time of Closing will have the right to transfer to
Pharmascience good title thereto, free and clear of all Encumbrances.
4.4 Litigation. To the best of Connetics' knowledge, there are no
actions, suits, proceedings, investigations, arbitration proceedings or other
proceedings pending or threatened against or affecting the Purchased Assets at
law or in equity or by or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or by or before any arbitrator which actions, suits or
arbitration proceedings or other proceedings relate to the Purchased Assets, and
Connetics is not aware of any existing grounds on which any such action, suit or
proceeding might be commenced and there is not currently outstanding against
Connetics any judgment, decree, injunction, rule, order or award of any court,
governmental department, commission, board, bureau, agency, instrumentality,
domestic or foreign, or arbitrator and relating to the Purchased Assets. During
the time that Connetics has owned the Purchased Assets, there has not been any
occurrence of, nor is there under consideration or investigation by Connetics
of, any product recall, or post-sale warning conducted by or on behalf of
Connetics concerning any Product or any product recall conducted by or on behalf
of any entity as a result of any alleged defect in any Product.
4.5 Regulatory Issues. Connetics has previously delivered or made
available to Pharmascience all material regulatory issues, to the best of
Connetics' knowledge, with respect to the Products in the Territory.
4.6 Compliance with Law. To the best of Connetics' knowledge,
SmithKline has conducted and is currently conducting the sale of the Products in
the Territory in compliance with all applicable laws, rules, regulations and
court or administrative orders and processes.
4.7 No Default Under Agreements. To the best of Connetics' knowledge,
there are no contracts that relate to the Products in the Territory. To the
extent any such contracts exist, Connetics will (upon the request of
Pharmascience) use its best efforts to facilitate the transfer of such
contracts, and the rights and responsibilities thereunder from SmithKline or
Connetics, as the case may be, to Pharmascience.
4.8 Intellectual Property Rights.
(a) Connetics is the beneficial owner of all right, title and
interest in the Intellectual Property and the registered owner of all right,
title and interest in the items listed on
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Exhibit A, and has the right to use, license, sublicense or assign the
Intellectual Property without liability to, or any requirement to obtain the
consent of, any other person, except as described in Exhibit A. Except as set
forth in Exhibit A there are no agreements, understandings, instruments,
contracts, trade secrets or other proprietary rights to or from Connetics
affecting the Intellectual Property.
(b) Except as otherwise set forth therein, all of the
Intellectual Property listed in Exhibit C as registered or filed has been duly
registered or filed in the Canadian Trademark Office and is currently valid.
(c) To the best of Connetics' knowledge, there are no
infringements, threats of infringements or asserted or unasserted claims by
Connetics of infringements or misappropriation of any of the Intellectual
Property in the Territory nor are there any asserted or unasserted claims by
Connetics contesting or challenging the right, title, or interest of any other
person in any of the Intellectual Property in the Territory.
(d) To the best of Connetics' knowledge, there are no
outstanding threatened or actual claims asserted against Connetics alleging the
infringement or misappropriation by Connetics of any intellectual property of
any other party that may affect the Purchased Assets in the Territory or the
revocation, withdrawal, expiration, abandonment, or breach of any right to use
the Intellectual Property in the Territory. Connetics has not been notified of
any such claim of any person nor does Connetics know of any basis for the
existence of any such claim in the Territory.
4.9 Health, Safety, Employment and Environmental Matters. To the extent
that the failure to do so or be so would have a material adverse effect upon the
Purchased Assets, to the best of its knowledge Connetics is in compliance with
all federal, state, local and foreign laws related to health and occupational
safety, environment and hazardous materials and employment practices, that are
applicable to Connetics or its business related to the Purchased Assets, and
Connetics has conducted its business relating to the Purchased Assets in
compliance with the foregoing laws.
4.10 Ordinary Course. From December 31, 1996 through the date of this
Agreement, Connetics has conducted the business relating to the Purchased Assets
in the Territory only in the ordinary course and there have been no events or
circumstances of any kind that have materially and adversely affected the
business related to Purchased Assets.
4.11 Governmental Approvals. Except for compliance with the U.S.
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or as
disclosed in the Schedules to this Section 4, no governmental authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, under any applicable laws, rules or
regulations currently in effect, is or will be necessary for, or in connection
with, the execution or delivery by Connetics of this Agreement.
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SECTION 5
COVENANTS OF CONNETICS
5.1 Conduct of the Business Until Closing. Except for the steps or
actions taken pursuant to the prior consent of Pharmascience, Connetics, from
the date of this Agreement until the Time of Closing, will conduct its business
with respect to the Purchased Assets in good faith and in accordance with the
same practices previously followed by it except to the extent specifically
contemplated by this Agreement and during that period Connetics shall:
(a) conduct the business relating to the Purchased Assets,
including without limitation marketing of the Products, only in the normal
course;
(b) not transfer any of the Purchased Assets;
(c) not enter into any trademark or tradename or know-how
licenses, or any other leases, licenses, contracts or other commitments relating
to the Purchased Assets, unless each such lease, license, contract or commitment
(other than purchase orders for raw materials and Products placed in the normal
course of business) is disclosed to and approved by Pharmascience;
(d) continue to meet the contractual obligations of, and to
pay obligations relating to, the Purchased Assets as they mature in the normal
course;
(e) preserve the good relations with respect to the Products
with suppliers, business customers and others with whom Connetics has business
relations relating to the Products in the Territory; and
(f) not implement in the Territory any price increases or
decreases for any of the Products or any new trade or consumer promotions, and
not change the terms or conditions or any such promotion in existence on the
date hereof.
5.2 Records and Retained Product. Connetics shall continue to the
extent of its current practice to preserve its books and records (including
financial information) relating to the Products and the Purchased Assets and
retain product samples from each batch of the Products produced for Connetics,
and during such periods and upon reasonable notice, shall grant Pharmascience
and its agents and representatives reasonable access to such records and
retained product samples during normal business hours.
5.3 Post Closing Orders. Connetics shall promptly (but in no event
later than five Business Days after receipt by Connetics' customer service
department) deliver any purchase orders and refer all inquiries it shall receive
with respect to the Products in the Territory to Pharmascience.
5.4 Confidentiality. From and after the date hereof, Connetics shall
use the same efforts to maintain the confidentiality of any proprietary or
confidential information regarding the manufacture or sale of the Products in
the Territory as Connetics uses with respect to the Products
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outside the Territory; provided, however, that any such confidential or
proprietary information (a) may be shared, subject to execution of a
confidentiality agreement, with potential third party manufacturers of the
Products, (b) may be disclosed, subject to execution of a confidentiality
agreement, with potential purchasers of rights outside the Territory to product
lines for which auranofin is an active ingredient; provided that no information
specific to Pharmascience shall be disclosed in such context, and (c) may be
disclosed to the extent required by law (including without limitation under
securities law disclosure requirements).
5.5 Post-Closing Cooperation. From and after the Time of Closing, in
order to assist Pharmascience sell and market the Products in an effective
manner, Connetics shall use its best efforts to:
(a) permit Pharmascience to have one marketing representative
present at Connetics' booths at trade shows and conferences so long as such
Pharmascience representative adheres to the protocol, etiquette and
communications guidelines that apply to Connetics' representatives at such
events;
(b) provide, at Pharmascience's request and at cost (e.g.,
printing and pro rata production costs), reasonable quantities of marketing or
promotional materials regarding the Products;
(c) provide to Pharmascience any information it receives
regarding sales leads in the Territory;
(d) permit up to three Pharmascience sales representatives to
attend any Product training sessions and national sales meetings that Connetics
conducts for Connetics' sales representatives, with the direct costs (e.g.,
travel, hotel, out-of-pocket expenses, and pro rata amounts of meals and
entertainment) to be paid by Pharmascience and with such training to be held at
a location reasonably determined by Connetics;
(e) inform Pharmascience of any ongoing or planned clinical
studies pertaining to the Products.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF PHARMASCIENCE
Pharmascience hereby represents and warrants to Connetics and
acknowledges that Connetics is relying on such representations and warranties in
connection with the transactions contemplated by this Agreement that:
6.1 Incorporation, Organization and Qualification of Pharmascience.
Pharmascience is a corporation duly incorporated, validly existing and in good
standing under the law of the jurisdiction of its incorporation, and has the
corporate power to own or lease its property and to carry on its business as now
being conducted by it. Pharmascience is duly qualified to do business as a
foreign corporation and is in good standing in every jurisdiction where the
nature of the business conducted by it makes such qualification necessary except
in such jurisdictions
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where the failure to so qualify does not in the aggregate have a material
adverse effect on Pharmascience's business taken as a whole.
6.2 Corporate Action. This Agreement and any other agreements and
instruments executed in connection herewith are the valid and binding
obligations of Pharmascience, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency or similar laws of general application
affecting the enforcement of rights of creditors, and subject to equitable
principles limiting rights to specific performance or other equitable remedies,
and subject to the effect of federal and state securities laws on the
enforceability of indemnification provisions relating to liabilities arising
under such laws. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action of Pharmascience.
6.3 Governmental Approvals. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, under any applicable laws, rules or regulations presently in effect, is
or will be necessary for, or in connection with, execution and delivery of this
Agreement, or for the performance by it of its obligations hereunder.
SECTION 7
COVENANTS OF PHARMASCIENCE
7.1 Insurance.
(a) Pharmascience. At all times from the Time of Closing for
as long as Pharmascience promotes and distributes the Products, Pharmascience
shall maintain product liability insurance written on a claims made form in such
amounts as are customary in the industry in the Territory for similar products;
provided however, that notwithstanding the foregoing, such amounts shall be not
less than $1,000,000 per occurrence, $2,000,000 annual aggregate. At Connetics'
request, Pharmascience shall provide Connetics with a certificate of insurance
as evidence of such insurance at any time. In the event that any such insurance
shall be significantly reduced or restricted, terminated or shall otherwise not
be renewed, Pharmascience shall immediately notify Connetics.
(b) Connetics. At all times from the Time of Closing for as
long as Connetics promotes and distributes Products in the United States,
Connetics shall maintain product liability insurance written on a claims made
form in such amounts as are customary in the industry in the United States for
similar products; provided however, that notwithstanding the foregoing, such
amounts shall be not less than $1,000,000 per occurrence, $2,000,000 annual
aggregate. At Pharmascience's request, Connetics shall provide Pharmascience
with a certificate of insurance as evidence of such insurance at any time. In
the event that any such insurance shall be significantly reduced or restricted,
terminated or shall otherwise not be renewed, Connetics shall immediately notify
Pharmascience.
7.2 Confidentiality. From and after the date hereof until the Time of
Closing, Pharmascience shall use the same efforts to maintain the
confidentiality of any proprietary or confidential information regarding the
Purchased Assets and Products as Pharmascience uses to
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maintain the confidentiality of its own proprietary information. In the event
that there is no Time of Closing under this Agreement, Pharmascience shall
return all information regarding the Purchased Assets and Products to Connetics,
retaining no copies, excerpts or other analysis or redactions of such
information and covenants that no such information shall be disclosed to any
third party or utilized in any way by Pharmascience in the conduct of its own
business.
SECTION 8
MUTUAL COVENANTS
8.1 Right to Investigate. After the date hereof, Connetics shall afford
to representatives of Pharmascience reasonable access to offices, plants,
properties, books and records of Connetics relating to the Products, during
normal business hours, in order that Pharmascience may have full opportunity to
make such investigations as it desires with respect to the Products. In the
event of termination of this Agreement prior to the Closing, Pharmascience shall
deliver to Connetics all documents, work papers and other material obtained by
Pharmascience, or on its behalf, from Connetics and all copies thereof, whether
so obtained before or after the execution of this Agreement, and shall not
itself use directly or indirectly or through any subsidiary or affiliate any
information so obtained, or otherwise obtained from Connetics, hereunder or in
connection herewith (unless such information is generally known in the industry
or was acquired by Pharmascience prior to the receipt thereof from Connetics or
was acquired after the date hereof from a third party having a bona fide right
to provide the same to Pharmascience), and shall endeavor to have all such
information kept confidential and not used in any manner.
8.2 Supply Arrangements. On or prior to the Closing, the parties shall
enter into the Supply Agreement.
8.3 Trade returns. For the period prior to the Time of Closing
Connetics shall bear the cost of all returns, governmental reimbursements and
chargebacks for Products regardless of the date of sale, in each case in
accordance with Connetics' then-current practices. Pharmascience will not take
any action to encourage any returns of such goods to Connetics. From and after
the Time of Closing, Pharmascience shall be responsible for all governmental
reimbursements and chargebacks for Products regardless of the date of sale and
shall be responsible for returns of Products from the trade in accordance with
Pharmascience's return policy.
8.4 Brokers. Pharmascience represents to Connetics that Pharmascience
has not employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or commission upon the execution of this Agreement or the consummation of
such transactions. Connetics represents to Pharmascience that Connetics has not
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to a fee or
commission upon the execution of this Agreement or the consummation of such
transactions. Each party agrees to indemnify and hold the other party harmless
with respect to any action, claim or demand with respect to any third party
claiming any such fee or commission by reason of its relationship to the
indemnifying party.
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8.5 Best Efforts. Each party shall use its best efforts to close, to
comply with all covenants herein and to consummate the transactions contemplated
hereby as expeditiously as possible.
8.6 Best Efforts to Obtain Satisfaction of Conditions. Connetics and
Pharmascience covenant and agree to use their best efforts to obtain the
satisfaction of the conditions specified in this Agreement.
8.7 Adverse Event Reports. Pharmascience shall assume responsibility
for compliance with Canadian governmental regulations, including without
limitation adverse event reporting requirements. To the extent that Connetics
receives any adverse event reports (distinguished as serious and non-serious by
U.S. Food and Drug Administration (FDA) regulations), Connetics shall promptly
(but in no event later than (i) five Business Days for serious adverse events
after receipt by Connetics of complete information regarding such events and
(ii) thirty calendar days for non-serious adverse events after receipt by
Connetics of complete information regarding such events) forward copies of such
reports to Pharmascience at the address set forth in Section 16.3. To the extent
that Pharmascience receives any adverse event reports, Pharmascience shall
promptly (but in no event later than (i) five Business Days for serious adverse
events after receipt by Pharmascience of complete information regarding such
events and (ii) thirty calendar days for non-serious adverse events after
receipt by Connetics of complete information regarding such events) forward
copies of such reports to Connetics at the address set forth in Section 16.3.
8.8 Transfer of Registrations, etc. Upon Pharmascience's request and to
the extent legally permissible, Connetics will transfer to Pharmascience or
facilitate the transfer from SmithKline any health registrations in Connetics'
possession necessary to enable uninterrupted manufacture, marketing and sale of
the Products in the Territory. Connetics will cooperate with Pharmascience in
disclosing and copying any relevant records and reports which are required to be
made, maintained and reported pursuant to law.
8.9 Transfer of Regulatory Responsibility. Pharmascience shall be
responsible for transferring the Canadian registrations and permits and
transferring regulatory responsibilities for the Products in the Territory from
Connetics or SmithKline to Pharmascience as expeditiously as possible. Without
limiting the foregoing, Pharmascience shall be responsible for effecting the
transfer of all Health Protection Branch (HPB) registrations and permits, and
Connetics will provide reasonable assistance to Pharmascience in such transfer.
8.10 Sales and Marketing Cooperation. Connetics and Pharmascience shall
exchange, on a regular basis, information regarding sales and marketing
initiatives for the Products. In addition, representatives of each party shall
meet at least once per calendar year (at a mutually agreed upon time and
location) to discuss sales and marketing strategies, assess the state of the
arthritis market, and review historical and projected sales levels.
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SECTION 9
CLOSING ARRANGEMENTS
9.1 Closing Arrangements. At or before the Time of Closing upon
fulfillment of all the conditions hereof which have not been waived in writing
by Pharmascience or Connetics respectively:
(a) Connetics' Delivery of Closing Documents. Connetics shall
deliver to Pharmascience:
(i) a bill of sale and assignment substantially in
the form of Exhibit C;
(ii) all technical data, formulations, product
literature and other documentation related to the Purchased Assets;
(iii) such certificates of Connetics' officers and
such other documents evidencing satisfaction of the conditions specified in
Section 10 as Pharmascience shall reasonably request; and
(iv) such other documents, instruments and
certificates as Pharmascience may reasonably request.
(b) Pharmascience's Delivery of Closing Documents.
Pharmascience shall deliver to Connetics:
(i) such certificates of Pharmascience's officers and
such other documents evidencing satisfaction of the conditions specified in
Section 11 as Connetics shall reasonably request; and
(ii) such other documents, instruments and
certificates as Connetics may reasonably request.
(c) Payment of Purchase Price. On the fulfillment of the
foregoing terms of Section 9 and upon the fulfillment of all the conditions of
this Agreement, which have not been specifically waived in writing by Connetics
or Pharmascience, as the case may be, Pharmascience shall pay and satisfy the
Purchase Price as provided in Section 3 hereof.
(d) Physical Delivery. Pursuant to delivery arrangements
specified by Pharmascience to Connetics prior to the Time of Closing, and
reasonably acceptable to Connetics, Connetics shall deliver to Pharmascience at
Pharmascience's premises those tangible assets included in the Purchased Assets
at the Time of Closing or as soon thereafter as reasonably practical but in no
event later than ten Business Days after the Time of Closing.
(e) Transfer Expenses. At Pharmascience's request, Connetics
shall deliver to Pharmascience such trademark assignment documents in recordable
form necessary to effect the transfer to Pharmascience of all trademarks
included in the Intellectual Property. Pharmascience shall be responsible for
the recordation of same and Pharmascience shall bear any costs and fees
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related thereto. Pharmascience shall be responsible for all costs associated
with maintenance of trademarks from the Time of Closing.
SECTION 10
PHARMASCIENCE'S CONDITIONS OF CLOSING
The sale and purchase of the Purchased Assets in accordance with the
terms of this Agreement are subject to the following terms and conditions, each
of which is included for the exclusive benefit of Pharmascience, to be fulfilled
and/or performed at or prior to the Time of Closing:
10.1 Representations and Warranties at Closing. The representations and
warranties of Connetics to Pharmascience contained in this Agreement and
Exhibits hereto shall be true and correct in all material respects at the Time
of Closing with the same force and effect as if such representations and
warranties were made at and as of such time and Connetics shall deliver to
Pharmascience at the Time of Closing certificate(s) by an officer of Connetics
to such effect provided that the receipt of such evidence and the closing of the
transaction herein provided for shall not be nor be deemed to be a waiver of the
representations and warranties contained in this Agreement and Schedules hereto.
10.2 Compliance with Terms and Conditions. All of the terms, covenants
and conditions of this Agreement to be complied with or performed by Connetics
at or before the Time of Closing shall have been complied with or performed in
all material respects.
10.3 Necessary Consents. There shall have been obtained from all
appropriate federal, state, municipal or other governmental or administrative
bodies such approvals or consents as are required to permit the change of
ownership of the Purchased Assets contemplated hereby.
10.4 No Actions Taken Restricting Sale. No action or proceeding in the
Territory by law or in equity shall be pending or threatened by any person,
firm, corporation, government, governmental authority, regulatory body or agency
to enjoin, restrict or prohibit the purchase and sale of the Purchased Assets
contemplated hereby.
10.5 Non-Performance of Conditions for the Benefit of Pharmascience. In
the event that any of the conditions set forth in this Section 10 shall not be
fulfilled and/or performed at or before the Time of Closing, Pharmascience may
rescind this Agreement by notice in writing to Connetics, and Pharmascience
shall thereupon be released from all obligations under this Agreement unless the
condition or conditions for the non-fulfillment of non-performance of which
Pharmascience has rescinded this Agreement are reasonably capable of being
fulfilled and/or performed or caused to be fulfilled or performed by Connetics,
then Connetics shall also be released from all obligations under this Agreement,
provided any of the said conditions may be waived in whole or in part by
Pharmascience at any time without prejudice to its rights of rescission in the
event of non-fulfillment and/or non-performance of any other condition or
conditions, any such waiver to be binding upon Pharmascience only if the same is
in writing.
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10.6 Supply Agreement. The parties shall have entered into the Supply
Agreement.
10.7 Release of Security Interests. Connetics shall have obtained all
required releases from third parties (including, without limitation, SmithKline
and Silicon Valley Bank) who hold any security interest in the Purchased Assets.
SECTION 11
CONNETICS' CONDITIONS OF CLOSING
The sale and purchase of the Purchased Assets in accordance with the
terms of this Agreement is subject to the following terms and conditions, each
of which is included for the exclusive benefit of Connetics. Each of such
conditions is to be fulfilled and/or performed at or prior to the Time of
Closing.
11.1 Compliance with Terms. All the terms, covenants and conditions of
this Agreement to be complied with or performed by Pharmascience at or before
the Time of Closing shall have been duly complied with or performed in all
material respects.
11.2 No Action Taken Restricting Sale. No action or proceeding in the
United States or Canada at law or in equity shall be pending or threatened by
any person, firm, corporation, government, governmental authority, regulatory
body or agency to enjoin, restrict or prohibit the sale of the Purchased Assets
contemplated hereby or the right of Connetics to sell the Purchased Assets.
11.3 Non-Performance of Conditions for the Benefit of Connetics. In the
event that any of the conditions set forth in this Section 11 shall not be
fulfilled and/or performed at or before the Time of Closing, Connetics may
rescind this Agreement by notice in writing to Pharmascience and Connetics shall
thereupon be released from all obligations under this agreement and
Pharmascience shall also be released from all obligations under this Agreement,
provided any of the said conditions may be waived in whole or in part by
Connetics at any time without prejudice to its respective rights of rescission
in the event of a non-fulfillment and/or non-performance of any other condition
or conditions, any such waiver to be binding upon Connetics only if the same is
in writing
11.4 Supply Agreement. The parties shall have entered into the Supply
Agreement.
SECTION 12
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
The obligations of each of the parties hereto are subject to the
condition that at the Time of Closing, there shall exist no injunction or other
order issued by a court of competent jurisdiction which would make unlawful the
consummation of the transactions contemplated by this Agreement.
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SECTION 13
INDEMNIFICATION
13.1 Connetics' Indemnification. Connetics will indemnify and hold
harmless Pharmascience and each of its directors, officers, employees, advisors,
affiliates, agents and shareholders from and against any and all losses,
damages, liabilities, costs, claims and expenses, including but not limited to
attorney's fees, arising out of, based upon or resulting from:
(a) any claims against, or liabilities or obligations of,
Connetics or against the Purchased Assets other than the Assumed Liabilities;
(b) any inaccuracy of any representation or warranty or
schedule of Connetics which is contained in or made pursuant to this Agreement;
(c) any tax liability of Connetics (other than sales and use
taxes referred to in Section 3.2 of this Agreement) including, without
limitation, any tax liability arising out of the failure of Connetics or
Pharmascience to comply with any provisions of the tax laws of the State of
California;
(d) any breach by Connetics of any of its agreements,
covenants, warranties or obligations contained in or made pursuant to this
Agreement; or
(e) any claims, liabilities or obligations arising from the
sale of Products in the Territory by Connetics or SmithKline prior to the
Closing.
Connetics shall have no obligation to indemnify Pharmascience under
this Section 13.1 for any breach of Connetics' representations and warranties
made in or pursuant to this Agreement, until such time, if any, as the aggregate
amount of the liabilities, losses, damages, claims costs and expenses arising
out of such breach exceeds $50,000 and then only to the extent of such excess.
13.2 Pharmascience's Indemnification. Pharmascience will indemnify and
hold harmless Connetics and each of its directors, officers, employees,
advisors, affiliates, agents and shareholders from and against any and all
losses, damages, liabilities, costs, claims and expenses including but not
limited to attorney's fees arising out of, based upon or resulting from:
(a) any inaccuracy of any representation or warranty of
Pharmascience which is contained in or made pursuant to this Agreement;
(b) any breach by Pharmascience of any of its agreements,
covenants, warranties or obligations contained in or made pursuant to this
Agreement;
(c) any of the Assumed Liabilities, excluding damages,
liabilities, costs and claims arising out of or related to returns to the extent
that Connetics has retained liability pursuant to Section 8.4; or
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(d) the Products ordered by Connetics on Pharmascience's
behalf pursuant to Section 8.2 above.
Pharmascience shall have no obligation to indemnify Connetics under
this Section 13.2 for any breach of Pharmascience's representations and
warranties made in or pursuant to this Agreement, until such time, if any, as
the aggregate amount of the liabilities, losses, damages, claims costs and
expenses arising out of such breach exceeds $50,000 and then only to the extent
of such excess. For the avoidance of doubt this limitation does not apply to
Pharmascience's obligations to pay the Purchase Price.
13.3 Claims Procedures. (a) Promptly after the receipt by any party
hereto of notice or upon any party becoming otherwise aware of (x) any claim or
(y) the commencement of any action or proceeding, such party (the "Aggrieved
Party") will, if a claim with respect thereto is to be made against any party
obligated to provide indemnification (the "Indemnifying Party") pursuant to this
Section 13, give such Indemnifying Party written notice of such claim or the
commencement of such action or proceeding and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting from
such claim. Failure by the Indemnifying Party to notify the Aggrieved Party of
its election to defend any such action within a reasonable time, but in no event
more than thirty days after notice thereof shall have been given to the
Indemnifying Party, shall be deemed a waiver by the Indemnifying Party of its
right to defend such action.
(b) If the Indemnifying Party assumes the defense of any such
claim or litigation resulting therefrom, the obligations of the Indemnifying
Party as to such claim shall be limited to taking all steps necessary in the
defense or settlement of such claim or litigation resulting therefrom and to
holding the Aggrieved Party harmless from and against any and all losses,
damages and liabilities caused by or arising out of any settlement approved by
the Indemnifying Party or any judgment in connection with such claim or
litigation resulting therefrom. The Aggrieved Party may participate, at its
expense, in the defense of such claim or litigation provided that the
Indemnifying Party shall direct and control the defense of such claim or
litigation. The Indemnifying Party shall not, in the defense of such claim or
any litigation resulting therefrom, consent to entry of any judgment, except
with the written consent of the Aggrieved Party, or enter into any settlement,
except with the written consent of the Aggrieved Party, which does not include
as an unconditional term thereof the giving by the claimant or the plaintiff to
the Aggrieved Party of a release from all liability in respect of such claim or
litigation.
(c) If the Indemnifying Party shall not assume the defense of
any such claim or litigation resulting therefrom, the Aggrieved Party may defend
against such claim or litigation in such manner as it may deem appropriate and,
unless the Indemnifying Party shall deposit with the Aggrieved Party a sum
equivalent to the total amount demanded in such claim or litigation, or shall
deliver to the Aggrieved Party a surety bond or an irrevocable letter of credit
in form and substance reasonably satisfactory to the Aggrieved Party, the
Aggrieved Party may settle such claim or litigation on such terms as it may deem
appropriate, and the Indemnifying Party shall promptly reimburse the Aggrieved
Party for the amount of all reasonable expenses, including, without limitation,
attorneys' fees, incurred by the Aggrieved Party in connection with the defense
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against or settlement of such claims or litigation. If no settlement of such
claim or litigation is made, the Indemnifying Party shall promptly reimburse the
Aggrieved Party for the amount of any judgment rendered with respect to such
claim or in such litigation and of all expenses, including, without limitation,
attorneys' fees, incurred by the Aggrieved Party in the defense against such
claim or litigation.
13.4 Nature of Survival of Representations, Etc. All representations
and warranties and agreements made by the parties hereto shall survive the Time
of Closing and any investigation at any time made by or on behalf of either
party, provided, however, that no suit or action may be commenced in respect of
a representation or warranty after twelve (12) months from the Time of Closing.
SECTION 14
CLOSING
The completion of the transactions contemplated by this agreement shall
take place at the Time of Closing at the offices of Venture Law Group, 2800 Sand
Hill Road, Menlo Park, California, U.S.A. or at such other place as may be
agreed upon by the parties hereto.
SECTION 15
CONDUCT OF BUSINESS PRIOR TO THE TIME OF CLOSING
It is expressly understood by the parties that in the event that there
is no closing under this Agreement, Pharmascience shall have no rights
whatsoever to the revenues from the Products, and shall have no liability for
the Assumed Liabilities or for any costs or expenses incurred or accrued with
respect to the business related to the Products.
SECTION 16
MISCELLANEOUS
16.1 Further Assurances. Each of the parties hereto upon the request of
the other party hereto, whether before or after the Time of Closing and without
further consideration, shall do, execute, acknowledge and deliver or cause to be
done, executed acknowledged or delivered all such further acts, deeds,
documents, assignments, transfers, conveyances, powers of attorney and
assurances as may be reasonably necessary or desirable to effect complete
consummation of the transactions contemplated by this Agreement.
16.2 Announcements. The parties hereto agree that no disclosure or
public announcement with respect to this Agreement or any of the transactions
contemplated by this Agreement shall be made by any party hereto without the
prior consent of Connetics or Pharmascience provided, however, that nothing
herein contained shall restrict Connetics or Pharmascience from making any
public announcement of the transactions contemplated by this Agreement to the
extent that it, in its sole discretion reasonably exercised, is of the view that
such announcement is required or deemed advisable in order to meet its
obligations under the securities laws or stock exchange requirements in Canada
or the United States. Notwithstanding the foregoing, Connetics may disclose this
Agreement and the transactions contemplated hereby, to
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the extent reasonably necessary, in connection with (a) a private placement of
securities for the purpose of obtaining financing and/or (b) Connetics' filing
and disclosure obligations under the Exchange Act, including the filing of this
Agreement and all exhibits with the Securities and Exchange Commission.
16.3 Notices. Any notice, direction or other instrument required or
permitted to be given to Connetics hereunder shall be in writing and may be
given by delivering the same to Connetics via internationally-recognized courier
as follows:
To: Connetics Corporation
3400 W. Bayshore Road
Palo Alto, CA 94303
Attn: Chief Executive Officer
Copy to: Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Attn: Joshua L. Green
Any notice, direction or other instrument required or permitted to be
given to Pharmascience hereunder shall be in writing and may be given by
delivering the same to Connetics via internationally-recognized courier as
follows:
To: Pharmascience, Inc.
8400 Darnley Road
Montreal, Quebec
H4T 1M4
Attn: Chairman of the Board
Any such notice, direction or other instrument, if delivered,
shall be deemed to have been given on the date on which it was delivered and if
transmitted by telecommunication shall be deemed to have been given at the
opening of business in the office of the addressee on the Business Day next
following the transmission thereof.
Any party hereto may change its address for service from time to time
by notice given to the other parties hereto in accordance with the foregoing.
16.4 Termination.
(a) This Agreement may be terminated at any time prior to the Time of
Closing:
(i) by mutual consent of Connetics and Pharmascience; and
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(ii) by either Connetics or Pharmascience if the sale
contemplated hereby shall not have been consummated on or before January 31,
1998.
(b) In the event of termination of this Agreement in accordance with
this Section 16.4, neither party shall be liable to the other, because of such
termination, for compensation, reimbursement or damages on account of the loss
of prospective profits or anticipated sales or on account of expenditures,
inventory, investments, leases or commitments in connection with the business or
goodwill of Connetics or Pharmascience. Termination shall not, however, relieve
either party of any obligations incurred prior to the termination.
16.5 Time of the Essence. Time shall be of the essence.
16.6 Applicable Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties hereto shall be governed by, the
laws of the State of California, U.S.A.
16.7 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, constitutes the entire agreement between the parties hereto
with respect to the transactions provided for herein and, except as stated
herein and in the instruments and documents to be executed and delivered
pursuant hereto, contains all of the agreements between the parties hereto and
there are no verbal agreements or understandings between the parties hereto not
reflected in this Agreement. This Agreement may not be amended or modified in
any respect except by written instrument executed by each of the parties hereto.
16.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same Agreement.
16.9 Parties in Interest. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
successors, administrators, and assigns; provided, however, that this Agreement
shall not be assignable by Connetics or Pharmascience hereto prior to the Time
of Closing without the written consent of the other party.
[Signature Page Follows.]
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IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the date first above written.
PHARMASCIENCE, INC.
By: /s/ Pharmascience, Inc.
--------------------------------
Title:
-----------------------------
CONNETICS CORPORATION
By: /s/ Thomas G. Wiggans
--------------------------------
Title: President and Chief
-----------------------------
Executive Officer
-----------------------------
EXHIBIT A
Intellectual Property Rights
TRADEMARKS
Canadian Trademark Registration
Registration No. TMA316,242
Trademark Oppositions/Litigation
No known pending oppositions or litigation, or threats thereof, affecting
RIDAURA trademarks in Canada.
COPYRIGHTS
No known registrations/applications.
EXHIBIT B
SUPPLY AGREEMENT
[Filed as Exhibit 10.55 to Connetics' Registration Statement on Form S-1 (File
No. 333-41195).]
EXHIBIT C
BILL OF SALE AND ASSIGNMENT
Bill of Sale and Assignment, dated December __, 1997, from Connetics
Corporation, a Delaware corporation ("Connetics") to Pharmascience, Inc., a
Canadian corporation ("Pharmascience").
1. Pursuant to the Canadian Asset Purchase Agreement between Connetics
and Pharmascience dated December __, 1997 (the "Agreement"), incorporated herein
by reference, and for valuable consideration therein recited, including a
purchase price payable as set forth in Section 3 of the Agreement, and other
good and valuable consideration recited therein, Connetics has respectively
sold, conveyed, assigned, transferred, set over and delivered and by these
presents does hereby sell, convey, assign, transfer, set over and deliver unto
Pharmascience, and to its successors and assigns forever, all and singular
rights, title and interest in and to the Purchased Assets as described in
Section 2 of the Agreement, all of which is incorporated herein by reference.
2. Connetics hereby covenants and agrees to and with Pharmascience, its
successors and assigns, to execute and deliver all such other and further
instruments of conveyance, assignment and transfer and all such other notices,
releases, acquittances, powers of attorney and other documents, and to do all
such other acts and things as may be necessary more fully to convey and assign
to Pharmascience or its successors or assigns, all and singular rights, title
and interest in and to the Purchased Assets therein and hereby conveyed,
assigned and transferred to or acquired by Pharmascience by any such specific
conveyances and assignments; and in case of conflict, such specific instrument
shall control with respect to the properties or assets assigned or conveyed
thereby.
3. Connetics represents and warrants to Pharmascience that (i)
Connetics is the sole owner of all the Purchased Assets with good title thereto
free and clear of any mortgage, lien, charge, security interest, adverse claim
or other encumbrance whatsoever (collectively, the "Encumbrances"), and (ii)
Connetics has the right to transfer to Pharmascience good title to the Purchased
Assets, free and clear of all Encumbrances, and to execute this Bill of Sale and
Assignment.
[Signature page follows]
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IN WITNESS WHEREOF, Connetics has caused this Bill of Sale and
Assignment to be executed as of the date first above written.
Connetics Corporation
By: _________________________
Title: _________________________
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